Apparently, Cattle futures were too cheap and/or traders had already factored in what turned out be a bearish Cattle on Feed report Friday.
Feeder Cattle closed an average of 98¢ higher (5¢ higher in spot May to $1.70 higher).
And that was with Corn futures futures closed 5¢ to 7¢ higher through Jly ‘23 and then mostly fractionally higher to 1¢ higher.
Higher wholesale beef prices helped Live Cattle close an average of 69¢ higher, except for 2¢ lower in away Aug.
Choice Boxed beef cutout value was $2.11 higher through Monday afternoon at $264.28/cwt. Select was $1.21 higher at $244.23.
Negotiated cash fed cattle trade ranged from mostly inactive on very light demand to a standstill through Monday afternoon, with too few transactions to trend, according to the Agricultural Marketing Service.
Last week, live prices were $138/cwt. in the Southern Plains, $140-$142 in the Northern Plains and $142 in the western Corn Belt. Dressed prices were $226 in Nebraska and $223-$227 in the western Corn Belt.
The five-area weighted average fed steer price last week was $2.19 lower at $140.25/cwt. The average price in the beef was $3.02 lower at $225.80.
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Major U.S. financial indices closed higher Monday, amid what might have been a relief rally following last week’s sharply lower markets.
The Dow Jones Industrial Average closed 618 points higher. The S&P 500 closed 72 points higher. The NASDAQ was up 180 points.
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By any measure, Derrell Peel, Extension livestock marketing specialist at Oklahoma State University says national pasture and hay conditions are off to their worst start in 35 years as drought continues to grip various parts of the country.
“The Latest Drought Monitor has a Drought Severity and Coverage Index (DSCI) of 183 (out of 500 possible) for the nation, the highest DSCI in mid-May for any year of the data back to 2000,” Peel explains, in his weekly market comments. “This includes over 63% of the country abnormally dry or worse, with 21.6% percent of the country in extreme (D3) to exceptional drought (D4). USDA reported pasture and range conditions starting in May have the highest percentage of poor to very poor conditions this year in data back to 1995.”
At the same time, Peel notes national hay stocks May 1 were 15.1% less than the average for 2012-2021; hay stocks in the 17 western states were 21.7% less.
“High fertilizer and fuel prices are adding to the extraordinary cattle industry challenges in 2022. High input costs are causing some producers that are not facing drought conditions to reduce or skip fertilization of pastures and hay fields. This will result in additional forage reduction and push herd inventories even lower,” Peel says.
From January through April, Peel explains beef cow slaughter equated to 4.2% of the Jan. 1 inventory. It was 3.0% for the same period from 1986 though 2021.
“The highest previous culling percentage for the January through April period was 3.7% in 1986,” Peel says. “The beef cow herd decline this year may well be the largest since 1986, when the beef cow herd decreased 4.7% year over year, a drop of 1.65 million head in one year.”