Neutral Cattle on Feed numbers and neutral to softer overall inventory numbers in the semiannual Cattle report helped Cattle futures rally to start the week. Lower grain prices also helped.
Live Cattle futures closed an average of 54¢ higher.
Feeder Cattle futures closed an average of $2.20 higher.
Grain futures fell, presumably on expectations of more favorable growing weather.
Corn futures closed 7¢ to 9¢ lower through Jul ’20 and then mostly fractionally lower to 1¢ lower.
Soybean futures closed mostly 10¢ to 13¢ lower.
Wholesale beef values were steady on light to moderate demand and offerings, according to the Agricultural Marketing Service.
Choice boxed beef cutout value was 10¢ lower Monday afternoon at $213.32/cwt. Select was 8¢ higher at $189.59.
Major U.S. financial indices edged higher Monday, with quarterly earnings reports from the likes of Amazon and Facebook surpassing expectations.
The Dow Jones Industrial Average closed 17 points higher. The S&P 500 closed 8 points higher. The NASDAQ was up 57 points.
“If both domestic and international demand for U.S. beef continues at current levels, there will be little or no pressure on cattle markets,” says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly market comments. “If something should happen to weaken beef demand in the U.S. or in global markets, lower beef and cattle prices could result in some liquidation of cattle inventories.”
In the meantime, Peel says the cattle inventory revealed in Friday’s semiannual USDA Cattle report suggest the nation’s beef cowherd is at a plateau. As mentioned in Monday’s Cattle Current, the 34.0 million head of beef cows and the 103 million total cattle and calves July 1 were the same as a year earlier.
“I contrast a plateau with a more typical cyclical peak inventory that historically has implied a liquidation phase to follow,” Peel explains. “The current inventory levels do not suggest a need for, or an inevitable, liquidation in cattle inventories at this time. Stable cow numbers and calf crop suggest that beef production will show little or no growth going into 2020. Current beef production levels and cattle prices are sustainable until something changes to provoke a new direction in cattle inventories.”
In fact, Peel says the U.S. cattle and beef industry may be the most stable he can ever remember.
“This is pretty remarkable, given the continued turbulence in external market conditions,” Peel says. “Numerous factors that could destabilize cattle markets should be monitored, including: corn prices and feed market conditions; the impacts of African Swine Fever on global protein markets; U.S. macroeconomic conditions; and exchange rates among others. Additionally, progress or lack thereof on current trade politics or new trade issues that could arise will have a large impact, positive or negative, on the overall climate for beef and cattle markets.”