Feeder Cattle futures took center stage Thursday, closing sharply higher and leading Live Cattle along. Support seemed to stem mainly from increased trader confidence based on notions the seasonal low is in the books.
Feeder Cattle futures closed an average of $2.34 higher ($1.50 higher at the back to $3.55 higher in spot Oct).
Live Cattle futures closed an average of $1.29 higher (47¢ higher at the back to $1.87 higher toward the front.)
Corn futures closed mixed, mostly 1¢ lower to 1¢ higher.
Soybean futures closed mostly 5¢ to 9¢ higher.
Negotiated cash fed cattle trade was mostly inactive with light demand in all major feeding regions through Thursday afternoon with too few transactions to trend, according to the Agricultural Marketing Service.
So far this week, live prices are steady in the Southern Plains at $122-$124/cwt. in Kansas and $124 in the Texas Panhandle. Prices are steady in the western Corn Belt at $122 but mostly steady to $2 higher in Nebraska at $122-$124. Dressed prices are $196, which is steady in Nebraska and toward the top of last week’s price range in the western Corn Belt.
Choice boxed beef cutout value was $1.32 lower Thursday afternoon at $285.30/cwt. Select was $1.52 higher at $264.44.
Major U.S. financial indices extended gains Thursday, buoyed by reports Congress reached a deal to raise the nation’s debt ceiling through early December.
The Dow Jones Industrial Average closed 337 points higher. The S&P 500 closed 36 points higher. The NASDAQ was up 152 points.
“There are lingering questions about consumer beef demand as we close out 2021 and move into 2022,” says James Mitchell, an Extension livestock economist at the University of Arkansas. “Last year, we learned that consumers were willing to buy beef at higher prices. Recovery in the restaurant sector was certainly a positive for the beef industry in 2021. As the holiday beef buying season approaches, will we observe a return to company holiday parties and large family gatherings? Will beef demand remain strong next year?”
In the most recent issue of In the Cattle Markets, Mitchell says insight to those questions can be had by monitoring boxed beef cutout values for the remainder of this year, which includes their seasonal nature.
“Seasonality in the cutout value is driven by price seasonality for individual beef cuts. Based on monthly data from 2014-2018, Choice boxed beef prices were seasonally highest in May, averaging 6.7% above the annual average price,” Mitchell says. “The seasonal high in May aligns with peak beef demand during grilling season (Memorial Day to Labor Day). Choice cutout prices decline through the summer, reaching a low in October when prices average 5.5% below the annual average Choice cutout value. Choice boxed beef prices recover, but remain below the annual average, during November and December’s holiday beef buying season.”
Although cutout values are following a similar trend so far this year this year, Mitchell notes prices were boosted further earlier by increased demand from restaurants as that sector replenished supplies amid loosening COVID-19 restrictions. More recently, wholesale prices continue to decline, in part due to seasonality.
“For the week ending Oct. 1, the Choice cutout value was $297.79/cwt., down 3.6% from the previous week but still 36.5% above this time last year,” Mitchell explains. “The rib primal, which is the highest valued beef primal, was down 4.5% last week. The loin and chuck primals were down 3.8% and 4.3% compared to the previous week. The round primal was 1.9% higher last week, while the brisket primal observed the largest weekly decline, down 11.5%.”