After a day’s reprieve, wheat soared higher, boosting front-month Corn and Soybean futures. K.C. Wheat was 75¢ higher in the front four contracts.
Corn futures closed 9¢ to 22¢ higher in the front three contracts and then mostly 4¢ to 11¢ lower.
Soybean futures closed 2¢ to 4¢ higher in the front two contracts and then mostly 8¢ to 11¢ lower.
Stouter feed prices took Cattle futures down another peg.
Feeder Cattle futures closed an average of $1.68 lower, erasing much of the headway made in the previous session.
Live Cattle futures closed an average of 72¢ lower (12¢ to $1.75 lower), except for 15¢ higher in the back contract.
Negotiated cash fed cattle trade ranged from limited on light demand to mostly inactive on light demand with too few transactions to trend in any region, according to the Agricultural Marketing Service.
So far this week, live prices are $2 lower in the Southern Plains at $140/cwt., $2-$4 lower in Nebraska at $140 and $2 lower in the western Corn Belt at $142. Dressed prices are $2-$3 lower at $224-$225.
Choice boxed beef cutout value was $1.37 lower Thursday afternoon at $254.35/cwt. Select was $3.55 lower at $247.79.
U.S. beef export sales continue strong, according to USDA’s U.S. Export Sales report for the week ending Feb. 24. Net sales of 23,800 metric tons for 2022 were 64% more than the previous week and 23% more than the prior four-week average. Increases were primarily for South Korea, China, Japan, Taiwan and Canada.
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Major U.S. financial indices closed lower Thursday, as investors appeared skittish about Friday’s monthly employment report, as well as Russia’s war on Ukraine.
The Down Jones Industrial Average closed 96 points lower. The S&P 500 closed 23 points lower. The NASDAQ was down 214 points.
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“With both revenues and costs rising, cattle producers must adjust cattle production and marketing to maximize profits,” says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly market comments. “Economists model this decision mathematically resulting in the rule that profit maximization is the point at which marginal revenues equal marginal costs. This balance occurs when the value of the last unit produced equals the additional cost of producing that last unit. Of course, cattle producers don’t use mathematical models to maximize profits but should use marginal thinking to adjust to changing market conditions. Marginal decision-making means that production is adjusted at the margin, i.e. with minor modifications and tweaks to production systems rather than major changes.”
Peel explains the unique circumstances of each individual operation will determine whether the net impact of higher revenues and higher costs poses the need to cut back slightly on production, hold steady, or increase production.
“There are short and long-run considerations and risks to be considered as well,” Peel says. “Care should be taken that short term efforts to manage higher costs should not, for example, jeopardize herd health by cutting vaccination programs or skimping on nutrition and risking decreased future herd productivity. “Markets are extremely volatile now and likely to remain so for the foreseeable future. Producers should consider the use of risk management to protect revenues and potentially use forward pricing or other means to manage input costs.”