Cash strength and weaker Corn futures helped lift Feeder Cattle futures Monday.
Feeder Cattle futures closed an average of $1.80 higher.
Live Cattle futures closed narrowly mixed, from an average of 18¢ lower in three contracts to an average of 34¢ higher (7¢ to 75¢ higher).
Apparently, the trade wasn’t buying reports of Russia pulling out of the Black Sea Grain initiative, set to expire on Tuesday without renewal. Grain futures were stronger right after the reports but lost ground throughout the session.
Corn futures closed mostly 6¢ to 8¢ lower.
KC HRW Wheat closed mostly 7¢ to 13¢ lower.
Soybean futures closed mostly 2¢ to 7¢ higher.
Negotiated cash fed cattle trade was inactive on very light demand in all major cattle feeding regions through Monday afternoon, according to the Agricultural Marketing Service.
Last week, live prices were generally $3 higher in Nebraska at $186/cwt., $1-$2 higher in the western Corn belt at $184-$185 and from $3 lower to $6 higher in Kansas at $175-$184. Dressed prices were steady to $2 higher in Nebraska at $290-$292 and steady to $5 higher in the western Corn Belt at $290-$295.
Live prices in the Texas Panhandle the previous week were $178.
The five-area direct weighted average fed steer price last week was $2.21 higher on a live basis at $184.27/cwt. The average fed steer price in the beef was $1.35 higher at $291.34.
Choice boxed beef cutout value was 84¢ higher Monday afternoon at $306.78/cwt. Select was 87¢ lower at $275.74/cwt.
Major U.S. financial indices closed higher Monday ahead of this week’s bellwether quarterly corporate earnings reports.
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 95¢ to $1.27 lower through the front six contracts.
USDA will release the semiannual Cattle report Friday, which could provide some clues about the pace of further beef cow liquidation this year.
“The report is expected to show that herd liquidation continued in the first six months of the year but may slow in the remainder of the year,” says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly market comments. “There is no data currently to support the idea that heifer retention is under way, but it may have started with recent improvements in range and pasture conditions. The beef replacement heifer number in the upcoming report will be of keen interest and is likely to show a still smaller number compared to last year but could show a slight increase year over year if heifer retention has begun.”
Likewise, analysts with USDA’s Agricultural Marketing Service explain preliminary numbers for the first half of the year indicate yearling heifer slaughter was the most in 15 years, while year-to-date beef clow slaughter is the second most in 10 years,
“With that number of females going to market in the first half of the year, it will take a considerable amount of time to turn the tide and have more heifer retention,” AMA analysts say.
Moreover, AMS analysts point out significant drought persists broadly across key the cow-calf states of Kansas and Missouri and Nebraska, as well as parts of Texas.
“The cattle inventory report will show that the beef cow herd continued to decline in the first half of the year. While beef cow slaughter is down thus far — 12.0% less year over year in the first six months of the year — the current pace suggests a herd culling rate over 12% for the year. Beef herd expansion requires a herd culling rate below 10% and likely below 9% for a year or more,” Peel says.
While beef cow slaughter is likely to decline more significantly in the second half of the year, Peel explains, “It is unlikely to drop enough to come close to stabilizing the beef cow herd this year.”