Negotiated cash fed cattle trade got underway in the Southern Plains Wednesday at $124/cwt. on a live basis, which was steady with last week.
Likewise, there were 510 head—four five lots of Oklahoma heifers—offered in the weekly Fed Cattle Exchange auction. Four lots (416 head) sold for 1-17 day delivery at a weighted average price of $124/cwt.
Continued sluggish trade and lack of direction pressured Cattle futures Wednesday, despite strong renewed buying in Lean Hog futures.
Live Cattle futures closed an average of 51¢ lower (2¢ lower in spot Apr to 72¢ lower).
Feeder Cattle futures closed an average of 53¢ lower (2¢ lower to 97¢ lower in spot Apr).
Corn futures closed mostly fractionally higher to 1¢ higher.
Soybean futures closed 2¢ to 3¢ higher.
Wholesale beef values were firm to higher on moderate demand and offerings, according to the Agricultural Marketing Service.
Choice boxed beef cutout value was 73¢ higher Wednesday afternoon at $229.05/cwt. Select was 82¢ higher at $219.62.
Major U.S. financial indices edged higher Wednesday. Support included release of minutes from the most recent FOMC meeting, underscoring the likelihood of static interest rates for the remainder of the year.
“…a majority of participants expected that the evolution of the economic outlook and risks to the outlook would likely warrant leaving the target range unchanged for the remainder of the year,” according to the FOMC minutes. “Several of these participants noted that the current target range for the federal funds rate was close to their estimates of its longer-run neutral level and foresaw economic growth continuing near its longer-run trend rate over the fore-cast period.”
The Dow Jones Industrial Average closed 6 points higher. The S&P 500 closed 10 points higher. The NASDAQ was up 54 points.
Cattle prices will meander lower next year and then increase steadily through 2028, according to the 2019 Baseline Outlookreport from the University of Missouri’s Food and Agricultural Policy Institute (FAPRI) and Agricultural Markets and Policy team. The outlook through 2028 is based on market information available in February.
FAPRI pegs the 5-area fed steer price in 2020 at $112.38/cwt., compared to a projection of $114.17 this year. The price is projected at $114.78 in 2021, rising from there to $130.29 in 2028.
Prices for steers weighing 600-650 lbs. (basis Oklahoma City) are projected to ebb at $143.92/cwt. in 2020, compared to a projection of $153.30 for this year. The estimated price in 2021 is $149.47 and then increases to $181.35 in 2028.
Overall, however, FAPRI suggests pressure on farm finances likely will continue. Although the analysis shows a projected increase for net farm income this year, it remains below the average of 2014-17. Longer-term projections suggest little change in real net farm income over the next decade, resulting in continued increases in the farm sector’s debt-to-asset ratio.“Although it remains well below the levels of the 1980s, the ratio of U.S. farm debts to assets has increased from 11.3% in 2012 to 13.5% in 2018,” according to the report. “The outlook is for continued stress on farm finances, with the debt-to-asset ratio averaging 14.8% between 2020 and 2028.”