Feeder Cattle futures faltered Tuesday, pressured by more feedlot placements than expected in the latest Cattle on Feed report and pricier Corn futures. Feeder Cattle closed an average of 72¢ lower (30¢ to $1.35 lower).
Live Cattle futures paddled on either side of steady, helped along by surging wholesale beef prices and notions that cash trade could be higher this week. They closed from unchanged to an average of 12¢ lower to an average of 11¢ higher.
Choice wholesale beef prices continue to churn higher as buyers scramble to fill orders amid decreased packer production. Choice boxed beef cutout value was $8.09 higher Tuesday afternoon at $280.04/cwt. Select was 17¢ higher at $245.64/cwt. The Choice-Select spread was a whopping $34.40.
Negotiated cash fed cattle trade was at a standstill in all major cattle feeding regions through Tuesday afternoon, according to the Agricultural Marketing Service.
Last week, live prices were $156/cwt. in the Southern Plains, $156-$157 in Nebraska and $157 in the western Corn Belt. Dressed prices were $248-$249.
The five-area direct weighted average fed steer price last week was 57¢ higher on a live basis at $156.25/cwt. The weighted average steer price in the beef was 90¢ higher at $248.70.
Corn futures surged higher Tuesday, buoyed by the weaker U.S. dollar, weather concerns in South America and perhaps some year-end positioning. They closed 5¢ to 8¢ higher through Dec ‘23 and then mostly 3¢ to 4¢ higher.
Soybean futures closed 3¢ to of 6¢ higher through Aug ‘23 and then mostly fractionally lower to 2¢ lower.
Major U.S. financial indices closed mixed Tuesday with the most pressure in tech stocks.
The Dow Jones Industrial Average closed 37 points higher. The S&P 500 closed 15 points lower. The NASDAQ was down 144 points.
West Texas Intermediate Crude Oil futures (CME) closed narrowly mixed, from 3¢ lower to 25¢ higher through the front six contracts.
Reflecting on the recent Cattle on Feed report, Derrell Peel, Extension livestock marketing specialist at Oklahoma State University points out in his weekly market comments that both feedlot placements and the number of cattle on feed were lower year over year for the third consecutive month.
“Drought pushed more cattle into feedlots earlier this year and kept feedlot totals higher for longer,” Peel says. “Monthly inventories from February through June of 2022 were not only higher year over year but were at record monthly levels in the cattle on feed data series that began in 1996.”
On average, Peel explains feedlot inventories peaked in December and hit their low in September (2016-20). However, in 2021, the peak came in February and the ebb in September. This year, the ebb came in September and peak numbers may already have been established for a long while.
“Feedlot inventories decreased from November to December. This may signal that the seasonal peak is already in place, although it is too early to be sure,” Peel says. “The last time that December feedlot inventories were lower than November occurred in 2016. In that instance, feedlot inventories decreased in December and January before jumping higher to a belated peak in June 2017. I believe it is unlikely that feedlot inventories will move higher anytime in 2023 and the November 2022 total may be the peak for many months. Time will tell.”