Daily Market Highlights

Grain markets Friday continued to adjust to the previous day’s Prospective Plantings report.

Soybean futures closed 5¢ to 35¢ lower across the board on more planted acres than expected.

New-crop Corn futures mostly gained again Friday, mostly 4¢ to 7¢ higher on fewer anticipated acres.

Rising feed costs once again helped pressure Feeder Cattle futures an average of $1.61 lower, except for 18¢ higher in spot April.

Cash calves and feeder cattle sold mixed last week, based on weekly auctions monitored by Cattle Current — mainly higher early, driven by demand for grass-suited cattle and then with more pressure later in the week with another bounce higher in Corn and full-to-the-brim feedlots.

“Feedlots will have plenty of cattle to market for another few months, but tighter placements are ahead and feedlot production will decline in the second half of the year, says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly market comments. “If drought conditions persist, feedlots may perhaps continue to borrow against the future with early-weaned calves available through the spring and summer before facing the full reality of tighter feeder cattle supplies. On the other hand, if drought conditions abate, higher cattle prices might result in increased heifer retention by the end of the year, thereby squeezing feeder supplies even more and more quickly.”

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Negotiated cash fed cattle trade was mostly inactive on light demand in all major cattle feeding regions through Friday afternoon, with too few transactions to trend, according to the Agricultural Marketing Service.

Live prices last week were steady in the Southern Plains at $138/cwt., steady to $2 higher in Nebraska at $138-$140/cwt. And $1-$2 higher in the western Corn Belt at $140-$143. Dressed prices were $1 higher in Nebraska at $222 and steady to $3 lower in the western Corn Belt at $222.

Estimated total cattle slaughter last week of 639,000 head was 20,000 head fewer than the previous week. Estimated year-to-date total cattle slaughter of 8.39 million head was 29,000 head more.

Estimated year-to-date beef production of 7.03 billion lbs. was 47.4 million lbs. more.

Live Cattle futures, closed an average of 64¢ lower, except for 10¢ to 30¢ higher in the back two contracts, challenged by volatile markets and the looming bulge in second-quarter fed cattle supplies amid limited shackle space once again.

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Major U.S. financial indices edged higher Friday, despite a slightly gloomier jobs report than anticipated.

Total non-farm payroll employment increased by 431,000 month-to-month in March, according to the U.S. Bureau of Labor Statistics.

The Dow Jones Industrial Average closed 140 points higher. The S&P 500 closed 15 points higher. The NASDAQ was up 41 points.

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Wholesale beef prices continue their seasonal push higher.

Choice boxed beef cutout value was $12.42 higher week to week on Friday at $267.14/cwt. Select was $13.41 higher at $262.52.

Beyond seasonal beef prices, consumers will continue to face sharp increases in retail meat prices.

“Relative to 2019, beef retail prices are projected to be 26% higher this year, with pork up 21% and chicken 18% more expensive,” according to the 2022 Agricultural Outlook from the Food and Agricultural Policy Institute (FAPRI) at the University of Missouri. “To this point consumers have continued to spend their dollars on meat, particularly higher-value products, but the risk of some consumers being priced out of the market is increasing. With energy and other goods taking a larger share of consumer finances, recent meat demand strength could be tested given projected price levels.”

Although meat prices have driven the trend toward higher food inflation, FAPRI analysts explain prices for other food products are also increasing.

“Even if food inflation slows in the months ahead, the annual rate for 2022 is likely to be the highest since 2008,” says Patrick Westhoff, FAPRI director. “Higher farm commodity and energy prices caused by the Ukraine war could make it more difficult for consumer food price inflation to return to normal levels in the near term.

Corn futures closed sharply higher and Soybean futures closed sharply lower Thursday, all fueled by the Prospective Plantings and quarterly Grain Stock reports from USDA (see below).

Corn futures closed 20¢ to 27¢ higher in new-crop contracts.

Soybean futures closed 36¢ to 49¢ lower through Sep ‘23 and then 23¢ to 27¢ lower.

The sharp bounce higher in Corn futures helped push Feeder Cattle futures an average of $2.25 lower, except for 7¢ lower in expiring Mar.

Sharply lower outside markets helped pressure Live Cattle an average of 49¢ lower, except for unchanged in away Apr.

Negotiated cash fed cattle trade was slow to moderate on good demand in Nebraska and the western Corn Belt through Thursday afternoon, according to the Agricultural Marketing Service.

