Tuesday markets
Cattle markets collapsed Tuesday, with feeder cattle closing limit down and live cattle losing over $5.
“CME cattle futures are sharply lower today with feeder cattle futures trading down their 925-point limit,” Cassie Fish, market analyst, wrote in The Beef. “September is proving to be a ‘correction month’ as the market posts an inside month, retrenching after the historic rally in August. This is the biggest cattle market correction since June. Even though many were anticipating a correction, the velocity of today’s sell-off has pulled all market participants’ focus.”
Live cattle futures closed sharply lower, with the October contract $5.62 lower to close at $230.17 and the December contract down $6.40 to $231.17.
Cash trade was moderate, with 7,962 head sold. Live steers sold for $237-239, and dressed steers sold between $375-382.
On the formula side, 35,200 head averaging 934 lbs. sold for an average of $389.37.
Coming into this week, there was widespread anticipation of a correction in negotiated fed cattle prices and boxed beef prices this month,” Fish wrote. “September is a time of seasonal weakness, and the market, especially wholesale beef prices, has had an incredible rally as of late.”
The national weekly direct beef type price distribution for the week of Sept. 1-8 was the following on a live basis:
• Negotiated purchases: $242.75.
• Formula net purchases: $246.60.
• Forward contract net purchases: $216.99.
• Negotiated grid net purchases: $251.53.
On a dressed basis:
• Negotiated purchases: $383.57.
• Formula net purchases: $387.37.
• Forward contract net purchases: $317.50.
• Negotiated grid net purchases: $387.05.
Today’s slaughter is estimated to be 118,000 head, 2,000 head below the previous week.
Boxed beef prices were mixed on 152 loads, with the Choice cutout down $2.02 to $407.67 and the Select cutout up $1.62 to $386.96.
Feeder cattle
Feeder cattle closed limit down, with the September and October contracts down $9.25 to close at $351.70 and $349.92, respectively.
“I hate to speculate, but I think it’s safe to say that most of us didn’t foresee the cattle complex toppling down so aggressively, given that from a fundamental perspective, feeder cattle demand is incredible,” ShayLe Stewart, DTN livestock analyst, wrote in her midday comments. “But what’s important to keep in perspective here is that even though it’s frustrating, and even though so many factors say that today’s actions simply shouldn’t be, traders don’t have to obey sound logic, and not every move complements the reality of the countryside’s fundamentals.”
The CME Feeder Cattle Index was up $3.07 to $367.03.
Corn futures closed lower, with the September contract down a penny to $4.01 and the December contract down 2 cents to $4.19.
Iowa: Russell Livestock in Russell sold 3,119 head on Monday. Compared to the last auction two weeks ago, light steers under 550 lbs. sold sharply higher, while steers over 550 lbs. sold steady to $15 lower. Heifers under 550 lbs. also sold sharply higher, while heifers 550-800 lbs. sold lower, although not well compared. Benchmark steers averaging 768 lbs. sold for $359-373 and averaged $364.79.
Nebraska: Tri-State Livestock in McCook sold 2,764 head on Monday. Due to the lack of a recent auction, an accurate comparison could not be made. Benchmark steers averaging 784 lbs. sold for $384.25-394, averaging $388.80.
New Mexico: Roswell Livestock in Roswell sold 1,005 head on Tuesday. Compared to the previous auction, steer calves 300-400 lbs. sold $2-15 higher, 400-500 lbs. were $12-19 higher and 500- 600 lbs. traded $13-20 higher. Feeder steers 600-700 lbs. sold $3-15 higher and 700-750 lbs. were $7 lower. Heifer calves 300-450 lbs. sold steady and 450-550 lbs. were $10-20 higher. Feeder heifers 650-700 lbs. sold steady to $5 higher. A group of steers averaging 706 lbs. sold for $352-370 and averaged $359.76. — Charles Wallace, WLJ contributing editor
