Finally, feeder cattle markets gained some seasonal steam last week.
Overall, steers and heifers traded steady to $5/cwt. higher early in the week and then $3-$10 higher, according to the Agricultural Marketing Service (AMS).
“Market activity at special sales throughout the country was strong, especially after Tuesday’s rally on the CME Feeder board. Traders quickly and aggressively
moved back into the market,” say AMS analysts.
On the other side of the trade, the AMS folks note, “Ranchers were ready
and willing to sell cattle out front with the market getting a little bounce.” Analysts are referring to heavy video trade last week, including 118,000 via the Western Video Market and 209,000 head at Superior’s week-long auction.
Feeder Cattle futures closed an average of 3.11 higher week to week on Friday.
At $141.06 on Thursday, the CME Feeder Cattle Index was $7.85 higher week to week, at the highest level since the first two days of May.
“The surge in the index value is largely due to cattle feeders looking to reload pens that have emptied recently. It makes logical sense that cattle feeders were looking to capitalize on a somewhat soft feeder cattle market in May and June, but the strong demand for feeder cattle has boosted prices,” says Andrew P. Griffith, agricultural economist at the University of Tennessee, in his weekly market comments.
Fed Cattle Prices Appeared Higher
Negotiated cash fed cattle prices were yet to be fully established through Friday afternoon, based on reports from AMS, but the trend appeared decidedly higher. The Texas Cattle Feeders Association reported its members trading at $112/cwt., which was $3 more than the previous week. Although too few to trend, early dressed sales were $2-$5 higher at $182-$185 in Nebraska and the western Corn Belt.
“It appears the packer needs inventory and the fed cattle market is bracing
for a higher market,” explain AMS analysts. “Market-ready fed cattle supplies in the Northern Plains are very current, and for the time being, will remain that way. The Southern Plains will more than likely remain at a discount because of
large numbers of cattle on feed.”
After 77¢ higher in spot Aug, Live Cattle futures an average of $1.80 higher week to week on Friday.
Wholesale beef values continue the seasonal decline.
Choice boxed beef cutout value was $4.87 lower week to week on Friday afternoon at $212.80/cwt. Select was $5.20 lower at $189.60.
“Even though the cutout has turned lower, packer margins are reading on the positive side, despite having to increase bids to get cattle purchased,” according to AMS.
U.S. beef exports continue to underpin cattle prices but are getting iffier with protracted unresolved trade issues. Beef exports in May were steady with the previous year for volume (117,541 metric tons) and slightly higher for value at $727.6 million, according to data released by USDA and compiled by the U.S. Meat Export Federation (USMEF). However export volume for January-May is 3% less year over year, while value is slightly lower at $3.3 billion.
“Beef exports to Japan, the leading beef export market, were down by 4.9% year over year in May and are down 4.5% for the first five months of 2019,” says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly market comments. “Beef exports to Japan are beginning to show the impact of the CPTPP (Comprehensive and Progressive Agreement for Trans-Pacific Partnership), in which the U.S. does not participate, leaving the U.S. at a bigger tariff disadvantage.”
In fact, according to USMEF, all of U.S. pork and beef’s major competitors gained tariff relief in Japan this year through that agreement, as well as the economic partnership agreement between Japan and the European Union.
Corn Price Uncertainty Continues
Wonderments about how many acres of corn were planted and the ultimate yield, due to the long wet spring continue to roil markets.
Despite last week’s bearish World Agricultural Supply and Demand Estimates (WASDE) shaving a dime off the projected season average corn price to $3.70/bu., Corn futures closed an average of 15¢ higher through the front six contracts week to week on Friday. The WASDE was based on the acreage and yield projections from the June 28 USDA Acreage report. Traders are betting there will be significantly less corn.
In July, USDA’s National Agricultural Statistics Service (NASS) will collect updated information on 2019 acres planted, and if the newly collected data justify any changes, NASS will publish updated acreage estimates in the August Crop Production report.
Friday to Friday Change*
Weekly Auction Receipts
|
Receipts July 12 |
Auction (head) (change) |
Direct (head) (change) |
Video-Net (head) (change) |
Total (head) (change) |
|
135,700 (+111,000) |
77,700 (+50,500) |
121,100 (+81,900) |
335,500 (+244,400) |
CME Feeder Index
| CME Feeder Index* | July 11 | Change |
| $141.06 | + 7.85 |
*Thursday-to Thursday for CME Feeder Index
Cash Stocker and Feeder
North Central
| Steers-Cash | July 12 | Change |
| 600-700 lbs. | $165.82 | + $4.44 |
| 700-800 lbs. | $156.78 | + $3.14 |
| 800-900 lbs. | $147.03 | +$10.36 |
South Central
| Steers-Cash | July 12 | Change |
| 500-600 lbs. | $154.41 | – $4.06 |
| 600-700 lbs. | $147.82 | – $0.24 |
| 700-800 lbs. | $142.10 | + $2.61 |
Southeast
| Steers-Cash | July 12 | Change |
| 400-500 lbs. | $147.68 | + $3.23 |
| 500-600 lbs. | $141.05 | + $1.80 |
| 600-700 lbs. | $134.76 | + $3.08 |
(AMS National Weekly Feeder & Stocker Cattle Summary)
Wholesale Beef Value
| Boxed Beef (p.m.) | July 12 ($/cwt) | Change |
| Choice | $212.80 | – $4.87 |
| Select | $189.60 | – $5.20 |
| Ch-Se Spread | $23.20 | + $0.33 |
Futures
| Feeder Cattle | July 12 | Change |
| Aug | $141.600 | + $2.775 |
| Sep | $142.550 | + $3.850 |
| Oct | $142.850 | + $3.950 |
| Nov | $142.625 | + $3.400 |
| Jan ’20 | $141.025 | + $3.075 |
| Mar | $139.875 | + $3.000 |
| Apr | $140.175 | + $2.600 |
| May | $140.250 | + $2.200 |
| Live Cattle | July 12 | Change |
| Aug | $108.475 | + $0.775 |
| Oct | $109.975 | + $1.900 |
| Dec | $114.225 | + $1.900 |
| Feb ’20 | $118.150 | + $1.925 |
| Apr | $120.125 | + $1.825 |
| Jun | $113.300 | + $1.825 |
| Aug | $111.550 | + $1.725 |
| Oct | $113.375 | + $1.550 |
| Dec | $114.850 | + $1.750 |
| Corn futures | July 12 | Change |
| Jul | $4.494 | + $0.154 |
| Sep | $4.542 | + $0.156 |
| Dec | $4.592 | + $0.170 |
| Mar ’20 | $4.650 | + $0.160 |
| May | $4.666 | + $0.142 |
| Jul | $4.676 | + $0.120 |
| Oil CME-WTI | July 12 | Change |
| Aug | $60.21 | + $2.70 |
| Sep | $60.30 | + $2.71 |
| Oct | $60.27 | + $2.71 |
| Nov | $60.15 | + $2.67 |
| Dec | $59.96 | + $2.61 |
| Jan ’20 | $59.70 | + $2.53 |
Equities
| Equity Indexes | July 12 | Change |
| Dow Industrial Average | 27332.03 | + 409.91 |
| NASDAQ | 8244.14 | + 82.35 |
| S&P 500 | 3013.77 | + 23.36 |
| Dollar (DXY) | 96.72 | – 0.45 |