Daily Market Highlights

Softer feed futures prices, late-week firmness in cash trade and higher outside markets helped support Cattle futures Friday.

Corn futures closed 2¢ to 12¢ lower in old-crop contracts and then mostly 1¢ lower to 1¢ higher.

Soybean futures closed fractionally lower to 3¢ lower through Jan ’23 and then mostly 11¢ to 13¢ higher.

Feeder Cattle futures closed an average of $1.25 higher (45¢ higher in spot Mar to $1.57 higher).

Live Cattle futures closed an average of 66¢ higher, from 35¢ to $1.15 higher.

Negotiated cash fed cattle trade ranged from slow on light demand to mostly inactive on light demand with too few transactions to trend in any region, according to the Agricultural Marketing Service.

Live prices last week were steady in the Southern Plains and Nebraska at $138/cwt. They were steady to $2 higher in the western Corn Belt at $140. Dressed prices were $1 higher in Nebraska at $221 and steady to $3 higher in the western Corn Belt at $222.

Estimated total cattle slaughter last week of 644,000 head was the same as a week earlier but 15,000 head more than the same week last year. Total estimated year-to-date cattle slaughter of 7.1 million head is just 2,000 head fewer than the same time last year. Total estimated year-to-date beef production is 13.3 million lbs. more at 5.96 billion lbs.

The seasonal turn in wholesale beef prices was also supportive.

Choice Boxed beef cutout value was $1.11 higher Friday afternoon at $258.16/cwt. Select was 3¢ lower at $250.65.

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Major U.S. financial indices continued to scale higher Friday, extending the mid-week relief rally, as investors apparently grew more comfortable with the Fed trajectory for interest rates, as well as potential fallout from Russia’s attack on Ukraine.

The Dow Jones Industrial Average closed 274 points higher. The S&P 500 closed 51 points higher. The NASDAQ was up 279 points.

West Texas Intermediate Crude Oil futures on the CME closed $1.21 to $1.72 higher in the front six contracts.

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Elevated prices for beef middle meats and Australia’s shift to more grain-fed production could further underpin slaughter bull and slaughter cow prices going forward, says Andrew P. Griffith, agricultural economist at the University of Tennessee, in his weekly market comments.

“Higher beef prices will certainly result in some consumers reducing the quantity of steaks purchased and increase the quantity of ground beef purchased,” Griffith explains. “The shift in Australia production to include more grain-finished beef will likely reduce the supply of lean grinding beef, which is a commodity commonly imported by the United States. A reduction in this supply will increase the price of imports that in turn should increase the price of grinding beef from cows. Not to be undersold, it should also increase the value of 50-50 trimmings from finished cattle.”

Currently, Griffith notes slaughter cow and slaughter bull prices increased $8/cwt., from January to February and are likely to be another $4-$6 higher by the end of March.

“The increase in March will not likely be the end of such increases as the seasonal tendency is for slaughter cow and bull prices to continue increasing through June,” Griffith says.

As noted in the previous issue of Cattle Current beef prices and high inflation appear to be shifting some consumer buying decisions.

“There is some evidence of consumers shifting purchases to more ground beef and fewer steaks in response to high retail prices. There is also evidence of some shifting to less expensive Select beef cuts and away from higher priced Choice and Prime,” explains David Anderson, Extension livestock economist at Texas A&M University, in the latest issue of In the Cattle Markets from the Livestock marketing Information Center.

For perspective, Anderson says, “Both the cow beef cutout and wholesale 90% lean beef for ground beef are well above a year ago, at $229 and $284/cwt., respectively. Wholesale middle meat prices have dropped in recent weeks. For example, both wholesale ribeye and strip loin prices have fallen below year-ago levels.”

Grain futures rebounded from the previous session’s hard break. Kansas City Wheat set the pace — up mainly 24¢ to 32¢ — as traders apparently grew less confident in the Russia ceasefire chatter. Soybeans also received support from stronger oil prices.

Corn futures closed 20¢ to 24¢ higher in old-crop contracts and then mostly 11¢ to 14¢ higher.

Soybean futures closed 14¢ to 21¢ higher in old-crop contracts and then mostly 8¢ to 12¢ higher.

Higher grain futures weighed on Feeder Cattle futures, which closed an average of $1.13 lower.

Live Cattle futures edged an average of 13¢ higher, except for 7¢ lower in Feb.

