WLI

Another day of hard pressure on Cattle futures started to take a toll on cash markets.

It started with the weekly Fed Cattle Exchange where 1,287 head sold out of the 1,993 head offered. Weighted prices ranged from $138.72/cwt. for delivery at 1-9 days to $132.00 for delivery at 17-30 days. Most of those selling came from the Southern Plains. The weighted average on the Exchange last week—all for delivery at 1-9 days—was $140.15, with only 547 head sold. So, about $1.43 lower week to week on current delivery cattle.

In the country, there were a few early live sales in Kansas on Wednesday at $138, but there were too few transactions to trend. Prices in Kansas last week were at mostly $145.

Feeder Cattle futures closed off of session lows and mixed, but still sharply lower in the front months. After 2¢ lower in spot May and an average of $1.10 higher in Jan and Mar, Feeder Cattle futures closed 30¢ to $3.22 lower for an average of $1.53 lower.

Front-month Live Cattle futures followed along to a lesser degree, but managed marginal gains across most of the board. After 77¢ and 25¢ lower in the front two contracts, Live Cattle futures closed 2¢ to 22¢ higher, except for unchanged at the back.

Corn futures closed 4¢-7¢ higher.

Choice boxed beef cutout value was $2.42 higher yesterday afternoon at $244.58/cwt. Select was $1.59 higher at $224.62.

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Major U.S. financial indices closed mixed on Wednesday, with much of the chatter centering around the firing of the FBI director and wondering if that will slow down other things like tax reform.

The Dow Jones Industrial Average closed 32 points lower. The S&P 500 closed 2 points higher. The NASDAQ closed 8 points higher.

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Fed cattle prices for this year were forecast higher in the latest monthly World Agricultural Supply and Demand Estimates, based on recent price strength and expectations that demand will remain relatively firm.

For the year, the estimated annul fed steer prices were raised from $115-$121/cwt. in April to $120-$125 in the May forecast. Estimates are for fed steers prices of $128-$132 in the second quarter; $115-$123 in the third quarter and $113-$123 in the fourth quarter.

The yo-yo volatility of recent days continued in Cattle futures on Tuesday, this time sharply lower as traders eyed lighter boxed beef movement and wondered how higher wholesale beef values will affect demand leading up to larger summer fed cattle supplies.

Choice boxed beef cutout value was 72¢ higher Tuesday afternoon at $242.16. Select was 14¢ higher at $223.03.

Live Cattle futures closed an average of $2.47 lower ($1.72 to $2.80 lower).

Except for 27¢ lower at the very back, Feeder Cattle futures closed an average of $4.35 lower ($3.77 lower to mostly limit-down $4.50).

Corn futures closed fractionally higher to a penny higher.

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Major U.S. financial indices closed mixed on Tuesday, with the main news being bandied about having to do with North Korea’s announced intentions to launch another nuclear missile test.

The Dow Jones Industrial Average closed 36 points lower. The S&P 500 closed 2 points lower. The NASDAQ closed 17 points higher.

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“It was obvious feeder cattle prices in March and April were undervaluing animals. However, the market could have moved too far the other direction during this time of correction,” says Andrew P. Griffith, agricultural economist at the University of Tennessee, in his weekly market comments. “The market could certainly move higher, but the upside potential is dwindling compared to downside risk. This would be a good time to physically market cattle, forward contract future sales, or use a price risk management tool to set a price floor on cattle to be sold in future months.”

As suspected, volatility continued at the beginning of the week as short covering and the gaping discount to cash fed cattle spurred Cattle futures sharply higher on Monday…following the late-week crash on Thursday and Friday.

Except for 52¢ lower in spot Jun, Live Cattle futures closed an average of $2.22 higher with a range of $1.87 to $2.60 higher.

Except for $1.65 higher at the very back, Feeder Cattle futures closed an average of $4.67 higher with a range of $3.22 to $5.77 higher.

Corn futures closed mostly 3¢-4¢ lower.

