Feeder Cattle futures rallied an average of $2.11 higher Monday, helping Live Cattle futures close an average of 65¢ higher, underpinned by bullish fundamentals and last week’s stronger cash.
Last week, negotiated cash fed cattle prices were $1-$2 higher on a live basis at $165/cwt. Dressed prices were $3 higher in Nebraska at $265 and steady to $3 higher in the western Corn Belt at $262-$265.
On Monday, trade ranged from mostly inactive on very light demand to a standstill through the afternoon, according to the Agricultural Marketing Service.
Choice boxed beef cutout value was 88¢ higher Monday afternoon at 290.20/cwt. However, Select was 39¢ lower at $276.47/cwt.
Corn futures closed mostly fractionally lower to 2¢ lower.
KC HRW Wheat closed mostly 10¢ to 18¢ lower.
Soybean futures closed 5¢ to 7¢ higher., except for 10¢ to 11¢ higher in the front four contracts.
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Major U.S. financial indices closed narrowly mixed Monday.
The Dow Jones Industrial Average closed 40 points higher. The S&P 500 closed 2 points higher. The NASDAQ was down 13 points.
West Texas Intermediate Crude Oil futures (CME) closed 68¢ to 78¢ higher through the front six contracts.
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Rising cash prices and Cattle futures underscore declining beef production, which will continue for a prolonged period.
“The decrease in cattle numbers since the 2018 peak calf crop has finally worked through the system,” says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly market comments. “Cattle slaughter and beef production are expected to decrease for the balance of 2023 and beyond. With continuing drought conditions, it is not clear exactly how cattle and beef market timing will develop going forward, but the question is not one of whether beef production will fall, but rather how fast and how much it will fall in 2023.”
Peel uses Oklahoma auction prices to provide perspective on recent price gains. He explains the average Oklahoma auction price last week for steers weighing 500 pounds was $239.66/cwt., the highest since September 2015. The average price for feeder steers weighing 825 pounds was $181, the highest since October 2015. The five-area direct fed steer price was $165.09, the highest since April 2015.
“Cattle prices are expected to continue trending higher in 2023 and new record cattle prices will happen, if not in 2023, at some point in the next two or three years,” Peel says. “Higher cattle prices will push wholesale and retail beef prices against beef demand, which remains strong but somewhat muted currently. There will be resistance to higher beef prices, but the reality of decreasing beef supplies will ultimately push beef prices higher.”
You can find more of Peel’s insights here.