Negotiated cash fed cattle trade waddled from the blocks at steady money of $138/cwt. on a live basis in the Southern Plains and Nebraska through Thursday afternoon, according to the Agricultural Marketing Service. That was on moderate demand and light trade in the Southern Plains; slow trade and light demand in Nebraska.

Elsewhere, trade was limited on light demand with too few transactions to trend.

Live prices in the western Corn Belt last week were at $138-$140. Dressed prices there were $219-$222; $220 in Nebraska.

Choice Boxed beef cutout value was $1.03 lower Thursday afternoon at $257.05/cwt. Select was 41¢higher at $250.68.

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Major U.S. financial indices closed sharply higher again Thursday, amid what some analysts term a relief-rally, in this case tied to confirmation of what was mainly expected in the Fed announcement the previous day, relative to interest rates.

The Dow Jones Industrial Average closed 417 points higher. The S&P 500 closed 53 points higher. The NASDAQ was up 178 points.

CME WTI Crude Oil futures closed $6.41 to $8.06 higher in the front six contracts.

West Texas Intermediate Crude Oil futures on the CME closed $6.41 to $8.06 higher in the front six contracts as Russia continued its attack on Ukraine.

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“Cow and calf prices have taken divergent paths in recent weeks due to the uncertainty of war, rising feed costs, record cattle on feed, and shifting consumer purchases,” says David Anderson, Extension livestock economist at Texas A&M University, in the latest issue of In the Cattle Markets from the Livestock marketing Information Center.

Anderson notes the price for mid-7-weight steers dropped about $9 over the last two weeks to $156/cwt., though still significantly higher than $138 a year earlier (Southern Plains). At the same time, he says cull cow prices reached $75/cwt. in the Southern Plains last week, which was $20 higher than early February. He adds 85-90% lean cull cows averaged about $46 a year earlier. The five-year average price for the first week of March was about $59.

“Cow prices are increasing in spite of large cow slaughter. Weekly cow slaughter during the first two weeks of February totaled at least 145,000 head per week. That was the largest weekly slaughter since the first week of December 2012,” Anderson says. “It was the biggest two consecutive weeks since the fall of 2011. Beef cow slaughter has been extremely large, rivaling peak fall slaughter levels. This large beef cow slaughter is coinciding with seasonally large dairy cow slaughter, which typically peaks early in the year.”

Anderson explains higher prices in tandem with increased volume speaks to consumer demand.

“Both the cow beef cutout and wholesale 90% lean beef for ground beef are well above a year ago, at $229 and $284/cwt., respectively,” Anderson says. “Wholesale middle meat prices have dropped in recent weeks. For example, both wholesale ribeye and strip loin prices have fallen below year-ago levels. There is some evidence of consumers shifting purchases to more ground beef and fewer steaks in response to high retail prices. There is also evidence of some shifting to less expensive Select beef cuts and away from higher priced Choice and Prime.”

Kansas City Wheat futures plummeted Wednesday (limit-down 85¢ in the front two contracts) on apparently more positive ceasefire talks between Ukraine and Russia. Corn and Soybean futures went along for the ride.

Corn futures closed mostly 14¢ to 28¢ lower.

Soybean futures closed mostly 6¢ to 9¢ lower.

That helped Feeder Cattle futures close an average of 37¢ higher (2¢ to 90¢ higher) except for 2¢ lower in May and 20¢ lower in the back contract.

Live Cattle futures closed an average of 69¢ lower (10¢ lower toward the back to $1.50 lower in spot Apr), except for unchanged in the back contract.

Negotiated cash fed cattle trade ranged from limited on light demand to a standstill through Wednesday afternoon, according to the Agricultural Marketing Service (AMS). Country chatter suggested some early bids at steady money.

Live prices last week were at $138/cwt. in the Southern Plains and Nebraska and at $138-$140 in the western Corn Belt. Dressed prices were $220 in Nebraska and $219-$222 in the western Corn Belt.

Choice Boxed beef cutout value was 18¢ higher Wednesday afternoon at $258.08/cwt. Select was $1.43 higher at $250.27.

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Major U.S. financial indices closed sharply higher again Wednesday, amid a volatile session as investors reacted to the Fed’s decision to raise interest rates for the first time in about three years. Although the increase was widely anticipated, intimation the Fed will continue raising interest rates to nearly 2% (1.9% median projection) by the end of the year caught some off guard.

