Live cattle futures recovered this week following last week’s gap open lower, though gains have been limited in the feeders market. December live cattle traded $1.77 higher on Tuesday to $245.42 per cwt.
The market has been digesting implications from the Trump administration’s comments about increasing beef imports from Argentina. The U.S. has already been importing larger volumes of Argentine beef; imports are up 42 percent this year as of July, according to the most recent U.S. Census data. Meanwhile, imports from Brazil are likely lower due to high tariffs on the country.
Wholesale beef prices recovered in recent weeks, with the choice cutout rising to the highest since late September. The USDA cutout index rose to $372 per cwt and is sitting comfortably above year-ago levels.
Fed cash cattle prices have been improving again. Negotiated sales of fed cattle in the Southern Plains sold $5 higher last week at $240 per cwt. In Nebraska, prices were $5 to $6 higher.
On the feeder cattle front, November futures traded about $1.22 higher on Tuesday to $370.40. Prices have been more reluctant to trade higher than live cattle. Friday’s limit-down move proved that prices can fall much faster than they go up.
The CME Feeder Cattle Index fell for a second day but is only a few dollars lower than its all-time high at $373. Feeder cattle demand was very good last week before Friday’s limit-down trade. Steers and heifers both traded sharply higher than the previous week.
The USDA would have published its monthly Cattle on Feed report on Friday, absent of a government shutdown. A Bloomberg survey of analyst estimates predicts that the Oct. 1 feedlot inventory would have been 2 percent lower than a year ago. Additionally, September placements are expected to have dropped nearly 9 percent compared to last year.
Unfortunately, the report would have also shown the percentage of heifers in feedlots to signal more clues about the status of herd expansion.
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PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS. FUTURES TRADING INVOLVES SUBSTANTIAL RISK AND IS NOT SUITABLE FOR ALL INVESTORS.