Negotiated cash fed cattle trade was $1.50-$3.50 higher on a live basis Friday at $128-$130/cwt. in the western Corn Belt, $128-$129 in Nebraska and, according to the Texas Cattle Feeders Association, at $128 in the Texas Panhandle. In the beef, prices were $3 more than the previous week at $205 with a few up to $206 in the western Corn Belt.
Live Cattle futures mostly edged higher on fundamental strength Friday, while nearby Feeder Cattle dropped, perhaps with queasiness about increased numbers waiting to go on feed, plus the slower pace of fed cattle marketing.
Other than 30¢ and 7¢ lower at either end of the board, Live Cattle futures closed an average of 16¢ higher.
Feeder Cattle futures closed an average of 92¢ lower across the front half of the board (20¢ lower to $1.65 lower in spot Mar) and then an average of 38¢ higher (5¢ higher to $1.30 higher in the back contract).
Corn futures closed 1¢ to 2¢ higher.
Soybean futures closed mostly 1¢ to 2¢ higher.
Wholesale beef values were higher on good demand and light offerings, according to the Agricultural Marketing Service.
Choice boxed beef cutout value was $1.34 higher Friday afternoon at $221.29/cwt. Select was $1.52 higher at $216.79.
Major U.S. financial indices closed higher Friday, with growing optimism regarding a U.S.-China trade deal. That was tempered by economic news, such as that from the Institute for Supply Management (ISM)—Manufacturing Report on Business—pointing to slowing domestic economic growth.
“Comments from the panel reflect continued expanding business strength, supported by notable demand and output, although both were softer than the prior month,” said Timothy R. Fiore, CPSM, C.P.M., Chair of ISM’s Manufacturing Business Survey Committee. “Demand expansion continued, with the New Orders Index reaching the mid-50s, the Customers’ Inventories Index scoring lower and remaining too low, and the Backlog of Orders returning to a low-50s expansion level. Consumption (production and employment) continued to expand but fell a combined 8.9 points from the previous month’s levels. Inputs — expressed as supplier deliveries, inventories and imports — stabilized at a mid-50s level and had a slight negative impact on the PMI®. Inputs continue to reflect an easing business environment, confirmed by Prices Index contraction.”
The Dow Jones Industrial Average closed 110 points higher. The S&P 500 closed 19 points higher. The NASDAQ was up 62 points.
“The April live cattle contract is running more than a $9 premium to the June contract and more than a $13 premium to the August contract. At the same time, the finished cattle market is trading between a negative $1 to negative $2 basis compared to the April contract,” says Andrew P. Griffith, agricultural economist at the University of Tennessee, in his weekly market comments. “Considering this scenario, there is a large price gap to fill between now and the June contract. As likely or as unlikely as it may seem that finished cattle prices will decline $9 between April and June, the market could actually have more swing than what is being represented by futures. Steer slaughter the first couple of months of 2019 has been below previous year levels, which likely means there are more animals waiting in the balance the next few months.”
Fed cattle slaughter in December of 2.01 million head was 0.67% less (-13,500 head) than the previous December, according to the latest USDA Livestock Slaughter report. December beef production of 2.12 billion lbs. was 1.52% less (-32.6 million lbs.) than the same month in 2017.