Shadowed by outside markets driven sharply lower by trade issues, cattle markets ended the week, month and quarter on a positive note Friday, with spot Cattle futures popping up to their highest levels since March.
Steers and heifers sold mostly $1-$4 lower last week, according to the Agricultural Marketing Service (AMS). The exception was steady to $4 higher at North Central auctions. Hot weather limited auction receipts in some areas.
“Much speculation occurred over the week after the Cattle on Feed report showed much higher placements than first imagined,” said the AMS reporter on hand for Superior Livestock’s video auction. “Receipts at auctions in the Southern Plains have been very large over the month of June and many drought stricken areas have received a good amount of moisture. However, the high placements number may indicate many calves have been marketed already due to the drought wreaking its havoc.” That reporter added that demand was especially good for fall-delivery cattle.
Except for 65¢ lower in the back contract, Feeder Cattle futures closed an average of $1.03 higher week to week on Friday (60¢ higher to $2.12 higher in spot Aug).
“Cattle futures bookended the week with opposite moves on the Board. Monday was a dramatically down day coming off a Cattle on Feed report that many viewed as bearish,” said AMS analysts. “However, after more scrutiny of the reported large placement numbers and the largest June on-feed number since the data series started in 1996, market watchers reevaluated the data. Placements of feeders in May of cattle under 700 lbs. were 10% larger than a year ago, so fed cattle supplies are not going to be affected as much as the first reaction implied.”
Noting the increased percentage of lighter-weight placements, Derell Peel, Extension livestock marketing specialist at Oklahoma State University noted in his weekly market comments, “This suggests that feedlot cattle supplies will tighten relatively in the third quarter. Fed cattle prices are expected to be lower year over year in the second half of the year, but the timing of fed cattle marketings will reduce the price pressure relative to the second quarter.”
Peel emphasizes early placements don’t change the number of cattle available, just the timing of when they hit the market.
Perhaps growing realization of that fact was at least partly responsible for the late-week nudge in negotiated cash fed cattle prices.Though still lower than the previous week, negotiated prices for fed cattle were $1-$2 higher on Friday than earlier in the week: $107-$108/cwt. in the Texas Panhandle and $107.50 in Nebraska. Until then, prices were mainly $105-$106/cwt. on a live basis and $170 in the beef.
Except for $1.27 lower in expiring June, Live Cattle futures closed an average of 59¢ higher week to week on Friday (17¢ to 82¢ higher).
Wholesale Values Continue Lower
“Boxed-beef cutout continues its normal seasonal decline, as July can be a sluggish month for overall beef demand and not necessarily a rally month for fed cattle prices with the extreme hot weather,” explained AMS analysts.
Choice boxed beef cutout value was $5.20 lower week to week on Friday at $211.96/cwt. Select was $3.45 lower at $198.57.
“The Choice cutout peaked at just under $232/cwt. in the middle of May and has declined nearly $15 in a matter of six weeks,” says Andrew P. Griffith, agricultural economist at the University of Tennessee, in his weekly market comments. “The apex in the beef cutout came just prior to the Memorial weekend holiday and was closely followed by Father’s Day, which continued supporting the market.”
Although Independence Day is usually supportive to beef demand, there’s some question about whether there will be much of a boost this year, considering that it occurs in the middle of the week, and that extreme heat is expected across wide swaths of the nation.
“Looking deeper into the summer months, the dog days of summer will hamper cutout prices, as will a strong beef supply,” Griffith says. “Following the restocking of meat counters next week, packers will turn their attention to Labor Day, which is more than two months down the road. Could Choice beef test the $200 mark? It is more likely than not.”
Heading into the new week, trade issues will continue as a market focus. On Friday, Canada announced surtaxes on $16.6 billion worth of U.S. imports—including $170 million worth of beef products—beginning Jul. 1. That’s in retaliation for new tariffs imposed by the U.S. on steel and aluminum imported from Canada.
Friday to Friday Change*
Weekly Auction Receipts
|
Receipts June 29 |
Auction (head) (Change) |
Direct (head) (Change) |
Video/net (head) (Change) |
Total (head) (Change) |
|
182,800 (+18,800) |
47,400 (-18,400) |
66,800 (+49,800) |
297,000 (+50,200) |
CME Feeder Index
| CME Feeder Index | June 28 | Change |
| $142.00 | – 0.57 |
*Thursday-to Thursday for CME Feeder Index
Cash Stocker and Feeder
North Central
| Steers-Cash | June 29 | Change |
| 600-700 lbs. | $174.86 | + $3.62 |
| 700-800 lbs. | $160.65 | + $5.46 |
| 800-900 lbs. | $142.00 | – $0.52 |
South Central
| Steers-Cash | June 29 | Change |
| 500-600 lbs. | $160.31 | – $3.83 |
| 600-700 lbs. | $153.31 | – $2.03 |
| 700-800 lbs. | $144.33 | – $0.30 |
Southeast
| Steers-Cash | June 29 | Change |
| 400-500 lbs. | $157.61 | – $1.52 |
| 500-600 lbs. | $149.41 | – $3.83 |
| 600-700 lbs. | $141.55 | – $0.46 |
(AMS National Weekly Feeder & Stocker Cattle Summary)
Wholesale Beef Value
| Boxed Beef (p.m.) | June 29 ($/cwt) | Change |
| Choice | $211.96 | – $5.20 |
| Select | $198.57 | – $3.45 |
| Ch-Se Spread | $13.39 | – $1.75 |
Futures
| Feeder Cattle | June 29 | Change |
| Aug | $151.325 | + $2.125 |
| Sep | $150.950 | + $1.125 |
| Oct | $150.075 | + $0.600 |
| Nov | $149.750 | + $0.625 |
| Jan ’19 | $147.650 | + $1.200 |
| Mar | $146.225 | + $0.625 |
| Apr | $146.475 | + $0.900 |
| May | $144.850 | – $0.650 |
| Live Cattle | June 29 | Change |
| Jun | $107.000 | – $1.275 |
| Aug | $106.725 | + $0.825 |
| Oct | $110.025 | + $0.625 |
| Dec | $113.700 | + $0.750 |
| Feb ’19 | $116.325 | + $0.875 |
| Apr | $117.300 | + $0.700 |
| Jun | $110.150 | + $0.325 |
| Aug | $108.975 | + $0.175 |
| Oct | $110.550 | + $0.450 |
| Corn futures | June 29 | Change |
| Jul | $3.502 | – $0.070 |
| Sep | $3.594 | – $0.070 |
| Dec | $3.712 | – $0.068 |
| Mar ’19 | $3.812 | – $0.062 |
| May | $3.880 | – $0.064 |
| Jul | $3.942 | – $0.060 |
| Oil CME-WTI | June 29 | Change |
| Aug | $74.15 | + $5.57 |
| Sep | $72.46 | + $4.83 |
| Oct | $70.92 | + $4.13 |
| Nov | $70.16 | + $3.82 |
| Dec | $69.49 | + $3.53 |
| Jan | $68.85 | + $3.29 |
Equities
| Equity Indexes | June 29 | Change |
| Dow Industrial Average | 24271.41 | – 309.49 |
| NASDAQ | 7510.30 | – 182.52 |
| S&P 500 | 2718.37 | – 36.51 |
| Dollar (DXY) | 94.51 | – 0.03 |