WLI

When all was said and done last week, negotiated cash fed cattle prices moved higher. Live sales in the Southern Plains and Nebraska were $2.00-$3.50 higher than the previous week at mostly $113/cwt. Dressed trade in Nebraska was $5-$6 higher at $178-$181. Compared to two weeks earlier, live trade in the western Corn Belt was mostly steady at $112. Dressed trade was steady to $3 higher at $178-$180.

Higher cash prices and firmer to stronger wholesale beef values helped Cattle futures move mostly higher to start the week.

Except for 20¢ lower in spot Aug, Live Cattle futures closed an average of 52¢ higher.

Except for 42¢ and 22¢ lower in the front two contracts, Feeder Cattle futures closed an average of $1.00 higher.

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

Choice boxed beef cutout value was 65¢ higher Monday afternoon at $204.82/cwt. Select was $1.03 higher at $198.03.        

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Major U.S. financial indices closed narrowly mixed Monday, with support coming from tech stocks.

The Dow Jones Industrial average closed 13 points lower. The S&P 500 closed 5 points higher. The NASDAQ was up 21 points.

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“The modest increase in beef cows, combined with a smaller inventory of beef replacement heifers, suggests that herd expansion is slowing even more in 2018 after slowing in 2017,” says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly market comments. “However, the ratio of July 1 to Jan. 1 beef cow inventory is 102.4, a level that historically implies positive herd expansion in the current year. The ratio is down from 2015 and 2017 levels (no 2016 July Cattle report was issued), again indicating slow expansion for the current year and perhaps a peak in the cow herd inventory in 2019.” 

He’s referencing the mid-year Cattle inventory report issued by USDA Friday, showing 0.03% more beef cows than last year, but 2.13% fewer beef replacement heifers. Friday’s monthly Cattle on Feed report also underscored further increased placement of heifers.

“The July 1 quarterly inventory of heifers in feedlots was up 7.7% from last year, a large enough value to suggest further slowing in heifer retention, but down compared to the double-digit year over year increases of the previous four quarters,” Peel says.

For another week, negotiated cash fed cattle trade remained undeveloped through Friday afternoon. Though way too few to trend, there were a few dressed trades in the western Corn belt Friday at $180, which was steady to $5 higher than the last established market in the region two weeks ago.

Lack of cash direction, and perhaps some defensive positioning ahead of the Cattle on Feed report (see below) applied some pressure to Cattle futures.

Live Cattle futures closed mixed, an average of 26¢ lower across the front half of the board, except for 2¢ higher in spot Aug, and then an average of to 36¢ higher in the back four contracts.

Feeder Cattle futures closed an average of 32¢ lower (5¢ to 77¢ lower).

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

Choice boxed beef cutout value was 32¢ lower Friday afternoon at $204.17/cwt. Select was 8¢ higher at $197.00. 

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Major U.S. financial indices closed slightly lower Friday, with strong quarterly earnings providing a counterweight to more trade worries.

The Dow Jones Industrial average closed 6 points lower. The S&P 500 closed 2 points lower. The NASDAQ was down 5 points.

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Traders should view Friday’s monthly Cattle on Feed report as neutral, coming in about dead-on with most pre-report estimates.

For feedlots with 1,000 head or more capacity, there were 1.79 million head placed on feed in June, which was 1.30% more than last year. By weight, 41.55% were placed at 699 lbs. or lighter; 42.48% at 700-899 lbs.; 15.90% at weights of 900 lbs. or heavier.

Marketings in June of 2.01 million head were 0.85% more than last year.

Cattle on feed July 1 of 11.28 million head was 4.26% (461,00 head) more than the previous year, and the most for the month since the data series began in 1996. The mix included 2% more steers than last year and 8% more heifers.

USDA also released the mid-year Cattle inventory report Friday. Depending on your leanings, there were no surprises.

All cattle and calves July 1 was estimated at 103.2 million head, which is 0.98% more (+1 million head) than the same time last year.

Beef cows of 32.5 million head are 0.93% more (+300,000 head ) than last year.

Beef replacement heifers of 4.6 million head are 2.13% less (-100,000 head) than last year.

This year’s calf crop is estimated at 36.5 million head, which would be 1.93% more (+691,800 head) than last year.

Negotiated cash fed cattle trade remained undeveloped through Thursday afternoon, which helped encourage Cattle futures to wobble along in sideways fashion.

Except for unchanged in near Oct and 60¢ lower at the back of the board, Live Cattle futures closed narrowly mixed (22¢ lower to 22¢ higher).

Except for unchanged in spot Aug, Feeder Cattle futures closed narrowly mixed (32¢ lower to 20¢ higher).

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

Choice boxed beef cutout value was 31¢ lower Thursday afternoon at $204.39/cwt. Select was 17¢ lower at $196.92.          

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Major U.S. financial indices settled lower Thursday, pressured  by bank stocks.

