Besides lower cash fed cattle prices and wholesale beef values, analysts credited rising grain prices for the pressure on Feeder Cattle futures Monday. Pressure spilled over into front-month Live Cattle, too. Keep in mind, trade was light in both pits with the shorter trading hours.
Live Cattle futures closed an average of 36¢ lower through the front four contracts (10¢ to 55¢ lower) and then and average of 26¢ higher (7¢ to 65¢ higher).
Feeder Cattle futures closed an average of $1.24 lower (85¢ to $1.82 lower).
Choice boxed beef cutout value was $1.84 lower Monday afternoon at $222.89/cwt. Select was 97¢ lower at $207.45.
Corn futures closed 7¢ higher through Mar 18 and then 2¢-6¢ higher (mostly 2¢ higher).
Cash prices for grain and soybeans were sharply higher again on Monday, supported by bearish weather and last Friday’s mostly-favorable USDA reports.
Wheat bids were 25¢ to 30¢ higher. Soybean bids were mostly 22¢ to 23¢ higher. Sorghum bids were 13¢ higher. Corn bids were 6¢ to 10¢ higher.
Major financial indices closed mostly higher at the end of Monday’s holiday-shortened trading session. Along with higher oil prices, apparently, some investors are swapping dollars from recently pressured tech stocks with financial ones.
The Dow Jones Industrial Average closed 129 points higher. The S&P 500 closed 5 points higher. The NASDAQ closed 30 points lower.
Among the news supporting markets on Monday was the latest Manufacturing ISM® Report On Business® indicating that economic activity in the manufacturing sector expanded in June, and the overall economy grew for the 97th consecutive month.
“Comments from the panel generally reflect expanding business conditions; with new orders, production, employment, backlog and exports all growing in June compared to May and with supplier deliveries and inventories struggling to keep up with the production pace,” says Timothy Fiore, Chair of the Institute for Supply Management® (ISM®) Manufacturing Business Survey Committee.
The June PMI® (Purchasing Managers Index) was 2.9% higher than in May at 57.8%. The New Orders Index was 4% higher at 63.5%.
The global beef complex has been characterized by a series of market disruptions through the second quarter, according to the most recent quarterly report from Rabobank.
“While U.S. beef exports continue to perform strongly (and have now reached record levels), reduced supply from Australia and New Zealand, along with potential shocks from Brazil and India, could see the balance in the beef market shift back to a supply-limited market,” says Angus Gidley-Baird, Rabobank Senior Analyst Animal Protein.
Specifically, Rabobank points to political scandals in Brazil, the new beef trade agreement between the U.S. and China, as well as India’s proposed ban on cattle slaughter. All involve major beef-exporting nations and have the potential to cause material shifts in global trade.
- “Brazilian beef exports dropped by around 10% year over year in the first five months of 2017, opening space in the global beef market,” say Rabobank analysts. They add that the recent drop in cattle prices there may lead to a future reduction in production.
- India is one of the largest global bovine exporters. Any ban on slaughter would have enormous global impact. At the time of writing their report, Rabobank analysts said no information was available as to how many states would conform to the federal government directive, and when.
- As for the U.S.-China pact, the first shipment of U.S. beef arrived in China mid-June.
In the meantime, the Rabobank Seven-Nation Beef Index remained relatively stable up to May.
The next issue of Cattle Current will come out Thursday morning, July, 6.