July 19, 2019                                







Cash Cattle.


Cattle continued to trade at $111 -- south and $113-114- Nebraska and $115 Iowa. Dressed prices in the north ranged from $183-185. Trading is mostly concluded for the week.


Today's cattle on feed report contained no surprises. All category of reporting were in sync with pre-release guesses.


                        U.S. CATTLE ON FEED ESTIMATES
                   IN YARDS WITH MORE THAN 1,000 CAPACITY
                                                  AVERAGE            RANGE
                                   ACTUAL       OF ESTIMATES     OF ESTIMATES
CATTLE ON FEED           July           102            101.8      100.9-103.2
PLACED DURING            June            98             97.9       93.2-105.7
MARKETED DURING          June            97             97.0        95.8-98.3



Severe heat is not the friend of the beef business. Almost 2/3rd of the country is suffering from excessive hear with areas like Chicago and NYC well over 100 with high humidity. Consumers tend to avoid some beef purchases during periods of high heat.


Cattle Futures. Live cattle were modestly higher at week's end. There exists a large gap between August live cattle and the current cash prices. Hedged feeders are enjoying a extremely favorable positive basis for selling cattle. 


The Comprehensive Fed Cattle Weekly Report offers the most current carcass weight information. Steers and heifers are grouped together. The latest report shows carcass weights up 6# at 841# -- 4# under last year. Year to year weights are important for the tonnage of beef produced. 


Forward Cattle Contracts: The trades for forward deliveries were mainly dairy cattle.


Weekly graphs on the Comprehensive Weekly Fed Cattle Report break down the categories of trade for the week according to 1) formula cattle; 2) negotiated live; 3) negotiated dressed; 4) and forward contracts. Some cattle included in the formula category are week to week negotiated grids and not committed cattle to one plant. Other cattle designated as formula are "over the tops".


The Cutout. The cutout moved higher at week's end anticipating cooler temperatures next week.  The choice/select spread is $24.  The national grading percentage has fallen -- widening the spread.


Beef Feature Activity Index. The weather is turning warm to hot across much of the nation. All meats are in ample supply. Beef will face off against pork and chicken - both have seen price fall instead of move higher.


Cutout Values as of Friday, July 19, 2019
Choice CutoutChoice Price Change
213.42Up $0.08
Select CutoutSelect Price Change
189.51Up $0.90
Choice/Select Spread


Replacement markets


The influence of grain prices on replacement costs will continue to be felt through fall harvest. Conflicts between government reports and private companies that monitor the crop progress will compete with each other for price discovery. Higher grain cost will encourage pasture operations, where feed is plentiful and gains are cheap, to hold cattle on pasture as long as possible. Look for more heavy cattle placed on feed this fall.


More perspective on the shape of the market will be available after the reports this afternoon.


Oklahoma City. Feeder steers and heifers were $4-6 higher. 


Feeder Cattle Futures. Feeder futures were modestly higher at week's end. A more pessimistic view of future fed prices is spilling over into the replacement market. Prices are flat line from August on for currently traded contracts.


Feeder Cattle Cash Index. Feeder cattle are being yanked around from the run up in grain prices and government trade policies. The futures are currently pulling the cash.


Forward cattle contracting. Feedlots are moving into more forward contracts on fall cattle but basis levels are narrowing as feedlots compete for supplies.  Fall cattle are selling premium to current offerings encouraging many owners to hold to sell inventory.   


National Weekly Feeder Summary released on Friday of each week tracks the national prices by region for last week.   


Grain Futures. Corn futures were higher at week's end. Wheat is developing a feed value to cause many feeding operations to switch grains. Widespread wheat feeding will cause the corn basis to fall and adjust corn stocks before new crop harvest in the fall. The basis levels are rising and currently at 70 over the July board in Guymon, Oklahoma. Corn is now pricing into rations at $9.20 cwt. in the Oklahoma Panhandle.






July 1 Cattle Inventory Unchanged


All cattle and calves in the United States on July 1, 2019 totaled 103 million head, unchanged from the 103 million head on July 1, 2018.


All cows and heifers that have calved, at 41.7 million head, were slightly below the 41.8 million head on July 1, 2018. Beef cows, at 32.4 million head, were unchanged from a year ago. Milk cows, at 9.30 million head, were down 1 percent from previous year.


All heifers 500 pounds and over on July 1, 2019 totaled 16.4 million head, 1 percent above the 16.3 million head on July 1, 2018. Beef replacement heifers, at 4.40 million head, were down 4 percent from a year ago. Milk replacement heifers, at 4.10 million head, were down 2 percent from previous year. Other heifers, at 7.90 million head, were 5 percent above a year earlier.


Steers 500 pounds and over on July 1, 2019 totaled 14.7 million head, up 1 percent from July 1, 2018. Bulls 500 pounds and over on July 1, 2019 totaled 2.10 million head, unchanged from July 1, 2018. Calves under 500 pounds on July 1, 2019 totaled 28.1 million head, down 1 percent from July 1, 2018.


Cattle and calves on feed for the slaughter market in the United States for all feedlots totaled 13.6 million head on July 1, 2019. The inventory is up 2 percent from the July 1, 2018 total of 13.3 million head. Cattle on feed in feedlots with capacity of 1,000 or more head accounted for 84.4 percent of the total cattle on feed on July 1, 2019, down slightly from previous year.


The combined total of calves under 500 pounds and other heifers and steers over 500 pounds (outside of feedlots) is 37.1 million head. This is slightly above the 37.0 million head on July 1, 2018.


Calf Crop Down Slightly The 2019 calf crop in the United States is expected to be 36.3 million head, down slightly from last year's calf crop. Calves born during the first half of 2019 are estimated at 26.5 million head, down slightly from the first half of 2018. An additional 9.80 million calves are expected to be born during the second half of 2019.




Below are links to articles published in the Cattle Report pertaining to industry change. Two important changes are on the table for progress -- supply chain management and animal ID. Both applications will transform and disrupt the industry.






The Case for National ID for Cattle


Reforming the Futures Contract and Cash Trading of Cattle





Sections of the newsletter are redesigned with hyperlinks to the appropriate source pages. The hyperlinks are in light blue within the report.







Regional differences in grain and cattle basises create a difficulty in modeling a national composite for current close outs or a proforma forward look at a breakeven. Readers should consider your own area for adjustments to these models. 




The Cattle Report introduces the FEEDER METER. The report estimates profit or loss for currently purchased feeder steers and projects a result 150 days out.  The chart is interactive and updated every 15 minutes in real time based on changes in futures markets in grain and cattle. Corn basis information is based on current trade prices adjusted every two weeks. Feeder prices and fed cattle sales are par the appropriate futures contract.

750 # Feeder Steer1,042.88139.05
Cost of Gain 600 pounds483.410.81
Estimated Interest(Prime + 1%)41.23 
Current Breakeven1,559.18115.49
Current Futures1,568.03116.15
Net Profit / Loss8.850.66


The Cattle Report estimates current profit or loss on cattle placed on feed 150 days ago. This report generated from industry averages attempts to simulate a typical close out based on prevailing purchase prices for a feeder steer 150 days ago. The close out assumes grain was purchased at market each month. Selling prices and interest rates are based on prevailing benchmark quoted prices. This chart will change weekly.

750 # Feeder Steer OKC 150 days ago1,102.50147.00
Cost of Gain 600 pounds529.830.88
Estimated Interest(Prime + 1%)36.53 
Resulting Breakeven1,668.86123.62
Current Texas Panhandle Cash1,510.52111.89
Net Profit / Loss-158.34-11.73



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