Cattle futures extended gains again Monday, supported by last week’s stronger cash prices and notions they can move higher again this week.
Feeder Cattle futures closed an average of $1.28 higher.
Live Cattle futures closed an average of 45¢ higher.
When all the counting was in last week, negotiated cash fed cattle prices were $2 higher on a live basis in the Texas Panhandle at $158/cwt. and then $2-$3 higher at $158-$159 in Kansas, $155-$159 in Nebraska and $154-$160 in the western Corn Belt. Dressed prices were $2 higher at $250.
The five-area direct weighted average fed steer price last week was $2.92 higher at $158.17/cwt. The weighted average steer price in the beef was $2.16 higher at $249.88.
On Monday, cash fed cattle trade ranged from a mostly inactive on very light demand to a standstill through Monday afternoon, according to the Agricultural Marketing Service.
Choice boxed beef cutout value was $1.83 higher Monday afternoon at $266.57/cwt. Select was $2.11 higher at $253.72/cwt.
Corn futures closed 1¢ to 3¢ higher through Jly ‘24, buoyed by exports, and then fractionally lower to 2¢ lower.
Soybean futures closed 8¢ to 11¢ lower through the front four contracts and then unchanged to 2¢ lower.
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Major U.S. financial indices extended losses Monday, pressured by rising bond yields.
The Dow Jones Industrial Average closed 34 points lower. The S&P 500 closed 25 points lower. The NASDAQ was down 119 points.
West Texas Intermediate Crude Oil futures (CME) closed 72¢ to 84¢ higher through the front six contracts.
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Reflecting on last week’s Cattle inventory report, analysts with the Livestock Marketing Information Center (LMIC) note the year-over-year decline of 2.8 million head across all classes was the most since 1989.
“One key difference is that in 1989 the largest drop occurred in animals under 500 pounds — down 1.5 million head of the drop in total cattle inventory,” LMIC analysts explain in the latest Livestock Monitor. “This year, over 1 million cows were lost, predominantly in the beef breeding herd.”
The nation’s beef cow inventory of 28.92 million head was 1.06 million fewer (-3.6%). Total beef cow inventory is the smallest since 1962, according to the Agricultural Marketing Service (AMS).
Beef replacement heifers of 5.16 million head were 317,800 head fewer, down 5.8%.
“Low retention and a much smaller ‘other’ heifer number represent the significant undercutting that has happened to the beef cattle herd,” LMIC analysts explain. “It will take a significant amount of time to rebuild to normal cull rates and gain back the time lost in genetic improvement by culling heifers. There is very likely to be significant opportunities in the bred heifer markets, but 2023 might be a touch early to see the most benefits of that game plan.”
“With the liquidation in full swing, as well as a greater number of heifers being harvested in 2022, the question will be how long it takes for rebuilding to take place,” say AMS analysts. “The last time this happened a decade ago, the beef cow number grew by 2.2 million cows from 2014 to 2017.”
However, among other challenges, AMS analysts point out there’s more competition today for shifting forage acres into crop production.