Cattle prices continued mainly steady to higher last week, amid roiling clouds of trade uncertainty, but boosted by increasing Futures market optimism.
Steers and heifers sold steady to $2/cwt. higher, according to the Agricultural Marketing Service (AMS). Week to week on Friday, Feeder Cattle futures closed an average of $1.18 higher (27¢ to $1.87 higher).
“Auction supplies of feeders was somewhat higher again this week, even though we are in the dog days of summer,” AMS analysts explained. “Beef demand has remained on solid ground for a couple weeks now as the market has traded sideways on plentiful supplies,” say AMS analysts. “Widespread drought areas brought many mature cattle to auctions this year. Year to date, beef cow slaughter is 10.7% above a year ago and 12.7% above the previous five-year average. Herd liquidation or culling is well upon the mid-section of the country’s cow-calf sector. In addition to mature cattle slaughter increasing, year-to-date heifer slaughter is 8.2% above a year ago and 9.0% above the previous five-year average.”
Andrew P. Griffith, agricultural economist at the University of Tennessee notes in his weekly market comments that in his part of the country—also true in many areas—calf and feeder cattle prices remain similar to last year, offering opportunities for positive returns.
“This calendar year, calf and yearling prices are projected to be similar to 2016’s and 2017’s. In the fourth quarter of this year, calf prices may average slightly below 2017’s, but substantially above 2016’s,” say analysts with the Livestock Marketing Information Center (LMIC), in the latest Livestock Monitor. “If the general trends of the first half of 2018 persist, as of January 1, 2019, the U.S. cowherd likely will be up well less than 1.0% year over year. That suggests cyclically stronger calf prices are ahead (e.g., calf prices in the fall of 2020). Pre-planning may position a cattle operation to take advantage of this market transition.”
“No one knows for sure which way the market will move going forward, but the expectation is for lower prices to consume the market due to increased production,” Griffith says. “However, market analysts have consistently undervalued beef demand, which has supported cattle prices all year. One aspect of the market that has appeared to slow down is the purchase of open heifers for beef cow replacement. There have been several feeder cattle sales in which the auction price made it seem apparent that the heifers were destined to be bred because they were valued tremendously higher than same-weight feeder heifers. However, many of the high quality open heifers in today’s market are only bringing a moderate premium compared to average quality heifers destined for the feedlot.”
Weekly negotiated cash fed cattle trade was another late-week affair, but at prices reportedly $1-$2 higher than the previous week on a live basis at $113-$114/cwt. and as much as $4 high in the beef at $178.
Live Cattle futures closed an average of $1.76 higher ($1.35 to $2.15 higher).
Wholesale beef value continued to search for the seasonal bottom last week. Choice boxed beef cutout value was 39¢ lower week to week on Friday at $204.75/cwt. Select was $1.18 lower at $197.09.
“There has been considerable media coverage of the latest Cold Storage report from USDA, but this information can be misleading if not put in context,” Griffith says. “Beef in cold storage at the end of June totaled 449 million lbs., which is 33 million more lbs. than the same time last year, but in line with expectations for June. To put this quantity in perspective, weekly beef production in 2018 has averaged 501 million lbs., which means there is less than one week’s worth of beef production in cold storage.”
Friday to Friday Change*
Weekly Auction Receipts
|
Receipts Aug. 3 |
Auction (head) (Change) |
Direct (head) (Change) |
Video/net (head) (Change) |
Total (head) (Change) |
|
156,900 (+15,300) |
67,300 (-400) |
30,200 (-70,500) |
254,400 (-55,600) |
CME Feeder Index
| CME Feeder Index | Aug. 2 | Change |
| $148.92 | – 0.65 |
*Thursday-to Thursday for CME Feeder Index
Cash Stocker and Feeder
North Central
| Steers-Cash | Aug. 3 | Change |
| 600-700 lbs. | $167.98 | – $5.43 |
| 700-800 lbs. | $157.71 | – $9.13 |
| 800-900 lbs. | $151.17 | – $5.62 |
South Central
| Steers-Cash | Aug. 3 | Change |
| 500-600 lbs. | $162.90 | + $1.42 |
| 600-700 lbs. | $158.59 | + $1.86 |
| 700-800 lbs. | $150.82 | – $0.64 |
Southeast
| Steers-Cash | Aug. 3 | Change |
| 400-500 lbs. | $158.75 | – $0.32 |
| 500-600 lbs. | $152.51 | + $2.02 |
| 600-700 lbs. | $143.77 | + $1.19 |
(AMS National Weekly Feeder & Stocker Cattle Summary)
Wholesale Beef Value
| Boxed Beef (p.m.) | Aug. 3 ($/cwt) | Change |
| Choice | $204.75 | – $0.39 |
| Select | $197.09 | – $1.18 |
| Ch-Se Spread | $7.66 | + $0.79 |
Futures
| Feeder Cattle | Aug. 3 | Change |
| Aug | $152.850 | + $0.550 |
| Sep | $153.025 | + $0.850 |
| Oct | $153.025 | + $0.275 |
| Nov | $153.475 | + $0.975 |
| Jan ’19 | $152.250 | + $1.450 |
| Mar | $151.125 | + $1.675 |
| Apr | $151.775 | + $1.875 |
| May | $151.500 | + $1.800 |
| Live Cattle | Aug. 3 | Change |
| Aug | $110.675 | + $2.050 |
| Oct | $112.000 | + $1.525 |
| Dec | $115.500 | + $1.350 |
| Feb ’19 | $118.850 | + $1.475 |
| Apr | $120.300 | + $1.600 |
| Jun | $113.900 | + $1.825 |
| Aug | $112.725 | + $1.925 |
| Oct | $114.000 | + $1.975 |
| Dec | $115.000 | + $2.150 |
| Corn futures | Aug. 3 | Change |
| Sep | $3.696 | + $0.076 |
| Dec | $3.842 | + $0.080 |
| Mar ’19 | $3.954 | + $0.088 |
| May | $4.014 | + $0.090 |
| Jul | $4.070 | + $0.094 |
| Sep | $4.076 | + $0.090 |
| Oil CME-WTI | Aug. 3 | Change |
| Sep | $68.49 | – $0.20 |
| Oct | $67.35 | – $0.38 |
| Nov | $66.93 | – $0.43 |
| Dec | $66.59 | – $0.45 |
| Jan | $66.29 | – $049 |
| Feb | $65.87 | – $0.50 |
Equities
| Equity Indexes | Aug. 3 | Change |
| Dow Industrial Average | 25462.58 | + 11.52 |
| NASDAQ | 7812.02 | + 74.60 |
| S&P 500 | 2840.35 | + 21.54 |
| Dollar (DXY) | 95.20 | + 0.52 |