Cattle futures stepped higher Thursday, supported by recently lower Corn futures, bullish cash strength for feeder cattle, cattle feeders’ resolve to hold the line on fed cattle prices and perhaps some positioning ahead of Friday’s Cattle on Feed report.
Feeder Cattle futures closed an average of $2.83 higher ($1.55 to $3.35 higher).
Live Cattle futures closed an average of 78¢ higher.
Bearish sentiment continued in the grain complex.
Corn futures closed mostly 1¢ higher.
KC HRW Wheat closed mostly 18¢ to 28¢ lower.
Soybean futures closed mostly 1¢ to 3¢ lower.
Negotiated cash fed cattle trade was slow on light demand in the Texas Panhandle through Thursday afternoon, according to the Agricultural Marketing Service. Prices were steady at $177/cwt.
Elsewhere, trade was limited on light demand. Although too few to trend, there were some live trades in the western Corn Belt at $178.
Last week, live prices were $170/cwt. in Kansas, mostly $176 in Nebraska and $175-$177 in the western Corn Belt. Dressed prices were $280.
Choice boxed beef cutout value was 16¢ higher Thursday afternoon at $298.31/cwt. Select was 16¢ higher at $283.61/cwt.
Net U.S. beef export sales (2023) were 17,400 metric tons for the week ending May 11, according to the U.S. Export Sales report. That was 5% more than the previous week and 7% more than the prior four-week average. Increases primarily were for Japan, South Korea, China, Mexico and Taiwan.
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Major U.S. financial indices closed higher again Thursday, once again supported by apparent optimism about debt ceiling talks.
The Dow Jones Industrial Average closed 115 points higher. The S&P 500 closed 39 points higher. The NASDAQ was up 188 points.
West Texas Intermediate Crude Oil futures (CME) closed 77¢ to 97¢ lower through the front six contracts.
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USDA’s Economic Research Service (ERS) raised the expected second-quarter feeder steer price by $5 to $204/cwt. That’s basis 750-800 lbs. at Oklahoma City. The increase was based on recent data and forecast declines in season-average corn prices, according to ERS analysts, in the May Livestock, Dairy and Poultry Outlook.
Projected feeder steer prices were unchanged for the third quarter at $214, but $4 lower in the fourth quarter at $220. The average annual price was little changed at $205.37. ERS projected next year’s annual average price at $220.75.
As mentioned recently in Cattle Current, ERS increased forecast fed steer prices (five-area direct) higher for the remainder of this year, in the May World Agricultural Supply and Demand Estimates (WASDE). Prices were projected $3 higher in the second quarter at $172/cwt., and $2 higher in the third and fourth quarters at $164 and $169, respectively. The annual average price estimate increased $2 to $166.50.
Lingering drought in the Central and Southern Plains continues to hold market sway.
“Despite recent rains, for some producers, the very low hay supplies may not be sufficient to offset poor pastures to sustain herds this summer and allow producers to retain breeding stock to rebuild their herds,” ERS analysts say. “As a result, the culling of beef cows continues at a relatively high rate. Based on USDA, Agricultural Marketing Service reports for weekly slaughter under federal inspection, the pace of monthly beef cow slaughter remains relatively high despite dropping to below the pace for the last two years in March and April. This has the potential to weaken the outlook for calf crops in late 2023 and 2024, further reducing potential cattle placements year over year in 2024.”
ERS projects new highs for cattle prices in 2024, as cattle numbers decline.
“The relatively strong pace of beef cow slaughter and relatively large placements of heifers in feedlots in 2022 and into early 2023 will likely yield a smaller year-over-year calf crop in 2023, tightening future cattle supplies,” ERS analysts say. “Further, this will likely lead to fewer cows and bulls in the slaughter mix in 2024, both as absolute numbers are lower and—assuming a return to normal pasture conditions—producers hold back animals for herd expansion.”
ERS projects 2024 beef production 8% less than this year at 24.7 billion pounds.