Negotiated cash fed cattle trade was slow on light demand in the Southern Plains through Tuesday afternoon at $119-$120/cwt. That was steady in Kansas and steady to 50¢ higher in the Texas Panhandle. Although too few to trend, there were a few live trades at $120 in Nebraska and the western Corn Belt, mainly steady with the prior week.
Feeder Cattle futures weakened amid higher Corn futures prices Tuesday.
Feeder Cattle futures closed an average of 66¢ lower, except for 40¢ higher in the back contract.
Live Cattle futures closed mainly higher on Tuesday, with support from a bounce higher in Lean Hog futures and the relentless climb in wholesale beef values. There were also reports that Argentina banned exporting beef for the next 30 days.
Live Cattle futures closed an average of 90¢ higher (22¢ to $1.40 higher), except for an average of 21¢ lower in two contracts.
Choice boxed beef cutout value was $3.72 higher Tuesday afternoon at $323.34/cwt. Select was $2.16 higher at $299.05
Corn futures closed mostly 6¢ to 9¢ higher.
Soybean futures closed mostly 6¢ to 8¢ higher after 1¢ to 13¢ lower in the front three contracts.
Major U.S. financial indices closed lower Tuesday, despite positive earnings reports from the likes of Home Depot and Walmart. Negative economic news included less robust housing news than traders expected. Housing starts in April of 1.57 million were 9.5% less than the previous month, according to the U.S. Census Bureau.
The Dow Jones Industrial Average closed 267 points lower. The S&P 500 closed 35 points lower. The NASDAQ was down 75 points.
“Packers appear unable to increase weekday slaughter levels to process the market-ready supply in a timely manner as the sector enters a period of typically higher fed cattle slaughter,” say analysts with USDA’s Economic Research Service (ERS), in the latest monthly Livestock, Dairy and Poultry Outlook. “This appears to be in part due to labor disruptions that packers have dealt with since the beginning of the pandemic, but also interruptions in slaughter due to extreme weather in February and scheduled plant maintenance events.”
Compared to 2019, due to pandemic disruptions last year, ERS analysts say packers are processing about 10,000-15,000 head fewer per week, for the first six weeks of the second-quarter this year. That’s with Saturday kills about 5,000 head more per week than in 2019. As of April 1 they estimated there were 11% more cattle on feed for more than 150 days than last year; about 1% more than in 2019.
At the same time, ERS expects drought, poor pasture and higher feed costs will increase feedlot placements this year more than previously expected.
“Feedlots are constrained in their ability to market cattle in a timely manner. As producers face poor pasture conditions and rising feed costs, they will compete for space in feedlots in an environment with higher expected feed prices and little optimism for fed cattle prices,” ERS analysts explain. “Accordingly, the second-quarter 2021 feeder steer price forecast was lowered $1 on current prices and the third-quarter 2021 price was dropped $2, for a 2021 annual forecast of $139.30/cwt.,” say ERS analysts.
Projected average feeder steer prices (basis Oklahoma City) are $139 for the second quarter, $141 for the third quarter and $143 for the fourth quarter.