Cattle futures faded early follow through pressure Monday morning to rally back for a positive close.
Except for 20¢ lower in the back contract, Live Cattle futures closed an average of 71¢ higher (27¢ to $1.35 higher).
Feeder Cattle futures closed an average of $1.19 higher after four consecutive sessions of lower money (75¢ to $1.45 higher).
Wholesale beef values were steady to weak on light to moderate demand and moderate offerings, according to the Agricultural Marketing Service.
Choice boxed beef cutout value was 41¢ lower Monday afternoon at $221.82/cwt. Select was 25¢ lower at $202.51.
Corn futures closed mostly 4¢ to 5¢ higher through Sep ‘20 and then mostly fractionally higher to 1¢ higher.
Soybean futures closed 10¢ to 16¢ higher through Jul ‘20 (16¢ higher in the front four contracts) and then 6¢ to 9¢ higher.
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Major U.S. financial indices edged higher Monday, basically erasing minimal losses from the previous session. Traders are likely content to wait for further direction from the Fed meeting scheduled to take place Tuesday and Wednesday.
The Dow Jones Industrial Average closed 22 points higher. The S&P 500 closed 2 points higher. The NASDAQ was up 48 points.
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“Softening fed cattle prices in 2019 and the prospect of higher feed input costs could delay steers and heifers from entering feedlots,” say analysts with USDA’s Economic Research Service, in the monthly Livestock, Dairy and Poultry Outlook (LDPO) released Monday. “This could incentivize keeping lightweight cattle on pasture longer to add weight, which may lead to a more gradual pace of heavier cattle placed on feed so that feedlots will spend less time feeding them to the appropriate finishing weights. The slower pace of placement will likely be reflected in fewer fed cattle to be marketed for slaughter in early 2020.”
Higher anticipated feed costs and the anticipated slower pace of fed cattle marketings in the fourth quarter are behind the reduction in projected beef production for this year to 27.2 billion lbs., which would still be 332 million lbs. more than last year.
“Lower fed cattle prices have turned feedlot margins negative, and higher forecast feed input prices could make feedlots less willing to bid up prices for feeder cattle for the rest of 2019,” say ERS analysts. “Based on recent price data, the second-quarter 2019 feeder steer price was lowered by $3 to $142/cwt. Faced with continued poor operating margins, the 2019 third and fourth-quarter price forecasts were each lowered $5 from the prior month to $145 and $142/cwt., respectively. As a result, this month’s annual price forecast for 2019 was $4 lower at $142. The 2020 annual price forecast was reduced $5 from last month’s forecast to $145/cwt. as higher forecast feed costs and a lower forecast for fed cattle prices weigh on feedlot margins.”