Sign in Subscribe
Commodity futures

Wholesale Beef Prices Seen Steady into Summer

Strategic Insights

— 1 min read

Amid high choice beef product and predictions of adequate feedlot supplies for at least two more weeks, Chicago Mercantile Exchange live cattle futures traders are expecting steady to slightly higher opening prices. Beef wholesalers and their customers have not accumulated inventories over the past few months due to expectations of lower prices this summer. However, major beef packers are now warning them to expect prices similar to current levels for the remainder of the year, along with increased delivery surcharges due to gasoline price increases. According to a major Midwest beef wholesaler, inflation is now a significant factor in the rising prices.

Key Takeaways:

  • Over 3,000 Jun long rolls moved into Aug, associated with the Goldman Sachs Commodity Index, putting pressure on the pits and driving futures price levels to remain discount to cash live cattle quotes.
  • The second session of five Jun long rolls into Aug is expected to occur on Tuesday's close, after a large roll on Monday's close.
  • Feeder cattle futures are predicted to be 10 to 20 points higher, amid strong live auction interest and weakening feedgrain values, with the CME feeder index continuing to gain ground.
  • The USDA reported mostly higher boxed-beef prices, with light choice sold at $160.69, up $1.40, and the choice/select spread for Monday at $20.34.
  • The operating margin index for cattle packers was plus $2.95 per head, indicating the general health of the industry, calculated by www.HedgersEdge.com.
  • The USDA estimated cattle slaughter Monday at 130,000 head, compared with 124,000 last week and 133,000 last year.

Statistics:

  • Over 3,000 Jun long rolls moved into Aug on Monday.
  • The CME feeder index was $1.84 higher at $102.06.
  • The USDA reported nationwide cattle slaughter at 130,000 head on Monday.
  • The total loads of fabricated cuts moved Monday was 229.
  • The choice/select spread for Monday was $20.34.
  • The operating margin index for cattle packers was plus $2.95 per head.
  • Feedlot supplies are predicted to remain adequate for at least two more weeks.

Sources:

  • OsterDowJones
  • COMTEX
  • Chicago Mercantile Exchange
  • USDA
  • HedgersEdge.com

Read more