Stronger cash fed cattle prices and the recent surge in wholesale beef value helped drive Cattle futures higher on Wednesday.
Toward the close, Live cattle futures were an average of $2.92 higher. Feeder Cattle futures were an average of $5.97 higher.
Negotiated cash fed cattle trade was moderate on moderate demand in Nebraska through Wednesday afternoon, according to the Agricultural Marketing Service. FOB live prices were steady to $2 higher at $245/cwt. Dressed delivered prices were $5-$7 higher at $385-$392.
Trade in the western Corn Belt was light on moderate to good demand. FOB live prices were steady to $5 higher at $245. Dressed delivered prices there last week were $380-$385.
In the Southern Plains, trade was mostly inactive on moderate demand. FOB live prices in Kansas last week were $235, the same as in the Texas Panhandle the previous week.
Choice boxed beef cutout value was $1.35 lower Wednesday afternoon at $405.85. Select was $3.40 higher at $383.16.
Grain and Soybean futures were narrowly mixed Wednesday.
Toward the close and through Jly contracts, Corn futures were fractionally higher to 1¢ higher. Kansas City Wheat futures were mostly fractionally mixed. Soybean futures were 1¢ higher.
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Major U.S. financial indices closed mostly lower again Wednesday, once again led by tech stocks.
The Dow Jones Industrial Average closed 16 points higher. The S&P 500 closed 15 points lower. The NASDAQ was down 142 points.
Through mid-afternoon, West Texas Intermediate Crude Oil futures (CME) were 79¢ to $1.09 higher through the front six contracts.
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Fewer slaughter cows and longer-fed heavier, fatter fed cattle are reducing domestic lean trimming supplies, according to James Mitchell, Extension livestock economist with the University of Arkansas.
“Through June, combined beef and dairy cow slaughter is down 13%, translating to an estimated 10% decline in domestic lean trimmings production. Lean trimmings from cull cows and bulls are the primary source of 85s and 90s used in ground beef,” Mitchell explains, in the latest issue of In the Cattle Markets. “At the same time, fed steer and heifer dressed weights remain historically high. Through June, fed cattle slaughter is down 4%, but dressed steer weights are up 3%, adding more pounds of fat trim. The net result is a trim market with proportionally less lean and more fat.”
That helps explain the significant increase in U.S. beef imports this year, which are primarily lean trimmings.
For perspective, U.S. beef imports were nearly 737 million pounds more (33%) in the first half of the year, according to USDA’s Economic Research Service, in the August Livestock, Dairy and Poultry Outlook.
“Imports of lean trim help balance the U.S. beef trimmings market,” Mitchell says. “Otherwise, an adjustment occurs through higher prices that ration limited lean trim across end users. This means higher ground beef prices for consumers.”