Negotiated cash fed cattle trade remained undeveloped through Tuesday afternoon. Although too few to trend, there was a limited number of sales in Kansas at $122/cwt. on a live basis and at $123 in Nebraska.
Despite stronger wholesale beef values and recent firmness in cash fed cattle prices, Cattle Futures closed lower Tuesday, led by Feeder Cattle. Pressure included sharply lower outside markets, perhaps less weather impact from the weekend than anticipated and concerns about longer term demand strength (see “financial indices” below).
Live Cattle futures closed an average of $1.24 lower through the front three contracts and then an average of 61¢ lower.
After 40¢ lower in spot Jan, Feeder Cattle futures closed an average of $1.35 lower.
Corn futures closed mostly 2¢ lower through Sep ’20 and then fractionally lower to 1¢ lower.
Soybean futures closed 5¢ to 7¢ lower through Sep ’20 and then 2¢ to 3¢ lower.
Wholesale beef values were higher on moderate to fairly good demand and light offerings, according to the Agricultural Marketing Service.
Choice boxed beef cutout value was $1.08 higher Tuesday afternoon at $216.34/cwt. Select was 86¢ higher at $211.72.
Major U.S. financial indices closed sharply lower Tuesday, erasing gains from the previous session. Pressure included news from the International Monetary Fund the previous day, suggesting that global economic growth is slowing. Investors also seemed to be rattled by reports of slowing economic growth in China, specifically.
The Dow Jones Industrial Average closed 301 points lower. The S&P 500 closed 37 points lower. The NASDAQ was down 136 points.
“Interest in purchasing breeding stock has been cautious, relative to current spot and futures market pricing for calves and yearlings…Bred cow prices at auctions during the last quarter of 2018 were down 10-20% from a year earlier in key cattle production regions,” say analysts with the Livestock Marketing Information Center (LMIC), in the latest Livestock Monitor.
Based on average prices reported by the Agricultural Marketing Service (AMS), LMIC analysts say prices in Georgia were 19% less for cows weighing 1,200-1,300 lbs. and bred 4-6 months. They brought $912.30/head in December, versus $1,119.89 a year earlier.
For the same month, mid-age cows in Montana weighing 1,200-1,300 lbs. sold 6% less year over year.
“Not surprisingly, Midwest auction cow price changes from late 2017 to late 2018 posted a drop between that of Montana and Georgia; prices at Saint Joseph, MO were down 15%,” say LMIC analysts.
Keep in mind, breeding stock markets in some areas, like Missouri, were pressured by drought.
As for calf prices, LMIC projects Southern Plains steer calf prices (500-600 lbs.) to average $167-$174/cwt. this year, compared to the 2018 calf price average of $171.39 last year. LMIC forecasts yearling steer prices (700-800 lbs.) at $145-$150/cwt., compared to $150 last year. LMIC analysts point out that in mid-January, the November Feeder Cattle futures contract closed at $149.85, versus $144.93 a year earlier.