Owners of long positions in cattle futures ran for the exits to start the week, taking Feeder Cattle sharply lower, while hammering nearby Live Cattle. There’s not much concrete to explain the level of bearishness. A case can be made for increased fund liquidation based on last week’s CFTC report, as well as technical selling. More than anything, at least for the day, traders seem to be betting on cattle futures breeching support levels, thinking increased beef production will overwhelm positive fundamentals. The more bullish set points to less production relative to cattle numbers than previously expected (lower carcass weights year to year for a sustained period) and apparent currentness, from the feedlot, to the packinghouse, to freezers and even the pace of calf and feeder cattle marketing.
Choice boxed beef cutout value was 89¢ lower Monday afternoon at $202.72/cwt. Select was 31¢ lower at $197.00.
Live Cattle futures closed an average of $1.89 lower ($1.10 to $2.97 lower).
Feeder Cattle futures closed an average of $3.14 lower ($2.32 to $3.75 lower).
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Major U.S. financial indices opened the week higher on Monday.
The Dow Jones Industrial Average closed up 25 points. The S&P 500 closed 4 points higher. The NASDAQ closed 32 points higher.
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June beef exports were the largest of 2017, reaching 109,554 metric tons (mt) – up 11% year-over-year and the largest June total since 2011, according to statistics released by USDA and compiled by the U.S. Meat Export Federation (USMEF). Export value increased 10% percent to $602.5 million. For January through June, beef exports were up 12% in volume (606,876 mt) and 15% in value ($3.35 billion) compared to the first half of last year.
Export value per head of fed slaughter averaged $264.51 in June, up 6% from a year ago. Through June, per-head export value was up 8% to $269.21.
“In this time of large red meat production, the upward trend in per-head export value and in the percentage of production exported is especially critical to the industry,” says USMEF President and CEO Philip Seng. “These metrics confirm that we’re not simply exporting more red meat because more is available – those exports are also generating excellent returns. It was also gratifying to see that the U.S. trade deficit narrowed in June due to an expansion of exports, knowing that the red meat industry made another solid contribution toward that effort.”
Beef exports to leading market Japan continued to gain momentum in June, with volume up 7% percent to 27,521 mt and value up 13% to $174.4 million (the highest since 2000). First-half exports to Japan exceeded last year’s pace by 23% in volume (150,812 mt) and 28% in value ($905.8 million). This included a 40% increase in chilled beef exports to 70,807 mt, valued at $511 million (up 38% percent), as the U.S. captured more than 50% of the chilled beef market. While demand for U.S. beef is very strong in Japan’s retail and foodservice sectors, as mentioned in Cattle Current last week, frozen exports to Japan face a higher tariff rate through March 2018.