Cash cattle markets never stop completely, but plenty of folks continued to take cover Tuesday as Cattle futures sank further—limit and near-limit down in some contracts, with expanded limits—in response to fed cattle harvest disruptions caused by the fire at Tyson’s plant in Holcombe, KS.
As reported in Cattle Current yesterday, estimates suggest lost fed harvest capacity amounts to approximately 30,000 to 35,000 head per week. With industry-wide beef packing capacity utilization already running historically high before the fire, by most accounts, both cattle feeders and packers are scrambling to find solutions.
Live Cattle futures closed an average of $4.34 lower.
Feeder Cattle futures closed an average of $5.60 lower.
Wholesale beef values continued to climb Tuesday, with the shortage in immediate supplies fostered by the Tyson fire. Prices were sharply higher on good demand and moderate to heavy offerings, according to the Agricultural Marketing Service.
Choice boxed beef cutout value was $7.74 higher Tuesday afternoon at $226.36/cwt. Select was $2.79 higher at $200.58.
USDA acreage numbers continued to weigh on corn Tuesday. Corn futures closed 8¢ to 19¢ lower through Jul ’20, then mostly fractionally mixed.
Soybean futures gained, though, after ignoring the previous day’s positive acreage news. Soybean futures closed 8¢ to 10¢ higher through Jul ‘20, and then mostly 4¢ to 5¢ higher.
Major U.S. financial indices closed sharply higher Tuesday. Stocks rebounded after the U.S. Trade Representative (USTR) announced removing some items from the list of Chinese imports that are subject to an additional 10% tariff beginning Sept. 1.
“Further, as part of USTR’s public comment and hearing process, it was determined that the tariff should be delayed to December 15 for certain articles,” according to a USTR statement. “Products in this group include, for example, cell phones, laptop computers, video game consoles, certain toys, computer monitors, and certain items of footwear and clothing.”
All told, the news buoyed investor hopes that the U.S. and China can resolve their trade differences.
The Dow Jones Industrial Average closed 372 points higher. The S&P 500 closed 42 points higher. The NASDAQ was up 152 points.
Analysts with USDA’s Economic Research Service (ERS) increased the anticipated average fed steer price for this year by $1 to $116.50/cwt., in the most recent monthly World Agricultural Supply and Demand Estimates. That was based on recent price strength, before the Tyson fire. Average price for the third quarter is forecast to be $110 and then $112 in the fourth quarter.
Estimated beef production for this year was reduced by 86 million lbs. to 27.04 billion lbs., compared to the previous month’s forecast. That’s based on the expected slower pace of cattle slaughter in the third quarter and lighter expected carcass weights through the remainder of this year.
For next year, though, ERS analysts say, “The beef production forecast is raised from the previous month on a higher expected pace of first-half marketings. However, the 2019 calf-crop estimated in the July 19 Cattle report implies lower-than-previously expected marketings in the latter part of 2020.”
Beef production for 2020 is forecast at 27.57 billion lbs. WASDE has next year’s average fed steer price at $119.
Forecast total red meat and poultry production was forecast 107 million lbs. higher for this year at 104.62 billion lbs., based on increased broiler and turkey production.
Total red meat and poultry production estimates were higher for next year, too, at 106.48 billion lbs., with increased beef and poultry production.