For now, the Federal Open Market Committee decided to raise the target range for the federal funds rate to 0.25% to 0.50% and expects to begin reducing its holdings of Treasury securities and agency debt and agency mortgage-backed securities at a coming meeting.

The Dow Jones Industrial Average closed 518 points higher. The S&P 500 closed 95 points higher. The NASDAQ was up 487 points.

West Texas Intermediate Crude Oil futures on the CME closed $1.20 to $1.40 lower in the front six contracts.

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USDA’s Economic Research Service revised the expected average feeder steer price for this year slightly lower to $160.50/cwt., in the latest monthly Livestock, Dairy and Poultry Outlook. The price is basis steers weighing 750-800 lbs. selling at Oklahoma City.

“The first-quarter forecast was lowered $2 from last month to $156/cwt., but the second-quarter forecast was raised by $1 to $159 on tightening feeder cattle supplies and higher forecast fed cattle prices,” ERS analysts say. “However, due to higher anticipated feed prices in the second half of 2022, the feeder steer forecasts for the third and fourth quarters were reduced by $1 to $161 and $166, respectively.”

ERS analysts note first-quarter feedlot placements are expected to be less year over year, although deteriorating pasture conditions and wheat prices could encourage more rapid placements than projected.

“Fed cattle marketings are expected to be slightly higher in the second half of 2022 than the previous month’s forecast, reflecting a larger number of placements in the first quarter as well as higher feed prices likely encouraging feedlot operators to be as current as possible in cattle marketings,” say ERS analysts.

Kansas City Wheat futures charged higher 47¢ to 53¢ in old-crop contracts. Corn futures closed mostly 1¢ to 2¢ lower, though, and Soybean futures closed 9¢ to 14¢ lower through Sep ‘23.

That helped Cattle futures hold on to most of the previous session’s strong gains.

Feeder Cattle futures closed mixed from an average of 33¢ lower to an average of 25¢ higher.

Live Cattle futures closed unchanged to an average of 47¢ higher, from (2¢ to $1.10 higher).

Wholesale beef prices continued to show signs of the seasonal bloom. Choice Boxed beef cutout value was $2.39 higher Tuesday afternoon at $257.90/cwt. Select was $1.10 lower at $248.84.

Negotiated cash fed cattle trade remained stuck at the gate.

Live prices last week were at $138/cwt. in the Southern Plains and Nebraska and at $138-$140 in the western Corn Belt. Dressed prices were $220 in Nebraska and $219-$222 in the western Corn Belt.

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Major U.S. financial indices closed sharply higher Tuesday, buoyed by declining crude oil prices and a slightly more positive inflation gauge than some expected.

The Producer Price Index (PPI) for final demand rose 0.8% in February, compared to the previous month, but the core PPI — less food, energy and trade services — rose just 0.2%, according to the U.S. Bureau of Labor Statistics.

The Dow Jones Industrial Average closed 599 points higher. The S&P 500 closed 89 points higher. The NASDAQ was up 367 points.

West Texas Intermediate Crude Oil futures on the CME closed $3.83 to $6.57 lower in the front six contracts.

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U.S. beef exports maintained their blistering pace in January, according to data released by USDA and compiled by the U.S. Meat Export Federation (USMEF).

Beef exports for the month totaled 119,066 metric tons (mt), up 13% year over year, while value soared 57% to $1.03 billion. That was the third-highest value total on record — trailing only August and November of last year. Export value per head of fed slaughter set a new record, exceeding $500 for the first time.

“This is a truly remarkable run for U.S. beef exports, and the momentum is not limited to our large Asian markets,” says USMEF President and CEO Dan Halstrom. “Regions such as Central America and the Caribbean contributed significantly to January export growth, and export value made strong gains in the Middle East.”

U.S. pork exports were 16% less year over year in January and value was 14% less at $555.6 million, challenged by China’s recovering domestic production, as well as logistics.

Port congestion and shipping costs, for instance, are weighing on the U.S. pork industry’s ability to serve some markets, according to Halstrom.

“Australia, for example, has been a very reliable destination for U.S. hams for further processing, but shipping raw material to Oceania is becoming cost-prohibitive. The low price of European pork is also impacting demand in other further-processing markets such as Southeast Asia and Taiwan,” Halstrom explains. “This underscores the importance of our Western Hemisphere markets, where the U.S. industry continues to pursue new strategies for increasing pork consumption and expanding demand. It is also a reminder that the U.S. industry must continue to strive for market diversification, so we are well-prepared for shifts in the competitive landscape.”

