Negotiated cash fed cattle trade ranged from a standstill to mostly inactive on very light demand through Monday afternoon with too few transactions to trend, according to the Agricultural Marketing Service.
Last week, live prices were $142/cwt. in the Southern Plains and Colorado; $140 in Nebraska and the western Corn Belt. Dressed prices were $220.
Cattle futures closed mostly higher Monday, buoyed by higher outside markets, recently stronger cash prices and prospects of higher money this week.
Feeder Cattle futures closed an average of 91¢ higher.
Live Cattle futures closed an average of 40¢ higher, except for an average of 13¢ lower in two contracts toward the back.
Choice boxed beef cutout value was $1.83 lower Monday afternoon at $272.53/cwt. Select was 79¢ lower at $257.85.
Corn futures closed mainly fractionally lower to mostly fractionally higher.
Soybean futures closed 2¢ to 5¢ lower through the front six contracts and then mostly unchanged to fractionally mixed.
Investors started the week, apparently unafraid of the new COVID variant’s impact on the global economy. According to various reports, on Sunday, Dr. Anthony Fauci, Director of the National Institute of Allergy and Infectious Diseases said preliminary reports suggest omicron is less severe than the preceding delta variant. Major U.S. financial indices rocketed higher Monday
The Dow Jones Industrial Average closed 646 points higher. The S&P 500 closed 53 points higher. The NASDAQ was up 139 points.
West Texas Intermediate Crude Oil futures on the CME closed $2.95 to $3.23 higher through the front six contracts.
“Drought in the wintertime is generally not a major cattle market issue with limited exceptions, such as the winter wheat crop (winter wheat grazing). However, the extent and level of drought in the U.S. at this time is troubling because of the potential for drought to extend into the next growing season, at least in some regions,” says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly market comments.
Peel points out dry conditions have lingered in some areas since last year.
“Many beef cattle operations have already made significant adjustments and will have very little flexibility if the current drought extends into 2022. This could result in another severe round of cow liquidation in the first half of next year,” Peel says. “A decade ago, severe drought caused the unplanned liquidation of some 2 million beef cows and affected cattle markets for several years, arguably up to the current time. It is possible it could happen again.”
Based on the U.S. Drought Monitor at the end of November, 69% of the U.S. was abnormally dry or worse with more than 53% in some degree of drought (D1-D4). At the same time last year, 67% of the nation was abnormally dry or worse and 48% was in some degree of drought.
“Beef cow slaughter is up 8.6% for the year to date and includes some drought liquidation but from exactly where is unclear,” Peel says.
He created an ad-hoc index that incorporates the Drought Severity and Coverage Index, as well as the number of beef cows in the West and High Plains regions where current drought has ben most severe. With drought impacts heavily weighted, Peel says the index suggests the most significant impact on the U.S. beef cow herd this year came from North Dakota, Montana, California and South Dakota.
“The annual Cattle report, due out Jan. 31, 2022, will reveal exactly where and how much beef cow inventories changed along with other cattle inventory data,” Peel says.