Cattle futures surged higher Monday, recovering most of the losses from the previous session, even more for Live Cattle. Some attributed the reversal to the after-hours announcement on Friday that threatened U.S. tariffs on Mexican imports were suspended indefinitely.
Live Cattle futures closed an average of $2.15 higher ($1.57 to $3.00 higher).
Feeder Cattle futures closed an average of $2.31 higher.
Wholesale beef values were weak on Choice and higher on Select with moderate demand and light offerings, according to the Agricultural Marketing Service.
Choice boxed beef cutout value was 65¢ lower Monday afternoon at $221.66/cwt. Select was $1.87 higher at $208.79.
Corn futures closed mostly 2¢ higher, except for unchanged to fractionally lower in the front three contracts.
Soybean futures closed 2¢ to 4¢ higher, except for 7¢ higher in the back three contracts.
Major U.S. financial indices closed higher Monday with apparent support from the aforementioned agreement between the U.S. and Mexico regarding illegal immigration that staved off U.S. tariffs.
The Dow Jones Industrial Average closed 95 points higher. The S&P 500 closed 13 points higher. The NASDAQ was up 82 points.
“While good moisture conditions bodes well for forage growth in general, ongoing flooding and excessively wet conditions is limiting grazing and hay production in some regions,” says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly market comments. “Sloppy feedlot conditions continue to hamper feedlot production in some areas. Additionally, the record late planting of corn and soybeans this year is adding uncertainty about corn acreage and yield and is beginning to push corn prices higher. There is little doubt that the corn crop will be smaller than anticipated just a few weeks ago but carryover levels are still expected to be adequate. While significantly higher feed prices are not anticipated at this time, the uncertainty remains.”
Peel outlined the variety of quandaries adding pressure to cattle markets, including ongoing trade issues. So far this year, he says weaker year-to-year exports of beef, pork and poultry suggest the meat complex is struggling internationally.
“Weaker beef demand may be the biggest threat to cattle and beef markets for the remainder of the year,” Peel says. “Strong beef demand supported cattle and beef markets in 2017 and 2018, but there are signs that some weakness may be developing in beef demand in both domestic and international markets. While unemployment remains very low, other indications of weakness in the macro-economy are concerning and have led to reduced forecasts for U.S. economic growth in 2019; largely due to ongoing impacts of tariffs and trade disruptions. Relatively slow domestic income growth and higher prices for major consumer items, such as gasoline, combined with record large supplies of beef, pork and poultry may be limiting domestic beef demand going forward in 2019. Relatively wet and cold weather thus far has likely stifled summer beef demand somewhat and probably contributed to an early seasonal peak in boxed beef prices and recent weakness in wholesale beef values.”