Negotiated cash fed cattle prices gained $1 in Kansas at $139/cwt. on active trade and good demand through Tuesday afternoon, according to the Agricultural Marketing Service. Although too few to trend there were also some early trades $2 higher in Nebraska and the western Corn Belt at $142.
Choice Boxed beef cutout value was $1.36 higher Tuesday afternoon at $273.47/cwt. Select was 42¢ higher at $260.71.
Stronger cash trade helped boost Cattle futures.
Live Cattle futures closed an average of 75¢ higher (62¢ to $1.50 higher), also supported by increasing open interest the past couple of days.
Feeder Cattle futures closed an average of 55¢ higher (22¢ to $1.10 higher) except for 15¢ lower and unchanged in the back two contracts.
That was despite another day of higher Corn futures.
As if they needed more help, Corn futures climbed 11¢ to 14¢ higher through Jly ‘23, boosted by President Biden’s announcement that the higher-blend 15% ethanol gas (E15) could be sold through the summer in an effort to curb rising fuel costs. Previously, E15 sales were prohibited during the summer months.
Soybean futures closed 14¢ to 22¢ higher.
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Major U.S. financial indices softened further Tuesday with the highest inflation since 1981, according to the latest Consumer Price Index (CPI) for all urban consumers from the U.S. Bureau of Labor Statistics. It increased 1.2% in March after rising 0.8% in February, up 8.5% over the last 12 months.
The Dow Jones Industrial Average closed 87 points lower. The S&P 500 closed 15 points lower. The NASDAQ was down 40 points
West Texas Intermediate Crude Oil futures (CME) closed $4.71 to $6.31 higher through the front six contracts.
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“With declining beef production and increased prices, 2022 will likely see a contraction of about 4% year over year in exports,” says Brenda Boetel, livestock economist at the University of Wisconsin-River Falls. “Although exports will be lower, they are still historically high and continue to be a supportive factor for cattle prices. The bigger trade concern currently for cattle is the indirect effects from decreased trade opportunities for poultry due to highly pathogenic avian influenza (HPAI) and the decreased export potential for pork due to lower imports from China.”
In the latest issue of In the Cattle Markets from the Livestock Marketing Information Center (LMIC), Boetel explains current HPAI impacts so far are less than the outbreak in 2014-15 when about 12% of the layer hens were lost and more than 50 countries imposed import restrictions on U.S. poultry leading to a 14% decline in broiler exports and a 4% decline in domestic broiler prices. She notes export restrictions today are different than in 2015, confined to regions of infection rather than the entire nation.
“If HPAI continues to expand, though the impact on trade will grow and hence the potential to impact beef prices will continue to increase,” Boetel explains. “Beef is the highest priced animal protein in the U.S., and given the expected decline in production due to lower numbers and continued strong trade, we will likely see continued increases in retail beef prices. Additional supplies of poultry or pork on U.S. grocery shelves will put downward pressure on those prices and will eventually transfer to cattle prices.”