Cash cattle trade remained undeveloped through Wednesday afternoon. So far, there’s not any reason to believe prices will be any worse than steady, likely higher.
For instance, slaughter steers sold $1-$2 higher at Sioux Falls Regional at $126.25-$127.50/cwt. (Ch-2-4). Slaughter heifers sold $2 higher in a light test at $126.25-$128.00 (Ch 2-4).
Only 255 head (three lots of heifers) were offered in the weekly Fed Cattle Exchange auction. There were no sales, but one P.O at $124/cwt.
Expectations for steady-to-higher cash trade, the lower U.S. dollar and higher Lean Hogs helped lift Cattle futures.
Live Cattle futures closed an average of 39¢ higher (17¢ to 82¢ higher in spot Feb.).
Feeder Cattle futures closed an average of 65¢ higher (30¢ lower to 92¢ higher).
Choice boxed beef cutout value was 45¢ higher on Wednesday afternoon at $207.81/cwt. Select was 38¢ higher at $203.51.
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Major U.S. financial indices took a step higher on Wednesday, following early pressure tied to the inflation indicated by the Consumer Price Index (CPI).
The CPI increased 0.3% in January on a seasonally adjusted basis, according to the U.S. Bureau of Labor Statistics. Over the last 12 months, before seasonal adjustment, the CPI for all items is up 2.1%. The index for all items less food and energy rose 1.8% over the past year, while the energy index increased 5.5% and the food index advanced 1.7%.
The Dow Jones Industrial Average closed 253 points higher. The S&P 500 closed 35 points higher. The NASDAQ closed 130 points higher.
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Increased late-year feedlot placements due to drought and relatively slower growth in last year’s calf crop, lowered USDA’s expectations for beef production this year by 35 million lbs. to 27.7 billion lbs. That’s still 6% more than last year’s estimated production of 26.2 billion lbs., which was 3.8% more than in 2016.
“This reflects anticipation of fewer cattle to be placed in feedlots in the first half of the year and marketed in the second half, although it is largely offset by the first-half marketing of cattle placed in late-2017,” say analysts with USDA’s Economic Research Service (ERS) in the latest Livestock, Dairy and Poultry Outlook.
ERS analysts note that the timing and weight of placements in the coming months will increasingly depend on precipitation in the Southern Plains.
“Despite higher cattle slaughter and beef production during January 2018 relative to January 2017, wholesale beef prices climbed above 2017,” ERS analysts say. “With packer margins above 2017 in early 2018, January fed steer prices also averaged above year-earlier levels. On expectations of continued demand strength, fed steer price forecasts for the first and second quarters were raised to $122-$126/cwt. and $117-$125, respectively. Although first-quarter fed steer prices are expected to average above 2017, second-quarter prices could be pressured by marketings.”