Live prices were steady to $2 higher than last week in Nebraska at $138-$140/cwt. Dressed prices were $1 higher at $222.

In the western Corn Belt, live prices were $1-$2 higher at $140-$143. Dressed prices there last week were $221-$225.

So far this week, live prices are steady in the Southern Plains at $138.

Choice Boxed beef cutout value was $1.35 higher Thursday afternoon at $268.39/cwt. Select was $4.88 higher at $262.34.

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Major U.S. financial indices sank Thursday, with the end of the month and quarter, and as 2-year and 10-year Treasury yields inverted, which some view as signal of coming recession.

The Dow Jones Industrial Average closed 550 points lower. The S&P 500 closed 72 points lower. The NASDAQ was down 221 points.

West Texas Intermediate Crude Oil futures on the CME closed $4.26 to $7.54 lower through the front six contracts.

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USDA’s Prospective Plantings report drove grain markets Thursday with significantly fewer corn acres than many expected and significantly more soybean acres.

Corn planted area for all purposes in 2022 was estimated at 89.5 million acres, down 4% or 3.87 million acres from last year. Planted acreage is expected to be down or unchanged in 43 of the 48 estimating States.

Corn stocks in all positions on March 1, of 7.85 billion bu. were 2% more than a year earlier, according to USDA’s quarterly Grain Stocks report. Of the total stocks, 4.08 billion bu. were stored on farms, up 1% from a year earlier. Off-farm stocks of 3.77 billion were 3% more than the previous year.

Soybean planted area for 2022 was estimated at a record 91.0 million acres, up 4% from last year. Compared with last year, planted acreage is up or unchanged in 24 of the 29 estimating States.

Soybeans stored in all positions on March 1 totaled 1.93 billion bu., up 24% year over year. Soybean stocks stored on farms were estimated at 750 million bu., up 26% from a year ago. Projected off-farm stocks of 1.18 billion bu. were 22% more than last March.

All wheat planted area for 2022 was estimated at 47.4 million acres, up 1% from 2021. If realized, this represents the fifth lowest all wheat planted area since records began in 1919.

All wheat stored in all positions March 1 totaled 1.02 billion bu., down 22% from a year earlier. On-farm stocks were estimated at 174 million bu., down 39% from last March. Off-farm stocks of 850 million bushels were 17% less. 

All hay harvested area this year is projected at 50.33 million acres, which would be 404,000 fewer acres than last year.

Cattle futures closed mostly lower Wednesday, under pressure from higher grain futures prices, but they retained the majority of the previous day’s gains.

Feeder Cattle futures closed an average of 92¢ lower (50¢ to $1.32 lower), giving back about a third of what was gained in the previous session.

Live Cattle futures closed an average of 47¢ lower, except for an average of 6¢ higher in three contracts.

Rising Grain futures prices on the day were likely due in part to Russia’s continued bombardment on Ukraine, despite optimism surrounding ceasefire talks a day earlier.

Corn futures closed mostly 3¢ to 5¢ higher, except for 11¢ higher in the front two contracts.

Soybean futures closed mostly 13¢ to 21¢ higher.

Negotiated cash fed cattle trade was moderate on moderate demand in the Southern Plains through Wednesday afternoon at steady money of $138/cwt., according to the Agricultural Marketing Service.

Elsewhere, trade ranged from slow on light demand to limited on light demand with too few transactions to trend. There were a few early live trades in Nebraska at $138-$140. Live prices there last week were $138; $221 in the beef. Live and dressed prices in the western Corn Belt last week were $138-$142 and 221-$225, respectively.

Choice Boxed beef cutout value was $2.04 higher Wednesday afternoon at $266.54/cwt. Select was $2.62 higher at $257.46.

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Major U.S. financial indices softened Wednesday, pressured by tech stocks and another day of higher oil prices. West Texas Intermediate Crude Oil futures (CME) closed $3.43 to $3.67 higher in the front six contracts.

The Dow Jones Industrial Average closed 65 points lower. The S&P 500 closed 29 points lower. The NASDAQ was down 177 points.

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Depending on your particular leanings, details released earlier this week regarding a previously announced modification to the Cattle Price Discovery and Transparency Act does little to appease opponents or proponents.

For those opposed, regional mandates remain, dictating specific levels of cash trade, thereby also dictating how many cattle producers can market by various means.

