Cattle Current Daily—Sept. 2, 2021

Cattle Current Daily—Sept. 2, 2021

Negotiated cash fed cattle trade was slow on light demand in all major regions through Tuesday afternoon, according to the Agricultural Marketing Service. A few dressed sales in Nebraska traded at $203/cwt.

Last week, live prices were at $122-$123/cwt. in the Southern Plains at $123/cwt. Live and dressed sales were at $128 and $202-$208, respectively, in Nebraska and the western Corn Belt.

The Choice boxed beef cutout value was $3.66 lower Wednesday afternoon at $338.45/cwt. Select was $4.46 lower at $307.57.

Likely short covering helped Cattle futures regain some recently lost ground Wednesday. Further erosion in grain futures, tied to Hurricane Ida impacts, also helped Feeder Cattle futures.

Feeder Cattle futures closed an average of $1.11 higher (30¢ to $1.53), except for 7¢ lower in spot Sep.

Live Cattle futures closed an average of 43¢ higher, except for an average of 43¢ lower in the back two contracts.

Grain futures continued to fall Wednesday beneath the weight of export shipping disruptions wrought by Hurricane Ida.

Corn futures closed 10¢ to 18¢ lower through new-crop contracts and then mostly 2¢ to 4¢ lower.

Soybean futures closed 9¢ to 21¢ lower through new-crop contracts and then mostly 6¢ to 9¢ lower.

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Major U.S. financial indices closed mixed on Tuesday after an ADP Research Institute report showed companies added fewer jobs than anticipated in August. However, manufacturing grew at a faster pace than forecast even as global supply chains continue to be bottlenecked.

Private sector employment increased by 374,000 jobs from July to August, according to the August ADP National Employment Report.

“Our data, which represents all workers on a company’s payroll, has highlighted a downshift in the labor market recovery. We have seen a decline in new hires, following significant job growth from the first half of the year,” says Nela Richardson, ADP chief economist. “Despite the slowdown, job gains are approaching 4 million this year, yet still 7 million jobs short of pre-COVID-19 levels.”

The Dow Jones Industrial Average closed 48 points lower. The S&P 500 closed 1 point higher. The NASDAQ was up 50 points. 

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As mentioned previously in Cattle Current, USDA’s Agricultural Marketing Service (AMS) began publishing two new reports in August, based on Livestock Mandatory Reporting and aimed at bolstering market transparency.

The National Weekly Direct Slaughter Cattle-Formulated Base and Forward Contract Base Purchases report provides more detail about foundational prices used in cattle market formulas, grids and contracts. The base prices are published in the morning and afternoon each day, as is an overall summary. Those prices are then aggregated into a weekly report.

Matthew Diersen, a risk and business management specialist at South Dakota State University weighs in with some of his initial observations, in the latest issue of In the Cattle Markets.

“The weekly formulated base shows the formula base price across gender, general quality level, and delivery type. For example, there is now a head count and price range for the base price for formula priced steers, delivered dressed, grading 65-80% Choice,” Diersen explains. “The average net price is there too, thus any major skew in the data would be easier to infer than in the past. The main averages are also broken out by state or region. It is all informative and overwhelming. However, knowing the base you are dealing with as a buyer and as a seller should mean better signals about the value of quality.”

The other new report, the National Weekly Cattle Net Price Distribution report shows at what price and volume levels trade occurred across the weekly weighted average price for each purchase type.

Diersen points out average net prices were available previously and were most useful for monitoring forward net prices over time relative to the negotiated and formula prices. If many cattle were forward contracted during a period of higher expected prices, and prices subsequently fell, then the forward net would be much higher than the negotiated. The opposite could also happen.

The new report provides volumes in $2 increments from the average price levels.

“The more transparent base prices and more complete net prices seem to fill in more of the gap between the average value of average quality cattle and fair values for higher quality cattle being traded today,” Diersen says.

2021-09-01T21:00:43-06:00

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