Cattle futures closed mostly lower Monday, despite logic suggesting a friendly to neutral Cattle on feed report Friday. Besides technical pressure and near expiration of spot Live Cattle, less estimated week-to-week cattle slaughter and the higher year-to-year cattle inventory could have lent bearishness.
Live Cattle futures closed an average of 90¢ lower, except for 75¢ higher in the back contract.
Feeder Cattle futures closed an average of $1.90 lower (35¢ to $3.12 lower), except for an average of 22¢ higher in the back three contracts.
Choice boxed beef cutout value was 78¢ lower Monday afternoon at $202.55/cwt. Select was 50¢ lower at $190.13.
Corn futures closed mostly fractionally mixed.
Soybean futures closed mostly 2¢ to 3¢ higher.
Major U.S. financial indices closed higher Monday, led by tech stocks and buoyed by hopes surrounding another round of federal economic aid to address COVID-19.
The Dow Jones Industrial Average closed 114 points higher. The S&P 500 closed 23 points higher. The NASDAQ closed 173 points higher.
There’s still plenty of backlogged market-ready fed cattle to work through, but it appears progress is being made, says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly market comments.
“The calculated estimates of cattle on feed over 120 days are still very large compared to last year, but the difference has decreased by some 160,000 head since May,” Peel says, referring to Friday’s monthly Cattle on Feed report. “It appears that the backlog is decreasing but a sizable number of cattle remain to be cleaned up before feedlots will be current. In the January-April period, feedlot placements were down just over 1 million head year over year.”
Peel also notes the report may highlight some regional drought impacts, with increased June placements of cattle weighing less than 700 lbs. in Texas and Colorado.
As for the semiannual Cattle inventory report, also issued Friday, Peel says the slow decrease in beef cow numbers, relative to January, and the same number of beef replacement heifers suggest no accelerated liquidation at this point.
“The second half of the year may tell the tale as cow-calf producers react to fall calf market conditions,” Peel says. “Overall, it appears that cattle numbers continue a slow tightening of inventories going forward.”