Steep declines in nearby Lean Hog futures, pressure in the corn market and continued skittishness over near-term supply and demand helped pressure Live Cattle futures on Tuesday, leading Feeder Cattle lower, too.
Other than 17¢ and 25¢ higher at the back of the board, Live Cattle futures closed an average of 81¢ lower (35¢ to $1.32 lower).
Feeder Cattle futures closed an average of 42¢ lower.
Choice boxed beef cutout value was 77¢ lower Tuesday afternoon at $190.79/cwt. Select was 48¢ higher at $190.86. You read those prices correctly, the Choice-Select spread turned negative. If my records are right, that’s the first time since January in 2014.
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Major U.S. financial indices closed sharply higher on Tuesday. Easing concerns about North Korea—if only for a day—less damage from Hurricane Irma than expected and bullish treasury yields (10 years) all provided support.
The Dow Jones Industrial Average closed 61 points higher. The S&P 500 closed 8 points higher. The NASDAQ closed 22 points higher.
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The Livestock Marketing Information Center (LMIC) forecasts calf prices (500-600 lbs. steer) prices in the Southern Plains for the fourth quarter will average above last year’s depressed price level.
However, in the latest Livestock Monitor, LMIC analysts emphasize that does not suggest continued year-over-year price increases in 2018 and 2019.
“The fundamentals of the cattle and beef supply for the next two years will be the size of the U.S. calf crops,” LMIC analysts explain. “As reported by USDA-NASS, the size U.S. calf crops have increased each of the last three years and in 2017 looks to be the largest since 2008. Based on the cowherd, both the 2018 and 2019 calf crops are expected to be even bigger. All else equal, that is a challenging environment to keep raising prices.”
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Odds continue for lower feed prices, according to the monthly World Agricultural Supply and Demand Estimates (WSADE) released yesterday.
All told, WASDE says the outlook for the 2017-18 U.S. corn crop is for increased production, greater feed and residual use, higher ending stocks, and lower prices.
The projected range for the season-average corn price received by producers was lowered 10¢ on both ends to a range of $2.80 to $3.60/bu.
Soybean production is forecast at a record 4.43 billion bu.
The 2017-18 U.S. season-average soybean price is forecast at $8.35 to $10.05/bu. Soybean meal prices are projected at $290 to $330 per short ton. Soybean oil prices are projected higher at 32.5¢ to 36.5¢ per pound.
The season-average wheat price at the farm price is forecast to be $4.30 to $4.90/bu.
WASE forecasts less total meat production for this year than a month earlier, with estimated decreases in beef and broiler production more than offsetting increased pork and turkey production.
Second-half beef production was reduced on the slower expected marketing pace for fed cattle. For 2018, the beef production forecast is lowered from the previous month on the slower rate of placements during the second-half of 2017, which are expected to result in reduced steer and heifer slaughter in the first half of next year.
The fourth-quarter fed steer price is projected at $107-$113/cwt., compared to $110-$113 estimated for the third quarter. The annual price was reduced $2 on both ends of the range from the previous month’s forecast to $118-$120. The projected first-quarter price for next year is $110-$120.