Cattle futures continued to gain Wednesday with prospects for record-high cash fed cattle prices increasing again this week.
Feeder Cattle futures closed an average of $1.26 higher (12¢ to $1.80 higher).
Live Cattle futures closed an average of 78¢ higher (37¢ to $1.97 higher).
Choice boxed beef cutout value was $3.38 higher Wednesday afternoon at $298.48/cwt. Select was 23¢ lower at $281.81/cwt.
Negotiated cash fed cattle trade ranged from limited on light demand to mostly a standstill through Wednesday afternoon. Although too few to trend, there were some early live sales in the western Corn Belt at $181/cwt.
Last week, live prices were $170/cwt. in the Southern Plains and $174-$177 in Nebraska and the western Corn Belt. Dressed prices were $275-$280.
Corn futures closed mostly 1¢ to 3¢ lower.
KC HRW Wheat closed mostly 2¢ to 3¢ lower.
Soybean futures closed mostly 3¢ to 9¢ lower, except for nearby contracts.
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Major U.S. financial indices softened Wednesday with recessionary concerns, although inflation was lower last month than the trade expected.
The Consumer Price Index for All Urban Consumers (CPI-U) rose 0.1% in March on a seasonally adjusted basis, after increasing 0.4% in February, according to the U.S. Bureau of Labor Statistics. Over the last 12 months, the all items index increased 5.0% before seasonal adjustment.
However, investors appeared to focus more on cautionary comments from the Federal Open Market Committee (FOMC).
“Given their assessment of the potential economic effects of the recent banking sector developments, the staff’s projection at the time of the March meeting included a mild recession starting later this year, with a recovery over the subsequent two years,” according to FOMC minutes released Wednesday.
The Dow Jones Industrial Average closed 38 points lower. The S&P 500 closed 16 points lower. The NASDAQ was down 102 points.
West Texas Intermediate Crude Oil futures (CME) closed $1.26 to $1.73 higher through the front six contracts.
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“From a seasonal standpoint, lightweight calf prices tend to soften after April, but it is highly unlikely lightweight calf prices will soften this summer and may even be higher during the fall of 2023 than the current time period,” says Andrew P. Griffith, agricultural economist at the University of Tennessee, in his weekly market comments.
Likewise, Griffith notes feeder-weight cattle prices continue to gain amid narrowing supplies.
“The CME feeder cattle index has gained about $10/cwt. since the last day of February and the futures market is predicting further gains,” Griffith says. “The futures market may be a bigger story than the strength in local cash markets. The April Feeder cattle contract has traded between $193 and $200 since the beginning of March. It appears to have a direction towards higher prices, but recent volatility in the futures market makes it tough to say prices are definitely going to increase to predicted levels. It seems certain cattle prices are destined to continue increasing given supply and demand fundamentals, but meeting the current expectations of the futures market is not as certain. This is especially true looking into the summer and fall months that are trading between $222 and $228/cwt.”
On the other side of the demand equation, Choice boxed beef cutout value is knocking at $300/cwt.
“There remain questions as to the consumer’s willingness to continue paying high prices for beef, and if those consumers are willing to pay more than they are currently paying,” Griffith says. “As has been mentioned before, there is no reason to doubt the consumer’s willingness to continue purchasing beef until the consumer demonstrates some sort of pushback on the market.”