Negotiated cash fed cattle prices continued softer week-to-week on Wednesday. Live prices were $117/cwt. in the Texas Panhandle, $110-$117 in Kansas and mostly $117 in Nebraska. Dressed trades were at $175-$185.
Cattle feeders offered 1,736 head in the weekly Fed Cattle Exchange auction Wednesday. Just one lot–199 steers from Texas–sold at a weighted average price of $110.50/cwt. for delivery at 1-17 days.
Despite softer cash prices, surging outside markets helped support Cattle futures on Wednesday.
Except for 10¢ lower in the back two contracts, Live Cattle futures closed an average of 40¢ higher, from 2¢ higher to $1.15 higher.
Feeder Cattle futures closed an average 84¢ higher.
Wholesale beef values continue to plunge as packing capacity recovers. Choice boxed beef cutout value was $22.83 lower Wednesday afternoon at $295.90/cwt. Select was $13.80 lower at $276.78.
Corn futures closed mostly fractionally higher to 1¢ higher.
Soybean futures closed 5¢ to 7¢ higher through Jan ’21 and then mostly 3¢ to 4¢ higher.
Major U.S. financial indices closed strongly higher Wednesday.
Positive news included fewer lost jobs than originally anticipated, based on the closely watched ADP National Employment Report®. Still, private sector employment decreased by 2.76 million jobs from April to May, according to the report.
“The impact of the COVID-19 crisis continues to weigh on businesses of all sizes,” says Ahu Yildirmaz, co-head of the ADP Research Institute. “While the labor market is still reeling from the effects of the pandemic, job loss likely peaked in April, as many states have begun a phased reopening of businesses.”
The Dow Jones Industrial Average closed 527 points higher. The S&P 500 closed 42 points higher. The NASDAQ closed 74 points higher. Those were the highest levels since the first part of March.
“It’s too soon to talk too much about markets returning to normal, but the steady improvements associated with the packing industry facing fewer obstacles is a relief,” says Stephen Koontz, agricultural economist at Colorado State University, in the latest issue of In the Cattle Markets from the Livestock Marketing Information Center.
Koontz explains recent weekly commercial cattle slaughter under federal inspection is a little more than 71% of the year’s peak weekly volume, before COVID-19 began reducing slaughter capacity. The low point was approximately 60% of the peak.
“These slaughter numbers will determine when the cattle and beef markets return to more normal relationships,” Koontz says. “There are very large supplies and substantial inventory of long-fed cattle on feed. There has been a steady improvement in fed cattle and feeder cattle prices through last month and into the current. Continued improvement hinges on any further disruptions and steady elevation in slaughter numbers.”
From the lows of the year, Koontz points out: the five-area weighted average fed steer price is up about $15 at $115/cwt.; 7 to 8-weight feeder prices are up about $15 to $135; 4 to 5-weight calf prices are up about $8 to $170.
“But let’s not forget those steer and heifer slaughter weights are in a contra- seasonal increase and are no less than 40 lbs. per animal above last year. That’s a 4.8% increase in beef supplies due to carcass weights,” Koontz says. “And there are 4.8 million head of cattle on feed over 120 days, based on the last report. Working through these supplies will easily require the rest of the summer.”