Daily Market Highlights

Concerns about less corn and wheat exports from Ukraine and Russia, due to the war, continued to underpin futures prices Friday. As time wears on, there is also concern about fertilizer exports from the region.

Corn futures closed 5¢ to 8¢ higher, except for 10¢ to 29¢ higher from near Jly to next Mar.

Soybean futures closed mostly 7¢ to 8¢ lower.

Cattle futures sagged beneath the weight of escalating feed prices Friday.

Feeder Cattle futures closed an average of $2.47 lower (90¢ at the back to $3.27 lower toward the front).

Live Cattle futures closed an average of $1.53 lower (80¢ to $2.62 lower).

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

For the week, live prices were $2 lower in the Southern Plains at $140/cwt., $2-$4 lower in Nebraska at $140 and $1 lower in the western Corn Belt at $143. Dressed prices were $2-$3 lower at $224-$225.

The average five-area direct fed steer price was $2.64 lower week to week on Thursday at $140.76/cwt. The average steer price in the beef was $2.40 lower at $224.62.

Choice Boxed beef cutout value was 2¢ lower Friday afternoon at $254.33/cwt. Select was 62¢ higher at $248.41.

Estimated total cattle slaughter last week of 658,000 was 11,000 head more than the previous week but 8,000 head fewer than the same week last year. Estimated year-to-date total cattle slaughter of 5.83 million head is just 17,000 head fewer than the same time last year.

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Major U.S. financial indices closed lower Friday, amid continued pressure from Russia’s war on Ukraine, and despite a more positive jobs report than expected.

Total non-farm payroll employment rose by 678,000 in February, according to the U.S. Bureau of Labor Statistics, pushing the unemployment rate down to 3.8%. Average hourly earnings for private non-farm employees was static at $31.58.

The Down Jones Industrial Average closed 179 points lower. The S&P 500 closed 34 points lower. The NASDAQ was down 224 points.

West Texas Intermediate Crude Oil Futures (CMW) were up a staggering $7.31 to $8.01 through the front six contracts.

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Fundamental changes are transforming the beef supply chain from a just-in-time delivery model toward a just-in-case approach. Managing the costs associated with these changes may result in a shift of the historical live cattle and retail beef price ratio, according to a recent RaboResearch report.

“While a cattle producer has little or no control over what happens in the beef supply chain post-harvest, it will be important for livestock producers to be aware of changes occurring throughout the supply chain,” says report author, Don Close, senior animal protein analyst with Rabo AgriFinance. “Any changes, any inventory building, any additional controls and inspections could have a direct impact on the total cost of beef to the end user, which could change historical norms for live-to-wholesale and live-to-retail price spreads.”

Meat processors, distributors and retailers are striving to build supply resiliency into the beef supply chain and reduce the risk of another round of empty grocery store shelves in the future, according the report, which explores these major drivers:

1. Automation in packing plants to increase the efficiency of their labor force
2. Packaging that extends shelf life, is more durable for grocery delivery and meets sustainability expectations
3. Government and investor-led sustainability demands, which may require more documentation and verification methods throughout the supply chain
4. The transportation system’s technology and infrastructure overhaul that reduces carbon emissions and the risk for backlogs

The area of change with the greatest potential direct impact on cattle producers is meatpacking plants’ embedding more automation into their facilities, according to Rabo AgriFinance analysts. The report notes that the initial introduction of advanced technology will not serve as a replacement for labor, but will serve to make labor more efficient. However, the transformation toward greater automation will require a workforce with different skill sets or extensive retraining.

“The challenge of finding and retaining a ready workforce has increased labor costs to the tipping point where investments into technology, robotics and software advancements become economical,” Close explains. “Anything that de-risks packers from becoming a dam that slows the flow of market-ready cattle is a win for cattle producers.”

After a day’s reprieve, wheat soared higher, boosting front-month Corn and Soybean futures. K.C. Wheat was 75¢ higher in the front four contracts.

Corn futures closed 9¢ to 22¢ higher in the front three contracts and then mostly 4¢ to 11¢ lower.

Soybean futures closed 2¢ to 4¢ higher in the front two contracts and then mostly 8¢ to 11¢ lower.

Stouter feed prices took Cattle futures down another peg.

Feeder Cattle futures closed an average of $1.68 lower, erasing much of the headway made in the previous session.

Live Cattle futures closed an average of 72¢ lower (12¢ to $1.75 lower), except for 15¢ higher in the back contract.

