Cattle futures softened Thursday with likely positioning ahead of Fridays monthly Cattle on Feed report. Many expect the report to indicate a sharp decline in feedlot placement, about 12% less year over year in January, based on average analyst estimates. January marketing are estimated to be about even, while the Feb. 1 on-feed inventory is projected to be up slightly.
Live Cattle futures closed an average of 84¢ lower.
Feeder Cattle futures closed an average of $1.44 lower, except for an average of 56¢ higher in the front three contracts.
Negotiated cash fed cattle trade ranged from a standstill in the South to mostly inactive on light demand in the North, with too few transactions to trend, through Thursday afternoon, according to the Agricultural Marketing Service.
Last week, FOB live prices were $180/cwt. in the Southern Plains, $181 in Nebraska and $180 in the western Corn Belt. Dressed delivered prices were mostly $287 in Nebraska and $285 in the western Corn Belt.
Choice boxed beef cutout value was $1.99 higher Thursday afternoon at $299.79/cwt. Select was $1.35 higher at $285.81/cwt.
Grain and Soybean futures continued searching for a bottom Thursday with apparent added pressure from recent producer selling.
Corn futures closed 4¢ to 5¢ lower through Dec. ’24 and then mostly 2¢ lower.
KC HRW Wheat futures closed mostly fractionally lower to 3¢ lower.
Soybean futures closed 10¢ to 13¢ lower through Jly ’25. and then mostly 7¢ to 8¢ lower.
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Major U.S. financial indices roared higher, fueled by tech stocks.
The Dow Jones Industrial Average closed 456 points higher. The S&P 500 closed 105 points higher. The NASDAQ was up 466 points.
CME WTI Crude Oil futures closed 47¢ to 70¢ higher through the front six contracts.
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Aggregating everything from cow-calf operations through feedlots, cattle sector returns are expected to be less this year as lower traded volume offsets higher prices, according to Matthew Diersen, Extension risk and business management specialist at South Dakota State University. His statement refers to the latest Agricultural Prices from USDA’s Economic Research Service, published earlier this month.
“At the same time, higher feeder animal expenditures are expected to continue,” Diersen says, in a recent issue of In the Cattle Markets. “Another major cost item, interest expense, is expected to remain high, as steady to potentially lower interest rates are offset by higher loan volumes. At the local level, higher rates have been discussed as they have influenced returns to storage on crops, resulted in higher operating expenses overall, and factored into the value of replacement heifers.”
Diersen points out multi-state grazing fee rates in the same report were higher last year for animal units and cow-calf pairs. “High prices for substitute feedstuffs (corn and hay) for much of 2023 likely placed upward pressure on grazing fees,” he says.
On the other hand, corn and hay prices are projected to be lower year over year in 2024 due to larger expected ending stocks.
A final cost pressure depends on individual perspective, according to Diersen.
“Feeder cattle continue to trade at high levels,” Diersen says. “The CME Feeder Cattle Index is a weighted average price of 700–899-pound steers traded at AMS-reported sales across 12 states. The index is a common benchmark that reached an all-time high of $254.10 on Sept. 20, 2023. The recent index values have been around $243.00, or record level for this time of year.”