Cattle futures gained more ground Tuesday, buoyed by continued strength in Lean Hog futures and firm wholesale beef prices. Feeder Cattle likely received some benefit from lower grain futures.
Live Cattle futures closed an average of 68¢ higher (20¢ to $1 higher).
Except for unchanged and 17¢ higher in the front two contracts, Feeder Cattle futures closed an average of 94¢ higher .
Corn futures closed mostly 1¢ to 3¢ lower.
Soybean futures closed mostly 8¢ to 10¢ lower.
Wholesale beef values were higher on Choice and steady on Select with moderate to fairly good demand and moderate to heavy offerings, according to the Agricultural Marketing Service.
Choice boxed beef cutout value was $1.07 higher Tuesday afternoon at $232.05/cwt. Select was 7¢ lower at $221.15.
Major U.S. financial indices edged higher Tuesday, regaining the minimal losses from the previous session. Support included stronger quarterly earnings than expected.
The Dow Jones Industrial Average closed 67 points higher. The S&P 500 closed 1 point higher. The NASDAQ was up 24 points.
Between recent prices and expectations for stronger feedlot demand, USDA increased projected feeder cattle prices for the second quarter by 2$ at the midpoint to $144-$150/cwt., according to the monthly Livestock, Dairy and Poultry Outlook. Prices for the fourth quarter increased $2 at the midpoint, as well, to $140-$152. The annual price forecast increased to $143-$150.
Analysts with USDA’s Economic Research Service (ERS) note the inventory of cattle on feed more than 150 days continued to build in March; 23% more than a year earlier. They expect feedlot placements and marketings in the coming quarters to bring the supply of long-fed cattle more in line with the 5-year average.
“These large supplies of market-ready cattle in feedlots have experienced a tough winter, and the performance of steers and heifers in the feedlot has suffered. Given how long feedlot operations have had to feed these animals, the feedlots may be more inclined to take prices offered than to feed their cattle longer to recover the lost weight,” ERS analysts explain. “As a result, the momentum of the weekly 5-area steer price may have limited upward support, particularly given the strong number of market-ready cattle in early 2019. However, based on expected strength of beef demand as the year progresses, the 2019 annual price forecast was left unchanged at $117-$122/cwt.