Negotiated cash fed cattle prices end up sharply higher in late trade last week: $4 higher at $123/cwt. in the Southern Plains and Nebraska; $1-$3 higher in the western Corn Belt at $119-$121. Dressed sales were $5 higher in Nebraska at $195; steady to $5 higher in the western Corn Belt at $190-$195.
Recently higher cash fed cattle prices and continued firmness in wholesale beef values continue to support Cattle futures. They were pressured on Wednesday by likely profit taking; added pressure for Feeder Cattle early from stronger grain prices.
Live Cattle futures closed narrowly mixed (from an average of 29¢ lower to an average of 22¢ higher), with a sharp increase in open interest.
Feeder Cattle futures closed an average of 71¢ lower through the front four contracts, but well off of session lows, erasing Monday’s gains. They were 7¢ lower to 2¢ higher across the back half of the board.
Corn futures closed fractionally higher to 2¢ higher.
Soybean futures closed 10¢ to 12¢ higher through Sep ‘19 and then mostly 6¢ to 9¢ higher.
Wholesale beef values were higher on Choice and steady on Select with moderate to fairly good demand and light offerings, according to the Agricultural Marketing Service.
Choice boxed beef cutout value was $1.29 higher Wednesday afternoon at $216.64/cwt. Select was 25¢ higher at $210.91.
Major U.S. financial edged higher after early pressure on Wednesday. Support included higher crude oil prices, stronger tech stocks and bank shares.
The Dow Jones Industrial Average closed 18 points higher. The S&P 500 closed 3 points higher. The NASDAQ was up 30 points.
“The past few years have been a demand-driven environment where stronger than expected beef demand led to stronger than expected calf and yearling prices,” says Josh Maples, Extension livestock economist at Mississippi State University. “These have been important transition years that coped with the sharp supply increases. Looking ahead, slower herd growth numbers begin to paint a brighter price picture for 2019 and 2020 if domestic demand and exports continue to grow.”
In the most recent issue of In the Cattle Markets, Maples explains beef production, including about 2% expected growth this year, would be about 15% more in 2019 than it was in 2015.
“This would be the fastest four-year growth since 1973-1977,” Maples says. “With respect to the cattle cycle, recent cowherd trends suggest 2020 could potentially mark the end of the current U.S. cattle inventory build-up. But, it is worth noting that this is looking like a unique cattle cycle. History might suggest that after herd growth stops, herd declines will follow, but the ingredients for near-term herd declines are not obvious at this point. Prices have mostly remained at or above profitable levels for cow-calf producers, which does not provide much incentive for liquidation.” He expects herd growth to be flat this year.
On the other side of the ledger, Maples emphasizes the strong domestic economy and international demand continue to support beef and cattle prices, despite increasing supplies of beef, pork and chicken.