Cattle futures surged higher on Wednesday, extending gains from the previous session. Perhaps traders are expecting a bounce back from last week’s winter storms that dampened beef demand. High-flying equity markets added to market optimism.
There was no country trade to speak of, but early signs pointed to steady to slightly higher cash fed cattle prices this week.
Besides strength on the Board, Choice 2-4 steers sold $2-$3 higher at Sioux Falls Regional in South Dakota on Wednesday at $121.50 to $125.00/cwt. Last week’s country trade was mainly $120 on a live basis.
Only 108 head (one lot—steers) out of 304 offered sold in the weekly Fed Cattle Exchange Auction. The weighted average price was $119.75 for deliver at 1-9 days. There were POs on two lots of heifers at $118.00 and $119.50.
Choice boxed beef cutout value was 28¢ lower on Wednesday afternoon at $205.30/cwt. Select was 28¢ lower at $199.61.
Live Cattle futures closed an average of $1.93 higher ($1.52 to $2.87 higher in spot Feb).
Feeder Cattle futures closed an average of $2.03 higher ($1.72 to $2.27 higher).
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Major U.S. financial indices closed sharply higher on Wednesday, fueled by stronger than expected quarterly earnings reports from the likes of Bank Of America. Apple’s announcement that it plans to repatriate billions of dollars of cash from overseas—and pay billions in taxes here—also provided support.
The Dow Jones Industrial Average closed 322 points higher. The S&P 500 closed 26 points higher. The NASDAQ closed 74 points higher.
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“The hard cold weather in the northern and eastern U.S. and the warm dry weather in the southern and western U.S. will likely contribute to further declines in hay stocks and support hay prices through the rest of the winter,” says Stephen Koontz, an agricultural economist with Colorado State University, in the latest issue of In the Cattle Markets.
As it is, Koontz points out that all-hay production was 2.6% less last year than in 2016, according to the recently released annual Crop Production Summary from USDA’s Economic Research Service.
“The largest decreases were in states most impacted by dry weather last year, including Montana and the Dakotas, and there were substantial decreases in states with some of the largest production, including California and Texas,” Koontz says. “Missouri and Nevada showed substantial increases among the higher-production states. On farm hay stocks as of Dec. 1 showed a 3% decline compared to the prior year.”