Monday markets
Feeder cattle markets were robust today with Superior Livestock Auction selling yearlings from everywhere in the country. The futures have helped support this market, with the August futures contract moving 70 cents higher to $136.15 and September moving $1.25 higher to $137.22. Most of the 850-lb. steers were trading from $130-$135 with program cattle trading up to $167.50. Superior is enjoying a good market today.
ShayLe Stewart, DTN market analyst, said, “Feeder cattle contracts haven’t forgot about the big price move made last week before Thursday’s close and have picked up that support and are carrying optimism into this week’s marketplace. Feeder cattle prices have been truly commendable throughout the early summer sales which came as a surprise to most but as prices keep creeping higher and higher, the feeder cattle contracts could be subject to downward pressure when cash cattle prices continue to develop for lower money.”
The National Feeder Cattle Summary reported compared to last week, steers and heifers sold steady to $2 higher.
“There were lighter receipts this week due to the holiday occurring this last weekend, especially in the Northern Plains and Southeast, as most sales take some time off to do maintenance on their yards and get that new paint smell in the sales arena.
“Drought conditions in some Southern and Northern Plains regions are in the minds of those that are affected by the situation. Cattle in those areas are coming to the sales off dry summer grass or coming out of grow yards. Several cows are headed to town in Wyoming and western Nebraska.
“Order buyers started doing business on very good demand at the Green City Livestock Auction in Missouri, offering around 4,200 head with near 250 head of 900-950-lb. steers averaging 919 lbs., sold with a weighted average price of $132.41.
“The most in demand on Wednesday at the location was the 500-600-lb. heifers that sold with a weighted average of $148.16. With larger production available, packing plants continue to refill the pipeline and increase beef items to consumers. Beef and pork will have to find price levels to clear record production that will persist for several months.
“Boxed beef cutout prices continue to see pressure with Select cuts now under the $200 price level. Retailers will no doubt have to adjust their counter prices and hopefully feature more beef items in order to move more product.”
There were 4,862 head sold Monday; negotiated cash trade was slow on light demand in the western Corn Belt. Compared to last week in the western Corn Belt, a few early dressed purchases traded $5-7 higher at $160. The latest established live market in the western Corn Belt was last week, with live purchases from $96-97.
Trade was limited on light demand in Kanas and Nebraska. A few early live purchases traded from $93-95 in Kansas with a few early dressed purchases in Nebraska at $160. However not enough purchases in either region for an adequate market test. Trade was inactive on light demand in all other regions.
The latest established market in the Texas Panhandle was last week with live purchases from $93-95. In Kansas last week, live purchases traded mostly at $95. Last week in Nebraska, live purchases traded from $95-96 with dressed purchases from $154-155. Last week in Colorado, live purchases traded mostly at $96. There were 33,400 head priced today on the formula grid trade at $154.66 weighing 885 lbs.
Cassie Fish in The Beef said, “CME cattle futures rallied big Thursday and followed through today, as futures turn their eye to better days, much like the stock market has done. It’s been since May 8, 2020 since Aug and Oct LC have traded as high as today, though then cash averaged $104.50 and last week, cash averaged $94.47. Then Choice boxes were $460. Now they are $205. Packer margins have collapsed in the last two months to normal levels.
“So, what now? Can cattle futures sustain a rally or was this just a short-covering push? The CME’s decision to raise spread margins on hedgers last Wednesday afternoon by 2.5 times certainly contributed to the rally as hedgers, caught unaware, scrambled to make margins calls prior to the holiday weekend.
Open interest dropped 3,553 contracts last Thursday. Of course, there is some roll happening and Goldman will get underway tomorrow, but it is highly probable the margin change was responsible for some of Thursday’s electric move.” — Pete Crow, WLJ publisher
