Cattle Current Daily—May 16, 2023

Cattle Current Daily—May 16, 2023

Cattle futures, especially Feeder Cattle, extended gains Monday, closing an average of $1.34 higher (67¢ to $2.07 higher).

Live Cattle futures closed an average of 66¢ higher, except 7¢ lower in spot Jun.

That was with Corn futures closing 5¢ to 7¢ higher through Jly ‘24, on the coattails of Wheat futures (KC HRW), which closed 21¢ to 27¢ higher through May ‘24, fueled by follow-through support from the World Agricultural Supply and Demand Estimates, along with concerns about the Black Sea Initiative.

Soybean futures closed 5¢ to 10¢ higher through Jly ‘24.

Negotiated cash fed cattle trade was inactive on light demand in all regions through Monday afternoon, with too few transactions to trend, according to the Agricultural Marketing Service.

Last week, live prices were $2 lower in the Southern Plains at $170/cwt., mostly steady to $2 lower in Nebraska at mainly $176 and $1 lower to $3 higher in the western Corn belt at $175-$177. Dressed prices were $1 lower in Nebraska at $280 and steady to $5 lower in the western Corn Belt at $280.

The weighted average five-area direct fed steer price was 20¢ higher on a live basis last week at $174.13/cwt. but $1.46 lower in the beef at $279.48.

Choice boxed beef cutout value was $2.63 lower Monday afternoon at $301.98/cwt. Select was 3¢ higher at $284.71/cwt.

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Major U.S. financial indices closed little changed but higher Monday, with apparent optimism about the debt ceiling talks. 

The Dow Jones Industrial Average closed 47 points higher. The S&P 500 closed 12 points higher. The NASDAQ was up 80 points.

West Texas Intermediate Crude Oil futures (CME) closed $1.07 to $1.08 higher through the front six contracts.

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Despite improving moisture conditions in many parts of the country, persistent drought in key cattle states continues to impact the overall industry, says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University.

In his weekly market comments, Peel notes two recent USDA reports underscore forage challenges in the Southern Plains and Central Plains.

One is the weekly Crop Progress report for the week ending May 7.

Peel points out year-over-year pasture and range conditions were significantly worse in Kansas and Oklahoma.

As well, Peel says the recent crop production report paints a dour picture of hay inventory in those same areas.

“For the beginning of the hay crop year, May 1, U.S. hay stocks were down 13.4% year over year and were down 26.4% from the 10-year 2012-2021 average,” Peel says. “Compared to the 10-year average, in Kansas, May 1 hay stocks were down 25.5%; Nebraska was down 51.6%; Oklahoma was down 62.3%; and Texas was down 41.3%.” He adds dry conditions are challenging new hay production in four off the top 10 hay-producing states, which account for about 21% of total U.S. hay production on average: Texas, Nebraska, Kansas and Oklahoma.

“These four states accounted for 9.3 million beef cows on Jan. 1, 2023, just over 32% of the total U.S. beef cow herd and include four of the top 10 beef cow states, Texas (1), Oklahoma (2), Nebraska (4) and Kansas (6),” Peel says. “Delayed, slow and limited pasture and hay growth in these areas is likely still provoking some cattle liquidation. Total beef cow slaughter through April this year is down 11.2% from last year’s elevated level.  However, it is likely that reduced beef cow slaughter in drought-free areas is masking some additional herd liquidation in these worst drought areas … The much-anticipated herd rebuilding and corresponding market conditions in the beef cattle industry cannot begin in earnest until drought conditions ease significantly in these major beef cattle states.”

You can hear more of Peel’s market insights here.

2023-05-15T19:01:53-05:00

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