Cattle futures rallied higher Monday, helped along by sharply lower nearby Corn futures prices, as well as the nascent seasonal increase in wholesale beef prices.

Feeder Cattle futures closed an average of $3.08 higher from $2.07 higher at the back to $4.42 toward the front.

Live Cattle futures closed an average of $1.65 higher, from $1.17 higher in the back contract to $3.02 higher in spot Apr.

Weakness in grain futures was apparently tied to a risk-off mentality across many commodities, including Crude Oil, as well as reports China is releasing some of its state-owned soybean stocks to combat domestic inflation.

Expiring spot Corn futures closed 36¢ lower, but mostly other contracts were mainly 1¢ to 3¢ lower.

Soybean futures closed 7¢ to 8¢ lower.

Negotiated cash fed cattle trade was at a standstill in all major 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-$140 in the western Corn Belt. Dressed prices were $220 in Nebraska and $219-$222 in the western Corn Belt.

The five-area direct average fed steer price was $2.30 less last week at $138.30/cwt. The average steer price in the beef was $4.50 less at $220.01.

Early chatter anticipated cash fed cattle prices trading steady to a touch higher this week.

Choice Boxed beef cutout value was 80¢ higher Monday afternoon at $255.51/cwt. Select was 83¢ higher at $249.94.

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Major U.S. financial indices closed steady to lower Monday, as investors digested more ceasefire talks between Russia and Ukraine, and awaited the Fed’s interest rate decision this week.

The Dow Jones Industrial Average closed 1 points higher. The S&P 500 closed 31 points lower. The NASDAQ was down 262 points.

West Texas Intermediate Crude Oil futures on the CME closed $4.13 to $6.32 lower in the front six contracts.

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Despite the recent, volatile surge in feed costs, feedlot returns should remain positive for most of this year, according to the Livestock Marketing Information Center (LMIC). Specifically, analysts there peg feedlot breakevens for a steers place at 750 lbs. to be $129-$133/cwt. for cattle already on feed — closeouts now through August — below anticipated fed cattle prices.

“One of the large risks for cattle feeders will be feeder cattle prices moving forward,” say LMIC analysts, in the latest Livestock Monitor. “The LMIC bases its cattle feeding returns on cash prices of raising a 750-lb. steer to slaughter weight. So far, 700-800 lb. steer prices have been limited in their upward mobility. The opposite has been true for lighter weight calves, whose prices across different regions of the country have ranged from $187-230/cwt. for 400-600-lb. animals. At those prices, and current grain prices, putting a 500-lb. animal on feed that was bought north of $185/cwt. would need a breakeven fed cattle price of $160 or higher.”

Noting increased year-over-year January feedlot placements of cattle weighing less than 699 lbs., LMIC analysts explain, “Our assessment is that some of the price increase is linked to the availability of feeder cattle supplies after so many months of strong placements. Additionally, feedlots are flush with cash from the last couple of months of closeouts, and even though it does not appear that these expensive lightweight cattle will be profitable, cattle feeders may be using them for other strategies such as keeping pens full to maintain cash flow.”

Cattle feeding returns were positive for most of the last 12 months, with gains surging to $200 per head in the fourth quarter of last year, according to LMIC. The organization calculated returns at just less than $100 per head in February.

“Returns faded in the last two months due to increasing total costs. Feeder steers were 13% higher at the time of purchase compared to those that came out in November when closeouts were in the black $200 per head,” LMIC analysts explain. “Feed costs have also continued to rise and are expected to do so for the coming months with ongoing concerns in the grain space related to the Ukraine and Russia conflict. For closeouts in February, feed costs increased 7% from November closeouts. In the wake of Ukraine/Russia, the grain markets look to challenge last year’s highs again. This will likely erode some profitability, however closeouts through the next couple of months had lower feeder cattle input costs at time of placement, which should offset some of the rising feed costs for the next four months.”

Cattle futures stepped higher Friday, helped along by higher wholesale beef prices, stronger Lean Hog futures and moderating feed futures.

Live Cattle futures closed an average of 50¢ higher, from 10¢ higher in the back contract to $1.40 higher in spot Apr. Week to week, they closed an average of $1.17 higher (42¢ to $1.80 higher), recovering about half of the previous week’s losses.

