WLI

Cattle futures managed to close marginally lower to narrowly mixed Thursday.

Feeder Cattle futures closed narrowly mixed, from an average of 34¢ lower in four contracts to an average of 56¢ higher.

Live Cattle futures closed an average of 38¢ lower, except for an average of 6¢ higher in two contracts.

Negotiated cash fed cattle trade was at a standstill in the Southern Plains and mostly inactive on light demand in the North through Thursday afternoon, according to the Agricultural Marketing Service.

For the week, prices are steady to unevenly steady in the Southern Plains and Nebraska with live prices at $124/cwt. in the Texas Panhandle, $123-$124 in Kansas and $125 in Nebraska. Live prices in the western Corn Belt are $1-$3 lower at $123-$124. Dressed traded is unevenly steady at $200.

Choice boxed beef cutout value was $1.82 lower Thursday afternoon at $318.00/cwt. Select was $3.62 lower at $280.27.

Net U.S. beef export sales for the week ending Sept. 9 were 15,300 metric tons, according to USDA’s weekly U.S. Export Sales report. That was 23% more than the previous week and 24% more than the prior four-week average. Increases were primarily for Japan, South Korea, China, Mexico, and Canada.

Corn futures closed mostly 3¢ to 4¢ lower.

Soybean futures closed fractionally higher to 1¢ higher through May ‘22 and then mostly 1¢ to 4¢ lower.

******************************

Major U.S. financial indices mainly hovered in place Thursday amid investor caution. Weekly initial unemployment insurance claims for the week ending Sept. 11 were 332,000, which was 20,000 more than the previous week and a tad gloomier than expected.

The Dow Jones Industrial Average closed 63 points lower. The S&P 500 closed 6 points lower. The NASDAQ was up 20 points.

*****************************

Price projections in the latest monthly Livestock, Dairy and Poultry Outlook from USDA’s Economic Research Service (ERS) continue to be optimistic, especially heading into 2022.

ERS sees the 2022 annual average feeder steer price (basis 750-800 lbs., Oklahoma City) at $155.00/cwt., which would be $9.12 more than this year’s estimate and $19.55 more than the 2020 average. Prices are projected at $154 in the third quarter and $155 in the fourth quarter for an annual average of $145.88. Prices are forecast at $153 in the first quarter next year and at $151 in the second.

ERS projects the 2022 annual average five-area direct fed steer price at $128.25/cwt., which would be $6.07 more than this year’s projection and $19.74 more than 2020. Prices are projected at $124 in the third quarter and $131 in the fourth quarter for an annual average of $122.18. Prices are forecast at $133 in the first quarter next year and at $128 in the second.

“Cow slaughter is expected to be higher during the second half of the year, partly offsetting declines in steer and heifer slaughter. But, coupled with lighter expected dressed weights, the forecast for 2021 beef production was reduced to 27.74 billion lbs., down 130 million lbs. from last month,” according to ERS analysts.

Negotiated cash fed cattle trade was slow on light to moderate demand in the Southern Plains through Wednesday afternoon, according to the Agricultural Marketing Service. Live prices were generally steady at $124/cwt. in the Texas Panhandle and $123-$124 in Kansas.

Prices were unevenly steady in Nebraska at $125 on a live basis and $200 in the beef.

There were too few transactions to trend in the western Corn Belt.

Choice boxed beef cutout value was $3.07 lower Wednesday afternoon at $319.82/cwt. Select was $6.73 lower at $283.89.

Cattle futures retreated Wednesday but held on to most of the previous session’s gains. Resurgent Corn futures added pressure to Feeder Cattle.

Feeder Cattle futures closed an average of $1.20 lower (2¢ at the back to  to $2.15 lower toward the front).

Live Cattle futures closed an average of 59¢ lower (10¢ lower at the front to $1.10 lower at the back), except for 5¢ higher in spot Oct.

Corn futures closed 11¢ to 13¢ higher through new-crop contracts and then mostly 3¢ to 6¢ higher.

Soybean futures closed 8¢ to 12¢ higher through Nov ‘22 and then mostly 4¢ to 6¢ higher.

******************************

Major U.S. financial indices rose Wednesday, supported by tech and energy stocks.

The Dow Jones Industrial Average closed 236 points higher. The S&P 500 closed 37 points higher. The

NASDAQ closed 123 points higher

Crude Oil futures (WTI-CME) closed $1.65 to $2.15 higher through the front six contracts.

