Cattle prices strong despite outside volatility
Fed cattle trade was opening with sharply-higher prices last week as a surge in boxed beef prices and improving packer margins helped to fuel the market.
Although volume was light through midday last Thursday, early dressed trade had been reported on light volume at $185 and analysts were predicting that the volume live trade would come around the $114 mark.
Booming export markets and a tight supply of market-ready fed cattle have all helped fuel the push toward higher prices. The Choice boxed beef cutout moved sharply higher last Thursday morning, gaining $1.79 to hit $178.02, and Select was up $1.70 at $174.18 on moderate trade volume. The cow beef markets were slightly mixed last week, though, with the 90 percent lean product trading flat with the prior week at $178.29 and the 50 percent trim rising sharply to hit $91.30 as demand for beef trim for grinding is outstripping supply. The cow beef cutout rose to $145.37 as the number of cows and bulls heading to market in the southern tier begins to slow some what from recent high levels.
That effort to push prices higher was helped last week by USDA’s monthly crop report which indicated that, as expected, the corn crop is unlikely to be as large as had been projected early in the growing season. USDA has begun lowering their estimates for this year’s crop with the report coming in lower than most pre-report expectations. USDA lowered yield expectations from their previous July estimate of 158.7 bushels per acre to 153 bushels per acre. Acres harvested declined by 500,000 in the August report. The result is a projected yield for this year’s corn crop of 12.91 billion bushels.
The result of USDA’s latest projection, if realized, will leave the market with a very tight supply picture. The crop, as it’s currently projected, would result in a stocksto-use ratio of just 5.4 percent, the tightest it has been since the 1995/1996 marketing year. However, analysts are predicting that future reports will show further reductions in either yield expectations or acreage, which would
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