As expected, markets viewed Friday’s Cattle on Feed report as bearish, despite the fact that cattle numbers continue to decline overall and will continue to decline.
Feeder Cattle futures closed an average of 69¢ lower (17¢ lower at the back to $1.65 lower toward the front).
Live Cattle futures closed an average of 31¢ lower, except for 32¢ and 2¢ higher in the front two contracts.
Negotiated cash fed cattle trade ranged from mostly inactive on light demand to a standstill through Monday afternoon, with too few transactions to trend, according to the Agricultural Marketing Service.
Last week, live prices were steady in the Texas Panhandle at $175/cwt., steady to $2 lower in Kansas at $173-$175, $1-$2 lower in Nebraska at $180-$185 and steady to $1 lower in the western Corn Belt at $180-$183.
Dressed prices were steady to $6 lower in Nebraska at $284-$290 and $2 lower in the western Corn Belt at $288.
The weighted average five-area direct fed steer price was $178.57/cwt. on a live basis last week, which was 1.87 lower. The average fed steer price in the beef was $2.35 lower at $287.42.
Choice boxed beef cutout value was 52¢ higher Monday afternoon at $307.12/cwt. Select was 90¢ higher at $288.70/cwt.
Corn futures closed mostly 2¢ to 3¢ higher on Monday, except for fractionally lower to 12¢ lower in the front four contracts.
KC HRW Wheat closed mostly 7¢ to 8¢ lower.
Soybean futures closed 8¢ to 18¢ lower through May ‘24 and then 6¢ to 8¢ lower.
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Major U.S. financial indices closed narrowly mixed Monday, ahead of quarterly corporate earnings reports from bellwether tech companies.
The Dow Jones Industrial Average closed 66 points higher. The S&P 500 closed 3 points higher. The NASDAQ was down 35 points.
West Texas Intermediate Crude Oil futures (CME) closed 89¢ to 94¢ higher through the front six contracts.
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Although futures traders appeared to use Friday’s Cattle on Feed report as a reason to sell, cattle numbers are less year over year and will continue to decline.
Analysts with the Livestock Marketing Information Center (LMIC) point out strong placements of cattle weighing 700-799 pounds and 800-899 pounds likely point to drought forcing cattle from wheat pasture earlier than usual in Kansas, Texas and Oklahoma. In theory, in the latest Livestock Monitor, they say it suggests fewer cattle available to place in April-May. They add that the ratio of heifers on feed remains historically high.
“…Heifers are a strong proportion of the FI slaughter mix and beef cow slaughter continues at a strong pace. The unsaid conclusion is that better cattle prices are yet to come — that should be a question,” says Stephen Koontz, agricultural economist at Colorado State University, in the latest issue of In the Cattle Markets. “I believe the continued rally is unlikely for the remainder or even a portion of the year. Seasonality is favorable in the spring, but the seasonal peak is likely soon.”
Koontz points out cattle markets have been ruled by a unique environment the past couple of years including supply chain shocks and federal economic stimulus. He explains such factors have diminished.
“In the long-term the cattle market is likely to have substantial strength but in the short-term – within the year – we will see the market get back to business of relative protein prices mattering, disposable income not being substantially better than the prior year, and the surprises in trade news being pessimistic,” Koontz says. “Both inflation and the economy are slowing. And that corn crop is not yet planted.”