Negotiated cash fed cattle trade was mostly inactive with very light demand in Nebraska and the western Corn belt through Monday afternoon, according to the Agricultural Marketing Service. Elsewhere, trade was at a standstill.
Live prices last week were at $119-$120/cwt. in the Texas Panhandle, at $119 in Kansas and at $120 in other regions. Dressed trade was at $190-$191 in Nebraska, $191 in Colorado and at $188-$191 in the western Corn Belt.
Feeder Cattle futures shrugged off Friday’s Cattle on Feed report and mostly extended gains Monday, helped along by further softness in Corn futures and recently stronger cash prices.
Feeder Cattle futures closed an average of 57¢ higher, except for 95¢ lower in spot May and unchanged in Mar.
Live Cattle futures weakened. Besides the lack of early-week cash direction, traders are likely trying to decide whether beef prices decline significantly after the Memorial Day push or slowly recede from current levels with further reopening of restaurants and food service.
Live Cattle futures closed an average of 55¢ lower, from 15¢ lower toward the back to 92¢ lower in spot Jun.
Choice boxed beef cutout value was $2.66 higher Monday afternoon at $327.83/cwt. Select was $1.08 higher at $303.39
Corn futures closed mostly 5¢ to 6¢ lower.
Soybean futures closed mostly 3¢ to 4¢ higher, after 1¢ to 3¢ lower in the front three contracts.
Major U.S. financial indices closed higher Monday, apparently buoyed most by stocks that gain more with the reopening economy.
The Dow Jones Industrial Average closed 186 points higher. The S&P 500 closed 41 points higher. The NASDAQ was up 190 points.
“Current futures prices imply fourth-quarter margins will be very good for feedlots,” say analysts with the Livestock Marketing Information Center (LMIC), in the latest Livestock Monitor. “LMIC projected break-evens currently list October at about $115/cwt., nearly $10 under the current October Live Cattle Contract. More distant deferred Live Cattle contracts are even higher, which should bode well for cattle feeding returns into the first half of 2022.”
So far this year, LMIC estimates cattle feeding returns at -$60 to +$40 per head, due in part to escalating feed costs on the negative side of the ledger, but supported by declining feeder cattle prices from August of last year through January this year.
“Break-evens have been declining since January because of the rapid decline in feeder prices six months prior,” say LMIC analysts. “However June will be the last month of declining feeder costs, and those breakeven prices are expected to rise at least through September. May feeder cattle costs are expected to drop significantly, offering an opportunity for cattle feeders to make money in the fourth quarter.”