Tuesday markets
Pressure on grain commodities due to Hurricane Ida and questions about restoring ports in the Gulf of Mexico led cattle futures lower.
Live cattle futures declined, with the August contract down $1.30 to $118.95 and the October contract down $1.42 to $126.90. The August contract ended trading today.
“The expiration of August live cattle today was ugly,” wrote Cassie Fish, market analyst for The Beef. “The settlement of $118.95 was 375 points below the June expiration and the lowest expiration since April. This performance is on the heels of last week’s check of the 2020 high by the August contract.
“October live cattle closed below its 40-day moving average for the first time since July 21 and is behaving defensively as well. Perhaps the hefty premiums boldly reached last week now have the appearance of being too high and not grounded in reality.”
Cash trade was at a standstill for all major feeding regions, with 385 head sold. On the formula side, 24,900 head averaging 872 lbs. sold for an average of $203.23.
“This week very few cattle have traded following last week’s light volume, as falling futures have grabbed the attention,” Fish remarked. “Estimates for this week’s slaughter are 645k to 655k, depending on how many plants schedule a shift on Saturday.”
Slaughter for the day is expected to be 121,000 head, a thousand head above last week.
Boxed beef prices were lower today on 89 loads, with the Choice cutout down 67 cents to $342.11 and the Select cutout lower 52 cents to $312.03.
The National Weekly Direct Beef Type Price Distribution report was released for the week ending Aug. 30. The report showed the average live basis distribution as:
• Negotiated purchases: $125.54.
• Formula net purchases: $125.69.
• Formula contract net purchases: $125.08.
• Negotiated grid net purchases: $124.34.
For dressed purchases:
• Negotiated purchases: $204.38.
• Formula net purchases: $199.42.
• Formula contract net purchases: $189.72.
• Negotiated grid net purchases: $199.55.
Feeder cattle
Feeder cattle futures were also lower, with the September contract down $1.05 to $163 and the October contract was lower $1.20 to $167.75. The CME Feeder Cattle Index was down 2 cents to $159.54.
“The gains seen early in the week associated with lower feed and corn prices were not enough to create market support Tuesday morning,” Rick Kment, DTN contributing analyst, wrote in his midday comments.
“October and November futures are holding triple-digit losses following active pressure in most commodities, including live cattle and corn futures. October futures still remain in the top third of recent trading ranges, as traders are slowly but steadily backing away from contract highs set last week. End-of-month market pressure may continue to add further weakness to the complex as trade volume remains generally sluggish.”
Corn futures traded down with the grain complex, with both the September and December contracts closing at $5.34 a bushel. September was down 6 cents and December was lower 8 cents.
New Mexico: Roswell Livestock in Roswell sold 805 head on Monday. Compared to the previous auction, steer calves and feeders sold $2-4 higher on limited receipts. Heifer calves under 600 lbs. were $5 higher. A small group of steers averaging 523 lbs. sold between $187-196, averaging $191.99.
Crop progress
Corn conditions remained steady this week despite the continued drought and excess moisture in the eastern Corn Belt. The good-to-excellent rating is 60 percent and corn dented was estimated at 59 percent—4 percent above the five-year average. The Dakotas and Minnesota still remain poorly rated, but the poor to very poor improved 1 percent in the region to 15 percent poor to very poor.
Topsoil conditions show the same states as short to very short, with Washington state continuing to show the driest conditions at 94 percent, followed closely by Montana at 89 percent, Oregon at 87 percent and California at 85 percent.
WLJ will publish a complete listing of pasture conditions with the Drought Monitor on Thursday. — Charles Wallace, WLJ editor
