Cattle futures stepped higher Friday, helped along by higher wholesale beef prices, stronger Lean Hog futures and moderating feed futures.
Live Cattle futures closed an average of 50¢ higher, from 10¢ higher in the back contract to $1.40 higher in spot Apr. Week to week, they closed an average of $1.17 higher (42¢ to $1.80 higher), recovering about half of the previous week’s losses.
Negotiated cash fed cattle trade ranged from mostly inactive on very light demand to a standstill through Friday afternoon with too few transactions to trend, according to the Agricultural Marketing Service.
For the week, live prices were $2 lower in the Southern Plains and Nebraska at $138/cwt. and $2-$4 lower in the western Corn Belt at $138-$140. Dressed prices were $4-$5 lower in Nebraska at $220; $3-$5 lower in the western Corn Belt at $219-$222.
“Cattle feeders should be experiencing strong profit margins with cattle coming off feed in today’s market, but the budget for placing cattle on feed is changing,” explains Andrew P. Griffith, agricultural economist at the University of Tennessee, in his weekly market comments. “A month ago, cattle feeders were faced with strengthening feeder cattle prices and what now seems like relatively low feed prices. However, the sudden increase in feed grain prices has resulted in higher feed cost expectations, which has resulted in bidding lower prices for cattle to be placed in the near term.”
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Based on weekly auctions monitored by Cattle Current, calf and feeder cattle prices were mainly lower last week.
Feeder Cattle futures closed an average of $1.46 higher on Friday. That helped lift them to an average of 63¢ higher week to week on Friday (7¢ to $1.37 higher), barely denting the average $5.85 decline the previous week.
Corn futures closed mostly 1¢ to 3¢ higher.
Soybean futures closed 1¢ to 10¢ lower through Jan ‘23, and then mostly 1¢ to 3¢ higher.
Week to week Corn futures closed an average of 7.9¢ lower through the front three contracts, and then an average of 24.2¢ higher in the next three. During the same period, Soybean futures closed an average of 26.1¢ higher through the front six contracts (14¢ lower in spot Mar to 43.6¢ higher in near Sep).
“Markets are trying to find where values should be,” explains Aaron Smith, crop marketing specialist at the University of Tennessee, in his weekly market comments. “There continues to be a large amount of uncertainty regarding commodity prices, due to the Ukraine-Russia conflict and political responses by external nations. Futures markets have been very volatile, and are likely to continue to be volatile, as traders try to determine value between commodities and across time.”
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Wholesale beef prices showed signs of turning the seasonal corner higher. Choice boxed beef cutout value was 38¢ higher week to week on Friday at $254.71/cwt. Select was 70¢ higher at $249.11.
Estimated total cattle slaughter of 644,000 head last week was 10,000 head fewer than the previous week and 5,000 head fewer than the same week last year. Year-to-date estimated total cattle slaughter of 6.46 million head is just 22,000 head fewer. Estimated year-to-year beef production of 5.42 billion lbs. is 8.5 million lbs. less year over year.
“Monthly retail meat prices for February were recently released by USDA. The retail price of beef remains elevated with the Choice retail beef price coming in near $7.62/lb., which is a marginal decline from January and $1.20/lb. higher than one year ago,” Griffith says.
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Major U.S. financial indices continued lower Friday, pressured by higher energy prices, lingering uncertainty tied to Russia’s war on Ukraine and declining consumer confidence.
The closely monitored University of Michigan Consumer Sentiment index declined to 59.7 in March from 62.8 the previous month and 84.9 a year earlier, as consumer incomes lose ground with higher inflation.
The Dow Jones Industrial Average closed 229 points lower. The S&P 500 closed 55 points lower. The NASDAQ was down 286 points.
West Texas Intermediate Crude Oil futures on the CME closed $3.31 to $3.81 higher in the front six contracts.
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Potentially, Livestock Mandatory Reporting (LMR) received yet another reprieve Thursday of last week when the U.S. Senate passed the Fiscal Year 2022 Omnibus Appropriations package. The $1.5 trillion bill would fund the U.S. government through the end of its fiscal year (Sept. 30). The U.S. House of Representatives approved the bill the previous day.
So, if President Biden signs the bill, as expected, LMR will be funded through the end of the government fiscal year. According to the National Cattlemen’s Beef Association (NCBA), the bill also provides funding for, among other things: the Electronic Logging Device exemption for livestock haulers, important EPA regulatory relief and a Cattle Contract Library pilot program.
A cattle contract library — specifics of alternative marketing arrangement contracts packers utilize — is viewed by many as a step toward increased market transparency and price discovery. Others believe the fine points of the one outlined in the bill could do more harm than help.
“Congress and the Administration say they value transparency in the beef and cattle market yet they bury this rider without debate in a giant spending bill and direct USDA to create the pilot program without any feedback from beef companies or cattle producers,” says Julie Anna Potts, president and CEO of the North American Meat Institute (Meat Institute). “There will be no opportunity for companies to provide valuable perspective on what information should be included or how it should be reported.”
The law is vague and provides no guardrails for the type or amount of data and leaves program development up to the U.S. Department of Agriculture’s (USDA) Agricultural Marketing Service (AMS), Potts explains. She adds the law contains a provision enabling AMS to promulgate the rules without a comment period as normally required by law.