Cattle Weekly Comments May 26

Cattle Weekly Comments May 26

Live cattle started the week off on a rough note, posting losses the first two sessions of the week, but then found support to post gains the second half of the week. Feeder cattle saw gains each session in the expiring May contract but a mixed performance in the deferred months.

Cattle traded in a back-and-forth fashion to start the week session with early support coming from Friday’s as expect COF numbers. The lack of a cash trade kept a lid on the live cattle market. But losses were kept in check due to June’s steep discount to the cash. Feeder cattle were mixed with the soon to expire front month contract staying in line with the cash trade. The deferred months were pressured by a stronger grain complex. Reports of an atypical BSE case in NC from a cow out of a herd in TN did not impact the market. The real test for the cattle markets will come with the start of the BBQ season next week. Will beef demand remain strong or will the consumer switch to cheaper protein sources?

Cattle traded in different direction on Tuesday with the live cattle posting losses while the feeder cattle saw the May contract end with solid gains while the deferred months were lower. The front month contracts are trying to stay in line with cash offers. The front month June live cattle contract is at a steep $11.48 discount to cash. The cash feeder cattle index jumped over $2 to $206.76, closing its gap to May futures. Monday’s cash trade was reported taking place between $170 and $178 on light volume.

Gains returned to the cattle market midweek as cattle opened the session higher and extended session gains throughout the session. Early support came from reports of a cash trade taking place on the FCE Auction. The need to tighten June’s discount to the cash trade added support. Tight supplies of feeder cattle helped support the feeder.

The front month May feeder cattle contract went off the board Thursday with little fanfare, expiring unchanged at $208.975. The cash feeder cattle index was estimated at $208.14. The deferred feeder cattle contracts are on track to test the Oct 2014 all-time contract high of $245.20. The live cattle market was supported by a strong cash trade, with reports of activity taking place between $180 and $182. Last week’s export sales pace was estimated at 18,256 MT, a three-week high.

Light support was due to Wednesday’s Cold Storage report which put April’s beef in the freezer at 448 million pounds, a 6% decline from last month and 4% below last year.

As of May 21, pasture and range conditions were estimated at 37% g/e, 34% fair, and 29% p/vp, 3% above last week.

For the week, June live cattle are at $167.35 up $1.625. May feeder cattle went off the board at $208.975 up $2.70. August feeder cattle are at $233.925 down $1.175.