Cattle futures continued to soften Friday, perhaps with some follow-through profit taking and with surging Corn futures and sharply lower outside markets.
Feeder Cattle futures closed an average 60¢ lower.
Live Cattle futures closed mixed from an average of 49¢ lower to an average of 35¢ higher.
Negotiated cash fed cattle trade ranged from limited on light demand to a standstill through Friday afternoon, according to the Agricultural Marketing Service.
For the week, live prices were steady to $1 higher in the Southern Plains at $140/cwt., steady to $2 higher in Nebraska at $140 and $1-$2 higher in the western Corn Belt at $141-$142. Dressed trade was $2-$4 higher at $224.
Choice Boxed beef cutout value was 37¢ lower Friday afternoon at $274.52/cwt. Select was $1.12 lower at $267.83.
Total estimated cattle slaughter last week of 659,000 head was 20,000 head more than the previous week and 53,000 head more than the previous year. Year-to-date estimated total cattle slaughter of 3.83 million head is 120,000 head fewer (-3.0%) than the same period last year.
Corn futures closed 9¢ to 10¢ higher through Jly ‘23 and then most 4¢ higher.
Soybean futures closed mostly 9¢ to 11¢ higher.
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Major U.S. financial indices continued to scale lower Friday with follow-through pressure from the previous day’s report of steeper inflation, as well as growing fears about Russia invading Ukraine, which fueled a surge in crude oil prices.
The Dow Jones Industrial Average closed 503 points lower. The S&P 500 closed 85 points lower. The NASDAQ was down 394 points.
Crude Oil futures (WTI-CME) were $1.75 to $3.22 higher through the front six contracts.
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“Cattle producers and traders appear to be extremely optimistic as it relates to cattle prices,” says Andrew P. Griffith, agricultural economist at the University of Tennessee, in his weekly market comments. He notes input prices are the key concern currently.
“The question to answer is how expensive it is going to be to feed cattle in 2022. Animals can either be fed with purchased feed or with pasture and hay, which is dependent on fertilizer. It is clear purchased feed remains elevated near $270 per ton while a unit of nitrogen is likely to cost $1,” Griffith says. “The failure to apply fertilizer will likely result in reduced hay and pasture yields. The decision becomes to purchase feed, purchase fertilizer, reduce the stocking rate, or overgraze pastures.”
For cow/calf producers, Griffith says current cull cow prices may provide some of the solution.
“Slaughter cow prices are strong and continue to increase, which means this may be a good year for producers to market older cows, poor temperament cows, and low producing cows,” Griffith explains. “The salvage value and reduced pressure on pasture from marketing these animals may prove to be extremely valuable. Looking into the next few months, calf and slaughter cow prices are expected to continue increasing as will feeder cattle prices. There is no way to know if prices will reach or exceed levels being predicted by the futures market, but the futures market is offering some hedging opportunities for those interested.”