WLI

Negotiated cash fed cattle sales were at $109.00-$110.50/cwt. in Nebraska through Friday afternoon. That was steady to $2 less than previous week. Dressed trade was at mostly $173, which was $2 less than the prior week. Elsewhere, trade remained undeveloped for the week, based on USDA reports.

Despite that, Cattle futures gained ground, supported by extended gains in Lean Hog futures and strengthening wholesale beef values.

Live Cattle futures closed an average of 97¢ higher (47¢ higher at the back of the board to $1.60 higher in near Oct).

Feeder Cattle futures closed an average of $1.13 higher (67¢ higher to $1.70 higher).

Boxed beef cutout values were higher on Choice and weaker on Select with moderate to fairly good demand and light offerings, according to the Agricultural Marketing Service.

Choice boxed beef cutout value was $2.28 higher Friday afternoon at $211.38/cwt. Select was 54¢ lower at $200.92.

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Major U.S. financial indices extended gains from the previous session, buoyed by reports that President Trump and Chinese leader Xi Jinping are working on plans to discuss trade issues.

The Dow Jones Industrial average closed 110 points higher. The S&P 500 closed 9 points higher. The NASDAQ was up 9 points.

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“In the recent past, price movements in the cattle markets and most agricultural commodity markets, for that matter, have been attributed to weather events, trade issues or some other newsworthy disgruntlement,” says Andrew P. Griffith, agricultural economist at the University of Tennessee, in his weekly market comments. “However, the softening that is taking place in today’s market seems to have more to do with the seasonal price patterns established through supply and demand factors.”

Although prices for feeders and fed cattle continue higher than many expected, Griffith points out feeder cattle prices typically peak in August and then soften heading into fall.

“Softer prices on calves and feeder cattle this week may be a sign that the market is beginning its seasonal decline, which is fully evident in the slaughter cow market,” Griffith says. “Calves and slaughter cows tend to take a larger hit in the fall than do feeder cattle. There are sure to be producers who try to time the market during the fall months, which may result in $10 to $15 more per head on a certain week, but the strategy of trying to time the market when prices are heading lower does little to improve profitability.”

Cattle futures edged higher again Thursday, with even lighter trade and less open interest than in the previous session. Support for the day included Lean Hog futures—limit up in the front months, on possible resumption of trade talks with China.

Except for unchanged in spot Aug and 17¢ lower in the back contract, Live Cattle futures closed an average of 37¢ higher.

Feeder Cattle futures closed an average of 68¢ higher (7¢ higher at the back of the board to $1.22 higher in spot Aug).

Boxed beef cutout values were lower 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 85¢ lower Thursday afternoon at $209.10/cwt. Select was 85¢ higher at $201.46.

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Major U.S. financial indices, especially the DJIA climbed higher Thursday on the reports that the U.S. and China agreed to resume trade talks. Strong quarterly earnings also provided support.

The Dow Jones Industrial average closed 396 points higher. The S&P 500 closed 22 points higher. The NASDAQ was up 32 points.

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“The strength in prices (feeder) may be supported by moderate feed costs and the prospect of higher fed cattle prices in 2019,” say analysts with USDA’s Economic Research Service (ERS), in the latest Livestock, Dairy and Poultry Outlook. “The feeder steer price forecasts for the third quarter and fourth quarter of 2018 were revised higher from last month to $147-$151/cwt. and $143-$151. The 2019 full-year price forecast was raised to $138-$150/cwt.”

Fed cattle price estimates were unchanged from the previous month at $115-$117 for 2018 and $113-$122 for 2019.

“Fed cattle marketings appear to be a reflection of meatpackers managing slaughter cattle volumes, and feedlots responding to potentially better margins in the near future,” say ERS analysts. “This will likely keep pressure on fed steer prices in third-quarter 2018.”

Choice 2-4 steers brought $112.16 to $112.83/cwt. at Tama Iowa Wednesday. At Sioux Falls Regional in South Dakota, however, they sold steady to $1 lower than the previous week at $108.50-$109.50. That was the upper end of the range paid a day earlier in Nebraska on light trade.

There were 488 head offered in the weekly Fed Cattle Exchange Auction—none sold.

Cattle futures edged higher Wednesday, amid extremely light trade and declining open interest—range-bound with no conviction one way or the other.

Live Cattle futures closed an average of 29¢ higher.

Feeder Cattle futures closed an average of 45¢ higher.

Boxed beef cutout values were firm on Choice and weak on Select with moderate demand and moderate to heavy offerings, according to the Agricultural Marketing Service.

Choice boxed beef cutout value was 31¢ higher Wednesday afternoon at $209.95/cwt. Select was 66¢ lower at $200.61.

