Choice boxed beef cutout value was 11¢ higher Thursday afternoon at $210.24/cwt. Select was $2.78 lower at $187.83.
Cattle futures drifted lower on Thursday with light trade and perhaps some defensiveness ahead of Friday’s Cattle on Feed report.
Except for 10¢ higher in the back contract, Live Cattle futures closed an average 47¢ lower (22¢ to 90¢ lower).
Feeder Cattle futures closed an average of 21¢ lower. Spot Nov went off the board at $157.77.
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Major U.S. financial indices closed sharply higher on Thursday, rebounding from the previous session’s losses. Support included the House passage of its tax reform proposal, as well as the likes of Walmart and Cisco beating estimates for quarterly earnings and revenue.
The Dow Jones Industrial Average closed 187 points higher. The S&P 500 closed 21 points higher. The NASDAQ closed 87 points higher.
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“For most of 2017, market demand has pulled cattle through U.S. feedlots at a rapid pace, which has likely kept dressed weights lower than last year and limited the number of cattle in feedlots over 150 days,” say analysts with USDA’s Economic Research Service (ERS), in the latest monthly Livestock, Dairy and Poultry Outlook. “At present, packers may be forced to bid up prices because feedlots do not have an incentive to sell below their breakeven prices, in light of low feed costs and high futures prices for December and February. With strong demand for beef and continued firm packer margins, fed cattle prices for the fourth quarter are expected to average above last year. However, in the first half of 2018, fed prices are expected to be below those of 2017, reflecting increasing supplies of slaughter-ready cattle.”
Projected fourth-quarter fed steer prices were raised from last month to $117-$121/cwt. Forecast first-quarter prices for 2018 were raised to $116-$124.
On the other side of the trade, ERS raised the fourth-quarter projected price for medium frame No.1 feeder steers weighing 750-800 lbs. to $155-$159/cwt. Forecast prices for the first quarter of next year were raised to $144-$152; $143-153 in the second quarter.
Beef production will increase about 4.6% next year to 27.6 billion lbs., according to ERS as cattle numbers increase.
“An increase in overwinter forage availability and a larger calf crop likely support the strong placements in 2018,” ERS analysts say. “The increase in the proportion of heifers on feed on Oct. 1, 2017, may reflect that a modest retention of heifers for breeding supports more heifers to be placed on feed in the coming months. Based on strong margins at the retail and packer level, demand is expected to encourage feedlots to market cattle at a timely pace in 2018.”