WLI

Negotiated cash fed cattle trade remained undeveloped through Wednesday afternoon. If some of the fed cattle auctions—and a smattering of country sales—are any indication, though, steady money may be a hopeful stretch this week.

For instance, Choice 2-3 steers brought $110.00-$111.25/cwt. at Sioux Falls Regional in South Dakota. Choice 3-4 steers brought $109.00-$111.60.

Although too few to trend, there were some early live country sales in the western Corn Belt at $110, which was $1-$3 lower than last week’s trade in the region.

There were only 620 head offered in the weekly Fed Cattle Exchange auction Wednesday, and no takers.

As for Cattle futures, adjusting to the previous session’s rally seemed to be the main business.

Other than unchanged in June, Live Cattle futures closed an average of 35¢ lower.

After unchanged in the front two contracts, Feeder Cattle futures closed an average of 54¢ lower.

Wholesale beef values were lower on light demand and moderate offerings, according to the Agricultural Marketing Service.

Choice boxed beef cutout value was 92¢ lower Wednesday afternoon at $213.16/cwt. Select was $1.80 lower at $197.18.

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Major U.S. financial indices closed lower on Wednesday, with pressure from tech stocks, led by Apple—tied to reports of softer iPhone sales. Banking shares also declined.

The Dow Jones Industrial Average closed 205 points lower. The S&P 500 closed 20 points lower. The NASDAQ was down 64 points.

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Culling decisions and the timing of them could be more complex for some this year, given the state of cull cow prices, says Josh Maples, Extension economist at Mississippi State University.

For price examples, Maples says average cull cow prices reported by AMS were about 12% lower year over year in South Dakota (July-October). Prices at San Angelo, Texas were 18% lower. They were 17% lower in Kentucky.

“While prices have been low already, we are now in the time of year when we typically expect lower cull prices,” Maples explains, in the latest issue of In the Cattle Markets. “Cow slaughter is seasonally higher during the last three months of the year as producers make culling decisions prior to winter. Combined with winter usually being a slower ground beef-demand time of the year, there usually is not much cull market strength until we get closer to Spring.”

For perspective, total cow slaughter this year is averaging 18.9% of total cattle slaughter, compared to a long-term average of 17.7% of total slaughter, according to Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly market comments.

“Total cow slaughter is up 7.3% year to date with beef cow slaughter up 10.5% year over year as beef cow culling returns to long-term average levels,” Peel says.

“Dairy cow slaughter is currently up 4.3% year over year.”

Using NASS data, analysts with the Livestock Marketing Information Center (LMIC) say the average dairy cow price for the quarter ending Oct. 1 was $1,230. That’s $380 less (-24%) year over year. In the latest Livestock Monitor, they explain the NASS data reflect only cows sold to be used as dairy herd replacements.

Add it all up and Maples says deciding whether to sell cull beef cows now or carry them through the winter could be less straightforward than usual, at least for some.

“Culling, even at current prices, will still make sense for many (probably even most) producers once the cost of carrying a cow through the winter is considered,” Maples says. “But, for producers with relatively low marginal wintering costs, this is at least a year to crunch the numbers.”

Cattle futures got some spark Tuesday—especially Feeder Cattle— credited in part to oversold conditions.

Other than unchanged in the back contract, Live Cattle futures closed an average of 57¢ higher.

Except for 60¢ higher in spot Nov, Feeder Cattle futures closed an average of $2.12 higher ($1.32 to $3.15 higher).

Wholesale beef values were lower on light to moderate demand and moderate offerings, according to the Agricultural Marketing Service.

Choice boxed beef cutout value was $1.47 lower Tuesday afternoon at $214.08/cwt. Select was $1.41 lower at $198.98.

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Major U.S. financial indices tried but failed on Tuesday to regain steep losses from the previous session. Along with tech stocks, the continuing decline in crude oil prices continued to weigh on the market.

West Texas Intermediate Crude Oil futures (CME) closed $4.02 to $4.24 lower through next November. Spot Dec closed at $55.69. It was $71.18 a month ago; $76.24 about six weeks ago. At least part of the recent slide in prices has to do with increased production by OPEC countries and the softer outlook for global economic growth.

The Dow Jones Industrial Average closed 100 points lower. The S&P 500 closed 4 points lower. The NASDAQ was just a tick to the positive side.

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Consumer spending for food and beverages (purchased for off-premises consumption—mainly grocery stores) increased 2.8% and 4.0% in the spring and summer quarters, respectively, according to analysts with the Livestock Marketing Information Center (LMIC).

