The bearish monthly Cattle on Feed report ravaged Cattle futures Monday.
Feeder Cattle futures closed an average of $6.51 lower ($4.20 to $7.35 lower).
Live Cattle futures closed an average of $5.44 lower ($3.92 to $6.75 lower).
Through mid-morning Tuesday, Cattle futures were recovering some of the losses.
Negotiated cash fed cattle trade ranged from slow on light demand to mostly inactive with very light demand through Monday afternoon, with too few transactions to trend, according to the Agricultural Marketing Service.
FOB live prices last week were $184-$185/cwt. in the Southern Plains and $186-$187 in the North. Dressed delivered prices were $294.
Choice boxed beef cutout value was 84¢ lower Monday afternoon at 304.54/cwt. Select was $2.32 higher at $281.02/cwt.
Corn futures xlosed mostly 1¢ to 5¢ lower.
Soybean futures closed 9¢ to 15¢ lower through Sep ‘24 and then 5¢ to 8¢ lower.
KC HRW Wheat closed fractionally higher to 2¢ higher.
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Major U.S. financial indices closed mostly lower Monday, with follow-through pressure from rising U.S. Treasury yields.
The Dow Jones Industrial Average closed 190 points lower. The S&P 500 closed 7 points lower. The NASDAQ was up 34 points.
West Texas Intermediate Crude Oil futures (CME) closed $1.63 to $2.59 lower through the front six contracts.
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Based on the recent Cattle on Feed report, Josh Maples, Extension livestock economist at Mississippi State University points out the percentage of heifers on feed is the highest in 20 years at 40%.
“There are two sides of this,” Maples explains in the latest Cattle Market Notes Weekly. “Heifers are helping to boost inventories now which could be viewed somewhat negatively for prices in the short term but also fewer heifers retained means a smaller calf crop next year which can be viewed as supporting high price levels in the longer term. To me, this report shut down any ideas that herd expansion is happening or will happen in 2023 and that discussion will shift toward whether expansion occurs in 2024.”
Maples also notes the increase in feedlot placements, which surprised many.
“It likely reflects producers selling now to take advantage of strong markets but also some producers being forced to sell feeder cattle a little earlier than expected due to expanding drought in many areas. This is especially true for swaths of the Southeast when drought conditions have gotten severe,” Maples says. “Looking ahead at price expectations, it is worth noting that the current strong market prices have not really reflected herd rebuilding efforts yet. The rebuilding phase will include holding back more heifers which will mean fewer heifers sold as feeder cattle. Combined with smaller calf crops as a whole, this will be the point when feeder cattle supplies get really tight and that prices have the strongest supply-side support.”