On the other hand, those in favor of mandates likely are disappointed at the relatively innocuous penalty proposed for packers who violate the mandated cash minimum.

According to Senator Deb Fischer’s (R-Neb.) office, who introduced the modified bill with fellow Senators, Chuck Grassley (R-Iowa), Jon Tester (D-Mont.) and Ron Wyden (D-Ore.), the updated bill would:

Require the Secretary of Agriculture to establish five to seven regions encompassing the continental U.S. and then establish minimum levels of fed cattle purchases made through approved pricing mechanisms. Approved pricing mechanisms are fed cattle purchases made through negotiated cash, negotiated grid, at a stockyard, and through trading systems that multiple buyers and sellers regularly can make and accept bids.

Establish a maximum penalty for covered packers of $90,000 for mandatory minimum violations. Covered packers are defined as those packers that during the immediately preceding five years have slaughtered five percent or more of the number of fed cattle nationally.

The bill also includes provisions to create a publicly available library of marketing contracts, mandating box beef reporting to ensure transparency, expediting the reporting of cattle carcass weights, and requiring a packer to report the number of cattle scheduled to be delivered for slaughter each day for the next 14 days. The contract library would be permanently authorized and specify key details about the contents that must be included in the library like the duration of the contract and provisions in the contract that may impact price such as schedules, premiums and discounts, and transportation arrangements.

As debate continues, surely all on both sides recognize price improvements and narrowing packer margins as cattle markets continue to rebalance and normalize following the extreme shocks of the past few years. Markets reacted as economics expected them to during the shocks and are now in the aftermath.

“Supply and demand has already driven the cattle markets back into balance without the radical government interference and convoluted mandates called for in the latest draft of the Grassley-Fischer bill. “Make no mistake, the bill still contains government mandates directing how producers market their cattle,”says Meat Institute President and CEO Julie Anna Potts. “If this bill becomes law, there will be cattle producers who want alternative marketing arrangements but will instead be forced to sell on the cash-market, and the industry will turn back time to the days of commodity cattle, or worse, to government-controlled markets.”

Potts shared an observation made by Stephen Koontz, agricultural economist at Colorado State University, during the recent American Farm Bureau Federation Annual Convention: “Mandated cash trade is not going to get you better price discovery. It’s going to put a $50 cost on calves impacted.” Ultimately, the cost likely would be borne by cow-calf producers.

Continuing optimism about a ceasefire between Russia and Ukraine helped drag grain futures sharply lower again Tuesday.

Corn futures closed 7¢ to 22¢ lower through Jly ‘23 and then 2¢ to 7¢ higher.

Soybean futures closed 12¢ to 23¢ lower through Jly ‘23 and then mostly 6¢ to 10¢ lower.

The continued break in grains helped boost Cattle futures.

Feeder Cattle futures closed an average of $2.62 higher (60¢ to $4.32 higher).

Live Cattle futures closed an average of 86¢ higher.

Negotiated cash fed cattle trade ranged from mostly inactive with very light demand to a standstill through Tuesday afternoon, according to the Agricultural Marketing Service.

Live prices last week were at $138/cwt. in the Southern Plains and Nebraska and at $138-$142 in the western Corn Belt. Dressed prices were $221 in Nebraska and $221-$225 in the western Corn Belt.

Choice Boxed beef cutout value was 63¢ higher Tuesday afternoon at $264.50/cwt. Select was $1.48 lower at $254.84.

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Major U.S. financial indices closed higher Monday, apparently buoyed by signs of optimism regarding peace talks between Russia and Ukraine.

The Dow Jones Industrial Average closed 338 points higher. The S&P 500 closed 56 points higher. The NASDAQ was up 264 points.

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RaboResearch analysts expect higher corn, soybean and wheat prices to continue along a higher plane, according to a new report.

While the sudden shutdown of trade in the Black Sea region has sent corn and wheat prices to their highest in a decade, the 10-year outlook for all major crops has shifted up to a new price level, according to the report, which cites transformative geo-political changes, continued increases in demand and limited acreage availability as the drivers.

RaboResearch analysts explain the war in Ukraine effectively closed trade routes shipping agricultural products grown from the Black Sea region to other parts of the world. Continuing conflict will cut supplies of corn and wheat available to the global market. RaboResearch expects the U.S. to increase its exports to help fill the gap, which should increase prices paid to farmers. According to their analysis, a 200 million bushel increase in exports for each commodity would increase the 2022-23 average on-farm price for corn by approximately 13% and wheat by approximately 50%.

