Cattle futures closed higher on Tuesday, though off of session highs, boosting hopes for steady to slightly higher negotiated cash fed cattle prices this week.
Live Cattle futures closed an average of 35¢ higher (10¢ higher to 62¢ higher in nearly spent Feb).
Feeder Cattle futures closed an average of $1.14 higher (95¢ to $1.42 higher).
Choice boxed beef cutout value was $1.00 higher on Tuesday afternoon at $220.52/cwt. Select was 7¢ higher at $214.79.
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Major U.S. financial indices closed sharply lower on Tuesday. Though it seemed expected, given the fundamental strength of the economy, plenty of analysts credited the dip with Federal Reserve Chair, Jerome Powell, suggesting to Congress that the Fed will continue increasing interest rates this year.
The Dow Jones Industrial Average closed 299 points lower. The S&P 500 closed 35 points lower. The NASDAQ closed 91 points lower.
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“The expectation moving through the spring is for strength in the calf market as the seasonal tendency for freshly weaned calves is stronger prices,” says Andrew P. Griffith, agricultural economist at the University of Tennessee, in his weekly market comments. “Though there is an expectation for calf prices to continue increasing through March and maybe into early April, due to grass fever, weakness in the feeder cattle market can and will quickly dampen buyers’ attitudes…Based on the March feeder cattle contract, there appears to be support near the $145 level and even stronger price support at $140. Similarly, the August feeder cattle contract has strong support at the $148 and $143 price levels. The point being made here is that downside price risk does exist in the feeder cattle market. However, it appears the downside price risk is limited to price levels that are still fairly strong.”
Support also continues to come from cattle feeders remaining aggressive in marketing and placing cattle.
“…Strong margins and a basis near zero should keep cattle feeders interested in marketing cattle,” Griffith says. “Similarly, the strong feeding margins should keep cattle feeders active in placing cattle. Looking forward a few weeks, it may be difficult to push finished cattle prices higher as the seasonal tendency would indicate, due to the current strength. A steady market would be well received.”