Compared to last week, yearling feeder cattle started the week mostly 5.00 lower on a light test with calves trading 5.00-15.00 lower, then on Tuesday the Live and Feeder Cattle futures closed with limit gains that turned the week around. Cattle futures then rocketed higher again on Wednesday and Thursday; it seems one extreme move one way can have extreme moves the other way as from mid- week on yearlings moved mostly 3.00-10.00 higher and calves traded firm to 5.00 higher, instances 10.00 higher. It still seems too early to determine if a change in the market has found its bearings. This sharp move higher in the cattle futures came without any positive news in the cattle markets or meat trade.
A sustained or prolonged move higher would be far more important than a couple of large moves higher, but hopefully this is a start. A year ago the cattle market was closing higher every week trying to find a top, the opposite has happened this fall with the market going down every day trying to find a bottom. Overall tone in the market remains uncertain with any long-term direction trying to find a base. Even if we have a bottom finally in place in live and feeder cattle markets, feeder cattle prices still have some headwinds to face after this sharp slide. Before the slide happened it was unprofitable to place feeder cattle on feed and it will still be a struggle even now. There still remain legitimate concerns in the cattle markets with consumer demand being very important, competition from competing meat proteins and declining export sales. Compared to 2014, August 2015 beef exports fell 18 percent to 84 thousand metric tons, total exports for the year so far are down 14 percent in volume.
Unpredictable attitudes and volatility are the only rule that cattle markets abide by lately with the debate of how low is low enough. The velocity of these sell-offs and then the extreme moves higher should not be a surprise, but they do leave an impression. Boxed-beef trade still seems to be hopelessly “boxed-in” with a pattern of lower prices; on Tuesday Choice boxed- beef closed .20 cents higher at 204.17, this was the first time since September 9th that choice cut-out closed higher. The choice-cut-out then closed .59 cents lower on Wednesday at 203.58 with heavy movement of 281 loads; the choice cut- out has lost over 60.00 since its May high. Friday Choice boxed-beef closed .61 cents lower at 203.00, compared to last Friday’s close at 205.77.
Friday USDA released its WASDE grain report and lowered its forecast for corn and soybean production to 13.56 bb for corn and 3.89 bb for soybeans. Corn yield was estimated at 168 bpa up 0.5 bpa from last month. Harvested acres were trimmed by 500,000 acres to 80.7 ma. Corn ending stocks for 2015-16 marketing year came in at 1.561 bb down 31 mb from last month. USDA forecasted the corn crop will be the 3rd largest on record. Soybean yield came in at 47.2 bpa up 0.1 bpa from last month. Harvested acres were lowered by 1.1 ma to 82.4 ma. Soybean ending stocks foe 2015-16 marketing year declined by 25 mb to 425 mb. Auction volume included 42 percent over 600 lbs and 39 percent heifers.