Cash fed cattle trade wobbled from the blocks Wednesday, with hints of slightly lower prices in the South and steady to higher prices in the North.
For instance, there were four lots (475 head) offered for 1-9 day delivery in the weekly Fed Cattle Exchange auction. One lot (133 Kansas heifers) sold for a weighted average price of $111/cwt. Country trade there last week was at $112.
By late afternoon, USDA’s Agricultural Marketing Service also reported early negotiated cash fed cattle sales at $111 in the Southern Plains, but too few transactions to trend.
Conversely, at the fat auction in Tama, IA, Choice steers and heifers traded $1.50-$1.75 higher. For instance, 209 Ch 2-4 steers weighing an average of 1,324 lbs. at $119.03.
Likewise, slaughter steers sold $2-$3 higher at Sioux Falls Regional in South Dakota; $1 higher for heifers.
AMS reported cash trades in the western Corn Belt at $185 on a dressed basis, which was steady to $3 higher than last week. Buyers paid $185 in Nebraska, which was $2 more than the bulk of the previous week’s trade.
Another day of limit-down pressure in Lean Hog futures cast a pall over Cattle futures Wednesday, likely helped along by month-end position squaring. At least part of the pressure on Lean Hogs stems from the lack of progress in trade talks with China.
Live Cattle futures closed an average of $1.02 lower (65¢ lower to $1.42 lower).
Feeder Cattle futures closed an average of $1.25 lower.
Wholesale beef values were weak to lower on moderate demand and offerings, according to the Agricultural Marketing Service.
Choice boxed beef cutout value was 49¢ lower Wednesday afternoon at $213.54/cwt. Select was $1.44 lower at $189.69.
Favorable weather and the aforementioned sluggish trade talk between the U.S. and China helped pressure Grain futures Wednesday.
Corn futures closed 9¢ to 11¢ lower through Jul ’20 and then mostly 3¢ to 4¢ lower.
Soybean futures closed 10¢ to 15¢ lower through Sep ’20 and then mostly 8¢ to 9¢ lower.
Major U.S. financial indices closed sharply lower Wednesday, following a mostly flat session ahead of the announcement from the Federal Open Market Committee (FOMC), regarding interest rates.
As expected, the FOMC reduced interest rates (25 basis points).
“In light of the implications of global developments for the economic outlook, as well as muted inflation pressures, the Committee decided to lower the target range for the federal funds rate to 2.0 to 2.25%,” according to an FOMC statement. “This action supports the Committee’s view that sustained expansion of economic activity, strong labor market conditions, and inflation near the Committee’s symmetric 2% objective are the most likely outcomes, but uncertainties about this outlook remain. As the Committee contemplates the future path of the target range for the federal funds rate, it will continue to monitor the implications of incoming information for the economic outlook and will act as appropriate to sustain the expansion, with a strong labor market and inflation near its symmetric 2% objective.”
Apparently, it was a news conference following the announcement, and interpretation that this may be the only cut, that sent investors fleeing.
The Dow Jones Industrial Average closed 333 points lower. The S&P 500 closed 32 points lower. The NASDAQ was down 98 points.
“We have to remember that only 4% of the world’s consumers live in this country,” says Randy Blach, CattleFax CEO. “Currently 14% of beef and beef by products are exported. More than 20% of the value of every fed steer is generated by exports. We need to have more outlets for not only our beef, but our poultry and pork.”
Through January of this year, U.S. beef exports equated to an average of $309.33 per head of fed slaughter, according to data released by USDA and compiled by the U.S. Meat Export Federation.
Blach was sharing insights at the Cattle Industry Summer Business Meeting near Denver on Tuesday. With record meat consumption expected next year, he emphasized the importance of opening export markets and resolving trade issues.
Here and abroad, Blach explains increased beef quality expands opportunity. Today, upwards of 80% of the U.S. fed beef supply grades Prime and Choice each week. Production of beef achieving those grades increased 50% during the last 15 years. Along the way, he says beef captured an additional 7% of market share of meat spending from poultry and pork.
By way of reference, the combined percentage of carcasses grading Prime and Choice each week so far this year ranges from 77.11% (week ending June 28) to 83.20% (week ending Mar. 29), according to USDA’s National Steer and Heifer Estimated Grading Percent Report.
More specifically, the percentage of carcasses grading Prime ranges from 6.87% (July 19) to 10.10% (Mar. 22). Carcasses grading Choice ranged from 69.59% (May 24) to 73.88% (Feb. 8). The range for carcasses grading in the upper two-thirds of Choice is 30.14% (May 31) to 35.46% (Mar. 22).
“It’s a great, great success story,” Blach says. “We have to continue to be the highest quality protein provider, delivering products we can stand behind that consumers love.”