Negotiated cash fed cattle tradewas limited on light demand in all major cattle feeding regions through Wednesday afternoon, according to the Agricultural Marketing Service. There were a few live trades in the Southern Plains steady with last week at $114/cwt., but too few to trend.
Cattle feeders offered 1,145 head (9 lots) in Central Stockyards’ (CS) Fed Cattle Exchange auction Wednesday, all from the Southern Plains. Of those, 409 head sold (250 heifers and 159 steers) for a weighted average price of $114.25/cwt. CS will host a special sale Thursday.
On the other hand, slaughter steers sold steady to $3 lower, with instances of $4 lower at Sioux Falls Regional in South Dakota. There were 534 head of Choice 3-4 steers weighing an average of 1,654 lbs., bringing an average of $112.06, which was $2-$3 lower than cash trade in the region last week.
Cattle futures closed higher Wednesday, helped along by sharply higher outside markets, broad commodity support and recent strength in Lean Hog futures.
Live Cattle futures closed an average of 91¢ higher.
Feeder Cattle futures closed an average of $1.23 higher, from 67¢ higher at the back to $2.15 higher toward the front.
Choice boxed beef cutout value was 46¢ higher Wednesday afternoon at $240.75/cwt. Select was 74¢lower at $229.79.
Corn futures closed mostly 3¢ to 7¢ higher.
Soybean futures closed 14¢ to 18¢ higher through Jan ‘22, and then mostly 5¢ to 10¢ higher.
Major U.S. financial indices closed higher Wednesday, amid another volatile session. Support seemed to center around optimism for the economy picking up steam. Remarks from Federal Reserve Vice Chair, Richard Clarida also helped quell inflation worries, with remarks to the U.S. Chamber of Commerce, mirroring the dovish tone of Chair Jerome Powell a day earlier.
The Down Jones Industrial Average closed 424 points higher. The S&P 500 closed 44 points higher. The NASDAQ was up 132 points.
Cattle markets continue to underperform, beneath the weight of record high beef production since the middle of June. But, Randy Blach, CattleFax CEO, expects cattle prices to increase from now through 2024, especially after the first half of this year. Profitability will increase significantly for cow-calf producers and margin operators, he says.
CattleFax shared its Market Outlook Wednesday, as part of the National Cattlemen’s Beef Association Winter Reboot.
Part of the price optimism has to do with declining cattle numbers, after working through current front-end supplies.
CattleFax projects modest herd liquidation of 200,000 beef cows this year and 350,000 head next year, due in part to the likelihood of expanding La Niña drought this spring and summer.
Leverage will also swing back in producers’ favor as packing plant capacity utilization declines, according to Kevin Good, CattleFax vice president of industry relations and analysis.
At the same time, CattleFax expects consumer beef demand to continue strong.
Blach explained domestic consumer beef demand last year was the strongest in more than 30 years, based on the U.S. Consumer Beef Demand Index. That was helped by consumer incomes being replaced almost entirely by government stimulus.
Internationally, CattleFax expects U.S. beef exports to increase at least 5% this year.
In terms of cattle prices, these are the CattleFax projections for this year.
Annual Av. Range
Fed steer $119/cwt. $108 to $128
800 lbs. steer $145/cwt. $135 to $160
550 lbs. steer $170/cwt. $160 to $180
Utility cows $64/cwt. $52 to $74
Bred cows $1,600/hd $1,200 to $1,900
There are headwinds, of course.
Even before considering the drought, Mike Murphy, CattleFax vice president of research and risk management services, said both supply and demand mean feed costs will likely remain elevated into the next crop marketing year.
As well, the folks at CattleFax expect inflation and interest rates to begin rising.