Cattle futures closed sharply lower on the front end, led by Live Cattle, as bears continue to win the day, and despite the cash premium.
Live Cattle futures closed an average of $1.14 lower through the front three contracts, (82¢ to $1.57 lower) and then an average of 31¢ lower except for an average of 20¢ higher at the back of the board.
Except for 7¢ and 30¢ higher at the back of the board, Feeder Cattle futures closed an average of 47¢ lower.
Choice boxed beef cutout value was 24¢ lower Monday afternoon at $223.90/cwt. Select was 23¢ higher at $217.49.
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Major U.S. financial indices closed mixed on Monday. Much of the pressure seemed to stem from unease about potential ramifications of the recently implemented tariff on U.S. steel and aluminum imports.
The Dow Jones Industrial Average closed 157 points lower. The S&P 500 closed 3 points lower. The NASDAQ closed 27 points higher.
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“Consumer demand for meat was stronger than average in 2017. It is rare for meat supplies to grow as they did last year without output prices suffering more severe declines,” say analysts with the Food and Agricultural Policy Research Institute (FAPRI) at the University of Missouri. “While economic projections
point to U.S. meat demand remaining solid, prices are projected to retreat for most products in 2018 due to continued supply pressure and a return to more historical levels of consumer demand.”
Among highlights in FAPRI’s annual U.S. Baseline Outlook released last week, which includes 10-year projections:
- Strong demand supported cattle, hog, chicken and milk prices in 2017, in the face of large increases in meat and milk production. Further production increases could weigh on livestock and dairy prices in 2018 unless demand growth is exceptionally strong.
- Projected prices for corn, soybeans and wheat all increase slightly in 2018-19 and 2019-20, but large global stocks limit the increase. Corn prices average $3.57/bu. for the 2018-19 crop, while soybean prices average $9.38 and wheat prices average $4.89.
- Projected net farm income increases slightly in 2019. In later years, real net farm income is fairly flat, remaining below the 2015 level through 2027.
- Annual food price inflation was below 1% for the second straight year in 2017. Projected food price inflation is about 2% in 2018, similar to the overall rate of inflation in the U.S. economy.