Cattle Current Daily—Dec. 22, 2020

Cattle Current Daily—Dec. 22, 2020

Negotiated cash fed cattle trade was at a standstill in the five-area feeding region through Monday afternoon, according to the Agricultural Marketing Service. Live sales last week were at $108/cwt. in the Southern Plains and at mostly $105 in Nebraska and the western Corn Belt. Dressed trade was at mostly $165.

Cattle futures closed mainly higher Monday, supported by the nascent reversal in wholesale beef values and Friday’s friendly Cattle on Feed report.

Live Cattle futures closed an average of 28¢ higher except for 22¢ lower in near Feb.

Feeder Cattle futures closed an average of 73¢ higher from 17¢ higher in spot Jan to $1.02 higher at the back.

Wholesale beef prices continued to firm. Choice boxed beef cutout value was $2.29 higher at $210.92/cwt. Monday afternoon. Select was $2.99 higher at $197.26.

Corn futures closed 1¢ to 2¢ higher through Jly ‘22 and then mostly unchanged to fractionally lower.

Soybean futures closed 17¢ to 23¢ higher through Aug ’21, and then mostly 7¢ to 10¢ higher.

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Major U.S. financial indices closed narrowly mixed Monday amid widely volatile trade that began with a steep selloff based on concerns about the new COVID-19 strain discovered in the United Kingdom. By session’s end, though, cooler heads prevailed with optimism Congress would pass the new federal spending bill—including another round of pandemic stimulus.

The Dow Jones Industrial Average closed 37 points higher. The S&P 500 closed 14 points lower. The NASDAQ was down 13 points.

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Volatile feedlot flows stemming from pandemic disruptions made it more difficult than usual to assess the fed cattle market, but that should change going forward, says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University.

In his weekly market comments, Peel explains the extent of the volatility.

Monthly feedlot placements varied from 23% lower year over year in March to 11% higher in July, to 11% lower in October. “For the January to November period, total placements are down 4.4% year over year. In the last six months, which would include the majority of current feedlot inventories, placements are 0.5% above the same period last year,” Peel says.

Monthly feedlot marketings varied from 13% higher year over year in March to 27% lower in May to 6% higher in September. “For the year to date through November, total marketings are down 3.1% year over year. In the last six months, feedlot marketings are just fractionally higher than the same period last year,” according to Peel.

As of Dec. 1, there were 12.04 million head of cattle on feed (yards with 1,000 head or more capacity), according to the monthly Cattle on Feed report. That  was about even with the same time last year. Those numbers should continue a cyclical decline.

“Flows of cattle through feedlots should begin to show more consistent tightening in 2021,” Peel says. “The beef cowherd was at a peak in January 2019 and led to a 2019 calf crop that was down 0.7% from the 2018 peak calf crop. The estimated feeder cattle supply on Jan. 1, 2020 was down 0.4% from 2019 levels. The estimated 2020 calf crop in the July Cattle report is down another 0.7% from 2019. The July estimate of feeder cattle supplies was up slightly but was likely pushed higher due to the intra-year dynamics of feedlot placements. Current estimates suggest that the total calf crop in 2020 is 513,000 head less than the peak in 2018.”

So far this year, Peel explains total cattle slaughter is 2.8% less year over year. It should decline again next year.

“With herd inventories continuing to drift lower, total cattle numbers should be generally supportive of cattle prices in 2021,” Peel says.

2020-12-21T19:13:59-05:00

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