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

So far this week, live prices are $2 lower in the Southern Plains at $140/cwt., $2-$4 lower in Nebraska at $140 and $2 lower in the western Corn Belt at $142. Dressed prices are $2-$3 lower at $224-$225.

Choice boxed beef cutout value was $1.37 lower Thursday afternoon at $254.35/cwt. Select was $3.55 lower at $247.79.

U.S. beef export sales continue strong, according to USDA’s U.S. Export Sales report for the week ending Feb. 24. Net sales of 23,800 metric tons for 2022 were 64% more than the previous week and 23% more than the prior four-week average. Increases were primarily for South Korea, China, Japan, Taiwan and Canada.

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Major U.S. financial indices closed lower Thursday, as investors appeared skittish about Friday’s monthly employment report, as well as Russia’s war on Ukraine.

The Down Jones Industrial Average closed 96 points lower. The S&P 500 closed 23 points lower. The NASDAQ was down 214 points.

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“With both revenues and costs rising, cattle producers must adjust cattle production and marketing to maximize profits,” says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly market comments. “Economists model this decision mathematically resulting in the rule that profit maximization is the point at which marginal revenues equal marginal costs. This balance occurs when the value of the last unit produced equals the additional cost of producing that last unit. Of course, cattle producers don’t use mathematical models to maximize profits but should use marginal thinking to adjust to changing market conditions. Marginal decision-making means that production is adjusted at the margin, i.e. with minor modifications and tweaks to production systems rather than major changes.”

Peel explains the unique circumstances of each individual operation will determine whether the net impact of higher revenues and higher costs poses the need to cut back slightly on production, hold steady, or increase production. 

“There are short and long-run considerations and risks to be considered as well,” Peel says. “Care should be taken that short term efforts to manage higher costs should not, for example, jeopardize herd health by cutting vaccination programs or skimping on nutrition and risking decreased future herd productivity. “Markets are extremely volatile now and likely to remain so for the foreseeable future. Producers should consider the use of risk management to protect revenues and potentially use forward pricing or other means to manage input costs.”

Feeder Cattle futures rebounded from some of the steep, recent losses Wednesday, helped along by static to lower Corn futures prices and sharply higher outside markets. Feeder Cattle futures closed an average of $2.44 higher ($2.02 to $3.20 higher.

Live Cattle futures closed an average of 71¢ higher, except for an average of 45¢ lower in the front three contracts. 

Corn futures closed mostly 8¢ to 16¢ lower.

Soybean futures closed 20¢ to 30¢ lower.

Negotiated cash fed cattle trade started the week $2 lower in the Southern Plains at $140/cwt. Trade was slow on light to moderate demand, according to the Agricultural Marketing Service.

Trade was limited on light demand in Nebraska with a few live trades at $140, but too few to trend. Live prices last week were $142-$144 and dressed prices were $227.

Trade was also limited on light demand in the western Corn Belt. Prices last week were $144 on a live basis and $227 in the beef.

Choice boxed beef cutout value was 96¢ lower Wednesday afternoon at $255.72/cwt. Select was 18¢ lower at $251.34.

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Major U.S. financial indices closed sharply higher Wednesday, basically erasing losses from the previous session.

Positive news included the labor front. Private-sector non-farm employment increased by 475,000 jobs from January to February according to the February ADP^®National Employment Report^TM.

“Hiring remains robust but capped by reduced labor supply post-pandemic. Last month large companies showed they are well-poised to compete with higher wages and benefit offerings, and posted the strongest reading since the early days of the pandemic recovery,” says Nela Richardson, ADP chief economist, “Small companies lost ground as they continue to struggle to keep pace with the wages and benefits needed to attract a limited pool of qualified workers.”

The Down Jones Industrial Average closed 596 points higher. The S&P 500 closed 80 points higher. The NASDAQ was up 219 points.

Gains came despite another surge in crude oil prices. West Texas Intermediate Crude Oil futures (CME) closed $4.28 to $7.19 higher through the front six contracts.

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Farmland prices are rising sharply as a result of high yields and strong commodity prices, as well as other factors, according to R.D. Schrader, president of Schrader Real Estate and Auction Company.

“A lot of things are falling into place to create one of the most positive land markets in recent years,” Schrader says. “The high yields and strong commodity prices are a powerful combination we haven’t seen in several years. In addition, many investors see the U.S. farmland market as a safe haven.”