Figuring an increase of 200 million bu., and accounting for local basis, RaboResearch estimates the 2022-23 average on-farm price for corn at $5.77/bu.; $10.50 for wheat.

This year’s report is the first annual outlook from the organization to incorporate the expected expansion of U.S. soybean crush capacity into the 10-year acre and price estimates. Fueled by the growing demand for soybean oil as an ingredient for renewable diesel, RaboResearch analysts say crush capacity expansion is an important transformation driving long-term commodity prices to a higher level.

All things considered, Monday’s action in Cattle futures might be considered a victory of sorts, given the bearish placements in the latest Cattle on Feed report, although it tightens cattle supplies further down the line.

Feeder Cattle futures closed an average of 29¢ lower amid light trade.

Live Cattle futures closed an average of 44¢ lower.

Negotiated cash fed cattle trade was at a standstill in all cattle feeding regions through Monday afternoon, according to the Agricultural Marketing Service.

Live prices last week were at $138/cwt. in the Southern Plains and Nebraska and at $138-$142 in the western Corn Belt. Dressed prices were $221 in Nebraska and $221-$225 in the western Corn Belt.

The five-area direct average steer price was 15¢ lower at $138.95/cwt. The average steer price in the beef was 22¢ lower at $221.46.

Choice Boxed beef cutout value was $1.23 higher Monday afternoon at $263.87/cwt. Select was $4.18 higher at $256.32.

Grain futures softened Monday, led by wheat and soybeans, apparently with more optimism regarding a resolution to Russia’s war on Ukraine.

Soybean futures closed 16¢ to 46¢ lower.

Corn futures closed 2¢ to 5¢ lower through Jly ‘23 and then 3¢ lower to 3¢ higher.

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Major U.S. financial indices closed higher Monday, led. By tech stocks and perhaps emboldened by continued peace talks between Russia and Ukraine.

The Dow Jones Industrial Average closed 94 points higher. The S&P 500 closed 32 points higher. The NASDAQ was up 185 points.

West Texas Intermediate Crude Oil futures (CME) closed $5.50 to $7.94 lower in the front six contracts.

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“Feedlots will have plenty of cattle to market for another few months, but tighter placements are ahead and feedlot production will decline in the second half of the year, says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly market comments. “If drought conditions persist, feedlots may perhaps continue to borrow against the future with early-weaned calves available through the spring and summer before facing the full reality of tighter feeder cattle supplies. On the other hand, if drought conditions abate, higher cattle prices might result in increased heifer retention by the end of the year, thereby squeezing feeder supplies even more and more quickly.”

Noting the 9.3% increase in February feedlot placements revealed in Friday’s Cattle on Feed report, Peel says the bulge will likely be offset by sharply lower placements in March.

Total cattle slaughter for this year surpassed the previous year’s year-to-date total last week.

Estimated total cattle slaughter last week of 659,000 head was 15,000 more than the previous week and 10,000 head more than the same time last year. Estimated total year-to-date cattle slaughter of 7.76 million head was 2,000 head more year over year.

Estimated year-to-date beef production of 6.51 billion lbs. was 20.9 million lbs. more (+0.3%) than the same time last year.

Those numbers speak to apparently mostly recovered packing capacity and the massive numbers of cattle on feed. Judging by the latest Cattle on Feed report (see below), increased production will continue in the near term.

Negotiated cash fed cattle trade was limited on light demand in all major cattle feeding regions through Friday afternoon, with too few transactions to trend, according to the Agricultural Marketing Service.

Live prices last week were steady in the Southern Plains and Nebraska at $138/cwt. and steady to $1 lower in the western Corn Belt at $139-$142. Dressed prices were steady in Nebraska at $221 and steady to $1 lower in the western Corn Belt at $221.

Feeder Cattle futures closed an average of 88¢ lower Friday (35¢ to $1.17 lower), pressured by grain futures and perhaps some prescient trepidation about the Cattle on Feed report (see below).

Corn futures closed mostly 2¢ to 3¢ higher, while Soybean futures closed mostly 3¢ to 7¢ higher.

Live Cattle futures closed an average of 45¢ higher in the front four contracts and then an average of 12¢ lower, except for 12¢ higher in away Apr.

