Daily Market Highlights

Cattle futures edged lower and closed off of session lows on Monday with little support.

Other than 95¢ lower in spot Aug and narrowly mixed in the back four contracts, Live Cattle futures closed 37¢ lower.

Except for 7¢ higher in Apr, Feeder Cattle futures closed an average of 38¢ lower.

Choice boxed beef cutout value was $1.30 lower Monday afternoon at $217.54/cwt. Select was 16¢ higher at $202.67.

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Major financial indices closed little changed on Monday, but with some upward push from tech stocks.

The Dow Jones Industrial Average closed 5 points lower. The S&P 500 closed 2 points higher. The NASDAQ closed 23 points higher.

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“There is a growing recognition that international beef trade will play an increasingly important role in the U.S. beef industry in the coming years,” says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly market comments. While exports typically receive the most focus, Peel points out imports of beef to the U.S. also vary significantly over time.

So far this year (through May) Peel explains total beef imports to the U.S. are 9% less year over year. They were 10.5% less year over in 2016.

Canada is currently the largest source of U.S. beef imports, Peel says. May beef imports from Canada 3.4% more year over year are 3.6% less year to date.

“Canada accounts for about 23% of beef imports in 2017,” Peel explains. “Canada has varied as the number one, two or three source of U.S. beef imports in the last 10 years. However, Canada’s share of U.S. beef imports appears to have trended down some over time with the current share considerably lower than the 27% average over the past decade.”

Historically, the U.S. imports more beef from Australia than Canada, but a period of herd rebuilding there, following forced herd liquidation due to drought has pushed imports to the U.S. 34% lower year over year, according to Peel. As the Australian herd expands, he expects that nation to recover market share in the U.S. market.

“The clearest and most pronounced trend in U.S. beef imports is the growing role of Mexico as a source of beef imports,” Peel says. “In May, beef imports from Mexico were up 27.4% year over year and are up 29.7% for the year to date. Mexico, which accounted for less than 2% of beef imports a decade ago, increased to account for over 16% of U.S. beef imports in 2016 and represents 20% of beef imports so far in 2017.”

Cattle futures treaded water on Friday with light trade.

Choice boxed beef cutout value was $1.21 lower Friday afternoon at $218.84/cwt. Select was $1.25 lower at $202.51.

Live Cattle futures closed narrowly mixed (17¢ lower to 20¢ higher).

Feeder Cattle futures closed narrowly mixed (45¢ lower to 40¢ higher).

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Major financial indices closed higher on Friday, fueled by better than expected employment numbers (see below) and despite lower oil prices.

The Dow Jones Industrial Average closed 94 points higher. The S&P 500 closed 15 points higher. The NASDAQ closed 63 points higher.

“June’s unemployment numbers were little changed at 4.4% from the previous month’s level of 4.3%,” said U.S. Secretary of Labor Alexander Acosta, following release of the June 2017 Employment Situation report. “Non-farm payroll employment rose by 222,000 jobs. 187,000 private sector jobs were created in June, and 821,000 private sector jobs have been added to the economy during the five months since January 2017. Job growth was strong in the sectors of mining and logging, financial activities, and education and health services. Since January, the unemployment rate has dropped by 0.4% and is well below the pre-recession rate of 5.3%.

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U.S. beef exports in May increased significantly from the previous month and year, according to statistics released by USDA and compiled by the U.S. Meat Export Federation (USMEF).

May beef exports of 105,321 metric tons (mt), were 6% more than a year ago; value was 9% more at $582.6 million. For January through May, beef exports were up 12% in volume (497,322 mt) and 16% in value ($2.75 billion) compared to the same period last year.

“2017 is shaping up as a very solid year for U.S. pork and beef exports, but we remain in an extremely competitive situation in each of our key markets,” says Philip Seng, USMEF president and CEO. “That’s why it is so important to capitalize on every opportunity to increase carcass value, and this is where variety meat plays an important role. USMEF has been working with our industry partners to expand the range of variety meat product offerings and diversify their destinations, and those efforts are paying important dividends for producers.”

In May, beef variety meat exports reached 2017 highs in both volume (30,173 mt, up 12%) and value ($77.7 million, up 10%).

Export value per head of fed slaughter averaged $265.55 in May, matching the average from a year ago. Through May, per-head export value averaged $270.27, up 8% percent. Beef export prices are also increasing, especially in key Asian markets, with double-digit increases in Japan and Korea in May illustrating the strong demand for U.S. beef.

