Cattle future closed lower Monday, especially Feeder Cattle, as traders retrenched following the previous session’s new contract highs.
Feeder Cattle futures closed an average of 91¢ lower (5¢ lower at the back to $2.10 lower toward the front).
Live Cattle futures closed an average of 35¢ lower, except for an average of 10¢ higher in two contracts.
Negotiated cash fed cattle trade ranged from mostly inactive on very 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 $2-$4 higher in the Texas Panhandle at $165-$167/cwt., $4 higher in Kansas at $167, $4-$7 higher in Nebraska at $168-$172 and $4-$6 higher in the western Corn Belt at $170. Dressed prices were $5-$7 higher at $270-$272.
The weekly weighted average five-area direct fed steer price was $4.33 higher on a live basis last week at $168.74/cwt. The weekly average steer price in the beef was $5.30 higher at $270.36.
Wholesale beef prices continued to gain Monday. Choice boxed beef cutout value was 3.02 higher in the afternoon at 285.09/cwt. Select was $3.46 higher at $274.18/cwt.
As for grains and soybeans, Corn futures closed narrowly mixed, mostly 1¢ lower to 1¢ higher.
KC HRW Wheat closed mostly 1¢ to 2¢ lower through Mar ‘24, and then 1¢ higher.
Soybean futures closed 13¢ to 19¢ higher through Aug ‘24, and then mostly 8¢ to 9¢ higher.
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Major U.S. financial indices closed mostly higher Monday with carryover support from the previous session and despite the prospect of higher inflation, associated with higher crude oil prices spurred by the announced production cuts by OPEC+ nations.
The Dow Jones Industrial Average closed 327 points higher. The S&P 500 closed 15 points higher. The NASDAQ was down 32 points.
West Texas Intermediate Crude Oil futures (CME) closed $3.76 to $4.75 higher through the front six contracts.
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Assuming drought conditions improve significantly, bred cow and heifer prices will likely increase dramatically, says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly market comments. He adds the price jump could come as early as this fall and into 2024.
As it stands currently, though, Peel notes lingering drought conditions appear to be keeping bred cow prices relatively lower than would be expected heading into April’s typical seasonal increase.
Currently (last week), Peel says 1,100-1,200-pound, second-trimester, 5-8-year-old Medium/Large No. 1 cows, sold for $1,332 per head in Oklahoma. Younger cows — 2-4 years old — in second to third trimester averaged $1,300-$1,500. Based on prior research and current broader market conditions, he explains bred cow values would likely be $100-$300/head higher without drought impacts.
“The prior research also provides insights into the range of values for bred cows. The base cow described above assumes average quality. Variations from low to high quality decrease or increase value of the cow by roughly 15%, about $200 per head less for low quality, to $200/head more for high quality cows compared to average quality,” Peel says. “On average, the value of bred cows is highest at ages 3-5 and begins to drop sharply after age 7. Bred cow value is higher for later stages of gestation, with bred cows valued roughly $150/head more in the third trimester compared to the first trimester.”
All told, Peel says current bred cow values could range from less than $1,000 per head to nearly $2,000 across a wide range of quality, age, stage of gestation, and hide-color factors.