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

For the week, live prices were $2 lower in the Southern Plains and Nebraska at $138/cwt. and $2-$4 lower in the western Corn Belt at $138-$140. Dressed prices were $4-$5 lower in Nebraska at $220; $3-$5 lower in the western Corn Belt at $219-$222.

“Cattle feeders should be experiencing strong profit margins with cattle coming off feed in today’s market, but the budget for placing cattle on feed is changing,” explains Andrew P. Griffith, agricultural economist at the University of Tennessee, in his weekly market comments. “A month ago, cattle feeders were faced with strengthening feeder cattle prices and what now seems like relatively low feed prices. However, the sudden increase in feed grain prices has resulted in higher feed cost expectations, which has resulted in bidding lower prices for cattle to be placed in the near term.”

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Based on weekly auctions monitored by Cattle Current, calf and feeder cattle prices were mainly lower last week.

Feeder Cattle futures closed an average of $1.46 higher on Friday. That helped lift them to an average of 63¢ higher week to week on Friday (7¢ to $1.37 higher), barely denting the average $5.85 decline the previous week.

Corn futures closed mostly 1¢ to 3¢ higher.

Soybean futures closed 1¢ to 10¢ lower through Jan ‘23, and then mostly 1¢ to 3¢ higher.

Week to week Corn futures closed an average of 7.9¢ lower through the front three contracts, and then an average of 24.2¢ higher in the next three. During the same period, Soybean futures closed an average of 26.1¢ higher through the front six contracts (14¢ lower in spot Mar to 43.6¢ higher in near Sep).

“Markets are trying to find where values should be,” explains Aaron Smith, crop marketing specialist at the University of Tennessee, in his weekly market comments. “There continues to be a large amount of uncertainty regarding commodity prices, due to the Ukraine-Russia conflict and political responses by external nations. Futures markets have been very volatile, and are likely to continue to be volatile, as traders try to determine value between commodities and across time.”

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Wholesale beef prices showed signs of turning the seasonal corner higher. Choice boxed beef cutout value was 38¢ higher week to week on Friday at $254.71/cwt. Select was 70¢ higher at $249.11.

Estimated total cattle slaughter of 644,000 head last week was 10,000 head fewer than the previous week and 5,000 head fewer than the same week last year. Year-to-date estimated total cattle slaughter of 6.46 million head is just 22,000 head fewer. Estimated year-to-year beef production of 5.42 billion lbs. is 8.5 million lbs. less year over year.

“Monthly retail meat prices for February were recently released by USDA. The retail price of beef remains elevated with the Choice retail beef price coming in near $7.62/lb., which is a marginal decline from January and $1.20/lb. higher than one year ago,” Griffith says.

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Major U.S. financial indices continued lower Friday, pressured by higher energy prices, lingering uncertainty tied to Russia’s war on Ukraine and declining consumer confidence.

The closely monitored University of Michigan Consumer Sentiment index declined to 59.7 in March from 62.8 the previous month and 84.9 a year earlier, as consumer incomes lose ground with higher inflation.

The Dow Jones Industrial Average closed 229 points lower. The S&P 500 closed 55 points lower. The NASDAQ was down 286 points.

West Texas Intermediate Crude Oil futures on the CME closed $3.31 to $3.81 higher in the front six contracts.

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Potentially, Livestock Mandatory Reporting (LMR) received yet another reprieve Thursday of last week when the U.S. Senate passed the Fiscal Year 2022 Omnibus Appropriations package. The $1.5 trillion bill would fund the U.S. government through the end of its fiscal year (Sept. 30). The U.S. House of Representatives approved the bill the previous day.

So, if President Biden signs the bill, as expected, LMR will be funded through the end of the government fiscal year. According to the National Cattlemen’s Beef Association (NCBA), the bill also provides funding for, among other things: the Electronic Logging Device exemption for livestock haulers, important EPA regulatory relief and a Cattle Contract Library pilot program.

A cattle contract library — specifics of alternative marketing arrangement contracts packers utilize — is viewed by many as a step toward increased market transparency and price discovery. Others believe the fine points of the one outlined in the bill could do more harm than help.

“Congress and the Administration say they value transparency in the beef and cattle market yet they bury this rider without debate in a giant spending bill and direct USDA to create the pilot program without any feedback from beef companies or cattle producers,” says Julie Anna Potts, president and CEO of the North American Meat Institute (Meat Institute). “There will be no opportunity for companies to provide valuable perspective on what information should be included or how it should be reported.”

