Cattle futures gained some traction on Monday with short covering and a focus on expected strength for holiday beef buying.
Live Cattle futures closed an average $1.16 higher (95¢ to $1.60 higher).
Feeder Cattle futures closed an average of $1.00 higher.
Choice boxed beef cutout value was $1.42 lower Monday afternoon at $209.57/cwt. Select was 57¢ lower at $187.28.
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Major U.S. financial indices closed narrowly mixed on Monday. Support was apparently tied to a bullish view of holiday retail sales and the Senate vote scheduled later this week on its tax reform proposal.
The Dow Jones Industrial Average closed 22 points higher. The S&P 500 closed 1 point lower. The NASDAQ closed 10 points lower.
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“The price outlook the next several months appear favorable for cow-calf and stocker producers,” says Andrew P. Griffith, agricultural economist at the University of Tennessee.
Griffith notes in his weekly market comments that the Jan Feeder Cattle contract has traded above $148 since the third week of September, suggesting strong support at or above that level. It closed at $154.45 on Monday.
“The current situation may offer highly leveraged producers the opportunity to lock in a profit at a minimal cost,” Griffith says. “For producers who can afford to carry the market risk, it may be beneficial to sit tight and keep a close eye on the market. At the same time producers are eyeing the first-quarter feeder cattle market, many of these same producers are thinking about early spring calf prices. The strong feeder cattle market should lead to a strong calf market in late March and early April.”
Griffith also points out Feeder Cattle contracts through Sep 2018 are trading within $2.50 of each other.
“There are several thoughts concerning the tight trading range, but the thought that is most likely to summarize it is that there is a lot of uncertainty to the number of animals coming to the market,” Griffith says.