WLI

Cattle futures settled mixed on Friday with light trade amid holiday-trimmed trading hours for futures and equities.

Cash fed cattle trade for the week was generally steady to a touch higher, with live sales at $120.00 to $120.50/cwt., except for $118 in the Southern Plains. Dressed trade was steady to $2 higher than the previous week at $190.

Live Cattle futures closed an average 50¢ lower through the front five contracts (5¢ to 90¢ lower) and then 2¢ to 10¢ higher.

Feeder Cattle futures closed an average of 68¢ higher.

Choice boxed beef cutout value was $1.98 higher Friday afternoon at $210.99/cwt. Select was 79¢ lower at $187.85.

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Major U.S. financial indices closed higher on Thursday, as investors apparently are betting on strong holiday shopping.

The Dow Jones Industrial Average closed 31 points higher. The S&P 500 closed 5 points higher. The NASDAQ closed 21 points higher.

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“Fed carcass weights continue to inch toward a seasonal peak but remain well below year-ago levels,” says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly market comments. “The latest steer carcass weights were 902 lbs. compared to 913 lbs. the same week last year. Heifer carcass weights are currently 833 lbs., which is 9 lbs. lighter”

Although beef production is 4.1% more than last year (year to date), Peel points out the year-to-year increase is declining.

“In the last eight weeks, beef production is up only 1.8% compared to the same period last year,” Peel says. “…Year to date steer and heifer slaughter is up 5.5% year over year with steer slaughter up 2.5% and heifer slaughter up 12.0%. However, in the last eight weeks, steer and heifer slaughter is up just 4.4% year over year. So far this year, cow slaughter is up 7.1% led by a 10.4% year-over-year increase in beef cow slaughter and a 4.2% increase in dairy cow slaughter.”

Cash fed cattle trade on Wednesday—light trade and moderate demand—recovered the scant ground lost earlier in the week. Live prices were steady to $1 higher than last week at $120.00 to $120.50/cwt. Dressed trade was steady at $190.

Earlier in the day, sellers passed on bids of $119-$120 in the weekly Fed Cattle Exchange Auction. There were 955 head (six lots) offered for delivery at 1-9 days.

Steady to higher fed cattle prices, supported by follow-through buying helped lift Cattle futures for the second consecutive session.

Live Cattle futures closed an average 96¢ higher (72¢ to $1.42 higher).

Except for 35¢ higher in the back contract, Feeder Cattle futures closed an average of $1.27 higher ($1.10 to $1.45 higher).

Choice boxed beef cutout value was 38¢ higher Wednesday afternoon at $209.01/cwt. Select was 1¢ lower at $188.64.

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Major financial indices settled mixed on Wednesday, after closing at record-high levels the previous day. The tech-driven NASDAQ closed higher again, supported by a deal between Amazon and a leading health technology company. Pressure across the broader market included worries about current market valuation expressed by the Federal Reserve in its most recent minutes.

The Dow Jones Industrial Average closed 64 points lower. The S&P 500 was down 1 point. The NASDAQ closed 4 points higher.

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Frozen beef stocks continued lower year over year in October, according to the latest USDA Cold Storage report. Total pounds of beef in freezers Oct. 31 were 2% more than the previous month but 5% less than last year.

Frozen pork supplies were down 3% from the previous month and down slightly from last year.

Total red meat supplies in freezers were down 1% from the previous month and down 2% from last year.

Total frozen poultry supplies were 4% less than the previous month but 12% more than a year earlier.

Cattle feeders in the Southern Plains traded fed cattle for $118/cwt. on Tuesday, which was $1 less than last week. Though too few to trend, there were a few live sales reported in Nebraska at $118-$120, steady to $1 lower than last week; a few dressed trades $2 lower at $188.

Choice boxed beef cutout value was $2.45 higher Tuesday afternoon at $206.63/cwt. Select was 60¢ higher at $188.65.

Slightly lower to steady cash fed cattle prices, higher wholesale beef value and short covering ahead of Thanksgiving all helped Cattle futures gain a foothold, at least for a day.

Live Cattle futures closed an average $1.05 higher (47¢ to $1.30 higher).

Except for 35¢ higher in the back contract, Feeder Cattle futures closed an average of $1.69 higher ($1.00 to $2.07 higher).

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Tech stocks led major U.S. financial indices to new record highs on Tuesday. Support also came from stronger than expected quarterly earnings from the likes of Hormel Foods, as well as optimism heading into Black Friday.

The Dow Jones Industrial Average closed 160 points higher. The S&P 500 closed 16 points higher. The NASDAQ closed 71 points higher.

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“Producers should prepare for a good market in 2018 but not an over-the-top market,” says Andrew P. Griffith, agricultural economist at the University of Tennessee, in his weekly market comments.

Griffith notes that calf prices typically start increasing in January before grabbing another gear higher in March and early April. He notes that steer calf prices (500-600 lbs.) last year advanced from $107/cwt. in November to $140-$145 in March, ultimately peaking later than normal in June at $161.

