Negotiated cash fed cattle trade was slow on light demand in Nebraska and the western Corn Belt through Wednesday afternoon, according to the Agricultural Marketing Service. Although too few transactions to trend, there were a few live sales in Nebraska at $126/cwt. There were also some early dressed sales in Nebraska and the western Corn Belt at $203. Last week, live prices were $125-$126 in Nebraska and $125-$128 in the western Corn Belt. Dressed trade in the regions was at $200-$203.
Trade in the Southern Plains was limited on light demand. There were a few live sales at $124, steady with the previous day. Last week, live sales in Kansas were at $125-$126 and at $123-$124 in the Texas Panhandle.
Cattle futures tried to gain traction early in Wednesday’s session but ran out of steam amid continued concerns about declining beef values and demand uncertainty.
Feeder Cattle futures closed an average of $1.18 lower (22¢ lower at the front to $1.77 lower toward the back).
Live Cattle futures closed an average of 76¢ lower amid heavy trade.
Choice boxed beef cutout value was 33¢ lower Wednesday afternoon at $334.86/cwt. Select was $3.73 lower at $298.17.
Corn futures closed mostly fractionally lower to 1¢ lower, except for 2¢ higher in spot Sep.
Soybean futures closed fractionally higher to 2¢ higher through Sep ’22 and then fractionally lower.
For the record, 59% of the nation’s corn crop was in Good or Excellent condition (week ending Sept. 5), according to the latest USDA Crop Progress report. That was 1% less than the previous week and 2% less than the five-year average.
57% of the soybean crop was in good or excellent condition versus 56% the previous year and 65% for average
Major U.S. financial indices softened Wednesday amid investor nervousness about inflation and economic growth.
“Economic growth downshifted slightly to a moderate pace in early July through August,” according to the Federal Reserve’s Beige Book. “…The deceleration in economic activity was largely attributable to a pullback in dining out, travel, and tourism in most Districts, reflecting safety concerns due to the rise of the Delta variant, and, in a few cases, international travel restrictions. The other sectors of the economy where growth slowed or activity declined were those constrained by supply disruptions and labor shortages, as opposed to softening demand.”
As for inflation, according to the Beige Book, “…With pervasive resource shortages, input price pressures continued to be widespread. Most Districts noted substantial escalation in the cost of metals and metal-based products, freight and transportation services, and construction materials, with the notable exception of lumber whose cost has retreated from exceptionally high levels. Even at greatly increased prices, many businesses reported having trouble sourcing key inputs. Some Districts reported that businesses are finding it easier to pass along more cost increases through higher prices. Several Districts indicated that businesses anticipate significant hikes in their selling prices in the months ahead.”
The Dow Jones Industrial Average closed 68 points lower. The S&P 500 closed 5 points lower. The NASDAQ was down 87 points.
“Weather is and will clearly play a role as to the timing and availability of calf numbers. And will also impact the distribution of calf weight,” says Stephen Koontz, agricultural economist at Colorado State University. “There is the potential for an interesting dynamic between regional calf marketings and weights and then the resulting placement into feedlots, which may bunch marketing of fed animals well into next year. There are also interesting opportunities for retaining calves across the different regions. All are worth following.”
In the latest issue of In the Cattle Markets, Koontz explains weather — drought specifically — is creating regional variation in heifer trade.
“There is modest evidence of heifers being sold into the meat supply chain as opposed to being used as replacements into the beef production system. This is especially the case in the North and West,” Koontz says. “In the South and East there is very modest evidence – supported by discussions with producers – about retaining and actually purchasing of heifers. The regional dynamics will likely play out well into next year as the late summer saw only some drought relief for the Southern Plains and desert Southwest.”
As for recent declines in Cattle futures, from a technical standpoint, Koontz says market optimism that pushed contracts higher over the last four months is broken or simply exhausted.