Cattle futures rallied Tuesday, supported by slower packer production which is helping lift wholesale beef prices.
Heading into the close and before settlement, Live Cattle futures were an average of $2.29 higher and Feeder Cattle futures were an average of $4.20 higher.
Choice boxed beef cutout value was $5.44 higher Tuesday afternoon at $304.39/cwt. Select was $6.64 higher at $293.82/cwt.
Negotiated cash fed cattle trade was at a standstill in all major cattle feeding regions through Tuesday afternoon, according to the Agricultural Marketing Service.
Last week, FOB live prices were $184/cwt. in the Texas Panhandle, $183-$185 in Kansas, $186-$187 in Nebraska and mostly $187 in the western Corn Belt. Dressed delivered prices were $295-$296 in Nebraska and mostly $295 in the western Corn Belt.
Choice boxed beef cutout value was $5.44 higher Tuesday afternoon at $304.39/cwt. Select was $6.64 higher at $293.82/cwt.
Turning to row crops, heading into the close, front-month Grain futures were softer on likely profit taking and producer selling.
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Major U.S. financial indices closed higher Tuesday as investors awaited key inflation reports this week.
The Dow Jones Industrial Average closed 126 points higher. The S&P 500 closed 25 points higher. The NASDAQ was up 122 points.
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The percentage of heifers in the fed cattle mix must drop below the long-run average of just over 37% — likely 35-36% — in order for the next herd expansion to begin, says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University.
“There is no indication that is happening yet,” Peel says in his weekly market comments. He explains heifer slaughter, as a percentage of fed cattle slaughter was 40% last year, as high as it has ever been. Although fractionally lower year over year, it was 40.5% in the first quarter this year.
“In most cases, the total increase in the cow herd from trough to peak is 2.2 to 2.9 million head, an increase of 5.8% to 9.4%,” Peel explains, reflecting on cattle cycles since 1975. “The corresponding increase in replacement heifers ranged from 1.1 to just over 1.2 million head in three of the four cycles. The most recent cycle, from 2014-2019, was different in that the increase in beef replacement heifers started prior to herd expansion and ended prior to the peak in herd inventory. This is likely an indication that there was pent up desire to expand that was delayed due to drought in 2011-2013.”