Cattle futures surged higher Wednesday, led by Live Cattle, supported by recent wholesale boxed beef strength, performance-depressing winter weather forecast across the Northern Plains, as well as bullish expectations for Friday’s Cattle on Feed report. Evidence of tightening cattle numbers also continues to grow (see below).
Live Cattle futures closed an average of 98¢ higher (25¢ higher at the back to $2.12 higher toward the front).
Feeder Cattle futures closed an average of 56¢ higher.
That was with Corn futures closing mostly 6¢ to 10¢ higher through Jly ‘24, supported by the drier outlook in South America. Soybean futures closed 1¢ to 4¢ higher through Nov ‘23 and then mostly 2¢ to 5¢ lower.
Negotiated cash fed cattle trade ranged from mostly inactive on light demand to a standstill through Wednesday afternoon, according to the Agricultural Marketing Service.
Last week, live prices were $155/cwt. in the Southern Plains and $155-$157 in Nebraska and the western Corn Belt. Dressed prices were $248.
Choice Boxed beef cutout value was 19¢ lower Wednesday afternoon at $264.86/cwt. Select was $2.39 higher at $236.29/cwt.
Major U.S. financial indices climbed Wednesday amid positive economic news that included strong earnings reports from bellwethers Nike and FedEx, as well as stronger consumer confidence.
The Conference Board Consumer Confidence Index® increased 6.9 points in December to 108.3, following back-to-back monthly declines.
“Consumer confidence bounced back in December, reversing consecutive declines in October and November to reach its highest level since April 2022,” says Lynn Franco, Senior Director of Economic Indicators at The Conference Board. “The Present Situation and Expectations Indexes improved due to consumers’ more favorable view regarding the economy and jobs. Inflation expectations retreated in December to their lowest level since September 2021, with recent declines in gas prices a major impetus. Vacation intentions improved but plans to purchase homes and big-ticket appliances cooled further. This shift in consumers’ preference from big-ticket items to services will continue in 2023, as will headwinds from inflation and interest rate hikes.”
The Dow Jones Industrial Average closed 526 points higher. The S&P 500 closed 56 points higher. The NASDAQ was up 162 points.
West Texas Intermediate Crude Oil futures (CME) closed $1.63 to $2.06 higher through the front six contracts.
Auction market volume in Oklahoma during the past few months suggest declining cattle numbers are adding lift to feeder cattle prices.
“Weekly volumes were larger year over year from July through mid-October and have been mostly smaller since,” says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in is weekly market comments. “From July to mid-October, the cumulative additional weekly feeder volume was up an average of 18%, totaling over 71,000 additional head of feeder cattle marketed in auctions during this period. The year-over-year decreases since mid-October have reduced the cumulative total by about half, meaning that the total feeder cattle auction volume in the second half of 2022 is up over 35,000 head at the end of the year, with all of that increase occurring prior to mid-October. Smaller auction volumes since mid-October are no doubt contributing to the strong feeder prices at the end of the year.”
Peel also points to the fact that average prices for Medium and Large #1 steers reached their annual high in mid-December at weights less than 550 lbs. and weights heavier than 850 lbs.
“Prices for steers from 550-850 lbs. were at the maximum in August/September but are above the annual average at the end of the year,” Peel says. “In general, feeder cattle markets are finishing 2022 strong with momentum going into the new year.”
Looking ahead, Peel notes the number of stocker cattle on wheat pasture are significantly fewer than typical, well below normal suggesting a muted run of wheat-pasture feeder cattle into March and for graze-out into May.
You can watch Peel sharing some of his market outlook here.