Negotiated cash fed cattle trade was slow on light to moderate demand in the Southern Plains through Wednesday afternoon, according to the Agricultural Marketing Service. A few early live sales traded steady with last week at $121.
In Nebraska and the Western Corn Belt, trading was limited with light demand
Last week in Kansas, live sales traded at $121. In Nebraska live sales traded at $125 and dressed at $198. In the Western Corn Belt, live sales were at $125-$126 and dressed at $198.
Stronger Corn futures and sluggish cash prices helped pressure Cattle futures Wednesday. There might have also been some defensiveness ahead of Thursday’s monthly World Agricultural Supply and Demand Estimates.
Live Cattle futures closed mixed from an average of 34¢ lower to an average of 15¢ higher
Feeder Cattle futures closed an average of 64¢ lower (22¢ lower toward the front of the board to $1.12 lower in the back contract).
Choice boxed beef cutout value was $5.48 higher Wednesday afternoon at $310.80/cwt. Select was $3.38 higher at $287.99/cwt.
Corn futures closed 2¢ to 7¢ higher through the front six contracts, then fractionally higher to 1¢ higher.
Soybean futures closed mostly fractionally higher to 2¢ higher, except for 42¢ lower in waning Spot Aug.
Major U.S. financial indices closed mixed on Wednesday with both the S&P 500 and the Dow Jones hitting record highs. Support included the moderating Consumer Price Index in July.
The Dow Jones Industrial Average closed 220 points higher. The S&P 500 closed 11 points higher. TheNASDAQ closed 23 points lower.
Declining cattle numbers, finally working through backlogged cattle supplies, as well as strong beef demand are setting the stage for significantly higher cattle prices next year and beyond, according to the 2021-22 CattleFax Industry Outlook yesterday at the 2021 Cattle Industry Convention and NCBA Trade Show in Nashville.
CattleFax projects the average fed steer price next year to be $135/cwt., up $14 from this year. That’s with the forecast average carcass composite price at $265/cwt., up $5 from this year.
In turn, projected feeder steer prices (850 lbs.) are forecast $20 higher next year at an average of $165/cwt. Steer calf (550 lbs.) prices are projected to average $200/cwt., which would be $30 more than this year.
Bred cows are projected to average $1,750/head, which would be $125 more than this year.
Rounding out prices, CattleFax sees Utility cows averaging $70/cwt., up $6.
Declining Cow Numbers
CattleFax expects the beef cowherd to decline 400,000 head by Jan. 1 of next year, reaching 30.7 million head. Part of that has to do with lingering drought.
Art Douglas, professor emeritus at Creighton University expects La Niña conditions to return this fall, intensifying drought in the West and Plains into early 2022.
According to Kevin Good, CattleFax vice president of industry relations and analysis, total cattle inventory peaked at 94.8 million head. He explains those numbers remain in the system due to the COVID-19 induced slowdown in harvest over the past year. So, fed cattle slaughter will remain elevated through 2021 as carryover from pandemic disruptions works through the processing sector, which remains hindered by labor issues.
Ultimately, during the current contraction phase, CattleFax expects feeder cattle and calf supplies to decline roughly 1 million head from the cyclical peak.
“While fed cattle slaughter nearly equals 2019 highs at 26.5 million head this year, we expect a 500,000-head decline in 2022,” Good says. “This, combined with plans for new packing plants and expansions, possibly adding near 25,000 head per week of slaughter capacity over the next few years, should restore leverage back to the producer.”
Beef Demand Remains Strong
Aftershocks from the pandemic continue to keep domestic demand at elevated levels not seen since 1988, say CattleFax analysts.
“Customer traffic remained strong at restaurants and retail – even as those segments pushed on the higher costs, proving consumers are willing to pay more for beef,” Good explains. He notes the boxed beef cutout price peaked at $336/cwt. in June, while retail beef prices pushed to an annual high at $7.11/lb. Retail beef prices are expected to average $6.80/lb. in 2021 and increase to $6.85/lb. in 2022, he says.
At the same time, global U.S. beef export demand is on a record pace this year.
“Tightening global protein supplies will support stronger U.S. red meat exports in 2022,” according to Good. “U.S. beef exports are expected to grow 15% in 2021 and another 5% in 2022.”