After support early, Cattle futures dropped hard Thursday before paring some of the loss. Technical selling, pushed into overdrive by algo trading could have been part of the slide. Some pointed to pressure on commodities, in general, stemming from fewer month-to-month exports of all U.S. goods in June and the widening trade deficit. The U.S. Commerce Department said yesterday that the nation’s international trade deficit was $3.6 billion more in June than May at $68.3 billion.
Live Cattle futures closed an average of $1.16 lower (97¢ higher to $1.40 lower).
Feeder Cattle futures closed an average of $1.42 lower ($1.17 to $1.60 lower).
Boxed beef cutout values were firm on moderate to fairly good demand and light offerings, according to the Agricultural Marketing Service.
Choice boxed beef cutout value was 27¢ higher Thursday afternoon at $204.91/cwt. Select was 69¢ higher at $198.27.
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Major U.S. financial indices closed mixed Thursday. Pressure included a steep slide in Facebook on poor quarterly earnings.
The Dow Jones Industrial average closed 112 points higher. The S&P 500 closed 8 points lower. The NASDAQ was down 80 points.
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David Anderson, Extension livestock economist with Texas A&M, offers some insights to last week’s Cattle on Feed and Cattle inventory reports in the latest issue of In the Cattle Markets.
Noting the 2.01 million head marketed in June by feedlots with 1,000 head or more capacity, Anderson explains, “…the marketings rate is holding up well given the large supplies of cattle. That we are moving these large supplies of cattle is a tribute to good demand from retail and export markets and demand for fed cattle from packers. Continued good movement will be critical to cattle prices over the next six weeks approaching Labor Day.”
The number of cattle marketed last month was 0.85% more than last year. However, according to the Livestock Marketing Information Center, daily average marketing in June (adjusting for one less slaughter day than a year earlier) was 5.7% higher year over year (see graph).
Anderson points out the number of heifers on feed July 1 (4.454 million head) was nearly 8% more than a year earlier. He adds the mid-year Cattle report indicates 2.1% fewer beef replacement heifers, year over year.
“When combined with beef cow and heifer slaughter, the data continues to indicate a drastically slowing rate of herd growth,” Anderson says.