Negotiated cash fed cattle trade was at a standstill in all major cattle feeding regions through Tuesday afternoon, according to the Agricultural Marketing Service.
Trade last week was steady in the Southern Plains at $114/cwt. on a live basis, $1-$2 higher in Nebraska at $113-$114 and steady to $1 higher in the western Corn Belt at $112-$115. Dressed trade was steady to $2 higher at $180.
Futures markets closed mixed but mainly higher Tuesday, with Feeder Cattle fading pressure from surging grain futures and Live Cattle helped by higher wholesale beef values and recently increasing open interest.
Live Cattle futures closed mixed, from an average of 41¢ lower in four contracts (5¢ lower at the back to $1.05 lower in spot Feb) to an average of 31¢ higher.
Feeder Cattle futures closed an average of 78¢ higher, except for an average of 10¢ lower in the front three contracts.
Choice boxed beef cutout value was $2.33 higher Tuesday afternoon at $234.77/cwt. Select was 62¢ higher at $222.03.
Grain futures surged, led by wheat and concerns about winter kill from the severe weather.
Corn futures closed 11¢ to 13¢ higher through Sep ‘21, 7¢ to 9¢ higher through the next four contracts and then mostly 3¢ to 4¢ higher.
Soybean futures closed 11¢ to 17¢ higher.
Major U.S. financial indices closed narrowly mixed Tuesday. Pressure included investors fretting over escalating Treasury yield rates pointing toward higher interest rates and the potential impact on the speed of economic recovery.
The Dow Jones Industrial Average closed 64 points higher. The S&P 500 closed 2 points lower. The NASDAQ closed 47 points lower.
“Heavier anticipated carcass weights and greater fed cattle marketings are expected to lift 2021 beef production to record levels at 27.540 billion lbs.,” say analysts with USDA’s Economic Research Service (ERS), in the latest monthly Livestock, Dairy and Poultry Outlook (LDPO).
Based on January’s Actual Slaughter Under Federal Inspection report, ERS analysts say average carcass weights were more than 18 lbs. heavier than the same time a year earlier at 844.1 lbs. They add that the same data suggests cattle slaughter is 3.7% more than last year.
“Although the number of cattle outside feedlots Jan. 1 was less than a year ago, a larger proportion of cattle on small grains pastures, and dry conditions in parts of the Plains States, raised prospects for higher anticipated placements in first-half 2021. As a result, marketings in second-half 2021 were increased, which also contributed to a raised production forecast,” say ERS analysts.
Those projections helped lead to the lower month-to-month forecast for an average five-area direct fed steer price of $115/cwt.
ERS also lowered expectations for feeder steer prices.
“Feeder steer prices for January 2021 averaged $133.94/cwt. for steers weighing 750-800 lbs. sold at Oklahoma City National Stockyards, about 7% below the average for January 2020. With prices for the first two weeks of February almost $7 below the same month last year, the first-quarter 2021 forecast was lowered $2 to $132/cwt.,” say ERS analysts. “Revisions to the 2020 calf crop tightened anticipated feeder cattle supplies in second-half 2021. However, higher expected feed costs offset expectations for stronger prices the rest of the year; as a result, the second-half 2021 feeder steer price forecasts are unchanged from last month.”
ERS forecasts the feeder steer price at $134/cwt. in the second quarter, $139 in the third and $140 in the fourth quarter for an annual average of $136.25. That would be only 80¢ more than the 2020 average.