Cattle futures trended lower pressured by bearish outside markets. Feeder Cattle futures closed an average of 69¢ lower. Live Cattle futures closed an average of $1.46 lower.
Grain futures were also pressured by pessimistic outside markets. Corn futures closed mostly 10¢ to 20¢ lower. Soybean futures closed 14¢ to 26¢ lower.
Negotiated cash fed cattle trade was slow on light demand in Nebraska at $140/cwt., which was $2 less than earlier in the week. Elsewhere, trade was limited on light demand through Wednesday afternoon with too few transactions to trend.
So far this week, live prices are $2 lower in the Southern Plains at $138, $2-$4 lower in Nebraska at $140-$142 and $2-$3 lower in the western Corn Belt at $142. Dressed prices are $4 lower in Nebraska at $226.
Last week, live prices were $140-$144 in Colorado. Dressed prices were $227-$230 in the western Corn Belt.
Choice Boxed beef cutout value (p.m.): 1¢ lower at $260.47/cwt. Select was $2.17 lower at $246.02.
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Major U.S. financial indices plunged Wednesday Tuesday, in the wake of mega-retailers Walmart and Target posting weaker than expected earnings as inflation weighs.
“Bottom-line results were unexpected and reflect the unusual environment. U.S. inflation levels, particularly in food and fuel, created more pressure on margin mix and operating costs than we expected,” according to Doug McMillon, Walmart president and CEO.
Likewise, Brian Cornell, Target Corp, chairman and chief executive officer explains, “Throughout the quarter, we faced unexpectedly high costs, driven by a number of factors, resulting in profitability that came in well below our expectations, and well below where we expect to operate over time.”
The Dow Jones Industrial Average closed 1,164 points lower. The S&P 500 closed 165 points lower. The NASDAQ was down 566 points.
West Texas Intermediate Crude Oil futures on the CME closed $2.59 to $2.83 lower through the front six contracts.
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USDA’s Economic Research Service (ERS) projects cattle prices next year to increase for a second consecutive year and approach the record-high levels of 2014, when the U.S. cattle inventory was the least since 1952.
“With a smaller 2022 calf crop and higher anticipated beef cow slaughter in 2022, calf supplies are expected to contract in 2023,” say ERS analysts, in the latest Livestock, Dairy and Poultry Outlook. “The average annual feeder steer price is expected to climb to $198.00/cwt. in 2023, $35 (+22%) than the projection for 2022.”
So far this year, ERS analysts point out the faster pace of placements and slower than expected fed cattle marketing resulted in the largest on-feed numbers recorded for the month of April.
“This has likely kept feeder calf prices restrained, given late-2022 fed cattle prices implied by the futures market for late 2022,” say ERS analysts. “The third-quarter 2022 price forecast is raised $1, but the fourth-quarter 2022 price is lowered $2, for an annual forecast of $162.80/cwt., 20¢ lower than last month’s forecast.”
Specifically, ERS projects feeder steers prices (basis 750-800 lbs. in Oklahoma City) at $159 in the second quarter, $166 in the third quarter and $170 in the fourth quarter. Price for the first quarter of next year is projected at $168.