Although still range-bound, cattle futures closed solidly lower on Monday. More than anything, sluggish trade seems to indicate uncertainty, including ongoing trade talks, the higher U.S. dollar, looming increased fed cattle supplies and wonderments about how many cattle drought could force to town (see below).
Live Cattle futures closed an average of 98¢ lower (25¢ to $1.35 lower).
Feeder Cattle futures closed an average of $1.97 lower (75¢ to $2.77 lower).
Choice boxed beef cutout value was 84¢ higher Monday afternoon at $229.14/cwt. Select was $1.71 higher at $211.20.
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Major U.S. financial indices closed higher on Monday, propelled by energy stocks, which were buoyed by surging crude oil prices that topped $70 for the first time since 2014 (spot CME-WTI).
The Dow Jones Industrial Average closed 94 points higher. The S&P 500 closed 9 points higher. The NASDAQ closed 55 points higher.
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“The drought can pass with little significant additional impact if rains arrive very soon. Failing that, the drought will become a major issue in the next few weeks,” says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly market comments. “I’m not aware of any cattle liquidation in the worst drought areas yet. However, hay supplies are tight and if summer pastures do not develop in the next month the situation will be much more critical. Significant removal of cattle could begin by June. The total D3 and D4 drought area in Kansas, Oklahoma and Texas is currently 53.5 million acres. This area has a carrying capacity between 2.0-2.5 million animal units. The drought area and the number of cattle impacted could expand rapidly in the coming weeks.”