Prospects for negotiated cash fed cattle prices got a shot in the arm from the weekly Fed Cattle Exchange auction Wednesday. One lot of Texas steers—268 head—sold out of a total offering of 878 head, for a weighted average price of $120/cwt., which was $1 higher than last week’s country trade in the region.
Similarly, Choice steers and heifers sold $1.00-$1.50 higher at the fat auction in Tama, IA. There were 305 Ch 2-4 steers weighing an average of 1,453 lbs. and bringing an average price of $120.54, which was at the upper end of the previous week’s country price.
Cattle futures wavered, amid the lack of cash direction and sluggish overall trade.
Other than 2¢ higher in spot Dec, Live Cattle futures closed an average of 25¢ lower.
Other than 7¢ higher toward the back, Feeder Cattle futures closed an average of 52¢ lower.
Wholesale beef values were lower to sharply lower on light demand and moderate offerings, according to the Agricultural Marketing Service.
Choice boxed beef cutout value was $3.24 lower Wednesday afternoon at $209.57/cwt. Select was $1.90 lower at $201.57.
Corn futures closed 1¢ to 3¢ lower.
Other than fractionally lower in the front four contracts, Soybean futures closed 1¢ to 4¢ higher.
Major U.S. financial indices closed narrowly mixed Wednesday, amid mixed news and continuing optimism surrounding the presumed phase-one U.S.-China trade deal.
The Dow Jones Industrial Average closed 27 points lower. The S&P 500 closed 1 point lower. The NASDAQ was up 4 points.
Although narrowing recently, analysts with the Livestock Marketing Information Center (LMIC) point out the Choice-Select spread was $19-$27/cwt. from June through November, well above the previous year and the five-year average. They explain the spread typically begins to narrow following peak summer beef demand around Independence Day.
According to LMIC, in the latest Livestock Monitor, 70.9% of carcasses graded Choice through November, which was 1% less than the prior year. Prime-grading carcasses were higher, though, at 8.5%.
“Interestingly, total cattle slaughter through the first week of December is 1.4% above last year at 31.1 million head. Slaughter data does not indicate that there is a lack of cattle available, but there is a lack of Choice grade cattle,” say LMIC analysts. “A factor contributing to the lower available supplies of Choice product are cattle graded for branded programs. Branded programs typically include higher quality-grade cattle, which may contain cattle that grade Choice and/or Prime.”
More specifically, quality-based brands commonly target carcasses that grade in the upper two thirds of Choice. So far this year, USDA certified 31.5% of fed cattle for that category, according to LMIC. That’s 7.4% more than last year.
“Branded boxed beef prices have been commanding an average of $5.30/cwt. above the Choice boxed beef price, indicating that there may be more Choice product going into channels for branded products,” say LMIC analysts. “The relatively higher price for branded boxed beef products over Choice products, and more cattle qualifying for branded programs, may be contributing to lower availability in the Choice category.”