Despite the lack of sustained follow-through support from the most recent Cattle on Feed report, volatile outside markets and an apparent top in wholesale beef values, cash cattle and futures mainly gained last week.
Live Cattle futures closed an average of $1.02 higher (7¢ to $1.45 higher) week to week on Friday, except for $2.27 lower in almost-spent spot Aug.
On the cash side of the fence, negotiated fed cattle prices last week, were $1-$2 higher on a live basis in the Southern Plains at $123/cwt. However, the anemic pace of trade meant there was no established trend in the North. Live prices the previous week were at $125-$127 in Nebraska and at $127 in the westerner Corn Belt. Dressed trade the previous week was at $200 in Nebraska and at $200-$205 in the western Corn Belt.
Sluggish trade pressured Live Cattle futures on Friday. Part of that stemmed from reports of mechanical problems at various plants last week.
Through Thursday, USDA’s Agricultural Marketing Service (AMS) reported 33,363 head traded direct in the five-area regions, compared to 60,342 at the same time the previous week and 65,386 head a year earlier.
Live Cattle futures closed an average of 52¢ lower through the front four contracts (5¢ lower to $1.27 lower in spot Aug) and then an average of 28¢ higher.
Overall, though, recently expanding open interest provided support, as does the reality of improving supply-side fundamentals.
As Derrell Peel, Extension livestock marketing specialist at Oklahoma State University pointed out in his weekly market comments,
“August represents the sixth consecutive monthly decline in feedlot inventories from the February peak, a decrease of 1.032 million head or 8.5% over the six months. In the previous five years, he says the average feedlot inventory decline from the spring high to summer low has been 6.2%.”
Moreover, Peel notes lighter year-over-year carcass weights also provide more indication that feedlots are getting more current. He adds lower carcass weights also reflect the impact and incentives stemming from sharply higher feedlot cost of gain, which should help hold carcass weights in check.