While futures traded mostly sideways last week, cash trade found some momentum among higher boxed beef prices.
Live cattle futures found some gains throughout the week but ended up closing Thursday closer to the prior week’s levels. The August contract gained about 25 cents to close at $123.40, and the October contract lost 34 cents to close at $128.15.
“October live cattle contracts have not traded in the same direction for two consecutive days since Aug. 3,” remarked Rick Kment, DTN contributing analyst, in his Thursday midday comments. “This created a systematic back-and-forth pattern that has lasted well over two weeks and is creating uncertainty about bringing additional trade activity back into the market until the complex is able to break out of this price pattern.”
Cash trade volume picked up last week, with the bulk of trades happening Wednesday and Thursday. Live steers sold as high as $129.50 but averaged between $121-129.50. Dressed steers reached as high as $205 but sold around the $203 mark. Cash trade through Aug. 15 totaled 75,996 head. Live steers averaged $123.40, and dressed steers averaged $200.58.
The Fed Cattle Exchange hosted their weekly online sale on Wednesday, offering 3,011 head. A total of 1,328 head actually sold, 76 head were scratched from the auction and 1,607 head were listed as unsold as they did not meet the reserve prices that ranged from $120-125. High bids ranged from $120-122.
One of USDA’s newest reports, the National Weekly Direct Beef Type Price Distribution report, was released for the week ending Aug. 16. The report showed the average live basis distribution as:
• Negotiated purchases: $123.26;
• Formula net purchases: $124.29;
• Formula contract net purchases: $125.67; and
• Negotiated grid net purchases: $123.43.
For dressed purchases:
• Negotiated purchases: $200.21;
• Formula net purchases: $196.68;
• Formula contract net purchases: $191.23; and
• Negotiated grid net purchases: $197.67.
Slaughter through Thursday totaled 479,000 head, 17,000 head higher than the same time a week earlier. Total slaughter for the week ending Aug. 13 is projected to be 639,000 head. Actual slaughter through the first week of August totaled 644,342 head—a level the industry has been stuck at for several weeks now.
Boxed beef prices continue to gain steam, with demand for Labor Day grilling kicking into high gear. Over one week, the Choice cutout closed $23.70 higher to $341.63, and the Select cutout increased $26 to $316.41.
“The $60 rally in Choice boxes since the summer low has been supported by the entire carcass, but no primal more than the rib, which gained $47 [two weeks ago] and is trading almost as high as the 2020 pandemic high—without the slaughter shortfall this time,” wrote Cassie Fish, market analyst, in The Beef. “‘Normal’ boxed beef prices would have topped in August, but there is nothing normal about this price increase.”
Feeder cattle
Feeders futures lost some value over the week. The August contract closed 43 cents lower to $158.27, and the September contract closed 65 cents lower to $162.90. The CME Feeder Cattle Index lost 83 cents from the prior Thursday, closing at $155.42.
Corn futures also experienced some losses, with the September contract down 19 cents to $5.50 and the December contract down 25 cents, also to $5.50.
“Sharp losses in grain prices are creating some opportunities to lock in lower feed costs, but this is not seen as totally positive to the feeder cattle market, as traders remain concerned that more widespread shifts in commodity investments will develop from the noncommercial segment of the market,” Kment said.
USDA’s Crop Progress report showed the good-to-excellent corn rating at 62 percent—a 2 percent drop from the week prior. Nebraska dropped 2 percent in the good-to-excellent rating, Kansas and Iowa dropped 3 percent and South Dakota dropped 6 percent. Last week, corn in the dough stage experienced a significant jump to 73 percent from the previous week’s 56 percent.
Kansas: Winter Livestock in Dodge City sold 1,370 head Wednesday. Compared to the previous sale, feeder steers 800-950 lbs. sold $2-5 higher; steers 650-800 lbs. sold $2 lower; and steer calves 450-650 lbs. sold $4-10 higher. Feeder heifers 800-900 lbs. sold $2 lower, and heifers 450-800 lbs. sold $5-10 higher. Benchmark steers averaging 791 lbs. sold between $150-153, averaging $152.57.
Missouri: Joplin Regional Stockyards in Carthage sold 4,801 head Monday. Compared to the last sale, feeder steers and heifers traded steady at the mid-session. Benchmark steers averaging 773 lbs. sold between $155-157, averaging $155.82.
Montana: Miles City Livestock in Miles City sold 1,017 head on Tuesday. Compared to the prior sale, feeder steers were too thinly tested to form an accurate market trend. The only comparison available was yearling steers 800-850 lbs., which traded $1.50 lower. Feeder heifers under 750 lbs. were too lightly tested the previous sale for any comparisons. Yearling heifers between 750-950 lbs. traded steady to $5 lower, while those weighing over 950 lbs. traded $2.50 higher. A group of steers averaging 821 lbs. sold for $157.75.
New Mexico: Roswell Livestock in Roswell sold 635 head on Monday. Compared to the previous auction, there was not an accurate comparison on steer and heifer calves or feeders due to limited receipts, but a lower undertone was noted. A small group of steers averaging 562 lbs. sold between $167-168.
Oklahoma: Oklahoma National Stockyards in Oklahoma City sold 6,341 head Monday. Compared to the previous sale, feeder steers sold steady to $2 higher, and feeder heifers sold unevenly steady. Steer calves sold $5-7 lower, and heifer calves sold unevenly steady. Benchmark steers averaging 773 lbs. sold between $145-162, averaging $153.56.
South Dakota: Sioux Falls Regional Cattle Auction in Worthing sold 2,385 head Monday. Compared to the sale two weeks earlier, feeder steers and heifers sold unevenly steady. The drought has forced early weaning and sale of cattle that may have been backgrounded. Benchmark steers averaging 789 lbs. sold between $158.50-164.50, averaging $161.89. — Anna Miller, WLJ managing editor
