Packers showed their hand early and came out swinging in Nebraska Tuesday where live prices were $4-$6 higher at $145-$149/cwt. That was on slow trade and light demand. Dressed trade there last week was $225-$226.
Elsewhere, trade was limited on light demand with too few transactions to trend, according to the Agricultural Marketing Service. However, early prices were steady to higher.
Last week, live prices were $136-$137 in the Southern Plains, $141 in Colorado and $141-$143 in the western Corn Belt, where dressed trade was $225.
Choice Boxed beef cutout value was $1.10 lower through Tuesday afternoon at $269.44/cwt. Select was 63¢ lower at $246.82.
Cattle futures closed little changed Tuesday but firmed following the previous day’s decline.
Feeder Cattle futures closed an average of 14¢ lower, except for an average of 8¢ higher in two contracts.
Live Cattle futures closed an average of 42¢ higher (7¢ to $1.20 higher).
Corn futures closed fractionally lower to 1¢ lower through Jly ‘23 and then mostly 5¢ lower.
Soybean futures closed 5¢ to 11¢ lower through Aug ‘23 and then mostly fractionally lower.
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Volatile two-sided trade left major U.S. financial indices lower Tuesday, as investors await the Fed’s next crack at interest rates later this week. The latest producer price index for final demand added pressure, indicating wholesale prices in May rose 10.8% year over year, according to the U.S. Bureau of Labor Statistics.
The Dow Jones Industrial Average closed another 151 points lower. The S&P 500 closed 14 points lower. The NASDAQ was up 19 points.
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Year-to-date beef cow slaughter was 15% more than last year through the end of May and likely will end the year with a double-digit increase, says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University.
“While some drought reduction regionally has improved pasture conditions (Oklahoma is a good example), range and pasture conditions nationally are still at the worst level ever for this time of year,” Peel explains in his weekly market comments. “In other areas, drought continues to expand. Colder than normal weather in northern regions this spring and reduced fertilizer use everywhere are also contributing to delayed and reduced pasture and hay production. The most recent weeks of slaughter data have year-over-year beef cow slaughter increasing rather than decreasing, as the reality of reduced pasture and hay production becomes clear moving into June.”
Peel points out this year’s beef cow slaughter increase comes after last year’s elevated level, which was 9% more than the previous year for a net herd culling rate of 11.6%. Beef cows in the Jan. 1 inventory were 2.3% less than the prior year — 4.9% less than the recent peak number in 2019.
“Given beef cow slaughter so far this year a significant level of culling is guaranteed,” Peel says. “In order for the level of beef cow slaughter to just hold steady with last year, beef cow slaughter for the remainder of the year would have to drop 9.4% year over year. That is extremely unlikely. Note that beef cow slaughter in 2021 was 3.56 million head. A 2022 beef cow slaughter level equal to that implies herd liquidation, given the 3.41 million heifers expected to calve this year, even if every one of those heifers actually entered the herd.
“Just holding cow slaughter for the remainder of this year equal to last year would still result in an annual increase in cow slaughter of 5.9% because of slaughter so far this year. That would result in a record herd culling level of 12.5% in 2022. That also seems unlikely at this point. The current level of beef cow slaughter suggests a culling rate in excess of 13% this year and a potential beef cow herd decline of 1 million head or more.”
On a related note, Peel explains the net impacts of heifer retention and cow culling drive changes in annual beef cow numbers.
“Heifer retention for 2022 is already determined at this point. We know that we started the year with 5.61 million beef replacement heifers, which was 18.6% of the Jan. 1 beef cow inventory. Of those, 3.41 million head are expected to calve in 2022,” Peel says.