Negotiated cash fed cattle trade was at a standstill in all major cattle feeding regions through Monday afternoon, according to the Agricultural Marketing Service, with too few transactions to trend.
Last week, prices were at $114/cwt. on a live basis in the Southern Plains and Northern Plains, and at $114-$115 in the western Corn Belt. Dressed trade was at $180-$182.
The average five-area direct fed steer price last week was $114.23/cwt. on a live basis, which was 61¢ more than the prior week. The average steer price in the beef was $181.33, which was $2.01 higher.
Cattle futures found some traction Monday amid relatively light trade, following the late-week decline. Support included lower Corn futures, higher outside markets, stronger wholesale beef prices and the neutral Cattle on Feed report.
Live Cattle futures closed an average of 40¢ higher.
Feeder Cattle futures closed an average of 28¢ higher, expect for unchanged in Apr.
Choice boxed beef cutout value was 96¢ higher Monday afternoon at $230.95/cwt. Select was $3.10 higher at $223.05.
Corn futures closed 5¢ to 8¢ lower in the front three contracts, and then mostly 2¢ to 3¢ lower.
Soybean futures closed mostly 5¢ lower, after 1¢ higher in the front two contracts.
Major U.S. financial indices closed higher Monday, buoyed by declining Treasury yield rates and increased demand for big tech stocks.
The Dow Jones Industrial Average closed 103 points higher. The S&P 500 closed 27 points higher. The NASDAQ was up 162 points.
“There is considerable optimism for fed cattle markets going forward, beginning in the second quarter and especially in the second half of the year,” says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly market comments. “…Feedlots have been somewhat front-loaded thus far in 2021 which has contributed to the sluggish fed cattle markets in the first quarter of the year. Feedlot supplies should tighten in the second half of the year after working through current inventories.”
For context, Peel says fed steer and heifer slaughter is 0.8% more year over year for the first nine weeks of 2021; steer and heifer carcass weights are 13-14 lbs. heavier year over year. He explains that reality, along with last month’s weather-based packer disruptions, overwhelmed the opportunity for a seasonal rally in cash fed cattle prices.
Market-ready fed cattle supplies will begin to tighten, though, with total feedlot placements for the last six months 2.3% less year over year, according to Peel. Placements in February were 1.86% less than a year earlier, according to the latest USDA Cattle on Feed report.
“Currently Live Cattle futures for April and June are trading at roughly the same level with June; at times, premium to April. This is unusual because June is usually at a significant discount to April Live Cattle futures. In fact, the previous five-year average discount of June to April Live Cattle futures in March is -$8.47/cwt.,” Peel says. “The fact that April and June are at equal levels this year is due to weak April prices relative to June expectations. Live Cattle futures prices for October and December reflect additional optimism for fed cattle markets in late 2021 and heading into 2022.”