Climbing futures prices later last week and firming wholesale beef values helped hold the line on cash fed cattle trade, when it finally opened up late on Friday. Prices were mainly steady to $1 higher than the previous week at $105/cwt. on a live basis and $165 in the beef, up to $168. Many would say that’s a victory, considering that expectations earlier in the week were for lower money.
Although the degree of support softened, Cattle futures closed mostly higher on Monday with Feeder cattle in the lead once again.
Other than 12¢ lower in spot Oct and 7¢ lower in Feb, Live Cattle futures closed an average of 59¢ higher (2¢ to $1.15 higher).
Feeder Cattle futures closed an average of 84¢ higher (57¢ to $1.07 higher).
Choice boxed beef cutout value was 32¢ lower Monday afternoon at $191.56/cwt. Select was 41¢ higher at $190.38.
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Major U.S. financial indices closed sharply higher on Monday. One popular notion for the bounce was a relief rally based on Hurricane Irma, though severe, appearing less so than traders anticipated.
The Dow Jones Industrial Average closed 259 points higher. The S&P 500 closed 26 points higher. The NASDAQ closed 72 points higher.
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Despite increased cattle slaughter, lighter carcass weights, strong beef exports, reduced beef imports and steady domestic consumer beef demand continue to bolster cattle and beef prices at higher levels than many anticipated. That’s how Derrell Peel, Extension livestock marketing specialist at Oklahoma State University sums up the price outlook heading into the fourth quarter.
“Calf and feeder prices peaked in June, a later-than-usual seasonal peak for calves and earlier than typical for the heavy feeders,” Peel explains in his latest weekly market comments. “Calf prices will likely decline a bit more to a seasonal low in October but are expected to remain higher year over year through the fourth quarter. Strong stocker demand for fall and winter grazing may limit seasonal price pressure this fall. Heavyweight feeder cattle prices typically decline seasonally through the end of the year but are also expected to remain above year-ago levels. While prices may weaken seasonally, I don’t expect a repeat of last year’s October crash in cattle prices.”
Although fed cattle prices are currently about 5% less compared to the same time last year, Peel expects them to stabilize near current levels before increasing seasonally in the fourth quarter and remaining above year-earlier levels.
Similarly, Peel explains, “Boxed beef prices have dropped sharply from June highs but appear to have stabilized recently. Choice boxed beef prices are currently very close to year-ago levels, while Select boxed beef prices are slightly higher year over year. Boxed beef prices are expected to increase some in the fourth quarter and average higher year over year for the balance of the year.”