Market bears might finally have to consider fundamentals and seasonal reality, rather than beat the drum about heavy third-quarter fed cattle supplies.
Live Cattle futures broke above the well-worn trench of recent months with spot October closing at $113.80 Friday, the highest for the contract since March.
Nationwide, calves and feeder cattle sold fully steady to $5 per cwt higher, according to the Agricultural Marketing Service (AMS). That’s compared to two weeks ago, given Labor Day last week.
Feeder Cattle futures closed an average of $4.94 higher week to week on Friday ($3.97 to $6.17 higher). That’s an average of $8.15 higher in the last two weeks.
“This week’s price movement is working against the seasonal tendency of calf prices, as are feeder cattle futures contracts,” explains Andrew P. Griffith, agricultural economist at the University of Tennessee, in his weekly market comments.
“The calf and feeder cattle market remained strong through the late summer months and the futures market is suggesting continued strength, while seasonal price trends would suggest lower prices. Prices are strong now with most of the price risk being to the downside.”
Lower grain prices, driven by expectations of even more corn and soybean production (see “Grain Prices Down—Hay Prices Climb” below), added to support. Week to week, Corn futures through next July were an average of 15¢lower.
Cattle feeders and beef packers had yet to find common ground through late Friday afternoon. Asking prices were reportedly at $112-$114 per cwt, about $4 higher than bids. Prices the previous week were mainly $107-$108 on a live basis.
Live Cattle futures closed an average of $2.73 higher week to week on Friday ($1.27 higher at the back to $3.85 higher in spot Oct). That makes for an average increase of $4.34 over the past two weeks.
Listen to Wes Ishmael's Cattle Market Weekly Audio Report every Saturday morning on the BEEF magazine website. This is your report for Saturday, Sept. 15 2018.