Fire at the Tyson beef packing plant at Holcombe, KS cast a pall over cattle markets last week.
Uncertainty about how much beef packing capacity was lost and for how long, amid seasonally and cyclically heavy fed cattle supplies, created an exodus among futures traders at the opening bell.
Live Cattle and Feeder Cattle futures were limit-down last Monday, then down the expanded limit in some contracts Tuesday.
Some auctions cancelled sales, waiting for the dust to settle. Where auctions proceeded, extreme heat and the futures fallout limited receipts and demand.
Nationwide, steers and heifers sold $5-$10/cwt. lower, according to the Agricultural Marketing Service (AMS).
Feeder Cattle futures closed an average of $5.48 lower week to week on Friday. They were down an average $10.10 after the first two sessions of the week, before recovering an average of $5.18 on Wednesday.
The CME Feeder Cattle Index was down $4.06 week to week on Thursday at $137.60.
All of that was with Corn futures closing an average of 36¢ lower through the front five contracts week to week on Friday. Pressure was tied to the surprisingly large estimate for corn production in last week’s USDA Crop Production report.
Cash feeder prices were already under pressure, of course.
“Prices for feeder steers weighing 750-800 lbs. for the week of August 12, 2019, were $137.71/cwt., more than $10 below the same week last year,” say analysts with USDA’s Economic Research Service (ERS), in the latest Livestock, Dairy and Poultry Outlook. “Based on recent price data, the third-quarter 2019 feeder steer price was lowered by $1 to $142 and the 2019 fourth-quarter price forecast was lowered $1 from the prior month to $140. This month’s annual price forecast for 2019 is $141/cwt.”
“This market is likely to rebound following the kneejerk reaction,” says Andrew P. Griffith, agricultural economist at the University of Tennessee, in his weekly market comments. “The primary rebound will be in the yearling cattle arena which is where cattle feeders will continue to search for cattle to fill pen space. The calf market may see a short-lived rebound, but the calf market is going to be coming under seasonal price pressure as spring born calves begin to move to market in September and October.”
Fed Cattle Lower in Cautious Trade
Through late Friday afternoon, the only established negotiated cash fed cattle trade for the week remained the $105/cwt. paid in the Southern Plains, which was $5 less than the previous week. Although too few to trend, there were a few trades in Nebraska Friday at $106/cwt. on a live basis and at $172 in the beef.
Through Thursday the 5-area direct steer price was $105.40 on a live basis (7,941 head) and $170.46 in the beef (4,172 head). Week to week that was $8.71 less on a live basis and $12.11 less dressed.
Live Cattle futures were down an average of $7.34 after the first two trading sessions of the week. Week to week on Friday, Live Cattle futures closed an average of $6.53 lower ($4.17 to $8.70 lower).
“The last time the weekly weighted average finished cattle price fell below $100 was December 2010, while the $100 mark was only achieved in 12 weeks from 2000 through 2010,” Griffith says. “Could the cash market fall below the century mark? It is possible, but unlikely.”
Wholesale beef prices exploded higher as there were apparently lots of buyers living hand to mouth in the spot market for supply.
Choice boxed beef cutout value was a staggering $22.32 higher week to week on Friday afternoon at $238.69/cwt. Select was $19.45 higher at $213.26.
“Price jumps like this do not come along very often and will be only temporary as adjustments take place in future,” say AMS analysts.
Friday to Friday Change*
Weekly Auction Receipts
|
Receipts Aug. 16 |
Auction (head) (change) |
Direct (head) (change) |
Video-Net (head) (change) |
Total (head) (change) |
|
104,800 (-49,800) |
27,900 (-26,200) |
70,100 (-171,300) |
202,800 (-247,300) |
CME Feeder Index
| CME Feeder Index* | Aug. 15 | Change |
| $137.60 | – 4.06 |
*Thursday-to Thursday for CME Feeder Index
Cash Stocker and Feeder
North Central
| Steers-Cash | Aug. 16 | Change |
| 600-700 lbs. | $158.93 | – $3.75 |
| 700-800 lbs. | $148.56 | – $5.17 |
| 800-900 lbs. | $143.46 | – $0.41 |
South Central
| Steers-Cash | Aug. 16 | Change |
| 500-600 lbs. | $148.21 | – $9.02 |
| 600-700 lbs. | $142.46 | – $8.36 |
| 700-800 lbs. | $136.20 | – $7.61 |
Southeast
| Steers-Cash | Aug. 16 | Change |
| 400-500 lbs. | $141.60 | – $7.08 |
| 500-600 lbs. | $133.78 | – $7.93 |
| 600-700 lbs. | $128.78 | – $6.65 |
(AMS National Weekly Feeder & Stocker Cattle Summary)
Wholesale Beef Value
| Boxed Beef (p.m.) | Aug. 16 ($/cwt) | Change |
| Choice | $238.69 | + $22.32 |
| Select | $213.26 | + $19.45 |
| Ch-Se Spread | $25.43 | + $2.87 |
Futures
| Feeder Cattle | Aug. 16 | Change |
| Aug | $134.575 | – $4.325 |
| Sep | $132.375 | – $6.075 |
| Oct | $132.850 | – $5.400 |
| Nov | $132.750 | – $5.525 |
| Jan ’20 | $130.925 | – $5.675 |
| Mar | $130.300 | – $5.725 |
| Apr | $131.425 | – $5.675 |
| May | $132.300 | – $5.475 |
| Live Cattle | Aug. 16 | Change |
| Aug | $99.925 | – $8.125 |
| Oct | $98.050 | – $8.700 |
| Dec | $103.525 | – $7.925 |
| Feb ’20 | $108.925 | – $6.775 |
| Apr | $111.300 | – $6.375 |
| Jun | $104.825 | – $6.050 |
| Aug | $103.200 | – $5.750 |
| Oct | $105.575 | – $4.900 |
| Dec | $108.850 | – $4.175 |
| Corn futures | Aug. 16 | Change |
| Sep | $3.710 | – $0.392 |
| Dec | $3.806 | – $0.370 |
| Mar ’20 | $3.926 | – $0.356 |
| May | $4.000 | – $0.340 |
| Jul | $4.056 | – $0.318 |
| Sep | $4.050 | – $0.172 |
| Oil CME-WTI | Aug. 16 | Change |
| Sep | $54.87 | + $0.37 |
| Oct | $54.81 | + $0.44 |
| Nov | $54.42 | + $0.33 |
| Dec | $53.99 | + $0.21 |
| Jan ’20 | $53.56 | + $0.10 |
| Feb | $53.19 | + $0.03 |
Equities
| Equity Indexes | Aug. 16 | Change |
| Dow Industrial Average | 25886.01 | -401.43 |
| NASDAQ | 7895.99 | – 63.15 |
| S&P 500 | 2888.68 | – 29.97 |
| Dollar (DXY) | 98.20 | + 0.71 |