Choice Boxed beef cutout value was 23¢ higher Friday afternoon at $262.64/cwt. Select was 45¢ lower at $252.14. Week to week, Choice was $4.48 higher and Select was $1.49 higher. 

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Major U.S. financial indices closed the week mainly higher Friday.

The Dow Jones Industrial Average closed 153 points higher. The S&P 500 closed 22 points higher. The NASDAQ was down 22 points.

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Cattle markets likely will start the week on a dour note, pressured by USDA’s monthly Cattle on Feed report issued Friday (feedlots with 1,000 head or more capacity).

February placements of 1.85 million head were a staggering 9.3% more (+157,000 head) year over year. That was 3% more than average analyst estimates ahead of the report, underscoring expanding drought impacts.

In terms of placement weights, 37.1% went on feed weighing 699 lbs. or less, 52.6% weighing 700-899 lbs. and 10.3% weighing 900 lbs. or more.

Marketings in February of 1.82 million head were 4.9% more (+86,000 head) than the prior year, which was 0.6% more than estimated ahead of the report.

Cattle on feed March 1 of 12.16 million head were 1.4% more (+163,000 head) than the same time last year. That was 0.3% more than expectations and the most on feed for the date since the data series began in 1996.

Cattle futures gained a little ground Thursday with softer Corn futures. Positioning ahead of Friday’s Cattle on Feed report could have also played a role.

Feeder Cattle futures closed an average of 57¢ higher except for unchanged in the back contract.

Live Cattle futures closed an average of 32¢ higher.

Grain futures backed up a pace, pressured in part by bearish weekly U.S. export sales and perhaps some skittishness over next week’s Planting Intentions report.

Corn futures closed 4¢ to 9¢ lower through Jly ’23 and then mostly 1¢ to 5¢ higher.

Soybean futures closed 13¢ to 18¢ lower through Jan ’23 and then unchanged to 10¢ lower.

Negotiated cash fed cattle trade was limited on light demand in all major cattle feeding regions through Thursday afternoon, with too few transactions to trend, according to the Agricultural Marketing Service.

So far this week, live prices are steady in the Southern Plains and Nebraska at $138/cwt. and steady to $1 lower in the western Corn Belt at $139-$142. Dressed prices are steady in Nebraska at $221 and steady to $1 lower in the western Corn Belt at $221.

Choice Boxed beef cutout value was 81¢ higher Thursday afternoon at $262.41/cwt. Select was 65¢ lower at $252.59.

Net U.S. beef export sales of 27,500 MT (2022) for the week ending March 17 were a marketing-year high, according to the U.S. Export Sales report. Sales were 40% more than the previous week and 29% more than the prior four-week average.

Increases were primarily for South Korea, China, Japan, Hong Kong and Taiwan.

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Major U.S. financial indices continued what has become the daily back and forth seesaw, to the upside this time. Positive news included the fewest weekly initial unemployment insurance claims since September 1969 at 187,000.

The Dow Jones Industrial Average closed 349 points higher. The S&P 500 closed 63 points higher. The NASDAQ was up 269 points.

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A new agreement should further enhance U.S. beef exports to Japan.

United States Trade Representative (USTR) Katherine Tai and United States Secretary of Agriculture Tom Vilsack announced yesterday that the United States and Japan reached an agreement to increase the beef safeguard trigger level under the U.S.-Japan Trade Agreement. The new three-trigger safeguard mechanism will allow U.S. exporters to meet Japan’s growing demand for high-quality beef and reduce the probability that Japan will impose higher tariffs in the future.

U.S. beef exports to Japan exceeded 320,000 metric tons in 2021 and set a new value record at $2.38 billion. But U.S. beef was subject to a higher tariff than its competitors for 30 days, from mid-March to mid-April, after imports exceeded the safeguard volume, according to the U.S. Meat Export Federation (USMEF).

“USMEF greatly appreciates the efforts of USTR and USDA to adjust Japan’s safeguard on U.S. beef. The U.S.-Japan Trade Agreement was a tremendous breakthrough for the U.S. meat industry, including the significant reduction in Japan’s tariffs on U.S. beef, but the playing field has not been entirely level due to this safeguard. The changes announced today reduce the potential impact of the safeguard and make it less disruptive for U.S. exporters and their customers in Japan,” explains Dan Halstrom, USMEF president and CEO.

