July 10, 2007

  

US cattle trading seen quiet this week as traders size up markets

 

 

Cattle market analysts and brokers Monday (July 9) said they expected action in the central and southern Plains this week to be very quiet as the market sizes up Friday's (July 6) trade.

 

Most of last week's fed cattle trading took place late in the day Friday (July 6), much of it too late to tally with any sense of accuracy, the analysts and brokers said. As a result, much of Monday morning's activity will be spent totalling the score.

 

Prices last week tended to rise as the week progressed. The US Department of Agriculture reported cattle trading at mostly US$140 in Nebraska's dressed market, up US$3 to US$4 from the previous week. Some dressed-basis trades were reported late Friday in Kansas at US$142 as well.

 

On a live basis, cattle traded in Nebraska at US$87.50 up to US$89, although there were reports that many cattle feeders in the west were passing these bids. Market analysts and brokers reported the bulk of the live-basis trades in the Plains Friday at US$90, up US$3 from the previous week.

 

Market analysts estimated that more than 50,000 head sold in the Texas/Oklahoma area last week, while about 40,000 head changed hands in Kansas, and 60,000 or so sold in Nebraska.

 

After last week's increase in cash values and moderate-to-heavy volumes, most market analysts and brokers said they were expecting futures prices to open higher. Corn prices also were down in overnight trading at the Chicago Board of Trade, which could support feeder cattle.

 

However, after paying more for cattle last week, packers will have to try very hard to boost beef values in the wholesale market, the analysts said. One said the USDA's cutout value is at levels where retail meat buyers have supported it before, so he held out hope that buyers would feel beef was a good value and go along with packer price pushes.

 

However, another analyst/broker said July heat will limit the amount of grilling done by consumers and could make retail meat buyers very cautious. Also, pork prices were thought to be too low for meat buyers to ignore and could limit the ability of packers to raise beef prices.

 

The cautious market analyst also pointed out that last week's higher fed cattle prices came after sellers held out until late Friday to sell, and he said this is a tactic that rarely works two weeks in a row. He expected hedge selling to pressure futures.

 

The USDA estimated cattle slaughter Friday at 122,000 head, compared with 122,000 a week ago and 128,000 a year ago. Saturday's kill was estimated at 82,000 head, versus 67,000 the previous week and 96,000 the previous year. For the week, slaughter was estimated at 582,000 head, compared with 696,000 the previous week and 598,000 the previous year.

 

Urner Barry's Yellow Sheet Friday said many sellers of boxed beef were not trading late in the week. Firmer market conditions had surfaced, as cattle were selling at sharply higher money and futures contracts posted large gains. While some boxed beef items were quoted at very modest discounts, offering prices for delivery over the next two weeks were at higher levels.

 

The USDA reported choice grade boxed beef cutout values Friday were down US$0.22 at US$139.63. Select was up US$0.39 at US$133.79. The volume of sales for fabricated product was 298 loads, with about 81 loads of trimmings and coarse grinds reported. The choice/select spread was US$5.85, versus the previous day's spread of US$6.45.