Market News

Cattle futures mixed, watching direct cash trade develop

Chicago Mercantile Exchange live cattle futures were narrowly mixed, with boxed beef mixed at midday as traders watched direct cash business develop. The USDA currently projects 2018 beef production at 26.944 billion pounds, compared to 27.094 billion in September, with the reduction tied to expectations for a slower fourth quarter slaughter pace. The USDA also expects lighter weights because of an increased cow kill rate. Imports were slightly lower, exports were unchanged, and per capita consumption was down fractionally. The 2018 average steer price is projected at $116.29 per hundredweight. The USDA’s next set of supply and demand estimates is out November 8th. October was up $.55 at $112.62 and December was $.30 higher at $116.77. After that, contracts were weak.

Feeder cattle were mixed, mostly lower, on the same factors as the live pit. The modest rally in corn was largely ignored by feeders. October was $.82 higher at $156.72 and November was up $.57 at $156.75, with the remaining contracts weak to lower.

Direct cash cattle business was light to moderate in most of the major feeding areas. Live sales in the South were reported at $111, steady with a week ago. Live sales in the North ranged from $110.50 to $111, steady to $.50 lower on the week, with dressed sales of $173 to $174, $1 to $2 lower than last week. The overall steady to lower business could be seen as a surprise, since this week’s showlist was reportedly lower than last week. Given the pace of business seen over the past couple of days, Friday’s activity could be limited to clean-up.

Boxed beef closed modestly higher on fairly good demand for heavy offerings. Choice was up $.40 at $202.51 and Select was $.72 higher at $192.49. The estimated cattle slaughter of 117,000 head was down 3,000 on the week and 2,000 on the year. Wednesday’s kill was revised to 119,000 head, up 3,000 from the USDA’s initial projection.

At the Ogallala Livestock Auction feeder cattle sale in Nebraska Thursday, compared to the previous week, steer and heifer calves were $5 to $10 higher on comparable trades, with no trend reported for yearlings. Receipts of 1,261 head were down on both the week and the year. The USDA says the weekly run was short because of weather. Medium and Large 1 feeder steers weighing 400 to 500 pounds were reported at $199 to $222, 500 to 600-pound steers came out at $185 to $190, and 600 to 700-pound steer calves brought $161 to $175. Medium and Large 1 feeder heifers weighing 400 to 500 pounds sold at $167 to $187 and 500 to 600-pound heifers ranged from $151 to $179, while 21 head of heifer calves averaging 607 pounds were reported at $152 to $155.

Lean hog futures were mixed, mostly sharply lower on position squaring ahead of the October contract’s expiration and demand uncertainties. Most contracts are at a discount to the cash index, but with those questions about demand and the large supply of pork, the fundamentals won out. The USDA pegs 2018 pork production at 26.425 billion pounds, compared to 26.675 billion last month, because of lighter carcass weights and a slower kill rate during the second half of the year. The import projection was lowered, exports were unchanged, and the per capita consumption estimate was lowered by nearly a pound. The average 2018 barrow and gilt price is seen at $45.23 per hundredweight. Lightly traded October was up $.20 at $68.67, but more active December was down $1.52 at $54.42 and February dropped $2.10 to $62.42.

Cash hogs were steady to lower, with moderate to heavy closing negotiated numbers for the major direct markets. Buyers continued to take advantage of the more than ample market ready numbers, even as those pork demand uncertainties continue. The industry continues to monitor the spread of African Swine Fever in China, which could increase imports by that nation, but with the current state of the trade situation between Washington D.C. and Beijing, it’s questionable how much of that would be from the U.S. According to several reports, Presidents Trump and Xi could meet at the next G20 meeting in November.

Pork closed down $.59 at $78.61. Hams were up $2.22, but the other primal cuts ranged from $.01 to $3.03 lower. The estimated hog slaughter of 473,000 head was up 15,000 on the week and 13,000 on the year. Wednesday’s kill was revised to 465,000 head, 8,000 more than the Ag Department’s previous projection.

Iowa/Southern Minnesota direct barrows and gilts closed $.93 lower at $57 to $63 with a weighted average of $61.74, the Western Cornbelt was down $.93 at $57 to $63 for an average of $61.70, and national direct business was $.73 lower at $57 to $63.42 with an average of $61.92. Butcher hogs at the Midwest cash markets were steady at $40 to $44. Illinois direct sows were steady at $20 to $33 on moderate demand and offerings. Barrows and gilts were steady at $37 to $45, also on moderate demand and offerings. Boars ranged from $5 to $23.