“This is a win-win for American ranchers and Japanese consumers,” says United States Ambassador to Japan, Rahm Emanuel. “It ensures certainty for years and shows American beef can compete and win anywhere anytime.”

Negotiated cash fed cattle prices were steady Wednesday at $138/cwt. on a live basis in the Southern Plains (slow trade and light demand) and Nebraska (moderate trade and good demand), according to the Agricultural Marketing Service. Dressed prices were also steady in Nebraska at $221.

Trade was limited on light demand in the western Corn Belt with a few dressed sales at $221, but too few to trend. Last week, prices were $140-$142 on a live basis and $222 in the beef.

Choice Boxed beef cutout value was $1.63 higher Wednesday afternoon at $261.60/cwt. Select was $1.35 higher at $253.24.

Cattle futures mainly batted on either side of steady, pressured by rising feed costs, steady cash and lower outside markets, but supported by strengthening wholesale beef prices.

Feeder Cattle futures closed an average of 40¢ higher (2¢ to $1.20 higher) except for unchanged to 22¢ lower in three contracts.

Live Cattle futures closed an average of 25¢ higher except for unchanged in spot Apr and 7¢ lower toward the back.

Corn futures closed mostly 2¢ to 4¢ higher.

Soybean futures closed 10¢ to 227¢ higher through Nov ’22 and then mostly 5¢ to 6¢ higher.

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Major U.S. financial indices closed sharply lower Wednesday, as oil and other commodity prices continued to climb. 

The Dow Jones Industrial Average closed 448 points lower. The S&P 500 closed 55 points lower. The NASDAQ was down 186 points.

West Texas Intermediate Crude Oil futures (CME) were $3.62 to $5.66 higher in the front six contracts.

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Consumers are more comfortable shopping and dining in person, although some pandemic behaviors appear to be lasting, according to a recent RaboResearch report. Among the highlights:

Foodservice demand is demonstrating excellent resilience with increased food traffic at dine-in establishments.

Where consumers previously grabbed breakfast on-the-go, they now pop out for lunch while at home, and there are somewhat fewer evening dinners and drinks, so long as people are working from home.

Consumption of food at home has sustained strong demand above pandemic levels, bolstered by higher average spend (inflation included), the return of in-person shopping (to 2019 levels), and structurally higher online grocery orders.

Inflation is driving consumers to discount grocers, driving growth in share of traffic. On the opposite end, foot traffic at premium and natural stores remains far from the good old times.

Online groceries seem to have reached a steady cap of 2.8 orders per month per active client, still significantly above pre-pandemic levels but below the levels of the initial months of hoarding. The average order amount is 16% higher than pre-pandemic, as clients add more items to their virtual carts.

Grain and Soybean futures extended the previous session’s gains Tuesday with Corn futures closing mostly 2¢ to 6¢ higher and Soybean futures closing 5¢ to 7¢ higher.

Stronger Grain futures continued to cap Cattle futures.

Feeder Cattle futures closed an average of 40¢ lower, except for 22¢ higher in spot Mar.

Live Cattle futures closed an average of 39¢ lower.

Negotiated cash fed cattle trade ranged from inactive on very demand to a standstill through Tuesday afternoon with too few transactions to trend, according to the Agricultural Marketing Service.

Live prices last week were at $138/cwt. in the Southern Plains and Nebraska and at $140 in the western Corn Belt. Dressed prices were at $221 in Nebraska at $222 and in the western Corn Belt.

Choice Boxed beef cutout value was $1.47 higher Tuesday afternoon at $259.97/cwt. Select was 61¢ lower at $251.89.

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Major U.S. financial indices rebounded Tuesday, helped along by bank stocks with rising interest rates.

The Dow Jones Industrial Average closed 254 points higher. The S&P 500 closed 50 points higher. The NASDAQ was up 270 points.

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Although short-run fed cattle supplies are less than a year ago, Matthew Diersen, risk and business management specialist at South Dakota State University says packer forward contracting of cattle is also less.

“Seasonally, this is the time of year when packers tend to try to have a larger share of cattle forward contracted for delivery. As a result, April through June tends to have larger shares contracted than other months,” Deirsen says, in the latest issue of In the Cattle Markets. “As of March 14, 2022, feedlots had contracted 235,000 cattle for delivery in April and 139,000 head for June. A year ago at this time of year, there had been 271,000 head contracted for April and 170,000 for June. Thus, the contracting pace is running behind last year’s levels. In other words, packers do not have as many cattle lined up even though short-run supplies of cattle on feed are similar to a year ago.”

