Negotiated cash fed cattle trade continued at lower money for the week with live sales in the Texas Panhandle on Thursday down $5-$7 at $93-$97/cwt.
Cattle futures closed mainly higher, with support likely including lower corn prices and positive export news.
Weekly net U.S. beef export sales as of June 18 were 24,400 metric tons (mt), which were 21% more than the previous week and 52% more than the prior four-week average, according to the weekly U.S. Export Sales report from USDA’s Foreign Agricultural Service. Increases were primarily for South Korea, Japan, Taiwan, Mexico, and Hong Kong.
Other than unchanged to an average of 15¢ lower in three contracts, Live Cattle futures closed an average of 32¢ higher.
Feeder Cattle futures closed an average of 49¢ higher.
Choice boxed beef cutout value was $1.43 lower Thursday afternoon at $208.26/cwt. Select was $1.76 lower at $199.93.
The average dressed steer weight for the week ending June 13 was 896 lbs., which was 4 lbs. heavier than the previous week and 47 lbs. heavier than the same week a year earlier, according to USDA’s Actual Slaughter Under Federal Inspection report. The average dressed heifer weight was 824 lbs., which was the same as a week earlier, but 37 lbs. heavier than the prior year.
Corn futures closed 4¢ to 7¢ lower through May ’21 and then mostly 3¢ lower.
Soybean futures closed mostly 1¢ to 3¢ lower through Sep ’21 and then 4¢ to 7¢ lower.
Major U.S. financial indices closed higher Thursday after a volatile session. Primary support seemed to be the rollback of some regulations for big banks, despite the somber outlook from the International Monetary Fund (IMF).
“Consumption growth, in particular, has been downgraded for most economies, reflecting the larger-than-anticipated disruption to domestic activity,” according to that organization’s most recent quarterly World Economic Outlook. “The projections of weaker private consumption reflect a combination of a large adverse aggregate demand shock from social distancing and lockdowns, as well as a rise in precautionary savings. Moreover, investment is expected to be subdued as firms defer capital expenditures amid high uncertainty. Policy support partially offsets the deterioration in private domestic demand.”
The IMF projects global economic growth this year to be -4.9%, which is 1.9% more negative than its April outlook.
Outlook for economic growth in advanced economies is -8.0%, also 1.9% more negative than April projections. IMF also projects growth for the U.S. this year at -8.0%. Next year, GDP in advanced economies is projected at +4.8%.
The Dow Jones Industrial Average closed 299 points higher. The S&P 500 closed 33 points higher. The NASDAQ closed 107 points higher.
“The calculated number of cattle on feed longer than 120 days is 5.1 million compared to 4.2 million a year ago,” says David Anderson, Extension Livestock Economist at Texas A&M University, referring to last week’s monthly Cattle on Feed report. “Most of that increase in over 120 days on feed are cattle that have been on feed even longer as evidenced by the number of cattle on feed over 150 days. But, cattle on feed between 90 and 120 days totaled about 1.65 million versus 1.79 million last year. So, there remains more adjustments to come to work through the impacts of corona virus in the cattle markets.”
However, in the most recent issue of In the Cattle Markets, Anderson explains the recent report hints at more normalcy returning to the industry.
For instance, he points out marketings in May were 27.5% less than the prior year, but there were two less business days.
“As May progressed, packing constraints loosened and daily slaughter moved closer to year-ago speeds. June 2020 has 22 slaughter days compared to only 20 in June 2019, so the next report’s marketings will likely show the dual impact of improving slaughter speeds and 10% more workdays in the month,” Anderson says.
Likewise, May feedlot placements (feedlots with 1,000 head or more capacity) were 1.3% less year over year, after being more than 20% less the previous two months.
“May is typically a larger month for placements due to cattle coming off wheat pasture and other small winter grains,” Anderson explains. “Feeder cattle sales did start to pick up as May went on, as cattle previously held back had to move. Some drought conditions likely moved some feeders, and some opportunities to favorably place occurred.”