Wednesday markets
It was a strange day in the cattle markets; futures markets didn’t seem to offer any direction and cash markets were slow to develop—only 15,000 head have traded for the week. Live trade so far has been $100 and dressed trade $163. The Fed Cattle Exchange sold most of their offering today.
Slaughter has been slower; estimated slaughter for the day was 117,000 head, last week was 346,000 through Wednesday and the same period last year, 361,000 were processed. Boxed beef markets inched a bit higher with Choice gaining 42 cents to $204.24 and Select up 5 cents to $190.45 on 160 loads.
ShayLe Stewart, DTN livestock analyst, said today’s futures markets were, “Sitting quietly through most of Wednesday morning, live cattle contracts are mixed. Nearby contracts dip $0.07-0.32 lower while some deferred contracts rally $0.10-0.17 higher. As the market plays cat and mouse, trading mostly steady, the market looks for a stable sense of direction as mixed signals seem to be all that the market has at midday. Cash cattle prices have the opportunity to trade higher, but packers are reluctant to be overly aggressive. There are a few bids on the table in Nebraska, but the country remains fairly quiet.”
She also pointed out, “The Fed Cattle Exchange Auction listed a total of 1,474 head, with 1,400 actually sold, and 74 head listed as unsold. The state-by-state breakdown looks like this: Kansas, 350 total head, with 276 head sold at $100, 74 head unsold; Texas, 788 total head, all of which sold at $99.75-$100; Oklahoma, 336 total head, all of which sold at $100.
“The delivery date/weighted averages breakdown is as listed: 1-9-day delivery: 960 head total, all sold with a weighted average price of $99.95; 1-17-day delivery 514 head total, of which 440 head sold, with a weighted average price of $100.”
Rick Kment at DTN feels a changing market in the wind. “Traditionally, when negotiated trade is steady to higher than formula cash cattle prices, slight to moderate supply tightness is indicated. Although the current backlog of cattle seen through the industry and previous reductions of slaughter levels has changed the dynamic of market structures, this pattern may become more evident as packers work to maintain daily and weekly slaughter levels akin to year ago levels. Daily slaughter rates remain near 120,000 head.
“These levels are still below the aggressive early spring levels and have not made up for the losses seen during March and April, but current daily runs are generally steady to 2,000 head per day lower than year-ago levels. This will continue to put the focus on packers’ need to gain access to cattle through the rest of July and well into the fall months.
The high temperatures through the week has helped to stimulate buyer support and may cause the wide price premiums for formula traded cattle to become nonexistent over the near future. In general, as negotiated trade remains at or above formula prices, tighter supplies should start to develop.
“This diversion in chart trends flies in the face of expectations that cattle supplies will be burdensome over the coming weeks. However, with a combination of falling slaughter weights and spread reversals in negotiated trade charts, the potential for tighter market-ready cattle could help support prices in the next several weeks.
“With cash cattle prices in both negotiated and formula-based trade remaining at a strong discount to futures trade, it is clear that ‘normal’ market relationships have not redeveloped.”
Hub City Livestock Auction in Aberdeen, SD offered 1,343 head today and reported, “Different weight classes than last week, so an accurate trend cannot be established. Good to very good demand for this offering of mostly packages and loads. Similar to last week, flesh varied from light to heavy depending on where the cattle were coming from. Quality today mostly average to attractive. An active market seen for this offering. Wheat harvest is just getting a good start in the area and many producers are still putting up hay, feed supplies look to be very plentiful this year.”
Benchmark steers weighing 765 lbs. had a weighted average price of $149.55. — Pete Crow, WLJ publisher
