Tuesday markets
Markets were strong today at the CME, feeder cattle contracts were very active with August gaining $4.50 to $133.30 and September up $4.27 to $134.42.
Live cattle were trading up against a $100 market with June up $1.70 to $99.40 and August up $1.92 to close at $99.25. The big video sales are starting soon, and we will start to get a good look at the fall calf market.
ShayLe Stewart at DTN reported that live cattle contracts may not be rallying the solid $3 or higher like the feeder cattle complex is, but the substantial $1.70 to $2 gains seen throughout the complex is warmly welcomed.
“Seeing that both the June and August contracts are within a $1 of the $100 threshold, leaves the market with a decision to make. Is there enough support and enough traders around willing to buy into the marketplace to push past the $100 benchmark? Or will the market trade higher, but without coming in full contact with the resistance? Solid support builds within the market as cash cattle have already traded steady this week.
“Some light trade is developing in parts of Nebraska at $190, which is fully steady with the top end of last week’s business. Show lists this week appear to be higher in all feeding regions and especially in Texas.”
Live cash trade Tuesday traded 10,423 head, but has been met with limited trade in Kansas, Nebraska and the western Corn belt. In Kansas a few live trades ranged from $110-120. In Nebraska a few live and dressed trades moved at $112 and 190, respectively. In the western Corn Belt a few dressed trades ranged from $174- 190. However, there were not enough trades in any of these regions for a full market trend.
Beef markets have been weaker, the Choice cutout was at $385.49 and Select was at $360.02 on 222 loads. There is a $25.47 spread between Choice and Select beef, but the grading report shows the industry is producing higher quality, 85.6 of last week’s slaughter was Choice and Prime.
The grinding market has been very stable with 90 percent lean trading at $306.33 and the 50-50 trim at $155.88. There is a lot of activity in the hamburger market. The cow beef cutout was at $240.91, which should bring strength to the slaughter cow market. Estimated slaughter for the day was 102,000 head.
Cassie Fish’s comments in The Beef today were quite optimistic, “Enthusiasm abounds today. Whether it is grains, oilseeds, lean hogs, equities or cattle futures, all markets seem to want to shake off the COVID-19 blues and look forward to a better day. Talk of a potential second vaccine is circulating; more businesses are opening back up and even air travel has shown a tiny improvement.
“Cattle prices particularly have hung all hope on the assumption that the packer will continue to support cash prices as the cutout continues to fall and their margin contracts. This morning in very light volume trade, one major packer paid $190 dressed, steady with last week while another paid $115 live in Kansas, also steady with one of the three prices paid by that packer last week.
“With open interest low and futures volume light, it doesn’t take much to elevate futures prices, especially in lightly traded feeder cattle futures which are now all trading above $133, reflecting zero negativity related to the growing backlog of market-ready fed cattle supplies. In fact, this reality is getting very little press or mention by anyone. Or if it is discussed then packer support is included in the same sentence.
“This week’s slaughter is estimated at 500-510k head and next week 580-600k head. Last year’s slaughter for the same weeks was 588k and 665k. Historically, June is the largest fed cattle slaughter month of the year. Fed cattle slaughter has been hurt much more than cow slaughter, with the fed kill making up about 75 percent of the total.”
Feeder cattle markets have been showing some strength and more feeder cattle are coming to market. Compared to last week, steers and heifers sold steady to $4 higher. Demand was moderate to good this week with the larger auctions in the Southern Plains having many offerings weighing over 800 lbs. coming off rye or wheat.
Those calves and lighter yearlings that are suitable for grass were met with good to very good demand. Seller interest has improved as feeder prices slowly start to rise and more buyers are coming out to the auction. Auction receipts were heavy again in the wheat and rye grazing areas in the Southern Plains. Two Oklahoma City-area auctions had over 24,000 head on hand. The latest CME Feeder Index Price was $126.96, 72 cents higher than the prior day.
California auction markets are in full swing with the major markets running 2,500 to 3,500 head a week. Both calves and yearling steers were $4-8 higher with good demand. 700-800 lbs. steers were trading between $120-135. One load of 730 lbs. steers traded at $142 and one set of 530 lbs. calves sold at $161.50. — Pete Crow, WLJ publisher
