Cattle futures weakened Monday, pressured by recently waning wholesale beef values and sharply lower outside markets, but supported by lower Corn futures.
Feeder Cattle futures closed an average of 44¢ lower, except for 25¢ higher in spot May.
Live Cattle futures closed an average of 37¢ lower, except for 80¢ and 2¢ higher in the front two contracts.
Corn futures closed mostly 9¢ to 13¢ lower, while Soybean futures closed mostly 20¢ to 34¢ lower, pressured my optimism the forecast will enable rapid planting progress.
As of May 8, 22% of corn was planted, which was 42% less than last year and 28% less than average, according to the latest USDA Crop progress report. Twelve percent of soybeans were in the ground, which was 27% less than last year and 12% less than the average.
Negotiated cash fed cattle trade ranged from mostly inactive on light demand to a standstill through Monday afternoon, according to the Agricultural marketing Service.
Live prices last week were steady at $140/cwt. in the Southern Plains and at $146 in Nebraska. Prices were $2 lower to $3 higher in Colorado at $142-$148; steady to $1 lower in the western Corn Belt at $144-$147. Dressed prices were steady in Nebraska at $232, but steady to $2 lower in the western Corn Belt at $230-$232.
The weighted average five-area direct fed steer price last week was 8¢ higher at $143.42. The average steer price in the beef was $1.62 lower at $230.69.
Although lower week to week, Choice Boxed beef cutout value was $4.57 higher through Monday afternoon at $259.01/cwt. Select was 81¢ lower at $244.25.
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Wall Street’s selloff continued Monday as investors try to recalibrate value in the face of inflation and the Fed’s plans to battle inflation.
The Dow Jones Industrial Average closed 653 points lower. The S&P 500 closed 132 points lower. The NASDAQ was down 521 points.
West Texas Intermediate Crude Oil futures on the CME closed $5.50 to $6.68 lower through the front six contracts.
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Currently, there are no broad-based indications of weakening beef demand, but some red flags could be ready to unfold, says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University.
“In the last three weeks, Choice boxed beef values have dropped below year-ago levels, which were surging higher at this time in 2021,” Peel explains in his weekly market comments. “Beef demand is not likely to repeat last year’s levels, but current levels are still relatively high compared to recent years. Comparisons to last year will look weaker for boxed beef and many wholesale cut values but that is not really a valid comparison to judge beef demand in 2022.”
Peel points out beef demand was exceptionally strong over the last 12 months, driven by pent-up, post-pandemic demand and exports.
“A bellwether indicator of summer grilling demand is strip loin prices, which typically and reliably increase seasonally going into summer,” Peel says. “So far this year, strip loin prices have increased only modestly and have actually weakened since mid-April. This may indicate some demand weakness and bears watching in the coming weeks. Relative weakness in some chuck product prices may be related to slower growth in export demand. The ground beef market continues very strong due to fundamental demand.”
Potential demand headwinds include near record-high retail beef prices and inflation that is weighing on consumer wallets.
“However, all proteins are higher priced and the ratio of retail beef price to retail broiler chicken and pork prices is actually lower now compared to six months ago,” Peel says. “Still, we watch for indications that consumers are ‘trading down’ from the most expensive beef cuts to cheaper value cuts,” Peel says.
For perspective, according to the Livestock Marketing Information Center (LMIC), retail beef prices were $7.67/lb. in March, up $1.20 or 18.6% from a year earlier.
Retail pork prices were record high at $4.84/lb. in March, which was 16.1% or 67¢ higher than last year.
The retail broiler price in March was the second highest on record at $1.72/lb., an increase of 11.7% or 18¢ from a year earlier. The retail broiler composite price was record high at $2.32/lb., up 15.5% (+31¢) year over year.