Cattle futures surged higher on Wednesday—limit up in several contracts—buoyed by cash fed cattle prices in the weekly Fed Cattle Exchange auction, followed by a step higher in country trade. Feeder Cattle received additional support from declining Corn futures prices, which were pressured by the monthly World Agricultural Supply and Demand Estimates (see below).
Unlike the last few sales, the majority of cattle—1,907 head of 2,665 head offered—traded hands in the Fed Cattle Exchange sale. Prices were unevenly steady with the bulk of last week’s country trade: $117.80 for delivery at 1-9 days; $118.45 for delivery at 1-17 days; $117.34 for delivery at 17-30 days.
Then, country trade opened up $2-$3 higher on Wednesday at mostly $120/cwt. on a live basis.
Live Cattle futures closed and average of $2.50 higher ($1.00 to limit up $3.00 in the front three contracts).
Feeder Cattle futures closed an average of $4.17 higher (from $2.22 higher to limit up $4.50 across most of the board).
Choice boxed beef cutout value was $2.55 lower Wednesday afternoon at $212.69/cwt. Select was $1.78 lower at $198.73. That’s the first time Select was below $200 since mid April.
Major financial indices closed sharply higher on Wednesday, with many analysts attributing a solid share of the bounce to testimony from Federal Reserve Chair, Janet Yellen, which struck a more dovish tone toward hiking interest rates.
The Dow Jones Industrial Average closed 123 points higher. The S&P 500 closed 17 points higher. The NASDAQ closed 67 points higher.
Monthly World Agricultural Supply and Demand Estimates (WASDE) released yesterday increased red meat and poultry production for 2017 with higher forecast beef and broiler production more than offsetting declines in pork and turkey production. The beef production forecast increased on both higher cattle slaughter and heavier carcass weights.
For 2018, however, red meat and poultry production forecasts declined with projected beef production lower on expected steer and heifer slaughter in the first part of the year.
Cattle price forecasts for 2017 were lowered slightly from last month on weakened prices and ample fed cattle supplies.
The average fed steer price (5-area Direct) was $132.76/cwt. in the second quarter. The range is projected at $117-$121 in the third quarter and at $113-$121 in the fourth quarter, for an annual price range of $121-$125, which is $1 less than the June projection.
The annual projected price for next year is $113-$123.