Friday markets
It was a quiet day in cattle markets. The industry had a great week selling feeder cattle. Western Video’s sale produced strong prices for producers and even stronger prices for those who placed their cattle in production protocol programs such as NHTC, verified natural, Gap 4 and third party-verified programs. These programs earned producers from $20-30/cwt premiums over fresh-weaned calves or long-weaned backgrounded cattle.
Futures markets were very bullish on feeder cattle and cautious on live cattle. ShayLe Stewart at DTN described the futures markets, saying, “Live cattle contracts are trading mostly higher other than the spot August contract which is just mildly lower. August live cattle were flat at $103.27, October live cattle are up $0.27 at $106.87 and December live cattle are up $0.60 at $110.70.
“Coming off two big days of aggressive trading, the market seems tapped out as traders are looking to the weekend and aren’t interested in upping the ante (thus far anyways) before the day closes. Cash cattle trade is at a mere standstill as feeders want their full asking prices of $97 to $98 in the South and $158 to $160 in the North.
“Thus far packers haven’t seemed too interested in meeting them at their desired priced. It wouldn’t be surprising to see a couple more clean-up deals transpire, especially in the North where trade has been slimmer thus far.
“Boxed beef prices are lower: Choice down $0.06 ($200.74) and Select down $0.87 ($190.43) with a movement of 67 loads (40.99 loads of Choice, 8.47 loads of Select, 10.04 loads of trim and 7.73 loads of ground beef).
“Feeder cattle contracts are seeing some mild resistance in the spot August contract as well as some further deferred months but for the most part the complex is gingerly trading higher following Wednesday and Thursday’s strong trade. August feeders are up $0.10 at $142.70, September feeders are up $0.57 at $143.32 and October feeders are up $0.40 at $143.60.
“The hunger for good news, strong feeder cattle sales throughout the countryside, the unwavering strength from cattlemen and affordable corn prices have allowed the market to rise in a time when most assumed that lower, steady trade was all that was in store for the complex. If the market can keep this with its current pace through closing, a stronger undertone should carry into next week,” Stewart surmised.
Slaughter volume is down a bit. Packers were expected to process just 15,000 head today. For the week, they have run 585,000 head through plants, 5,000 lower than last week. Last year, the same week saw 607,000 head processed, which were 37 pounds lighter. Analysts say that we will work through the backlog of cattle quicker than most folks think.
Cassie Fish’s eye on the market reports, “CME live cattle futures have posted a big outside week with a higher close, breaking out of the trading range it had been confined in since early May. Despite being overbought, futures pushed to new highs and open interest increased notably the last two trading days.
“It is stating the obvious that futures are looking past the immediate fundamentals. Short hedgers are losing money on the cattle that are being harvested, $200 to $400 per head while the basis slingshot move is putting some hedgers in the red on their futures position,” Fish continued.
“The futures rally has enhanced the optimism of those buying replacement cattle and cash feeder cattle prices have hit the highest level since February.
“Today’s futures action has been quiet following two very active days, with Aug LC backing off and staying red, the bear spreads reasserting after a couple of days. But all in all, the chart picture is positive, and its likely fund buying has increased, enticed by the technical action.
“Cash trade has continued at $97 late yesterday in western Nebraska and $160 in northwest Iowa this morning. The weekly negotiated trade total is 84k head, not tiny but the first sub-100k head trade volume in three weeks.
“This week’s slaughter is estimated at 650k to 655k head. Yesterday’s actual slaughter for week ended July 4 was reported and the actual kill fell short of the estimate by 12k head—something that has become commonplace since post-COVID production has resumed.” — Pete Crow, WLJ publisher
