Negotiated cash fed cattle trade was at a standstill in all major cattle feeding regions through Wednesday afternoon, according to the Agricultural Marketing Service. There was some trade in the Texas Panhandle on Tuesday at $114/cwt., which was steady with last week.
Impacts from the severe weather, including reports of reduced slaughter at some packing plants in the Southern Plains, due to rolling power outages, might help explain what appears to be a tough road to maintaining steady fed cattle prices this week. Reduced production also helps account for the atypical rise in wholesale beef values.
Cattle feeders offered 1,444 head (9 lots) in Central Stockyards’ (CS) weekly Fed Cattle Exchange auction, all from Kansas and Texas. None sold. The reserve price for most was $114.50/cwt. CS will host another sale Thursday.
Choice steers and heifers sold 75¢ to $1.00/cwt. higher amid a light offering at the fat auction in Tama, IA. The deepest test was 198 head of Choice 2-4 heifers weighing an average of 1,362 lbs., bringing an average of $114.92. That was at the upper end of last week’s country trade in the region.
At Sioux Falls Regional, though, slaughter steers sold steady, while heifers traded $2-$3 lower. There were 171 Choice 2-3 steers weighing an average of 1,457 lbs. and bringing an average of $113.37.
Cattle futures closed lower Wednesday, pressured by supply chain disruptions, as well as uncertainty about post-storm impacts.
Live Cattle futures closed an average of 58¢ lower, from 2¢ lower toward the back to $1.65 lower toward the front.
Feeder Cattle futures closed an average of $1.26 lower, from 85¢ lower to $2.35 lower in spot Mar.
Choice boxed beef cutout value was $2.74 higher Wednesday afternoon at $237.51/cwt. Select was $3.61 higher at $225.64.
Corn futures closed mostly 1¢ to 3¢ higher through Sep ‘22, and then mostly unchanged to fractionally higher.
Soybean futures closed mostly 1¢ to 3¢ lower, except for 3¢ higher in near Nov and Jan.
Major U.S. financial indices closed narrowly mixed amid volatile trade Wednesday, despite domestic retail sales last month shattering expectations to the upside.
U.S. retail and food services sales in January were 5.3% more than the previous month at $586.2 billion, according to the U.S. Census Bureau.
Apparently, the sharp increase fueled investor concerns about inflation, as did the monthly Producer Price Index (PPI) from the U.S. Bureau of Labor Statistics. It increased 1.3% in January, the steepest rise since the index began in 2009.
The Dow Jones Industrial Average closed 90 points higher. The S&P 500 was down 1 point to 3,931. The NASDAQ was down 82 points.
Creighton University’s Rural Mainstreet Index (RMI) increased to 52.0 in January, from 51.6 in December. According to the monthly survey of bank CEOs in rural areas of a 10-state region dependent on agriculture and/or energy, the index increased to its second highest level since January 2020. The index ranges between 0 and 100 with a reading of 50.0 representing growth neutral.
“Recent sharp improvements in agriculture commodity prices, federal farm support payments, and the Federal Reserve’s record-low short-term interest rates have underpinned the Rural Mainstreet Economy in a solid and positive growth range. However, the rural economy remains well below pre-pandemic levels,” says Ernie Goss, Jack A. MacAllister Chair in Regional Economics at Creighton University’s Heider College of Business.
The confidence index, which reflects bank CEO expectations for the economy six months out, declined slightly to a still healthy 60.0 from December’s 62.9.
“Federal farm support payments, improving grain prices, and advancing exports have supported confidence, offsetting negatives from pandemic ravaged retail and leisure and hospitality companies in rural areas,” Goss explains.
For a fourth straight month, the farmland price index advanced above growth neutral. The January level of 56.3 was the highest level since July 2013, and up from 55.0 in December. This is first time since 2013 that Creighton’s survey has recorded four straight months of above growth-neutral farmland prices.
Similarly, the farm equipment-sales index the past two months rose above growth neutral for the first time in 86 months. It was 50.2 in December and then rose to 54.5 in January, the highest level since April 2013.
According to Goss, bankers reported that their primary economic concerns for this year are excessive inflation and higher long-term interest rates.
“I feel the economy is moving in a positive direction that can be rattled by a combination of higher taxes, higher inflation, and a return of stricter regulation,” explained Jim Levick, president of Nebraska State Bank in Oshkosh, NE.