Given current price levels, he doubts the increase from now until March will be as dramatic as last year.

“Significant seasonal price softening has yet to occur in the calf market in the fall of 2017, and there is no indication prices will falter at this point,” Griffith says. “It is always difficult to predict, but a price on these calves in March ranging from $148 to $156 may be as optimistic as it comes at this point. These predictions cannot take into account changes in international policy and trade agreements, nor do they take into account some sudden shock to the market. The point is that the market is unlikely to make as strong of a move as it did one year ago to the upside and the downside risk is very limited moving into the spring.”

As logic suggested, futures traders pushed Cattle futures sharply lower on Monday, in the wake of Friday’s monthly Cattle on Feed report. October placements were 10.2% more than the previous year, about 3% more than average estimates heading into the report.

However, Katelyn McCullock, economist with the American Farm Bureau Federation points out feedlot marketings remain higher, too.

In the latest issue of In the Cattle Markets (see below), McCullock explains, “Marketings have continued to be aggressive, so feedlot inventories have not become burdensome even though nine of the last 12 months have shown placements over 10% ahead of the prior year. Marketings have remained 3-10% above a year ago all year.” In October, marketing were 5.2% more than a year earlier.

Live Cattle futures closed an average $1.34 lower (77¢ to $1.75 lower).

Feeder Cattle futures closed an average of $2.16 lower ($1.07 to $2.57 lower).

Choice boxed beef cutout value was $1.06 lower Monday afternoon at $206.18/cwt. Select was 20¢ higher at $188.05.

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Major U.S. financial indices closed higher on Monday, with positive reads on the economy (see below) offset by uncertainty about tax reform.

The Conference Board Leading Economic Index® (LEI) for the U.S. increased 1.2% in October to 130.4 (2010 = 100), following a 0.1% increase in September, and a 0.4% increase in August.

“The US LEI increased sharply in October, as the impact of the hurricanes dissipated,” says Ataman Ozyildirim, Director of Business Cycles and Growth Research at The Conference Board. “The growth of the LEI, coupled with widespread strengths among its components, suggests that solid growth in the US economy will continue through the holiday season and into the new year.”

The Dow Jones Industrial Average closed 72 points higher. The S&P 500 closed 3 points higher. The NASDAQ closed 7 points higher.

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“Prices for bigger feeder cattle dropped last week under the pressure of declining Feeder futures. However, heavy feeder prices have been a bit stronger relative to calves all fall and thus remain very good,” says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly market comments. “Steer prices are realigning to a more typical rollback with heavy weights declining relative to calf prices. Heifers, however, continue to have a very flat price structure with heifers from 475 to 725 pounds all priced within $3/cwt. last week.”

Peel explains strong stocker demand continued to fuel calf prices higher and counter-seasonally through the middle of November. In Oklahoma, for instance, he points out steers calves are bringing $140-$200 per head more than last year; $100-$150 more for heifer calves.

“The strength in feeder cattle prices has been quite remarkable given increased supplies,” Peel says. “Auction volumes have been 25% higher than last year for the last four weeks.”

Katelyn McCullock, economist with the American Farm Bureau Federation notes in the latest issue of In the Cattle Markets that strong prices for 500-600 lbs. cattle also could reflect smaller, farmer-feeder lots taking advantage of low feed prices and marketing some of their grain through cattle.

“These higher than expected prices across the feeder cattle complex are likely a premonition of 2018 being another year of growth and expansion in the cattle sector,” McCullock says. “Southern plains 500-600 lbs. weights were $36/cwt. above 2016 last week, while 700-800 lb. weights were $40 higher.”

Feeder Cattle futures closed sharply lower on Friday with recent weakness, light trade, higher corn prices and defensiveness to the Cattle on Feed report (see below). Live Cattle followed along but less steeply.

Live Cattle futures closed an average 67¢ lower (45¢ to 90¢ lower).

Feeder Cattle futures closed an average of $1.67 lower ($1.00 to $2.17 lower).

Choice boxed beef cutout value was $3.00 lower Friday afternoon at $207.24/cwt. Select was 2¢ higher at $187.85.

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Major U.S. financial indices closed lower on Friday with profit taking from the previous session’s sharp gains apparently one of the drivers.

The Dow Jones Industrial Average closed 100 points lower. The S&P 500 closed 6 points lower. The NASDAQ closed 10 points lower.

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Placements came in higher than pre-report estimates once again—about 3% more than average expectations, according to the monthly Cattle on Feed report from USDA on Friday. The 2.39 million head placed on feed in October were 10.2% more than last year. In terms of weight composition, 52.93% went on feed weighing 700 lbs. or less and 10.46% went on feed weighing 900 lbs. or more.

“October is an important month when referencing placements as it is the largest month in regard to number of animals placed into feedyards,” say analysts with the Agricultural Marketing Service.

Marketings in October of 1.80 million head were 5.6% more than a year earlier, which was in line with pre-report estimates.

All told, there were 11.3 million head on feed Nov.1, which was 6.3% more than a year earlier, also in line with expectations.