Cattle Current Daily—March 22, 2023

Cattle Current Daily—March 22, 2023

Cattle futures firmed in cautious trade Tuesday, helped along by more optimistic outside markets.

Feeder Cattle futures closed an average of 38¢ higher, except for an average of 9¢ lower in the back two contracts.

Live Cattle futures closed mixed, from an average of 44¢ higher in the front three contracts to an average of 25¢ lower.

Lower grain and Soybean futures helped.

Corn futures closed mostly 2¢ to 4¢ lower.

KC HRW Wheat closed mostly 5¢ to 8¢ lower.

Soybean futures closed mostly 13¢ to 19¢ lower.

Negotiated cash fed cattle trade was mostly inactive on light demand in all regions through Tuesday 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.

Choice boxed beef cutout value was $1.10 lower Tuesday afternoon at $279.92/cwt. Select was $2.39 lower at $271.55/cwt.

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Major U.S. financial indices closed higher again Tuesday, supported by comments from U.S. Treasury Secretary, Janet Yellen that the federal government was ready to provide more support to smaller lenders if needed.

In prepared remarks at Tuesday’s American Bankers Association Washington, D.C. Summit, Yellen explained actions taken to protect FDIC-insured deposits at recently failed lenders, Silicon Valley Bank and Signature Bank.

“The situation is stabilizing. And the U.S. banking system remains sound. The Fed facility and discount window lending are working as intended to provide liquidity to the banking system. Aggregate deposit outflows from regional banks have stabilized,” Yellen explained.

Apparently, investors are also speculating the banking fiasco will bring a close to monetary tightening sooner rather than later.

The Dow Jones Industrial Average closed 316 points higher. The S&P 500 closed 51 points higher. The NASDAQ was up 184 points.

West Texas Intermediate Crude Oil futures (CME) closed $1.55 to $1.85 higher through the front six contracts. 

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Despite softer Cattle futures trade and mixed cash prices last week, calf prices at auction remain on an upward trajectory, buoyed by demand for summer-grazing cattle, says Andrew P. Griffith, agricultural economist at the University of Tennessee, in his weekly market comments. He explains value of gain on forage should be strong through the spring and summer, given the high cost of feedlot gain.

“Feeder cattle prices are likely to continue increasing as the CME Feeder Cattle Index price has gained $8 to $9/cwt. since the beginning of February. However, the increase in the cash price of feeder cattle has slowed, which may be part of the reason feeder cattle futures experienced weakness,” Griffith says. “Feeder cattle prices will increase further moving through spring, summer, and fall, but their ability to reach current expectations in the futures market is uncertain.”

On the other side of the equation, Griffith says the anticipated hole in cattle supplies will come eventually but likely later than expected as there is little evidence of additional heifer retention currently.

“Cattle on feed numbers will slowly dwindle as heifer retention picks up and as fewer calves are born, which is certain to be the case this year,” Griffith says. “There remains upside potential in the finished cattle market this spring, but there may not be enough to meet my lofty expectations of $170 cattle.”

2023-03-21T19:40:20-05:00

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