There were no sales in the weekly Fed Cattle Exchange auction, with 3,194 head offered. Two lots—one steers and one heifers from Kansas—were passed out at $121/cwt. and $120.25, respectively.
Cattle futures were lightly traded on Wednesday, firming after a slow start.
Live Cattle futures closed an average of 42¢ higher (27¢ to 82¢ higher).
Feeder Cattle futures closed an average of 79¢ higher (35¢ to $1.20 higher).
Wholesale beef values continued higher on Wednesday. Choice boxed beef cutout value was 88¢ higher in the afternoon at $218.53/cwt. Select was $1.04 higher at $203.15.
“Demand has been bullish for beef prices while supply worries have led to bearish trade,” says Andrew P. Griffith, agricultural economist at the University of Tennessee, in his weekly market comments. “It would seem the market has consistently been more concerned with increased supply as opposed to recognizing strong consumer demand. As the calendar moves deeper into spring, and as the unofficial start of summer begins with the Memorial Day weekend, the market will have a better idea of beef demand, which should provide a more consistent price direction for beef.”
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Major U.S. financial indices rebounded a little on Wednesday. Although rising Treasury Bond yields continued to pressure the market early, positive quarterly earnings from the likes of Boeing, provided enough support for a mostly positive close.
The Dow Jones Industrial Average closed 59 points higher. The S&P 500 closed 4 points higher. The NASDAQ closed 3 points lower.
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Although calf prices in the first quarter were 3.2% higher year over year—even with to slightly higher than seasonal indexes would project—analysts with the Livestock Marketing Information Center (LMIC) say, “The 10-year seasonal index indicates more potential downside than upside moving through 2018.”
In the latest Livestock Monitor, LMIC analysts point out the U.S. cattle inventory has grown four consecutive years, making for the second longest herd expansion phase since the cycle that began in 1976.
“Larger calf crops tend to put downward pressure on prices, particularly in the fourth quarter,” LMIC analysts say. “January of 2018 showed another 0.7% increase (cattle inventory) compared to the previous year, which would indicate that 2018 fall calf prices again should be the low price point during this calendar year.”