Tuesday markets
On the first day of the trading week, the cattle complex closed mixed, and the Choice/Select spread closed inverted.
Live cattle futures were mixed throughout the day but closed higher, with the February contract up 50 cents to $143.75 and the April contract up 15 cents to $146.02.
Cash trade was very light, with 1,076 head selling at $142. On the formula side, 38,600 head averaging 866 lbs. sold for $225.
“There are wide expectations that negotiated fed cattle prices will trade $2 to as much as $4 higher this week, making new highs for this bull market,” Cassie Fish, market analyst for The Beef, wrote. “As this holiday-shortened week begins on the heels of two very big consecutive slaughters and amidst tightening market-ready fed cattle supplies, packer competition is anticipated to heat up.”
Last week’s cash cattle trade totaled 98,691 head, with 83 percent committed for the nearby delivery, while the remaining 17 percent were committed for the deferred delivery. Live steers averaged $142.37, and dressed steers averaged $225.97.
“Packers have been strategic in their buying over the last month and, as you’ll note, they’re slowly stacking supplies around them as they buy cattle with time for deferred delivery,” ShayLe Stewart, DTN livestock analyst, wrote in the midday comments. “This negatively affects the spot cash cattle market as feedlots will see less interest from packers in the weeks to come.”
Boxed beef prices closed the day mixed on 117 loads, with the Choice cutout down $2.45 to $261.64 and the Select cutout up $1.80 to $263.64. The Choice/Select spread was inverted, closing -$2.
“When select cuts become worth more than choice cuts, the market has some evaluating to do. This could be the market’s way of saying choice prices are simply too high,” Stewart wrote. “Before too much time is spent on the matter, we need to see how the afternoon’s boxed beef prices close, so stay tuned.”
The national weekly direct beef type price distribution for the week of Feb. 14 to Feb. 21 was the following on a live basis:
• Negotiated purchases: $142.30.
• Formula net purchases: $142.21.
• Forward contract net purchases: $140.60.
• Negotiated grid net purchases: $140.74.
On a dressed basis:
• Negotiated purchases: $226.03.
• Formula net purchases: $225.31.
• Forward contract net purchases: $215.60.
• Negotiated grid net purchases: $222.24.
Slaughter for the day is projected to be 123,000 head, the same as last week.
“This week’s slaughter is not expected to be as large as last week’s 663,000 and the prior week’s 659,000, due to a few plants that were dark on President’s Day,” Fish said. “But the improvement in slaughter the last 5 weeks and most especially the last 2 weeks have made up for the issues earlier in January, likely more than made up.”
USDA’s Agricultural Marketing Service released the National Weekly Fed Cattle Comprehensive report, showing quality grading was down 1 percent to 84.6 percent, and dressed weights were down to 884.9 lbs.
Feeder cattle
Feeder cattle closed lower as grain prices climbed, with the March contract down $1.20 to $164.22 and the April contract down $1.72 to $169.12. The CME Feeder Cattle Index was down 11 cents to $162.03.
“With Russia deciding to enter two Ukraine provinces Monday, the grain complex jumped higher on the market’s volatile, uncertain nature, and it’s likely this type of anxious environment continues to plague the grain markets until tensions decrease,” Stewart said. “That being the case, the feeder cattle contracts have taken to lower prices as feeders become worried about their breakeven and what their cost of gains could become.”
Corn closed sharply higher, with the March contract up 20 cents to $6.74 and the May contract up 19 cents to $6.72 a bushel.
Iowa: Russell Livestock in Russell sold 5,214 head Monday. Compared to the previous auction, steer calves under 550 lbs. sold sharply higher, 550-750 lbs. were $2-6 higher and over 750 lbs. sold mostly steady to $4 lower. Heifer calves under 600 lbs. were also sharply higher; over 600 lbs. were mostly steady to $5 higher. Benchmark steers averaging 720 lbs. sold between $163-179.75, averaging $173.31.
Nebraska: Tri-State Livestock in McCook sold 1,690 head Monday. Compared to the last auction, steers were steady, and heifers were steady to $6 higher. Benchmark steers averaging 730 lbs. sold between $162.50-169.50 and averaged $165.13.
South Dakota:Sioux Falls Regional in Worthing sold 3,991 head Monday. Compared to the last auction, feeder steers sold steady to $5 higher, except 800-850 lbs., which were steady to $2 lower, and heifers were steady to $5 lower. Benchmark steers averaging 771 lbs. sold between $160-171.50, averaging $166.70. —Charles Wallace,WLJ editor
