Cattle futures continued to unravel Tuesday with follow-through pressure and another significant step lower in negotiated cash fed cattle prices.
Toward the close, Live Cattle futures were an average of $1.76 lower. Feeder Cattle futures were an average of $4.73 lower, except for 22¢ higher in spot Aug.
Negotiated cash fed cattle trade was moderate on moderate demand in Nebraska through Tuesday afternoon, according to the Agricultural Marketing Service. FOB live prices were $7-$8 lower at $218/cwt. and dressed delivered trades were $10-$11 lower at $345.
Trade was light on moderate demand in the western Corn Belt, where FOB live prices were $7 lower at $218. Dressed delivered prices there last week were mostly $355.
Choice boxed beef cutout value was $2.84 higher Tuesday afternoon at $388.53/cwt. Select was $3.96 higher at $368.98.
Grain and Soybean were higher on Tuesday.
Toward the close and through the front four contracts, Corn futures were 8¢ to 10¢ higher, buoyed by estimated yield declines and eroding crop conditions.
Soybean futures were 13¢ to 15¢ higher, rebounding from the previous day’s decline.
Kansas City HRW Wheat were 5¢ higher.
******************************
Major U.S. financial indices closed higher on Tuesday.
The Dow Jones Industrial Average closed 160 points higher. The S&P 500 closed 24 points higher. The NASDAQ was up 171 points.
Through mid-afternoon, West Texas Intermediate Crude Oil futures (CME) were $2.50 to $4.55 lower through the front six contracts.
******************************
“High cattle and beef prices, lower feedlot placements and plant closure announcements reflect the market doing precisely what we may expect — signaling scarcity, rationing what is short in supply and desired by eligible buyers, and encouraging removal of what is long or excess in supply,” says Glynn Tonsor, agricultural economist at Kansas State University.
He reflects on recent market drivers in the Aug. 24 issue of In the Cattle Markets, everything from the relative scarcity of cattle and cattle feeders putting more days on cattle to packing plant closures and the latest government attempt to intervene.
“Record calf values are providing cow-calf producers with the strongest herd-rebuilding incentive most, if not all, have ever seen when considered on a traditional dollar-per cow-per year basis,” Tonsor says. “Packer consolidation of harvest into fewer plants operating at higher volumes is the painful yet predictable response to overcapacity. Higher imported beef volumes, with or without tariff waivers, are how the market responds to strong U.S. consumer beef demand, high slaughter weights (yielding more trimmings to blend with imported lean beef), and shrinking feedlot inventories.”
Tonsor notes increased uncertainty is likely delaying and muting overall interest in herd expansion.