WLI

Cattle futures closed sharply lower on Tuesday in a volatile day of trading with continued support through mid-day—contract highs in some months—and then mostly limit-down in Feeder Cattle, with Live Cattle tagging along. That was with another bump higher in Choice wholesale beef value. There seems no easy explanation for the abrupt sell-off. Today’s weekly Fed Cattle Exchange auction should provide a clearer glimpse of fundamental reality.

Live Cattle futures closed an average of $2.16 lower ($1.80 to $2.60 lower).

Feeder Cattle futures closed an average of $4.39 lower (mostly limit-down $4.50).

Choice boxed beef cutout value was $2.10 higher Tuesday afternoon at $250.45/cwt., the first time above $250 since July of 2105. Select was 13¢ higher at $219.57. The Choice-Select was $30.88 in the afternoon.

*******************************

On Wall Street, major U.S. financial indices edged lower again on Tuesday, in what some analysts described as defensive positioning ahead of potential market-rattling events later this week, which include the general election in Great Britain.

The Dow Jones Industrial Average closed 47 points lower. The S&P 500 closed 6 points lower. The NASDAQ closed 20 points lower.

*******************************

Although U.S. red meat exports slowed moderately from the previous month’s steamy pace, they remained significantly higher year-over-year, according to statistics released by USDA and compiled by the U.S. Meat Export Federation.

Beef exports in April were 13% more than a year earlier for volume at 99,786 metric tons. Value was 14% more at $550.4 million. For the year through April, beef exports were 14% higher in volume and 18% more in value at $2.16 billion, compared to the same period last year.

April export value per head of fed slaughter averaged $283.52, which was 12% more than a year ago and the highest so far this year. Through April, per-head export value averaged $271.57, up 11%.

Follow-though buying and reports of increased commercial support helped push Feeder Cattle futures higher on Monday with Live Cattle tagging along. There was also plenty of chatter about expectations for higher wholesale beef values and higher cash fed cattle prices this week.

Live Cattle futures closed an average of $1.19 higher in half of the contracts, including $1.27 higher in spot Jun and $1.07-$1.22 higher in the back three contracts. Other months were an average of 39¢ higher.

Feeder Cattle futures closed an average of $2.51 higher, from $1.15 higher in spot Aug to $3.72 higher at the back.

Choice boxed beef cutout value was $3.11 higher Monday afternoon at $248.35/cwt. Select was $1.38 higher at $219.44. The Choice-Select spread hit a new high at $28.91.

******************************

On Wall Street, Major U.S. financial indices closed slightly lower on Monday, with little new economics news, bit still close to record-high levels.

The Dow Jones Industrial Average closed 22 points lower. The S&P 500 closed 2 points lower. The NASDAQ closed 10 points lower.

******************************

Softer sales and customer traffic levels dampened optimism among restaurant operators, in the most recent Restaurant Performance Index (RPI) from the National Restaurant Association (NRA). The RPI fell 1.5% in April to a level of 100.3, which is barely into expansion territory.

For perspective, according to NRA, index values above 100 indicate that key industry indicators are in a period of expansion. Index values below 100 represent a period of contraction. So, the key indicators, especially the forward-looking ones still favor expansion.

That’s good news for livestock producers, says Katelyn McCullock, an economist with the American Farm Bureau Federation, in the latest issue of In the Cattle Markets. She explains the expansionary outlook suggests a boost in demand to help lessen the negative effects of the large production numbers that are expected in beef, pork and chicken.

Cattle markets finished the bullish week on a high note Friday, supported by increased cash fed cattle strength. Negotiated fed cattle prices for the week were mostly $4-$7 higher on a live basis at mostly $134.00-$137.50/cwt. Dressed trade was up to $10 higher week to week at $215-$220.

“Packer profitability has been better than expected and helped improve cash prices after sliding the past couple of weeks,” say analysts with the Agricultural Marketing Service. They add that fewer cattle have been grading Choice and packers have been willing to chase them.

Choice boxed beef cutout value was 34¢ lower Friday afternoon at $245.24/cwt. Select was 84¢ higher at $218.06.

Other than spot Jun trying to catch up to the week’s hefty increase in cash trade, traders were content to square Live Cattle positions on Friday, while Feeder Cattle futures churned ahead.

Live Cattle futures closed $3.40 higher in spot Jun, and then an average of 10¢ lower, except for 60¢ and 35¢ higher at the back.

Feeder Cattle futures closed an average of $1.40 higher in the front three contracts , an average of 34¢ higher in the next three, and then 87¢ lower and $2.07 higher at the back.

You’ve got to wonder how much of the week’s increase has to do with the Board betting on the reality of U.S. beef going to China. In the meantime, there’s little doubt that India’s announcement last week to ban the sale of cattle and buffalo for slaughter should provide support to global beef export prices.

******************************

Major U.S. financial indices closed at record-high levels on Friday despite a monthly unemployment report that missed estimates. Total non-farm payroll employment increased by 138,000 in May, according to the U.S. Bureau of Labor Statistics. That’s about 50,000 fewer than the trade expected. At 4.3%, the nation’s unemployment rate was slightly less than the previous month’s already-low rate.

The Dow Jones Industrial Average closed 62 points higher. The S&P 500 closed 9 points higher. The NASDAQ closed 58 points higher.

******************************

“The concern for producers is not achieving the highest price of the year, which may occur on one specific day, but hitting a period when prices are strong and profitable,” says Andrew P. Griffith, agricultural economist at the University of Tennessee, in his weekly market comments. He adds that recent strength in Feeder Cattle futures provides support to summer feeder cattle prices, which typically peak between late July and early September.

“There is no guarantee prices will remain this strong, but there is also no information suggesting prices should decline,” Griffith says. “Thus, producers who are not willing to take on the risk of declining prices may want to consider price risk management strategies at this time. Alternatively, producers willing to take a few risks may want to sit tight to see what happens the next few days.”

Cash fed cattle trade roared higher on Thursday: $4-$5 higher in the Southern Plains at $136-$137/cwt.; $4-$7 higher in Nebraska at $136.00-$137.50 on a live basis and $5-$7 higher in the beef at $215, a few up to $216. Dressed trade was also at $215 in the western Corn Belt, which was $5-$7 higher than the previous week.

That, higher outside markets and the previous session’s fundamental leanings helped propel Cattle futures sharply higher; limit higher in front months.

Live Cattle futures closed an average of $2.41 higher ($1.42 to $3.00 higher).

Except for 50¢ higher at the very back, Feeder Cattle futures closed an average of $4.15 higher ($3.57 to $4.50 higher).

Choice boxed beef cutout value was 4¢ higher Thursday afternoon at $245.58/cwt. Select was 96¢ lower at $217.22. The Choice-Select spread reached a new high of $28.36. Analysts with the Livestock Marketing Information Center pointed out recently that a surge in rib prices—record-high in some cases—is helping to underpin wholesale beef values.

******************************

Major U.S. financial indices closer sharply higher on Thursday, buoyed by the bullish payroll report from ADP.

Private sector non-farm employment increased by 253,000 jobs from April to May according to the closely–watched monthly ADP National Employment Report from the ADP Research Institute, in collaboration with Moody’s Analytics.

“Job growth is rip-roaring,” says Mark Zandi, chief economist of Moody’s Analytics. “The current pace of job growth is nearly three times the rate necessary to absorb growth in the labor force.” He adds that, increasingly, the primary challenge facing businesses will be a shortage of labor. Of course, that’s a challenge folks in the cattle business well understand.

The Dow Jones Industrial Average closed 135 points higher. The S&P 500 closed 18 points higher. The NASDAQ closed 48 points higher.