Sharply lower Corn futures helped lift Feeder Cattle futures an average of $1.15 higher (70¢ to $1.37 higher).
Corn and Soybean futures continued lower Thursday as it appeared funds continued to liquidate positions on concerns about slowing demand. Corn futures closed mostly 11¢ to 12¢ lower. Soybean futures closed mostly 19¢ to 27¢ lower.
Live Cattle futures closed an average of 24¢ higher, except for unchanged to 17¢ lower in three contracts, despite the week’s softer cash market.
So far this week, live prices are $1 lower in the Southern Plains at $141, $2 lower in Nebraska at $143 and $4 lower in the western Corn Belt at $143-$144. Dressed prices are $4 lower in Nebraska at $228 and $2-$4 lower in the western Corn Belt at $228-$232.
Negotiated cash fed cattle trade ranged from slow on light demand to mostly inactive on light demand through Thursday afternoon, according to the Agricultural Marketing Service.
Choice Boxed beef cutout value was 27¢ lower Thursday afternoon at $258.07/cwt. Select was $1.15 lower at $236.59/cwt.
Major U.S. financial indices closed mixed Thursday with more optimism late in the session, perhaps tied to speculation about Friday’s employment report.
The Dow Jones Industrial Average closed 145 points higher. The S&P 500 closed 11 points higher. The NASDAQ was down 31 points.
West Texas Intermediate Crude Oil futures on the CME closed $2.37 to $2.94 lower through the front six contracts.
The recent Baseline Update for U.S. Agricultural Markets from the Food and Agricultural Policy Research Institute (FAPRI) at the University of Missouri offers added perspective regarding potential cattle numbers and prices over the next five years.
FAPRI pegs the beef cow inventory at 29.3 million Jan. 1 of next year, which would be 800,000 fewer (-2.7%) year over year. FAPRI projects the inventory at 28.7 million head in 2024 and then 28.5 million head the next two years before rising to 28.7 million in 2027.
Forecast cattle prices increase during most of the next five years — all higher than this year.
FAPRI forecasts the weighted average five-area direct fed steer price this year at $142.35/cwt. For 2023 through 2027, projected prices are, respectively, $150.98, $156.53, $158.87, $159.39 and $157.81.
FAPRI estimates this year’s average price for feeder steers (600-650 lbs., Oklahoma City) to be $180.54. For 2023 through 2027, projected prices are, respectively, $197.54, $211.62, $219.03, $220.45 and $218.22.
Updated projections are based on information available in mid‐August 2022 this year.
Among other update highlights:
- Drought conditions in important cow‐calf areas are causing producers to send animals to slaughter early, lifting beef production in the short term but leading to fewer cows and higher prices in the years to come.
- Sharply higher feed and other input costs help keep projected total U.S. meat production nearly flat in 2022 and 2023. The last time meat production failed to grow in consecutive years was 2003 and 2004. Strong U.S. consumer demand for meat offsets a decline in exports.
- Tight global supplies result in record prices for wheat and cotton and near‐record prices for corn and soybeans. For the 2022/23 marketing year, wheat prices are projected to exceed $9/bu., corn tops $6/bu. and soybean prices are more than $14/bu.
- Prices for fertilizer, fuel and many other farm inputs are also up sharply in 2022. For example, variable corn production expenses increase by an estimated $164 per acre in 2022. Projected input costs moderate in the years ahead but remain well above the 2021 level.
- If better growing conditions result in trendline crop yields in 2023 and later years, crop prices could decline from current levels. In 2023/24, projected average corn prices drop to $5.22/bu., wheat falls to $7.11/bu. and soybean prices decline to $12.36/bu.
- The CPI for food is projected to increase 9.0% in 2022. Food‐at‐home prices increase 10.6%, well above the increase in prices of food away‐from‐home for the first time since 2011.
- The increase in the food CPI moderates to 2.3% in 2023, as commodity prices and food marketing costs decline. This still outpaces the 1.7% average annual increase from 2010‐2019.