Stronger fed cattle prices last week and increasing fundamental strength helped lift Live Cattle futures an average of 83¢ higher on Tuesday (30¢ higher near the back to $1.30 higher toward the front).
However, Feeder Cattle futures closed an average of $1.13 lower, pressured by a bounce in Corn futures.
Grain and Soybean futures strengthened as the Black Sea Grain Initiative expired amid Russia’s increased aggression in its ongoing invasion of Ukraine. Increasing weather premiums could have also been in play.
Corn futures closed mostly 19¢ to 29¢ higher.
KC HRW Wheat closed 12¢ to 17¢ higher.
Soybean futures closed mostly 9¢ to 14¢ higher.
Negotiated cash fed cattle trade ranged from inactive on very light demand to a standstill through Tuesday afternoon, according to the Agricultural Marketing Service.
Last week, live prices were $186/cwt. in Nebraska, $184-$185 in the western Corn Belt and $175-$184 in Kansas on a light test. Dressed prices were $290-$292 in Nebraska and $290-$295 in the western Corn Belt. Live prices in the Texas Panhandle the previous week were $178.
Choice boxed beef cutout value was $2.10 lower Tuesday afternoon at $304.68/cwt. Select was 87¢ lower at $276.61/cwt.
Major U.S. financial indices closed higher again Tuesday, driven by more positive quarterly corporate earnings than expected from such notables as Bank of America.
The Dow Jones Industrial Average closed 76 points higher. The S&P 500 closed 17 points higher. The NASDAQ was up 131 points.
West Texas Intermediate Crude Oil futures (CME) closed $1.38 to $1.60 higher through the front six contracts.
Based on recent price strength and tightening cattle supplies, USDA’s Economic Research Service (ERS) increased expected feeder steer prices (750-800 pounds, Oklahoma City) in the July Livestock, Dairy and Poultry Outlook.
“In the first half of 2023, feedlot placements, as well as feeder and stocker sales receipt data, point to a faster pace than what was expected at the beginning of this year,” ERS analysts explain. “Further, improving pasture conditions, relatively cheaper corn prices, and the prospect for higher fed cattle prices have fueled feeder cattle sales. In turn, this likely lowers the expected supply for feeder cattle available in the second half of 2023, which will likely further elevate feeder cattle prices.”
Compared to the previous month, projected prices increased $17 in the third quarter to $241/cwt. and $20 in the fourth quarter to $246. The 2023 annual price increased $9.87 to $220.49. Prices were projected $23 higher for the first quarter of 2024 at $245. The forecast 2024 feeder steer price increased $23.75 to $245.
As mentioned recently in Cattle Current, the ERS also increased expected fed steer prices (five-area direct) for the remainder of this year to $178/cwt. in the third quarter and $183 in the fourth quarter for an annual average price of $175.24. Next year’s annual average fed steer price was forecast to be $183.50.
“Fed steer prices in the 5-area marketing region established a new record for the week ending June 11 of $188.75/cwt.,” ERS analysts say. “This was likely buoyed by a boost in packer margins supported by weekly comprehensive wholesale boxed beef values in June that climbed as high as 24% above year-ago levels at $325.29/cwt. for the week of June 23.”