Not much happened in the cattle and beef markets during the last week of 2018, but what did happen was pretty good.
The near-term cattle futures were feeling pretty good about cash cattle markets. With December live settling at $122.92, February live at $123.95, and January feeders at $149, we saw some new contract highs coming into the new year.
Cash fed cattle markets were slow to develop, and some traders felt it could go into Saturday. Cold, wet winter weather moved through feeding country, dampening any hope of getting significant trade volume started. No one wants to ship fed cattle or receive feeders in this kind of weather.
There was some scant trade at $120 live and $190 dressed to a regional packer. Cattle feeders were offering cattle at $122 live and $194 dressed. USDA’s slaughter report for Thursday afternoon showed only 534 head of negotiated cash fed cattle having traded for the whole week at press time. This report was not affected by the government shutdown.
Packers will be buying for another holiday-shortened week interrupted by the New Year’s holiday. Last week, packers were expected to process about 490,000 total head for the week. Packers will need about the same number of cattle this week, perhaps a few more.
The boxed beef markets were steady to slightly stronger at $215 for Choice and $207 on Select product with reasonably good volume. According to Andy Gottschalk at HedgersEdge, “Retail reports for Friday through Sunday sales were positive for beef. Ham and turkey sales lagged expectations, which continues to confirm the belief that consumers’ desire for and spending on meat is moving up the protein ladder. Export volume for the last two reporting weeks is very positive. Overall demand factors favor beef, with continued good features by retailers.”
“It may only be the day after Christmas, but packers are already focused on ramping up slaughter levels and gathering inventory,” commented Cassie Fish of the Beef Report last Wednesday morning.
“Packers are being incentivized to push slaughter levels by strong beef demand and anticipated advancing cutout values. It’s very likely that the cutout will exceed the 2018 Q4 high early in 2019, buoyed by holiday-reduced output.”
Gottschalk also said, “The storm system moving across the heart of cattle feeding country will likely limit interest in feeders, as feedlot conditions deteriorate. The feeder and calf supply outside feedyards on Jan. 1 is estimated at +225,000 head from year-ago levels. December placements should be up 3-5 percent year over year.”
Most feeder cattle auctions were closed for the holidays. There were literally no cash reports available. — Pete Crow, WLJ publisher
