Cattle futures bounced back Thursday, about as much and fast as they fell in the previous session, on the same fundamentals. Initial fear—and kneejerk reaction—over the new U.S. tariffs on Chinese imports, fueled by algo trading, provide as apt an explanation as any.
Except for unchanged in the back contract, Live Cattle futures closed an average of 96¢ higher (60¢ to $1.35 higher).
Except for unchanged in April, Feeder Cattle futures closed an average of 97¢ higher (32¢ higher to $1.62higher in spot Aug).
Wholesale values were lower for Choice and steady for Select, with light to moderate demand and offerings, according to the Agricultural Marketing Service.
Choice boxed beef cutout value was 86¢ lower Thursday afternoon at $206.58/cwt. Select was 13¢ lower at $197.01.
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Major U.S. financial indices closed sharply higher Thursday, erasing losses from the previous session. Rather than ponder the potential trade war with China, investors seemed content to cheer positive quarterly earnings.
The Dow Jones Industrial Average closed 224 points higher. The S&P 500 closed 24 points higher. The NASDAQ closed 107 points higher.
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Beef production for this year was estimated slightly higher in July (27.15 billion lbs.) than the previous month (27.13 billion lbs.) on expectations of increased cow slaughter in the third quarter, according to analysts with USDA’s Economic Research Service (ERS), in the latest monthly World Agricultural Supply and Demand Estimates (WASDE).
For next year, though, estimated beef production was reduced to 27.69 billion lbs. from 27.72 billon lbs. the previous month. That’s on anticipation of lighter steer and heifer carcasses through the first half of the year.
5-area direct steer prices are projected at $107-$111 in the third quarter and at $108-$116 in the fourth, for an annual price of $114-$117. That’s $1 lower on the top end of the range compared to last month. The annual price for next year is projected at $113-$122, the same as the previous month.
“For 2019, the red meat and poultry production forecast is raised as increases in pork and broiler production more than offsets expected declines in beef production,” ERS analyst say.