Cattle futures closed higher Wednesday, recovering some ground lost in the previous session’s limit losses. Increased trade activity and higher outside markets provided support.
Live Cattle futures closed an average of $1.77 higher ($1.17 higher to $2.70 higher in spot Apr).
Feeder Cattle futures closed an average of $2.01 higher (40¢ to $2.80 higher).
Wholesale beef values were higher on Choice and sharply higher on Select with moderate to good demand and moderate to heavy offerings, according to the Agricultural Marketing Service.
Choice boxed beef cutout value was 81¢ higher Tuesday afternoon at $226.67/cwt. Select was $4.37 higher at $215.77.
Corn futures closed 3¢ to 5¢ lower through Dec ’20 and then mostly 1¢ to 2¢ lower.
Soybean futures closed 5¢ to 7¢ lower through Jan ’21 and then mostly 4¢ lower.
Major U.S. financial indices closed higher on Tuesday, with various data pointing to signs that coronavirus is stabilizing in this country.
The Dow Jones Industrial Average closed 558 points higher. The broader S&P 500 closed 84 points higher. The NASDAQ closed 323 points higher.
“The red ink projected for cattle feeders, with few risk management opportunities ahead, is likely to significantly dampen placements in March and through summer,” say analysts with the Livestock Marketing Information Center (LMIC), in the latest Livestock Monitor. “The fall-out of fed cattle prices are expected to result in negative margins, even though feed costs are expected to be lower. This pessimism in cattle feeding has led to reluctance in buying cattle to fill pens. Coronavirus has also limited auctions, with some suspending auction sales or instituting more restrictions on day of sale.”
March auction receipts were 43% less than a year earlier, according to LMIC. Combined video auction and direct receipts were 47% less. Feeder cattle imports from Canada and Mexico were also fewer.
“March placements are expected to decrease significantly, flattening the seasonal increase. Placements through the rest of the summer are likely to be below a year ago as the trends above are unlikely to change without significant improvements on the public health front,” say LMIC analysts. “One of the key factors moving forward will be pasture and range conditions. Good forage conditions will allow cattle to gain weight outside the feedlot and buy time, which at this point looks like a pivotal hedge/risk management option. If drought becomes an issue, it will force placements into feedlots even if economic conditions for feeding animals is weak. Cattle feeding returns are expected to be negative until fall 2020. Producers selling feeder animals in a drought market will likely face prices sharply below a year ago.”