Cash trade saw faint interest at steady trade, and higher corn has put a damper on the cattle complex, which closed sharply lower. June live cattle are trading at a discount to cash trade, but they are moving toward each other while still far apart.
Live cattle closed lower, with the June contract down $2.12 to close at $131.65 and the August contract down $3.25 to $132.77.
“Open interest continues to cascade dramatically out of the June live cattle contract as the Goldman roll continues,” Cassie Fish, market analyst for The Beef, wrote on Thursday. “June live cattle lost almost 12K contracts yesterday and has just under 74K left open. By next week, June live cattle will have less open than October live cattle. This week’s decline has pushed technical indicators into oversold territory. Still, the charts are negative.”
Cash trade was light, as packers have bought on deferred delivery for the last couple of weeks, with about 76,000 head sold through Thursday. Live cattle were steady, selling between $137-148 and averaging $143.43. Dressed trade sold between $225-230 and averaged $228.30, down $2.
“The cash cattle market is holding its breath as it knows its nearby fate is lower but the question that remains unanswered is: When?” ShayLe Stewart, DTN livestock analyst, wrote in the Monday midday comments. “Packers have strategically bought up cattle for the upcoming weeks, which will minimize their need to participate in the cash cattle market.
“With boxed beef prices showing weakness in a time when, historically, the market would expect prices to be strong, packers won’t bat an eye at letting cash prices flounder as their own margins see minor setbacks from a cost-concerned consumer base.”
Cash trade through the week ending May 8 totaled 109,180 head. Live steers averaged $143.56, and dressed steers averaged $230.89. Of that total, 70 percent (76,050 head) were committed for nearby delivery, while the remaining 30 percent (33,130 head) were committed for deferred delivery.
On Wednesday, the Fed Cattle Exchange listed 1,317 head, of which 246 from Texas sold at $137. The remainder—1,071 head—went unsold, as they did not meet the reserve prices that ranged from $134-141. Opening prices ranged from $132-138, and high bids ranged from $137-140.
The national weekly direct beef type price distribution for the week of May 2-9 was the following on a live basis:
• Negotiated purchases: $143.59.
• Formula net purchases: $145.59.
• Forward contract net purchases: $147.20.
• Negotiated grid net purchases: $142.06.
On a dressed basis:
• Negotiated purchases: $231.22.
• Formula net purchases: $228.97.
• Forward contract net purchases: $224.80.
• Negotiated grid net purchases: $227.50.
Slaughter through Thursday totaled 495,000 head. Total slaughter for the prior week is projected to be 657,000 head, topping the last week of April’s estimated slaughter of 649,000 head.
“The large volume took a toll on box prices and processor margins, but profits at the plants will remain well above historic averages. The weekly slaughter size will determine the current status of fed supplies,” the Cattle Report wrote.
Actual slaughter for the week ending April 30 was 646,636 head. Steer carcass weights were 901 lbs. USDA’s Agricultural Marketing Service released the National Weekly Fed Cattle Comprehensive report, showing quality grading at 82 percent and dressed weights higher to 870.8 lbs.
Boxed beef prices closed mixed, with the Choice cutout closing higher $2.02 to $257.20 and the Select cutout closing lower $1.45 to $244.36.
USDA’s Weekly Export report for the April 29-May 5 period showed net sales of 28,400 metric tons (mt), up 95 percent from the previous week and the prior four-week average. Exports were 19,700 mt, down 3 percent from the previous week but up 2 percent from the prior four-week average. The destinations were primarily South Korea (6,000 mt), Japan (5,800 mt), China (2,500 mt), Taiwan (1,300 mt) and Mexico (1,200 mt).
Feeder cattle
Corn contracts traded higher after a favorable World Agricultural Supply and Demand Estimates (WASDE) report, pushing feeder cattle lower. The May contract was down $3.45 to close at $156.87, and the August contract lost $7.85 to close at $166.52.
The WASDE report showed lower production for the 2022-23 corn outlook, at 14.5 billion bushels, down 4.3 percent from last year, and the yield is projected lower at 177 bushels per acre, down 4 bushels.
The May contract was up 10 cents to close at $8.13, and the June contract was down 6 cents to close at $7.91 per bushel.
Colorado: Winter Livestock in La Junta sold 1,207 head Tuesday. Compared to the last auction, feeder steers and heifers were lightly tested, as feeders made up 60 percent of the head sold. A group of steers averaging 614 lbs. sold between $182-185, averaging $184.54.
Iowa: Russell Livestock in Russell sold 3,947 head Monday. Compared to the last auction, steer calves 300-650 lbs. sold $2-8 higher, 650-750 lbs. were $5-8 higher and 750-950 lbs. traded firm. Heifer calves 300-650 lbs. sold $3-8 higher, and 650-950 lbs. traded $2-5 lower. Benchmark steers averaging 777 lbs. sold between $151.25-165.25, averaging $160.58.
Kansas: Winter Livestock in Dodge City sold 2,112 head Wednesday. Compared to the previous auction, feeder steers 500-975 lbs. sold $2-6 lower. Steer calves 400-500 lbs. sold $10 lower. Feeder heifers 700-950 lbs. sold $2-5 higher. Heifers 400-700 lbs. sold $4-8 lower. Benchmark steers averaging 735 lbs. sold for $167.
Missouri: Joplin Regional Stockyards in Carthage sold 4,053 head on Monday. Compared to the previous auction, feeder steers under 700 lbs. traded $4-6 higher, and steers over 700 lbs. traded mostly steady. Feeder heifers traded from steady to $6 higher. Benchmark steers averaging 737 lbs. sold between $160-174.50 and averaged $162.70.
Montana: Miles City Livestock in Miles City sold 1,354 head Tuesday. Compared to the last auction, feeder cattle were too lightly tested to develop an accurate market trend. However, steady undertones were noticed. Benchmark steers averaging 703 lbs. sold for $158.
Nebraska: Tri-State Livestock in McCook sold 1,005 head Monday. There were not enough sales for an accurate comparison, but demand was good. Benchmark steers averaging 716 lbs. sold for $166.25.
Oklahoma: Oklahoma National Stockyards in Oklahoma City sold 6,532 head Monday. Compared to the last auction, feeder steers over 800 lbs. sold steady to $3 higher, while steers under 800 lbs. were $1-4 lower. Feeder heifers were unevenly steady. Steer and heifer calves traded $4-8 higher. Benchmark steers averaging 736 lbs. sold between $158.75-168, averaging $161.79.
South Dakota: Sioux Falls Regional Livestock in Worthing sold 2,372 head Monday. Compared to the previous auction, feeder steers and heifers sold with higher undertones. Overall demand was good, with black hided cattle in the biggest demand. Benchmark steers averaging 775 lbs. sold between $159-169.50 and averaged $163.10. — Charles Wallace, WLJ editor
