Negotiated cash fed cattle trade last week ended up mostly steady to higher on a live basis at $109/cwt. in the Southern Plains, $111.00-$111.50 in Nebraska and at $111-$112 in the western Corn Belt. Dressed trade in the North was steady to $3 lower at $178-$180.
Cattle futures closed mostly higher Monday, supported by the bounce in Feeder Cattle, tied to lower Corn futures, as well as higher Lean Hog futures and improved overall market optimism regarding trade negotiations between the U.S. and China.
Except for 17¢ higher in spot Aug, Feeder Cattle futures closed an average of $1.48 higher.
Except for 25¢ lower in spot Aug, Live Cattle futures closed an average of 58¢ higher, (10¢ higher to 95¢ higher at the back).
Wholesale beef values were steady on moderate demand and heavy offerings, according to the Agricultural Marketing Service.
Choice boxed beef cutout value was 6¢ higher Monday afternoon at $219.72/cwt. Select was 8¢ higher at $195.64.
Friday’s bearish Acreage report weighed on grains.
Corn futures closed 6¢ to 9¢ lower through Jul ’20 and then fractionally higher to 3¢ lower. That made for a decline of 19¢-30¢ for the front six contracts in the last two sessions.
Soybean futures closed mostly 10¢ to 14¢ lower though Nov. ’20 and then 8¢ to 9¢ lower.
Major U.S. financial indices closed higher on Monday, buoyed by news that the U.S. and China agreed to shelve additional tariffs and counter-tariffs for the time being, paving the way to resumed trade talks.
The Dow Jones Industrial Average closed 117 points higher. The S&P 500 closed 22 points higher. The NASDAQ was up 84 points.
“As long as beef demand does not weaken appreciably in the reminder of the year, fed cattle prices are expected to average about equal to 2018 levels for an annual average,” says Derrell Peel, Extension livestock marketing specialist Extension livestock marketing specialist at Oklahoma State University, in is weekly market comments. “Fed prices are expected to be slightly lower year over year in the third quarter before strengthening in the fourth quarter. Feeder prices are generally expected to average 3-5% below 2018 levels for the remainder of the year and for an annual average.”
Part of that has to do with carcass weights continuing to be lighter year over year. If they remain at or below previous-year levels, Peel says beef production for 2019 would be just a little more than 1% higher than last year.
Peel points out steer carcass weights ebbed to 842 lbs. the last two weeks of May, which was 4 lbs. light than last year’s low. Heifer carcass weights likely reached the low at 779 lbs. in late May, he says, which was 3 lbs. lighter than the low in 2018. He adds that steer and heifer carcass weights typically increase from the recent low to a seasonal peak in the fourth quarter of the year.
“With feed costs destined to be somewhat higher in the second half of the year, feedlots will have some incentive to trim back days on feed suggesting lighter finished and, thus, carcass weights,” Peel says. “However, feedlots do this largely by placing heavier feeder cattle, which need fewer days to finish. Heavier placement weights imply heavier finish weights. Feedlot data shows that every one pound increase in placement weight results in about one-half pound increase in finished weight. Thus, the impact of higher feed prices on carcass weights is unclear but is unlikely to have a major impact.”