Negotiated cash fed cattle trade was at a standstill in all major cattle feeding regions through Monday afternoon, according to the Agricultural Marketing Service.
Last week, Live prices were $5-$10 higher in the Texas Panhandle at $185/cwt., $6-$8 higher in Kansas at $186, steady to $9 higher in Nebraska at $189-$192 and $3-$5 higher in the western Corn Belt at $190. Dressed prices were $8-$15 higher in Nebraska at $300 and $8-$10 higher in the western Corn Belt at $298-$300.
The weighted average five-area direct fed steer price last week was $188.75/cwt. on a live basis, which was $6.72 more than the previous week. The average fed steer price in the beef was $9.16 higher at $299.21.
Choice boxed beef cutout value was $4.50 higher Monday afternoon at $337.43/cwt. Select was $4.53 higher at $210.24/cwt.
Last week’s strong gains in cash fed cattle prices and wholesale beef values helped lift Live Cattle futures higher on Monday, dragging Feeder Cattle along.
Live Cattle futures closed an average of $1.24 higher.
Feeder Cattle futures closed an average of 50¢ higher.
Corn futures closed mostly 10¢ to 18¢ higher, apparently driven once again by the latest weather outlook in the Corn Belt — drier this time.
Soybean futures closed mostly 3¢ to 8¢ higher, except for lower in the front two contracts.
KC HRW Wheat closed mostly fractionally mixed through May ‘24, and then 3¢ to 4¢ lower.
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Major U.S. financial indices closed higher Monday with apparent optimism the Fed will skip raising interest rates at this week’s meeting as inflation eases.
The Dow Jones Industrial Average closed 189 points higher. The S&P 500 closed 40 points higher. The NASDAQ was up 202 points.
West Texas Intermediate Crude Oil futures (CME) closed $2.66 to $3.05 lower through the front six contracts.
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Barring residual or redeveloping drought in key beef cow states, currently improving drought conditions and the onset of El Niño suggest beef herd liquidation is ending, according to Derrell Peel, extension livestock marketing specialist at Oklahoma State University, in his weekly market comments. Nevertheless, he explains the beef cow herd will likely contract again this year.
“The first step to stabilizing the beef cow herd is the reduction of beef cow slaughter and a lower rate of cow culling,” Peel says. “Following record beef herd culling in 2022, beef cow slaughter is down 11.5% so far in 2023, a sign that herd liquidation is slowing. However, I suspect that, until recently, the decrease in total beef cow slaughter was masking some continued liquidation in the drought areas of the plains… Beef cow slaughter is expected to decrease more sharply in the second half of the year.”
Definitive indication of herd expansion will come with increased heifer retention, according to Peel.
“Right now, no such signs exist, though I suspect that some heifer retention is beginning,” Peel says. “In fact, heifer slaughter thus far in 2023 is fractionally higher than last year’s elevated level. Of course, the reduced heifer feedlot placement that follows increased heifer retention will show up as lower heifer slaughter only after several months. The July Cattle inventory report may be the first sign that shows an increased inventory of beef replacement heifers. The report will be released July 21, 2023. Heifer slaughter is expected to start declining in the second half of the year.”
In the meantime, Peel notes the low inventory (Jan. 1) of replacement heifers — bred heifers calving this year and heifer calves to breed for calves in 2024.
“The bred heifer inventory is the lowest since 2011 and the inventory of replacement heifer calves is the lowest in the 23 years of data available,” according to Peel. “The number of replacement heifers is not enough to prevent more herd liquidation this year and likely not enough to do more than stabilize the beef cow herd in 2024. The big push for heifer retention will likely begin with weaning heifers this fall. These heifers will be bred in 2024, calve in 2025 and begin to increase beef production in 2026. It doesn’t seem possible to speed up the timeline.”
As herd expansion takes hold, reduced beef cow slaughter and increased heifer retention will pull beef production lower for a time.
“In the last herd expansion that began in 2014, total cattle slaughter in 2015 dropped to the lowest levels since 1963, resulting in the lowest beef production since 1993,” Peel explains. “We can expect analogous reductions in cattle slaughter and beef production in 2024 and 2025 at least. Increased heifer retention will pull feedlot inventories down sharply and keep them low for the expected three years of heifer retention that will be needed for the next herd expansion. With drought seemingly on its heels, the process of herd rebuilding is poised to begin.”