Negotiated cash fed cattle trade was at a standstill in Kansas and the Northern Plains through Tuesday afternoon, according to the Agricultural Marketing Service. Elsewhere, trade was very limited with very light demand; too few transactions to trend.
Feeder Cattle futures extended gains Tuesday, helped along by softer Corn and Soybean futures. Live Cattle mostly edged lower.
Live Cattle futures closed an average of 26¢ lower, except for from 45¢ to $1.15 higher in the front three contracts.
Feeder Cattle futures closed an average of $1.44 higher, except for 17¢ lower in spot Jan. That’s mainly an average of $3.46 higher in the last two trading sessions.
Choice boxed beef cutout value was $2.45 higher through Tuesday afternoon at $217.49/cwt. Select was 60¢ higher at $206.44.
Corn futures closed 4¢ to 7¢ lower through the front six contracts, and then mostly 2¢ to 4¢ higher toward the back.
Soybean futures closed 23¢ to 31¢ lower through the front four contracts, mostly 7¢ to 8¢ lower through the next five contracts and then mostly 1¢ lower.
Major U.S. financial indices closed higher Tuesday, amid chatter from the pending new Administration about another round of economic stimulus.
The Dow Jones Industrial Average closed 116 points higher. The S&P 500 closed 30 points higher. The NASDAQ was up 198 points.
Although forecasts indicate increased year-over-year domestic red meat and poultry production, analysts with USDA’s Economic Research Service (ERS) expect per capita meat disappearance to decline about 1%, due to increased exports and reduced beef imports.
“Availability is the disappearance on the domestic market of what remains after exports and ending stocks are subtracted from the sum of production, beginning stocks, and imports. Dividing this amount by the U.S. population yields per capita disappearance,” explain ERS analysts, in the latest monthly Livestock, Dairy and Poultry Outlook (LDPO).
Beef production for this year was projected lower than the previous month at 27.2 billion lbs. but still would be more than in 2020.
“This adjustment was based in part on fewer fed cattle to be slaughtered in second-quarter 2021 as a result of lower expected placements in fourth-quarter 2020,” say ERS analysts. “Further, higher feed costs in 2021 are expected to negatively impact cattle carcass weights.”
According to USDA, from January through November of last year, total cattle slaughter was about 3% less than the previous year. Average carcass weights were about 3% heavier, though, which mostly offset decreased slaughter, in terms of beef production.
“Live steer prices in the five-area marketing region for the first week of January were reported at $111.27/cwt., more than $13 below last year for the same week and the lowest January starting price since 2011,” say ERS analysts. “However, the annual price forecast for 2021 was raised $0.50 to $115.50/cwt. on lower expected production and expected improved packer demand in 2021.”
USDA projects the average five-area direct fed steer price at $113 in the first and second quarters, at $115 in the third quarter and at $120 in the fourth quarter.
On the other end of the trade, ERS analysts say the average feeder steer price last year was about 5% less than the previous year at $135.45/cwt. That’s basis a 750-800 lb. steer selling at Oklahoma National Stockyards.
“Prices in the first two weeks of January 2021 averaged $134.81, about 7% below the monthly average for January 2020,” ERS analysts say. “To the extent that prices at the beginning of 2021 were higher than expected, the first-quarter 2021 forecast was raised $1 to $134/cwt. However, higher expected feed costs lowered expectations for prices the rest of the year, and as a result the annual price forecast for feeder steers was lowered $1 to $137.”
Specifically, the average feeder steer price is projected at $134/cwt. in the first and second quarters, $139 in the third quarter and $140 in the fourth quarter for an annual average of $136.75.