Negotiated cash fed cattle trade was at a standstill in the Southern Plains and Nebraska through Monday afternoon. Elsewhere, it was mostly inactive on very light demand.
Prices on a live basis last week were at $112/cwt. in the Southern Plains, at $111-$112 in Colorado and at $110-$112 in Nebraska and the western Corn Belt. Dressed prices were at $175-$176.
The five-area average direct fed steer price last week was $2.32 higher than the previous week on a live basis at $111.51/cwt. The average steer price in the beef was $3.87 higher at $175.67.
Cattle futures fell hard Monday, beneath the weight of sharply lower outside markets and the unrelenting rise in feed costs.
Live Cattle futures closed an average of $1.83 lower.
Feeder Cattle futures closed an average of $2.72 lower, from $1.15 lower toward the back to $4.20 lower toward the front.
Choice Boxed beef cutout value was 8¢ lower Monday afternoon at $209.87/cwt. Select was 88¢ higher at $196.53.
Corn futures closed mostly fractionally lower.
Soybean futures closed mostly 4¢ to 6¢ higher.
Equities sold off at a brisk pace Monday, with most of the fuel appearing to be investor fears that a win by Democrats in Tuesday’s Georgia runoff election—giving that party control of both houses—could lead to an adverse business environment: higher taxes, more regulations, etc. Major U.S. financial indices closed off of session lows, though.
The Dow Jones Industrial Average closed 382 points lower. The S&P 500 closed 55 points lower. The NASDAQ was down 189 points.
“Strong beef demand and tightening cattle supplies provide cautious optimism for cattle markets in 2021,” says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly market comments. “Higher feed prices and continuing drought conditions are threats to individual producers and perhaps to overall market conditions in the coming year. Consumer demand will be supported by additional federal stimulus for a time but continuing macroeconomic challenges will persist through the year. The continuing pandemic and the time needed for vaccine implementation suggest that much of the promise of 2021 may be pushed into the second half of the year. In the meantime, uncertainty and volatility are likely to remain elevated and risk management continues to be a key management and marketing consideration.”
Peel points out cash corn prices in December, on average, were about 22% higher year over year, while sorghum prices up more than 50%, wheat prices were about 30% higher and soybean prices were up 35%.
“Cattle production will be affected by higher feed prices, not so much in terms of how much production will occur, but more in terms of how production will change,” Peel says. “For example, higher ration costs will change feedlot demand for the type and size of feeder cattle preferred in feedlots.”
On the plus side, Peel explains current hay supplies appear to be adequate with late- 2020 hay prices slightly less year over year for both alfalfa and other hay. Prices are projected lower for this year.
However, he also explains 41% of the U.S. was experiencing some degree of drought at the end of last year, mostly in the western half of the country. That was 31% more than a year earlier.
“The current level of drought is concerning and, should it persist into the coming growing season, may have significant impacts rather quickly in 2021,” Peel says.