Cattle futures closed higher Monday with the neutral to positive monthly Cattle on Feed report. However, they closed off session highs with trade likely limited by this week’s Thanksgiving holiday.
Feeder Cattle futures closed an average of $1.34 higher.
Live Cattle futures closed an average of 67¢ higher (30¢ to $1.05 higher), except for an average of 21¢ lower in the front two contracts.
Negotiated cash fed cattle trade was at a standstill through Monday afternoon, according to the Agricultural Marketing Service.
Last week, FOB live prices were $178/cwt. in all regions, which was $3 lower in the Texas Panhandle, mostly $2 lower in Kansas, $3.50 lower in Nebraska and steady to $2 lower in the western Corn Belt. Dressed delivered prices were $5 lower in Nebraska at $282 and $1-$5 lower in the western Corn Belt at $282.
Last week’s weighted average five-area direct FOB fed steer price was $2.09 lower at $188.82/cwt. The dressed delivered steer price was $4.72 lower at $281.41.
Choice boxed beef cutout value was $1.88 higher Monday afternoon at $295.75/cwt. Select was 25¢ higher at $270.95/cwt.
Soybean futures closed 20¢ to 27¢ higher through Jan ‘25 and then 12¢ to 17¢ higher with apparently more weather premium based on the South American crop.
Corn futures closed mostly 1¢ to 2¢ higher.
KC HRW Wheat futures closed mostly 5¢ to 7¢ lower.
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Major U.S. financial indices closed higher Monday, led by tech stocks and supported by lower Treasury yields.
The Dow Jones Industrial Average closed 203 point higher. The S&P 500 closed 33 points higher. The NASDAQ was up 159 points.
West Texas Intermediate Crude Oil futures (CME) closed $1.67 to $1.79 higher through the front six contracts.
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Increased feedlot placements the past two months have added about 200,000 head to feedlot inventories, according to Derrell Peel, Extension livestock marketing specialist at Oklahoma State University. However, in his weekly market comments, he emphasizes the surge mainly represents feedlots pulling cattle forward.
Ongoing drought in some areas has likely encouraged some cattle entering the market channel sooner than expected, as has the strong prices, according to Peel. As well, he explains feeder cattle imports from Mexico are 49% more year over year, boosted by drought in Mexico and price levels. He says most of those imports likely headed straight to the feedlot.
“Increased placements now will be offset by reduced placements later,” Peel says. “Total placements in the last six months, built on the recent increase and representing the majority of cattle on feed, are at the highest percentage of July 1 feeder supplies since 2011. This means that a larger percentage of available feeder supplies have already been placed in feedlots compared to recent years. Feedlot numbers will inevitably come down in the coming months, especially when heifer retention begins.”
Peel points out the estimated 2023 calf crop is 1.9% less than last year. The 2022 calf crop was down 2% from the previous year. In sum, he explains the calf crop has been decreasing since 2018 and has declined 2.5 million head (-6.9%) in the past five years.
“The recent futures market correction has reduced cash feeder prices for heavy feeder cattle and may have contributed to some fear-based sales,” Peel says. “Despite recent decreases, prices for 6-weight and heavier feeder cattle are still 30 to 40% higher compared to one year ago. In Oklahoma auctions, prices for lightweight calves and stockers have not declined and are 50+% higher year over year.”