Another day of higher Corn futures weighed heavily on Feeder Cattle futures, Wednesday, which closed an average of $3.35 lower ($2.57 to $4.20 lower), except for unchanged in expiring Apr
After 12¢ and 10¢ higher in the front two contracts, Corn futures closed mostly fractionally higher to 6¢ higher, pushed along by Soybean futures, which closed 20¢ to 22¢ higher through Jan ‘23.
Technical pressure and looming large supplies pressured Live Cattle futures an average of $1.03 lower, replacing early-week bullishness tied to stronger weekly cash prices.
Negotiated cash fed cattle trade on Wednesday ranged from a standstill to light on slow to moderate demand, with too few transactions too trend, according to the Agricultural Marketing Service.
So far this week, live prices are steady in the Southern Plains at $140/cwt.; steady to $1 higher in the Northern Plains at $144-$146 and in the Western Corn Belt at $145-$147. Dressed prices are $2 higher at $232.
Choice Boxed beef cutout value was $2.26 lower Wednesday afternoon at $261.91/cwt. Select was $3.91 lower at $252.32.
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Major U.S. financial indices closed little changed Wednesday, as investors appeared to take a breath and wait for further direction from corporate earnings reports.
The Dow Jones Industrial Average closed 61 points higher. The S&P 500 closed 8 points higher. The NASDAQ was up 1 point.
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Both the U.S. Senate and House of Representatives held hearings this week regarding the Cattle Price Discovery and Transparency Act of 2022, which would mandate regional minimum levels of negotiated cash fed cattle trade. A team of America’s foremost livestock economists assessed the proposed bill ahead of the hearings. Here are some of the highlights from their report:
- “There is no research evidence of any significant or persistent fed cattle price discovery problem at this time. This legislation is attempting to solve a problem that does not exist. As such, this legislation offers zero benefits for fed cattle markets and imposes many millions of dollars of additional cost, added risk, and lost value. The exact cost will depend on details of implementation, but the cost is minimally hundreds of millions of dollars resulting in lower feeder cattle prices and higher consumer beef prices.”
- “The incentives to reduce risks and transactions costs for producers and packers associated with quality and timing of sales and deliveries to plants will still exist with implementation of this bill. As such, forcing “minimum thresholds” will increase these risks and transactions costs for both producers and packing plants utilizing AMAs at a level beyond whatever the prescribed minimums, that cannot be objectively justified, turn out to be if this bill is implemented.”
- “There is no academic literature that indicates any analysis pointing toward benefits that can be quantified with these minimum thresholds. Benefits of reduced AMA use (alternatively, higher negotiated cash trade) are generally speculative. As noted, evidence that higher negotiated trade will positively impact prices, reduce marketing margins, or improve price discovery is lacking. However, many market participants clearly see negotiated cash trade as a good in and of itself. To the extent the industry desires greater cash market engagement, lower cost means of achieving this outcome are available.”