Heading into the new week, the primary focus is likely reaction to Friday’s monthly Cattle on Feed report for feedlots with 1,000 head or more capacity.
On the surface, it confirms the severity and duration of the current drought, with March placements about 8% more than expected, following surging placements the previous month. Beneath the surface, though, there likely will be some head scratching about how they square with USDA numbers at the beginning of the year suggesting the feeder supply outside of feedlots was 676,000 head fewer (-2.6%) than last year.
March placements of 1.99 million head were 8,000 less year over year — fractionally less — which was about 8% more than expectations ahead of the report.
In terms of placement weights, 35% went on feed weighing 699 lbs. or less, 53% weighing 700-899 lbs. and 12% weighing 900 lbs. or more.
Marketings in March of 2.0 million head were 41,000 head fewer (-2.0%) than the previous year, about even with pre-report expectations.
Cattle on feed April 1 of 12.11 million head were 208,000 head more (+1.7%) than the previous year. That’s the most for the date since the data series began in 1996 and slightly more than expectations ahead of the report.
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Cattle futures softened to end an otherwise positive week.
Perhaps there was some profit taking, but pressure in Live Cattle mirrored the logical response to numbers revealed in the monthly Cattle on Feed report. Presumably, however, the report was not released until after trading hours.
Feeder Cattle futures closed mixed, from an average of 53¢ lower to an average of 36¢ higher, while Live Cattle futures closed an average of 97¢ lower (20¢ lower at the back to $1.65 lower in spot Apr).
Week to week, though — from the previous Thursday through Friday — Feeder Cattle futures an average of $2.15 higher, except for 25¢ lower in waning spot Apr, and Live Cattle futures closed an average of $1.41 higher.
For much of the week, Cattle futures received support from a reprieve in the relentless surge of Corn futures prices and mostly from stronger cash fed cattle prices.
Negotiated cash fed cattle prices last week were $1 higher on a live basis in the Southern Plains at $140/cwt., $4 higher in Nebraska at $144-$146 and $3 higher in the western Corn Belt at $145-$146. Dressed prices were $4 higher at $230.
Through Thursday, the weighted average five-area direct steer price was $1.98 higher on a live basis at $143.00/cwt. The average dressed steer price was $6.03 higher at $231.90.
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Major U.S. financial indices plunged Friday on disappointing quarterly corporate earnings reports and follow-through pressure from the previous day tied to inflation and hawkish comments from the Fed suggesting a stronger response via interest rate hikes.
The Dow Jones Industrial Average closed 981 points lower. The S&P 500 closed 121 points lower. The NASDAQ was down 335 points.