Although Cattle futures closed mostly higher week to week, cash markets turned softer, pressured by seasonal trends, continued heavy supplies and ongoing trade uncertainty.
Steers and heifers sold $1-$5/cwt. lower, amid significantly lighter week-to-week offerings according to the Agricultural Marketing Service (AMS). In Missouri, for instance, AMS analysts say feeder cattle auction volume was the least for a non-holiday week since the week ending Sept. 15, 2017.
Week to week on Friday, Feeder Cattle futures closed an average of $2.13 higher through the front three contracts and then 22¢ lower to 35¢ higher. That was thanks to a surge Monday, tied to the announced trade pact between the U.S. and Mexico (more later)
Negotiated cash fed cattle trade remained undeveloped through Friday afternoon, with too few transactions to trend on limited trade and light demand up north—a standstill in Colorado and the Texas Panhandle. There were a few early live sales reported in the western Corn Belt Thursday at $106.00-$108.50/cwt.; a few early dressed sales at $170.
“It appears that packers may be willing to pull inventory cattle,” said AMS analysts Friday afternoon. “Packers are not quite ready to give up their triple-digit margins and they were expecting another drop in fed cattle prices moving forward into fall.”
Except for 55¢ and 35¢ higher at either end of the board, Live Cattle futures closed an average of $1.77 higher week to week on Friday.
“The strength in the cattle market is largely due to strong beef demand. If it were not for strong beef demand, prices of most classes of cattle would be moving lower and at a fairly quick clip,” says Andrew P. Griffith, agricultural economist at the University of Tennessee, in his weekly market comments. “The classes of cattle with the most downside risk at this point in the year are freshly weaned calves and slaughter cows. As marketings of these two classes of cattle begin to increase through September and then peak in October and November, prices will most likely decline due to calf supply and forage availability.”
While that’s no guarantee, Griffith explains, the probability of prices declining is much higher than prices increasing.
Beef Prices Move Seasonally Lower
“Boxed beef cut-out value appears to have found a top with resistance from retailers that have been content to buy hand-to-mouth recently,” say AMS analysts.
Choice boxed beef cutout value was $3.63 lower week to week on Friday at $209.69/cwt. Select was $2.55 lower at $201.27.
“Beef exports have been a bright spot in the marketing year so far,” say AMS analysts. “Net beef export sales last week was reported at 20,600 metric tons (mt), unchanged from the previous week, and up 13% from the previous four-week average. During the same time period, actual beef exports totaled 17,800 mt, up 5% from the previous week, but unchanged from the prior four-week average.”
“Demand for beef can and likely will remain strong, but wholesale beef prices will still succumb to downward pressure,” says Griffith. “Lower wholesale prices should not be interpreted negatively as this is a seasonal trend and prices are expected to be relatively strong for the time of year and the quantity of beef products available. The market will also be hampered by large pork production in the fourth quarter, but holiday beef buying will provide a lifeline in December.”
Recent misfortune in China could boost U.S. pork exports, though.
Chinese authorities culled more than 24,000 pigs in four provinces so far, in efforts to control the spread of African Swine Fever (AFS), according to the UN’s Food and Agriculture Organization (FAO). That organization warned that the rapid onset of the virus in China, and its detection in areas more than 1,000 kilometers apart could mean AFS may spread to other Asian countries anytime.
There is no effective vaccine to protect swine from the disease. And, while the disease poses no direct threat to human health, outbreaks can be devastating with the most virulent forms lethal in 100% of infected animals.
China accounts for approximately half the global population of swine, estimated at 500 million.
Moreover, the new trade pact between the U.S. and Mexico should bolster U.S. exports to that nation, while renewing hopes for a resolution to the trade dispute with Canada sooner rather than later.
