Cattle futures closed sharply lower Tuesday, pressured by pessimistic outside markets, demand worries, and likely some month-end and quarter-end position squaring.
Feeder Cattle futures closed an average of $4.56 lower ($1.27 to $5.82 lower).
Live Cattle futures closed an average of $1.88 lower (85¢ lower at the back to $2.85 lower).
Negotiated cash fed cattle trade ranged from slow on light demand to a standstill through Tuesday afternoon, with too few transactions to trend, according to the Agricultural Marketing Service.
Last week, FOB live prices were $183/cwt. in the Southern Plains, $184-$185 in Nebraska and $185-$186 in the western Corn Belt. Dressed delivered prices were $292.
Choice boxed beef cutout value was $1.94 lower Tuesday afternoon at $299.54/cwt. Select was $1.35 lower at $279.10/cwt. That’s the first time since May that Choice cutout dropped below $300.
Grain and soybean futures appeared to jockey for some position ahead of Friday’s Grain Stocks report.
Corn futures closed 1¢ lower through Sep ‘24 and then mostly fractionally mixed.
KC HRW Wheat closed 1¢ to 4¢ lower through Jly ‘24 and then mostly fractionally higher.
Soybean futures closed 4¢ to 5¢ higher.
Major U.S. financial indices closed sharply lower Tuesday, pressured by negative economic news.
Consumer confidence sagged lower than expected. The Conference Board Consumer Confidence Index® declined for a second consecutive month to 103.0 (1985=100), down from an upwardly revised 108.7 in August.
“September’s disappointing headline number reflected another decline in the Expectations Index, as the Present Situation Index was little changed, says Dana Peterson, Chief Economist at The Conference Board. Write-in responses showed that consumers continued to be preoccupied with rising prices in general, and for groceries and gasoline in particular. Consumers also expressed concerns about the political situation and higher interest rates. The decline in consumer confidence was evident across all age groups, and notably among consumers with household incomes of $50,000 or more.”
New residential home sales in August also missed expectations to the downside. Sales of new single‐family houses in August 2023 were at a seasonally adjusted annual rate of 675,000, according to estimates released jointly today by the U.S. Commerce Department. That was 8.7% below the revised July rate of 739,000.
The Dow Jones Industrial Average closed 388 points lower. The S&P 500 closed 63 points lower. The NASDAQ was down 207 points.
West Texas Intermediate Crude Oil futures (CME) closed 32¢ to 71¢ higher through the front six contracts.
Placements have decreased year over year for 10 of the last 12 months, with total placements down 897,000 head in the last year, says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, reflecting on the recent Cattle on Feed report.
“A 12-month moving average of placements shows that the peak annual average monthly placements occurred in December 2019, consistent with the cyclical peak in the calf crop in 2018,” Peel says, in his weekly market comments. “However, pandemic delays from 2020 into 2021and drought-enhanced placements in 2021 and 2022 have kept feedlot placements high until the last few months.”
Peel explains the current 12-month moving average of placements for August dropped to the lowest level since May of 2017. He says average placements are expected to continue declining for the foreseeable future.
As for the on-feed inventory, the 12-month moving average peaked in September 2022 at 11.836 million head, according to Peel.
“The September 2023 12-month moving average is 11.507 million head, down 2.8 % from the peak,” Peel says. “Following the drought a decade ago, the 12-month moving average dropped below 11 million head in April 2013 and remained below that level for 58 months through January 2018. This was the period of rapid herd expansion in the last cattle cycle and a similar situation is likely going forward, beginning in 2024.”