Cattle futures see-sawed to start the week as traders digested Friday’s Cattle on Feed report. As many suspected, the 4.4% increase in January feedlot placements year to year created pressure, especially early on, but futures managed to close with more moderate declines.
Live Cattle futures closed an average of 48¢ lower through the front five contracts (12¢ lower to 85¢ lower) and then an average of 21¢ higher.
Feeder Cattle futures closed an average of 38¢ lower (17¢ to 55¢ lower).
Though lower than the previous week, last week’s cash fed cattle trade continues to offer market support with live prices that were at mainly $128/cwt. and mostly at $205 in the beef.
Likewise, wholesale beef values continue to churn higher. Choice boxed beef cutout value was $1.15 on Monday afternoon at $219.52/cwt. Select was $1.90 higher at $214.72.
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Major U.S. financial indices closed sharply higher once again on Monday, driven by gains in giants like Boeing and 3M.
The Dow Jones Industrial Average closed 399 points higher. The S&P 500 closed 32 points higher. The NASDAQ closed 84 points higher.
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“Limited winter grazing numbers and early movement of wheat pasture cattle to feedlots means that little of the normal March run of wheat pasture cattle will be seen this year in the Southern Plains,” says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly market comments. “Likewise few cattle remain or are likely to be purchased for wheat graze-out.”
All of that, of course, has to do with drought conditions that began pushing cattle to feedlots earlier several months ago.
“Early placement of feeders in the feedlots means that the short term supply of feeder cattle outside of feedlots is tighter, as reflected in the year over year decrease in the estimated Jan. 1 feeder supply,” Peel explains. “However, many of the lightweight feeders placed late in 2017 will remain in feedlots until mid-2018. Feedlots are pretty full and will have reduced demand for feeders for some time yet this spring, thus the overall supply-demand balance may not have changed much. Larger feedlot placements in recent months represents a change in timing of feedlot production but not a change in the overall supply situation. In general, while feedlots will not maintain the placement rate of recent months going forward, feeder cattle numbers will be larger in 2018 supporting increased cattle slaughter and beef production.”