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Major U.S. financial indices gave back more than the previous session’s gains on Wednesday. Pressures included tech stocks and lingering concerns about the financial crisis in Turkey.

The Dow Jones Industrial average closed 137 points lower. The S&P 500 closed 21 points lower. The NASDAQ was down 96 points.

Live Cattle futures closed a touch higher Tuesday, supported by stronger wholesale beef values. Feeder Cattle futures mostly leaked lower, perhaps helped along by the surge in grain markets. However, trade was extremely light in both pits.

Live Cattle futures closed an average of 36¢ higher.

Except for an average of 25¢ higher in the front two contracts, Feeder Cattle futures closed an average of 32¢ lower (5¢ to 80¢ lower).

Boxed beef cutout values were higher on moderate to good demand and light to moderate offerings, according to the Agricultural Marketing Service.

Choice boxed beef cutout value was $1.21 higher Tuesday afternoon at $209.64/cwt. Select was $1.61 higher at $201.27.

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Major U.S. financial indices closed higher Tuesday, supported by a rebound in Turkey’s currency, quelling some concerns about that nation’s economy, at least for a day. Tech stocks and robust quarterly earnings from the likes of Home Depot added support.

The Dow Jones Industrial average closed 112 points higher. The S&P 500 closed 18 points higher. The NASDAQ was up 51 points.

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With Labor Day approaching—the last beef-boosting holiday for several months—Stephen Koontz, agricultural economist at Colorado State University sees little potential for cattle and beef price improvement. That has mostly to do with bountiful supplies.

In the latest issue of In the Cattle Markets, Koontz notes the seasonal increase in beef volume, as well as increased cow slaughter due to drought.

“Events in substitute meat markets and trade demand also appear unlikely to provide substantial relief for beef prices,” Koontz says. “Pork production will be up a solid 5% this coming fourth quarter, with consumption up a likely 2.5%. Poultry production and consumption are forecasted to be up moderately but the main word to focus on is, ‘up’ from the prior year.

“Beef exports have been solid through the summer. If they continue through the fall, then this could result in about an additional 40 million lbs. per month removed from the domestic markets this year compared to last. This is a little less than 2% of typical monthly production during fourth-quarter months. Forecasts of beef production during the fourth quarter are to be up better than 3%.”

Last week’s 5-area direct fed steer price was $2.00 lower on a live basis at $110.98/cwt. and $2.23 lower dressed at $175.73.

Softer cash prices helped pressure Cattle futures closed lower Monday, especially nearby contracts, while stronger wholesale beef values offered support.

Live Cattle futures closed an average of $1.08 lower through the front three contracts and then an average of 48¢ lower.

Feeder Cattle futures closed an average of $1.16 lower in the front two contracts and then an average of 43¢ lower.

Boxed beef cutout values were higher on good demand and moderate offerings, according to the Agricultural Marketing Service.

Choice boxed beef cutout value was $1.82 higher Monday afternoon at $208.43/cwt. Select was $1.89 higher at $199.66.  

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Major U.S. financial indices closed lower Monday, pressured once again by Turkey’s financial crisis and fears or rippling economic turbulence.

The Dow Jones Industrial average closed 125 points lower. The S&P 500 closed 11 points lower. The NASDAQ was down 19 points.

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Stocker demand will be the key to calf prices this fall, says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly market comments. He points out forage conditions will determine the degree to which stockers can demand calves, while economic conditions will dictate their willingness to do so. That could be the difference between seasonal declines in calf prices or steeper reductions based on more cattle numbers.

“Prices for feeder cattle typically decline seasonally for all weight classes after August,” Peel explains. “Calves and stockers up to 600 lbs. (which peak in March) typically have a seasonal low price in October, while heavier feeder cattle decline from an August peak lower through the end of the year. On average, feeder cattle prices decline 4-5% from August to lows in the fourth quarter.”

All indications are that more cattle will be available through the fall this year than last. For instance, Peel points to the mid-year Cattle report indicating a calf crop this year nearly 2% more than in 2017 and estimated feeder supplies 0.5% larger.

That’s why the importance of price-supporting stocker will be magnified this year. So far, value of gain suggests stocker operators have economic incentive to buy calves.

Peel ran the numbers for Oklahoma the first week of August and came up with a value of gain of $1.19/lb. for adding 319 lbs. to a steer calf weighing 465 lbs. and purchased at $171.59/cwt. and then selling at 774 lbs. for $150.65.

“Value of gain for added feeder cattle weight is largely a reflection of feedlot demand for feeder cattle of various weights,” Peel says. “A value of gain at this level indicates relatively less feedlot demand for lightweight feeders and is an economic signal for increased stocker production. If feeder cattle prices maintain a similar price relationship into the fall and forage conditions are good, fall feeder markets may follow seasonal price patterns rather closely.”