Cattle futures stumbled into a sharp correction this past week, pressured by bearish sentiment early on before regaining some ground by Thursday.
Live cattle futures closed lower over the week. The October contract lost about $4 to close at $232.27, and the December contract lost about $4 to close at $234.12.
“It’s been a dramatic correction week for CME cattle futures,” wrote Cassie Fish, market analyst, in The Beef on Thursday. “Plenty of bears have surfaced, convinced the market has made a major top and demand has already run out of steam.”
Cash trade through Thursday totaled about 34,000 head. Live steers sold from $235-240 and dressed steers sold from $373-378.
“The anticipated cash market correction is underway, but so far, it’s a healthy pull back as packers are willing to add inventory at lower money,” Fish said.
Cash trade for the week ending Sept. 7 totaled 73,490 head. Live steers averaged $242.64, and dressed steers averaged $383.20.
The national weekly direct beef type price distribution for the week of Sept. 1-8 was the following on a live basis:
• Negotiated purchases: $242.75.
• Formula net purchases: $246.60.
• Forward contract net purchases: $216.99.
• Negotiated grid net purchases: $251.53.
On a dressed basis:
• Negotiated purchases: $383.57.
• Formula net purchases: $387.37.
• Forward contract net purchases: $317.50.
• Negotiated grid net purchases: $387.05.
“Last week, there was little difference in live prices between north and south,” the Cattle Report wrote on Thursday. “Falling placements in Texas, when compared to other regions, are directly related to the closing of the border. Texas beef plants will struggle to acquire inventory in the coming months leaving Kansas plants to look north for fed supplies to supplement Kansas feedlot supplies.”
Slaughter through Thursday totaled about 459,000 head, compared to 363,000 head a week earlier (which was the week of Labor Day). Total slaughter for a week earlier is projected at 487,000 head. Actual slaughter for the week ending Aug. 30 was 566,581 head. The average steer dressed weight was 953 lbs., 1 lb. above the prior week.
“Bottomline, the 3.4% shortfall in domestic production will likely be ‘covered’ by imports and less exports than a year ago,” Fish said. “The U.S. consumer has paid more for beef this year than any other. Perhaps a saving grace is that many items cost more than a year ago.”
Boxed beef prices lost momentum, with the Choice cutout losing about $14 to close at $400.79 and the Select cutout losing about $10 to close at $379.95.
Feeder cattle
Feeder cattle futures also closed lower over the week. The September contract lost about $4 to close at $355.22, and the October contract lost about $6 to close at $352.35.
Feeder cattle tumbled lower on the board on Tuesday, closing limit down.
“What’s important to keep in perspective here is that even though it’s frustrating, and even though so many factors say that today’s actions simply shouldn’t be, traders don’t have to obey sound logic, and not every move complements the reality of the countryside’s fundamentals,” ShayLe Stewart, DTN livestock analyst, wrote in her Wednesday midday comments.
By Thursday afternoon, feeder cattle futures were trending higher again by a couple of dollars.
The CME Feeder Cattle Index lost 4 cents to close at $365.47.
Corn futures traded sideways over the week. The September contract was unchanged at $3.99, and the December contract was also unchanged at $4.19.
Iowa: Russell Livestock in Russell sold 3,119 head on Monday. Compared to the last auction two weeks earlier, light steers under 550 lbs. sold sharply higher, while steers over 550 lbs. sold steady to $15 lower. Heifers under 550 lbs. also sold sharply higher, while heifers 550-800 lbs. sold lower, although not well compared. Benchmark steers averaging 768 lbs. sold for $359-373 and averaged $364.79.
Missouri: Joplin Regional Stockyards in Missouri sold 13,500 head on Monday. Compared to the last sale held two weeks earlier, feeder steers under 450 lbs. sold $5-10 lower and heavier weights sold steady to $10 higher. Feeder heifers sold unevenly from $10 lower to $12 higher. Benchmark steers averaging 766 lbs. sold from $361-383, averaging $369.10.
Nebraska: Tri-State Livestock in McCook sold 2,764 head on Monday. Due to the lack of a recent auction, an accurate comparison could not be made. Benchmark steers averaging 784 lbs. sold for $384.25-394, averaging $388.80.
New Mexico: Roswell Livestock in Roswell sold 1,005 head on Tuesday. Compared to the previous auction, steer calves 300-400 lbs. sold $2-15 higher, 400-500 lbs. were $12-19 higher and 500- 600 lbs. traded $13-20 higher. Feeder steers 600-700 lbs. sold $3-15 higher and 700-750 lbs. were $7 lower. Heifer calves 300-450 lbs. sold steady and 450-550 lbs. were $10-20 higher. Feeder heifers 650-700 lbs. sold steady to $5 higher. A group of steers averaging 706 lbs. sold for $352-370 and averaged $359.76
Oklahoma: Oklahoma National Stockyards in Oklahoma City sold 9,400 head on Monday. Compared to the last test two weeks earlier, feeder steers sold steady to $3 lower and feeder heifers sold mostly steady. Benchmark steers averaging 773 lbs. sold from $360-374, averaging $368.12.
South Dakota: Sioux Falls Regional in Worthing sold 3,339 head on Monday. Compared to two weeks earlier, there were few comparable sales of feeder steers and heifers, but they sold steady to firm. A group of steers averaging 822 lbs. sold from $364-376, averaging $372.26.
Utah: Producers Livestock in Salina sold 1,436 head on Wednesday. Compared to the last auction, feeder cattle sold sharply lower on calves and yearlings. Benchmark steers averaging 720 lbs. sold for $325-355 and averaged $338.32. — Anna Miller Fortozo, WLJ managing editor
