Negotiated cash fed cattle trade was very limited on light demand in the Southern Plains through Tuesday afternoon. Early live sales were mostly $1 lower in the Texas Panhandle at $137/cwt. and mostly $1-$3 lower in Kansas at $135-$137.
Trade was mostly inactive on light demand in Nebraska and the western Corn Belt. Prices in those regions last week were $138-$140 on a live basis and $220 in the beef.
Choice Boxed beef cutout value was $2.18 higher Tuesday afternoon at $278.22/cwt. Select was $2.13 higher at $268.63.
Cattle futures found some traction Tuesday with support from higher outside markets and healthier looking packer processing, for a day at least.
Feeder Cattle futures closed an average of 57¢ higher (10¢ to $1.15 higher), except for 67¢ lower in the back contract.
Live Cattle futures closed an average of 52¢ higher (12¢ to $1.42 higher), except for 5¢ lower toward the back.
Corn and Soybean futures paddled in place ahead of Wednesday’s World Agricultural Supply and Demand Estimates.
Soybean futures closed mostly unchanged to fractionally mixed after 1¢ to 2¢ higher in the front four contracts.
Corn futures closed mostly fractionally mixed.
Major U.S. financial indices rallied back on Tuesday, supported by a slightly lower treasury yield rate and led by tech stocks as it appeared investors took advantage of the recent sell-off to take a stake.
The Dow Jones Industrial Average closed 183 points higher. The S&P 500 closed 42 points higher. The NASDAQ was up 210 points.
CME WTI Crude Oil futures closed $2.63 to $2.99 higher through the front six contracts.
“Cattle continue the move into the New Year with optimism,” says Stephen Koontz, agricultural economist at Colorado State University, in the latest issue of In the Cattle Markets. “Some related markets have shown short periods of weakness but the underlying perspective of a comprehensive look at cattle and beef markets is strength.”
Although prices were wobbly in recent days, Koontz points out, “The weekly five-area weighted average fed price fell to $138.41 in the second week of January, but this market peaked in the first week of December at $140.44, and the last time this market was in the $140s was the first week of May 2017. USDA Choice boxed beef cutout values were $262.14 for the second week of January, and this is down from the peaks in late August and early June approaching $350, but these are valuations from a market which was rarely above $250 outside of the pandemic shutdown period. Similarly, beef animal hide and offal values fell to $13.62/cwt. of live animal from $16 peaks, but these valuations have spent the last five years at or below $12.”
Koontz adds any weakening in consumer retail prices for animal protein is from record-high levels.
“These high retail prices — albeit flawed, as in not capturing actual purchase price discounts — combined with strong volumes of protein production clearly indicate very strong demand by domestic consumers. We are approaching two-years into the pandemic and the overall domestic economy is clearly signaling strength.”
Nearer term, Andrew P. Griffith, agricultural economist at the University of Tennessee, says in his weekly market comments, “Both slaughter cattle and lightweight calf prices would typically be expected to seasonally increase as the market approaches spring calving and the spring stocker grazing season, which seems certain to occur. However, the price increase is shaping up to be stronger than the seasonal tendency. Lightweight calf prices could easily push as high as $180/cwt. by the end of March and early April while slaughter cow prices may push the $75/cwt. price mark.”