Cattle futures rallied Tuesday, helped along by another day of lower Corn futures, recently stronger wholesale beef prices and improving supply fundamentals.
Live Cattle futures closed an average of $1.13 higher (60¢ higher at the back to $1.87 higher toward the front).
Feeder Cattle futures closed an average of $2.03 higher ($1.60 to $2.47 higher).
Negotiated cash fed cattle trade ranged from limited on light demand to mostly inactive on light demand with too few transactions to trend, 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 98¢ higher Tuesday afternoon at $265.44/cwt. Select was 60¢ lower at $239.12/cwt.
Grain and Soybean futures continued lower Tuesday with continued pressure from uncertain Chinese demand, given slower economic growth in that nation and heightened tension with the U.S.
Corn futures closed 14¢ to 18¢ lower through Sep ‘23 and then 6¢ to 12¢ lower.
Soybean futures closed 22¢ to 39¢ lower through Aug ‘23 and then 10¢ to 17¢ lower.
******************************
Major U.S. financial indices closed mainly higher Tuesday, led by retail stocks and positive quarterly results from the likes of Walmart and Home Depot.
The Dow Jones Industrial Average closed 239 points higher. The S&P 500 closed 8 points higher. The NASDAQ was down 25 points.
West Texas Intermediate Crude Oil futures on the CME closed $2.17 to $2.88 lower through the through the front six contracts.
******************************
If beef prices are strong and beef supplies are reasonably abundant, as they are currently, then the reason is demand, says Stephen Koontz, agricultural economist at Colorado State University. That’s how he responds to the number of inquiries he receives about why wholesale beef prices remain elevated.
“From a market fundamentals perspective, monthly beef production is strong, running better than 1% above the year prior. The total volume for 2022 will be slightly smaller than 2021 and comparable to 2019. These are large volumes of beef,” Koontz explains, in the latest issue of In the Cattle Markets from the Livestock Marketing Information Center. “Forecasts for the third and fourth quarters reveal drops in production but current weekly slaughter remains strong. Those declines have not yet materialized. Domestic consumption was likely flat in the second quarter but was large in the first. Again, the third and fourth quarters are forecast to be lower especially if strong beef exports persist. Current monthly beef net exports for 2022 are on path to be record large.”
Koontz points out retail beef prices remain higher than many expected following the COVID price spike, and retail margins remain strong.
“Fed cattle are trading in the high $144-$148/cwt. with some trades reported at $150. These are levels not seen since 2015,” Koontz says. “And cash prices for feeder animals across a number of regional markets – Oklahoma City, Montana, and Colorado – in the week of August 12 were also at levels not seen since 2015.” As an example, he mentions the $180.60/cwt. price for 700-750 lb. Medium and Large Number 1 feeder steers at Oklahoma City.