WLI

Although too few transactions to trend, there were some dressed sales in Nebraska and the western Corn Belt on Thursday at $205/cwt., which was even with last week and $1 higher than sales the day before.

Futures traders applied pressure to Feeder Cattle early in the session amid sluggish trade and general bearishness. Apparent profit taking ultimately helped lift prices above session lows. Live Cattle traded both sides of even.

After 5¢ higher in spot Apr, Live Cattle futures closed 5¢ to 32¢ lower.

After 30¢ higher in spot Mar, Feeder Cattle futures closed an average of 38¢ lower in the next four contracts (7¢ to 62¢ lower) and then 7¢ to 22¢ higher.

Choice boxed beef cutout value was $1.27 higher on Thursday afternoon at $222.30/cwt. Select was 50¢ higher at $215.60.

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Major U.S. financial indices closed sharply lower again on Thursday, with lots of help from President Trump’s announcement that the U.S. will levy tariffs on steel and aluminum imports, starting next week. If so, that will likely add an unwelcome wrinkle to NAFTA negotiations.

The Dow Jones Industrial Average closed 420 points lower. The S&P 500 closed 36 points lower. The NASDAQ closed 92 points lower.

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Wholesale beef values continue to find traction earlier than usual from a seasonal standpoint. Week to week on Thursday, Choice boxed beef cutout value was $3.90 higher and Select was $3.54.

“There are certainly retailers who are purchasing product for the spring months, but those sales are probably not as strong as what the current spot market price reflects,” says Andrew P. Griffith, agricultural economist at the University of Tennessee, in his weekly market comments.

Between rising beef prices and lower cash fed cattle prices last week—and mostly lower again so far this week, Griffith explains, “…lower input costs and higher output prices have allowed packers to experience improved margins. The values to keep an eye on that will have the greatest influence on beef prices are beef production, imports, and exports. Production is sure to increase, while import and export levels are less certain.”

Negotiated cash fed cattle trade developed Wednesday with moderate trade and demand in the Southern Plains and Nebraska. Live prices were $1-$2 lower than last week at $126-$127/cwt. Dressed trade in Nebraska was $1 lower at $204.

There were only 365 head (5 lots) offered in the weekly Fed Cattle Exchange auction. One lot of heifers (80 head) sold for $126/cwt.

Cattle futures took a wide and wild ride on Tuesday, but ended decidedly lower, pressured by softer cash fed cattle trade, a sense of overall market weakness and month-end position squaring.

Live Cattle futures closed an average of 56¢ lower (32¢ to 97¢ lower), except for 2¢ higher at the back of the board.

Feeder Cattle futures closed an average of $1.27 lower (65¢ to $2.20 lower).

Choice boxed beef cutout value was 51¢ higher on Wednesday afternoon at $221.03/cwt. Select was 31¢ higher at $215.10.

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Major U.S. financial indices closed sharply lower on Wednesday amid continued volatility. Pressure included ongoing concerns about rising interest rates, along with technical selling.

The Dow Jones Industrial Average closed 380 points lower. The S&P 500 closed 30 points lower. The NASDAQ closed 57 points lower.

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“The strength of all the cattle markets through this late winter needs to be kept in mind,” says Stephen Koontz, agricultural economist at Colorado State University, in the latest issue of In the Cattle Markets. “Calf prices have remained close to $200 per cwt, feeder cattle are about $150, fed cattle remain above $125, and boxed beef values are above $200. These are rather strong prices, given the volume of beef, pork and poultry in the domestic market. The strong domestic demand and strong export volumes that were well-reported through last year appear to be continuing. The other aspect that appears to be maintained is the retailer’s willingness to feature beef, keep beef posted prices somewhat reduced, and live with a smaller margin. All of these factors have kept the quantities moving and the prices strong.”

Cattle futures closed higher on Tuesday, though off of session highs, boosting hopes for steady to slightly higher negotiated cash fed cattle prices this week.

Live Cattle futures closed an average of 35¢ higher (10¢ higher to 62¢ higher in nearly spent Feb).

Feeder Cattle futures closed an average of $1.14 higher (95¢ to $1.42 higher).

Choice boxed beef cutout value was $1.00 higher on Tuesday afternoon at $220.52/cwt. Select was 7¢ higher at $214.79.

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Major U.S. financial indices closed sharply lower on Tuesday. Though it seemed expected, given the fundamental strength of the economy, plenty of analysts credited the dip with Federal Reserve Chair, Jerome Powell, suggesting to Congress that the Fed will continue increasing interest rates this year.

The Dow Jones Industrial Average closed 299 points lower. The S&P 500 closed 35 points lower. The NASDAQ closed 91 points lower.

