Cattle futures weakened Monday, apparently under technical pressure.
Live Cattle futures closed an average of 70¢ lower (25¢ to $1.07 lower). Feeder Cattle futures closed an average of 58¢ lower (37¢ to 87¢ lower), except for 30¢ higher in spot Aug.
That was despite a down day in the grain complex, where prices were challenged by the stronger dollar, weaker oil prices, positive weather and slowing economic growth in China.
Corn futures closed 12¢ to 14¢ lower through Jly ‘23 and then mostly unchanged to 3¢ lower.
Soybean futures closed 34¢ to 42¢ lower through Jly ‘23 and then mostly 20¢ to 23¢ lower.
Negotiated cash fed cattle trade ranged from mostly inactive on light demand to a standstill through Monday afternoon, according to the Agricultural Marketing Service.
Last week, live prices were $140/cwt. in the Southern Plains, $144-$148 in Nebraska and $146-$148 in the western Corn Belt. Dressed prices were $229-$230.
Choice Boxed beef cutout value was $1.09 higher Monday afternoon at $264.46/cwt. Select was 13¢ higher at $239.72/cwt.
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Major U.S. financial indices closed higher Monday, extending gains despite weaker oil and energy.
The Dow Jones Industrial Average closed 151 points higher. The S&P 500 closed 16 points higher. The NASDAQ was up 80 points.
West Texas Intermediate Crude Oil futures on the CME closed $1.98 to $2.68 lower through the through the front six contracts.
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Reduced hay stocks and production help illustrate the degree of herd liquidation this year, according to Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly market comments.
Based on USDA’s recent Crop Production report, Peel explains total alfalfa hay production this year was forecast at 49.1 million tons, which would be 0.3% less year over year and 13.6% less than the 10-year average for 2011-2020. All other hay production for this year was forecast at 67.7 million tons, down 4.6% year over year and down 7.4% from the 10-year average. So, Peel says, total U.S. hay production for 2022 was forecast at 116.8 million tons, down 2.9% from last year and down 10.1% from the 10-year average. He points out alfalfa and other hay prices are forecast at record levels this year.
At the same time, Peel explains last year’s drought led to reduced hay stocks this year.
“May 1 hay stocks were down 6.9% year over year but were down 16.9% from the 2011-2020 average,” according to Peel. “The total hay supply for the 2022-2023 hay crop year (May-April) is the sum of May 1 (beginning) hay stocks and 2022 hay production. The total hay supply is projected to be down 3.4% year over year and is down 11.0% from the 10-year average.”
Next consider the fact that Eight of the top-10 ten hay states are also among the top-10 states for beef cows: Texas, Oklahoma, Missouri, Nebraska, South Dakota, Kansas, Montana and Kentucky.
“These eight states had 15.7 million beef cows on Jan. 1, 2022. The other two, California and Idaho, are the number one and three dairy cow states, respectively,” Peel says. “With the growing season winding down amid continuing drought, the 2022 hay supply data illustrate why so much herd liquidation has occurred this year. It also speaks to the continuing challenges that cattle producers will face to get through the winter before the 2023 growing season could provide the next opportunity for improved forage conditions.”