Negotiated cash fed cattle trade was mostly inactive on very light demand in the western Corn Belt through Monday afternoon. Elsewhere, it was at a standstill, according to the Agricultural Marketing Service.
Last week, live trade was generally steady: $120/cwt. in the Southern Plains; $123-$125 in Nebraska; $125 in the western Corn Belt. Dressed trade was steady in Nebraska at $196-$202 and steady to $5 lower in the western Corn Belt at $196-$197.
Cattle futures faded early pressure from outside markets to close mostly higher.
Feeder Cattle futures closed an average of 52¢ higher, except for 5¢ lower in Apr.
Live Cattle futures closed narrowly mixed, from and average of 46¢ lower to an average of 16¢ higher.
Choice boxed beef cutout value was $1.45 lower Monday afternoon at $266.49/cwt. Select was $2.30 lower at $249.49/cwt.
Grain futures closed mixed Monday with traders eyeing sharply lower outside markets and weather.
Corn futures closed narrowly mixed, mostly 1¢ lower to fractionally higher.
Soybean futures closed 14¢ to 26¢ lower through Sep. ’22 and then mostly 9¢ lower.
Equity markets tumbled Monday with investors fretting the potential economic slowdown from resurgent COVID-19 cases among the unvaccinated.
The Dow Jones Industrial Average closed 725 points lower. The S&P 500 closed 68 points lower. The NASDAQ was down 152 points.
CME WTI Crude Oil futures closed $4.77 to $5.39 lower through the front six contracts.
“High feed prices mostly impact how cattle are produced. In an environment of high feed prices, the industry incentives are to make cattle bigger before feedlot placement and to slow down the rate of cattle production somewhat. For cow-calf and stocker producers, this means more opportunities for retained stockers and stocker production to heavier weights in response to those market signals,” says Derrell Peel, Extension livestock marketing specialist, in his weekly market comments.
More specifically, Peel explains feeder cattle markets respond to increased feed costs by reducing the price premium of lightweight feeders.
“This represents a reduction in the price rollback or price slide for feeder cattle as weight increases,” Peel says. “The result is to increase the value of gain for stocker production and thereby encourage cattle to achieve more weight prior to placement in the feedlot. More emphasis on stocker production also slows down the movement of cattle into the feedlot and reduces feed demand by spreading out feeder cattle over more time.”
Another way of looking at it, Peel says is that the price of lightweight feeder cattle would be significantly higher relative to heavy feeders with lower feed costs and the market line would be steeper and would be close to the green line.