Negotiated cash fed cattle prices continued the early-week’s lower tone through Tuesday afternoon, according to the Direct Slaughter Cattle Dashboard from USDA’s Agricultural Marketing Service. Live steers averaged $102.81/cwt. and live heifers averaged $101.62. In the beef, steers averaged $164.62 and heifers averaged $163.41.
Cattle futures rallied higher on Tuesday, amid relatively light trade, helped along by strength in outside markets, normalizing supply chains and possibly some early positioning ahead of the monthly Cattle on Feed report due out Friday.
Live Cattle futures closed an average of 99¢ higher (25¢ higher in spot Jun to $1.22 higher).
Feeder Cattle futures closed an average $2.03 higher ($1.70 higher in spot Aug to $2.30 higher at the back).
Choice boxed beef cutout value was 72¢ lower Tuesday afternoon at $227.89/cwt. Select was $1.18 lower at $213.17.
Corn futures closed mostly fractionally higher to 1¢ higher.
Soybean futures closed mostly 2¢ lower through Sep ’21 and then mostly unchanged.
Major U.S. financial indices closed strongly higher Tuesday, buoyed by news of an effective COVID-19 treatment, as well as a record high bounce in domestic retail sales.
Although 6.1% less than a year earlier, retail sales in May of $485.5 billion were a staggering 17.7% more than in April, according to the U.S. Census Bureau.
The Dow Jones Industrial Average closed 526 points higher. The S&P 500 closed 58 points higher. The NASDAQ closed 169 points higher.
Although consumers moved on from the panic grocery shopping they did in the early stage of COVID-19, they’re keeping up their at-home inventories of foods and beverages. At the end of last month, compared to early April, the estimated number of food and beverage packages on hand in homes declined by only 3%, according to the NPD Group (NPD).
Some consumers are finding it easier to maintain at-home inventories than others.
For the week ending May 28, 68% of U.S. grocery shoppers reported to NPD that they hadn’t encountered any out-of-stock foods and beverages they shopped for during the week. The other 32% of shoppers reported experiencing out-of-stock items that same week, according to NPD’s NET® COVID-19 Pantry & Food Strategy Tracker.
More specifically, 51% of the consumers who reported encountering out of stocks said they weren’t able to purchase the meat or poultry item they were looking for, which was 10% fewer than the previous week.
For perspective, 33% of consumers reported out of stocks of water, coffee, tea, and juice in the week ending May 28 compared to 25% the previous week.
Categories with increased week-to-week out of stocks reported by consumers included fruits, vegetables and potatoes, as well as dairy products.
Still, David Portalatin, NPD food industry advisor says, “Considering the unprecedented situations COVID-19 presented over the last few months, the U.S. food supply chain held up remarkably well.”
Net cattle feeding returns will be significantly negative through the summer, before improving, according to the latest Historical and Projected Kansas Feedlot Net Returns from Kansas State University.
Keep in mind, the net return projections reflect cash to cash, without any price risk management.
Currently, the net returns projected for steers closed out in May are -$107.72/head with a Feedlot Cost of Gain (FCOG) of $85.38/cwt. Net returns for heifers are projected at -$83.67/head with a FCOG of $91.82.
From there, projected net returns for steers range from -$194.58 per head (Aug.) to -$276.79 (June) with FCOG of $78.30 to $84.16/cwt. For September through February of next year, projected net returns range from -$73.90 (Sept.) to -$13.23 (Feb.) with FCOG ranging from $77.50 (Sept.) to $80.23 (Feb.).
Forecast summer net returns for heifers are similar: -$141.64 (Aug.) to -$240.81 (June) with FCOG of $85.87 (Aug) to $90.54 (June). For September through February of next year, projected net returns range from -$84.71 (Sept.) to -$19.48 (Feb.) with FCOG ranging from $83.54 (Nov.) to $86.29 (Jan.).