Speaking at the company’s State of the Farmer’s Economy Update, Schrader explained prices for high quality farmland have risen by up to 24% in some parts of the Midwest.

“We’re seeing factors we’ve never seen before, including the use of Midwest farmland for wind and solar leases, pipelines, carbon wells and others,” explains Steve Slonaker, a farm manager, appraiser and auction manager. “Since we have little or no history on which to base our assessments, this makes the picture more complicated for everyone buying, selling or leasing farmland.”

Grain and soybean futures continued to dominate market narrative Tuesday, blasting another leg higher, fueled by the Russian attack on Ukraine and the fallout from everything from export disruptions to financial turmoil.

Corn futures closed 30¢ to 42¢ higher in the front three contracts and the mostly 13¢ to 15¢ higher. Spot Mar was 80¢ higher over the last two sessions, closing Tuesday at a staggering $7.39’6

Soybean futures closed 41¢ to 61¢ higher in the front six contracts and then mostly 38¢ to 39¢ higher. The front two contracts are up more than $1.00 over the past two sessions.

Kansas City HRW futures closed 50¢ to 57¢ higher in the front five contracts; more than $1 higher in the front contracts over the last two sessions.

Those runaway feed futures prices hammered Cattle futures, especially Feeder Cattle once again. Feeder Cattle closed an average of $1.63 lower (65¢ to $2.55 lower) for an average of $4.14 lower over the last two sessions.

Live Cattle futures closed mixed, from an average of 54¢ lower in the front three contracts to an average of 19¢ higher.

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

Last week, live prices were $142/cwt. on a live basis in the Southern Plains, $142-$144 in Nebraska and $144 in the western Corn Belt. Dressed prices were $227 in Nebraska and $226-$227 in the western Corn Belt.

Choice boxed beef cutout value was 83¢ lower Tuesday afternoon at $256.68/cwt. Select was $1.89 lower at $251.52.

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Major U.S. financial indices closed fled lower Tuesday with intensified concern surrounding the fallout from Russia’s military invasion in Eastern Europe.

The Down Jones Industrial Average closed 597 points lower. The S&P 500 closed 67 points lower. The NASDAQ was down 218 points.

West Texas Intermediate Crude Oil futures (CME) closed $2.09 to $7.69 higher through the front six contracts.

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Agricultural producer sentiment increased month to month in February, according to the Purdue University/CME Group Ag Economy Barometer.

Specifically, the overall Ag Economy Barometer rose 6 points to 125. The Index of Current Conditions declined 1 point to 132. The Index of Future Expectations increased 10 points to 122.

Although the readings are static to positive, the Barometer’s Farm Financial Performance Index continues to underscore producer concerns about rising input costs. That index was unchanged in February, but declined 27% from late 2021 to 2022, indicating producers expect financial performance in 2022 to be worse than in 2021.

“These survey responses suggest that concerns about the spike in production costs and supply chain issues continue to mostly outweigh the impact of the commodity price rally that’s been underway this winter,” says James Mintert, the barometer’s principal investigator and director of Purdue University’s Center for Commercial Agriculture.

Higher input costs have consistently been the number one concern identified by farmers over the past six months, according to results from the Ag Economy Barometer survey. In February, 47% of respondents cited input costs as their primary concern.

Tight machinery inventories continue to be a problem. In February, more than 40% of producers said low farm machinery inventories were holding back their investment plans. While plans for farm building and grain bin construction were more optimistic month to month, 56% said their plans for new construction were below the previous year.

The Ag Economy Barometer is calculated each month from 400 U.S. agricultural producers’ responses to a telephone survey. This month’s survey was conducted between February 14-18, 2022, days prior to Russia’s invasion of Ukraine.

Grain and soybean futures ricocheted sharply higher Monday, driven once again by uncertainty stemming from the military assault in Eastern Europe.

Corn futures closed 24¢ to 38¢ higher through Jly ‘23 and then mostly 16¢ to 19¢ higher.

Soybean futures 29¢ to 54¢ higher through Sep ‘22 and the mostly 19¢ to 20¢ higher.

The spike weighed on Cattle futures, especially Feeder Cattle.

Feeder Cattle futures closed average of $2.51 lower.

Live Cattle futures closed an average 32¢ lower, except for $1.22 higher in spot Feb.