The law is vague and provides no guardrails for the type or amount of data and leaves program development up to the U.S. Department of Agriculture’s (USDA) Agricultural Marketing Service (AMS), Potts explains. She adds the law contains a provision enabling AMS to promulgate the rules without a comment period as normally required by law.

Feeder Cattle futures tumbled lower Thursday, pressured once again by surging Corn futures, tied to strong weekly U.S. export sales.

Feeder Cattle futures closed an average of $3.17 lower.

Corn futures closed 15¢ to 22¢ higher through Jly ‘23, and then mostly 6¢ to 9¢ higher.

Soybean futures closed mostly 15¢ to 22¢ higher.

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

So far this week, live prices are $2 lower in the Southern Plains and Nebraska at $138/cwt. and $2-$4 lower in the western Corn Belt at $138-$140. Dressed prices are $4-$5 lower in Nebraska at $224-$225; $3-$5 lower in the western Corn Belt at the same money.

Lower cash prices pressured Live Cattle futures an average of 70¢ lower, from 2¢ lower in the back contract to $1.67 lower in spot Apr.

Choice Boxed beef cutout value was $1.24 higher Thursday afternoon at $253.94/cwt. Select was $2.58 higher at $247.37.

On another positive note, net U.S. beef export sales for the week ending March 3 of 27,500 metric tons were a marketing year high, up 16% from the previous week and 36% higher than the prior four-week average, according to USDA data. Increases were primarily for China, Japan, South Korea, Canada and Taiwan. 

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Major U.S. financial indices closed lower Thursday, with continued volatility and uncertainty stemming from Russia’s war on Ukraine. Inflation was a touch higher than expected, too. Through February, the Consumer Price Index (all items) increased 7.9% over the last 12 months, according to the U.S. Bureau of Labor Statistics. That’s the steepest increase for the date since 1982.

The Dow Jones Industrial Average closed 112 points lower. The S&P 500 closed 18 points lower. The NASDAQ was down 125 points.

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The U.S. restaurant industry’s recovery stalled in January after 10 consecutive months of traffic gains over steep pandemic-related declines, according The NPD Group (NPD).

Physical and online visits to U.S. restaurants were down 2% in January compared to an 8% decline at the same time last year. Consumer spending at restaurants was 4% higher, though, reflecting higher food and operational costs. Total restaurant traffic, online and physical, is down 10% from the pre-pandemic level in January 2020, according to NPD’s continual tracking of the U.S. foodservice industry.

Online and physical visits to quick service restaurants represent the bulk of industry traffic and historically have led the industry out of challenging times. However, they were 3% less year over year in January and 7% less than January 2020. Full service restaurant traffic increased 2% year over year but was 21% less than two years ago, before the pandemic.

Dine-in traffic increased by 40% in January, compared to a year earlier but were 46% less than the pre-pandemic level in January 2020. 

“No one ever said the road to recovery would be smooth and steady. Right now, we’re experiencing a dip in the road due to the omicron variant and stimulus money expiring,” says David Portalatin, NPD Food Industry Advisor. “Looking ahead, we should expect volatility. February restaurant numbers will be compared to a rough February last year because of extreme weather. My advice is don’t get too discouraged by January or too elated if February seems great. Just stay the course because we’re on a steady path of gradual improvement.”

Cattle futures ran out of steam Wednesday, although the latest World Agricultural Supply and Demand Estimates continue to paint a positive fundamental picture (see below).

Feeder Cattle futures closed an average of 43¢ lower, except for 2¢ higher in spot Mar.

Live Cattle futures closed an average of 90¢ lower, except for 5¢ higher in the back contract.

Cattle futures were helped by lower Grain and Soybean futures as traders apparently were satisfied with the level of risk premium.

Negotiated cash fed cattle trade and demand were moderate in Nebraska through Wednesday afternoon, according to the Agricultural Marketing Service. Live trade was steady with the previous day and $2 lower than last week at $138/cwt. Dressed trade was $4-$5 lower at $220.

Trade was limited on light demand in Kansas with live prices at $138; steady with the previous day and $2 lower than last week.

Elsewhere, trade ranged from limited on light demand to mostly inactive with very light demand and too few transactions to trend. Live prices in the Texas Panhandle so far this week are $2 lower at $138. Trade was unestablished in the western Corn Belt where live prices last week were $142 and dressed prices were $224-$225.

