Trey G. Freeman, Commodity Futures Broker/Livestock Agent, Ever.Ag 

Last week, cash traded $2 per hundredweight lower in the South, from $188 to $191. In the North, cash traded fully steady at mostly $198 and $312 dressed. Weekly slaughter was estimated at 601,000 head. This was 79,000 more than last week (holiday shortened) and 32,000 less than a year ago.

Choice boxed beef prices averaged $324.29 per hundredweight, down $5.76 from the week prior. Primal rib and loin cuts are leading the way lower, down $47.30 and $23.65 for the week, respectively. On the other hand, lean 90s hit an all-time high of $379.75.

Cash is expected to move lower over the next few weeks as the summer heat takes its toll on beef demand, with consumers turning away from middle meats. However, lean trimmings are likely to provide a layer of support under boxed beef prices.

The Goldman Roll concluded last week, pressuring August live cattle futures $4.05 per hundredweight lower on the week to $182.075. August remains at a $12 discount to the 5-Area Weekly Fed Steer price of $194.24 with FND (first notice day) three weeks out.

How the spread between August and cash plays out will depend on the rate at which cash softens over the next 2-3 weeks. That likely hinges on boxed beef values, and how quickly their expected retracement down to the $300-$310 level occurs.

Open interest in live cattle was down 4,110 contracts for the week. Seasonally, open interest tends to decline into August. Managed money added only 252 contracts to their net-long position in last week’s CFTC Commitment of Traders report. Rallying potential in December and further out live cattle futures appear capped until gains in open interest, thereby managed money, return.

The beef production estimate for 2024 was raised 65 million pounds in Friday’s USDA monthly WASDE report, on account of larger fed cattle slaughter, stemming from much higher-than-expected placements in May.

This month’s Cattle on Feed report is set to be released this Friday. Early estimates have on-feed numbers up 1% versus last year, June placements down 3%, and June marketings down 9%. Two less business days than last year contribute to the lower placements and marketings pre-report estimates.

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.