Negotiated cash fed cattle trade was slow on light to moderate demand in Kansas, Nebraska and the western Corn Belt through Wednesday afternoon, according to the Agricultural Marketing Service.
For the week, live sales are steady to $1 lower in Kansas at $119/cwt.. steady in Nebraska at $120, and steady to 50¢ higher in the Texas Panhandle at $119-$120. Dressed trade in Nebraska is steady to $1 lower at $190-$191.
Slaughter steers sold steady to $1 higher at the Sioux Falls Regional fat auction Wednesday. Slaughter heifers traded $1-$2 higher. There were 246 Choice 3-4 steers weighing an average of 1,536 lbs., bringing an average of $120.57/cwt.
Feeder Cattle futures were mostly higher Wednesday, buoyed by pressure in grain markets. They closed an average of 85¢ higher (10¢ to $1.22 higher), except for 62¢ lower in spot May.
Live Cattle futures closed narrowly mixed as traders balanced sluggish cash prices and cattle movement with expectations for lower boxed beef prices after Memorial Day buying ends. They closed an average of 34¢ lower, except for an average of 22¢ higher in the front three contracts.
Choice boxed beef cutout value was 4¢ higher Wednesday afternoon at $323.38/cwt. Select was 64¢ higher at $299.69
Corn futures closed mixed, from 4¢ lower to 1¢ higher with most of the pressure in nearby contracts.
Soybean futures closed mostly 21¢ to 36¢ lower through Jly ‘22 and then mostly 6¢ to 10¢ lower.
Major U.S. financial indices closed lower Wednesday, but well off of session lows as a sudden, sharp decline in digital Bitcoin currency rattled investors and fueled a decline in speculative stocks.
The Dow Jones Industrial Average closed 164 points lower. The S&P was down 12 points. The NASDAQ was down 3 points.
“With decreased forages available, feeder cattle may need to enter feedlots earlier, depressing feeder cattle prices and possibly having a seasonal low mid-summer as opposed to early fall,” says Brenda Boetel, Extension livestock economist at the University of Wisconsin-River Falls. “With continued labor shortages and high levels of cattle on feed, there is limited bullish news for fat cattle prices. Corn prices will remain volatile and will move with any weather news.”
Even so, in the latest issue of In the Cattle Markets, Boetel notes fed cattle profit potential increased slightly last week. “The potential shows up in the gross feeding margins and the idea that corn price has decreased more than the increase in feeder cattle prices,” she says.
For all of the recent price volatility and elevated costs, the outlook is more positive than one might guess, based on the monthly Focus on Feedlots Survey (FFS) conducted by Kansas State University and published in Historical and Projected Kansas Feedlot Net Returns.
Net returns projected for steer closeouts in April were -$39.01/head for steers and $2.77/head for heifers, according to the Kansas data. Estimated returns the previous month were -$69.52 for steers and -$61.18 for heifers. Keep in mind no price risk management is included in the calculations.
Looking ahead, FFS projected returns for steers range from $105.09/head in May to -$56.12 in October, with feedlot cost of gain ranging from $100.82/cwt. in May to $115.80 in October. Projected heifer returns follow a similar pattern.
“Pay attention to basis levels, especially with feed purchases,” Boetel says. “Producers may also want to consider using the futures and options markets more effectively and explore hedging strategies to protect any profit potential. Finally, reconsider your marketing plan, including your marketing strategies and price risk management strategies. Purchasing and selling decisions need to be made in a timely manner and without emotion. Volatility in the cattle/feed markets is not likely to decrease. However, given good cattle marketing and some price risk management, there are still opportunities for profitability.”