Negotiated cash fed cattle trade was slow on light demand in the Western Corn Belt through Tuesday afternoon, according to the Agricultural Marketing Service. Live FOB prices were steady at $188/cwt. Dressed delivered prices last week were $295/cwt.
Elsewhere, trade ranged from inactive on light demand to a standstill with too few transactions to trend.
Last week live FOB prices were $180/cwt. in the Southern Plains and $188 in Nebraska, where dressed delivered prices were $295.
Choice boxed beef cutout value was $1.76 higher Wednesday afternoon at $307.26/cwt. Select was $2.58 higher at $283.03/cwt.
However, Cattle futures edged lower Tuesday, pressured by lower outside markets as much as anything.
Feeder Cattle futures closed an average of 27¢ lower, except for 5¢ higher in the back contract.
Live Cattle futures an average of 56¢ lower.
Weaker outside markets and improved crop conditions weighed on grain and Soybean futures Tuesday.
Corn futures closed 9¢ to 12¢ lower through Sep ‘24 and then mostly 5¢ to 6¢ lower.
KC HRW Wheat closed 13¢ to 16¢ lower through Mar ‘25.
Soybean futures closed 10¢ to 29¢ lower through Sep ‘24 and then 7¢ to 10¢ lower.
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Major U.S. financial indices closed lower Tuesday, pressured by anemic economic growth in China and weaker U.S. bank stocks tied to a potential downgrade in credit ratings.
The Dow Jones Industrial Average closed 361 points lower. The S&P 500 closed 51 points lower. The NASDAQ was down 157 points.
West Texas Intermediate Crude Oil futures (CME) closed $1.15 to $1.52 lower through the front six contracts.
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Feeder cattle prices are driving feedlot breakevens significantly higher, according to recent estimates from the Livestock Marketing Information Center (LMIC).
For perspective, in order to be profitable, LMIC analysts peg a closeout price exceeding $188/cwt. in January for cattle placed in July. They note it is close to the current level of the February Live Cattle contract.
“Feeder steers in Dodge City have increased since December of last year, jumping from $172 to the $180s, then the $190s, and were at $242/cwt. in July, a 40% increase in eight months. During that time, breakeven prices have increased 27%,” LMIC analysts explain, in the latest Livestock Monitor.
Projected breakevens at the beginning of next year represent a significant departure from apparent feedlot profits this year. LMIC estimated returns were as high as $400 per head earlier this summer. Analysts there estimated July feedlot returns at $300 per head, followed. By positive returns for the remainder of the year.
Keep in mind, estimates do not account for price risk management.
“Through the rest of 2023, breakevens are estimated to be between $150 and $176/cwt.,” LMIC analysts say. “The futures market has most contracts ahead of breakevens by $10 to more than $20/cwt., ensuring that cattle feeding returns will likely be profitable in 2023. LMIC is estimating the average per head return annually will be close to $250 per head, like the 2014 average.”