Those increases fall into the middle range of growth for this sector during the last two years,” say LMIC analysts, in the latest Livestock Monitor. “Meanwhile, the spending category of ‘food services and accommodations’ jumped 8.1% and 6.9% during the spring and summer quarters, capturing the preference for away-from-home meals (e.g., restaurants).”

For overall context, the LMIC folks explain the net value of goods and service produced by the U.S. economy increased by an annual rate of 3.5% in the summer quarter and by 4.2% in the spring quarter.

“Wholesale market measures of beef demand were consistent with trends in consumer spending choices,” LMIC analysts say. “The Choice beef cutout this summer was up 3% from a year ago, even as beef supplies from steers and heifers increased by 0.5%. More product selling at a higher price is the essence of favorable demand. Impressive export growth also played a role in this situation.”

Bottom picking and a rally in Lean Hog futures were credited with some of the support that helped Cattle futures regain some stability in the wake of Friday’s sharp decline.

Other than an average of 27¢ higher in the front two contracts and 50¢ higher at the back, Live Cattle futures closed an average of 11¢ lower.

Except for 15¢ higher in the back contract, Feeder Cattle futures closed an average of 65¢ lower.

Wholesale beef values were firm to higher on moderate to fairly good demand and light to moderate offerings, according to the Agricultural Marketing Service.

Choice boxed beef cutout value was 35¢ higher Monday afternoon at $215.55/cwt. Select was $1.67 higher at $200.39.

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Major U.S. financial indices closed sharply lower Monday, pressured by tech stocks—led by Apple— and continued worries about global economic growth and trade.

The Dow Jones Industrial Average closed 602 points lower. The S&P 500 closed 54 points lower. The NASDAQ was down 206 points.

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“Steer slaughter continues to run below year-ago levels so far this year. This despite the fact that the quarterly feedlot inventories have shown more steers on feed in 2018 compared to last year,” says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly market comments. “For the year to date, steer slaughter is about 1% below last year, but in the last four weeks has averaged very close to year-ago levels. Steer slaughter has averaged 51.6% of total cattle slaughter so far this year, down from 52.9% of total cattle slaughter in 2017. As heifer and cow slaughter return to normal levels, steer slaughter will move closer to the long-term average of 50.6% of total slaughter.”

So far this year, Peel says heifer slaughter is averaging about 7% more than last year, but has been only 1.5% more over the past four weeks.

“Heifer slaughter thus far in 2018 has averaged 27.8% of total cattle slaughter, up from 27.2% in 2017,” according to Peel. “As heifer retention continues to slow, heifer slaughter will approach the long-term average of just under 30% of total cattle slaughter.”

Negotiated cash fed cattle prices lost ground. Live sales were mainly $1-$2 lower at mostly $114-$115/cwt. ($111-$113 in the western Corn Belt). Dressed trade was steady to $3 lower at $177-$180.

Those lower prices were made possible, in part by the sharp erosion in Cattle futures on Friday. Pressure for the board included faltering wholesale beef values, declining open interest and growing chatter that the top may already be in for beef prices this season.

Live Cattle futures closed an average of $1.21 lower (35¢ to $2.07 lower).

Feeder Cattle futures closed an average of $2.04 lower ($1.17 to $2.47 lower).

Wholesale beef values were weak to lower on light demand and light to moderate offerings, according to the Agricultural Marketing Service.

Choice boxed beef cutout value was 87¢ lower Friday afternoon at $215.20/cwt. Select was 39¢ lower at $198.72.

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Major U.S. financial indices closed lower Friday, with weakness widely attributed to concerns about slowing global economic growth.

The Dow Jones Industrial Average closed 201 points lower. The S&P 500 closed 25 points lower. The NASDAQ was down 123 points.

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“When factoring in slaughter and weights, the grading data continues to indicate larger supplies of Prime and Select beef and a little less Choice than a year ago,” says David Anderson, Extension livestock economist at Texas A&M University, in the most recent issue of In the Cattle Markets. “It looks like steer slaughter is starting to pick up a little, so we might expect growing beef supplies in the coming months, especially when considering more cattle on feed than a year ago.”

For perspective, Anderson explains that for the week ending Oct. 20, 70.8% of cattle (presented for grading) graded Choice, compared to 71.6% for the same week a year earlier. There were 8.9% Prime-grading carcasses, which was 7.1% more than a year earlier. Likewise, 17.4% of carcasses graded Select, compared to 15.3% last year.