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Major U.S. financial indices closed sharply higher, buoyed by lower Crude Oil futures and cooling commodity prices, at least for the day.

The Dow Jones Industrial Average closed 653 points higher. The S&P 500 closed 107 points higher. The NASDAQ was up 460 points.

West Texas Intermediate Crude Oil Futures (CME) closed $12.19 to $15.00 lower in the front six contracts.

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“Fed cattle prices are raised on firm packer demand and declining inventories of fed cattle,” say analyst with USDA’s Economic Research Service (ERS), in the latest World Agricultural Supply and Demand Estimates (WASDE).

ERS projects the annual five-area direct fed steer price the year $17.10 higher than last year at $139.50/cwt. That’s $2.00 more than the previous month’s projection.

Forecast prices are $140 in the first quarter, $139 in the second, $136 in the third and $142 in the fourth quarter.

Estimated beef production this year of 27.57 billion lbs. would be 367 million lbs. less (-1.3%) than last year. “The beef production forecast is raised from the previous month on higher fed and non-fed cattle slaughter,” according to ERS.

Estimated total red meat and poultry production this year of 106.47 billion lbs. would be 324 million lbs. less (-0.3%) than the prior year.

“Russia’s recent military action in Ukraine significantly increased the uncertainty of agricultural supply and demand conditions in the region and globally,” say ERS analysts. “The March WASDE represents an initial assessment of the short-term impacts as a result of this action.”

Volatility continued Tuesday, but Cattle futures managed to extend gains amid two-sided trading, supported by an initial drop in Corn futures and eventually higher outside markets.

Feeder Cattle futures closed an average $1.07 higher (65¢ to $1.40 higher), except for 57¢ lower in spot Mar.

Live Cattle futures closed average 79¢ higher (17¢ higher at the back to $1.57 higher toward the front), except for unchanged in away Jun.

Negotiated cash fed cattle trade was slow on light demand in the Southern Plains through Tuesday afternoon, according to the Agricultural Marketing Service. Live prices were $2 lower in a light test at $138/cwt.

Trade was limited on light demand in Nebraska. Live price so far this week are $2 lower at $138. Dressed prices last week were $224-$225.

In the western Corn Belt, trade was mostly inactive on light demand. Live prices last week were $142 and dressed prices were $224-$225.

Choice Boxed beef cutout value was $2.27 lower Tuesday afternoon at $252.44/cwt. Select was $5.28 lower at $244.94.

Wheat futures tapped the brakes Tuesday, helping Corn to a narrowly mixed close.

Corn futures closed mixed, mostly 1¢ lower to 1¢ higher.

Soybean futures closed 14¢ to 30¢ higher through Jan ‘23 and then mostly 1¢ lower to 2¢ higher.

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Major U.S. financial indices closed lower Tuesday, after trading higher earlier, in another volatile session driven by Russia’s war on Ukraine, worries about the economic impact and inflation.

The Dow Jones Industrial Average closed 184 points lower. The S&P 500 closed 30 points lower. The NASDAQ was down 35 points.

West Texas Intermediate Crude Oil Futures (CME) were up another $1.91 to $4.30 through the front six contracts with spot Mar closing at 123.70.

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Lighter-weight feedlot placements in recent months, and the incentive to place more at light weights, will likely widen the Choice-Select spread this summer, according to Brenda Boetel, Extension livestock economist at the University of Wisconsin-River Falls.

In the latest issue of In the Cattle Markets (ICM) from the Livestock Information Center, she explains the Choice-Select spread is typically narrowest January to March as the demand for Choice middle meats is the least of the year, while Choice supply is usually most plentiful. The spread usually widens heading into summer as the Choice supply declines, due to harvesting lighter-weight cattle, while grilling demand for Choice middle meats increases.

Although the highest percentage of cattle placed on feed at weights lighter than 700 lbs. usually occurs in November, Elliott Dennis, Extension livestock economist at the University of Nebraska-Lincoln pointed out in the previous ICM that feedlots want to place lighter cattle currently, amid higher feed prices, due to cattle performance and ultimately total feed consumed. He ran the numbers and concluded, “…assuming Average Daily Gain and Average Feed Conversion are constant, the only way to reduce total feed costs would be to reduce harvest weights.” And cattle placed at lighter weights tend to finish at lighter weights.