Although feeder cattle futures continue to trade narrowly at the bottom of a broader price range going back to April, Andrew P. Griffith, agricultural economist at the University of Tennessee, points out that the fall contracts are trading stronger than the seasonal trend, relative to the August contract.

“This means the futures market is expecting some strength in the market this fall for cattle ready to enter the feedlot,” Griffith says, in his weekly market comments. “Prices seem to be well supported at the bottom of the aforementioned trading range, which would suggest there is some upside potential for feeder cattle moving through the summer and into early fall. This may result in yearling cattle prices being strong relative to lighter-weight cattle at the start of the fall calf run. This occurrence may result in some feedlots looking to put more lightweight animals on feed, especially if feed costs continue to be low. Therefore, the strong feeder cattle market will support prices for freshly weaned lightweight cattle in the October and November time frame.”

Cash fed cattle trade ranged from steady to $2 lower Thursday at $117-$118/cwt. on slow trade and light demand.

Choice boxed beef cutout value was $2.53 lower Thursday afternoon at $220.05/cwt. Select was $1.56 lower at $203.76.

Despite that, short covering seemed to be the primary driver in Cattle futures.

Except for 30¢ higher in the back two contracts, Live Cattle futures closed an average of $1.00 higher (72¢ to $1.40 higher).

Except for 10¢ and 12¢ higher in the back two contracts, Feeder Cattle futures closed an average of $1.62 higher ($1.12 to $2.40 higher).

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Major financial indices closed lower on Thursday, pressured by tech stocks and fewer jobs than the trade anticipated (see below).

The Dow Jones Industrial Average closed 158 points lower. The S&P 500 closed 22 points lower. The NASDAQ closed 61 points lower.

Private sector employment increased by 158,000 jobs from May to June according to the June ADP National Employment Report®.

“The job market continues to power forward,” says Mark Zandi, chief economist of Moody’s Analytics. “Abstracting from the monthly ups and downs, job growth remains a stalwart between 150,000 and 200,000. At this pace, which is double the rate of labor force growth, the tight labor market will continue getting tighter.”

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Premiums for feeder steers relative to their fed counterparts is back to normal, according to the Livestock Marketing Information Center (LMIC).

For the week ending June 17th, the premium between a feeder steer weighing 700-800 lbs. and a fed steer selling the same week was $28.72/cwt. (basis Southern Plains) or 24%, according to LMIC, in the latest Livestock Monitor.

“That premium has been increasing seasonally, which is normal into the early summer months,” explain LMIC analysts. “The premium is slightly above a year ago ($27.34 per cwt. or 23%), likely reflecting lower cost of gain in feedlots (e.g. corn prices are down year-over-year). Looking back to 2014 and 2015 that premium has dramatically declined.”

For perspective, the premium for the comparable week in 2014 was $55.09 per cwt. (37%). It surged to $82.42 (55%) in 2015.

“Those premiums in 2014 and 2015 were not sustainable,” LMIC Analysts say. “Last year and 2017’s have been rather normal.”

Cash fed cattle prices opened the week’s trade lower on Wednesday.

The weighted average price at the weekly Fed Cattle Exchange Auction was $117.75/cwt. on 92 head for 1-9 day delivery compared to $119.51 a week earlier. Another 337 head sold for delivery $117.25 (delivery 17-30 days). About 20% sold of the 2,093 head offered.

Country trade followed suit with early sales in Nebraska $1 less than the bulk of the previous week’s trade at $117.

Live Cattle futures closed an average of $1.72 lower ($1.35 to $2.20 lower).

Feeder Cattle futures closed an average of $3.05 lower ($1.47 to $3.87 lower).

Choice boxed beef cutout value was 31¢ lower Wednesday afternoon at $222.58/cwt. Select was $2.13 lower at $205.32.

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Major financial indices closed mostly little changed on Wednesday. Although tech stocks rebounded, oil prices moved lower following the hint of a rally in recent days.

The Dow Jones Industrial Average closed 1 point lower. The S&P 500 closed 3 points higher. The NASDAQ closed 40 points higher.

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“Following relatively tight supplies fueled by a rapid pace of slaughter earlier in the year and fed cattle weights well below a year ago, supplies are starting to increase, seasonally,” says David Anderson, Extension livestock economist with Texas A&M University. “Steer slaughter remains slightly above last year’s pace, while heifer slaughter in recent weeks has run close to 10% above last year. Dressed weights are also increasing, as they usually do this time of year. Steer dressed weights have increased 23 lbs. since they bottomed at 832 lbs.”

