Buyers stormed into Cattle futures early in yesterday’s session, though, pushing prices limit and near-limit higher in front-month Live contracts. There’s no definitive reason for the aggressive surge, but psychology surely got a lift from the weekly National Comprehensive Boxed Beef Cutout report indicating retailers intend to be aggressive in featuring and marketing beef. There were 7,589 loads reported for the week ending May 25—the most since the first week of September—with 6,072 loads for delivery up to 21 days. Perhaps there’s some compensatory gain to be had from latent and pent up grilling demand.
Live Cattle futures closed an average of $2.06 higher—an average of $2.97 higher in the front three contracts.
Feeder Cattle futures closed an average of $2.98 higher.
There were only 449 head offered in the weekly Fed Cattle Exchange auction—all from Kansas—but 225 head sold: two lots of heifers and one lot of steers for a weighted average price of $110/cwt. for delivery at 1-9 days. That price mirrored last week’s country trade in that region.
Boxed beef cutout values were firm to higher Wednesday on moderate to fairly good demand and moderate offerings, according to the Agricultural Marketing Service (AMS).
Choice boxed beef cutout value was $1.12 higher in the afternoon at $228.68/cwt. Select was 73¢ higher at $204.38.
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Major U.S. financial indices closed sharply higher Wednesday, basically erasing steep losses from the previous session and for similar but opposite reasons. In this case, the Euro recovered some lost ground as fears about Italy exiting the EU subsided for the day. Crude oil prices bounced back, on speculation the OPEC countries and Russia will not raise production.
The Dow Jones Industrial Average closed 306 points higher. The S&P 500 closed 34 points higher. The NASDAQ closed 65 points higher.
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“Feeder cattle prices are in the process of making a spring low. Prices have been pressured by forced early movement of cattle due to weather, escalating feed costs and weakness in deferred Live Cattle futures,” according to Rabobank’s Beef Quarterly for the second quarter. “Prices are expected to make a seasonal low, and the early forced placements of calves has reduced available supplies of cattle outside feedyards, which should be price supportive for summer and the second half of the year.”
Dry conditions continue as a primary market driver and wildcard.
Analysts with RaboResearch explain 34% of the U.S. cowherd resides in eight states currently amid Extreme or Exceptional drought; 70% of the cows are in 20 states under some level of measurable drought stress.
“The increased usage of hay for feeding—-following dry conditions and a moderate to severe winter—is driving hay prices higher, making forced feeding more expensive,” explain RaboResearch analysts. “…cow slaughter is already higher than previous years and the likelihood of some degree of forced liquidation during the coming grazing season is very high.”
Pasture conditions improved for the second consecutive week, according to the latest weekly Crop Progress report (week ending May 27).
49% of pasture and range is in Good (42%) or Excellent (7%) condition, compared to 63% last year. 17% is rated as Poor (12%) or Very Poor (5%) compared to 10% last year.