Fed trade gains $1-2
Fed cattle trade advanced $1-2 in the southern Plains last Wednesday and $2 in dressed trade in the Corn Belt. Most live trade was at $91-92 and dressed trade at $146-$148. Fed cattle continue to trade at a $2 premium over the futures markets and should keep feeders aggressive in their marketing efforts. Southern Plains feeders moved good volume of cattle early in the week with Corn Belt feeders trading shortly after the southern market was made. Packers were aggressive buyers working to fill slaughter schedules for this week. Packer margins are starting to erode with the higher fed prices even though the boxed beef cutout has advanced little this last week.
The Fourth of July weekend beef sales were considered mixed. Beef sales were slightly lower than expected, however, rib meats were surprisingly stronger and stable, according to reports. Ground beef was unusually slower. Pork moved well due to featuring at retail stores.
The cutout held together most of last week with the Choice product trading at $155.15 and Select at $145.46. We haven’t seen this type of Choice/Select spread in quite some time. Sales volume was light as retailers are only taking care of small fill-in purchases. The cutout is expected to decline in the next few weeks, adding pressure to fed cattle markets. Market analysts expect to see Choice cutout settle in at $148. Ground beef sales were slower with 90 percent lean beef trading at $162.69 and the 50 percent trim at $76.69. The cow beef cutout was at $129.74.
Beef production maintained some strength with 505.3 million pounds produced the week ending July 2; the year prior, the industry produced 487.6 million pounds. Slaughter numbers were 664,000 head. Year-to-date beef production is 1 percent below last year while slaughter volume is 1.1 percent higher. Lighter carcasses are making a difference in total supplies of beef. Average dressed weights are 17 pounds lower than a year ago. The packer margin index showed that packers were making $46.95 per head, with an average breakeven of $94.75 per cwt.
Troy Vetterkind, Vetterkind Brokerage, said that "a combination of good packer margins, fill-in beef business after last week’s holiday, and packers needing cattle for a full kill week next week were all catalysts for the higher trade last Wednesday.
"It was also reported that a West Coast packer who is short on cattle was in Colorado last week setting the market at $93/$1.48. There is some concern by some of the major packers that fed cattle inventory is going to fall short of expectations in the coming weeks. We will have to wait to see how this plays out because beef buying is expected to slow next week going into August, so if this is the case, will packers give up margin or will they cut kills? If the beef starts to back up as expected, I would call next week’s cash fed cattle trade steady/lower as opposed to steady/higher. Much will depend on what kind of beef orders packers will have next week," Vetterkind said.
Feeder cattle gained a bit on the futures markets with the August contract trading at $113.90 and cash feeder cattle markets were solid going into the end of the week. Tight supplies of feeder cattle have helped the market endure swings in the grain markets. Demand for all classes of cattle are good.
All eyes were focused on the string of big video sales last week and this week and will certainly set the trend in the market with around 550,000 calves and yearlings being offered between Superior and Western Video Auctions. The early summer video sales typically set the top prices for fall calves.
Last week on Superior Livestock’s video sale, the majority of the 800 pound cattle were trading around $113-$115 for July/August delivery. And Thursday, calves weighing 500 pounds with all their shots were trading at $125 and 600 pound calves were around $115. Heifer calves were trading $8-10 behind their steer mates.
West Coast markets reported that heavy feeder steers and heifers, over 700 pounds were $3 higher. The light calves traded as high as $130 and 550 pound steers were trading up to $125. Slaughter cow markets continue to stay strong, with the high-yielding cows trading as high as $70 and slaughter bulls up to $83.
Many auctions were shut down for the holiday and offered no reports. The ones that held sales offered very few cattle and market reporters weren’t able to call a market trend. —WLJ