DTN reports:
LIVE CATTLE:
When cash cattle gain $3.50 to $4.50 over last week ($140 live basis) and outside markets are brimming with optimism, it’s natural for the live cattle futures contracts to trade higher, too, which they did on Thursday. The August contract closed up $1.40 at $140.60, the October contract closed up $0.625 at $145.10 and the December contract closed up $0.375 at $151.075. Cattle slaughter for the week ending July 30 came to 666,168, which is 20,300 higher than the same period last year, but despite this increase, and despite weights creeping higher (steers dressed at an average 894 pounds, up 1 pound from the prior week, and heifers dressed at an average of 818 pounds, up 3 pounds from the prior week), the industry is having no problem finding hungry beef customers to buy that product. There are some subtle shifts in what types of beef grocery shoppers are willing to pay for in today’s inflation environment. For instance, July CPI data showed steak prices were down 1.5%, but ground beef was up 9.7% year over year. Even within the steaks, there have been shifts. Strips at $875 per cwt keep creeping closer to parity with ribeyes at $901, which is just more evidence of consumers’ willingness to shop around and try different cuts, even if they are still sticking with their beef preference. Overall, boxed beef prices were mixed Thursday afternoon: choice down $0.13 ($263.10) and select up $0.38 ($237.46) with a movement of 103 loads (56.24 loads of choice, 25.02 loads of select, 3.61 loads of trim and 18.3 loads of ground beef).
FRIDAY’S CASH CATTLE CALL:
$2 to $3 higher than last week. Any business that cleans up on Friday will use this week’s strong trade as a guide: generally $140 in the South and $229 in the North.
FEEDER CATTLE:
Feeder cattle futures succumbed to the pressure of higher feed grains prices as the Thursday session wore on to a close. The nearby August ended down $0.725 at $179.95, the September contract ended down $0.40 at $184.60 and the October contract ended down $0.325 at $186.85. Expect continued volatility in feed grains prices on Friday leading up to and following the monthly WASDE report from USDA regarding crop expectations. But no matter what happens with feed values, in order to produce those high-priced fat cattle that turn into all that high-priced beef, feedlots know they will need to buy calves out of a relatively scarce market in coming months. Excessive heat is forecast to beat down on cattle country in Kansas and Nebraska through the weekend, which is not at all helpful to rate of gain in the feedlots, nor to range conditions for the diminished beef herds out on grass.