“This has two broad industry implications for the quantity and quality of beef production,” Dennis explained. “First, total quantity of beef production will likely decrease, putting upward pressure on boxed beef and thus retail beef prices in deferred months. Second, smaller carcass weights are associated with more cattle grading USDA Select. As more cattle grade USDA Select, the Choice-Select

spread will widen providing incentives to feed cattle longer to heavier harvest weights.”

The Choice-Select spread was almost $4.50/cwt. wider than the 2019-2021 average when the year began, according to Boetel.

“Seasonally, the Choice-Select spread will widen until late June/early July due to the supply/demand considerations for Choice and for Select beef,” Boetel explains. “However, given the higher percentage of lightweight cattle placed on feed since November, as compared to the 2019-2021 average lightweight percentage placed on feed, the Choice-Select spread will likely widen more than average. How wide the spread becomes is dependent on corn prices when cattle are placed, the percentage of cattle grading Choice, total amount of beef production, as well as beef demand.

“If we hold all those factors affecting Choice-Select spread at a constant level and allow only the percentage of beef grading Choice to change, the impact of a 1% change in cattle grading Choice, can have almost a 9% change in the spread. This means that since the average 2016-2020 spread was as wide as $22.45 in June, a decrease of 1% in Choice graded beef could widen that spread by another $2, providing some incentives to feed cattle longer and to heavier weights.”

Cattle futures reversed direction to the upside Monday, despite sharply lower outside markets and grain market strength tied to Russia’s attack on Ukraine. Positioning and bottom-picking likely explain much of the move, while underscoring the unaltered, positive supply fundamentals.

Feeder Cattle futures closed an average $1.86 higher ($1.12 to $2.55 higher).

Live Cattle futures closed average $1.44 higher (50¢ to $2.15 higher).

Negotiated cash fed cattle trade ranged from a standstill to mostly inactive on very light demand in all major cattle feeding regions through Monday afternoon, according to the Agricultural Marketing Service.

Live prices last week were at $140/cwt. in the Southern Plains and Nebraska; $142 in the western Corn Belt. Dressed prices were at $224-$225.

Wholesale beef prices added support with Choice Boxed beef cutout value 38¢ higher Monday afternoon at $254.71/cwt. and  Select $1.81 higher at $250.22.

Wheat futures continued to lead Corn futures mostly higher Monday. Kansas City Wheat futures were mostly 39¢ to 85¢ higher Monday, as rationing continues due to the war in Eastern Europe

Corn futures closed 9¢ to 18¢ higher, except for 3¢ and 7¢ lower in the front two contracts.

Soybean futures closed mostly 10¢ to 14¢ lower.

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Major U.S. financial indices closed sharply lower Monday, pressured by Russia’s war on Ukraine and worries about the impact on domestic and global economic growth.

The Down Jones Industrial Average closed 797 points lower. The S&P 500 closed 127 points lower. The NASDAQ was down 482 points.

West Texas Intermediate Crude Oil Futures (CME) were up another $2.96 to $3.72 through the front six contracts.

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Derrell Peel, Extension livestock marketing specialist at Oklahoma State University provides perspective about the market impacts stemming from Russia’s attack on Ukraine, in his weekly market comments.

“Both Ukraine and Russia are major grain producing and exporting countries. With the reality of current disruptions of grain movement from the Black Sea region and the uncertainty of what could happen, crop prices have soared, pushing high feed prices much higher,” Peel explains. “Just a few more weeks will determine whether crop planting in the Ukraine will be possible. All crop markets are higher, but the uncertainty is focused on the near term, pushing old crop futures higher relative to new crop contracts in the fall.”

Peel also points out Russia is a major oil producing and oil exporting country. Potential disruptions to global energy markets are contributing to sharply higher energy prices.

“Russia is also a major producer and exporter of fertilizer. These will add to inflationary pressures for production costs and are a threat to beef demand as higher gas prices directly impact consumers,” he says.

Then, there’s the domestic drought.

“In just a few weeks, the drought will begin to impact forage production and producers will face rapidly worsening production conditions and additional management and marketing challenges,” Peel says. “The supply fundamentals of the industry will continue to be supportive with cattle numbers decreasing and beef production declining this year. Beef demand has been strong up to this point, but clearly, there are more concerns about demand and input prices going forward. A war situation like this has no analog in recent history and there is no way to anticipate when or even if the situation will stabilize in the foreseeable future.”