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

Last week live prices were generally steady in the Southern Plains at mostly $142/cwt., steady to $2 higher in Nebraska at $142-$144, and steady to $2 higher in the western Corn Belt at $144. Dressed prices were $1 higher in Nebraska at $227 and steady to $1 higher in the western Corn Belt at $226-$227.      

Choice boxed beef cutout value was 76¢ lower week to week on Monday afternoon at $257.51/cwt. Select was $2.00 lower at $253.41.

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Major U.S. financial indices closed mixed Monday after another volatile session tied to uncertainty about the Russian attack on Ukraine and the economic sanctions taken by the U.S. and other countries against Russia.

The Down Jones Industrial Average closed 166 points lower. The S&P 500 closed 10 points lower. The NASDAQ was up 56 points.

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“Replacement prices across regions will be a key indicator this summer to help determine where carrying capacity exists and if we should start to see regions of the U.S. expanding the beef herd,” say analysts with the Livestock Marketing Information Center (LMIC), in the latest Livestock Monitor.

Albeit slowly, the folks at LMIC say their data — a range of replacement auction data covering 16 areas — indicates, where possible, producers are adding breeding stock, prompted by the level of feeder cattle prices.

For instance, Medium and Large 1 bred cows, averaged across all trimesters and all ages, are running about $100 per head higher year over year at auctions in Nebraska and Missouri. Beef cow herds (Jan. 1) declined in those states last year but are near Iowa and Minnesota where the state herds expanded.

“Medium and Large 1-2 are only about $45 per head higher. West Plains, MO bred heifers (1-9 months) Medium and Large 1-2 are up 21% and medium and large 2s are up 13% from January of last year,” say LMIC analysts. “Across most of the bred cow categories, prices are seeing double digit percentage increases, with the exception of bred cows over 8 years old. Open stock cow prices are higher as well. Under 2-years-old Medium and Large 1-2 are up 19% from last year, 2-8 year olds are up 9%. Medium and Large 2 open stock cows (2-8 years) are up 11%. In Joplin, MO bred cows Medium and Large 1-2 are up 16% across all ages and trimesters. Open stock cows are up 35% across all types.”

Similarly, the Jan. 1 Cattle report indicated pockets of beef cow herd expansion in the Pacific Northwest. Looking at some of the nearest auctions in Montana, LMIC analysts say, “…bred heifers appear to be about 15% higher, bred cows (Medium and Large 1) are mixed with later trimesters commanding only a slightly higher price than last year. Stock cows are averaging about $2/cwt. higher across all age groups.”

The volatile market whipsaw unleashed by Russia’s attack on Ukraine continued in futures and equities Friday.

Grain and soybean futures closed sharply lower, shoved around by massive open interest, a more positive South American weather outlook and USDA projecting more corn and wheat acres to be planted than expected. In its Grains and Oil Seeds Outlook presented at the annual Agricultural Outlook Forum, USDA forecast 92.0 million acres of corn and 88.0 million acres of soybeans.

Soybean futures closed 34¢ to 71¢ lower through Jan ‘23 and the mostly 19¢ to 29¢ lower.

Corn futures closed 24¢ to 35¢ lower through Jly ‘23 and then mostly 20¢ lower.

Softer Corn futures benefitted Feeder Cattle futures, which closed an average of 96¢ higher (65¢ to $1.15 higher) Friday. However, they closed an average of $3.74 lower week to week on Friday ($2.22 to $6.10 lower). 

Based on weekly auctions monitored by Cattle Current, calves and feeders sold widely mixed last week but with distinctly lower undertones related to pressure from grain prices as well as weather disruptions in some areas.

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Negotiated cash fed cattle trade ranged from limited on light demand to mostly inactive on light demand through Friday afternoon, according to the Agricultural Marketing Service.

For the week, live prices were generally steady in the Southern Plains at mostly $142, $2 higher in Nebraska at $144 and steady to $3 higher in the western Corn Belt at $144-$145. Dressed prices were $1 higher in Nebraska at $227 and steady to $1 higher in the western Corn Belt at $226-$227.

The five-area direct weighted average steer price was $1.15 higher on a live basis at $143.40/cwt. and 92¢ higher in the beef at $227.02.

Total estimated cattle slaughter of 647,000 head was 13,000 head fewer than the previous week. Total estimated year-to-date cattle slaughter of 5.14 million head was just 19,000 head fewer than a year earlier.

Live Cattle futures closed an average 33¢ lower Friday (15¢ lower toward the back to $1.25 lower in spot Feb), except for 55¢ higher in the back contract. Week to week on Friday, they were an average of $2.64 lower ($1.30 to $3.97 lower).

