Wednesday markets
Live fed cattle prices have been slowly eroding. However, now that the June futures contract is gone, we turn to August, which gained $1.02 to $97.30, and the October contract also gained 77 cents to $100.67, offering a bit of optimism to cattle feeders. Negotiated cash trade has been slow to develop. There had been some early week trade at $95-98 live and $148-155 dressed, with only 28,000 head traded on the cash market. Packers are working with more formula cattle on a short slaughter week.
Beef markets are struggling to stay above $200 on Choice boxed beef. Packers’ willingness to turn the volume up on cattle slaughter is remarkable. Estimated slaughter was 121,000 head today and 363,000 head for the short week through Wednesday, which is 4,000 head over last week’s pace of 680,000 head.
The Choice cutout was down $1.59 to $205.38 and Select was trading at $198.43 on 193 loads. The grinding markets remain strong but are weaker; 90 percent fresh lean was at $248.94 and the 50 trim was down to $52.81 so there is plenty of fat on the market from these big carcasses. The cow beef cutout was $202.20 on June 26.
ShayLe Stewart at DTN said, “Understanding the live cattle market when fundamentally understanding the challenges the industry is up against is truly baffling. Last week’s data shared that carcass weights are 47 pounds over year-ago levels for steers, and 37 pounds over a year ago for heifers; we know that the backlog of cattle still has to be processed through and concerns about beef demand through the third quarter are heightened—all of which should be bearish sediments but yet the board scales modestly higher.
“Cash cattle trade has developed modestly throughout the countryside with Southern cattle selling for $95 live ($1 lower than last week) and Northern cattle selling dressed for $153 to $155, which is mostly steady for the week. Asking prices remain firm at $98-plus in the South and $158 in the North for dressed cattle.”
Cassie Fish in The Beef commented that “CME cattle futures are determined to discount bad news and maintain their premium. Whether the fundamentals of Q3 prove the futures market is too optimistic and the front-month ends up sliding lower as time wears on, remains to be seen.
“Many want to put an optimistic face on this difficult situation that the cattle feeding industry finds itself. It is the packer who controls throughput, not the feeder. And given the impossibility of knowing that throughput for the next three months, there is a great deal of hope attached to the idea that it will be large enough to reduce the current backlog to a manageable level.
“Those in the feeding business know there were a great many wheat pasture cattle placed with out-dates in Q3, that will overlap the backlog. There is a backlog of market-ready hogs also that will hit Q3, some say close to 2M. Both cattle and hogs are at and will continue to be marketed at record weights,” Fish said.
“Thanks to a shocking reduction by the USDA in corn acreage yesterday, corn has staged a 30-cent rally quickly which is putting pressure on feeders. Feeders are about $4-8 higher than they were back in April when corn was as high as it is now. Feeder cattle futures are also carrying an optimistic premium to the feeder index as the industry hopes the lower March and April placements will offset the backlog now in place for two months.”
National Stockyards in Oklahoma City offered 9,182 head and compared to the prior week, feeder steers steady to $4 higher. Feeder heifers were $4-7 higher. Demand was considered good for feeder cattle. Steer and heifer calves were steady to $4 higher, with demand moderate to good for calves, and quality mostly average. Several cattle off summer pasture sold, and several of weighed over 900 lbs. Weather has turned hot and high winds have caused drought areas to increase. Benchmark steers weighing 769 lbs. averaged $133.38.
Joplin Regional Stockyards, Carthage, MO, offered 10,768 head and compared to the prior week, steer calves were steady, heifer calves were steady to $3 higher, yearling steers were steady to $3 higher, and yearling heifers steady. Demand was moderate to good amid heavy supply including a Yearling Special with loads of true yearling cattle, off the grass, in the offering. Benchmark steers weighing 775 lbs. averaged $134.07.
Sioux Falls Regional Livestock in Worthing, SD, reported 1,421 head offered and compared to the prior week, feeder steers were too lightly tested last week to make a good comparison. Feeder heifers sold with a steady to higher undertone. Demand was characterized as good for this offering of yearling steers and heifers, with many small bunches and packages along with several longer strings including full loads and multiple load lots. The flesh condition was attractive overall as there were many light-fleshed cattle. The market was active with many farmer feeders on the seats who came to town to buy cattle. Benchmark steers weighing 770 lbs. averaged $141.83. — Pete Crow, WLJ publisher
