Cattle futures closed lower Monday, pressured by Friday’s Cattle on Feed report with unexpectedly higher placements.
Live Cattle futures closed an average of 40¢ lower.
Feeder Cattle futures closed an average of $1.68 lower (38¢ to $3.00 lower). They received extra pressure from Corn futures, which closed an average of 12¢ higher in the front six contracts, apparently based on early yields.
Soybean futures closed up across the board, mostly 2¢ to 6¢ higher.
Negotiated cash fed cattle trade was at a standstill in all major feeding regions through Monday afternoon, according to the Agricultural Marketing Service.
Live price last week were generally steady at $123-$124/cwt. Dressed trade was $2 lower at $198 in Nebraska and $194-$198 in the western Corn Belt.
Choice boxed beef cutout value was 62¢ lower Monday afternoon at $302.70/cwt. Select was 15¢ lower at $274.38.
Major U.S. financial indices closed mixed on Monday, after the Federal Reserve chair said last week tapering of stimulus efforts could start as soon as November. Brent crude closed at the highest mark since 2018. Two regional Fed presidents stepped down unexpectedly on Monday amid scrutiny over their 2020 stock trading.
The Dow Jones Industrial Average closed 71 points higher. The S&P 500 12 closed points lower. The NASDAQ closed 78 points lower.
“Going forward, the expectation is that fed cattle supplies will continue to tighten and drop below the slaughter capacity cap that has separated the fed market from beef markets,” says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University. “Beef production is expected to drop in the fourth quarter and fed markets should participate more fully in the market strength. Barring any new disruptions or “Black Swans,” cattle and beef markets should get lined up in a more typical fashion and move forward with tighter supplies and continued strong demand.”
In his weekly market comments, providing insight to Friday’s Cattle on Feed report, Peel notes cattle feeders appear to making headway with front-end supplies, albeit slowly.
“The 12-month moving average of feedlot placements peaked recently in April, with declines since, except for a slight move higher with the large August placements,” Peel explains. “Generally, declining placements imply smaller feedlot numbers, eventually. The large heavy placements in August will front-end load future production somewhat. The 12-month moving average of marketings peaked recently in June and is moving lower in July and August suggesting that the peak feedlot production is past.” He adds that the 12-month moving average feedlot inventory also peaked recently in June and is also moving lower.
As for August placements, Peel explains, the unexpected increase came almost exclusively in weights heavier than 700 lbs. For instances he points to the 15.4% year-over-year increase in cattle placed weighing more than 900 lbs.