There was no cash fed cattle trade reported on Monday. Depending on who you talk to, there seems to be plenty of expectation for steady money this week, if not lower. In the mean time, packers are certainly putting the pressure on meat buyers. Choice boxed beef cutout value was $2.57 higher Monday afternoon at $241.44. Select was $3.32 higher at $228.89.

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The weekend election of a Euro-friendly president in France helped major U.S. financial indices retain gains from the end of the week. The Dow Jones Industrial Average closed 5 points higher. The S&P 500 closed fractionally higher. The NASDAQ closed 1 point higher.

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“The fundamentals are there but are short term and will not likely persist through the summer,” says Stephen Koontz, agricultural economist at Colorado State University, in a recent issue of In the Cattle Markets.

Koontz current pricing opportunities will evaporate before cow-calf producers have the chance to market the current calf crop on video auctions this summer. So, he recommends establishing price floor protection now or as soon as the rally slows.

“As soon as beef supplies in the marketing pipeline are replenished, the market will likely soften and become focused on larger summer supplies,” Koontz says.

Cattle futures continued to crumble on Friday—mainly limit down for Feeder Cattle and $2.55 lower for Live Cattle—as those in a position to take profit did so, while others on the literal short end of the stick continued to exit and take take losses. Even with the volatility seen the last couple of years, the last couple of weeks was stunning.

Live Cattle futures closed an average of $2.55 lower ($1.92 to $3.00 lower).

Feeder Cattle futures closed an average of $4.44 lower (limit down in all but the last two contracts). That’s about $8 lower in the last two sessions.

Choice boxed beef cutout value was $3.29 higher Friday afternoon to the highest level since September of 2015. Select was $2.73 higher. Corn futures closed 3¢-4¢ higher.

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“Weather seems to a big driving factor recently as news of more rain in the forecast for the Corn Belt added to the higher tone seen today,” said analysts with the Daily National Grain market Summary on Friday. “Brazilian farmers seem to be holding out on selling much of their freshly harvested soybean crop, leading to higher demand for U.S. beans. However, there is still speculation as to how this will change once Brazil’s stocks hit the market.”

Wheat bids were mostly 5¢-6¢ higher. Soybean bids were 1¢ lower to 2¢ higher. Sorghum bids were 7¢ higher. Corn bids were mostly 4¢-5¢ higher.

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Robust employment growth last month helped lift major U.S. financial indices on Friday (see below). Apparently some investors were also betting on a favorable outcome to the French presidential election this weekend. The Dow Jones Industrial Average closed 55 points higher. The S&P 500 closed 9 pointw higher. The NASDAQ closed 25 points higher.

Total non-farm payroll employment increased by 211,000 jobs in April, according to the U.S. Bureau of Labor Statistics. That was more than the trade expected. The nation’s unemployment rate is 4.4%.

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U.S. beef exports (105,310 mt) were 18% higher in March compared to last year and value was up 22% at $588.2 million. First-quarter beef exports were up 15% in volume (292,215 mt) and 19% in value ($1.61 billion).

“Entering 2017 with record-large pork production and an uptick in beef slaughter, we knew this ‘wall of U.S. meat’ presented a challenge for our industry,” says USMEF President and CEO Philip Seng. “So the fact that first-quarter export volumes are higher than a year ago is not surprising, but it’s important to look beyond that – to the higher percentage of production being exported and the strong return on those exports. The U.S. is not just moving more meat internationally because we have more available. Our products are commanding solid prices and winning back market share in many key destinations, even with a strong U.S. dollar and many trade barriers still in place. But our competitors are working every day to reverse this trend, so we must aggressively expand and defend our international customer base.”

March exports accounted for 12.5% of total beef production and just under 10% for muscle cuts only, each up slightly from last year. Export value per head of fed slaughter averaged $270.14 in March, up 11% from a year ago, while the first-quarter average increased 10% to $267.71 per head.

Exports are also moving other meats from the domestic market. Year-to-year U.S. pork exports were 16% higher and a new record for the month. First-quarter pork exports were 17% higher.