Negotiated cash fed cattle trade and demand were moderate in Kansas through Wednesday afternoon with live prices $1-$2 less than the previous week at $124/cwt.
There were 513 head offered in the weekly Fed Cattle Exchange auction and no takers.
Up north, Choice 2-4 steers brought $128.90/cwt. at the fat auction in Tama, IA. They were $125.50-$127.25 at Sioux Falls.
Growing odds for lower cash prices this week, softer wholesale beef values and the lack or packer urgency to increase harvest levels helped pressure Cattle futures Wednesday.
Except for an average of 20¢ higher in two contracts toward the back, Live Cattle futures closed an average of 36¢ lower.
Feeder Cattle futures closed an average of 54¢ lower (10¢ to 90¢ lower).
Corn futures closed mostly 1¢ to 3¢ higher.
Soybean futures closed mixed, fractionally higher to 1¢ lower.
Wholesale beef values were firm on moderate demand and offerings, according to the Agricultural Marketing Service.
Choice boxed beef cutout value was 41¢ higher Wednesday afternoon at $226.14/cwt. Select was 48¢ higher at $218.97.
Major U.S. financial indices edged higher Wednesday. Support from news about China and the U.S. nearing a trade deal was tempered by indications of slowing domestic economic growth.
Private sector employment increased by 129,000 from February through March, according to the most recent ADP Employment report. That was less than the trade expected.
Month to month, the Non-Manufacturing Index (NMI®) from the Institute for Supply Management® (ISM®) declined 3.6% in March to 56.1%.
“The non-manufacturing sector’s growth cooled off in March after strong growth in February. Respondents remain mostly optimistic about overall business conditions and the economy. They still have underlying concerns about employment resources and capacity constraints,” according to Anthony Nieves, Chair of the ISM Non-Manufacturing Business Survey Committee
The Dow Jones Industrial Average closed 39 points higher. The S&P 500 closed 6 points higher. The NASDAQ was up 46 points.
Southern Plains cull cow prices increased 32% from the end of January through the end of March, increasing from about $40/cwt. to $53, according to David Anderson, Extension livestock economist at Texas A&M University. Along the way, he says 90%-lean beef prices increased 10% to $218/cwt., while the cow-beef cutout climbed by 7.7%.
“The rally in cow prices has come in the face of historically large slaughter,” Anderson explains, in the latest issue of In the Cattle Markets. “Dairy cow slaughter has exceeded 70,000 per week for that last 5 weeks. The 72,700 head sent to market the first week of March was the largest weekly dairy cow slaughter since 1986. Some readers might remember the Dairy Herd Buyout program that contributed to large dairy cow slaughter in 1986. Beef cow slaughter dropped below last year’s levels by mid-March; 53,000 head compared to 56,000 head this time last year. Total beef and dairy cow slaughter is the most since drought-forced movement in 2012-2013.”
Anderson points out new cow packing capacity in the Northwest is helping boost cull cow prices higher further north than in the Southern Plains, where packing capacity eroded amid the 2010-2012 drought.
“Presumably, dairy cow marketings will decline later in the year as increased culling has an effect on milk production and prices,” Anderson says. “Some milk market recovery should lead to higher milk prices and slower culling rates. The slowing rate of growth of the beef cow herd should slow beef cow marketings. The combination of slowing culling, limiting the growth in supplies, should provide some price support.”