The weekly Fed Cattle Exchange auction on Wednesday showed more life than recent weeks and helped bolster notions about higher country trade this week. All told, 636 head sold of the 1,450 head offered, for a weighted average price of $106.67/cwt., all for delivery at 1-9 days. The weighted average price there last week on 128 head sold was $104.75.
Strong buying support pushed Feeder Cattle futures sharply higher on Wednesday. That and reasonable hopes for higher cash fed cattle trade this week helped lift Live Cattle higher and beyond the recent narrow range.
Live Cattle futures closed an average of $1.73 higher ($1.00 to $2.97 higher).
Feeder Cattle futures closed an average of $3.07 higher ($2.37-$4.47 higher).
Choice boxed beef cutout value was 7¢ lower Wednesday afternoon at $192.04/cwt. Select was 31¢ lower at $188.52.
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Major U.S. financial indices closed narrowly mixed but mostly higher on Wednesday. Bank stocks received support on news that the Fed is leaving interest rates alone for the time being and that it will begin unwinding its multi-trillion dollar war chest built via long-term quantitative easing.
The Dow Jones Industrial Average closed 41 points higher. The S&P 500 closed 1 point higher. The NASDAQ closed 5 points lower.
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“Drought conditions in the Northern Plains and hurricanes Harvey and Irma have likely affected regional U.S. cattle production,” say analysts with USDA’s Economic Research Service (ERS), in the monthly Livestock, Dairy and Poultry Outlook. “While much of the effects from the drought in the Northern Plains has likely already played out, it is too early to estimate the impacts of the two hurricanes.”
In the meantime, those analysts remind that forecast beef production this year is 26.6 billion lbs. The most production in about a decade underscores the growing importance of the U.S. beef export market.
ERS analysts explain that year-over-year, July U.S. beef exports increased by 10% to 239 million lbs. with the lion’s share of the increase due to Japan.
“The Foreign Agricultural Service weekly Exports Sales Report shows year-over-year larger U.S. exports to Japan in August, despite the Aug. 1 implementation of the Japanese safeguard that raises the tariff on U.S. frozen beef,” ERS analysts say. “Increased tariffs were likely partially offset by lower U.S. domestic prices and the relative weakening of the U.S. dollar against the Japanese Yen.”