Tuesday markets
Cattle markets were all red today with triple digit losses. June live cattle were limit down $3 to $95.30 and August down $2.77 to close at $96.20. Feeder cattle have had a rough day losing $2.70 on May and $2.30 on August.
Where do fed cattle go from here? Packer support and a $20 negative basis on the board. Look for some convergence with boxed beef prices and cash fed trade. The big video sales will be starting soon and give us a snapshot into the fall optimism, or pessimism.
There will be money to be made somewhere in this pricing mess. The only feeder cattle activity seems to be in the Southern Plains’ wheat grass cattle and West Coast cattle coming off grass.
Negotiated cash trade is softer, today 12,000 head traded hands at $113-114 live and $178 dressed. There were 19,800 head priced on the grid formula today weighing 877 lbs. at $193.49. There was some trade at $118 Monday in Nebraska.
ShayLe Stewart at DTN said,” Last week’s cash cattle trade was enormous as packers bought 119,726 head. A large majority of those cattle were for delivery in the first two weeks (112,475 head), while the rest (7,251 head) will be delivered in the next 15 to 30 days.
“You won’t hear cattlemen complain about higher cash cattle prices, but one thing that you will hear them groan about is weaker feeder cattle prices—which could be in our near future if cash cattle prices take a nosedive.”
Beef markets continue their decline as slaughter volume picks up, today’s estimated slaughter was 113,000 head, 3,000 more than Monday. The Choice cutout fell $22.42 today and settled at $318.73 while Select was down $26.25 to $290.58.
Even though the Choice cutout has fallen over $100 in the last seven trading days, the ground beef side of the market is stable and strong. Ninety percent lean is at $307.25 and the 50s are $85.06.
With carcass weights 50 lbs. over last year, it doesn’t take much to fill the void in beef markets. Prime beef was 12 percent of the slaughter mix last week and was trading at $379.80. Choice was at $367.76 in last week’s comprehensive cutout. A total 5,685 loads of beef were sold last week.
Cassie Fish in The Beef said, “CME cattle futures are down and staying down so far today, as the awareness spreads that boxed beef values and cash cattle prices are now in a downtrend that will prevail for a long time. Boxed beef prices will drop much faster than cattle prices as packers let the margin normalize. Only the futures discount to cash is providing support.
“The bear spreads are working again today, and spot Jun LC is now more than $1 discount to Aug LC. Fundamentally that makes zero sense, since Jun LC expires four weeks from today and Aug LC will see the biggest downside risk as Q3 protein supplies and fed cattle numbers both swell.
“The cutout dropped another $18 this morning after losing $22 yesterday and the rib primal hasn’t even begun its seasonal decline. Once that occurs the downside break will quicken, and prices will seek some sort of level to clear beef during the dog days of summer. It will truly be the year of the greatest extreme of ‘not enough’ to ‘too much’.
“USDA grading data was released and the number cattle grading Choice and Prime has never been higher for any time in history. — Pete Crow, WLJ publisher
