Negotiated cash fed cattle trade was undeveloped through Tuesday afternoon. There were a few early dressed sales in Nebraska and the western Corn Belt at $180/cwt., but too few to trend.
A reversal higher in Lean Hog futures and apparent short covering helped Live Cattle futures gain some, while Feeder Cattle continued marginally lower amid light trade.
Except for 2¢ lower in the back contract, Live Cattle futures closed an average of 52¢ higher (10¢ to 82¢ higher).
Except for 25¢ higher in the back contract, Feeder Cattle futures closed an average of 26¢ lower (7¢ to 47¢ lower).
Corn futures closed mixed from 1¢ higher to 3¢ lower.
Soybean futures closed 3¢ to 8¢ lower.
Wholesale beef values were steady on Choice and lower on Select with weak to moderate demand and moderate to good offerings, according to the Agricultural Marketing Service.
Choice boxed beef cutout value was 10¢ lower Tuesday afternoon at $219.64/cwt. Select was 86¢ lower at $198.95.
Major U.S. financial indices closed lower Tuesday. Pressure included reports that the Fed may take its time cutting rates, whereas plenty of recent market steam was tied to the notion the central bank would start shaving rates as soon as next month.
More fundamentally, consumer confidence declined to it lowest level this month in almost two years.
“After two consecutive months of improvement, Consumer Confidence declined in June to its lowest level since September 2017 (Index, 120.6),” says Lynn Franco, Senior Director of Economic Indicators at The Conference Board.
The Conference Board Consumer Confidence Index® declined to 121.5 in June from 131.3 in May. The Present Situation Index—based on consumers’ assessment of current business and labor market conditions—decreased from 170.7 to 162.6. The Expectations Index—based on consumers’ short-term outlook for income, business and labor market conditions—decreased from 105.0 last month to 94.1 this month.
“The decrease in the Present Situation Index was driven by a less favorable assessment of business and labor market conditions. Consumers’ expectations regarding the short-term outlook also retreated,” Franco explains. “The escalation in trade and tariff tensions earlier this month appears to have shaken consumers’ confidence. Although the Index remains at a high level, continued uncertainty could result in further volatility in the Index and, at some point, could even begin to diminish consumers’ confidence in the expansion.”
The Dow Jones Industrial Average closed 179 points lower. The S&P 500 closed 27 points lower. The NASDAQ was down 120 points.
Drought in Canada may continue pushing more feeder cattle into the U.S., according to the Livestock Marketing Information Center (LMIC).
Although much of the U.S. continues to deal with too much moisture, the LMIC folks explain, in the latest Livestock Monitor, producers in Alberta are contending with several seasons of dry conditions, although the province received some rain earlier this month. Similarly, there had been no rain in Saskatchewan since April, until some recent moisture.
“The implications for the U.S. is that at this point it remains likely there will be cattle that move off summer grazing earlier than normal and early weaning of spring-born calves,” LMIC analysts explain. “Canadian feedlots have been showing a higher year-over-year count since May of 2018. Potentially lower feed costs in the U.S. and the exchange rate could factor into more feeder cattle coming south this year.”
Moreover, cattle on feed in Canada is approaching 1 million head, an inventory level seldom eclipsed, according to LMIC.
“There could also be a capacity factor that limits how many of those early removals could end up in Canadian feedlots. Even with timely rainfall, pasture and range conditions remain delicate and support watching,” say LMIC analysts.