Negotiated cash fed cattle trade was mostly light on light to moderate demand through Wednesday afternoon, according to the Agricultural Marketing Service.
So far this week, prices are $1 lower in the Southern Plains on a live basis at mostly $104/cwt., $2 lower in Nebraska at $103 and $1-$4 lower in the western Corn Belt at $103. Dressed sales are $3-$5 lower at $162-$164.
Cattle feeders offered 436 head in the weekly Fed Cattle Exchange Auction on Wednesday, three lots from the Southern Plains. Of those, 365 head–two lots–sold for a weighted average price of $103/cwt.–218 head for 1-9 day delivery and 147 head for delivery at 1-17 days.
Cattle futures sagged lower, pressured by softer cash prices and the beginning of seasonally lower wholesale beef values.
Live Cattle futures closed an average of 65¢ lower.
Except for 50¢ higher in the back contract, Feeder Cattle futures closed an average of $1 lower, from 55¢ lower to $1.42 lower in spot Sep.
Choice boxed beef cutout value was 76¢ lower Wednesday afternoon at $227.58/cwt. Select was 93¢ lower at $213.82.
Corn futures closed mostly 1¢ higher.
Soybean futures closed mostly 7¢ to 8¢ higher.
Major U.S. financial indices closed higher on Wednesday, despite less job growth than expected in the closely watched ADP National Employment Report®. According to that report, private sector employment increased by 428,000 jobs from July to August.
“The August job postings demonstrate a slow recovery,” says Ahu Yildirmaz, vice president and co-head of the ADP Research Institute. “Job gains are minimal, and businesses across all sizes and sectors have yet to come close to their pre-COVID-19 employment levels.”
The Dow Jones Industrial Average closed 454 points higher. The S&P 500 closed 54 points higher. The NASDAQ closed 116 points higher.
The latest Cattle on Feed report suggests that feedlots continue to make progress in working through the backlog of fed cattle that was created by COVID-19 packing disruptions, according to Elliot Dennis, Extension livestock economist at the University of Nebraska-Lincoln.
“For example, the number of cattle on feed over 90 days has dipped below 2019 levels for the first time since April. However, cattle on feed over 120 days is still about 10% higher than 2019,” Dennis explains, in the latest issue of In the Cattle Markets. “The result of cattle being on feed longer is sustained record level dressed weights for both steers and heifers. Heavier carcasses have led to higher beef production in recent months, relative to 2019, putting downward pressure on cattle prices.”
With net feedlot placements higher year over year and compared to the five-year average, Dennis says feedlots appear to be reloading with cattle weighing less than 700 lbs. In turn, he explains that means record beef production could continue for a longer period of time.
“With lower, but growing domestic demand and concerns about what a second government shutdown might do to domestic demand, beef export demand is likely to play a larger and more prominent role in sustaining domestic cattle prices,” Dennis says.
In the meantime, Dennis points to the baseline projections updated last week by the Food and Agricultural Policy Research Institute (FAPRI) at the University of Missouri.
“Their estimates continue to support the idea the U.S. cattle cycle peaked and will continue to contract over the next five years. Despite declining beef cows, total beef production is forecasted to be relatively stable at 27 billion pounds per year,” Dennis explains. “Smaller cow numbers will reduce the size of future calf crops, reducing the number of feeder and fed cattle marketed and ultimately boxes of beef available to be sold. Combined, this has the effect of raising prices along the supply chain. Planning prices in 2021 were estimated as follows: boxed beef at $221/cwt. five-area steers at $113/cwt. and Oklahoma City feeder steers at $151/cwt.