Fed cattle last week traded in a range $152 to mostly $153 per cwt on a live basis and $241 to $243, mostly $242, on a dressed basis. Both were down about $2 from the previous week as feeders pushed heavy cattle into the market and packer buyers toned down their buying enthusiasm.
Cash prices this week are expected to be about steady as lowered buying interest for a holiday-shortened kill week meets overall smaller feedlot showlists.
USDA SUPPORTS BEEF, CATTLE
The USDA Friday lent support to beef and cattle markets when it reported beef inventories in cold storage were down 21% from a year earlier, down 14.4% from the five-year average and the lowest July total since 2001.
Sources say high prices for beef and cattle apparently caused the industry to dig into its reserves in May and June and then restrain its restocking efforts during July as inventories bounced modestly from their June low. It also seems packers were reluctant to replenish inventories with expensive product.
Some see this as a setup for a short-covering run later since the skinny inventories leave little wiggle room if and when beef demand rises. This is especially true in light of overall tightening supplies of feeder and fed cattle, the current bulge in heavy cattle offerings notwithstanding.
PORK INVENTORIES SHOW SEASONAL TENDENCIES
Pork in cold storage continued to decline seasonally and remained below a year ago in Friday’s USDA Cold Storage report. However, frozen pork inventories are above the five-year average, evidence the industry is getting a handle on the Porcine Epidemic Diarrhea virus.
The USDA indicated that pork inventories, at 529.2 million pounds were down 2.7% from a year earlier but 6.8% more than the average.
Seasonally, pork inventories level or climb slightly in August before rising in September.
Pork belly (raw bacon) inventories were 129% higher than a year ago and 93% higher than the five-year average. Bacon and belly prices often decline after the Labor Day holiday as BLT season fades with the back yard tomato plants. This could be a drag on hog prices, which could have a tempering effect on beef and cattle.
CASH CATTLE MARKETS QUIET
Cash cattle markets are quiet at this point in the week, even though a holiday mood is apparent in some circles as traders prepare for a long weekend. No bids or offers were reported Monday in the Plains or western Midwest.
Trading is not expected to take place especially early this week, probably Thursday or Friday, at about steady prices.
Wholesale beef prices tried to bounce in the USDA’s morning report but declined again by the afternoon. The choice beef cutout was down $0.08 per cwt to $249.69 while the select cutout was off $0.59 at $239.07.
The choice/select spread continued to widen seasonally, moving out to $10.62 on Monday, and there were 98 loads of fabricated product sold into the spot market.
The CME Feeder Cattle Index for the seven days ended Thursday was $218.18 per cwt, down $0.09, compared with Friday’s Aug futures settlement of $216.10, up $0.90.
The CME Feeder Cattle Index for the seven days ended Friday was $217.64 per cwt, down $0.54, while the Aug futures contract settled Monday at $217.40, up $1.30.