Feeder Cattle futures closed mixed on Monday, from an average of 27¢ lower to unchanged to an average of 48¢ higher. They were supported by weaker Corn futures but challenged by softer Live Cattle futures which closed an average of 59¢ lower, except for 5¢ higher in spot Dec.
Corn futures closed mostly 2¢ to 4¢ lower.
Soybean futures closed mostly 5¢ to 9¢ lower.
Negotiated cash fed cattle trade ranged from mostly inactive on very light demand to a standstill through Monday afternoon, with too few transactions to trend, according to the Agricultural Marketing Service.
Last week, live prices were $150/cwt. in the Southern Plains $153 in Nebraska and $153-$154 in the western Corn Belt. Dressed prices were $240-$242.
Choice Boxed beef cutout value was 96¢ lower Monday afternoon at $257.98/cwt. Select was $2.06 lower at $233.21/cwt.
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Major U.S. financial indices closed lower Monday, with skittishness ahead of further reads on inflation this week.
The Dow Jones Industrial Average closed 211 points lower. The S&P 500 closed 35 points lower. The NASDAQ was down 127 points.
West Texas Intermediate Crude Oil futures (CME) closed $2.31 to $3.09 lower through the front six contracts.
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Domestic beef demand strength continues despite higher retail prices.
“Beef demand considers retail beef prices as well as the quantity of beef consumption,” explains Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly market comments. “Total commercial beef production is projected for 2022 at a record level of 28.3 billion lbs. After adjusting for beef trade, per capita retail beef consumption is projected at 59.3 lbs., up year over year from 58.9 lbs. per capita in 2021. The fact that retail beef prices this year are averaging higher at the same time as consumption is increasing is an indication of strong beef demand.”
The all-fresh retail beef price has remained in a narrow range from $7.37/lb. to $7.25/lb. this year, averaging $7.33/lb. through October, according to Peel. It was $6.95/lb. during the same period last year.
“Wholesale boxed beef prices, similar to retail prices, have traded in a narrow range for most of 2022,” Peel says. “Since March, Choice boxed beef has averaged $261.77/cwt. with a weekly maximum of 272.48/cwt. and a minimum of $246.31/cwt., leading to a range of $26.17/cwt. This follows very strong wholesale demand in 2021, which led to an average Choice boxed beef price of $279.81/cwt. with a weekly maximum of $347.02/cwt., a minimum of $206.73/cwt. and a range of $140.29/cwt. for the year.”
USDA projects domestic beef production significantly lower next year, which suggests higher beef prices.
“Consumers, thus far, have absorbed large supplies of beef at record prices,” Peel says. “As beef supplies tighten, some consumers may begin to ‘trade down’ as market prices ration a smaller supply of beef. Per capita beef consumption is expected to decrease in the coming year, not because beef demand is weak but simply because the available supply of beef will decrease.