By and large, Cattle futures and cash markets faded the extreme volatility that whipsawed equity markets last week.
Feeder steer prices were uneven, according to the Agricultural Marketing Service (AMS): $2/cwt. lower in the South Central region; $3.50 higher in the North Central. Feeder heifers in both regions traded mostly steady to $1 lower. In the Southeast, feeder steers and heifers sold $1-$2 lower amid lighter offerings.
“Extremely hot weather gripped most of the southern trading areas…Temperatures topped 100 degrees (Fahrenheit) in the Southern Plains, with heat indices of +110 degrees all week,” say AMS analysts. “Pasture conditions are deteriorating, causing concern for the remainder of grazing season. Producers are weighing their options between decreased forage and the thought of hauling cattle to the auction barn in these extreme conditions.”
Feeder Cattle futures closed narrowly mixed week to week on Friday, from an average of 42¢ lower to an average of 27¢ higher.
“Most cattle producers in the business of marketing cattle recently have not been satisfied with current price levels. Many of them have found it difficult to make money at the cow-calf level. As well, stocker margins are extremely thin, if not negative in many instances,” says Andrew P. Griffith, agricultural economist at the University of Tennessee, in his weekly market comments.“The angst on this matter stems from summer Feeder Cattle futures market contracts trading as high as $160 in the March and April time period, now trading closer to $140. There was significant optimism in the spring for the summer marketing timeframe. It appeared that producers with fall-calving cows would benefit from backgrounding cattle through the summer, which was the same thought process of many stocker producers when purchasing calves in the spring. However, the market plummeted nearly $30/cwt. before recapturing $10. Maybe the one bright side is that the summer feeder cattle contracts have been trading in a tight range for about a month, which has provided another opportunity to reevaluate marketing alternatives.”
Griffith suggests the narrow trading channel for the past several weeks could stem partly from producers awaiting Monday’s USDA reports to get a tighter handle on potential corn and soybean production.
Corn futures closed an average of 8¢ higher through the front six contracts week to week on Friday, reversing the downward trend of recent weeks.
Cash Fed Cattle Prices Appeared Lower
“Negotiated cash trade followed a similar trend compared to recent weeks with early dressed purchases in the North ranging from $183 to $185/cwt. Dressed purchases late in the week traded mostly at $180,” say AMS analysts. “In the Western Corn Belt, early live purchases traded at $114-$115. Early live purchases in Nebraska were at $113.” They add that trade was slow to develop in the Southern Plains with producers passing on bids of $109.
Week to week on Friday, Live Cattle futures closed from an average of 50¢ lower in three contracts (10¢ to $1.07 lower) to an average of 31¢ higher.
As mentioned, that was despite extreme volatility rocking equity markets.
Major U.S. financial indices blasted lower Monday as China responded to the latest intended U.S. tariffs by allowing its currency to slide to decade-low values and ordering state-owned companies to suspend purchases of U.S. agricultural goods. Stocks were up the next day when China set its currency value higher than originally feared. Equities followed U.S.-China trade news up and down the rest of the week.
For perspective, the Dow Jones Industrial Average closed 767 points lower on Monday, 311 point higher Tuesday, little changed on Wednesday, though it was down 600 points during the session, up 371 points on Thursday, then 90 points lower Friday. For all of the gyrations, it ended up closing 197 points lower week to week on Friday.
Wholesale Values Increase
Wholesale beef values continued to gain traction last week, perhaps buoyed by the upcoming Labor Day weekend.
Choice boxed beef cutout value was $1.64 higher week to week on Friday afternoon at $216.37/cwt. Select was $3.18 higher at $193.81. For the last two weeks, Choice was up $4.20, while Select increased $5.47.
“The beef values that cattle producers ultimately see as determinants of cattle prices are the result of a diverse set of beef products with widely ranging values and seasonal patterns,” says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly market comments. “Many beef product values vary sharply at various times of the year as a result of seasonal demand and supply influences.”
Overall, Peel explains boxed beef cutout values typically vary by about 13% from a seasonal high in May (about 7% above average) to a seasonal low in October (about 6% below average).
Overall, U.S. beef exports continue to provide strong underpinning, despite all of the trade issues.
U.S. beef exports in June were up 3% year-over-year for volume (118,677 mt) and were 1% higher for value at $724.8 million, according to data released by USDA and compiled by the U.S. Meat Export Federation. Value was the fourth most on record for any month.
For January-June, beef exports were 2% less in volume (648,765 mt), compared to the same period last year, but value was steady with last year’s record value pace at $4.03 billion.
Beef export value per head of fed slaughter in June averaged $325.10, up 4% from a year ago, while export value for the first six months of the year averaged $312.06 per head, down 2%.
Friday to Friday Change*
Weekly Auction Receipts
CME Feeder Index
|CME Feeder Index*||Aug. 9||Change|
*Thursday-to Thursday for CME Feeder Index
Cash Stocker and Feeder
|600-700 lbs.||$162.68||– $2.79|
|700-800 lbs.||$153.73||– $0.62|
|800-900 lbs.||$143.87||– $4.86|
|500-600 lbs.||$157.23||+ $0.72|
|600-700 lbs.||$150.82||+ $0.64|
|700-800 lbs.||$143.81||+ $2.00|
|400-500 lbs.||$148.68||+ $0.40|
|500-600 lbs.||$141.71||– $1.29|
|600-700 lbs.||$135.43||– $1.63|
(AMS National Weekly Feeder & Stocker Cattle Summary)
Wholesale Beef Value
|Boxed Beef (p.m.)||Aug. 9 ($/cwt)||Change|
|Ch-Se Spread||$22.56||– $1.54|
|Feeder Cattle||Aug. 9||Change|
|Jan ’20||$136.600||– $0.475|
|Live Cattle||Aug. 9||Change|
|Corn futures||Aug. 9||Change|
|Oil CME-WTI||Aug. 9||Change|
|Jan ’20||$53.46||– $1.95|
|Equity Indexes||Aug. 9||Change|
|Dow Industrial Average||26287.44||-195.57|
|S&P 500||2918.65||– 13.40|
|Dollar (DXY)||97.03||– 1.07|