Cattle futures showed signs of support early but ended mostly lower on Monday.
After $1.75 lower in spot Apr, Live Cattle futures closed narrowly mixed , from 52¢ lower to 17¢ higher.
Feeder Cattle futures closed an average of 74¢ lower (2¢ lower toward the front to $2.27 lower at the back).
Wholesale beef values were lower on light demand and heavy offerings, according to the Agricultural Marketing Service.
Choice boxed beef cutout value was $1.87 lower Monday afternoon at $250.97/cwt. Select was $4.24 lower at $238.14.
Corn futures closed mostly 3¢ to 4¢ lower.
After fractionally higher to 1¢ higher in the front three contracts, Soybean futures closed mostly 5¢ to 8¢ lower.
The USDA Grain Stocks and Prospective Plantings reports are scheduled to be released Tuesday morning.
The equities whipsaw continued Monday, to the upside this time, with major U.S. financial indices gaining back most of what was lost in the previous session.
Support included an announcement from Johnson & Johnson (J&J) that the company selected a lead COVID-19 vaccine candidate from constructs it has been working on since January. The company expects to initiate human clinical studies of its lead vaccine candidate by September 2020 at the latest. According to a statement, J&J anticipates the first batches of a COVID-19 vaccine could be available for emergency use authorization in early 2021, a substantially accelerated timeframe in comparison to the typical vaccine development process.
The Dow Jones Industrial Average closed 690 points higher. The S&P 500 closed 85 points higher. The NASDAQ was up 271 points.
In his weekly market comments, Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, provides some perspective on recent extreme market volatility, as well as underscoring the distinct dynamics of various cattle and beef markets.
Peel points out the Dow Jones Industrial Average dropped from more than 29,000 points in the third week of February to less than 19,000 a month later. During the same time, he says the Jun Live Cattle contract fell from about $112/cwt. to $86, reflecting ongoing concern about weakening U.S. and global macroeconomic conditions resulting from COVID-19, as well the risk of labor disruptions at packing plants.
Also from mid-February to mid-March, Peel explains, “Cash fed cattle prices declined from nearly $120/cwt. to a low around $106 on broader concerns reflected in the Live futures as well as the supply pressure of increased beef production.” He adds that year-to-date beef production is up 6.3% through mid-March, but cash fed cattle prices increased the last couple of weeks, due to the sharp demand increase for retail beef.
Similarly, macroeconomic uncertainty pressured Feeder Cattle futures from more than $143 in mid-February to about $109 a month later.
“Cash feeder cattle prices followed futures with the Oklahoma combined auction prices for 500-550 lb. No. 1 steer prices dropping from about $184/cwt. in the third week of February to a low near $152 one month later,” Peel says. “Prices for 750-800 lb. No. 1 steers declined from about $139/cwt. to $117 over the same period…The squeeze on available feeder supplies pushed feeder prices sharply higher last week by 10-12% over the previous week. Ripple effects will likely impact feeder cattle markets in the coming weeks.”
At the same time, as of Monday, the Choice boxed beef cutout value was 11% higher than the same time a year earlier and Select was about 9% higher.
“The different patterns of boxed beef, fed and feeder cattle prices in the past six weeks illustrates vividly the fact that these markets operate with very distinct dynamics,” Peel says, explaining “These dynamics have become very apparent as the distinction between the current market situation and expectations for future supply and demand conditions has widened.”