Steady cash prices last week, and declining carcass weights pointing to the potential for higher fed cattle prices this week, helped lift Cattle futures Tuesday. Some also attributed part of the support to traders fleeing the meltdown in Lean Hog futures.
Live Cattle futures closed an average of $1.26 higher in the front two contracts and then an average of 33¢ higher.
Feeder Cattle futures closed an average of 58¢ higher (42¢ higher to $1.15 higher in spot Mar).
Corn futures closed 1¢ to 5¢ lower through Sep ’20 and then fractionally lower.
Soybean futures closed 6¢ to 7¢ lower through Jan ‘20, then 3¢ to 5¢ lower.
Wholesale beef values were steady to firm on moderate to fairly good demand and moderate to heavy offerings, according to the Agricultural Marketing Service.
Choice boxed beef cutout value was 12¢ lower Tuesday afternoon at $217.27/cwt. Select was 54¢ higher at $213.54.
Major U.S. financial indices recovered from early pressure to close slightly higher Tuesday. Support included strong quarterly earnings from Walmart, as well as further indications that trade talks with China continue to be positive.
The Dow Jones Industrial Average closed 8 points higher. The S&P 500 closed 4 points higher. The NASDAQ was up 14 points.
“With continued large supplies of cattle in feedlots and a slower expected pace of placements in early 2019, feeder steer prices in first-half 2019 were lowered, bringing the annual price forecast down to $140-$149/cwt, with a midpoint price of $144.50/cwt.,” say analysts with USDA’s Economic Research Service (ERS), in the February Livestock, Dairy and Poultry Outlook (LDPO)—the first since December, due to the government shutdown.
At least part of the pressure stems from unrealized expectations for improved Southern Plains winter wheat pasture last fall to absorb increased seasonal supplies of cattle. Instead, wet weather since last fall delayed and restricted planting. Winter wheat planted area for harvest this year is 4% less than last year and second lowest on record (31.3 million acres), according to the Winter Wheat and Canola Seedings report.
“Based on weekly data from the National Feeder and Stocker Cattle Summary, there were about 1% more calves sold in 2018 than in 2017. This was particularly true in fourth-quarter 2018, where about 7% more calves were sold than for the same period in 2017,” ERS analysts say. “However, in late 2018, feedlots’ pace of marketings slowed more than expected. The large numbers of cattle in feedlots may have stymied feeder calf prices.”
The fourth-quarter 2018 feeder steer price was $147.90/cwt. for an annual price of $146.93.
For this year, the recent LDPO pegs feeder steers prices (basis Oklahoma City) at $140-$144/cwt. in the first quarter; $141-$149 in the second; $144-$154 in the third quarter; $138-$148 in the fourth.