Apparently, beef packers over-played their hand of bought-ahead cattle last week. Cash fed cattle tore sharply higher on Friday. Live trade was $5-$6 higher in the Southern Plains at mostly $112-$113/cwt. In Nebraska and the western Corn Belt, it was $3-$7 higher at $112-$114. Dressed trade was $5-$11 higher at $175-$180.
Higher cash prices helped Cattle futures surge higher for much of Friday’s session. Futures closed slightly lower, though, likely on profit taking and week-end positioning.
Except for unchanged in spot Aug, Live Cattle futures closed an average of 22¢ lower.
Other than 2¢ and 15¢ higher in the back two contracts, Feeder Cattle futures closed an average of 33¢ lower.
Boxed beef cutout values were steady to weak on light to moderate demand and moderate to heavy offerings, according to the Agricultural Marketing Service.
Choice boxed beef cutout value was 40¢ lower Friday afternoon at $208.03/cwt. Select was 1¢ higher at $198.71.
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Major U.S. financial indices closed higher Friday, buoyed by more jobs than expected in the monthly national employment report. Total non-farm employment increased by 213,000 in June, according to the U.S. Bureau of Labor Statistics.
The Dow Jones Industrial Average closed 99 points higher. The S&P 500 closed 23 points higher. The NASDAQ closed 101 points higher.
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“Young bred cow prices have been under more pressure than mid-aged cows this spring. Prices have declined by more than $200 from last spring and have averaged a discount of $40 compared to mid-aged bred cows,” say analysts with the Livestock Marketing Information Center (LMIC), in the most recent Livestock Monitor. “Over the last 15 years, discounts have occurred only about 20% of the time and $40-$45 is as big as the discounts tend to get. The year of the biggest premiums for young bred cows was 2015 (when feeder cattle prices peaked) at $165.”
Regionally, LMIC analysts explain the value of young bred cows in the Northern Plains has been at a premium to those in the Southern Plains for the last six years.
“Prices for young bred cows in Montana markets have held steady with a year ago this spring after declining $100 from 2016 to 2017,” LMIC analysts say. “A $400 premium for Montana young bred cows versus the Oklahoma City market this year rivals the euphoric Montana premium of 2015, even though actual prices are $1,000 lower than three years ago.”
For perspective, the LMIC folks say mid-aged bred cows (1,200-1,300 lbs.) at Oklahoma City averaged $1,082 per head during April and May. That $112 less than the same period last year.
“These prices tend to follow the trend set by feeder cattle prices, but with a bit of a time lag,” explain LMIC analysts. “This spring’s mid-age bred cow price was 6.11 times the price of steers (500-550 lbs.) at Oklahoma City. Last year, the ratio was 6.74, and in 2016 the ratio peaked out at 8.06 for the 2004-2018 interval.”