Negotiated cash fed cattle trade remained undeveloped through Wednesday afternoon. There were only 571 head offered in the weekly Fed Cattle Exchange auction, with none sold.
Cattle futures softened some, likely on profit taking and awaiting the week’s cash direction.
Live Cattle futures closed an average of 26¢ lower through the front six contracts and then an average of 27¢ higher.
Except for 10¢ higher in the back contract, Feeder Cattle futures closed an average of 58¢ lower.
Corn futures closed mostly unchanged to 1¢ higher.
Soybean futures closed 5¢ higher across the board.
Wholesale beef values were steady on Choice and lower on Select with light to moderate demand and offerings, according to the Agricultural Marketing Service.
Choice boxed beef cutout value was 14¢ lower Wednesday afternoon at $213.84/cwt. Select was 79¢ lower at $206.47.
Major U.S. financial indices closed higher for the fourth session in a row, buoyed by confirmation the FOMC plans to be patient with future interest rate increases.
According to the FOMC minutes, “… many participants expressed the view that, especially in an environment of muted inflation pressures, the Committee could afford to be patient about further policy firming. A number of participants noted that, before making further changes to the stance of policy, it was important for the Committee to assess factors such as how the risks that had become more pronounced in recent months might unfold and to what extent they would affect economic activity, and the effects of past actions to remove policy accommodation, which were likely still working their way through the economy.”
Crude oil prices continued to climb as well, with West Texas Intermediate Crude on the CME closing $2.36 to $2.58 higher for the next 12 months.
The Dow Jones Industrial Average closed 91 points higher. The S&P 500 closed 10 points higher. The NASDAQ was up 60 points.
Lots went right and little went wrong for cattle markets last year or the year before, according to Stephen Koontz, agricultural economist at Colorado State University. He notes strong wholesale margins, efficient movement of increased production through the supply chain and exceptional U.S. beef export levels, particularly to Japan and Korea.
“But forecasts for 2019 suggest a further 1.8% increase in beef production, a further 2.4% increase in pork production, a 1.3% increase in broiler production, and 0.5% increase in milk production,” Koontz explains, in the most recent issue of In the Cattle Markets. “There will be plenty of protein and fats. While the stock market has been volatile, the underlying indicators of the macro economy have largely remained strong. That is not the case for the rest of the world. There are clear weaknesses in the world economy. There is plenty of protein. And, there appears to be plenty of downside price risk.”