Cattle futures treaded water on Friday with light trade.
Choice boxed beef cutout value was $1.21 lower Friday afternoon at $218.84/cwt. Select was $1.25 lower at $202.51.
Live Cattle futures closed narrowly mixed (17¢ lower to 20¢ higher).
Feeder Cattle futures closed narrowly mixed (45¢ lower to 40¢ higher).
Major financial indices closed higher on Friday, fueled by better than expected employment numbers (see below) and despite lower oil prices.
The Dow Jones Industrial Average closed 94 points higher. The S&P 500 closed 15 points higher. The NASDAQ closed 63 points higher.
“June’s unemployment numbers were little changed at 4.4% from the previous month’s level of 4.3%,” said U.S. Secretary of Labor Alexander Acosta, following release of the June 2017 Employment Situation report. “Non-farm payroll employment rose by 222,000 jobs. 187,000 private sector jobs were created in June, and 821,000 private sector jobs have been added to the economy during the five months since January 2017. Job growth was strong in the sectors of mining and logging, financial activities, and education and health services. Since January, the unemployment rate has dropped by 0.4% and is well below the pre-recession rate of 5.3%.
U.S. beef exports in May increased significantly from the previous month and year, according to statistics released by USDA and compiled by the U.S. Meat Export Federation (USMEF).
May beef exports of 105,321 metric tons (mt), were 6% more than a year ago; value was 9% more at $582.6 million. For January through May, beef exports were up 12% in volume (497,322 mt) and 16% in value ($2.75 billion) compared to the same period last year.
“2017 is shaping up as a very solid year for U.S. pork and beef exports, but we remain in an extremely competitive situation in each of our key markets,” says Philip Seng, USMEF president and CEO. “That’s why it is so important to capitalize on every opportunity to increase carcass value, and this is where variety meat plays an important role. USMEF has been working with our industry partners to expand the range of variety meat product offerings and diversify their destinations, and those efforts are paying important dividends for producers.”
In May, beef variety meat exports reached 2017 highs in both volume (30,173 mt, up 12%) and value ($77.7 million, up 10%).
Export value per head of fed slaughter averaged $265.55 in May, matching the average from a year ago. Through May, per-head export value averaged $270.27, up 8% percent. Beef export prices are also increasing, especially in key Asian markets, with double-digit increases in Japan and Korea in May illustrating the strong demand for U.S. beef.
Although feeder cattle futures continue to trade narrowly at the bottom of a broader price range going back to April, Andrew P. Griffith, agricultural economist at the University of Tennessee, points out that the fall contracts are trading stronger than the seasonal trend, relative to the August contract.
“This means the futures market is expecting some strength in the market this fall for cattle ready to enter the feedlot,” Griffith says, in his weekly market comments. “Prices seem to be well supported at the bottom of the aforementioned trading range, which would suggest there is some upside potential for feeder cattle moving through the summer and into early fall. This may result in yearling cattle prices being strong relative to lighter-weight cattle at the start of the fall calf run. This occurrence may result in some feedlots looking to put more lightweight animals on feed, especially if feed costs continue to be low. Therefore, the strong feeder cattle market will support prices for freshly weaned lightweight cattle in the October and November time frame.”