Cattle Current Daily-July 7

Cattle Current Daily-July 7

Cash fed cattle trade ranged from steady to $2 lower Thursday at $117-$118/cwt. on slow trade and light demand.

Choice boxed beef cutout value was $2.53 lower Thursday afternoon at $220.05/cwt. Select was $1.56 lower at $203.76.

Despite that, short covering seemed to be the primary driver in Cattle futures.

Except for 30¢ higher in the back two contracts, Live Cattle futures closed an average of $1.00 higher (72¢ to $1.40 higher).

Except for 10¢ and 12¢ higher in the back two contracts, Feeder Cattle futures closed an average of $1.62 higher ($1.12 to $2.40 higher).

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Major financial indices closed lower on Thursday, pressured by tech stocks and fewer jobs than the trade anticipated (see below).

The Dow Jones Industrial Average closed 158 points lower. The S&P 500 closed 22 points lower. The NASDAQ closed 61 points lower.

Private sector employment increased by 158,000 jobs from May to June according to the June ADP National Employment Report®.

“The job market continues to power forward,” says Mark Zandi, chief economist of Moody’s Analytics. “Abstracting from the monthly ups and downs, job growth remains a stalwart between 150,000 and 200,000. At this pace, which is double the rate of labor force growth, the tight labor market will continue getting tighter.”

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Premiums for feeder steers relative to their fed counterparts is back to normal, according to the Livestock Marketing Information Center (LMIC).

For the week ending June 17th, the premium between a feeder steer weighing 700-800 lbs. and a fed steer selling the same week was $28.72/cwt. (basis Southern Plains) or 24%, according to LMIC, in the latest Livestock Monitor.

“That premium has been increasing seasonally, which is normal into the early summer months,” explain LMIC analysts. “The premium is slightly above a year ago ($27.34 per cwt. or 23%), likely reflecting lower cost of gain in feedlots (e.g. corn prices are down year-over-year). Looking back to 2014 and 2015 that premium has dramatically declined.”

For perspective, the premium for the comparable week in 2014 was $55.09 per cwt. (37%). It surged to $82.42 (55%) in 2015.

“Those premiums in 2014 and 2015 were not sustainable,” LMIC Analysts say. “Last year and 2017’s have been rather normal.”

2017-07-06T20:09:09+00:00

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