Consumers visiting their local meat counter to purchase steaks and hamburgers for grilling over Labor Day weekend may experienced some sticker shock over the price of beef and thought cattle producers must be making a lot of money.
The latest trade data for July provides additional indication that recent trends in U.S. and Mexican cattle and beef trade have changed dramatically. The 51 percent decrease in July imports of Mexican cattle, compared to last year, is a continuation of the change in Mexican cattle imports that has been happening for several months.
Fiscal 2014 agricultural exports are forecasted at $135 billion, down $5 billion from the fiscal 2013. Oilseeds and products are expected to decline the most, down $5.4 billion due to lower soybean and meal prices. Grain and feed exports are expected to fall $1.
It was another week of the “put it off ‘til Friday” mentality in the cash trade last week. By Thursday afternoon, barely 6,000 head had been confirmed sold on the negotiated market, for the week-to-date, these being numbers too low dayto-day to set a trend.
The Expectations Index stood at 101.3 in July, down 0.6 percent from June and the lowest level in seven months. Despite the decline, each of the four expectations indicators stood above 100 for the seventh consecutive month, which indicates restaurant operators remain generally optimistic about business conditions in the months ahead.
Cattle feeders’ reaction to the bullish Cattle on Feed (COF) report of holding firm on higher asking prices, and packers’ theoretic position of leverage with larger showlists and buying for a short kill week this week had the two parties on the sidelines of cash trade last week.
Calling the most recent Cattle on Feed (COF) report “bullish” is something of an understatement. Instead of the usual bovine mascot for that market scenario—horned, alert, ready for action— let’s substitute something more extreme. Like a rodeo bull or a Spanish fighting bull.
By the second quarter of 2014 the projections are above the futures price by $10 per hundredweight. Gessner said these prices, combined with new crop corn and hay prices remaining lower than last year, suggest profit potential for calves backgrounded throughout winter.
It seems the cash attention last week was on the feeder sales because negotiated cash fed sales were slow to “dead.” Very few bids and only tiny and sporadic sales had occurred by midweek. By Thursday afternoon only 4,679 head had been confirmed sold, making the volume too low for a market trend.
Cattle markets and boxed beef appear to have moved past the summer lows. Wholesale beef, fed cattle and feeder cattle markets are all generally moving in the same direction, rare for this year, and certainly not all in harmony yet. The Choice boxed beef cutout has increased about $8/cwt.