Cattle futures lost ground Wednesday with pressure including lower early negotiated cash fed cattle prices and surging corn prices.
Toward the close, Live Cattle futures were an average of $2.13 lower, except for 5¢ higher and unchanged at the back.
Feeder Cattle futures were an average of $4.64 lower.
Negotiated cash fed cattle trade was limited on moderate demand in the North through Wednesday afternoon, according to the Agricultural Marketing Service.
Although too few transactions to trend, there were some early dressed trades in Nebraska at $355-$360/cwt. Also, too few to trend, there were some early dressed trades in the western Corn Belt at $355-$356 and some FOB live trades at $225.
Last week, FOB live prices were $228 in Kansas, $225-$230 in Nebraska and $228-$230 in the western Corn Belt. Dressed delivered prices were $362-$368.
Choice boxed beef cutout value was $3.84 higher Wednesday afternoon at $394.99/cwt. Select was $2.12 lower at $364.17. This Choice-Select spread was the widest since December 2024.
Grain and Soybean futures were higher Wednesday, supported by lower corn and yield estimated by private-firm crop tours.
Toward the close and through the front four contracts, Corn futures were 9¢ to 10¢ higher. Soybean futures were 16¢ to 20¢ higher. Kansas City HRW Wheat were 15¢ to 16¢ higher.
******************************
Major U.S. financial indices closed higher Wednesday, supported by lower treasury bond yields, thanks to the Treasury Department announcing it will at least double the size of its government debt purchases, beginning Sept. 9.
The Dow Jones Industrial Average closed 119 points higher. The S&P 500 closed 16 points higher. The NASDAQ was up 41 points.
Through mid-afternoon, West Texas Intermediate Crude Oil futures (CME) were 63¢ lower to 48¢ higher.
******************************
Tyson Food’s recent closure of beef packing and fabrication facilities underscores the sector’s ongoing challenges amid historically low cattle numbers.
“There is too much packing capacity in the cattle and beef sector for the number of animals that have been available in the past few years and will likely be available in the next few years. Beef packers have been routinely losing $200-$400 per head on every head slaughtered and fabricated since 2023 and likely earlier,” says Stephn Koontz, agricultural economist at Colorado State University.
In the Aug. 17 issue of In the Cattle Markets, Koontz explains labor, supplies and energy for operations are a minor portion of a plant’s weekly total cost.
“Most of the cost is for the facility and inputs that cannot be much changed. Even labor is relatively inflexible. Contracts usually guarantee 36 hours per shift per week. If a shift operates, then it does so – and generates costs – through Thursday,” Koontz says. “Low-cost slaughter and fabrication plants have costs of about $300 per head when operating at five days per week capacity. High-cost plants are short of the $500 per head neighborhood. Running the plant at a reduced number of days per week – less than four – does not reduce the total costs. These costs are spread over fewer animals.”
Moreover, plants modestly smaller than the typical large commercial plant have total costs in the $600-$800 per head range, according to Koontz.
“These economies of size efficiencies are why we have the industry we have – the few very large plants – that is currently in overcapacity with respect to the number of animals,” Koontz says.