The weekly weighted average five-area direct price for fed steers was $1.68 lower on a live basis last week at $113.17/cwt. Steer prices in the beef were $3.98 lower at $180.80.
There were too few transactions to trend negotiated cash fed cattle in any region on Monday, but early sales were decidedly pessimistic with some live trade in Nebraska and the western Corn Belt at $110/cwt.; early dressed sales at $175.
Cattle futures started the week limit down and near limit-down as equity markets plunged amid continued uncertainty about COVID-19, coupled with the outbreak of an oil price war over the weekend that sent crude oil prices into free-fall.
Live Cattle futures closed an average of $2.89 lower.
Feeder Cattle futures closed limit-down $4.50 across the board.
Wholesale beef values were generally steady on light demand and offerings, according to the Agricultural Marketing Service.
Choice boxed beef cutout value was 11¢ lower Monday afternoon at $207.36/cwt. Select was 25¢ lower at $202.32.
Corn futures closed 2¢ to 5¢ lower.
Soybean futures closed mostly 15¢ to 21¢ lower.
Major U.S. financial indices plunged Monday, to their lowest levels since early 2019, fueled by the continued spread of COVID-19 and the panic it spawns, as well as an oil price war.
The simple version goes something like this: Saudi Arabia and most of its OPEC allies wanted to cut oil production in an effort to stabilize oil prices, which were losing significant ground due to the COVID-19-slowed global economy. Russia said no, so Saudi Arabia set about offering oil at lower prices. As oil prices plummet, so does the economic health of companies tied to the energy sector.
Crude Oil futures—West Texas Intermediate on the CME—closed $8.98 to $10.15 lower through the front six contracts. Spot Apr closed $10.15 lower (-24.59%) than the previous session and $15.62 lower (-33.4%) week to week.
The Dow Jones Industrial Average closed 2,013 points lower. The S&P 500 closed 225 points lower. The NASDAQ was down 624 points.
Although it’s too soon to tell if COVID-19 is impacting beef demand, or to what degree, Derrell Peel, Extension livestock marketing specialist at Oklahoma State University says it’s certainly possible there are negative impacts, especially where exports are concerned.
“There are a multitude of market factors to sort out including: new trade agreements, macroeconomic changes (stock market, interest rates, etc.), exchange rates, African Swine Fever, and others that will make it more difficult to determine the more direct impacts of COVID-19 on international and domestic beef markets,” Peel says.
In the meantime, there has been little seasonal improvement to wholesale beef prices.
Compared to the prior year, for Choice, Peel says rib primal prices last week were 10.4% less, loin values were 10.8% less, brisket values were 13.8% less, chuck values were down 7% and rounds were 1.3% less. He adds Select primal values are also lower year over year.
“Weakness in boxed beef prices does not necessarily mean that beef demand is lower,” Peel says. “Beef production is up 5.1% year over year for the first eight weeks of 2020. Beef prices would normally be pressured with higher beef production even with stable demand.”