Cattle futures extended gains Monday, helped along by last week’s stronger negotiated cash fed cattle prices and thoughts that wholesale beef values may have established the seasonal bottom.
Toward the close, Live cattle futures were an average of 52¢ higher. Feeder Cattle futures were an average of 78¢ higher.
Negotiated cash fed cattle trade was inactive on moderate demand in the all major cattle feeding regions through Monday afternoon, according to the Agricultural Marketing Service.
Last week, FOB live prices were $3-$5 higher in the Texas Panhandle at $235/cwt., $4-$5 higher in Kansas at $235-$236, $2-$3 higher in Nebraska at $245-$247 and mostly $5 higher in the western Corn Belt at $245. Dressed delivered prices were $3-$5 higher in Nebraska at $383-$385 and $3 higher in the western Corn Belt at $380.
Last week’s weighted average five-area direct FOB live fed steer price was $3.79 higher at $243.17. The weighted average dressed delivered fed steer price was $4.18 higher at $383.68.
Choice boxed beef cutout value was $1.10 higher Monday afternoon at $364.32. Select was $1.09 higher at $341.59.
Turning to the grain complex, Toward the close and through away Jly contracts, Corn futures were 2¢ to 3¢ lower. Kansas City Wheat futures were fractionally lower to 1¢ lower. Soybean futures were 5¢ higher.
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Major U.S. financial indices closed sharply higher Monday, mostly erasing losses from the previous session with no apparent reason.
The Dow Jones Industrial Average closed 585 points higher. The S&P 500 closed 91 points higher. The NASDAQ was up 403 points.
Toward the close, West Texas Intermediate Crude Oil futures (CME) were 55¢ to $1.21 lower through the front six contracts on OPEC’s decision to increase crude oil production levels.
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Although the recent monthly Cattle on Feed report illustrated historically high long-fed cattle numbers, Stephen Koontz, agricultural economist at Colorado State University notes the total inventory of cattle on feed is the fewest in seven years.
Moreover, Koontz explains in the latest issue of In the Cattle Markets that fed cattle supplies supplies will tighten further this summer, into the fall and through the end of the year.
“There are noticeably short numbers coming for the beef packing industry – some this year but continuing over the next several years with herd expansion,” Koontz says. “High-cost plants and low-volume plants – many of these built or renovated in the past five years – will have economic issues. There will be something or some series of events which will slow the rise of cattle prices, and perhaps it will be this structural change as opposed to less expensive pork and poultry proteins.”