Market optimism grew on Tuesday with more chatter about short front-end fed cattle supplies in the north and the increasing likelihood that cash prices can move higher again this week. There was no negotiated trade reported.
Other than an average of 5¢ lower in Feb, Live Cattle futures closed an average of 34¢ higher (12¢ to 90¢ higher in spot Apr).
Other than 12¢ to 50¢ lower in three contracts, Feeder Cattle futures closed an average of 34¢ higher.
Choice boxed beef cutout value was 34¢ higher Tuesday afternoon at $212.13/cwt. Select was 40¢ lower at $199.58.
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Major U.S. financial indices closed sharply higher again on Tuesday, supported by strong quarterly earnings from some of the big players, including Netflix and UnitedHealth.
The Dow Jones Industrial Average closed 213 points higher. The S&P 500 closed 28 points higher. The NASDAQ closed 124 points higher.
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“Current projections indicate losses (cattle feeding) spanning the rest of 2018, consistent with lower expected sales prices, which have decline by $8-$12/cwt. (depending on closeout month) since early March,” according to the latest Historical and Projected Kansas Feedlot Net Returns (KFNR) from Kansas State University.
Keep in mind that KNFR estimated returns are on a cash to cash basis with no risk management assumed.
March net returns for steers were estimated at $41.54 per head. Projections are for negative net returns of -$253.77 (April) to -$256.67 (June) per head. Estimated losses for the rest of the year range from -$70.95 (December) to -$191.13 (July).
Similarly, March net returns for heifers were projected at $59.56 per head. Projections are for negative net returns of -$238.69 (April) to -$48.27 (December) per head), but mostly well above $100.