Negotiated cash fed cattle trade was limited on light demand in the Texas Panhandle through Tuesday afternoon, according to the Agricultural Marketing Service. Compared to last week, early live sales traded steady at $120/cwt. In Kansas, trading was slow on moderate demand. Compared to last week, early live sales traded steady to $1 higher, mostly at $120/cwt.
In Nebraska and the Western Corn Belt, cash trading was mostly inactive on light demand. In Nebraska on Monday, live sales traded at $125/cwt.; dressed sales last week traded from $196-$202/cwt. In the Western Corn Belt, last week live sales traded from $124-$126/cwt. and dressed at $196-$202/cwt.
Whether it was hedging for inflation (see below) or simply considering the fundamentals and optimistic prices ahead, Live Cattle futures closed higher Tuesday, dragging Feeder Cattle along.
Live Cattle futures closed an average of $1 higher (45¢ to $1.92 higher).
Feeder Cattle futures closed an average of 82¢ higher (62¢ to $1.17 higher).
Choice boxed beef cutout value was $1.66 lower Tuesday afternoon at $273.34/cwt. Select was $2.03 lower at $256.74/cwt.
Net U.S. beef export sales were 23,700 metric tons (for 2021) the week ending July 1, according to USDA’s Weekly Export Sales report. That was 96% more than the previous week and 64% more than the prior four-week average.
Increases were primarily for South Korea, Japan, China, Mexico, and Canada.
Grain futures edged higher with follow-through support from the previous day’s, WASDE.
Corn futures closed 7¢ to 8¢ higher through Jly ‘22, and then mostly 3 higher
Soybean futures closed mostly 1¢ to 3¢ higher.
Major U.S. financial indices closed lower on Tuesday after reports the consumer price index rose 0.9% last month and 5.4% compared to June 2020 – higher than expected and the biggest jump since 2008.
The index for all items less food and energy rose 0.9% in June after increasing 0.7% percent in May, according to the U.S. Bureau of Labor Statistics.
The food index increased 0.8% in June. The beef index rose 4.5% in June, its steepest one-month increase since June of last year.
The Dow Jones Industrial Average closed 107 points lower. The S&P 500 closed 15 points lower. The NASDAQ was down 56 points.
Despite elevated feed costs, prospects for higher fed cattle prices are pushing projected feedlot returns higher, according to the latest monthly Focus on Feedlots Survey (FFS) from Kansas State University.
Currently, net returns projected for closeouts in June are -$11.22/head for steers and -$47.34/head for heifers. Estimated returns in May were +$3.71 for steers and -$39.91 for heifers.
After projected returns for steers of -$19.30/head in July, the FFS forecasts positive returns for the remainder of the year ranging from $3.34 (Sept.) to +$76.33 (Dec.). Feedlot cost of gain for September through December ranges from $126/cwt. (Sept.) to $137.08 (Dec.).
Projected returns follow a similar path for fed heifers.
Keep in mind that estimates exclude any price risk management.