Steers and heifers sold $2/cwt. lower to $2 higher last week, amid reduced receipts during the holiday-shortened week, according to the Agricultural Marketing Service (AMS).
Feeder Cattle futures closed an average of $1.75 higher week to week on Friday.
“Feeder cattle prices are in the process of making a spring low. Prices have been pressured by forced early movement of cattle due to weather, escalating feed costs and weakness in deferred Live Cattle futures,” according to Rabobank’s Beef Quarterly for the second quarter. “Prices are expected to make a seasonal low, and the early forced placements of calves has reduced available supplies of cattle outside feedyards, which should be price supportive for summer and the second half of the year.”
Negotiated cash fed cattle trade for the week ended up steady to either side of steady with extremely light trade.
There were some live sales at $111/cwt. in Nebraska, compared to $109.00-$110.50 the previous week. A few sold in the beef at $177, compared to $176-$180 the previous week. Live sales the previous week were at $110-$114. Scattered sales in the Southern Plains were generally steady at $110. In the western Corn Belt, dressed sales were mostly $2-$4 lower than the previous week at $178.
“In three weeks, live cattle prices declined $14 to $15/cwt., which goes without mentioning that prices for the week were $26 lower than the same week one year ago,” explains Andrew P. Griffith, agricultural economist at the University of Tennessee, in his weekly market comments. “Adding insult to injury, basis for fed cattle was near $20/cwt. and now sits near $5 with nearly all of the narrowing resulting from lower cash prices. The narrowing of the basis means that most hedging strategies did little to nothing to protect against the expected price decline. It may be several weeks before cattle feeders escape red closeouts.”
Live Cattle futures closed mostly narrowly mixed week to week on Friday (67¢ lower to 47¢ higher, except for $1.32 higher in near Aug).
Lower outside markets contributed to market uncertainty early in the week, associated with the potential global economic impact of political upheaval in Italy. Later in the week, pressure on outside markets came from announced retaliations from Canada, Mexico and the European Union to President Trump imposing tariffs on steel and aluminum imported from those countries.
“It is unlikely the summer and fall cattle markets will experience the extreme volatility that has been a mainstay the past few years,” Griffith says. “However, volatility is sure to exist as the market hears of trade wars and rumors of trade wars. The unsettled political climate will impact agricultural markets; the cattle and beef markets are not immune to the impacts as trade agreements are restructured.”
The short week and previous bought-ahead purchases also diluted packer urgency.
“Packers didn’t need to get aggressive as they procured enough the previous week to get through the holiday week,” AMS analysts explained. “Weekly volume of fed
cattle trading was considered very light with only 50,680 head trading on a negotiated cash basis nationwide; the eleventh lowest weekly trading volume since MPR started reporting this series in November 2002. This trading volume was also the lowest since September 2016 when 50,074 were swapped with packers.”
Futures and market psychology did receive a boost mid-week. There were 7,589 boxed beef loads reported for the week ending May 25, according to the weekly National Comprehensive Boxed Beef Cutout report. That was the most since the first week of September.
Choice boxed beef cutout value was 10¢ higher week to week on Friday at $227.53/cwt. Select was 18¢ higher at $204.80.
“Now that Memorial weekend has passed, many retailers will focus on Father’s Day grilling items. Father’s Day continues to be a key holiday for middle meat movement, which generally helps the loin and rib primal to maintain value,” Griffith explains. “A good portion of the support leading up to Father’s Day is restocking the meat counter following Memorial weekend. Looking at individual wholesale cut prices, beef ribeye prices outperformed year-ago prices every week through the middle of April. However, the last five weeks have seen year-over-year declines, as the week’s price ($8-$9/lb.) was about $1.50 lower than the same week one year ago. Such a price difference may catch some by surprise, but ribeye prices were extremely strong in May and June of 2017. Loin strip prices, on a weekly basis, have been in line with year-ago prices, while considerable support has been provided by the chuck roll. Also notable, fresh 90% lean beef has traded in a $10 range in 2018 compared to a $30 range the same weeks last year.”
Friday to Friday Change*
Weekly Auction Receipts
|
Receipts June 1 |
Auction (head) (Change) |
Direct (head) (Change) |
Video/net (head) (Change) |
Total (head) (Change) |
|
110,900 (-73,300) |
51,600 (+4,100) |
15,900 (+5,300) |
178,400 (-63,900) |
CME Feeder Index
| CME Feeder Index | May 31 | Change |
| $136.17 | + 0.13 |
*Thursday-to Thursday for CME Feeder Index
Cash Stocker and Feeder
North Central
| Steers-Cash | June 1 | Change |
| 600-700 lbs. | $165.49 | + $2.19 |
| 700-800 lbs. | $151.99 | + $6.26 |
| 800-900 lbs. | $139.10 | – $1.52 |
South Central
| Steers-Cash | June 1 | Change |
| 500-600 lbs. | $164.37 | – $1.35 |
| 600-700 lbs. | $152.88 | – $1.94 |
| 700-800 lbs. | $140.61 | – $0.40 |
Southeast
| Steers-Cash | June 1 | Change |
| 400-500 lbs. | $162.54 | + $0.60 |
| 500-600 lbs. | $155.78 | + $2.45 |
| 600-700 lbs. | $142.15 | + $0.83 |
(AMS National Weekly Feeder & Stocker Cattle Summary)
Wholesale Beef Value
| Boxed Beef (p.m.) | June 1 ($/cwt) | Change |
| Choice | $227.53 | + $0.10 |
| Select | $204.80 | + $0.18 |
| Ch-Se Spread | $23.73 | + $0.92 |
Futures
| Feeder Cattle | June 1 | Change |
| Aug | $146.325 | + $1.400 |
| Sep | $146.600 | + $2.150 |
| Oct | $146.425 | + $2.100 |
| Nov | $146.475 | + $1.550 |
| Jan ’19 | $143.175 | + $1.350 |
| Mar | $141.600 | + $1.600 |
| Apr | $141.300 | + $2.075 |
| Live Cattle | June 1 | Change |
| Jun | $104.900 | + $0.250 |
| Aug | $103.625 | + $1.325 |
| Oct | $106.275 | + $0.450 |
| Dec | $110.650 | – $0.675 |
| Feb ’19 | $114.450 | – $0.125 |
| Apr | $115.600 | + $0.250 |
| Jun | $109.600 | + $0.475 |
| Aug | $108.000 | + $0.050 |
| Oct | $108.900 | + $0.050 |
| Corn futures | June 1 | Change |
| Jul | $3.914 | – $0.146 |
| Sep | $4.004 | – $0.146 |
| Dec | $4.116 | – $0.134 |
| Mar ’19 | $4.202 | – $0.132 |
| May | $4.256 | – $0.120 |
| Jul | $4.304 | – $0.116 |
| Oil CME-WTI | June 1 | Change |
| Jul | $65.81 | – $2.07 |
| Aug | $65.77 | – $2.01 |
| Sep | $65.53 | – $1.92 |
| Oct | $65.23 | – $1.83 |
| Nov | $65.01 | – $1.71 |
| Dec | $64.78 | – $1.58 |
Equities
| Equity Indexes | June 1 | Change |
| Dow Industrial Average | 24635.21 | – 117.88 |
| NASDAQ | 7554.33 | + 120.48 |
| S&P 500 | 2734.62 | + 13.29 |
| Dollar (DXY) | 94.18 | – 0.07 |