Wholesale beef price continue their seasonal decline.

Choice boxed beef cutout value was $7.58 lower week to week on Friday at $258.27/cwt. Select was $7.22 lower at $255.41.

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Major U.S. financial indices closed higher Friday with follow-through support from the momentum that reversed the steep decline during the previous day’s session. Part of that seemed to extend from oversold conditions. 

The Down Jones Industrial Average closed 834 points higher. The S&P 500 closed 95 points higher. The NASDAQ was up 221 points.

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Logic suggests markets should view Friday’s monthly Cattle on Feed report as neutral with numbers close to pre-report expectations.

Placements in January (feedlots with 1,000 head or more capacity) were 1.999 million, which was 25,000 less (-1.2%) than the previous year.

In terms of placement weights, 43.3% went on feed weighing 699 lbs. or less, 48.0% weighing 700-899 lbs. and 8.8% weighing 900 lbs. or more.

Marketings in January of 1.773 million were 56,000 head less (-3.1%) than a year earlier.

Cattle on feed Feb. 1 of 12.199 million were 93,000 head more (+0.8%) year over year. That’s the most for the data since the date series began in 1996.

The February report also provides perspective on how many cattle were on feed Jan. 1 in feedlots with less than 1,000 head capacity, and how many cattle those feedlots marketed last year.

Cattle and calves on feed in feedlots with 1,000 head or more capacity Jan. 1 represented 81.9% of all cattle and calves on feed in the United States. It was 81.6% a year earlier.

Marketings of fed cattle for feedlots with capacity of 1,000 head or more during 2021 represented 87.2% of total cattle marketed from all feedlots in the United States, compared to 87.0% in 2020.

Cattle futures fell hard Thursday as outside markets initially plummeted in response to Russia’s invasion of Ukraine, although they did close off of session lows.

Feeder Cattle futures closed an average of $2.91 lower, from $1.90 to $4.47 lower.

Live Cattle futures closed an average of $2.05 lower, from $1.12 to $2.52 lower.

So far this week, though, negotiated cash fed cattle prices are firm to higher with live prices steady in the Southern Plains at $142/cwt., $2 higher in Nebraska at $144 and steady to $3 higher in the western Corn Belt at $144-$145. Dressed prices are $1 higher in Nebraska at $227 and steady to $1 higher in the western Corn Belt at $226-$227.

Trade was slow on light demand in all major cattle feeding regions through Thursday afternoon, according to the Agricultural Marketing Service.

Choice Boxed beef cutout value was 76¢ lower Thursday afternoon at $260.88/cwt. Select was $4.68 lower at $258.96.

Grain and soybean futures were widely volatile as traders came to grips with the war in eastern Europe, as well as U.S. baseline projections released as part of the annual Agricultural Outlook Forum (see below).

Corn futures closed 4¢ to 9¢ higher in the front three contracts and then 6¢ to 15¢ lower.

Soybean futures closed mostly 23¢ to 36¢ lower.

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Although major U.S. financial indices managed to close higher Thursday, they plumbed sharply lower during the session amid fears and uncertainty stemming from Russia’s military aggression in neighboring Ukraine.

The Down Jones Industrial Average closed 92 points higher. The S&P 500 closed 63 points higher. The NASDAQ was up 463 points.

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USDA expects more moderate feed prices later this year and slightly less total red meat and poultry production.

“In the first part of the year, steer and heifer slaughter will likely remain near last year’s levels, as current feedlot inventories are marketed. As the year progresses, however, marketings will decline as feedlot numbers diminish,” according to analysts with USDA’s World Agricultural Outlook Board (WAOB). “Additionally, cow slaughter is expected to decline due to lower inventories and expectations that any response to improving returns or forage will likely be manifest in producers retaining cows later in the year. Heavier cattle weights, which is a function of expected demand for higher-grading fed cattle as well as a decreasing proportion of cows in the slaughter mix during 2022, will only partly offset lower slaughter numbers.”

That’s from the Livestock and Poultry Outlook presented during this year’s Agricultural Outlook Forum.

Commercial beef production for this year is forecast to be 2% less than last year at 27.38 billion lbs. Total red meat and poultry production is projected to decrease fractionally to 106.6 billion lbs. Although fractional, WAOB analysts note the decline would be the first decline since 2014.

