Cattle markets finished the bullish week on a high note Friday, supported by increased cash fed cattle strength. Negotiated fed cattle prices for the week were mostly $4-$7 higher on a live basis at mostly $134.00-$137.50/cwt. Dressed trade was up to $10 higher week to week at $215-$220.
“Packer profitability has been better than expected and helped improve cash prices after sliding the past couple of weeks,” say analysts with the Agricultural Marketing Service. They add that fewer cattle have been grading Choice and packers have been willing to chase them.
Choice boxed beef cutout value was 34¢ lower Friday afternoon at $245.24/cwt. Select was 84¢ higher at $218.06.
Other than spot Jun trying to catch up to the week’s hefty increase in cash trade, traders were content to square Live Cattle positions on Friday, while Feeder Cattle futures churned ahead.
Live Cattle futures closed $3.40 higher in spot Jun, and then an average of 10¢ lower, except for 60¢ and 35¢ higher at the back.
Feeder Cattle futures closed an average of $1.40 higher in the front three contracts , an average of 34¢ higher in the next three, and then 87¢ lower and $2.07 higher at the back.
You’ve got to wonder how much of the week’s increase has to do with the Board betting on the reality of U.S. beef going to China. In the meantime, there’s little doubt that India’s announcement last week to ban the sale of cattle and buffalo for slaughter should provide support to global beef export prices.
Major U.S. financial indices closed at record-high levels on Friday despite a monthly unemployment report that missed estimates. Total non-farm payroll employment increased by 138,000 in May, according to the U.S. Bureau of Labor Statistics. That’s about 50,000 fewer than the trade expected. At 4.3%, the nation’s unemployment rate was slightly less than the previous month’s already-low rate.
The Dow Jones Industrial Average closed 62 points higher. The S&P 500 closed 9 points higher. The NASDAQ closed 58 points higher.
“The concern for producers is not achieving the highest price of the year, which may occur on one specific day, but hitting a period when prices are strong and profitable,” says Andrew P. Griffith, agricultural economist at the University of Tennessee, in his weekly market comments. He adds that recent strength in Feeder Cattle futures provides support to summer feeder cattle prices, which typically peak between late July and early September.
“There is no guarantee prices will remain this strong, but there is also no information suggesting prices should decline,” Griffith says. “Thus, producers who are not willing to take on the risk of declining prices may want to consider price risk management strategies at this time. Alternatively, producers willing to take a few risks may want to sit tight to see what happens the next few days.”