By Trey Freeman, Ever.Ag

Trade data released for the month of July showed feeder cattle imports from Mexico over 122,000 head, nearly 50,000 more than a year ago. Year-to-date feeder cattle imports from Mexico rose 170,000 or an increase of 25% versus last year’s levels. The substantial increase this year is due to drought in Northern Mexico, matched with high feeder cattle prices in the U.S. 

Additionally, the state cattlemen’s association of Chihuahua has provided incentives to help producers purchase registered bulls that will improve herd genetics. That, along with the price difference for quality cattle at the border, has led many ranchers in the state to focus on improving genetics. This incentive program will continue to pull more feeder cattle into the U.S. long term. 

Total U.S. beef imports for the month of July were reported at 403.4 million pounds, an increase of 86 million pounds from a year ago, up 27%. Imports increased 436.4 million pounds year-to-date through July, up 20%. Australia is a large contributor with inbound shipments from the country up 229.4 million pounds year-to-date, or an increase of 75%.

Total U.S. beef exports for the month of July were reported at 257.7 million pounds, a decrease of 18.4 million pounds from a year ago, down 7.7%. Beef exports are down 52.5 million pounds through July, down 2.9%. Japan, South Korea, and China have been the largest export markets for the U.S. over the last three years. Together, exports to these countries declined 77 million pounds through July, down 7%.

Cash fed cattle traded $180.00-$181.00/cwt. in the South last week, down $2.00-$3.00 than the week prior. In the North, cash traded $180.00-$182.00/cwt., also down $2.00-$3.00/cwt. Dressed trade was $2.00/cwt. lower at $288.00/cwt.

Boxed beef prices were relatively unchanged for the week. Seasonally, September is a weaker month for boxed beef demand.

October live cattle finished the week down $3.425/cwt. at $175.175. The October and December contracts managed to hold the previous week’s lows, while the further out contracts did not. 

October feeder cattle futures finished the week down $6.80/cwt. at $230.95. Feeder contracts across the board made new weekly low closes for life of contract. November and further out contracts were unable to fill their perspective gaps from Thursday’s lower open.

It’s hard to tell which negative news prompted last week’s selloff, which started Thursday morning and continued through Friday’s close. Some point to anthrax found in Wyoming cattle, news of which made its way through the news cycle on Wednesday afternoon. Others suggest that the lower-than-expected fed cattle trade of $180.00/cwt. in Kansas Wednesday, although on light volume, sparked the activity. Each likely played a role. 

The risk of loss trading commodity futures and options can be substantial.Investors should carefully consider the inherent risks in light of their financial condition. The information contained herein has been obtained from sources to be reliable, however, no independent verification has been made.The information contained herein is strictly the opinion of its author and not necessarily of Ever.Ag and is intended to be a solicitation. Past performance is not indicative of future results.