Negotiated cash fed cattle trade ranged from a standstill to mostly inactive on very light demand through Monday afternoon, according to the Agricultural Marketing Service.
Cash fed cattle prices last week were $1 higher in the Southern Plains at $122/cwt., $1-$2 higher in Nebraska at $125-$127 and $1-$2 higher in the western Corn Belt at $127. Dressed trade was mostly $2 higher in Nebraska at $200; from $1 to $2 higher to $4 lower in the western Corn Belt at $200.
Last week’s five-area direct average steer price was $2.19 higher on a live basis at $125.47/cwt. The average steer price in the beef was 5¢ higher at $200.68.
Lower year-over-year July feedlot placements and fewer cattle on feed year over year — based on the latest Cattle on Feed report — helped boost Cattle futures Monday, amid heavy and active trade.
Choice boxed beef cutout value was $2.97 higher Monday afternoon at $348.03/cwt. Select was 87¢ higher at $319.40.
Corn futures closed mainly narrowly mixed from 1¢ lower to 1¢ higher.
Soybean futures closed 2¢ to 9¢ higher through Sep ’22 and then mostly 11¢ to 14¢ higher.
Major U.S. financial indices climbed Monday, due in part to FDA’s full approval of the Pfizer-BioNTech COVID vaccine.
The Dow Jones Industrial Average closed 215 points higher. The S&P 500 closed 37 points higher. The NASDAQ was up 227 points.
Crude Oil futures (CME-WTI) roared back Monday, up an average of $3.42 through the front six contracts.
“August is a tough time for fed cattle markets to move higher, but the market seems poised to break out from the constraints of the first half of the year as we move into the last part of the third quarter,” says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly market comments. “Meanwhile, auction calf and stocker prices have moved counter-seasonally higher in July-August, while feeder cattle markets, which typically increase through the summer, have shown a strong seasonal price increase.” He adds cull cow prices remain above year-ago levels, although they’re less than summer peak prices.
Reflecting on the monthly Cattle on Feed report that came out Friday, Peel notes feedlot inventories continue to fall, partly seasonally, but also reflecting the cleanup of the backlog of feedlot cattle from earlier in the year.
“August represents the sixth consecutive monthly decline in feedlot inventories from the February peak, a decrease of 1.032 million head or 8.5% over the six months. In the previous five years, the average feedlot inventory decline from the spring high to summer low has been 6.2%.”
Moreover, lighter year-over-year carcass weights also provide more indication that feedlots are getting more current.
“Steer and heifer carcass weights dropped below year-ago levels in May and continue below year-earlier levels,” Peel says. “Carcass weights reached a seasonal low in June, a tad later than the normal May low and are rising seasonally into the last part of the year. Most recently, weekly steer carcass weights were 896 lbs., down 10 lbs. year over year but still 18 lbs. heavier than 2019 levels. Heifer carcass weights are currently 817 lbs., down 15 lbs. from last year but 11 lbs. above 2019.”
Peel adds that lower carcass weights also reflect the impact and incentives stemming from sharply higher feedlot cost of gain, which should help hold carcass weights in check.
“Cash feeder cattle markets continue to adjust to higher feed costs, partly in terms of general price levels but particularly in the relative prices of lightweight and heavy feeder cattle,” Peel says. “The flattening of the price line across weights translates into higher value of gain potential for added feeder cattle weight gain.”