Growing fears about the global spread of novel coronavirus hammered equity and futures markets Monday.
Live Cattle futures close an average of $2.29 lower, from $1.35 lower at the back to limit-down $3.00 toward the front.
Other than 5¢ higher in waning spot Jan, Feeder Cattle futures closed an average of $3.84 lower, from $3.17 lower toward the back to limit-down $4.50 toward the front.
Wholesale beef values were lower on Choice and steady on Select with light to moderate demand and moderate offerings, according to the Agricultural Marketing Service.
Choice boxed beef cutout value was 90¢ lower Monday afternoon at $213.59/cwt. Select was 20¢ lower at $210.50.
Corn futures closed mostly 2¢ to 6¢ lower.
Soybean futures closed 4¢ to 5¢ lower through Jan ‘21 and then mostly 1¢ higher.
As alluded to earlier, equity markets sank Monday beneath the weight of increasing fears about the global spread of coronavirus and its potential economic impact, especially given that the epicenter is in China, a driver of the world’s economic growth.
The Dow Jones Industrial Average closed 453 points lower. The S&P 500 closed 51 points lower. The NASDAQ was down 175 points.
“With total cattle inventories at or just past a cyclical peak, feedlot inventories will likely peak in the next few months,” says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly market comments. “However, average feedlot inventories are currently record large. After peaking last August then declining for two months, the 12-month moving average of feedlot inventories moved higher the last three months and is currently at 11.639 million head, record large for the current data series back to 1996.” He explains the 12-month moving average removes seasonality, allowing month-to-month comparisons of annual average feedlot inventories.
In reviewing Friday’s monthly Cattle on Feed report, Peel points out the 11.96 million head of cattle on Feed Jan. 1 (feedlots with 1,000 head or more capacity) were the most for the month since 2008. December placements of 1.83 million head were the most for the month since 2011 and December marketings of 1.83 million head represented the highest total for the month since 2010.
“Cattle slaughter is expected to decrease in 2020, including a slight year-over-year decline in steer and heifer slaughter and lower cow slaughter,” Peel says. “However, large current feedlot inventories confirm that slaughter will be higher early in the year before decreasing in the second half of 2020. Total annual beef production is expected to be slightly higher year over year as heavier carcass weights offset lower slaughter. Beef production in the first half of the year will be higher on increased slaughter and larger carcass weights before lower slaughter pulls beef production down late in the year.”