Price action: February live cattle futures fell 42 1/2 cents to $171.375 and nearer the session low. For the week, February cattle rose 80 cents. March feeder cattle futures rose 30 cents to $227.70, near mid-range and hitting a six-week high. For the week, March feeders rose $3.55.
5-day outlook: Not a bad week for the cattle futures markets bulls. Today’s bullish weekly high close in March feeders sets the stage for follow-through technical buying in that market next Tuesday. Markets are closed Monday for the Martin Luther King holiday. Focus next week will also be on wintry weather in cattle country. Heavy snow, blizzard conditions and extreme cold in the Midwest this week and in the coming days have reduced packers’ urgency to aggressively bid for cattle late this week, with only light sales so far at generally steady price levels in the far northern market. For many feedlot operators, getting cattle to market next week will be challenging, and the animals, themselves, will find it difficult to gain or keep weight. The noon report showed wholesale beef prices continued higher Friday, with Choice rising $3.69 to $289.58, while Select rose $2.08 to $272.02, taking the Choice/Select spread to $17.56. Movement at midday was 73 loads.
On the feed side, today’s solid losses in corn futures and new contract lows are a bullish element for feeder cattle futures next week.
30-day outlook: This week’s extreme wintry weather in cattle country will stress feedlot cattle, especially in northern states. That will likely reduce supplies of cattle and beef available to packers and retailers in the next couple weeks. However, presently elevated cattle weights may limit the cattle markets’ upside potential in the short run.
90-day outlook: Today’s producer price index report, which tracks inflation in the commodities sold for personal consumption, capital investment, government and export, showed prices unexpectedly declined 0.1%, month-over-month, compared to expectations for a 0.1% rise. That marks three consecutive months of deflation in producer prices. Today’s PPI data mostly mitigated Thursday’s higher-than-expected consumer price index report, thereby rallying the U.S. stock indexes back to near their recent 12-month highs. This is good news for the cattle markets as it implies better consumer demand for America’s favorite red meat in the coming months.
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