The Cattle on Feed report was considered somewhat positive to the market as placements onto feedlots in July came in down 10% from last year, which was well below trade expectations. This was partially offset by news of sluggish marketings for the month. On-feed supply came in below expectations at 100.7%. As a result, the report is considered supportive for December cattle and neutral to slightly negative for October cattle.
Placements have been down from the previous year in four of the past five months but May placements were up 15% from last year and these are the cattle which might begin to hit the market in September. Traders are also fearful that many cattle operators will run out of foraged fields or pasture in the next six weeks or so and that more non-Fed cattle and cows will be moving on the market.
The market closed mixed on Friday with October down some and December slightly higher into the close ahead of the USDA Cattle on Feed report. October cattle pushed moderately lower but the market bounced back to see choppy trade around unchanged into the mid-session. However, the market drifted back down into the close but still managed to close one tick higher for the week.
Cash cattle traded at $120 in Texas, which was $1.00 higher on the week but may have been short of expectations. Kansas cattle traded $121.00, up $2.00 on the week. This leaves October at a premium to the cash market. Traders believe beef prices are near a short-term peak once retailers fully book Labor Day features. Boxed beef cutout values were up $1.53 at mid-session Friday and closed $1.55 higher at $193.03. This was up from $184.95 the prior week and is the highest beef market since July 5th.
The estimated cattle slaughter came in at 125,000 head Friday and 13,000 head for Saturday. This brought the total for last week to 643,000 head, up from 642,000 the previous week but down from 669,000 a year ago.
The Commitments of Traders reports as of August 14th showed non-commercial traders were net long 40,166 contracts, an increase of 6,169 for the week. The buying trend is a short-term positive force but the market is already well off of the highs, and this could leave the market vulnerable to fund trader long liquidation. Non-commercial and nonreportable traders combined held a net long of 14,934 contracts, up 7,458 in the net long position held by these traders. Commodity Index traders held a net long of 120,259 contracts, up 1,252. There were 6 new deliveries and 51 retenders against the August contract for the market to absorb today.