“Feed prices during 2022 are likely to be slightly lower than 2021. Corn prices in the first part of 2022 are expected to be above a year ago reflecting a forecast 2021-22 crop year average of $5.45/bu. However, prices later in the year are expected to be below 2021, reflecting a decline in the season-average price to $5.00/bu. for 2022-23,” say WAOB analysts. “Soybean meal prices in the first part of 2022 will reflect a 2021-22 crop year average of $410 per ton and prices in the fourth quarter are expected to reflect a market year forecast of $375 for 2022-23.”

It was deja vu all over again Wednesday as Wheat and Soybean futures blasted higher, carrying Corn along for the ride and weighing on Cattle futures.

Chicago wheat was 27¢ to 32¢ higher through May ’23. Soybean futures closed 19¢ to 40¢ higher in the front five contracts and then mostly 4¢ to 6¢ higher. Corn futures closed 5¢ to 9¢ higher through Jly ‘23 and then 1¢ to 2¢ higher.

Feeder Cattle futures closed average 85¢ lower (20¢ lower at the back to $1.45 lower in spot Mar).

Live Cattle futures closed an average 61¢ lower (25¢ to $1.27 lower).

Negotiated cash fed cattle trade ranged from a standstill to limited on light demand through Wednesday afternoon, according to the Agricultural Marketing Service. However, some private reports from the North suggested higher prices for the day.

Prices last week were $142/cwt. on a live basis in Nebraska and the Southern Plains and $142-$144 in the western Corn Belt. Dressed prices were at $226.

Choice Boxed beef cutout value was 76¢ lower Wednesday afternoon at $260.88/cwt. Select was $4.68 lower at $258.96.

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Major U.S. financial indices dredged lower Wednesday with follow-through pressure from the Russia-Ukraine turmoil. 

The Down Jones Industrial Average closed 464 points lower. The S&P 500 closed 79 points lower. The NASDAQ was down 344 points.

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Creighton University’s Rural Mainstreet Index (RMI) edged higher in February to 61.5, from 61.1 the previous month — above growth neutral for the 15th consecutive month. The RMI is based on a monthly survey of bank CEOs in rural areas of a 10-state region dependent on agriculture and/or energy.

“Strong grain prices, the Federal Reserve’s record-low short-term interest rates, and growing agricultural exports have underpinned the Rural Mainstreet Economy,” says Ernie Goss, Jack A. MacAllister Chair in Regional Economics at Creighton University’s Heider College of Business.

The region’s farmland price index decreased to 78.8 from January’s 88.5 and December’s record high of 90.0. February’s reading represented the 17th consecutive month the index was above growth neutral.

The February farm equipment-sales index slipped to 72.0 from 72.4 in January — the 15th straight month above growth neutral.

This month, bankers were asked to project corn and soybean prices six months down the road. On average, bank CEOs expect corn prices per bushel to decline by 2.6% and soybean prices per bushel to drop by 2.3% over the next six months.

Grain futures surged Tuesday, led by Wheat futures, fueled by the tensions in Eastern Europe, with Chicago wheat was 40¢ to 48¢ higher through the front six contracts.

Corn futures closed 12¢ to 20¢ higher in the front four contracts and then mostly 7¢ to 8¢ higher.

Soybean futures closed 24¢ to 33¢ higher in the front four contracts and then mostly 12¢ to 14¢ higher.

Higher Corn prices weighing on Feeder Cattle futures, which closed average of 94¢ lower (37¢ lower at the back to $1.72 lower toward the front).

Recently stronger cash prices helped Live Cattle fade the heat. They closed an average 26¢ higher Tuesday.

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

Prices last week were $142/cwt. on a live basis in Nebraska and the Southern Plains and $142-$144 in the western Corn Belt. Dressed prices were $2 higher at $226.

Tuesday was one of those rare occasions where the Choice-Select spread was negative, with Choice Boxed beef cutout value $2.45 lower in the afternoon at $261.64/cwt., while Select was $1.80 higher at $263.64.

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Major U.S. financial indices sank Tuesday in response to U.S. economic sanctions on Russia after that nation recognized breakaway regions in Ukraine and sent military assistance to them.

The Down Jones Industrial Average closed 480 points lower. The S&P 500 closed 44 points lower. The NASDAQ was down 166 points.

