WLI

Cattle futures softened Tuesday, following the previous session’s strong gains, apparently pressured mostly by the lower outside markets.

Live Cattle futures closed an average of 48¢ lower (2¢ to 92¢ lower).

Feeder Cattle futures closed an average of 75¢ lower.

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

Choice boxed beef cutout value was $1.00 higher Tuesday afternoon at $210.28/cwt. Select was 80¢ lower at $196.86.

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Major U.S. financial indices closed lower again Tuesday, pressured by quarterly earnings reports from the likes of Caterpillar and 3M.

The Dow Jones Industrial Average closed 125 points lower. The S&P 500 closed 15 points lower. The NASDAQ was down 31 points.

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Total pounds of beef in freezers Sept. 30 were 1% more than the previous month and 3% more than the same time a year earlier, according to the latest USDA Cold Storage report. That appears to be a demand win, given the significant production increase through the summer.

Frozen pork supplies were 1% more than the previous month but 5% less than the same time a year earlier.

Total red meat supplies in freezers were up 1% from the previous month but down 1% from last year.

Total frozen poultry supplies were down slightly from the previous month but up 10% from a year ago.

Apparently, traders viewed Friday’s Cattle on Feed report as bullish overall (see below), helping to boost Cattle futures Monday.

Live Cattle futures closed an average of $1.10 higher (55¢ to $1.32 higher).

Feeder Cattle futures closed an average of $1.92 higher ($1.00-$2.97 higher).

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

Choice boxed beef cutout value was $1.35 higher Monday afternoon at $209.28/cwt. Select was $3.42 higher at $197.66.

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Major U.S. financial indices closed lower Monday, pressured by bank stocks and trade worries.

The Dow Jones Industrial Average closed 126 points lower. The S&P 500 closed 11 points lower. The NASDAQ was up 19 points.

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From an expectations perspective, Stephen Koontz, agricultural economist at Colorado State University says Friday’s Cattle on Feed report is long-term bullish but short-term bearish.

Although September placements were less than expected (4.6% less than a year earlier), so were marketings (3.59% less).

“The drop off in marketings, regardless of placements, suggests the need for strong slaughter volumes the next two months,” Koontz explains, in the most recent issue of In the Cattle Markets. “On-feed numbers are nothing short of enormous, and placements in July and August were close to 7% above the prior year. The availability of market-ready cattle come the end of this year and the first of next will be substantial. However, the marketplace has handled the large volume of beef so far this year, and much of last, perfectly. Saturday slaughter volumes have been strong, packer and retailer margins have been excellent, slaughter weight increases are typical for the season but not excessive, and domestic demand is appearing to favor beef while exports have been excellent.”

Cattle futures continued to soften Friday, pressured in part by a lack of positive news, deterioration in Lean Hog futures and perhaps positioning ahead of the monthly Cattle on Feed report (see below).

Live Cattle futures closed an average of 47¢ lower.

Feeder Cattle futures closed an average of 66¢ lower.

Wholesale beef 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 $1.11 higher Friday afternoon at $207.93/cwt. Select was $1.89 higher at $194.24.

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Major U.S. financial indices closed narrowly mixed Friday. Strong quarterly earnings reports provided support, while worries about global trade and higher interest rates continued to pressure.

The Dow Jones Industrial Average closed 64 points higher. The S&P 500 closed 1 point lower. The NASDAQ was down 36 points.

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Both bears and bulls can likely find support in Friday’s monthly Cattle on Feed report, with fewer placements and slightly fewer cattle on feed than expected, but also fewer marketings.

Cattle on feed Oct. 1 were the most since the data series began in 1996 at 11.40 million head, which was 5.43% (+587,000 head) more than last year. Most analysts expected to see about 6% more. That’s for feedlots with a capacity of 1,000 head or more.

While most analysts ahead of the report expected September placements to be about even with last year, the 2.05 million head placed were 4.60% less (-99,000 head) than a year earlier.

“High placements have been seen despite profitability concerns,” explained analysts with Allendale, Inc., ahead of Friday’s report. “Kansas State estimates a $110 loss per head on finished cattle in September. First-half 2019 marketings are slated for $122-$125 breakevens. August placements determine a part of the March through early August beef supply.”

In terms of weights, 36.81% went on feed weighing 699 lbs. or less; 43.69% weighing 700-899 lbs.; 19.5% weighing 900 lbs. or more. That continues the trend of recent months.

September marketings of 1.72 million head were 3.59% less (-64,000 head) than the previous year. Expectations ahead of the report were for marketings to be about even.

