Wednesday markets
Cattle markets seem to have found a new trading range as futures and cash are closer and narrowing the basis. Slaughter levels are getting back to a normal pace; today’s estimated slaughter was 120,000 head, 8,000 more than same time last week.
Boxed beef markets are lower and fed cattle follow. June live cattle futures gained 17 cents to $96.50 and August was 7 cents higher to close at $96.85, while cash trade is trading between $99- 02. Feeder cattle futures were also higher with more optimism in the deferred months; August feeders were 70 cents higher to $133.57, September was 50 cents higher to $134.90 and November was 22 cents higher to $136.32.
Today, 36,233 fed cattle traded on the cash market and trade was considered moderate in all feeding regions. In the Texas Panhandle compared to Tuesday, live purchases traded steady to $2 higher from $100-102, bulk at $102. In Kansas compared to last week, live purchases traded $2-6 lower from $100-102, bulk at $102.
In Nebraska compared to last week, live purchases traded $2-6 lower from $100-102, bulk at $102. Compared to Tuesday, dressed purchases traded mostly $2 higher from $160-162. In the western Corn Belt compared to Tuesday, dressed purchases traded mostly $2 higher from $160-162. The latest established live market in the western Corn Belt was on Tuesday with live purchases from $99-102.
ShayLe Stewart, DTN livestock market analyst, commented, “Putting your finger on why packers would bid higher in the middle of the week when they’ve been able to buy cattle cheaper earlier in the week is challenging. But if God wanted to write an 11th commandment it may have been, ‘If packers buy cattle early in the week, it’s because they NEED cattle.’
“Seeing that a lot of the cattle that have been bought in Nebraska are set to be delivered late this week or early next week leads one to believe they are indeed short bought.”
Beef prices continue to fall as more supply becomes available. The Choice cutout was down $9.96 to $217.93 and Select was off $5.09 to $208.08. This decline should start to moderate but expect late summer trade to be around $200.00. Ground beef markets remain robust as the Fourth of July celebrations start.
Cassie Fish, market analyst in The Beef, points out the inevitable. “After a tumultuous time that persisted for months, the cattle market is settling into a slow and mundane pace. Futures traded only 35k contracts yesterday.
“The long-lived trading range persists. Premiums to current cash prices are creeping in beginning with the Dec 2020 contract throughout 2021 as the market prices in better times when the backlog has been eliminated.
“So, it goes as this market attempts to determine what the new normal post the 8-week-long COVID-19 disruption looks like and packer margins continue to retract.
“Boxed beef values keep dropping, rib and loin seasonally falling fast and hard and still a long way from summer lows. Ends and grinds are catching, also seasonal, as interest resurfaces in ground beef now that prices have returned to some level of normalcy.
“This week and next week’s slaughter are estimated at 665k head and the pipeline will be refilled by early July as a result. No retail beef features were to be found today, just pork. It will take weeks before features surface again.
“The true dog days of summer lie ahead. Price erosion on the physical side—beef and cattle prices, will continue. Keeping kill levels elevated in July and August are critical and the expansion of the supply chain of beef to accommodate the record production will weigh heavy.
CME cattle futures can drift lower, the basis continuing to narrow, as the days and weeks go by this summer and beef prices seek a level to clear supply and find demand.”
Union Stockyards in McAlester, OK, offered 2,350 head today and compared to last week, steer calves were $2-7 lower, and heifer calves were uneven in all classes, steady to $2 higher. Demand was moderate to good. Quality was average through attractive, mostly attractive. Slaughter cows were $4-8 higher and slaughter bulls $8 higher. A total of 300 cows and bulls sold with 77 percent going to packers. Steers weighing 776 lbs. averaged $118.95.
Huss Livestock Auction, in Kearney, NE, offered 2,327 head today and compared to two weeks ago, steers sold steady to $4 higher and heifers sold unevenly steady. Demand was good on a hot, windy June day. Wide variety of type of cattle and condition ranging from thin-fleshed to fleshy. Bulk of the offering sold in packages with only a few loads lots on the day. Steers weighing 757 lbs. averaged $140.91. — Pete Crow, WLJ publisher
