Cattle Prices Slid as Grain Cost Increased

On Wednesday, live cattle prices dropped amid spillover from the feeder cattle rates weakness and long liquidation.

The live cattle futures for February delivery fell by 0.16% to 156.75 cents per pound on January 18 closing session. Further, March feeder cattle cost tumbled by 1.60 cents to 181.30 cents per pound, pressured by the rising crop rate. Lastly, the April livestock consumer price tumbled by 0.80 cents to 160.10 cents per pound.

Also, analysts stated that any time grain moves higher, it weakens the livestock market.

On Friday, the US Commodity Futures Trading Commission (CFTC) reported that funds expanded their net long position in cattle futures. The recent data reached nearly 92,000.00 contracts, the largest since May 2019, leaving the market prone to bouts of liquidation.

In other news, the instability of boxed beef does not indicate better for higher cash. Its market may be rolling over as demand is impacted.

Additionally, demand could decelerate as the calendar moves through the first quarter of the year. The slowing of both its domestic and international requests would leave a sufficient supply readily available to the market.

Also, the continued weakness of pork cutouts would keep the upside price potential limited.

Moreover, hog weights have been increasing and near recorded data a year ago. This allows for more capacity of pork through fewer animals.

Calf and Cattle Feed Production Down in 2022

On the other hand, the total calf and cattle feed production is down by 2.00% over the five-month period. Also, the rise in dairy feed production was outweighed by a drop in all other cattle feed.

Moreover, the total animal feed production from July to November 2022 was down 5.00% at 5.41 million tons. This is the lowest level of data recorded since the season from 2016 to 2017.

Also, analysts expected livestock fodder outcomes to continue to tumble, driven mainly by reductions in manufactured poultry and pig feed. Meanwhile, higher input costs are expected to remain, and producer margins will continue to be squeezed.

Furthermore, experts predicted a shift in consumer buying habits due to the cost-of-living crisis.