Cash fed cattle trade remained at an impasse through Thursday afternoon. Cattle feeders appear to have the leverage on their side, though, with current marketing and the recent weight-robbing winter weather. Plus, wholesale beef prices appear poised to continue trending higher.
Choice boxed beef cutout value was 5¢ higher on Thursday afternoon at $208.67/cwt. Select was $1.70 higher at $200.86; up about $8 in the last three days.
Following a positive start, sluggish trade and the lack of direction from cash fed cattle helped pressure Cattle futures on Thursday.
Other than 80¢ higher in the back contract, Live Cattle futures closed an average of 54¢ lower.
After 35¢ lower in spot Jan, Feeder Cattle futures closed and average of $1.18 lower.
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Major U.S. financial indices closed higher again on Thursday—the Dow closed above 25000 for the first time—supported by strong employment data.
Private sector employment increased by 250,000 jobs from November to December according to the December ADP National Employment Report®. That was significantly more than expected. The U.S. employment report comes out on Friday.
The Dow Jones Industrial Average closed 152 points higher. The S&P 500 closed 10 points higher. The NASDAQ closed 12 points higher.
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Despite increasing cattle numbers and beef production borne by ongoing herd expansion last year, Josh Maples, livestock economist at Mississippi State University points out average annual prices last year were near or above prior-year levels for fed cattle and feeder cattle.
For quick perspective, Maples explains about 1.3 million more calves were born in 2017 than the prior year. Cattle on feed Dec. 1 were 8.1% more than the previous year. Cattle slaughtered in 2017 was about 5% more than in 2016.
Heading into 2018, Maples suggests three key factors that will shape markets.
Herd Expansion—In the latest issue of In the Cattle Markets, Maples explains, “We’ll get a good measure of this when the annual USDA Jan. 1 Cattle Inventory report is released Jan. 31. I anticipate that expansion has continued, but not as rapidly as in the past few years.”
U.S. Beef Exports—“Our export markets are a primary reason for
stronger than expected prices in 2017,” Maples says. “With even more supplies coming in 2018, can export markets exceed expectations again in 2018?”
Impact of Total Meat Production—“While beef production is increasing, chicken and pork production are also expanding. This has set the stage for 2018 to be largest total meat consumption year of the past decade,” Maples says. “How will this increased production get sorted out at the grocery meat case by consumers?”