The Dow Jones Industrial average closed 134 points lower. The S&P 500 closed 11 points lower. The NASDAQ was down 29 points.

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Commercial red meat production so far this year is 4% more than the same period a year ago at 26.3 billion lbs., according to the latest Livestock Slaughter report from USDA.

Accumulated beef production for January through June was 4% more than last year at 13.19 billion lbs. In June, beef production of 2.30 billion lbs. was 1% more than the previous year. Cattle slaughter for the month of 2.88 million head was also 1% more than the previous year. The average live weight was unchanged from the previous year, at 1,321 lbs.

Pork production in June totaled 2.01 billion lbs., 2% less than the previous year. That was with hog slaughter of 9.61 million head, down 3% from June last year. The average live weight was 1 lb. more than the previous year at 280 lbs.

For January through June, pork production was 3% more than last year.

There were only 428 head offered—all from Kansas—in the weekly Fed Cattle Exchange Auction on Wednesday, but 142 sold for a weighted average price of $112/cwt. That’s $1 higher than country prices in the region last week.

That and surging Cattle futures buoy hopes for stronger negotiated trade yet this week.

Recent stability and firming wholesale beef values helped fuel Cattle futures sharply higher Wednesday. There was also chatter about snugger supplies heading through the fall, based on demand strength.

Live Cattle futures closed an average of $1.62 higher ($1.22 higher at the back of the board to $2.52 higher in spot Aug). The spot contract closed $5 higher week to week.

Feeder Cattle futures closed an average of $2.31 higher ($1.55 higher in the back contract to $3.17 higher in spot Aug).

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

Choice boxed beef cutout value was 41¢ higher Wednesday afternoon at $204.80/cwt. Select was 23¢ higher at $197.09.

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Major U.S. financial indices closed mostly higher Wednesday, supported by positive quarterly earnings in bell-weather banks and industrials.

The Dow Jones Industrial average closed 79 points higher. The S&P 500 closed 6 points higher. The NASDAQ was fractionally lower.

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“Despite firm feeder cattle prices in June and early July, the projected feedlot margin for feeding out a 750-lb. calf that is purchased today appears to have improved, and with lower corn price forecasts for the current and following marketing years, demand for calves for finishing may increase, supporting higher feeder calf prices,” say analysts with USDA’s Economic Research Service, in the latest monthly Livestock, Dairy and Poultry Outlook.

This year’s average feeder cattle price for steers weighing 750-850 lbs. (basis Oklahoma City) is estimated at $141-$144/cwt., compared to last year’s average of $145.08, according to ERS. The July LDPO pegs feeder prices in the third quarter at $140-$144. That’s $6 more on the lower end of the range than the previous month’s estimate and $4 more on the upper end. The fourth-quarter estimate is $136-$144, compared to the previous month’s projections of  $134-$142. First-quarter feeder steer prices next year are projected at $133-$143.

Cattle placed in feedlots earlier than normal through the spring also lends price support.

“Throughout the winter and extending into the summer months, drought conditions have plagued the Great Plains area, squeezing hay and roughage supplies,” say ERS analysts. “During the winter, many calves directed to feedlots might have otherwise stayed on pastures until the spring. This limited the expectation for strong cattle placements in feedlots this spring. However, as the drought expanded into the intermountain region, available summer pastures may have become restricted as well. As a result, some stocker operations may have placed cattle in the second quarter instead of waiting until third quarter. This is likely observed in the year-over-year increase in both volume and percentage of total placements of calves weighing under 600 lbs. in May 2018.”

Cattle futures closed narrowly mixed to lower Tuesday, unable to sustain gains from the previous session. Trade was paltry and the range skinny.

Live Cattle futures closed an average of 21¢ lower, except for unchanged in the back three contracts.

Feeder Cattle futures closed an average of 48¢ lower through the front five contracts (12¢ lower to $1.10 lower) and then 5¢ to 30¢ higher.

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

Choice boxed beef cutout value was 63¢ higher Tuesday afternoon at $204.39/cwt. Select was $1.19 higher at $196.86.  

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Major U.S. financial indices closed higher Tuesday, buoyed by tech stocks and positive quarterly earnings.

The Dow Jones Industrial average closed 55 points higher. The S&P 500 closed 11 points higher. The NASDAQ was up 49 points.

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Given increased fed cattle supplies, Brenda Boetel, Extension agricultural marketing specialist at the University of Wisconsin-River Falls expects year-over-year fed cattle prices for the remainder of the year to be 5-6% less.

“Prior to any trade war, expectations were that finished cattle prices would be approximately 5% lower in 2018 than 2017,” says Boetel, in the latest issue of In the Cattle Markets. “Given the current trade situation, lower wholesale beef prices and large pork production, prices may dip even lower, but the year-over year decreases should not be at the levels seen in the second quarter of 2018.”

For perspective, Boetel says first-quarter fed cattle prices (5-area Direct) were 2.8% above 2017, but second-quarter prices were 12% less.