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“The expectation moving through the spring is for strength in the calf market as the seasonal tendency for freshly weaned calves is stronger prices,” says Andrew P. Griffith, agricultural economist at the University of Tennessee, in his weekly market comments. “Though there is an expectation for calf prices to continue increasing through March and maybe into early April, due to grass fever, weakness in the feeder cattle market can and will quickly dampen buyers’ attitudes…Based on the March feeder cattle contract, there appears to be support near the $145 level and even stronger price support at $140. Similarly, the August feeder cattle contract has strong support at the $148 and $143 price levels. The point being made here is that downside price risk does exist in the feeder cattle market. However, it appears the downside price risk is limited to price levels that are still fairly strong.”

Support also continues to come from cattle feeders remaining aggressive in marketing and placing cattle.

“…Strong margins and a basis near zero should keep cattle feeders interested in marketing cattle,” Griffith says. “Similarly, the strong feeding margins should keep cattle feeders active in placing cattle. Looking forward a few weeks, it may be difficult to push finished cattle prices higher as the seasonal tendency would indicate, due to the current strength. A steady market would be well received.”

Cattle futures see-sawed to start the week as traders digested Friday’s Cattle on Feed report. As many suspected, the 4.4% increase in January feedlot placements year to year created pressure, especially early on, but futures managed to close with more moderate declines.

Live Cattle futures closed an average of 48¢ lower through the front five contracts (12¢ lower to 85¢ lower) and then an average of 21¢ higher.

Feeder Cattle futures closed an average of 38¢ lower (17¢ to 55¢ lower).

Though lower than the previous week, last week’s cash fed cattle trade continues to offer market support with live prices that were at mainly $128/cwt. and mostly at $205 in the beef.

Likewise, wholesale beef values continue to churn higher. Choice boxed beef cutout value was $1.15 on Monday afternoon at $219.52/cwt. Select was $1.90 higher at $214.72.

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Major U.S. financial indices closed sharply higher once again on Monday, driven by gains in giants like Boeing and 3M.

The Dow Jones Industrial Average closed 399 points higher. The S&P 500 closed 32 points higher. The NASDAQ closed 84 points higher.

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“Limited winter grazing numbers and early movement of wheat pasture cattle to feedlots means that little of the normal March run of wheat pasture cattle will be seen this year in the Southern Plains,” says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly market comments. “Likewise few cattle remain or are likely to be purchased for wheat graze-out.”

All of that, of course, has to do with drought conditions that began pushing cattle to feedlots earlier several months ago.

“Early placement of feeders in the feedlots means that the short term supply of feeder cattle outside of feedlots is tighter, as reflected in the year over year decrease in the estimated Jan. 1 feeder supply,” Peel explains. “However, many of the lightweight feeders placed late in 2017 will remain in feedlots until mid-2018. Feedlots are pretty full and will have reduced demand for feeders for some time yet this spring, thus the overall supply-demand balance may not have changed much. Larger feedlot placements in recent months represents a change in timing of feedlot production but not a change in the overall supply situation. In general, while feedlots will not maintain the placement rate of recent months going forward, feeder cattle numbers will be larger in 2018 supporting increased cattle slaughter and beef production.”

Cattle futures coasted to a narrowly mixed close on Friday, unable to muster much support since the mid-week selloff. Friday’s Cattle on Feed report (see below) indicating more January placements than the trade expected may add pressure early in the week.

Live Cattle futures closed narrowly mixed (55¢ lower to 22¢ higher).

Feeder Cattle futures closed narrowly mixed (52¢ lower at the back of the board to 42¢ higher in Apr).

Choice boxed beef cutout value was 3¢ lower on Friday afternoon at $218.37/cwt. Select was 76¢ higher at $212.82.

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Major U.S. financial indices closed sharply higher on Friday. Lower treasury yields on the day and higher crude oil prices provided support.

The Dow Jones Industrial Average closed 347 points higher. The S&P 500 closed 43 points higher. The NASDAQ closed 127 points higher.

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Despite early cattle placements over the last several months, due to both the growing cowherd and drought, there were even more to place in January, year over year, according to Friday’s monthly Cattle on Feed report.

Rather than being even with or slightly less than the previous year, as expected by most, January placements of 2.07 million head were 4.4% more than the previous year. That’s 87,000 head more. About half were placed on feed at 700-899 lbs.; 38.9% at 699 lbs. or lighter; 9.7% weighing more than 900 lbs.

Marketings in January of 1.86 million head were 6.1% higher (107,000 head more) than the previous year. That was mostly in line with expectations ahead of the report.

Total cattle on feed Feb. 1 was 11.63 million head (+848,000 head), which was 7.9% more than a year earlier. That’s at the upper end of most estimates ahead of the report.