Negotiated cash fed cattle trade was at a standstill through Tuesday afternoon, according to the Agricultural Marketing Service.
Last week, live prices were at $138/cwt. in the Southern Plains and $140 in Nebraska and the western Corn Belt. Dressed trade was at $220-$222.
Surging corn futures took Cattle futures down a peg Tuesday, especially Feeder Cattle.
Feeder Cattle futures closed an average of $1.99 lower (70¢ lower toward the back to $3.57 lower in spot Jan).
Live Cattle futures closed an average of 77¢ lower (5¢ to $1.52 lower).
Choice boxed beef cutout value was 79¢ higher Tuesday afternoon at $266.82/cwt. Select was 33¢ higher at $259.23/cwt.
Bearish South American weather lit a fuse beneath soybeans, leading other grain futures along for the ride.
Soybean futures closed 27¢ to 34¢ higher through Aug ‘22 and then 12¢ to 18¢ higher in the next four contracts; mostly 2¢ higher the rest of the way.
Corn futures closed 10¢ to 20¢ higher through the front four contracts and then mostly 4¢ to 8¢ higher.
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Major U.S. financial indices closed mixed Tuesday, with most of the pressure coming from tech stocks.
The Dow Jones Industrial Average closed 214 points higher. The S&P 500 closed 3 points lower. The NASDAQ was down 210 points.
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“The pandemic has significantly altered how our economy functions, with the greatest impact coming from what we consume. Through October, in 2021 Americans spent 18% more on goods and about 1% less on services than they did in 2019. Compounded by a labor shortage, it is easy to see why supply chains have become one of the biggest economic challenges of the pandemic — demand has significantly exceeded the capacity of our existing system,” according to the 2022 Year Ahead Report from CoBank’s Knowledge Exchange.
CoBank analysts expect the U.S. farm economy to continue struggling with the ongoing supply chain dysfunction and cost inflation issues that emerged in the summer of 2021. They say historically strong prices will be more than offset by increases in cost structure for nearly all crop production including row crops, fruits and vegetables, and hay. They do not anticipate any significant pullback in farm-level costs until the third quarter of this year, at the earliest.
Moreover, according to the report, “Wage rates and overall labor costs are expected to remain firmly higher in 2022 as the industry seeks solutions to reduced labor availability. Automation capital expenditures at the plant level will continue in earnest despite the rapidly rising costs of machinery and equipment. Most processors view this as a necessary cost of doing business moving forward.”
However, CoBank analysts also explain, “Livestock producer margins should continue to be generally favorable overall, with the effect of shrinking beef cattle supplies finally showing up in higher prices at the producer level.”