Cattle futures rebounded and gained on bullish fundamentals Tuesday, following the previous session’s volatility tied to news of New World screwworm confirmed in a U.S. resident, who was infected while traveling in South America.
Toward the close, Live cattle futures were an average of $1.57 higher. Feeder Cattle futures were an average of $2.81 higher.
Negotiated cash fed cattle trade was mostly inactive on light to moderate demand in in all major cattle feeding regions through Tuesday afternoon, according to the Agricultural Marketing Service.
Last week, FOB live prices were $240/cwt. in the Southern Plains and $245 in the North. Dressed delivered prices were $385-$392 in Nebraska and $385-$390 in the western Corn Belt on a light test.
Choice boxed beef cutout value was $4.68 higher Tuesday afternoon at $413.17. Select was $5.38 higher at $390.76.
Turning to the grain complex, Grain and Soybean futures were mixed again Tuesday.
Toward the close and through Jly contracts,
Corn futures were 2¢ to 3¢ lower, pressured by chart resistance.
Kansas City Wheat futures were 2¢ to 4¢ lower with weight including harvest pressure and global supplies.
Soybean futures were fractionally higher to 3¢ higher.
******************************
Major U.S. financial indices edged higher Tuesday.
The Dow Jones Industrial Average closed 135 points higher. The S&P 500 closed 26 points higher. The NASDAQ was up 94 points.
Through mid-afternoon, West Texas Intermediate Crude Oil futures (CME) were $1.36 to $1.43 lower through the front six contracts.
******************************
Domestic consumer beef demand continues to defy dogeared economic rules of thumb. As beef supplies decrease and retail beef prices increase, demand continues to strengthen. Based on USDA data, the second-quarter all-fresh retail beef demand index reached its highest level in at least 25 years, according to a recent research brief, U.S. Beef Attracts More Customers than it Can Handle from CoBank’s Knowledge Exchange.
“Twelve months ago, the question was whether beef demand would hold up at higher prices, but today most analysts are fairly certain that beef value risk is to the upside,” says Brian Earnest, CoBank lead animal protein economist. “Retail per capita beef consumption is headed for 60 pounds this year. U.S. consumers can’t seem to get enough protein these days, and among animal proteins beef remains king.”
According to the most recent inflation data released by the U.S. Bureau of Labor Statistics, core inflation was up 2.9% year-over-year. Beef price increases towered in comparison. The all-fresh retail beef prices surged by 9% for the year, hitting $8.90 per pound. Yet consumer beef demand remains unabated.
Several factors currently shape consumer food buying behaviors and their preference for beef, according to the CoBank research brief: heightened interest in dietary protein, changing health perceptions surrounding beef and the availability of restaurant-quality beef at retail grocery stores.
U.S. cattle producers improved beef carcass quality significantly in recent decades with 95% of U.S. carcasses now grading Choice or higher.
“The COVID-19 pandemic led us to a place where ‘leveling up’ through access to luxury goods is prioritized over luxury services,” Earnest says. “And beef, specifically high-quality beef, is a luxury good that can be accessed for at-home consumption at a fraction of the cost at fine dining establishments.”
Consumer perceptions surrounding the health aspects of eating beef have also improved in recent years. Fitness-conscious consumers who laud protein content for muscle production often favor beef. The advent of GLP-1 medications for weight loss have also sparked more widespread consumer interest in increasing the amount of protein in their diets.