Cattle futures closed sharply lower Wednesday, apparently driven by fund selling and likely pressure from outside markets.
Live Cattle futures closed an average of $2.53 lower ($1.97 to $2.95 lower).
Feeder Cattle futures closed an average of $4.35 lower.
Negotiated cash fed cattle trade ranged from limited on light demand to a standstill through Wednesday afternoon, according to the Agricultural Marketing Service.
Last week, live prices were $185/cwt. in the Texas Panhandle, $186 in Kansas, $189-$192 in Nebraska and $190 in the western Corn Belt. Dressed prices were $300 in Nebraska and $298-$300 in the western Corn Belt.
Choice boxed beef cutout value was $1.07 higher Wednesday afternoon at $339.06/cwt. Select was 22¢ lower at $309.26/cwt.
Corn futures closed 1¢ to 4¢ lower through Jly ‘24 and then mostly 1¢ higher.
Soybean futures closed mostly fractionally mixed.
KC HRW Wheat closed mostly 10¢ lower.
Major U.S. financial indices closed mixed Wednesday after dropping sharply lower following the Federal Reserve’s decision to let current interest rates ride at its meeting this week, as expected. However, the nation’s bank also insinuated more hikes were likely to come later.
“Holding the target range steady at this meeting allows the Committee to assess additional information and its implications for monetary policy,” according to an FOMC statement. “Tighter credit conditions for households and businesses are likely to weigh on economic activity, hiring, and inflation. The extent of these effects remains uncertain.”
The Dow Jones Industrial Average closed 232 points lower. The S&P 500 closed 3 points higher. The NASDAQ was up 53 points.
West Texas Intermediate Crude Oil futures (CME) closed 99¢ to $1.15 lower through the front six contracts.
Rapid escalation of wholesale beef prices since Memorial Day suggests beef demand remains positive, according to David P. Anderson, Extension livestock economist at Texas A&M University.
“Beef production will continue to be lower than a year ago, supporting higher wholesale beef prices. Normally, beef production increases seasonally in the summer months,” Anderson explains, in the latest issue of In the Cattle Markets. “Even though production may increase from current levels, it will be below last year. Reduced beef production combined with positive beef demand has drawn down beef in cold storage dramatically since the first of the year. Since January cold storage beef stocks have declined 86 million pounds, or 16%.”
As mentioned recently in Cattle Current, estimated year-to-date beef production of 11.8 billion pounds last week was 592.5 million pounds less (-4.8%) than a year earlier.
“It would appear beef demand actually changed post-coronavirus, when compared to the previous time period,” explains Andrew P. Griffith, agricultural economist at the University of Tennessee, in his weekly market comments. “…In the short term, beef supply is being impacted by slaughter rates and slaughter weights. Total steer and heifer slaughter continue to run below year-ago levels, but strong boxed beef prices incentivize growing animals to a larger weight. In recent weeks, cattle dressed weights have been catching up to year-ago weights, and it is likely cattle feeders will attempt to push finished weights higher than last year’s weights. This is about the only way to influence beef production in the short term.”