Cattle markets had a good week, inching their way higher. August live cattle were up 27 cents to $101.72 and the October live cattle contract was up 70 cents to $106.75. The real action was in the feeder cattle pit, as all contracts are getting to that resistance point of $145. The August feeder cattle contract was $1.05 higher to $143.02, September $1.85 higher to $144.42, and October $1.27 higher to $144.52.
Cash trade in the country was moderate with 79,534 head trading as of Thursday afternoon. Live trades ran between $95-$102.50 for a weighted average of $98.21 and dressed trade was $158-$160 and averaged $160. There were 28,000 head of formula grid cattle priced today at $156.88, weighing 890 lbs.
Estimated slaughter for the week was at 472,000 head through Thursday, just 2,000 head more than last week’s pace, but 9,000 head behind last year. Boxed beef markets were stronger with the Choice cutout trading 69 cents higher to $201.80 and Select gaining $1.90 to $191.50 on 137 loads.
Cassie Fish, market analyst in The Beef, reported, “Boxed beef values continue to struggle. At just over $201, the Choice cutout is $13 cheaper than a year ago this week. Now that the pipeline has finally been refilled, the loss of food service is beginning to become more noticeable and even problematic. Weekly beef production has been record high and will be again this week.
“Consumers continue to eat the bulk of their meals at home because of the pandemic. Meat cases are finally fully restocked and plentiful, and cheap pork and chicken could begin to slow beef sales because retail beef prices are record high. So far this has not been a factor. Food service will not return to anything resembling normal for quite some time to come as the nation struggles with COVID-19.”
The number of cattle on feed for more than 150 days has been growing, according to HedgersEdge. The big bulge will come in August with 140 percent of last August’s inventory. September looks a little rough at 121 percent, but slaughter levels should start to normalize in October.
ShayLe Stewart, market analyst at DTN, said, “Feeder cattle contracts have led the cattle complex higher again into Thursday’s afternoon hours. If the market can keep with its recent progression, the market will soon face the resistance again at $144. At which point the market’s recent strength and bullish push from feeder cattle sales will have to either push past or turn submissively to that resistance level once again.
OKC West Stockyards in El Reno, OK, offered 5,777 head and reportedfeeder steers sold steady to $3 lower and feeder heifers traded $2-4 lower. Benchmark steers weighing 777 lbs. averaged $138.80.
Huss Livestock Auction in Kearney, NE, offered 3,306 head and reported compared to two weeks ago, steers under 800 lbs. sold $3-5 higher and steers over 800 lbs. sold $1-3 higher. Heifers from 650-800 lbs. sold $5-7 higher. Benchmark steers weighing 777 lbs. averaged $141.50.
The folks at the Cattle Report had some interesting thoughts about cattle markets, “There are serious and material problems with the cattle markets. First and foremost is the lack of enough slaughter facilities to provide competitive markets. This condition results in a lack of leverage from cattle owners in negotiating a fair price for their cattle. The result for meatpackers has been historic and record-breaking margins. This is not market manipulation but simply strategic advantage.
“The other serious problems are the need for a larger pool of cattle in the cash markets and improved and restructure of reporting of sales by USDA. The ag markets have been slow to move trading of ag products online where instantaneous trade prices could be reported. Identifying the national beef cattle herd with RFID chips would provide the foundation for immediate and verifiable prices when cattle ownership changes. Moreover, the live cattle delivery contract is seriously flawed as well documented this year. These problems call on the industry to debate and implement the necessary changes.
“It is always easiest in times of financial stress to play the victim. Playing the victim allows blame to pass from the harmed party to the perpetrator. Victims become mired in lawsuits, calls for government remedies, and pleas for handouts and sympathetic support. It is never the victim’s fault—always someone else. It has become a national hallmark to create an identity group and claim a harm and plea for a remedy.
“The preferred solution to industry problems is an initiative by the industry to provide a solution. It is called problem solving. There is no problem so big that cattle producers cannot provide their own solution. Time and money are better spent on studies targeting a proposed solution to an existing problem, than wasted finding a scapegoat.” — Pete Crow, WLJ publisher