Cow slaughter is also running higher year over year, especially since the end of May, according to Anderson, in the latest issue of In the Cattle Markets.

“The weeks following Memorial Day saw a dramatic increase in beef cow slaughter, up about 10,000 head per week, almost 20% more than the same weeks in 2016,” Anderson explains. “For the year, beef cow slaughter is up about 9.8% over last year. About 62% of the increase in total beef cow slaughter is in the Southern Plains region, including Texas and Oklahoma. While cull cow prices in the Southern Plains have increased slightly over the past month, the cow beef cutout and 90%-lean wholesale beef price have increased sharply. The boxed cow-beef cutout hit $180/cwt. last week, up steadily from $158 at the beginning of the year. This cutout increased $8 over the last month. Wholesale boneless beef, 90% lean hit $229 the last week of June, up from $218 the same week last year. The strength in lean boneless beef is indicative of relatively tight supplies of lean beef for ground beef and apparently good interest in hamburgers from consumers.”

Besides lower cash fed cattle prices and wholesale beef values, analysts credited rising grain prices for the pressure on Feeder Cattle futures Monday. Pressure spilled over into front-month Live Cattle, too. Keep in mind, trade was light in both pits with the shorter trading hours.

Live Cattle futures closed an average of 36¢ lower through the front four contracts (10¢ to 55¢ lower) and then and average of 26¢ higher (7¢ to 65¢ higher).

Feeder Cattle futures closed an average of $1.24 lower (85¢ to $1.82 lower).

Choice boxed beef cutout value was $1.84 lower Monday afternoon at $222.89/cwt. Select was 97¢ lower at $207.45.

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Corn futures closed 7¢ higher through Mar 18 and then 2¢-6¢ higher (mostly 2¢ higher).

Cash prices for grain and soybeans were sharply higher again on Monday, supported by bearish weather and last Friday’s mostly-favorable USDA reports.

Wheat bids were 25¢ to 30¢ higher. Soybean bids were mostly 22¢ to 23¢ higher. Sorghum bids were 13¢ higher. Corn bids were 6¢ to 10¢ higher.

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Major financial indices closed mostly higher at the end of Monday’s holiday-shortened trading session. Along with higher oil prices, apparently, some investors are swapping dollars from recently pressured tech stocks with financial ones.

The Dow Jones Industrial Average closed 129 points higher. The S&P 500 closed 5 points higher. The NASDAQ closed 30 points lower.

Among the news supporting markets on Monday was the latest Manufacturing ISM® Report On Business® indicating that economic activity in the manufacturing sector expanded in June, and the overall economy grew for the 97th consecutive month.

“Comments from the panel generally reflect expanding business conditions; with new orders, production, employment, backlog and exports all growing in June compared to May and with supplier deliveries and inventories struggling to keep up with the production pace,” says Timothy Fiore, Chair of the Institute for Supply Management® (ISM®) Manufacturing Business Survey Committee.

The June PMI® (Purchasing Managers Index) was 2.9% higher than in May at 57.8%. The New Orders Index was 4% higher at 63.5%.

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The global beef complex has been characterized by a series of market disruptions through the second quarter, according to the most recent quarterly report from Rabobank.

“While U.S. beef exports continue to perform strongly (and have now reached record levels), reduced supply from Australia and New Zealand, along with potential shocks from Brazil and India, could see the balance in the beef market shift back to a supply-limited market,” says Angus Gidley-Baird, Rabobank Senior Analyst Animal Protein.

Specifically, Rabobank points to political scandals in Brazil, the new beef trade agreement between the U.S. and China, as well as India’s proposed ban on cattle slaughter. All involve major beef-exporting nations and have the potential to cause material shifts in global trade.

• “Brazilian beef exports dropped by around 10% year over year in the first five months of 2017, opening space in the global beef market,” say Rabobank analysts. They add that the recent drop in cattle prices there may lead to a future reduction in production.
• India is one of the largest global bovine exporters. Any ban on slaughter would have enormous global impact. At the time of writing their report, Rabobank analysts said no information was available as to how many states would conform to the federal government directive, and when.
• As for the U.S.-China pact, the first shipment of U.S. beef arrived in China mid-June.

In the meantime, the Rabobank Seven-Nation Beef Index remained relatively stable up to May.

