Negotiated cash fed cattle trade continued Wednesday. Live trade in the western Corn Belt was $2-$5 higher than last week at $110-$112/cwt. Dressed trade was steady at $175. Although too few to trend through the afternoon, live trade in the Southern Plains was mostly steady to $3 lower at $110-$113. In Nebraska, live prices were steady at $110; steady to $5 lower in the beef at $170-$175.
Cattle feeders offered 4,680 head in the weekly Fed Cattle Exchange auction Wednesday. Of those, 1,813 head sold: 1,415 head for delivery at 1-9 days brought an average weighted price of $112.76/cwt.; 398 head for delivery at 1-17 days brought an average weighted price of $111.00. Offerings were from the Southern Plains, Nebraska and Colorado.
Cattle futures started strong Wednesday and then turned sharply lower as equity markets tanked, basically losing what was gained in the previous session.
Live Cattle futures closed an average of $3.78 lower, from $2.55 lower at the back to $4.40 lower.
Feeder Cattle futures closed an average of $3.49 lower, from 97¢ lower in spot Mar to limit-down $4.50.
Wholesale beef values were sharply higher again, with good demand and heavy offerings.
Choice boxed beef cutout value was $7.31 higher Wednesday afternoon at $247.24/cwt. Select was $9.18 higher at $238.50.
Corn futures closed 5¢ to 8¢ lower through Jly ‘21 and then mostly fractionally lower to 1¢ lower.
Soybean futures closed fractionally higher to 1¢ higher through Sep ’20 and then fractionally lower to 3¢ lower.
Major U.S. financial indices closed sharply lower Wednesday, giving back most of the gains from the previous session, as investors fretted over the lack of clarity regarding the COVID-19 stimulus package being prepared by Congress.
West Texas Intermediate Crude Oil futures collapsed $5.14 to $6.58 lower through the front six contracts. Spot Apr closed at $20.37. That’s the lowest level in nearly two decades, according to various sources.
The Dow Jones Industrial Average closed 1,338 points lower. The S&P 500 closed 131 points lower. The NASDAQ was down 344 points.
“Faltering fed cattle prices, due to coronavirus developments, have ratcheted down profitability prospects for non-hedged animals to be closed out in the coming months. Feeder cattle prices may come under increased pressure. The lack of projected profitability for fed cattle to be sold this summer (breakeven sale prices above what summer Live Cattle futures are offering), is likely to be a factor dampening placements of animals into feedlots,” say analysts with the Livestock Marketing Information Center (LMIC), in the latest Livestock Monitor.
LMIC has estimated monthly cattle feeding returns since the mid-1970s. Those estimates assume feeding-out a 750-lb. steer in a commercial Southern Plains feedlot and include all costs of production. The estimates are not survey-based and presume normal weather conditions. Cash prices are used, meaning that fed cattle prices and feedstuff costs are not hedged.
“In 2019, monthly returns averaged about $9.50 per steer, ranging from $180.92 for an animal sold in December down to -$152.85 for September. Over the prior five years (2014-18), the annual average was about $23.00 per steer. The 10-year per animal average was about -$7.00,” say LMIC analysts. “For steers sold during January, the LMIC estimated profitability at $150.00 to $151.00 per head. Just over a month ago, the LMIC projected that the February number would come in at $136.00 to $140.00 per steer. If the cattle were not hedged, that turned out to be optimistic. Hedged animals will return excellent profits through June sale dates…For steers (750 lbs.) placed on feed in February, which will have a sale date of August, the breakeven price based on current feedstuff costs is $109 to 111/cwt.”