Cattle futures continued lower Monday with follow-through pressure from lower cash fed cattle prices and eroding boxed beef cutout values.
Feeder Cattle futures closed an average of $3.78 lower.
Live Cattle futures closed an average of $1.65 lower ($1.27 to $2.05 lower).
Negotiated cash fed cattle trade was at a standstill in all regions through Monday afternoon, according to the Agricultural Marketing Service.
Last week, FOB live prices were $2-$3 lower in the Southern Plains at $174-$175/cwt., $1-$2 lower in Nebraska at $174-$175 and $2-$3 lower in the western Corn Belt at $173-$175.
Dressed delivered prices were mostly $5 lower in Nebraska at $275 and $4-$5 lower in the western Corn Belt at $274-$275.
The weighted average five-area direct FOB live steer price last week was $2.32 lower at $174.45/cwt. The weighted average dressed delivered steer price was $4.14 lower at $274.59.
Choice boxed beef cutout value was $2.47 lower Monday afternoon at $294.99/cwt. Select was $2.66 lower at $262.83/cwt.
Corn futures closed mostly fractionally lower to 1¢ lower.
KC HRW Wheat futures closed mostly 7¢ to 11¢ higher.
Soybean futures closed mostly 11¢ to 19¢ lower through Sep ’24 and then 6¢ to 9¢ lower.
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Major U.S. financial indices softened Monday with investors apparently waiting for firmer direction.
The Dow Jones Industrial Average closed 41 points lower. The S&P 500 closed 24 points lower. The NASDAQ was down 119 points.
West Texas Intermediate Crude Oil futures (CME) closed 28¢ to $1.03 lower through the front six contracts.
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Calf and feeder cattle prices were a mixed bag last week. Steers and heifers sold steady to $10/cwt. higher in the North Central and Southeast, according to the Agricultural Marketing Service. The exception was $6 lower in the Southeast for steers weighing 600 lbs. In the South Central Region, steers sold $6-$17 lower and heifers traded $17-$19 lower.
The CME Feeder Cattle Index was $7.11 lower week to week on Friday at $223.27.
“A volatile futures market has caused some confusion between buyers and sellers in the auction barns,” says AMS analysts. They note the spot contract for Live Cattle declined $6.50 in the past two weeks while spot Feeder Cattle plunged $15.
“Calf and feeder cattle prices are reeling in the current environment,” says Andrew P. Griffith, agricultural economist at the University of Tennessee, in his weekly market comments. “The futures market has been in an utter freefall for two and a half months, and market participants do not know what to do, given the expectations for cattle in the future based on the futures market. Thus, feedlots are bidding less for cattle ready to be placed on feed, which means everyone down the line has to bid lower for lighter-weight cattle.”
Griffith adds that prices declining faster than they rose is reminiscent of the dramatic upsurge and plunge witnessed in 2014-16, when cattle numbers were similarly sparse.
“The primary difference is that cattle producers have not started retaining heifers and growing the beef cattle herd,” Griffith explains. “This means there has been no work on the pipeline to supply feeder cattle in the coming years. Thus, the market has likely overreacted to pushing prices too low just as the market pushed prices too high earlier this year.”