Markets this week had the feel of a turning point from focus on the summer’s heavy supply to what comes next: potentially snugger supplies heading into fall, given early placements and aggressive feedlot marketing so far this year.
For instance, although the action was sideways much of the week, Cattle futures gained to start the week and the surged at mid week, even as open interest in Live Cattle continues to decline.
Week to week on Friday, Feeder Cattle futures closed an average of $2.76 higher.
Week to week on Friday, Live Cattle futures closed an average of $2.52 higher ($1.17 to $4.37 higher in spot Aug).
“Feeder cattle futures have been showing strength and the cash market is in tow, though at a slower pace,” says Andrew P. Griffith, agricultural economist at the University of Tennessee, in his weekly market comments. “The August Feeder Cattle contract has been trading in the low to mid $150s, which is $15-$18 higher than where it was trading two months ago. This same pattern exists for most of the fall and winter marketing months.”
Nationwide, cash prices for calves and feeders were $3/cwt. lower to $2 higher than the previous week, according to the Agricultural Marketing Service (AMS).
Improved estimates of cattle feeding returns through the rest of the year appear to be providing some current support.
“Despite firm feeder cattle prices in June and early July, the projected feedlot margin for feeding out a 750-lb. calf that is purchased today appears to have improved, and with lower corn price forecasts for the current and following marketing years, demand for calves for finishing may increase, supporting higher feeder calf prices,” say analysts with USDA’s Economic Research Service, in the latest monthly Livestock, Dairy and Poultry Outlook.
This year’s average feeder cattle price for steers weighing 750-850 lbs. (basis Oklahoma City) is estimated at $141-$144/cwt., compared to last year’s average of $145.08, according to ERS. The July LDPO pegs feeder prices in the third quarter at $140-$144. That’s $6 more on the lower end of the range than the previous month’s estimate and $4 more on the upper end. The fourth-quarter estimate is $136-$144, compared to the previous month’s projections of $134-$142. First-quarter feeder steer prices next year are projected at $133-$143.
Friday’s monthly Cattle on Feed report shouldn’t apply any pressure. It matched almost perfectly estimates ahead of the report with 1.30% more June placements, 0.85% more June marketings and a July 1 on-feed inventory that was 4.26% more than the previous year.
Fed Cattle Prices Appear Stronger
Other than some scattered trade in the beef Friday, negotiated cash fed cattle trade remained undeveloped through late afternoon, in terms of USDA reports.
“Market participants were expecting higher prices as packers replenish much- needed inventory, with cattle slaughter of 635,000 head for the week and 650,000 last week,” AMS analysts explained.
Fed cattle slaughter in June was 0.6% more than last year and 6.9% more than the 5-year average, according to AMS. Total cow slaughter continues higher, too: 2.3% more in June than last year and 12.1% more than the 5-year average.
“Carcass weights for the week ending July 7 were reported at 867 lbs. for steers, which was 1 lb. higher than a year ago but 2 lbs. below the 5-year average,” AMS analysts say. “Carcass weights reported in line with historical numbers bode well for the industry as it indicates that front-end supplies have been marketed aggressively by feedyard managers.”
If seasonal trends hold sway, wholesale beef prices should soon be moving beyond a summer ebb, providing more support to fed cattle prices.
Choice boxed beef cutout value was 3¢ higher week to week on Friday at $204.17/cwt. Select was 63¢ higher at $197.00. The Choice-Select spread narrowed 60¢ to $7.17.
Commercial red meat production so far this year is 4% more than the same period a year ago at 26.3 billion lbs., according to the latest Livestock Slaughter report from USDA.
Friday to Friday Change*
Weekly Auction Receipts
|
Receipts July 20 |
Auction (head) (Change) |
Direct (head) (Change) |
Video/net (head) (Change) |
Total (head) (Change) |
|
153,800 (-11,800) |
78,700 (-31,000) |
5,400 (-319,100) |
242,400 (-361,900) |
CME Feeder Index
| CME Feeder Index | July 19 | Change |
| $148.16 | – 0.14 |
*Thursday-to Thursday for CME Feeder Index
Cash Stocker and Feeder
North Central
| Steers-Cash | July 20 | Change |
| 600-700 lbs. | $167.03 | – $7.69 |
| 700-800 lbs. | $156.07 | – $7.87 |
| 800-900 lbs. | $154.02 | – $1.28 |
South Central
| Steers-Cash | July 20 | Change |
| 500-600 lbs. | $161.01 | – $0.75 |
| 600-700 lbs. | $156.41 | – $1.36 |
| 700-800 lbs. | $150.38 | + $1.09 |
Southeast
| Steers-Cash | July 20 | Change |
| 400-500 lbs. | $155.54 | – $2.48 |
| 500-600 lbs. | $149.61 | – $2.69 |
| 600-700 lbs. | $141.82 | – $1.24 |
(AMS National Weekly Feeder & Stocker Cattle Summary)
Wholesale Beef Value
| Boxed Beef (p.m.) | July 20 ($/cwt) | Change |
| Choice | $204.17 | + $0.03 |
| Select | $197.00 | + $0.63 |
| Ch-Se Spread | $7.17 | – $0.60 |
Futures
| Feeder Cattle | July 20 | Change |
| Aug | $153.675 | + $2.950 |
| Sep | $154.550 | + $3.475 |
| Oct | $154.775 | + $3.425 |
| Nov | $154.250 | + $3.225 |
| Jan ’19 | $151.800 | + $2.275 |
| Mar | $150.325 | + $2.100 |
| Apr | $150.650 | + $2.300 |
| May | $150.550 | + $2.300 |
| Live Cattle | July 20 | Change |
| Aug | $108.925 | + $4.375 |
| Oct | $110.250 | + $2.875 |
| Dec | $114.200 | + $2.800 |
| Feb ’19 | $118.050 | + $2.300 |
| Apr | $119.175 | + $1.175 |
| Jun | $112.525 | + $2.325 |
| Aug | $111.925 | + $2.625 |
| Oct | $113.150 | + $2.300 |
| Dec | $114.050 | + $1.875 |
| Corn futures | July 20 | Change |
| Sep | $3.552 | + $0.140 |
| Dec | $3.690 | + $0.144 |
| Mar ’19 | $3.800 | + $0.136 |
| May | $3.862 | + $0.130 |
| Jul | $3.920 | + $0.128 |
| Sep | $3.934 | + $0.112 |
| Oil CME-WTI | July 20 | Change |
| Aug | $70.46 | – $0.55 |
| Sep | $68.26 | – $1.69 |
| Oct | $66.64 | – $1.91 |
| Nov | $66.18 | – $1.83 |
| Dec | $65.87 | – $1.71 |
| Jan | $65.57 | – $1.58 |
Equities
| Equity Indexes | July 20 | Change |
| Dow Industrial Average | 25058.12 | + 38.71 |
| NASDAQ | 7820.20 | – 5.58 |
| S&P 500 | 2801.83 | + 0.52 |
| Dollar (DXY) | 94.46 | – 0.23 |