Cattle futures closed narrowly mixed to slightly lower Tuesday amid sluggish action and participation as the trade awaits direction from the cash market.
Wholesale beef values were weaker on Choice and higher on Select with light to moderate demand and offerings, according to the Agricultural Marketing Service.
Choice boxed beef cutout value was 41¢ lower Tuesday afternoon at $213.57/cwt. Select was $1.79 higher at $204.08.
Except for 2¢ to 20¢ higher in the front three contracts, Live Cattle futures closed an average of 28¢ lower.
Feeder Cattle futures closed an average of 39¢ lower.
*******************************
Major U.S. financial indices continued to rise Tuesday amid positive economic news, higher crude oil prices and chatter about the longest bull market in history.
The Dow Jones Industrial average closed 63 points higher. The S&P 500 closed 5 points higher. The NASDAQ was up 38 points.
*******************************
“Looking at the rest of 2018, feeder prices are expected to be a little lower than during the same period of 2017,” says Josh Maples, Extension livestock economist at Mississippi State University, in the latest issue of In the Cattle Markets. “We typically see seasonal feeder price declines heading into September and October, and the large supplies of calves this year provide some reasoning for that seasonal pattern to hold this year. Looking beyond 2018, the slower herd growth numbers begin to paint a brighter price picture for 2019 and 2020. If the strong domestic economy maintains or grows and exports continue to gain steam, it is not difficult to project higher prices in the Fall of 2019 compared to fall 2018.”
In the meantime, Maples says increasing beef production will pressure prices. He explains beef production increased 6.4% in 2016 and 3.8% last year.
“Current forecasts suggest about a 4% increase in 2018, and 1.5% in 2019,” Maples says. “Put it all together and that would be about a 16% increase in beef production in just four years. This would be the fastest four-year growth since 1973-1977. The increases are slowing, though. All signs are pointing to slower herd expansion in 2018 and 2019. With respect to the cattle cycle, recent cowherd trends suggest 2020 could potentially mark the end of the current U.S. cattle inventory build-up. It is important to note that this would not be the end of a cycle, just the increasing segment of the cycle.”