Cash Cattle Trade Inactive As Buyers Wait

Cash cattle trading this week has yet to commence as packer buyers wait in the wings and cattle owners seek steady to higher prices.

The USDA has reported minimal trade in the western Corn Belt at about $2 per cwt below last week’s prices in the same area, and while the earliest action in any given week in Iowa or Minnesota often doesn’t match directly with prices in the Plains, the direction of early trades might.

Cattle traded in the Plains last week at mostly $159 per cwt on a live basis and $244 to $245 on a dressed basis.

Cattle owners this week are offering to sell slaughter-ready cattle to the packers at mostly $159 to $162 live and around $245 dressed.

The earliest packer bids are expected today or Friday.  Sources indicated they expected the first bids to come in at around $155 live and $237 to $239 dressed, and they could be tough negotiators.

Product values remain under pressure, with price charts of choice boxed beef looking like the market is giving up some of the summer’s counter-seasonal gains.

The USDA reported its choice boxed beef cutout value Wednesday at $239.13 per cwt, down only $0.04 for the day, but off $6.78, or 2.76%, from $245.91 a week earlier.

The USDA’s select boxed beef cutout was reported Wednesday at $226.31, down $0.98 from Tuesday and down $6.01, or 2.59%, from $232.32 a week ago.

The choice/select spread also may have peaked last week, just as it did last year when a weekly seasonal top of $16.63 gave way to a narrower spread trend.  Wednesday’s choice/select spread was $12.82, and if it holds will be well below last week’s $14.18.  A weaker spread at a time of generally lower prices and lower slaughter and production would indicate a demand pullback.

 

PRODUCT PRICE WEAKNESS NOT UNIVERSAL

 

However, just because carcass cutout prices are declining, it does not mean such declines are taking place across the board.  Even among key elements of ground beef, price movement is not universal.

Trimmings with 50% fat, for instance are headed lower, angling toward a seasonal bottom in early October.  But 90% lean trimmings are holding recent gains.  For the last three weeks, 90s have been just above $300 per cwt, actually peaking two weeks ago at $300.44.

Wholesale loin strip prices are weak and are approaching last year and the previous five-year average.  Last week, they were quoted at $526.51, compared with $565.17 the previous week, and the nearby top of $687.67 the second week of July.  A year ago last week, the price was $493.95, and the average is $485.34.

Ribeye prices also appear to have hit a short-term snag with a near-term top two weeks ago at $753.52 per cwt and last week’s quote of $734.90.  However, this cut has a strong seasonal pattern, and last week’s dip may not last.

But the largest portion of the carcass are the end cuts, and they do the heavy lifting in terms of beef markets, especially once the grilling season is past.  Wholesale chuck prices are moving sideways in a narrowing up-and-down pattern, and bottom rounds also appear to have found a range that ignores the seasonal tendency to strengthen.

 

GRAIN PRICES FEEL HARVEST HEAT

 

Grain prices continue to decline amid an onslaught of phenomenal yield reports.

Farmers can’t help but brag about record yields, and the reports keep pouring in to market advisors, although some futures traders are worried the CME grain complex may be getting oversold, which could lead to some technical short-covering.  Weather issues may be the trigger, but current forecasts hold nothing but ideal harvest conditions, and such a short-covering rally likely will be short-lived.