Cash trade was undeveloped through Tuesday afternoon, but expectations grew for higher prices based on the paltry volume of trade last week and the continued decline in carcass weights. Dressed steer weights for the week ending Feb. 9 were 4 lbs. lighter year over year at 885 lbs., according to USDA’s Actual Slaughter Under Federal Inspection report. Dressed heifer weights were 11 lbs. lighter at 822 lbs.
Cattle futures continued higher Tuesday, led by Live Cattle, which received support from the notion of higher cash prices, as well as continued strength in wholesale beef values. Lower grain prices also helped underpin Feeder Cattle support.
Live Cattle futures closed an average of 45¢ higher (25¢ higher to $1.02 higher in spot Feb).
Feeder Cattle futures closed an average of 70¢ higher.
Corn futures closed mostly 2¢ to 4¢ lower through near Dec and then mostly 1¢ lower.
Soybean futures closed 5¢ to 8¢ lower through Mar ‘20 and then mostly 3¢ lower.
Wholesale beef values were steady on Choice and lower on Select with light to moderate demand and moderate offerings, according to the Agricultural Marketing Service.
Choice boxed beef cutout value was 12¢ higher Tuesday afternoon at $219.67/cwt. Select was 84¢ lower at $213.73.
Major U.S. financial indices edged lower in choppy trade Tuesday, amid mixed economic news.
For instance, in a report delayed due to the government shutdown, privately owned housing starts in December were 11.2% less than in November and 10.9% less year to year, according to the U.S. Commerce Department.
On the other hand, in testimony to Congress yesterday, FOMC Chairman, Jerome Powell described strong domestic economic growth with estimated GDP last year of just less than 3%; strong employment numbers; inflation near the target of 2%.
“While we view current economic conditions as healthy and the economic outlook as favorable, over the past few months we have seen some crosscurrents and conflicting signals,” Powell explained. “Financial markets became more volatile toward year-end, and financial conditions are now less supportive of growth than they were earlier last year. Growth has slowed in some major foreign economies, particularly China and Europe. And uncertainty is elevated around several unresolved government policy issues, including Brexit and ongoing trade negotiations.”
The Dow Jones Industrial Average closed 33 points lower. The S&P 500 closed 2 points lower. The NASDAQ was down 5 points.
When the Cattle inventory report finally comes out—scheduled for this Thursday—David Anderson, Extension livestock economist at Texas A&M University expects to see a slight increase in beef cow numbers.
“We are likely about to the end of the growth part of the cattle cycle, as heifers on feed in the Cattle on Feed report, and cow and heifer slaughter data indicate,” says Anderson, in the latest issue of In the Cattle Markets.
In his weekly market comments, Derrell Peel, Extension livestock marketing specialist at Oklahoma State University explains the estimated 7.28 million head of steers on feed at the beginning of the year were 0.7% less than a year earlier.
“This is the first year-over-year decrease in quarterly steer feedlot inventories since April 2017,” Peel says. “Heifer feedlot inventory was 4.41 million head, up 6.2% from last year. This is the 12th consecutive quarter of year-over-year increases in heifers on feed since January, 2016.”
Likewise, Anderson explains through early February heifer slaughter was up 8.5% and steer slaughter was down about 0.6%.
“There are several other numbers in the report (Cattle) worth looking at beyond the headline all cattle and calves number,” Anderson says. “Watch for the number of heifers held back for replacement. That should show another decline as the cycle peaks. Also watch for the calf crop estimate, in particular for revisions to past years’ data based on placement patterns. The number of cattle on small grains pasture will be interesting, gauging supplies of feeder cattle to come from wheat pasture country.”