WLI

Negotiated cash fed cattle trade ended last week $1-$3 higher: mainly $111.00-$111.50 on a live basis and $175 in the beef.

Feeder Cattle futures wandered to a mostly higher close on Friday, while Live Cattle settled mostly marginally mixed as traders bided their time for the next week.

Other than 47¢ and 22¢ higher on either end of the board, Live Cattle futures closed marginally mixed (15¢ lower to 5¢ higher).       

Other than 5¢ and 7¢ lower at the back of the board, Feeder Cattle futures closed an average of 55¢ higher (32¢ to 80¢ higher).

Choice boxed beef cutout value was 78¢ higher Friday afternoon at $198.22/cwt. Select was 60¢ higher at $190.05.

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Major U.S. financial indices edged higher on Friday, basically regaining ground lost in the previous session. Some of the optimism stemmed from a strong start to quarterly earnings reports.

The Dow Jones Industrial Average closed 30 points higher. The S&P 500 closed 2 points higher. The NASDAQ closed 14 points higher.

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“Some may be asking themselves why feeder cattle prices remain elevated given the increased number of cattle, the expectation for increased meat production in the beef, pork, and poultry sectors, and relatively low finished cattle prices,” says Andrew P. Griffith, agricultural economist at the University of Tennessee, in his weekly market comments. Among the reasons Griffith cites:

• “…Low corn prices, which result in relatively low feed costs. December corn futures prices have been hanging around $3.50/bu. for two months now. Given expected corn production this year, there is little concern of corn prices rallying to the upside. Additionally, the cash corn price in many cattle feeding states is closer to $3 given the highly negative basis…”
• “The February and April live cattle futures prices are trading in the $121 to $122 range, which provides cattle feeders the opportunity to bid current levels for feeder cattle. Some cattle feeders may be even betting on stronger prices in the spring, which makes them feel like they are getting a good deal at today’s feeder cattle prices.”
• “Last but not least, beef demand domestically and internationally remains strong which is supporting prices.”

Cattle feeder confidence paid off in the Southern Plains on Thursday as packers paid $2 more than last week on a live basis at $111/cwt. There was too little trade for a trend in other regions through the afternoon.

Cattle futures lost ground on Thursday. Although the bounce higher in grains likely provided some pressure, more than anything, it had the feel of modest positioning and correcting rather than anything bearish.

Live Cattle futures closed an average of 96¢ lower (62¢ to $1.42 lower).        

Other than 60¢ and 37¢ lower at either end of the board, Feeder Cattle futures closed an average of $2.01 lower ($1.12 to $2.42 lower).

Choice boxed beef cutout value was $1.12 higher Thursday afternoon at $197.44/cwt. Select was 69¢ higher at $189.45.

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Major U.S. financial indices edged lower on Thursday, running out of early steam with sharp pressure in oil prices; though lower on the day, Crude Oil (WTI) recovered some ground by session end.

The Dow Jones Industrial Average closed 31 points lower. The S&P 500 closed 4 points lower. The NASDAQ closed 12 points lower.

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Forecast total red meat and production for this year was raised to 100.6 billion lbs. in the latest World Agricultural Supply and Demand Estimates (WASDE), with increased broiler and turkey production offsetting estimated reductions in beef and pork production.

“Beef production is reduced from the previous month largely due to lower expected fourth-quarter carcass weights,” say analysts with USDA’s Economic Research Service (ERS). “Beef production is little changed from last month, although first-half production is lowered as pasture conditions are expected to slow the pace of placements in the latter part of 2017. However, heavier carcass weights are expected to offset a portion of the decline.”

ERS estimates beef production this year at 26.5 billion lbs.; 27.3 billion lbs. next year.

The fourth-quarter steer price is estimated at $108-$112/cwt. Average for this year is projected at $119.55. Prices for the first quarter of next year are projected at $111-$119; $109-$119 in the second quarter; average 2018 annual of $111-$120.

Cash fed cattle trade for the week remained in neutral on Wednesday with cattle feeders growing more confident in the potential for higher prices.

Slaughter steers sold $2-$4/cwt. higher at Sioux Falls Regional Livestock in Worthing, SD yesterday. Slaughter heifers sold $2-$3 higher.

There were no sellers in the weekly Fed Cattle Exchange auction on Wednesday. Of the 1,444 head offered there were no sales, but several POs at $110.00-$110.75, which was the upper end of last week’s country trade.

Cattle futures closed little changed on Wednesday.

Live Cattle futures closed mostly 15¢ to 27¢ lower.         

Feeder Cattle futures closed mostly 12¢ to 47¢ lower.

Choice boxed beef cutout value was $1.08 lower Wednesday afternoon at $196.32/cwt. Select was $1.26 lower at $188.76.

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Major U.S. financial indices closed higher on Wednesday. Presumably, part of the support came from hints in the minutes of the most recent Fed meeting that plans for another hike in interest rates this year remain intact.

“Consistent with the expectation that a gradual rise in the federal funds rate would be appropriate, many participants thought that another increase in the target range later this year was likely to be warranted if the medium term outlook remained broadly unchanged,” according to the minutes. “Several others noted that, in light of the uncertainty around their outlook for inflation, their decision on whether to take such a policy action would depend importantly on whether the economic data in coming months increased their confidence that inflation was moving up toward the Committee’s objective…”

The Dow Jones Industrial Average closed 42 points higher. The S&P 500 closed 4 points higher. The NASDAQ closed 16 points higher.

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Overall, 41% of the nation’s pasture and range remained in Good (37%) or Excellent (4%) condition compared to 49% at the same time a year ago, according to the latest USDA Crop Progress report. 25% is rated as Poor (16%) or Very Poor (9%), compared to 19% a year earlier.

48% of winter wheat is planted, which is 9% less than last year and 10% less than average. Only 27% is planted in Kansas compared to 59% for average. 42% is planted on Oklahoma, 20% behind the average pace. Planting in Texas is 2% ahead of the average pace at 54%. 25% has emerged, compared to 32% last year and 30% for average.

Last week’s steady to higher cash fed cattle trade and firmer recent wholesale beef values helped push Live Cattle futures higher on Tuesday, sharply higher in the nearby contracts. Feeder Cattle futures closed a little higher, too, but shy of early support.

Live Cattle futures closed an average of $1.11 higher (65¢ to $2.27 higher in spot Oct).      

Feeder Cattle futures closed an average of 55¢ higher (30¢ to 70¢ higher).

Choice boxed beef cutout value was 73¢ lower Tuesday afternoon at $197.40/cwt. Select was $1.36 higher at $190.02.

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Major U.S. financial indices closed higher on Tuesday, supported by Walmart’s announcement that it would buy back up to $20 billion worth of stock in a share repurchase program over the next to years.

The Dow Jones Industrial Average closed 69 points higher. The S&P 500 closed 5 points higher. The NASDAQ closed 7 points higher.

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Heavy native steer hide values account for most of the recent decline in beef byproduct values, according to the Livestock Marketing Information Center (LMIC).

“Typically, hides account for about a half of the total value of the non-conventional meat products coming from the slaughter process,” LMIC analysts say, in the most recent Livestock Monitor. They explain hide prices declined about $6 since late June to $60 currently. Last year, they say the same grade of hide was valued at $75 in June (AMS reports) and declined only $1 heading into early October.

LMIC analysts say the $10.35/cwt. byproduct value in early October was the lowest for any week since April of 2010. Other key byproducts are liver, tallow (edible and inedible), tongues, oxtails, and tripe.