The next issue of Cattle Current will come out Thursday morning, July, 6.

Negotiated cash fed cattle trade for the week was $3-$5 lower at mostly $118-$119/cwt. Dressed trade was mostly $4-$5 lower at $189-$191.

Even so, Cattle futures continued to find stability toward the end of the week. Some credited Friday’s higher close, after early pressure, to the overall lack of trade.

Other than $1.10 lower in expiring June and 20¢ lower in spot Aug, Live Cattle futures closed an average of 61¢ higher (22¢ to 97¢ higher).

Feeder Cattle futures closed an average of $1.32 higher (75¢ to $2.32 higher).

Choice boxed beef cutout value was $1.82 lower Friday afternoon at $224.73/cwt. Select was $1.74 lower at $208.42.

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Major financial indices ended the seesaw week mixed on Friday as investors prepared for a long weekend. Although markets will be open today—closing early—you get the idea lots of folks are making this a 4-day weekend.

The Dow Jones Industrial Average closed 62 points higher. The S&P 500 closed 3 points higher. The NASDAQ closed 3 points lower.

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The Acreage and Quarterly Grain Stocks reports from USDA on Friday added fuel to grain markets that have been surging in recent days with expanding drought in the Northern Plains.

Corn

Corn planted area for all purposes in 2017 is estimated at 90.9 million acres, down 3% from last year.

Corn stocks of 5.23 billion bu. are 11% more than the same time last year. On-farm corn stocks were up 15% from a year ago and off-farm stocks were up 6%.

Soybeans

Soybean planted area for 2017 is estimated at a record-high 89.5 million acres, up 7% from last year. Soybean area for harvest is estimated at a record-high 88.7 million acres, which is 7% more than last year.

Soybeans stocks of 963 million bu. are 11% more than a year earlier. On-farm soybean stocks were up 18% from a year ago; off-farm stocks up 7%.

Wheat

The all wheat planted area for 2017 is estimated at 45.7 million acres, 9% less than last year and the lowest all wheat planted area since records began in 1919.

Wheat stocks of 1.18 billion bu. are 21% more than a year ago. On-farm all wheat stocks were down 3% from last year, while off-farm stocks were up 28%.

Stability and narrower price ranges were welcome in Cattle futures on Thursday with Live Cattle support firming as the session continued, helping Feeder Cattle along the way.

Other than 5¢ lower in expiring June and unchanged at the back, Live Cattle futures closed an average of $1.10 higher (87¢ to $1.32 higher).

Feeder Cattle futures closed an average of $1.28 higher (77¢ to $2.17 higher).

Choice boxed beef cutout value was $2.88 lower Thursday afternoon at $226.55/cwt. Select was $2.51 lower at $210.16.

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Sharp seesaw gyrations continued on Wall Street Thursday with major U.S. financial indices closing sharply lower. Tech stocks led the charge lower, bolstered by investors taking profits and squaring positions with the quarter ending today.

The Dow Jones Industrial Average closed 167 points lower. The S&P 500 closed 20 points lower. The NASDAQ closed 90 points lower.

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U.S. beef made its official return to China June 19, according to USDA—a shipment from Great Omaha Packing Company in Nebraska.

U.S. Secretary of Agriculture Sonny Perdue will join U.S. Ambassador, Terry Branstad, in China this weekend to formally mark the return of U.S. beef after a 13-year hiatus.

“I will be proud to be on hand for the official reintroduction of U.S. beef to China,” Perdue said. “This is tremendous news for the American beef industry, the agriculture community, and the American economy in general. We will once again have access to the enormous Chinese market, with a strong and growing middle class, which had been closed to our ranchers for a long, long time. There’s no doubt in my mind that when the Chinese people taste our high-quality U.S. beef, they’ll want more of it.”

Greg Ibach, Nebraska Department of Agriculture (NDA) Director will also be on hand in China. According to Nebraska Governor Pete Ricketts, “Nebraska is home to four of the six eligible suppliers that are currently approved to ship beef to China.”

China has emerged as a major beef buyer in recent years, with imports increasing from $275 million in 2012 to $2.5 billion in 2016. The United States is the world’s largest beef producer and in 2016 was the world’s fourth-largest exporter, with global sales of more than $5.4 billion.

Only about 20% of the offering sold in the weekly Fed Cattle Exchange auction on Wednesday. Specifically, 480 head sold out of the 2,554 offered. The weighted average price was $119.51/cwt. for delivery at 1-9 days and $120 for delivery at 1-17 days.

