Cattle futures mainly hovered on Tuesday, awaiting cash direction and in the face of a plunge on Wall Street.
Live Cattle futures closed narrowly mixed, from 20¢ lower to 25¢ higher.
Other than 2¢ and 10¢ lower in two contracts, Feeder Cattle futures closed an average of 33¢ higher.
Wholesale beef values were weak to lower on light demand and heavy offerings, according to the Agricultural Marketing Service.
Choice boxed beef cutout value was $2.46 lower Tuesday afternoon at $230.15/cwt. Select was 67¢ lower at $212.31.
After 1¢ lower and fractionally lower in the two front contracts, Corn futures closed mostly fractionally higher.
Soybean futures closed fractionally higher to 1¢ higher through Sep ’21 and then 3¢ higher.
Major U.S. financial indices closed sharply lower xTuesday, expanding recent losses. Primary angst seemed to revolve around, what else, but U.S.-China trade talks. This time it was investors interpreting comments from President Trump to mean it less likely that phase one of the deal will be concluded before new U.S. tariffs on Chinese imports begin Dec. 15.
The Dow Jones Industrial Average closed 280 points lower. The S&P 500 closed 20 points lower. The NASDAQ was down 47 points.
“The wide spread between Choice and Select beef cutout values continues to send a signal for more Choice beef,” says Josh Maples, Extension economist at Mississippi State University. “The spread has been near or above $20/cwt. since June. The average weekly spread in October was more than double the historical seasonal average; November was seasonally large, too. For 17 of the 21 weeks from July 6th to Nov. 23, the weekly average Choice-Select spread was the largest for that week of the year over the past two decades.”
In the latest issue of In the Cattle Markets, Maples explains supply is the most visible driver, with Choice-grade supplies 1-2% below year-ago levels since June. For the same months, he adds that Choice supplies were also at or below the five-year average.
“Demand for particular beef cuts also plays an important role,” Maples explains. “A wider Choice-Select spread is typically expected in October and November, largely due to seasonal demand for Choice ribs and loins (i.e. the middle meats) during the holidays. For example, Choice ribeye prices usually increase due to seasonal demand. Wholesale Choice ribeye prices hit just over $10.00/lb. a few weeks ago and continue to hover around $9.60. This is compared to a 2018 high of $9.15/lb. Choice rib and loin primal values are 4% and 7% above a year ago, respectively, while the Select rib primal value is only up 1% and the loin primal value is the same as a year ago.”