Negotiated cash fed cattle prices continued higher across a broad range Wednesday. Live sales in Nebraska were $15 higher than last week at $110/cwt. on a live basis and $20-$30 higher in the beef at $170-$180. Live sales in the western Corn Belt were mostly $12 higher than last week at mainly $115. Dressed trade was steady to $5 higher at $170-$185.
In the Southern Plains so far this week, live prices in Kansas are at $115, steady with the top of the previous week’s wide range. The price in the Texas Panhandle is at $110, compared to $95-$115 last week.
Similar gains were seen at Wednesday fed cattle auctions.
Choice steers and heifers sold $10 higher in the fat auction at Tama, IA, where 95 Ch 2-4 steers weighing an average of 1,466 lbs. brought an average price of $117.55/cwt.
At Sioux Falls in South Dakota, slaughter steers sold $17-$22 higher and fed heifers sold $10-$18 higher. There were 215 Ch 2-3 steers weighing an average of 1,446 lbs., bringing an average price of $111.78. “More packer buyers were present and willing to chase the market to get cattle bought after buying cattle in
the country at sharply higher prices on Monday and Tuesday,” according to the AMS reporter.
Cattle feeders also offered 4,601 head in the weekly Fed Cattle Exchange auction, selling 1,272 head for a weighted average price of $110. Money was the same on 450 head sold for delivery at 1-9 days and for 822 head sold for delivery at 1-17 days. Sold lots were from Texas and Nebraska.
Cattle futures continued the week’s volatile rollercoaster, though, giving back most of what was gained in the previous session.
Live Cattle futures closed an average of $2.24 lower (60¢ lower at the back to $3.30 lower in spot Jun).
Feeder Cattle futures closed an average of $2.49 lower.
Wholesale beef values declined sharply Wednesday, perhaps suggesting the Covid-skewed top is at least near.
Choice boxed beef cutout value was $9.40 lower Wednesday afternoon at $465.99/cwt. Select was $13.73 lower at $437.24
Grain futures lost some ground, with pressure from the previous day’s monthly World Agricultural Supply and Demand Estimates.
Corn futures closed mostly 3¢ lower through May ‘21, and then 1¢ lower to fractionally higher.
Soybean futures closed 11¢ to 13¢ lower through Jan ‘21 and then 5¢ to 7¢ lower.
Major U.S. financial indices closed sharply lower Wednesday, for the second consecutive session. At least part of the pressure seemed to stem from remarks made by Federal Reserve Chair Jerome Powell, via webcast, to the Peterson Institute for International Economics. Investors were apparently hoping for a more optimistic outlook, relative to economic recovery, in the wake of COVID-19.
“While the economic response has been both timely and appropriately large, it may not be the final chapter, given that the path ahead is both highly uncertain and subject to significant downside risks,” Powell said. “Economic forecasts are uncertain in the best of times, and today the virus raises a new set of questions: How quickly and sustainably will it be brought under control? Can new outbreaks be avoided as social-distancing measures lapse? How long will it take for confidence to return and normal spending to resume? And what will be the scope and timing of new therapies, testing, or a vaccine? The answers to these questions will go a long way toward setting the timing and pace of the economic recovery. Since the answers are currently unknowable, policies will need to be ready to address a range of possible outcomes.”
The Dow Jones Industrial Average closed 516 points lower. The S&P 500 closed 50 points lower. The NASDAQ closed 139 points lower.
Although fed cattle prices continue lower than pre-COVID projections, forecast feed costs are also lower, providing some cow-calf producers with potential opportunity to retain ownership through the feedlot.
More specifically, analysts with the Livestock Marketing Information Center point out feedlot cost of gain is declining.
“As reported by the monthly Kansas State University survey (Focus on Feedlots), the average steer cost of gain for March was $83.41/cwt. Kansas feedlot projections for mid-April averaged $74, the lowest since August 2018. If grain and hay costs continue to slip, as expected, that number is headed even lower,” say LMIC analysts, in the latest Livestock Monitor.
Since February, the LMIC folks explain corn prices declined counter-seasonally. For the week ending May 8, they say prices in the Texas Triangle and Omaha were the lowest since late November of 2016.
For perspective, LMIC calculates the breakeven price for a steer placed in a Southern Plains feedlot and sold in April was $115-$117. For one placed in April and sold in September, breakeven is $97-$98.
The organization calculates monthly projected breakeven sale prices with feedstuff costs when a 750-lb. steer is placed, assuming typical feeding conditions (including weather) in a commercial Southern Plains feedlot. LMIC also calculates adjusted monthly breakevens based on changes in feedstuff costs.
“As this summer unfolds, producers running summer stockers and even cow-calf operations may want to carefully evaluate retained ownership,” says LMIC analysts. “Some pre-planning and attention to projected cost of gain may pay off.”