Negotiated cash fed cattle trade continued on Thursday. For the week, live sales are $2-$4 higher than last week at $103.00-$103.50/cwt. in the Southern Plains, $103 in Nebraska and $104-$105 in the western Corn Belt. Dressed trade is $1-$3 higher at $162-$163.
Even so, Cattle futures closed mostly lower Thursday, with pressure from the grain side of the ledger, as well as demand wonderments.
Except for 5¢ higher to 82¢ higher in three contracts, Live Cattle futures closed an average of 38¢ lower.
Feeder Cattle futures closed an average of 77¢ lower (32¢ to $1.32 lower).
Choice boxed beef cutout value was 33¢ lower Thursday afternoon at $215.05/cwt. Select was $1.12 lower at $203.39.
Actual fed cattle slaughter for the week ending Sept. 5 of 508,955 head was 18,484 head fewer than the prior week, but 58,883 head more than the previous year, according to USDA’s Actual Slaughter Under Federal Inspection report.
Total cattle slaughter for the week of 635,387 head was 18,353 head fewer than the prior week, but 64,324 head more than the previous year.
The average dressed steer weight of 918 lbs. was 2 lbs. heavier than the previous week, but 25 lbs. more than the same week a year earlier. The average dressed heifer weight of 832 lbs. was 2 lbs. lighter than the previous week, but 17 lbs. more than a year earlier.
Net U.S. beef export sales for 2020 of 14,300 metric tons (mt) were 8% less than the previous week and 2% less than the prior four-week average, according to the Weekly Export Sales report from USDA’s Foreign Agricultural Service, for the week ending Sept. 10. Increases were primarily for South Korea, Japan, China, Mexico and Canada.
Net U.S. pork sales for 2020 of 50,600 mt were 68% more than the previous week and 41% more than the prior four-week average. Increases were primarily for China, Mexico, Japan, Canada and Australia.
Corn futures closed 2¢ to 3¢ higher through Jly ’21 and then mostly fractionally higher.
Soybean futures closed 9¢ to 17¢ higher through Mar ’21 and then mostly 1¢ to 4¢ higher.
Major U.S. financial indices closed lower on Thursday, pressured by big tech stocks, as well as uncertainty over the next round of federal pandemic economic stimulus.
The Dow Jones Industrial Average closed 130 points lower. The S&P 500 closed 28 points lower. The NASDAQ closed 140 points lower.
“The reduction in slaughter capacity in the second quarter continues to show up in the year-over-year higher number of cattle on feed over 150 days (although diminishing since June) and in the carcass weights of steers and heifers,” say analysts with USDA’s Economic Research Service (ERS), in the latest monthly Livestock, Dairy and Poultry Outlook. “The improved pace of slaughter, combined with an ample supply of fed cattle at heavier weights, led to higher expected beef production in third-quarter 2020 relative to 2019, which is likely putting pressure on cattle prices.”
ERS projects the average five-area direct Choice fed steer price at $101/cwt. for the third quarter, $104 for the fourth quarter and at $107.30 for the annual average, the same as the previous month.
Heading into 2021, however, ERS forecast average Choice steer prices $2 higher than the previous month’s estimate at $107 in the first and second quarters of next year with an annual average price of $112.
That’s based on expectations that a larger proportion of available feeder cattle supplies available July 1 were placed on feed, which will limit supplies available for placement in the first half of next year.
“This pulls feedlot marketings, and consequently steer and heifer slaughter, forward from the latter quarters of 2021,” say ERS analysts. “With fewer steers and heifers in the slaughter mix and higher forecast feed costs affecting the length of time on feed, carcass weight gains next year will be limited. Because of this, anticipated average carcass weights were reduced in 2021. Based on these factors combined, the forecast for 2021 beef production was reduced by 265 million lbs. from last month to 27.4 billion lbs.”
ERS left projected feeder cattle prices unchanged from the previous month as higher feed costs and the slower expected pace of marketing outweigh declining supplies.
The average feeder steer price (basis Oklahoma City) is projected at $140/cwt. in the third and fourth quarters for an annual average of $135.70. The projected feeder steer price is $131 for the first quarter of next year, $134 for the second quarter and at $137 for the 2021 average.
“The result of greater placements in second-half 2020 without increased marketings in the second half will likely keep cattle in feedlots above year-ago levels through the remainder of 2020,” say ERS analysts. “Because of this, anticipated feeder cattle supplies will diminish in 2021. However, the increase in fed cattle prices will likely offset higher corn prices forecast for next year.”