Cattle futures rallied Tuesday, buoyed by declining Corn futures.
Feeder Cattle futures closed an average of $4.02 higher.
Live Cattle futures closed an average of $1.55 higher ($1.22 to $2.05 higher).
Corn futures took a sharp step lower, pressured by more rain forecast in the Corn Belt and despite deteriorating crop conditions displayed in the previous day’s weekly Crop Progress report. Keep in mind Acreage and Grain Stocks reports out Friday.
Corn futures closed mostly 15¢ to 27¢ lower.
Soybean futures closed 20¢ to 29¢ lower through Sep ‘24 and then mostly 17¢ lower.
KC HRW Wheat closed 20¢ to 28¢ lower.
Negotiated cash fed cattle trade ranged from light on light demand in the Southern Plains to mostly inactive on very light demand through Tuesday afternoon, according to the Agricultural Marketing Service.
Although too few to trend, there were a few live sales in Kansas at $178/cwt.
Last week, live prices were $180 in the Southern Plains $182-$185 in Nebraska and $184-$185 in the western Corn Belt. Dressed prices were $290.
Choice boxed beef cutout value was $3.81 lower Tuesday afternoon at $329.23/cwt. Select was $1.24 lower at $298.43/cwt.
Major U.S. financial indices rose Tuesday, supported by positive economic news including an unexpected May increase of 1.7% for new manufactured durable goods orders. Consumer Confidence in June was also significantly higher.
The Conference Board Consumer Confidence Index® increased to 109.7 in June, up from 102.5 in May.
“Consumer confidence improved in June to its highest level since January 2022, reflecting improved current conditions and a pop in expectations,” says Dana Peterson, Chief Economist at The Conference Board. “Greater confidence was most evident among consumers under age 35, and consumers earning incomes over $35,000. Nonetheless, the expectations gauge continued to signal consumers anticipating a recession at some point over the next 6 to 12 months.”
The Dow Jones Industrial Average closed 212 points higher. The S&P 500 closed 49 points higher. The NASDAQ was up 219 points.
West Texas Intermediate Crude Oil futures (CME) closed $1.29 to $1.67 lower through the front six contracts.
Fed cattle supplies are the snuggest in three years, says Stephen Koontz, agricultural economist at Colorado State University, reflecting on Friday’s monthly Cattle on Feed report.
In the latest In the Cattle Markets, Koontz notes cattle on feed more than 150 days were less than the previous month and the prior three years, the same for cattle on feed for 90 days or more.
“Cattle on feed inventories continue to tighten from the peaks in 2022,” Koontz says. “The beginning of June saw an inventory of 11.552 million, roughly even with the beginning of June 2018. And there will be more and more of this to come with the level of heifer and beef cow slaughter. Beef cow slaughter remains down considerably from the prior year, but my assessment is that the industry is finally showing a neutral position and not liquidating nor rebuilding.”
Koontz also points to evidence of continued strong beef demand illustrated by the muted reaction of Live Cattle futures to the Cattle on Feed report, which indicated feedlot placements were about 3% more than expected.
“The boxed beef composite value has rallied to almost $340/cwt., whereas it spent all of 2022 below $295 and much of that year between $255-$275,” Koontz explains. “There is clearly strong beef demand supporting the market. We also see this in a seasonally strong Choice-Select spread.”