Country trade in Nebraska opened even lower at $118/cwt. on a live basis, which was $1-$5 less than last week. Dressed trade there was $3-$4 lower at $190-$191. Similar prices and declines were seen on early sales in the western Corn Belt, but there were too few to trend.

Choice boxed beef cutout value was $4.48 lower Wednesday afternoon at $229.43/cwt. Select was $2.59 lower at $212.67.

Even so, and despite early pressure, Cattle futures rebounded late in the session to close with gains.

Live Cattle futures closed an average of 79¢ higher (60¢ to $1.10 higher).

Feeder Cattle futures closed an average of $1.61 higher (60¢ to $2.10 higher).

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Major U.S. financial indices closed sharply higher on Wednesday, buoyed in part by a more dovish tone from the European Central Bank, regarding ongoing quantitative easing in those countries.

The Dow Jones Industrial Average closed 143 points higher. The S&P 500 closed 21 points higher. The NASDAQ closed 87 points higher.

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Beef Products Inc. (BPI)—the nations’ leading supplier of Lean Finely Textured Beef (LFTB)—settled its billion-dollar lawsuit against ABC and Jim Avila, according to a statement from BPI yesterday.

“We are extraordinarily pleased to have reached a settlement of our lawsuit against ABC and Jim Avila,” reads the statement. “While this has not been an easy road to travel, it was necessary to begin rectifying the harm we suffered as a result of what we believed to be biased and baseless reporting in 2012. Through this process, we have again established what we all know to be true about Lean Finely Textured Beef: it is beef, and is safe, wholesome, and nutritious.”

You’ll recall that ABC ignited a firestorm of controversy about LFTB with what it termed a startling investigation into what could be found in ground beef (first broadcast in march of 2012). By the time ABC reporter Jim Avila was through telling all that would listen that: “…70% of the ground beef we buy at the supermarket contains something he (former USDA scientist) calls pink slime, beef trimmings that were once only used in dog food and cooking oil, now sprayed with ammonia to make them safe to eat…” it was easy for anyone unfamiliar with LFTB to walk away feeling like they’d been feeding their families something harmful.

In fact, LFTB is 96-98% lean beef, first approved by USDA in 1993, borne by technology that enables the mechanical separation of lean from fat. It’s not sprayed with ammonia, as the ABC report indicated. The process employed by BPI blasts a puff of ammonium hydroxide on the beef. Ammonium hydroxide is approved by the FDA for use in many food industry practices.

Consumer reaction was furious and fast, fueled by the Internet. Major grocers quit buying ground beef that included LFTB. Food service giants like McDonalds and Burger King followed suit. Along the way, even USDA gave schools participating in its National School Lunch Program the option of buying ground beef with or without LFTB.

Less than three weeks after the ABC report, BPI was forced to idle three of its four plants, costing around 700 jobs. In the meantime, the price of 50% ground beef plunged and the drop credit sank. The reason is that LFTB means more of every beef carcass can be utilized at a higher value.

In September of 2012, BPI sued ABC and others associated with the report.

“Through nearly 200 false, misleading and defamatory statements, repeated continuously during a month-long disinformation campaign, ABC and other individuals knowingly misled consumers into believing that LFTB was not beef and not safe for public consumption, which is completely false,” said Dan Webb, Chairman, Winston & Strawn LLP at the time. “BPI has filed suit because their business has been severely damaged by this conduct. As a result, we will be asking a jury to award BPI over one billion dollars in compensatory and statutory damages, plus punitive damages.” BPI sought to recover damages for defamation, product and food disparagement, and tortious interference with business relationships.

The trial finally began the first week of June this year. Terms of the settlement were not disclosed.

So much for the promising start to the week in Cattle futures. After limit-up and near limit-up moves on Monday, both Feeder Cattle and Live Cattle crashed on Tuesday, basically giving back everything gained in the previous session’s gains.

There doesn’t seem to be an easy explanation, as is so often the case in recent years. Judging by the little change in open interest on the day, there didn’t seem to be any massive liquidation my non-commercial accounts holding long positions.

Except for unchanged in freshly minted away Oct, Live Cattle futures closed an average of $2.47 lower ($1.87 to $2.62 lower).

Feeder Cattle futures closed an average of $3.81 lower ($2.07 to $4.57 lower).

