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Cattle Prices Jump

HAY MAKER

Well-known member
Cattle Prices Jump

By Travis Holt


The cash cattle market moved sharply higher last week as short-bought packers and higher beef prices forced packers to aggressively pay up for cattle. Feeder cattle values also moved closer to their all-time record highs, supported by the higher cash cattle prices and falling corn prices.

The strength in the beef market was given a large boost early last week when reports out of Japan indicated that the first shipments of U.S. beef were quickly purchased by Japanese consumers. One of the unknowns as U.S. beef returned to Japan whether or not the Japanese consumer would accept the wholesomeness of U.S. beef. There have been many surveys released during the past months that indicated that Japanese consumers would be cold to U.S. beef. Last week's beef sales may be evidence that demand for U.S. beef may be higher than expected. If that is in fact the case, beef and cattle prices could appreciate significantly during the next few months.

Feeder cattle prices have climbed back above $115 as supplies of feeders outside of feedlots have fallen sharply due to the extreme drought conditions in cattle country. The widespread drought has forced feeder cattle backgrounders to take calves off pastures and send them to feedlots much faster than usual. Feeder cattle demand could continue to grow this fall if fed cattle prices remain strong and corn prices continue to weaken.



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The five-area average steer price closed last week at $85.48, $4.96 higher than the previous week's average price. The dressed average price came in at $135.14, an increase of $7.10. Negotiated sales figures were reported to be heavy during the week, which could result in a slow start to trade this week. The choice Holstein steer market was quoted as $80 to $83, an increase of $2 to $3 from the previous week. The Holstein market will likely begin the week strong as trade was mostly over before the large cash gains in the market took place last week.

The wholesale beef market was booming last week, increasing from $7 to $9. The choice wholesale beef cutout closed the week at $148.99, $7.13 higher than the previous week's close. The select beef cutout was even stronger, gaining $9.37 during the week to finish at $138.20. Beef production for the week was estimated at 526.6 million pounds, 8.5 percent higher than the previous week and 7.7 percent above a year ago.

Live Cattle futures were $1 to $4 higher for the week as front-month futures soared to keep up with the cash market. The August contract closed the week at $88.80 with the October contract posting a closing price of $92.55. Feeder Cattle contracts were mostly $2 higher across the board with the September contract closing trade Friday afternoon at $117.50.



Pork complex mixed

The lean hog market showed some mild strength during the middle of last week as slaughter volumes slowed during the week. USDA quoted the national lean hog index at $69.40 to close the week, an increase of 91-cents from the previous Friday. Slaughter for the week was estimated at 1.888 million head; down from 1.902 million a week-earlier and 1.911 million head during the same week a year ago.

The wholesale pork market did not follow the cash market as values ended the week slightly lower. The pork cutout was quoted at $72.97 to close out business Friday; 53-cents lower than the previous Friday's closing price. Hog slaughter weights are nearing their summer lows and will begin to increase as the cooler fall nights begin. This trend change will contribute to greater supplies of pork and keep pressure on pork prices.

Lean Hog futures finished the week $1 to $2 higher as the strength of the cattle pits at the Chicago Mercantile Exchange flowed over into the hog pit. The October contract closed at $64.50 with the December contract finishing at $61.80. Both of these contracts established new contract highs last week and appear to be susceptible to a technical sell-off.

Information contained herein is based on what is believed to be the most reliable resources available at the time of publication. Trading commodity futures or options involves risk, and past performance doesn't indicate future results.
 

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