Negotiated cash fed cattle trade ranged from a standstill to mostly inactive on very light demand through Monday afternoon, according to the Agricultural Marketing Service.
In the Western Corn Belt last week, live sales traded from $120-$124/cwt. and dressed sales from $195-$202.
Live trade in the Southern Plains last week was at $119.
In Nebraska last week, live sales were at $120-$123 and dressed at $195.
Cattle futures gained traction Monday, buoyed by last Friday’s friendly USDA reports (see below).
Feeder Cattle futures closed an average of $1.44 higher.
Live Cattle futures closed an average of 97¢ higher.
Choice boxed beef cutout value was $1.30 higher Monday afternoon at $267.93/cwt. Select was 98¢ higher at $250.92/cwt.
Grain futures edged higher Monday on a hotter, drier near-term weather outlook.
Corn futures closed up 2¢ to 3¢ through new-crop contracts, then mostly 6¢ to 7¢ higher.
Soybean futures closed up mostly 8¢ to 9¢, except for mostly 6¢ higher in the front four contracts.
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Major financial indices posted modest gains on Monday, as investors appeared content to wait for Wednesday’s Federal Reserve update on the economy and interest rates.
The Dow Jones Industrial Average closed 83 points higher. The S&P 500 closed 11 points higher. The NASDAQ was up 4 points.
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“While it is not clear that drought has contributed significantly to cattle liquidation thus far, the potential is high for additional herd liquidation in the remainder of the year,” says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly market comments.
Peel was referring to Friday’s semiannual USDA Cattle report, which pegged the July 1 beef cow inventory at 31.4 million, which was 650,000 head fewer (-2.03%) than the same time a year earlier.
Beef heifers retained for replacement of 4.3 million head were 100,000 head fewer (-2.27%) than the previous year.
“Tighter cattle supplies, combined with continued strong beef demand leads to expectations for modestly higher prices for the remainder of 2021 and beyond,” Peel says. “Fourth-quarter prices for calves, feeders and fed cattle are currently projected to average 8-12% higher year over year. However, profitability will be tempered by higher input costs, including sharply higher prices for feed grains and supplements.”
Likewise, Peel explains the feedlot situation continues to improve relative to slaughter capacity constraints.
“It appears that the feedlot industry has finally moved past the cyclical bulge of cattle numbers and should be operating with declining numbers going forward for the foreseeable future,” Peel says, citing the latest Cattle on Feed report.
As mentioned in Monday’s Cattle Current, June feedlot placements (feedlots with 1,000 head or more capacity) of 1.67 million head were 7.1% less (128,000 head fewer) than last year. June marketings of 2.02 million head were 2.7% more (53,000 head more) than a year earlier. Total cattle on feed July 1 of 11.29 million head was 1.3% less (148,000 head fewer) than the previous year.
“The overall message of these two reports is that declining cattle numbers are improving cattle market conditions both for the remainder of the year and into 2022 and beyond,” Peel says.