There were only 428 head offered—all from Kansas—in the weekly Fed Cattle Exchange Auction on Wednesday, but 142 sold for a weighted average price of $112/cwt. That’s $1 higher than country prices in the region last week.
That and surging Cattle futures buoy hopes for stronger negotiated trade yet this week.
Recent stability and firming wholesale beef values helped fuel Cattle futures sharply higher Wednesday. There was also chatter about snugger supplies heading through the fall, based on demand strength.
Live Cattle futures closed an average of $1.62 higher ($1.22 higher at the back of the board to $2.52 higher in spot Aug). The spot contract closed $5 higher week to week.
Feeder Cattle futures closed an average of $2.31 higher ($1.55 higher in the back contract to $3.17 higher in spot Aug).
Wholesale beef values were steady to firm on moderate demand and offerings, according to the Agricultural Marketing Service.
Choice boxed beef cutout value was 41¢ higher Wednesday afternoon at $204.80/cwt. Select was 23¢ higher at $197.09.
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Major U.S. financial indices closed mostly higher Wednesday, supported by positive quarterly earnings in bell-weather banks and industrials.
The Dow Jones Industrial average closed 79 points higher. The S&P 500 closed 6 points higher. The NASDAQ was fractionally lower.
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“Despite firm feeder cattle prices in June and early July, the projected feedlot margin for feeding out a 750-lb. calf that is purchased today appears to have improved, and with lower corn price forecasts for the current and following marketing years, demand for calves for finishing may increase, supporting higher feeder calf prices,” say analysts with USDA’s Economic Research Service, in the latest monthly Livestock, Dairy and Poultry Outlook.
This year’s average feeder cattle price for steers weighing 750-850 lbs. (basis Oklahoma City) is estimated at $141-$144/cwt., compared to last year’s average of $145.08, according to ERS. The July LDPO pegs feeder prices in the third quarter at $140-$144. That’s $6 more on the lower end of the range than the previous month’s estimate and $4 more on the upper end. The fourth-quarter estimate is $136-$144, compared to the previous month’s projections of $134-$142. First-quarter feeder steer prices next year are projected at $133-$143.
Cattle placed in feedlots earlier than normal through the spring also lends price support.
“Throughout the winter and extending into the summer months, drought conditions have plagued the Great Plains area, squeezing hay and roughage supplies,” say ERS analysts. “During the winter, many calves directed to feedlots might have otherwise stayed on pastures until the spring. This limited the expectation for strong cattle placements in feedlots this spring. However, as the drought expanded into the intermountain region, available summer pastures may have become restricted as well. As a result, some stocker operations may have placed cattle in the second quarter instead of waiting until third quarter. This is likely observed in the year-over-year increase in both volume and percentage of total placements of calves weighing under 600 lbs. in May 2018.”