Cattle futures found a foothold on Monday and recovered a portion of Friday’s losses. Depending on whom you talked to, explanations ranged from some seeing a bottom and hunting for bargains, to strength in wholesale beef prices and feedlot market currentness.
Except for 57¢ higher in the back two contracts, Live Cattle futures closed an average of $1.04 higher.
Feeder Cattle futures closed an average of $1.47 higher ($1.15 to $1.60 higher).
Choice boxed beef cutout value was 71¢ higher on Monday afternoon at $223.23/cwt. Select was 20¢ higher at $214.84.
*******************************
Major U.S. financial indices closed solidly higher on Monday. Presumably, it was something of a relief rally as President Trump softened his rhetoric about imposing tariffs on aluminum and steel, leading some to believe a trade war will be averted.
The Dow Jones Industrial Average closed 336 points higher. The S&P 500 closed 29 points higher. The NASDAQ closed 72 points higher.
*******************************
“In general, there is no reason to expect feeder markets not to follow seasonal tendencies,” says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly market comments. “While there may be relatively fewer feeder cattle marketed in the March to May period, feedlot demand is likely to be somewhat muted as feedlots are quite full until some cattle are marketed. Thus, the overall demand/supply balance likely has not changed a great deal for the spring period.”
Lightweight feeder prices typically peak in March, while heavyweight feeder prices usually increase from a February low heading towards a summer peak, Peel says.
Peel is speaking to the increased late-fall and early-winter placements resulting, in part, from dry conditions the pushed cattle from wheat pasture early or prevented them ever going to pasture.
Moreover, unless it rains soon in winter wheat portions of the Southern Plains, Peel explains, “Wheat production prospects will decrease sharply and it is increasingly likely that wheat producers will terminate wheat and switch to a summer crop. Even if the wheat receives rain and begins to grow it is unlikely that many producers will purchase new stockers for graze-out.”