As expected, significantly higher feedlot placements revealed in Friday’s monthly Cattle on Feed report cast a pall over Cattle futures Monday, darkened by wildly volatile outside markets. However, they recovered some lost ground by the end of the session.
Feeder Cattle futures closed an average of $1.46 lower (92¢ to $2.05 lower).
Live Cattle futures closed an average of $1.03 lower (25¢ to $2.02 lower).
Negotiated cash fed cattle trade ranged from mostly inactive with very light demand to a standstill through Monday afternoon, according to the Agricultural Marketing Service.
Last week, live prices were at $137/cwt. in the Southern Plains, $137-$138 in Nebraska and at $137-$139 in the western Corn Belt. Dressed prices were $218.
The five-area direct average steer price last week was 89¢ higher on a live basis at $137.50/cwt. The average steer price in the beef was 7¢ lower at $217.92.
Choice Boxed beef cutout value was $1.09 higher Monday afternoon at $293.50/cwt. Select was $2.46 higher at $284.79.
Corn futures closed mostly 2¢ higher, riding the coattails of Wheat futures, which remain bolstered by the geopolitical tension in eastern Europe.
Soybean futures closed mostly 7¢ to 13¢ lower on rains in South America.
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Major U.S. financial indices started out Monday rampaging lower as investors continued to flee risk amid uncertainty surrounding how quickly the fed will raise interest rates and by how much, as well as the tensions brewing between Russia and Ukraine. By the end of the session, however, they reversed course, presumably on perceived bargain buying.
The Dow Jones Industrial Average closed 99 points higher. The S&P 500 closed 12 points higher. The NASDAQ was up 86 points.
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“Although cattle numbers are generally declining, feedlots will try to maintain inventories as long as possible,” says Derrell Peel Extension livestock marketing specialist at Oklahoma State University, in his weekly market comments. In part, he was explaining the 6.5% (+119,000 head) year-over-year increase in December feedlot placements revealed in the monthly Cattle on Feed report.
“Producers may have helped feedlots with large December placements as rising feeder prices encouraged later and larger auction totals…at least in some regions,” Peel says. “In Oklahoma, for example, feeder cattle auction totals for the three weeks of December sales were up 22.4% year over year.”
Peel points out lighter cattle made up the lion’s share of increased placements with those weighing less than 700 lbs. up 9.5% compared to the previous year, while cattle going on feed weighing more than 800 lbs. were just 1.8% more.
“Feeder cattle supplies are expected to tighten considerably in 2022,” Peel says. “Declining cattle numbers are projected to reduce cattle slaughter by 2.5-3.0% in 2022 and lead to a 2.5% decrease in beef production for the year. However, drought could change the timing by forcing more liquidation and slaughter sooner and delaying the decrease in production until later.”
For annual perspective, Peel says total fed steer and heifer slaughter (federally inspected) was 25.97 million head last year with heifer slaughter of 9.83 million head comprising 37.8% of fed slaughter, the largest percentage since 2004.
“Total cow slaughter was 6.67 million head and accounted for 20.1% of total slaughter, the highest percentage since 2011,” Peel says. “Beef cow slaughter totaled 3.562 million head, up 9.0% year over year.”