Cattle futures closed mostly lower Tuesday, unable to muster much interest.
Feeder Cattle futures closed an average of 65¢ lower, except for unchanged to an average of 87¢ higher in the front three contracts.
Live Cattle futures closed an average of 53¢ lower, except for 20¢ higher spot Oct.
Negotiated cash fed cattle trade ranged from mostly inactive on light demand to a standstill through Tuesday afternoon, with too few transactions to trend, according to the Agricultural Marketing Service.
Last week, FOB live prices were $182/cwt. in the Southern Plains and $183-$184 in the north. Dressed delivered prices were $288-$290.
Choice boxed beef cutout value was $2.36 lower Tuesday afternoon at $301.06/cwt. Select was $1.35 lower at $276.15/cwt.
Grain futures softened a touch Tuesday with likely positioning ahead of this week’s World Agricultural Supply and Demand Estimates.
Corn futures closed mostly 1¢ to 2¢ lower.
KC HRW Wheat closed 13¢ to 14¢ lower.
Soybean futures closed 2¢ to 7¢ higher through Aug ‘24 and then fractionally lower to 1¢ lower.
Major U.S. financial indices extended gains Tuesday, helped along by lower Treasury yields.
The Dow Jones Industrial Average closed 134 points higher. The S&P 500 closed 22 points higher. The NASDAQ was up 78 points.
West Texas Intermediate Crude Oil futures (CME) closed 7¢ to 41¢ lower through the front six contracts.
Although October tends to pressure cattle markets, Stephen Koontz, agricultural economist at Colorado State University says there are also signs of fundamental and technical challenges.
“Placements of cattle in feedlots were the strongest for the year in May and June, and these are the animals to be marketed soon,” Koontz explains, in the latest issue of In the Cattle Markets from the Livestock Marketing Information Center. “The inventory of cattle on feed over 120 days and over 150 days is high, as revealed by the most recent report. Exports are showing a response to the record high prices in terms of drifting lower. Fed steer and fed heifer weights continue the seasonal increase and are likely for the next month and a half.”
Further, Koontz points to negative sustained packer margins in August and at the end of September.
“There are a variety of factors that press for the slowing of cattle processing, sales, exports, and in the end, prices,” Koontz says. “The next several weeks will determine the strength of cattle buying. What is needed to satisfy forward contracts and what volume can be moved through cash market retail and food service channels? We will learn that. The strength of demand in the remainder of the fourth quarter will be a good signal for the following year’s potential. From a long-term perspective, what happens in the replacement market during the fall will be informative too.”
With all of that said, analysts with the Agricultural Marketing Service (AMS) note auction prices for calves remained impressive last week, as long as it was a premium offering.
“Plainer type calves or those coming right off the cow un-weaned and un-worked are seeing sharp discounts and are being met with light to moderate demand with health risk being the major defining component,” AMS analysts say.