Unsurprisingly, negotiated cash fed cattle trade was yet to develop through Tuesday afternoon.
Cattle futures charged higher, though, fueled by limit-up gains in Lean Hog futures and technical support. Feeder Cattle were helped further by lower Corn futures.
Live Cattle futures closed an average of $1.48 higher.
Feeder Cattle futures closed an average of $3.61 higher ($2.65 higher at the back to $4.37 higher toward the front).
Wholesale beef values were sharply lower on light demand and heavy offerings, according to the Agricultural Marketing Service.
Choice boxed beef cutout value was $2.73 lower Tuesday afternoon at $214.73/cwt. Select was $2.32 lower at $192.09.
Corn futures closed mainly 5¢ to 6¢ lower through Jul ‘20, and then 1¢ lower to 1¢ higher.
Soybean futures closed mostly 7¢ to 8¢ higher.
Tech stocks helped lead major U.S. financial indices to a narrowly mixed close on Tuesday. One way or the other, testimony from Federal Reserve Chair, Jerome Powell—to the House Financial Services Committee on Wednesday—will likely provide a spark. Traders will be looking for clues as to whether or not and when the Fed will cut interest rates.
The Dow Jones Industrial Average closed 22 points lower. The S&P 500 closed 3 points higher. The NASDAQ was up 43 points.
“The nearby, and deferred, contracts for both livestock products (Live Cattle and Feeder Cattle futures) appear to have found a bottom. This strong upward movement appears to be supported by both fundamental and technical information,” says Elliott Dennis, an Extension livestock economist at the University of Nebraska-Lincoln. In the latest issue of In the Cattle Markets, he explains, “Bottoming prices appears to have been driven by projected grain supplies, weather-driven pasture conditions, and wholesale meat demand.”
With that said, in his recent market comments, Andrew P. Griffith, agricultural economist at the University of Tennessee notes the narrow price range between summer and fall Feeder Cattle futures contracts; about 80¢.
“The lack of a price spread means the market is offering an incentive to keep adding weight to cattle if a person can do it fairly inexpensively,” Griffith explains. “Alternatively, if weight cannot be added inexpensively, then the market is not offering much of an incentive. In reality, the feeder cattle market is very stale and can make marketing decisions more difficult than they are naturally. From a stocker operator standpoint, it may be more advantageous to cut one’s losses on the current set of cattle and start a new group…”
There certainly appears to be ample grazing opportunity, with 68% of the nation’s pasture and range rated in Good or Excellent condition as of July 7, according to the most recent USDA Crop progress report. That’s 17% more than last year. Only 8% was rated as Poor or Very Poor, compared to 21% a year earlier.
“High quality pastures should incentivize cow-calf and stockers to retain cattle longer,” Dennis says. “Likewise, with the recent USDA announcement waiving the Nov. 1 grazing requirement on prevent planting acres, the summer grazing window may extend much longer this year. Both signals will likely shift how and when feeder cattle are placed in feedlots. If feedlot placements slow then this should dampen the seasonally low fall feeder cattle prices.”