Cattle futures sauntered lower Wednesday with traders awaiting weekly cash fed cattle direction.
Feeder Cattle futures closed an average of $1.03 lower (20¢ to $2.20 lower).
Live Cattle futures closed an average of 32¢ lower, (2¢ to $1.00 lower).
Negotiated cash fed cattle trade ranged from limited on light demand to a standstill through Wednesday afternoon, according to the Agricultural Marketing Service. Although too few to trend, there were a few live trades in the western Corn Belt at $184/cwt.
Last week, FOB live prices were $180/cwt. in the Southern Plains and $183-$184 in the North.
Dressed delivered prices were $290 in Nebraska and $288-$290 in the western Corn Belt.
Choice boxed beef cutout value was 48¢ lower Wednesday afternoon at $307.55/cwt. Select was $3.41 higher at $287.19/cwt.
Corn futures closed mostly 4¢ to 5¢ higher Wednesday with apparent technical buying and support from wheat.
KC HRW Wheat closed 10¢ to 14¢ higher.
Soybean futures closed mostly 3¢ to 6¢ higher.
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Major U.S. financial indices closed mixed Wednesday.
The Dow Jones Industrial Average closed 70 points lower. The S&P 500 closed 5 points higher. The NASDAQ was up 39 points.
West Texas Intermediate Crude Oil futures (CME) closed 22¢ to 32¢ lower through the front six contracts.
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Even if you take drought recovery out of the equation, there’s no clear indication about how aggressive producers will retain heifers and begin herd rebuilding this fall.
“On one hand, we have the higher feeder cattle prices, current and deferred, which incentivizes the desire to retain cows and heifers to get profits in the future,” explains Elliott Dennis, Extension livestock economist at the University of Nebraska-Lincoln. “However, there are also atypically seasonal incentives to sell both cull cows and heifers at higher current market values than previously experienced and forgo profits next year.”
Dennis says declining cow numbers and strong ground beef demand are keeping cutter cow and slaughter cow prices significantly higher than both the five-year average and 2022 with general price support for cutter cows at $90/cwt.
“Higher and stronger ground beef prices and boxed beef cutter cow cutout will only keep these prices high or increase them into the fall. These seasonally higher prices should continue to impact the beef cow slaughter rate,” Dennis explains in the most recent issue of In the Cattle Markets from the Livestock Marketing Information Center.
As it is, even though weekly beef cow slaughter rates are declining, beef cow slaughter continues above the five-year average, according to Dennis. He adds heifers, as a percentage of total cattle on feed remains at the highest level in 20 years at about 40%.
Ultimately, Dennis says the tradeoff this fall will be between cashing in on cows and heifers at high prices or chasing after $310 per cwt. values on 500-600 lb. feeder cattle in 2024.
“Producers need to be extremely diligent about calculating how much they can pay for replacement heifers, as well as how much value that heifer has when she is retained rather than sold under current market conditions,” Dennis says. “Understanding what needs to go right and what can go wrong for heifers and bred cows to pay for themselves will be extremely important this fall.”