Live Cattle futures softened Monday, perhaps on profit taking, given stronger cash prices and higher wholesale beef values. Feeder Cattle gained, though, with some chatter crediting support to the potential impact of the recent arctic blast.
Other than 30¢ and 2¢ higher in the back two contracts, Live Cattle futures closed an average of 44¢ lower.
Other than 2¢ lower in the front two contracts, Feeder Cattle futures closed an average of 86¢ higher.
Corn futures closed fractionally higher to 1¢ higher.
Soybean futures closed 4¢ to 5¢ higher.
Wholesale beef values were sharply higher on Choice and firm on Select with fairly good demand and light offerings, according to the Agricultural Marketing Service.
Choice boxed beef cutout value was $2.26 higher Monday afternoon at $223.55/cwt. Select was 42¢ higher at $217.21.
Major U.S. financial indices closed lower Monday, with more data pointing toward slowing domestic economic growth. In this case, it was less construction spending than expected for December, according to the latest report from the U.S. Department of Commerce.
The Dow Jones Industrial Average closed 206 points lower. The S&P 500 closed 10 points lower. The NASDAQ was down 17 points.
“It appears that herd expansion is nearly over, although the level of beef replacement heifers is large enough to support a minimal level of additional herd expansion in 2019,” says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly market comments.
Peel is referring to last week’s Cattle report. Although there were more beef cows Jan 1—299,500 more than a year earlier—significantly fewer beef heifers were retained as replacements.
Specifically, there were 5.92 million beef replacement heifers Jan. 1, according to the Cattle report. That was 183,300 head fewer than a year earlier or 3.0% less.
“Beef replacement heifers as a percent of the beef cow herd on Jan. 1 of 2019 was 18.7%. This ratio is down from 19.4% one year ago as heifer retention moves closer to levels consistent with zero herd growth,” Peel explains. “A record heifer retention level occurred in 2016 with beef replacement heifers at 21.0% of the beef cow herd. Over the past 30 years this ratio has averaged 17.8%.”
That doesn’t mean the herd will necessarily shrink much after hitting the cyclical peak.
“While cyclical expansion may be mostly complete, there is no indication of herd liquidation at this time. Average cattle prices are expected to continue at current levels and seem likely to hold cattle numbers steady in 2019,” Peel says. “Future market conditions, good or bad, could prompt additional expansion or liquidation in 2020 and beyond. Producers should continue to monitor domestic and international market conditions to see what new cattle market direction emerges in the coming months.”