“After a year of tough negotiations, the United States and Mexico reached a trade agreement that is fair and reciprocal and will strengthen both nations’ economies,” according to a statement from U.S. Vice President Mike Pence. “The U.S.–Mexico Trade Agreement is a win for American ranchers, manufacturers, and auto workers. Our nations have agreed to new rules that will maintain duty free access for agricultural goods on both sides of the border. In addition, we have agreed to eliminate non-tariff barriers and take other steps to encourage more agriculture trade between our two countries…”
Friday to Friday Change*
Weekly Auction Receipts
|
Receipts Aug. 31 |
Auction (head) (Change) |
Direct (head) (Change) |
Video/net (head) (Change) |
Total (head) (Change) |
|
148,700 (-15,000) |
49,600 (-10,800) |
10,600 (-239,000) |
206,200 (-267,500) |
CME Feeder Index
| CME Feeder Index | Aug. 30 | Change |
| $149.98 | – $0.87 |
*Thursday-to Thursday for CME Feeder Index
Cash Stocker and Feeder
North Central
| Steers-Cash | Aug. 31 | Change |
| 600-700 lbs. | $159.92 | – $8.60 |
| 700-800 lbs. | $156.97 | – $5.34 |
| 800-900 lbs. | $150.85 | – $4.05 |
South Central
| Steers-Cash | Aug. 31 | Change |
| 500-600 lbs. | $153.34 | – $9.90 |
| 600-700 lbs. | $144.07 | – $13.29 |
| 700-800 lbs. | $143.72 | – $7.06 |
Southeast
| Steers-Cash | Aug. 31 | Change |
| 400-500 lbs. | $158.75 | – $2.10 |
| 500-600 lbs. | $149.82 | – $1.44 |
| 600-700 lbs. | $142.45 | + $0.76 |
(AMS National Weekly Feeder & Stocker Cattle Summary)
Wholesale Beef Value
| Boxed Beef (p.m.) | Aug. 31 ($/cwt) | Change |
| Choice | $209.69 | – $3.63 |
| Select | $201.27 | – $2.55 |
| Ch-Se Spread | $8.42 | – $1.08 |
Futures
| Feeder Cattle | Aug. 31 | Change |
| Sep | $149.450 | + $1.975 |
| Oct | $149.125 | + $2.400 |
| Nov | $149.000 | + $2.025 |
| Jan ’19 | $145.800 | + $0.350 |
| Mar | $145.150 | + $0.150 |
| Apr | $145.850 | – $0.200 |
| May | $146.250 | – $0.225 |
| Aug | $146.725 | n/a |
| Live Cattle | Aug. 31 | Change |
| Aug | $106.800 | + $0.550 |
| Oct | $108.775 | + $2.075 |
| Dec | $112.975 | + $1.775 |
| Feb ’19 | $116.985 | + $2.385 |
| Apr | $117.900 | + $2.150 |
| Jun | $111.400 | + $1.800 |
| Aug | $109.925 | + $1.300 |
| Oct | $111.775 | + $0.900 |
| Dec | $113.150 | + $0.350 |
| Corn futures | Aug. 31 | Change |
| Sep | $3.510 | + $0.026 |
| Dec | $3.650 | + $0.024 |
| Mar ’19 | $3.772 | + $0.022 |
| May | $3.846 | + $0.024 |
| Jul | $3.904 | + $0.028 |
| Sep | $3.910 | + $0.024 |
| Oil CME-WTI | Aug. 31 | Change |
| Oct | $69.80 | + $1.08 |
| Nov | $69.37 | + $1.01 |
| Dec | $69.05 | + $1.00 |
| Jan ’19 | $68.79 | + $1.01 |
| Feb | $68.46 | + $0.99 |
| Mar | $68.16 | + $0.98 |
Equities
| Equity Indexes | Aug. 31 | Change |
| Dow Industrial Average | 25964.82 | + 174.47 |
| NASDAQ | 8109.54 | + 163.56 |
| S&P 500 | 2901.52 | + 26.83 |
| Dollar (DXY) | 95.11 | – 0.05 |