Negotiated cash fed cattle trade was slow on light demand in Kansas through Wednesday afternoon at $114/cwt. on a live basis, which was steady with last week.
Trade was also slow on light demand in the western Corn Belt with early dressed sales steady to $2 higher at $180. Live prices there last week were at $112-$114.
Elsewhere, trade was limited on light demand, with too few transactions to trend, according to the Agricultural Marketing Service.
Last week: live prices in the Texas Panhandle and Nebraska were at mostly $114; dressed trade in Nebraska was at $178-$180.
Cattle feeders offered 1,251 head (10 lots) in Central Stockyards’ weekly Fed Cattle Exchange auction. Of those, 518 head (four lots) from the Southern Plains sold for a weighted average price of $114/cwt., via live weight and Bid-the-Grid. That was steady with the previous week’s country trade in the region.
Slaughter steers and heifers sold $3-$5 higher at Sioux Falls Regional in South Dakota. There were 147 head of Choice 3-4 steers weighing an average of 1,548 lbs., bringing an average of $113.79. That was at the upper end of last week’s country price for the region.
Cattle futures closed mixed on Wednesday. Sharply lower Corn futures helped boost Feeder Cattle, while softer Choice wholesale beef values and demand uncertainty pressured Live Cattle.
Live Cattle futures closed an average of 87¢ lower, from 55¢ lower to $1.32 lower.
Feeder Cattle futures closed an average of 39¢ higher, from 10¢ to 85¢ higher
Choice boxed beef cutout value was $1.27 lower Wednesday afternoon at $233.02/cwt. Select was 23¢ higher at $220.96.
Grain futures fell hard on Wednesday, with likely profit taking following the WASDE report leaving South American production unchanged, whereas the trade expected a reduction.
Corn futures closed 11¢ to 21¢ lower through the front four contracts, 5¢ to 8¢ lower through the next five contracts and then mostly 1¢ to 2¢ lower.
Soybean futures closed 24¢ to 47¢ lower through Jan ‘22, 12¢ to 18¢ lower through the next five contracts and then mostly 8¢ lower.
Major U.S. financial indices closed narrowly mixed Wednesday, as positive quarterly corporate earnings competed with a gloomy labor outlook.
In a speech to the Economic Club of New York on Wednesday, Federal Reserve Chair, Jerome Powell, painted a dour picture of the current labor market, in the pandemic’s wake, illustrating the daunting challenge to achieving maximum employment.
“After rising to 14.8% in April of last year, the published unemployment rate has fallen relatively swiftly, reaching 6.3% in January. But published unemployment rates during COVID have dramatically understated the deterioration in the labor market. Most importantly, the pandemic has led to the largest 12-month decline in labor force participation since at least 1948,” Powell explained. “… In addition, the Bureau of Labor Statistics reports that many unemployed individuals have been misclassified as employed. Correcting this misclassification and counting those who have left the labor force since last February as unemployed would boost the unemployment rate to close to 10% in January.”
The Dow Jones Industrial Average closed 69 points higher. The S&P 500 was down 1 point. The NASDQ was down 35 points.
“On-feed numbers are currently high but will moderate through the remainder of the year with smaller placements and smaller calf numbers. Further, the currently very large carcass weights will shrink into the spring as winter weather has its impact,” says Stephen Koontz, agricultural economist at Colorado State University, in the latest issue of In the Cattle Markets.
USDA’s recent Cattle report estimates the 2020 calf crop 1% less year over year at 35.1 million head. Analysts with the Livestock Marketing Information Center (LMIC) also point out estimates of the previous year’s calf crop were revised lower by about 500,000 head.
“The inventory report was decidedly bullish for cattle prices over the next three years. Tighter supplies of cattle will move through the system, lowering beef production,” say LMIC analysts, in the latest Livestock Monitor.
While declining cattle numbers will support cattle prices overall, Koontz sees more potential for fed cattle prices than those for calves and feeder cattle, due to the run up in feed prices.
“Even with the substantial increases in corn and soybean futures prices for nearby contracts, the current corn basis across the Central and Southern Plains remains strong – cash activity and price levels have followed the futures rally,” Koontz explains. “In this setting, these increases are not temporary but rather permanent. And permanent for cattle feeding cost-of-gains.”
LMIC analysts say drought and feed costs could impact cow-calf returns significantly. However, they believe higher year-over-year calf prices will support positive returns.
“I believe cow-calf producers should look hard at Livestock Revenue Protection (LRP) insurance,” Koontz says. “My outlook communications discussed the potential for returning to normal seasonal patterns and opportunities this year. For cow-calf producers that involves diversifying and making some sales in the spring and early summer, with fed cattle and beef price rallies. I am concerned that this year may play out more like last year. In 2020, selling opportunities evaporated through March. If the current changes to feed costs persists then we may be in for a repeat.”