There were significantly more cattle—3,931 head—offered in the weekly Fed Cattle Exchange Auction on Wednesday. All said and done, 450 head sold for 1-9 day delivery at a weighted average price of $117.71/cwt.; 59 sold for 17-30 day delivery at a weighted average price of $114.
That mirrored light country trade in the Southern Plains. Though too few to trend, there were some early live sales in the Texas Panhandle at $117 and in Kansas at $117-$118.
Cattle futures were mostly a repeat of the prior session, strong support early that eroded with a lack of activity.
After 70¢ higher in spot Apr, Live Cattle futures closed narrowly mixed, (an average of 20¢ lower in five contracts to an average of except for 8¢ higher in three.
Feeder Cattle futures closed narrowly mixed (from an average of 6¢ lower in three contracts to an average of 32¢ higher in five contracts).
Choice boxed beef cutout value was 44¢ lower Wednesday afternoon at $213.07/cwt. Select was 72¢ lower at $200.61.
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Major U.S. financial indices closed strongly lower Wednesday, reportedly on President Trump’s tweet-threat that the U.S. might aim missiles at Syria, in response to the alleged use of chemical weapons there over the weekend.
The Dow Jones Industrial Average closed 218 points lower. The S&P 500 closed 14 points lower. The NASDAQ closed 25 points lower.
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“It is unlikely that trade issues are responsible for the dramatic market softening in March,” says Stephen Koontz, agricultural economist at Colorado State University, in the latest issue of In the Cattle Markets. “Rather, many of the underlying fundamentals are different between this year and this time in 2017. And, different such that lower prices are to be expected.”
Most notable, Koontz says, are significantly more cattle on feed for more than 120 days.
“It is well known that inventories of cattle are higher as are on-feed numbers. But, the number of long-fed cattle is substantially higher this year than last, Koontz explains. “Last year, the market entered April with a very clean show-list. Not this April. Consequently, while in seasonal decline, carcass weights are running ahead of last year. Both of these will limit upward potential for fed cattle.”
On the other hand, Koontz believes the overall situation is unlikely to worsen for fed cattle, given the healthy fed slaughter volume and strong packers margins.
“It will be important to watch Saturday volumes (fed harvest) through the remainder of April. Strong volumes will indicate solid featuring at retail, which for the most part of this year has been soft compared to last year,” Koontz says. “I am not optimistic that retail featuring will lead to much improved beef demand in the northern and central parts of the nation–with the cold spring solidly in place. Further, beef will clearly need to compete through the summer with larger volumes of chicken and pork. These also limit upward potential for cattle and calves.”