Live Cattle futures firmed and clawed mostly higher Wednesday, while all but the front months drifted lower in Feeder Cattle.
Toward the close, Live cattle futures were an average of $1.21 higher. Feeder Cattle futures were an average of $1.40 lower, except for an average of $1.06 higher in the front two contracts.
Negotiated cash fed cattle trade ranged from inactive on light demand in the Southern Plains to limited on moderate demand in the North through Wednesday afternoon, according to the Agricultural Marketing Service.
For the week, FOB live prices are mostly $2-$3 lower in the western Corn Belt at mostly $240/cwt. and dressed delivered prices are $8 lower in Nebraska at $375.
Last week, FOB live prices were $242/cwt. in the Texas Panhandle and $242-$243 in Kansas and Nebraska. Dressed delivered prices were mainly $383 in the western Corn Belt.
Choice boxed beef cutout value was $2.03 lower Wednesday afternoon at $405.64. Select was $3.28 lower at $383.68.
Grain and Soybean futures were lower again Wednesday with likely continued positioning ahead of Friday’s monthly World Agricultural Supply and Demand Estimates.
Toward the close and through away Jly contracts, Corn futures were 2¢ to 3¢ lower. Kansas City Wheat futures were 3¢ to 4¢ lower, except for 2¢ higher in waning spot Sep. Soybean futures were mostly 5¢ to 6¢ lower.
******************************
Major U.S. financial indices closed mixed Wednesday, but with positive inflation data.
The Producer Price Index for final demand edged down 0.1% in August, seasonally adjusted, according to the U.S. Bureau of Labor Statistics. That was more favorable than the trade expected. On an unadjusted basis, however, the index for final demand rose 2.6% for the 12 months ended in August.
The Dow Jones Industrial Average closed 220 points lower. The S&P 500 closed 19 points. The NASDAQ was up 6 points.
Through mid-afternoon, West Texas Intermediate Crude Oil futures (CME) were 98¢ to $1.13 higher through the front six contracts.
******************************
Since 2022, calf prices have increased by 135.6%; feeder cattle prices are up by 107.4%; fed prices have increased 70.0%; boxed beef prices are up 59.2%; and retail prices have increased by 21.3%, according to Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly market comments. However, he also points out the cost of inputs has increased more and faster than the value of outputs for all of the margin sectors — stockers, feedlot, packers and retailers.
“Up to this point, packers have faced most of the losses due to lousy buy-sell margins,” Peel says. “Feedlots have avoided much of the margin challenges thus far, largely due to the strongly up trending market combined with the time lag between placements and marketings (extended by more days on feed in most cases) and a sharp decrease in feed costs. Feedlot cost of gain is down over 28% since the peak in early 2023.”
Stocker producers are being squeezed hard from both directions, Peel explains, as high calf prices increase stocker purchase cost and feedlots are competing more for limited feeder supplies, including lighter weight feeders due relatively low cost of gain.
“Retailers have faced relatively less of the margin challenge up to this point due to strong consumer beef demand and ample beef supplies,” Peel says. “Beef production is declining faster now, and retailers will face more challenges as beef production continues to decline in the coming months.”
In the meantime, Peel says, “Cow-calf producers will continue to enjoy strong returns and the higher calf prices that encourage herd rebuilding. Those higher calf prices will continue to work their way through the industry up to consumers in a complex set of market dynamics affecting the various sectors in a variety of ways.”