Cattle futures closed higher Monday, buoyed by the bullish Cattle on Feed report, stronger cash prices last week and weaker Corn futures on the day.
Feeder Cattle futures closed an average of $1.65 higher.
Live Cattle futures closed an average of 85¢ higher (47¢ to $1.17 higher).
Corn futures closed 5¢ to 8¢ lower through Jly ‘23, and then mostly 1¢ to 3¢ lower, pressured in part by worries about economic growth in China, due to rising COVID cases.
Negotiated cash fed cattle trade was mostly inactive on light demand in all regions through Monday afternoon, according to the Agricultural Marketing Service.
Last week, live prices were mainly steady in the Texas Panhandle at mostly $150, steady to $2 higher in Kansas at $150-$152, steady to $2 higher in Nebraska at $153-$155 and steady to $2 higher in the western Corn Belt at $152-$155. Dressed prices were steady to $2 higher at $242.
Choice Boxed beef cutout value was 70¢ higher Monday afternoon at $255.57/cwt. Select was 40¢ higher at $233.23/cwt.
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Major financial indices closed lower on fears of more COVID-hampered economic growth in China.
The Dow Jones Industrial Average closed 45 points lower. The S&P 500 closed 15 points lower. The NASDAQ was down 121 points.
West Texas Intermediate Crude Oil futures (CME) closed mixed, from 35¢ lower to 51¢ higher through the front six contracts.
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Feedlot inventories appear to have peaked, and cattle slaughter should begin to decline in the next several months, says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly market comments.
“On October 1, 2022, the inventory of heifers in feedlots was higher than the previous year, with the heifer percentage of total feedlot inventories the highest in 21 years,” Peel says. “The number of heifers in feedlots should begin to decline and will drop sharply when herd rebuilding begins. Feedlot inventories are beginning to reflect the fact that feeder cattle supplies have been declining since 2019.”
Peel explains both the drought and lingering effects of the pandemic pushed peak feedlot numbers into this year, well beyond the 2018 cyclical peak in calf production.
“The pandemic in 2020 caused a backlog of cattle in feedlots and in the country. As a result, the estimated feeder supply on Jan. 1, 2021 was higher than 2020,” Peel explains. “The drought in 2021 and 2020 caused cattle to be marketed earlier than usual and resulted in reduced heifer retention and increased heifer and cow slaughter in 2021 and 2022. Early marketing of cattle, reduced heifer retention and herd liquidation have kept feedlot inventories higher in 2022 and temporarily increased beef production. Beef production is projected at a record large 28.4 billion lbs. in 2022 as a result of the highest total cattle slaughter in 15 to 20 years.”