Cattle futures leaked lower Monday amid recently declining open interest and uncertainty about the health of the banking structure, and despite Friday’s friendly Cattle on Feed report.
Feeder Cattle futures closed an average of 46¢ lower, except for an average of 20¢ higher in the back two contracts.
Live Cattle futures closed an average of 41¢ lower, except for an average of 22¢ higher in the back two contracts.
Negotiated cash fed cattle trade ranged from mostly limited on very light demand to a standstill through Monday afternoon, according to the Agricultural Marketing Service.
Last week, live prices were mainly $1 lower in the Southern Plains and Nebraska at $164/cwt., and steady to $2 lower in the western Corn Belt at $164-$165. Dressed prices were $1 lower at $264.
The five-area direct weighted average steer price last week was $1.23 lower on a live basis at $164.17. The average steer price in the beef was $1.50 lower at $263.82.
Choice boxed beef cutout value was $2.33 lower Monday afternoon at $281.02/cwt. Select was $1.50 higher at $273.94/cwt.
Corn futures closed mostly 1¢ to 2¢ lower through Jly ‘24 and then mostly 1¢ higher.
KC HRW Wheat closed 6¢ to 8¢ lower.
Soybean futures closed mostly 1¢ to 4¢ lower.
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Major U.S. financial indices closed higher Monday, apparently buoyed by the forced takeover of troubled Credit Suisse over the weekend, though plenty of questions remain for the banking sector.
The Dow Jones Industrial Average closed 382 points higher. The S&P 500 closed 34 points higher. The NASDAQ was up 45 points.
West Texas Intermediate Crude Oil futures (CME) closed 79¢ to 90¢ higher through the front six contracts.
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Considering declining feedlot supplies before herd rebuilding begins, Derrell Peel, Extension livestock marketing specialist at Oklahoma State University says 2012-17 appear to provide a useful analog to help understand how low feedlot inventories may decline and when they might turn the corner to higher levels.
“The current state of cattle inventories, especially the cow herd size, replacement heifer inventories and expected calf crops are generally analogous to the previous period beginning in late 2012,” Peel explains, in his weekly market comments. “In fact, the current situation reflects a more severe depletion of female inventories compared to the 2012-2017 period. Based on the analog period, feedlot inventories will likely decline from the feedlot inventory (12-month) moving-average peak (MA) in September 2022 to a level similar to the 2014 low in the coming months and remain relatively low for the next four years or longer.”
Peel points out feedlot inventories declined year over year for six consecutive months through March 1. Specifically, he explains the MA peaked in September 2022 at 11.8 million head. It was11.63 million head in Friday’s Cattle on Feed report, the lowest level since October 2020.
“The previous multi-year low in the feedlot inventory MA was in October 2014, after drought-forced herd liquidation in 2011-2013. The current beef cow herd is slightly smaller that the 2014 herd level,” Peel explains. “The beef cow herd is likely to drop a bit more in 2023. It is reasonable to expect that average feedlot inventories will drop close to the 2014 low of 10.375 million head or possibly even lower at some point in the coming months … The smallest calf crop of the next few years will be in 2024 at the earliest. Feedlot inventories will decline through 2023 with the low in 2024 or beyond.”