Cattle Current Weekly Highlights—Week ending Aug. 30, 2019

Cattle Current Weekly Highlights—Week ending Aug. 30, 2019

Cattle markets started the week with some bounce from news about the U.S. trade deal with Japan and a neutral to friendly monthly Cattle on Feed report. However, Cattle futures faltered as the week wore on, with wholesale beef values adjusting lower toward pre-fire levels and with holiday beef buying in the rearview mirror.

Steer and heifer calves sold mostly steady to $5/cwt. higher, while yearlings traded steady to $3 lower, according to the Agricultural Marketing Service (AMS). 

“With the CME cattle board displaying a gloomy outlook the last quarter, demand for big yearlings off grass was good at the few locations that had several load lots on hand,” say AMS analysts. 

At the same time, sellers are less than eager to accept current prices. For instance at Superior’s Big Horn Classic video auction the previous week, with 208,800 head on offer, the AMS reporter noted some consignors moved cattle to the next sale or passed on the bids.

“Given the lower placement numbers for July, based on the August Cattle on Feed report, one could probably surmise that there are several feeder cattle that will be coming to market in September and October,” says Andrew P. Griffith, agricultural economist at the University of Tennessee, in his weekly market comments. “If corn prices remain relatively low and beef demand remains steady, then yearling type cattle prices should remain steady the next several weeks before succumbing to a downtrend.”

Feeder Cattle futures closed an average of $1.91 lower week to week on Friday (87¢ lower in spot Sep to $2.40 lower).

Although a sense of normalcy is returning, there’s still plenty of uncertainty remaining after the Aug. 9 fire that temporarily shuttered the Tyson plan at Holcombe, KS.

“While the impacts of the Tyson plant fire will likely diminish relatively quickly in the next few weeks, feeder cattle markets are still nervous and defensive about the corn market situation, increasingly shaky macroeconomic conditions and continued global economic turmoil,” says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly market comments. “The uncertainty and volatility impacting feeder cattle markets is likely to continue this fall and winter. This increases the risks of winter stocker production but may also present short term opportunities for either buying or selling cattle or both,” Peel says. “The best advice at this point is to evaluate and reevaluate possibilities frequently and remain as nimble as possible both offensively and defensively.”

Cash Fed Cattle Prices Sink

Negotiated cash fed cattle prices lost ground as the week progressed. They ended up $3/cwt. lower in the Southern Plains last week at $103/cwt. Live trades were $2-$3 lower in Nebraska at $104-$106 and steady to $5 lower in the western Corn Belt at $105-$110. Dressed sales in Nebraska were $6-$10 lower at $165-$172; $3-$7 lower in the western Corn Belt at mostly $171.

“The market is down one large harvest facility,” Griffith says. “Cattle feeders cannot feed the same animal for infinity and beyond. Availability of feeder cattle will increase in the near term. All of this information results in packers continuing to put the squeeze on cattle feeders as they appear to be holding all of the leverage. It is difficult to identify any leverage point cattle feeders control in today’s market, but this situation will not last forever.”

Except for 37¢ higher in expiring Aug and 45¢ higher in the back contract, Live Cattle futures closed an average of 57¢ lower week to week on Friday.

Although feedlot marketing remained aggressive last month, the estimated supply of cattle on feed more than 120 days was 0.7% more than the previous year, according to Brenda Boetel, a livestock economist at the University of Wisconsin-River Falls.

“Total cattle on feed inventory saw the largest July-to-August decline since 2008,” Boetel explains in the most recent In the Cattle Markets. “Although cattle are currently being marketed in a timely manner, there is danger that this pace will slow and currentness will slip. Given the decrease in slaughter capacity due to the Tyson fire, Saturday slaughter will need to continue to keep the market current. Keeping up with the increased supply in the fourth quarter will be a challenge.”

Choice boxed beef cutout value was $5.75 lower week to week on Friday afternoon at $231.77/cwt. Select was 44¢ lowerat $212.27. Compared to the Friday of the Tyson fire, that’s still $15.40 more Choice and $18.46 more for Select.

Friday to Friday Change*

Weekly Auction Receipts

Receipts

Aug. 30

Auction (head)

(change)

Direct

(head)

(change)

Video-Net (head)

(change)

Total

(head)

(change)

 

150,400

(+150,400)

58,600

(-6,300)

211,800

(+145,900)

420,800

(+202,600)

 

CME Feeder Index

CME Feeder Index* Aug. 29 Change
  $138.55 –  1.17

*Thursday-to Thursday for CME Feeder Index

 

Cash Stocker and Feeder

North Central

Steers-Cash Aug. 30 Change
600-700 lbs. $153.92 –  $6.45
700-800 lbs. $146.58 –  $5.52
800-900 lbs. $142.206 –  $3.46

 

South Central

Steers-Cash Aug. 30 Change
500-600 lbs. $150.35 + $1.06
600-700 lbs. $146.12 + $1.46
700-800 lbs. $141.71 + $1.62

 

Southeast

Steers-Cash Aug. 30 Change
400-500 lbs. $145.89 + $1.16
500-600 lbs. $138.79 + $2.52
600-700 lbs. $134.01 + $2.05

(AMS National Weekly Feeder & Stocker Cattle Summary)

 

Wholesale Beef Value

Boxed Beef  (p.m.) Aug. 30 ($/cwt) Change
Choice $231.77 –  $5.75
Select $212.27 –  $0.44
Ch-Se Spread $19.50 –  $5.31

 

Futures

Feeder Cattle  Aug. 30 Change
Sep $132.400 –  $0.850
Oct $130.800 –  $1.725
Nov $130.325 –  $1.975
Jan ’20 $128.500 –  $1.925
Mar $128.050 –  $2.175
Apr $128.925 –  $2.400
May $129.575 –  $2.325
Aug $131.150 n/a

 

Live Cattle   Aug. 30 Change
Aug $105.000 + $0.375
Oct $98.925 – $0.475
Dec $103.675 – $0.625
Feb ’20 $109.025 – $0.700
Apr $111.175 – $0.725
Jun $104.400 – $0.400
Aug $102.475 – $0.525
Oct $104.675 – $0.575
Dec $108.400 + $0.450

 

Corn futures Aug. 30 Change
Sep $3.580 – $0.016
Dec $3.696 + $0.020
Mar ’20 $3.822 + $0.022
May $3.900 + $0.016
Jul $3.970 + $0.018
Sep $3.992 + $0.002

 

Oil CME-WTI Aug. 30 Change
Oct $55.10 + $0.93
Nov $54.89 + $0.87
Dec $54.56 + $0.82
Jan ’20 $54.16 + $0.75
Feb $53.78 + $0.69
Mar $53.43 + $0.61

 

Equities

Equity Indexes Aug. 30 Change
Dow Industrial Average  26403.28 + 774.38
NASDAQ     7962.88 + 211.11
S&P 500     2926.46 +   79.35
Dollar (DXY)          98.81 +     1.55
2019-08-31T16:08:48-06:00

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