Of the 12 major cattle feeding states listed in the report, South Dakota was the only one with fewer cattle on feeder Oct. 1, year over year. There were 2.30% more steers on feed than a year earlier and 11.03% more heifers.

There was limited negotiated cash fed cattle trade Thursday with light to moderate demand in all major cattle feeding regions, but too few transactions to trend in any region. So far this week, trade has been at $109-$111/cwt. on a live basis in Nebraska and the western Corn Belt, with dressed sales in those regions at $174.

Cattle futures closed mostly narrowly mixed Thursday.

Other than 15¢ higher in spot Oct, Live Cattle futures closed an average of 17¢ lower.

Feeder Cattle futures closed mixed but mostly higher. The front two contracts were an average of $1.12 higher and then 7¢ lower to 35¢ higher across the rest of the board.

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

Choice boxed beef cutout value was $2.26 higher Thursday afternoon at $206.82/cwt. Select was $1.16 higher at $192.35.

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Wall Street continued to search for a bottom in the recent sell-off as major U.S. financial indices closed steeply lower Thursday. Among pressures cited by analysts are lingering worries about the trade impasse with China and higher interest rates, as well as some thoughts that tech stocks are valued too high.

The Dow Jones Industrial Average closed 327 points lower. The S&P 500 closed 40 points lower. The NASDAQ was down 157 points.

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“Fourth-quarter 2018 is likely to be characterized by feedlots feeding cattle longer than previously expected, lowering expected fourth-quarter fed cattle slaughter,” say analysts with USDA’s Economic Research Service (ERS), in this month’s Livestock, Dairy and Poultry Outlook. “This is largely responsible for reducing the 2018 commercial beef production forecast from the previous month. The beef production forecast for 2019 was raised on greater expected placements in second-half 2018 and first-half 2019.”

Projected beef production for this year was lowered by 150 million lbs. to 26.9 billion lbs., based on expectations of fewer steers and heifers to be slaughtered more than offsetting additional cows in the slaughter mix.

Projected beef production for next year was raised by 190 million lbs. to 27.9 billion lbs., based aforementioned projections for more placements than expected.

“The expected higher number of fed cattle to be slaughtered was partially offset by an expectation of lower dressed weights in early 2019,” ERS analysts say.

Negotiated cash fed cattle trade picked up in the North Wednesday with moderate demand and slow to moderate trade. Live prices were steady to $2 lower in Nebraska at $109-$111/cwt., and steady to $1 higher in the western Corn Belt at $109-$110. Dressed trade was steady in Nebraska at $174; steady to $1 lower in the western Corn Belt at $173-$174.

There were 1,103 head offered in the weekly Fed Cattle Exchange Auction, but no takers.

Cattle futures softened Wednesday, led by Feeder Cattle.

Other than 27¢ higher in spot Oct, Live Cattle futures closed an average of 31¢ lower.

Other than 5¢ higher in spot Oct, Feeder Cattle futures closed an average of 67¢ lower.

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

Choice boxed beef cutout value was 5¢ lower Wednesday afternoon at $204.56/cwt. Select was $1.36 lower at $191.19.

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Major U.S. financial indices wobbled lower Wednesday, amid mixed quarterly earnings reports and continued angst over higher interest rates.

The Dow Jones Industrial Average closed 91 points lower. The S&P 500 closed fractionally lower. The NASDAQ was down 2 points.

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Analysts with USDA’s Economic Research Service raised expected feeder cattle prices (OKC, 750-800 lbs.) to $150-$156/cwt. for the fourth quarter, based on expectations of continued strong demand.

“Price information from Oklahoma National Stockyards for feeder steers weighing 750-800 lbs. suggests that there is competition for ownership of these animals,” ERS analysts say, in the latest monthly Livestock, Dairy and Poultry Outlook. “Coupled with counter-seasonal gains in prices for lighter-weight feeder cattle, this may suggest that winter forage conditions have improved over last year.”

ERS estimates feeder prices at $141-$149 in the first quarter next year, $143-$153 in the second quarter and $145-$155 in the third quarter.

Likewise, ERS raised the expected fourth-quarter price for fed steers (5-area Direct) to $110-$114 on a projected slower marketing pace.

“The slower pace is likely in part a reflection of lighter placement weights during the spring months, but may also reflect a desire by feedlots to capture premiums implied by October and December futures,” ERS analysts explain. “Although fed steer prices in the 5-area marketing region for September averaged above year-earlier levels, expected increased supplies of cattle available for slaughter in fourth-quarter 2018 are likely to pressure prices relative to last year.”