Cattle futures closed higher Wednesday on apparent technical support and the notion that packer production is gaining.
Live Cattle futures closed an average of $1.11 higher.
Feeder Cattle futures closed an average of 95¢ higher (17¢ higher in waning spot Jan to $1.30 higher toward the back).
Negotiated cash fed cattle trade was slow on light demand in the Texas Panhandle through Wednesday afternoon, according to the Agricultural Marketing Service. Live sales were steady at $137/cwt.
Trade was slow on moderate demand in Kansas at $136-$137, mostly $1 lower at $136.
In Nebraska and the western Corn Belt, trade was limited on light demand. So far this week, in both regions, live sales are steady to $2 lower at $137 and dressed trade is steady at $218.
Wholesale beef prices continued to falter, suggesting the seasonal top may have been breeched. Choice Boxed beef cutout value was $2.92 lower Wednesday afternoon at $289.46/cwt. Select was $3.60 lower at $279.72.
Soybean futures surged on South American weather and dragged Corn futures along.
Soybean futures closed 21¢ to 32¢ higher through the front five contracts and then mostly 5¢ to 15¢ higher.
Corn futures closed 3¢ to 7¢ higher through the front six contracts and then mostly 1¢ lower.
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Major U.S. financial indices closed narrowly mixed Wednesday, continuing the volatile seesaw of late, but in reverse order this time: gaining early and losing late in the session.
Part of the give and take likely had to do with the statement from the Federal Reserve.
“With inflation well above 2% and a strong labor market, the Committee expects it will soon be appropriate to raise the target range for the federal funds rate,” said Federal Reserve Chair, Jerome Powell, in a statement. The timing and degree remain uncertain.
The Dow Jones Industrial Average closed 129 points lower. The S&P 500 closed 6 points lower. The NASDAQ was up 2 points.
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“Currently, levels indicate that 2022 will see continued herd contraction and the USDA Cattle report Jan. 31 will likely see the inventory of cows that have calved and beef heifers held as replacements decrease from 36.97 million head to approximately 36.75 million head,” says Brenda Boetel, Extension livestock economist at the University of Wisconsin-River Falls, in the latest issue of In the Cattle Markets.
Boetel is referring to the percentage of heifers on feed currently (38.8%) and the average on-feed percentage (38%) for 2019-2021.
“In January 2014, at the most recent cattle cycle inventory low, the percentage of heifers on-feed inventory was 35.5%. This percentage will decrease during the initial phases of herd rebuilding as heifers will be held back as replacements, and the percentage will increase during herd contraction.”
Boetel adds that deferred live cattle prices will likely receive most of the pressure from increased feedlot placements revealed in the latest Cattle on Feed report, which were led by light weights.