Cattle futures closed mixed on Monday, with plenty of bearishness… lighter carcass weights continue to dilute the impact of increasing cattle numbers… coming up on your Cattle Current Market Update with Wes Ishmael.
Cattle futures closed mixed on Monday amid widely divergent action that featured plenty of pressure early in the session as traders continued to focus on uncertainty about beef demand.
Live Cattle futures closed an average of 72¢ lower in the front four contracts and then narrowly mixed.
Feeder Cattle futures closed 37¢ lower to 47¢ higher.
Choice boxed beef cutout value was $2.20 higher on Monday afternoon at $208.19/cwt. Select was $1.93 higher at $185.54.
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Major U.S. financial indices closed mixed on Monday. Presumably the uptick in the Dow stemmed from the Senate’s narrow approval of its tax reform package on Saturday, as well as news that CVS will acquire U.S. health insurer, Aetna, in a $69 billion deal. Tech stocks provided most of the drag.
The Dow Jones Industrial Average closed 58 points higher. The S&P 500 closed 2 points lower. The NASDAQ closed 72 points lower.
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Although the latest data indicates that beef carcass weights continued to edge seasonally higher, they remain significantly lower than last year, fueled by aggressive feedlot marketing.
“The current steer carcass weight is 16 lbs. less than the same week last year,” says Derrell Peel, Extension livestock marketing specialist with Oklahoma State University, in his weekly market comments. “Steer carcass weights have been lower 44 of 46 weeks this year and the average decrease for the year to date is 14 lbs. below last year. Heifer carcass weights are currently 13 lbs. below last year and have been lower every week of the year resulting in an average of 12 lbs. lighter year over year for the year to date.”
Peel explains the lighter carcass weights continue to partially offset increased cattle slaughter and moderate increased beef production. While steer and heifer slaughter is 5.3% more year over year, beef production is up 4.1%.
However, Peel notes steer and heifer carcass weights have increased an average of 5 lbs. per year for the last 50 years, and there’s no reason to believe this year’s unique factors suggest a change.
“Current production systems, technology, and genetics would suggest that there is no end in sight to just how big cattle can get from a production standpoint,” Peel says.