Cattle Futures Traders May Be Looking At Cold Storage

Live and feeder cattle futures traders may be looking at the USDA’s monthly Cold Storage report since prices recovered from an initial bearish reaction after their release on Friday.

The Cold Storage report could be considered somewhat bullish rather than the monthly Cattle on Feed report or the quarterly Hogs and Pigs report, which held bearish overtones, a market analyst said.

 

CATTLE ON FEED

 

The Cattle on Feed report was seen as bearish overall as the number of calves placed on feed was well above trade estimates.  The report showed that calves finally came off pasture and were placed on feed, a market analyst said.  Almost 48% of the cattle placed on feed weighed 700 pounds or more while 25.5% weighed less than 600 pounds.

The report showed the number of cattle placed into feedlots of 1,000 or more capacity in November was 1.843 million head, compared with an average of pre-release estimates of 1.805 million.  Placements were 241,000, or 15.0%, more than 1.602 million a year ago.

The number of fed cattle sold to packers, or marketed, in November was 1.787 million, while traders estimated 1.778 million.  The latest number was 255,000, or 16.6%, above a year ago’s 1.532 million.

That left 10.652 million on feed, about 16,000, or 0.15%, fewer than was expected.  The on-feed number was down 148,000, or 1.37%, from 10.800 million on Dec. 1, 2015.

 

HOGS AND PIGS

 

The Hogs and Pigs report showed the US had a record 71.5 million hogs and pigs on hand Dec. 1, up 2.581 million, or 3.74%, from 68.919 million a year ago.  An Urner Barry pre-release survey shows the market expected an increase of slightly less than 2%.

Lean hog futures prices tumbled after the report’s release, only picking up a portion of the fall amid late-day and pre- holiday weekend short profit taking.

The number of hogs kept for breeding was 6.090 million, up 88,000, or 1.47%, from 6.002 million a year earlier.

The number of market hogs on Dec. 1 was 65.410 million head, up 2.493 million, or 3.96%, from 62.917 million a year earlier.

 

COLD STORAGE

 

The Cold Storage report showed the amount of beef in cold storage at 531.463 million pounds, down 1.524 million, or 0.29%, from 532.987 a month earlier.  But this was a counter-seasonal move as inventories usually increase during the month.

That had traders worried about beef demand in the face of burdensome supplies of pork either still on the foot or planned in the form of rising farrowing expectations.

Frozen pork and poultry supplies declined more than usual in November as retail specials moved large volumes into consumer hands.  At the same time, swine inventories already were record large, and the breeding herd was expanding.

 

CASH CATTLE TRADE HIGHER

 

Average Superior auction prices Wednesday were $2.21 per cwt higher at $112.68, versus $110.47 a week earlier.  Cash cattle then traded at $113.25 to $114 on a live basis, up $2.50 to $3.25.  Dressed-basis trading was up about $4 at $174.

Thursday, cattle traded at $114 to mostly $115 to $116 live and at $180 dressed.

The USDA’s choice cutout Friday was $0.66 per cwt higher at $198.27, while select was up $1.27 at $187.44.  The choice/select spread narrowed to $10.83 from $11.44 with 44 loads of fabricated product sold into the spot market.

The CME Feeder Cattle Index for the seven days ended Thursday was $132.03 per cwt, down $0.05.  This compares with Friday’s Jan settlement at $130.72, down $0.40.