Russia’s announcement over the weekend that it is suspending its participation in the Black Sea Grain Initiative (BSGI) propelled grain futures significantly higher Monday. The BSGI, brokered by the United Nations earlier this year, enabled resumption of Ukraine grain exports via the Black Sea as Russia’s war on Ukraine continued.
Corn futures closed 8¢ to 10¢ higher through Jly ‘23 and then mostly 4¢ to 5¢ higher.
Kansas City Wheat futures closed mostly 39¢ to 53¢ higher.
As logic would suggest, Feeder Cattle futures wilted in the face of the spike up in grain futures, closing an average of 81¢ lower (25¢ lower to $1.00 lower), except for an average of 9¢ higher in the back three contracts.
Added uncertainty came with the fact that there were no reports from the Agricultural Marketing Service during trading hours Monday, presume Bly due to technical difficulties.
Last week’s stronger cash fed cattle prices and higher wholesale beef values muted losses in Live Cattle futures, which closed an average of 27¢ lower, except for $3.60 lower in expiring Oct.
Last week, negotiated cash fed cattle prices were $2 higher on a live basis in the Southern Plains at $150/cwt.; they were $1-$2 higher in Nebraska at $152-$153 and $1-$3 higher in the western Corn Belt at $151-$153. Dressed prices were $4 higher in Nebraska at $240 and $4-$8 higher in the western Corn Belt at $240.
Major U.S. financial indices softened Monday with likely month-end position squaring as investors await the Fed’s next interest rate move later this week.
The Dow Jones Industrial Average closed 128 points lower. The S&P 500 closed 29 points lower. The NASDAQ was down 114 points.
West Texas Intermediate Crude Oil futures (CME) closed 74¢ to $1.37 lower through the front six contracts.
“Market fundamentals are generally positive for cattle markets going forward,” says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly market comments. “Improved futures prices, stronger boxed beef and fed cattle prices are all supportive for feeder cattle markets. Cattle slaughter is still running large but should taper off toward the end of the year. Unless unexpected external market pressure develops, cattle prices are expected to finish the year strong and the highest prices of the year may be recorded before the end of the year.”
Peel offers Oklahoma auction volume as an example of how drought altered cattle marketing. Across 14 weeks from mid-July to mid-October he notes the volume of feeder cattle flowing through auction markets in the state was 19.7% more year over year. The last two weeks, feeder auction volume was 6.1% less than the same period last year.
“Feeder cattle prices at Oklahoma auctions increased counter-seasonally through the summer to August peaks, nearly equal to the spring seasonal peaks before dropping through September into early October,” Peel says. “A sharp decrease in Feeder futures contract prices over this period was the major factor in the cash market decrease. Since mid-October, Feeder futures prices and cash auction prices have moved higher.”
Peel offers insights to the market impacts of recent rains here.