Grain and Soybean futures pressed higher Monday with support from higher crude oil prices and the lingering Russian war on Ukraine.

Corn futures closed 12¢ to 18¢ higher through Sep ‘23 and then mostly 6¢ to 8¢ higher.

Soybean futures closed mostly 20¢ to 24¢ higher.

Loftier grain futures helped pressure Feeder Cattle futures an average of $1.12 lower, while the upturn on wholesale beef prices helped Live Cattle to a mixed close, from 36¢ lower across the front half to an average of 28¢ higher.

Negotiated cash fed cattle trade ranged from inactive on very light demand to a standstill through Monday afternoon with too few transactions to trend, according to the Agricultural Marketing Service.

Live prices last week were at $138/cwt. in the Southern Plains and Nebraska and at $140 in the western Corn Belt. Dressed prices were at $221 in Nebraska at $222 and in the western Corn Belt.

The five-area direct average steer price last week was 80¢ higher at $139.10/cwt. The average steer price in the beef was $1.57 higher at $221.68.

Choice Boxed beef cutout value was 34¢ higher Monday afternoon at $258.50/cwt. Select was $1.85 higher at $252.50.

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Major U.S. financial indices pivoted Monday to close lower, following Federal Reserve Chair, Jerome Powell’s hawkish inflation comments at the 38th Annual Economic Policy Conference of the National Association for Business Economics.

“We will take the necessary steps to ensure a return to price stability. In particular, if we conclude that it is appropriate to move more aggressively by raising the federal funds rate by more than 25 basis points at a meeting or meetings, we will do so. And if we determine that we need to tighten beyond common measures of neutral and into a more restrictive stance, we will do that as well,” Powell explained. “…“The median projection that accompanied last week’s 25 basis point rate increase shows the federal funds rate at 1.9% by the end of this year and rising above its estimated longer-run normal value in 2023. The latest FOMC statement also indicates that the Committee expects to begin reducing the size of our balance sheet at a coming meeting. I believe that these policy actions and those to come will help bring inflation down near 2% over the next three years.”

The Dow Jones Industrial Average closed 201 points lower. The S&P 500 closed 1 point lower. The NASDAQ was down 55 points.

West Texas Intermediate Crude Oil futures on the CME closed $4.75 to $7.42 higher in the front six contracts.

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“The pre-war (Russia-Ukraine) highs in February may be the seasonal spring peak in calf and stocker prices, although another run at spring peaks could happen in the next month. Moreover, a strong uptrend in feeder prices is reflected in Feeder futures prices at this time, which may offset typical seasonal patterns,” says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University.

In his weekly market comments, Peel explains the value of stocker gain appears to have decreased significantly since last fall, but current prices don’t reflect the unfolding transition in feeder cattle markets.

“The current price for August Feeder futures is about $181/cwt., compared to about $158/cwt. for nearby March. The August futures price would suggest an Oklahoma cash price for 800-lb. steers of $179-$180/cwt. in August, well above the current price of $159/cwt. In that case, the value of 300 lbs. of gain from April to August is roughly $1.45/lb.,” according to Peel.

By way of contrast, he says the value of adding 300 lbs. to a 5-weight steer in November was $1.24/lb., roughly in line with increased cost of feedlot gain last year. However, current Oklahoma auction prices suggest the value of stocker gain is about $0.73/lb., for putting 300 lbs. on a 500-lb. steer.

“Running the current August Feeder futures price for 800 lb. steers though a feedlot budget finishing in January 2023 results in a fed breakeven price of $162-$165/cwt., depending on the feedlot cost of gain. Current Live futures for February 2023 are at roughly $153/cwt. These discrepancies suggest that more transition is yet to come,” Peel says. “Either the Feeder futures are too high or the Live futures are too low, or perhaps some of both. The take-home message is that imbalances in feeder markets, and between feeder and fed markets, likely mean more transition as markets rebalance. Markets are volatile and likely to remain so. Cattle producers at all levels may see opportunities to price cattle or lock in margins but markets are expected to continue to be very dynamic and such opportunities may be fleeting.”

See Peel’s overview of the market situation here.