Thursday markets
Managing two straight days of gains in the livestock sector has been elusive in the last couple of weeks. Both live and feeder cattle were slightly lower, erasing some of yesterday’s gains. The Livestock Slaughter report showed July cattle slaughter down 4 percent from last year.
August live cattle was down 62 cents to $123.40 and the September contract was lower 90 cents, closing at $128.15.
“The inability for cattle futures to string together any market consistency remains a challenge. October live cattle contracts have not traded in the same direction for two consecutive days since Aug. 3,” Rick Kment, DTN contributing analyst, wrote in his 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.”
Today, cash trade was moderate, with 21,184 head selling between $121-129.50, averaging $124.29. Dressed steers sold between $198-205, averaging $203.06. USDA reported there were not enough purchases in Nebraska or the western Corn Belt region for a full market trend, but a few live trades in Nebraska sold for $126. On the formula side, 26,200 head averaging 884 lbs. sold for $199.74.
Slaughter is expected to be 119,000 head for the day, bringing the weekly total to 479,000 head—17,000 head above last week.
USDA’s National Agricultural Statistics Service released the monthly Livestock Slaughter report showing beef production for July at 2.32 billion pounds, down 4 percent below the previous year. Cattle slaughter totaled 2.85 million head, down 2 percent from July 2020. The average live weight was down 14 pounds from the previous year, at 1,349 pounds.
Boxed beef prices continue to climb on higher demand, although the Choice cutout shows some signs of slowing. The Choice cutout was up $1.55 to $341.63 and the Select cutout was higher $6.61 to $316.41.
According to Robin Schmahl, DTN contributing analyst, estimates for the Cattle on Feed report on Friday show the on-feed average estimate on Aug. 1 at 98.3 percent, with a range of 97.7-98.8 percent. Placements are estimated at 93.2 percent, with a range of 90.7-95.5 percent. Marketings for July are estimated at 96.5 percent, with a range of 95.2-97 percent.
The weekly beef export report reported sales of 11,100 metric tons (mt), with shipments of 19,700 metric tons. These totals slipped 18 percent from week-ago levels and are down 42 percent from the four-week average. Exports of 19,700 mt were up 6 percent from the previous week but down 1 percent from the prior 4-week average. The destinations were primarily South Korea (5,600 mt), Japan (4,700 mt), China (4,200 mt), Mexico (1,200 mt), and Taiwan (1,100 mt).
Feeder cattle
Feeder cattle also took back some of the gains yesterday, with the August contract down 57 cents to $158.27 and the September contract lower 45 cents to $162.90. The CME Feeder Cattle Index was up 18 cents to $155.42.
“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,” Kmet wrote.
Corn traded lower throughout the day and closed down double-digits. The September contract was down 11 cents to $5.50 and the December contract was lower 14 cents to $5.50 a bushel.
South Dakota: Hub City Livestock in Aberdeen sold 3,120 head on Wednesday. Compared to last week, steers 800-900 lbs. sold mostly steady; 901-950 lbs. were steady to $2 higher and 951-1,000 lbs. sold $2-3 higher. Heifers were not well compared for a trend due to different weight classes. Demand was good to very good for another large yearling offering of loads and strings, the majority of these off grass. Benchmark steers averaging 831 lbs. sold between $159.50-163, averaging $161.84.
New Mexico: Clovis Livestock auction in Clovis sold 1,032 head on Wednesday. Compared to the previous auction, steer and heifer calves under 600 lbs. sold unevenly steady to $5 higher, with the most advance on 500-600 lbs.; feeders over 600 lbs. were $1-6 higher. A small group of steer averaging 673 lbs. sold between 148.50-150.
Oklahoma: OKC West in El Reno sold 6,685 head on Wednesday. Compared to last week, feeder steers sold $1-3 higher. Feeder heifers traded $2-4 higher. Steer and heifer calves sold mostly $3-5 lower on light to moderate demand. Benchmark steers averaging 738 lbs. sold between $156.50-164, averaging $161.49. — Charles Wallace, WLJ editor
