Despite pressure on grains, hogs and outside markets from the brewing trade war with China, aggressive feedlot marketing helped improve demand for calves and feeder cattle. Steers and heifers sold steady to $4/cwt. higher, according to the Agricultural marketing Service (AMS).
“Cattle feeders have been selling their fed cattle in a timely manner and have been aggressively filling their empty pens,” AMS analysts say. “Auction receipts are spotty this time of year…Direct trading receipts in the South Plains were heavy with future-delivery contracts as producers capitalized on the strong CME cattle complex. In the Northern Plains, some upcoming large video sales in the next several weeks will gauge buying interest, as buyers are content at this time to take a wait and see approach on what direction the market will move when dealing with summer and fall-delivery cattle.”
Feeder Cattle futures closed an average of $1.44 higher week to week on Friday (1.02 to $2.10 higher).
For the second week in a row, negotiated cash fed cattle trade volume appeared to be anemic through Friday afternoon, as packers continued to exploit sold-ahead cattle and the raw numbers available. The only prices reported by USDA at the end of the day Friday was $109-$110/cwt. on a live basis in the Texas Panhandle. That was $3 lower than the previous week.
Except for 17¢ lower in spot June, Live Cattle futures closed an average of 84¢ higher week to week on Friday (10¢ higher in the back contract to $2.37 higher).
“One bright spot for cattle feeders is lower feed costs as corn futures are 40¢ to 50¢/bu. lower than they were one month ago. Soybean meal is nearly $50/ton lower,” says Andrew P. Griffith, agricultural economist at the University of Tennessee, in his weekly market comments. “There remains a legion of cattle on feed that will be coming to market in the next few months, which will keep fed cattle prices in check. It will be important for cattle feeders to keep marketings current.”
Feedlot Placements Higher
Markets will likely view Friday’s monthly Cattle on Feed report as a touch bearish. Rather than a third consecutive month of declining placements, they were a touch higher in May (+0.24%) at 2.124 million head.
Marketings for May were in line with expectations at 2.056 million head (+5.38%).
That left the on-feed inventory (feedlot with 1,000 head or more capacity) June 1 at 11.553 million head, which was 4.12% more than the same time a year ago, the largest June 1 inventory since the data series began in 1996.
Wholesale Beef Values Decline Seasonally
Choice boxed beef cutout value was $4.43 lower week to week on Friday at $217.16/cwt. Select was 71¢ lower at $202.02.
“In the midst of a strong beef export market, there is concern among many people in the agricultural industry as trade war talks continue to be stoked with the threats of tariffs,” Griffith says. “Tariff threats have contributed to a major decline in soybean prices, but the beef market has yet to fill any major effects.”
Increasing beef production is beginning to show up in freezer inventory, as well. According to the monthly Cold Storage report released Friday, beef in freezers May 31 was 1% less than the previous month, but 13% more than the same time last year.
Total red meat supplies in freezers were 2% less than the previous month, but 9% more than last year.
Drought Ending Herd Expansion
“Cowherd expansion appears to have come to a screeching halt as the three states (TX, OK, MO) with the most beef cows in the U.S. are experiencing an average of 45% of their land mass being D1 or worse drought designation,” say AMS analysts.“Year-to-date heifer slaughter ending May 31 is 7.9% above a year ago and 13.5% above the 3-year average. Beef cow slaughter is 12.6% more than last year and 21.7% more than the previous three-year average. With deteriorating pastures conditions in the central part of the country, many more cows will find their way to the marketplace in some capacity this summer. If conditions worsen, some producers may be looking into an early-weaning program to save as much stored water as possible.”
Friday to Friday Change*
Weekly Auction Receipts
|
Receipts June 22 |
Auction (head) (Change) |
Direct (head) (Change) |
Video/net (head) (Change) |
Total (head) (Change) |
|
164,000 (-15,900) |
65,800 (+9,400) |
17,000 (-63,200) |
246,800 (-69,700) |
CME Feeder Index
| CME Feeder Index | June 21 | Change |
| $142.57 | + 1.84 |
*Thursday-to Thursday for CME Feeder Index
Cash Stocker and Feeder
North Central
| Steers-Cash | June 22 | Change |
| 600-700 lbs. | $171.24 | + $5.22 |
| 700-800 lbs. | $155.19 | + $2.38 |
| 800-900 lbs. | $142.52 | – $2.48 |
South Central
| Steers-Cash | June 22 | Change |
| 500-600 lbs. | $164.14 | – $0.76 |
| 600-700 lbs. | $155.34 | + $0.76 |
| 700-800 lbs. | $144.63 | – $2.48 |
Southeast
| Steers-Cash | June 22 | Change |
| 400-500 lbs. | $159.13 | – $1.18 |
| 500-600 lbs. | $153.24 | + $0.84 |
| 600-700 lbs. | $142.01 | – $0.74 |
(AMS National Weekly Feeder & Stocker Cattle Summary)
Wholesale Beef Value
| Boxed Beef (p.m.) | June 22 ($/cwt) | Change |
| Choice | $217.16 | – $4.43 |
| Select | $202.02 | – $0.71 |
| Ch-Se Spread | $15.14 | – $3.72 |
Futures
| Feeder Cattle | June 22 | Change |
| Aug | $149.200 | + $1.225 |
| Sep | $149.825 | + $1.550 |
| Oct | $149.475 | + $1.625 |
| Nov | $149.125 | + $1.425 |
| Jan ’19 | $146.450 | + $1.425 |
| Mar | $145.600 | + $1.150 |
| Apr | $145.575 | + $1.025 |
| May | $145.500 | + $2.100 |
| Live Cattle | June 22 | Change |
| Jun | $108.275 | – $0.175 |
| Aug | $105.900 | + $1.125 |
| Oct | $109.400 | + $2.375 |
| Dec | $112.950 | + $1.600 |
| Feb ’19 | $115.450 | + $0.675 |
| Apr | $116.600 | + $0.375 |
| Jun | $109.825 | + $0.100 |
| Aug | $108.800 | + $0.400 |
| Oct | $110.100 | + $0.100 |
| Corn futures | June 22 | Change |
| Jul | $3.572 | – $0.040 |
| Sep | $3.664 | – $0.042 |
| Dec | $3.780 | – $0.046 |
| Mar ’19 | $3.874 | – $0.050 |
| May | $3.944 | – $0.046 |
| Jul | $4.002 | – $0.050 |
| Oil CME-WTI | June 22 | Change |
| Aug | $68.58 | + $3.73 |
| Sep | $67.63 | + $3.23 |
| Oct | $66.79 | + $2.85 |
| Nov | $66.34 | + $2.60 |
| Dec | $65.96 | + $2.44 |
| Jan | $65.56 | + $2.27 |
Equities
| Equity Indexes | June 22 | Change |
| Dow Industrial Average | 24580.89 | – 505.59 |
| NASDAQ | 7692.82 | – 53.56 |
| S&P 500 | 2754.88 | – 24.78 |
| Dollar (DXY) | 94.54 | – 0.25 |