Negotiated cash fed cattle trade got off to a steady start Tuesday with live prices in the Southern Plains at $95/cwt., but a few up to $96.25 in Kansas, according to the Agricultural Marketing Service.
Cattle futures softened with some likely profit taking as traders take stock of the potential upside beyond the backlog of fed cattle.
Live Cattle futures closed an average of 73¢ lower (32¢ lower to $1.22 lower).
Feeder Cattle futures closed an average of 64¢ lower (30¢ to $1.20 lower).
Choice boxed beef cutout value was $2.34 lower Tuesday afternoon at $200.92/cwt. Select was $1.03 lower at $190.85.
Corn futures closed mostly 2¢ lower.
Soybean futures closed mostly 2¢ higher through Aug ’21 and then fractionally higher to 1¢ higher.
Major U.S. financial indices bounced higher Tuesday. Support included more positive quarterly earnings than expected from J.P Morgan Chase.
The Dow Jones Industrial Average closed 556 points higher. The S&P 500 closed 42 points higher. The NASDAQ closed 97 points higher.
“The COVID impacts on cattle and beef markets are not all behind us, but the majority of the disruptions appear to have passed,” says Stephen Koontz, agricultural economist at Colorado State University, in the latest issue of In the Cattle Markets. “Beef cutout prices have returned to normal levels with tenderloins being rather weak. Fed steer and heifer slaughter volumes have returned to strong levels and the Saturday kill is very comparable to last year’s high values. Packer margins remain rather strong, but are well off of record highs, and are being realized as plants are back to operating at or close to full capacity.”
Koontz notes exceptions to normality, which will remain for some time, include the inventory of cattle on feed, the number of long-fed cattle and the resulting heavier carcass weights.
“The supply scenario is usually difficult this time of year with gradual declines in numbers but higher animal weights. And that difficult scenario is usually on the tail of market opportunities in the spring,” Koontz explains. “The disruptions this year eliminated the most persistent opportunity and could not have been worse timed. I, and the futures market, think it will take us through December or into next year for the market outlook to clearly improve.”
Koontz also points to deepening drought conditions as another near-term market factor.
“I expect to see beef cow liquidation be more substantial in the fall and I expect to see stronger western forage prices through the rest of the year; the extent of both, depending on the weather,” Koontz says. “Forecasts are for high and dry through the remainder of this year, with the potential for more normal weather during next year and starting next winter.”
Although beef cow slaughter increased significantly in recent weeks, Koontz notes there is no indication of drought-forced cow liquidation currently, but beef cow feeding is reported in the West.