Negotiated cash fed cattle trade ranged from mostly inactive to limited on light demand through Friday afternoon, according to the Agricultural Marketing Service. Prices for the week were generally steady. Live sales were at $121/cwt. in the Southern Plains, $123-$126 in Nebraska and $125-$126 in the western Corn Belt. Dressed sales were at $198 in Nebraska and at $198-$203 in the western Corn Belt.
Cattle futures softened in front-month contracts Friday, but strengthened in away months, supported by improving supply fundamentals.
Live Cattle futures closed an average of 28¢ higher, except for an average of 30¢ lower in the front three contracts.
Feeder Cattle futures closed an average of 67¢ higher (15¢ to $1.40 higher), except for an average of 56¢ lower in the front two contracts.Choice boxed beef cutout value was $6.90 higher Friday afternoon at $324.83/cwt. Select was $7.71 higher at $298.02/cwt.
Corn futures wavered on the positive weather outlook.
Corn futures closed mixed, fractionally lower to 1¢ higher through new-crop contracts and then mostly 3¢ lower to 2¢ higher.
Soybean futures gained on confirmed strong weekly exports.
Soybean futures closed 11¢ to 26¢ higher through Aug ’22 and then 5¢ to 9¢ higher
Major U.S. financial indices closed slightly higher on Friday. Consumer sentiment, as measured by the University of Michigan index, fell 11 points to the lowest level since 2011. Analysts believe consumers are growing more concerned about the ongoing surge in the Covid virus and its effects on slowing the economy, as well as inflation.
The Dow Jones Industrial Average closed 15 points higher. The S&P 500 closed 7 points higher. The NASDAQ was up 7 points.
Weather the remainder of this year and Chinese demand will continue to bolster domestic feed grain prices, says Mike Murphy, CattleFax vice president of research and risk management services.
“As China rebuilds its pork industry following their battle with African Swine Fever, they are looking for higher quality feed ingredients, such as corn and soybeans” Murphy explained, during last week’s CattleFax Outlook Seminar in Nashville, Tennessee. “Exceptional demand from China is leading U.S. corn exports to a new record in the current market year, and strong demand for U.S. soybeans has elevated prices in the last 12 months.”
CattleFax expects spot soybeans prices to be $13 to $16/bu. for the next 18 months. They forecast Corn futures at $4.75 to $6.25 during the same period.
As for weather, long-time CattleFax meteorologist, Art Douglas, professor emeritus at Creighton University, forecasts La Niña conditions to return this fall, which would intensify drought in the West and Plains into early 2022. He adds that the precipitation outlook for fall through early next year suggests drought increasing in the Pacific Northwest with above-normal precipitation across the inter-mountain West – leaving the Midwest drier. He expects less tropical storm activity to reduce Southeast rainfall into late fall.
Drier weather in the Northern Plains and West will pressure hay production and quality in the 2021 season – supporting prices into the next year, according to Murphy.
“May 1 on-farm hay stocks were down 12% from the previous year, at 18 million tons,” Murphy explains. “The USDA estimates hay acres are down 700,000 from last year at 51.5 million acres. So, expect current-year hay prices to average near $170/ton; 2022 average prices should be steady to $10 higher due to tighter supplies and stronger demand.”