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“The fall run of calves has persisted because of the lack of forage and price of it and other feedstuffs,” says Stephen Koontz, agricultural economist at Colorado State University. “Dry weather in the Northern Plains and in the Mountain West, as well as deteriorating wheat pasture conditions, are pushing animals to the feeding sector…Feeder cattle movements are reasonably strong through January and February. Prices, likewise, remain strong as cattle feeding organizations are more aggressively chasing available animals and lighter animals.”

At the same time, the beef packing pace increased in recent weeks, helping work through long-fed cattle Koontz explains, in the latest issue of In the Cattle Markets from the Livestock Marketing Information Center (LMIC). 

“Federally inspected daily fed steer and heifer slaughter has been remarkable during February,” Koontz says. “…Daily slaughter in February has routinely been greater than 90,000 head and some days pushing 96,000. I anticipate the March Cattle on Feed report, which shows February marketings and placements, will reveal a drop in the number of cattle on feed over 120 or over 150 days.”

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

Prices last week were $142/cwt. on a live basis in Nebraska and the Southern Plains and $142-$144 in the western Corn Belt. Dressed prices were at $226.

The five-area average weighted direct fed steer price last week was $1.88 higher at $142.36/cwt. The average steer price in the beef was $2.00 higher at $226.04.

Equity and futures markets were closed Monday in observance of President’s Day.

As mentioned in the previous day’s Cattle Current, Live Cattle futures were an average of 75¢ higher (37¢ to $1.37 higher) week to week on Friday, except for 30¢ lower in near Apr.

Feeder Cattle futures closed an average of $1.24 higher (15¢ to $1.80 higher) week to week on Friday except for 80¢ lower in spot Mar.

Choice boxed beef cutout value was $1.76 lower Monday afternoon at $264.09/cwt. Select was 79¢ lower at $261.84.

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As mentioned at the outset, equity markets were closed Monday, giving investors and traders an extra day to dwell on the inflation concerns and political tensions in eastern Europe that drove markets lower amid a volatile ride last week.

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Drought will be an obvious key factor to whether the nation’s beef cow herd continues to contract this year and by how much.

“Widespread drought in 2022 could result in much more pronounced cow herd liquidation and relocation than previously and the scenario will be all about what we have to do,” explained Derrell Peel, extension livestock marketing specialist at Oklahoma State University, in his market comments last week, offering one drought scenario.

This week, Peel consider the outlook if drought subsides.

“The cyclical peak in the beef cow herd inventory was in 2019 and the industry has been in liquidation for three years, significantly enhanced by drought in 2021 and to a minor extent in 2020. If drought is not a limitation in 2022, will cattle producers continue herd liquidation? The answer will be determined by what cattle producers want to do and can do relative to cow culling and heifer retention,” Peel says. “Higher cattle prices and expectations of continued higher prices may have producers interested in slowing liquidation, holding cattle numbers steady or even expanding.  However, the extent to which higher prices leads to expectations of higher profitability (and a desire to expand the herd) will be tempered by higher feed and other input costs.”  

Peel points out, herd rebuilding will be the first step for producers emerging from drought.

“The overall beef cow culling rate in 2021 was 11.55%, the highest since 2011. In drought areas, producers who culled heavily last year may be able to sharply reduce culling this year if forage conditions improve,” Peel says. “In other areas, producers may hold cow culling to a minimum. After increasing sharply in 2021, beef cow slaughter could drop by as much as 10-15% year over year in 2022. This would result in a beef cow-culling rate between 10% and 10.5%. An even lower culling rate might be possible…the average culling rate in the last herd expansion from 2014-2018 was 8.7%…but it doesn’t seem likely that expansion signals are that strong yet.”

Moreover, Peel points to the 3.3% year-over-year reduction in beef replacement heifers Jan. 1, which limits herd expansion opportunities this year.

“It appears to me that the most aggressive 2022 scenario is for the industry to hold the beef cow herd to a low level of liquidation…perhaps a 0.5% or less reduction in beef cows,” Peel says. “Achieving herd expansion is likely not feasible and even holding the herd to zero change stretches the numbers to unlikely levels. If the industry does try to minimize herd liquidation in 2022 and prepare for later herd expansion, the reduction in cow and heifer slaughter could result in a larger decrease in beef production this year than is currently forecast.”

Peel expects the most likely reality this year lies in between severe-drought and no-drought scenarios, with continued drought in some regions.

“The result could be modest levels of additional beef cow herd liquidation in 2022, perhaps less severe than 2021 but still significant continued reduction in the beef cow inventory. It is likely that cattle numbers will continue to tighten in 2022,” Peel says.