Choice boxed beef cutout value was $4.66 lower Tuesday afternoon at $233.91/cwt. Week to week, Choice was down $13.08. Select was $2.40 lower at $215.26; week to week it was $4.62 lower.

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Major U.S. financial indices closed sharply lower on Tuesday. Pressure included the $2.7 billion fine the EU levied against Google’s parent company over antitrust laws, as well as the Senate having to delay a vote on its health-care plan.

The Dow Jones Industrial Average closed 95 points lower. The S&P 500 closed 19 points lower. The NASDAQ closed 100 points lower.

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Cattle producers and others in agriculture moved another step closer to getting rid of the Waters of the United States (WOTUS) rule proposed by the Environmental Protection Agency (EPA) back in 2015. You’ll recall that its definition of WOTUS would have granted EPA jurisdiction over all waters in the U.S. on all public and private lands.

The step came with announcement yesterday that EPA and the Department of Army, and Army Corps of Engineers are proposing a rule to rescind the Clean Water Rule and re-codify the regulatory text that existed prior to 2015 defining, WOTUS.

According to a statement from EPA, when finalized, this action would provide certainty in the interim, pending a second rulemaking in which the agencies will engage in a substantive re-evaluation of the definition of WOTUS.

“We are taking significant action to return power to the states and provide regulatory certainty to our nation’s farmers and businesses,” says EPA Administrator Scott Pruitt. “This is the first step in the two-step process to redefine ‘waters of the U.S.’ and we are committed to moving through this re-evaluation to quickly provide regulatory certainty, in a way that is thoughtful, transparent and collaborative with other agencies and the public.”

“This is another great step in the right direction, and the Administration deserves a great deal of credit for injecting some much-needed common sense into our nation’s environmental policies,” says Craig Uden, president of the National Cattlemen’s Beef Association (NCBA). “It’s important to remember, though, that this rule isn’t dead yet. The rulemaking process continues, and NCBA will submit and solicit additional comments on behalf of America’s cattle producers so that they finally get the sanity and clarity they need on land use policy.”

Likewise, Wesley Spurlock, president of the National Corn Growers Association, says, “The goal of the Clean Water Act is to restore and maintain the integrity of the nation’s waters. The 2015 rule moved us further away from that goal. Repealing it is an important first step toward providing farmers the certainty and clarity we have long desired.”

Apparently, futures traders priced in a gloomier monthly Cattle on Feed report than what it wound up being Friday, or they’re beginning to price in something else. After early and expected pressure, Limit-up moves in nearby Feeder Cattle futures led Live Cattle higher, as both pits expanded on gains established at the end of last week.

Except for 60¢ higher in newly minted away Oct, Live Cattle futures closed an average of $2.52 higher ($2.20 to $3.00 higher).

Feeder Cattle futures closed an average of $3.92 higher ($3.17 to limit-up $4.50 higher).

Choice boxed beef cutout value was $1.18 lower Monday afternoon at $238.57/cwt. Select was 94¢ higher at $217.66.

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Major U.S. financial indices closed narrowly mixed on Monday.

The Dow Jones Industrial Average closed 14 points higher. The S&P 500 closed fractionally higher. The NASDAQ closed 18 points lower.

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“Beef and cattle markets have defied gravity by staying stronger, longer than most expected this spring. However, with seasonal pressure prevailing, beef and cattle markets have weakened and will likely struggle seasonally for the next six plus weeks,” says Derrell Peel, Extension livestock marketing specialist, in his weekly market comments. “Beef markets often weaken during the summer doldrums, that period of summer heat between Independence Day and Labor Day. The summer slump may be mitigated somewhat if July 4 beef sales are strong, prompting follow-up beef sales. Wholesale markets will likely struggle until August when Labor Day purchases will pick up to support beef features for Labor Day, the last big grilling holiday of the summer.”

Peel points out that lighter year-to-year carcass weights continue to dilute the impact of increasing cattle numbers. Beef production is up 3.8% so far this year while cattle slaughter is 5.7% more. Even though steer and heifer carcass weights reached a seasonal nadir in early May, he explains a typical seasonal increase in carcass weights heading into the fourth quarter would still leave carcass weights significantly lower year over year.

“Strong beef demand has helped make the first half of 2017 a pleasant surprise to all cattle industry sectors,” Peel says. “Strong demand in the third and fourth quarters may help significantly, but supply pressures are likely to weigh a bit more heavily on cattle and beef markets in the second half of the year, holding markets generally to a sideways pattern for the remainder of the year.”