Cash fed cattle trade remained undeveloped through Thursday afternoon, although chatter continued about still-snug front-end supplies, stout boxed beef sales and declining carcass weights.
Other than 12¢ higher in the back contract, Live Cattle futures closed an average of 86¢ higher (50¢ to $1.85 higher in spot Jun).
Feeder Cattle futures closed an average of $1.11 higher, not counting 37¢ higher in the back contract.
Choice boxed beef cutout value was 11¢ higher Thursday afternoon at $231.07/cwt. Select was 19¢ higher at $209.14. Select and Choice rib, round, and loin cuts traded steady to firm, while chuck cuts sold steady to weak, according to the Agricultural Marketing Service.
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Major U.S. financial indices closed sharply higher on Wednesday, for the second consecutive day. Support included a less than expected increase in the monthly Consumer Price Index (CPI), which softened treasury yields a touch.
The CPI for all urban consumers increased 0.2% in April on a seasonally adjusted basis after falling 0.1% in March, according to the U.S. Bureau of Labor Statistics.
The all items index is up 2.5% over the last 12 months before seasonal adjustment.
The Dow Jones Industrial Average closed 196 points higher. The S&P 500 closed 25 points higher. The NASDAQ closed 65 point higher.
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Projected total red meat and poultry production this year was forecast lower than last month in the World Agricultural Supply and Demand Estimates (WASDE) released yesterday. Beef production for the year is estimated at 27.23 billion lbs., compared to 27.70 billion last month.
“Cattle slaughter in the second quarter has been slower than anticipated, and the pace of marketings in the second half of the year is slowed,” say analysts with USDA’s Economic Research Service (ERS). “However, carcass weights are increased for the second half of the year, partly offsetting the reduction in the slaughter forecast.”
Projected fed cattle prices for this year were little changed from last month. The second-quarter fed steer price (5-area direct, all grades) is projected at $116-$120/cwt. Prices are projected at $106-$112 in the third quarter and at $108-$116 in the fourth.
The May WASDE provides the first outlook for 2019. U.S. beef production next year is forecast above this year at 27.78 billion lbs.
“Beef production is forecast above 2018 on higher slaughter and heavier carcass weights,” ERS analysts say. “Pork production in 2019 is forecast to increase as expected growth in farrowings and pigs per litter will support larger pig crops…For 2019, fed cattle and hog prices are forecast above 2018 as relatively strong demand absorbs expected increases in supplies.”
ERS projects the annual fed steer price this year at $114-$119. The first projection for next year is $113-$122.