*****************************

“…while the four-firm concentration in fed cattle beef packing has remained relatively constant since 1994, the CPI (Consumer Price Index) for beef has been variable over that same period; sometimes above and sometimes below the overall consumer price index. If concentration is causing the recent rise in consumer prices for meat and poultry products, why did concentration not cause inflation five or 10 years ago?,” wonders Julie Anna Potts, president and CEO of the North American Meat Institute, in a letter sent Tuesday to Agriculture Secretary Tom Vilsack.

The letter was in response to a White House press briefing last week where the primary focus was climbing consumer food prices. Brian Deese, National Economic Council (NEC) director and Secretary Vilsack unveiled what they called a study. You’d be hard-pressed to find a credible economist able to connect the dots and conclusions. The abbreviated bottom line is that industry consolidation is at the root of higher red meat and poultry prices.

“…Just four large conglomerates control the majority of the market for each of these three products, and the data show that these companies have been raising prices while generating record profits during the pandemic…The dynamic of a hyper-consolidated pinch point in the supply chain raises real questions about pandemic profiteering. During the pandemic, wholesale prices for beef rose much faster than input prices for cattle. That means that the prices the processors pay to ranchers aren’t increasing, but the prices collected by processors from retailers are going up.”

There’s neither time nor space to start filling in the fictional holes and inferential leaps.

Good luck getting profit data from privately owned companies, which represent a fair bit of beef packing capacity. Never mind what gross packing margins have and don’t have to do with profitability.

Few would argue that food retail prices are increasing. As mentioned in yesterday’s Cattle Current, beef and veal values were 9.6% higher year over year in pandemic-ravaged 2020, according to according to the Consumer Food Price Index from ERS. Year over year in July, those values were 6.5% higher; 4.2% higher year to date compared to the same time last year.

Everything from increased labor costs and supply chain disruptions to inflation and derived demand contribute to increasing consumer prices and the price imbalance between industry sectors.

“Before the administration attempts to recreate the animal agriculture industry, it is prudent to look back and acknowledge the benefits that flow from the food supply chains as they exist, which ERS described as ‘efficient,’ Potts explained in her letter. “In 2020, according to ERS, Americans spent an average of 8.6 percent of their disposable personal incomes on food. Indeed, Americans spend less of their disposable personal income on food than any other country in the world. This remarkable drop is attributable largely to systematic efficiencies that allow food processors to offer food to consumers at lower prices.”  

Negotiated cash fed cattle trade was inactive on light demand in all major cattle feeding regions through Tuesday afternoon, with too few transactions to trend according to the Agricultural marketing Service.

Last week, live prices were at $123-$124/cwt. in the Southern Plains and $124-$127 in the North. Dressed trade was at $198-$203.

Cattle futures were finally oversold and cheap enough to generate buying interest Tuesday. Support included the fact that the JBS plant in Grand Island — offline Monday due to a fire on the rendering side — was reportedly back up and running.

Feeder Cattle futures closed an average of $2.96 higher ($2.57 to $3.45 higher).

Live Cattle futures closed an average of $2.16 higher ($1.65 to $2.82 higher).

Choice boxed beef cutout value was $3.04 lower Tuesday afternoon at $322.89/cwt. Select was $1.54 lower at $290.62.

Corn futures closed 3¢ to 7¢ higher across the front half of the board and then fractionally higher to 3¢ higher.

Soybean futures closed 1¢ to 2¢ lower, except for 4¢ higher in spot Sep.

*****************************

Major U.S. financial indices weakened after a respite the previous day and despite the fact that the closely watched Consumer Price Index (CPI) was slightly less than the trade expected month over month and year over year. The CPI for All Urban Consumers (CPI-U) increased 0.3% in

August on a seasonally adjusted basis after rising 0.5% in July, according to the U.S. Bureau of Labor Statistics. The unadjusted index for all items was 5.3% more than 12 months earlier.

The Dow Jones Industrial Average closed 292 points lower. The S&P 500 closed 25 points lower. The NASDAQ was down 67 points.

*****************************

Wholesale beef prices continue to decline, while retail beef prices edge higher.

Although wholesale beef prices remain elevated, Choice boxed beef prices continue downward, from a recent summer high in of $348.03/cwt. in August to $322.89 yesterday afternoon. Likewise, Select declined from $319.59 to $290.62.

Conversely, the most recent summary of retail beef prices, published by USDA’s Economic Research Service (ERS) yesterday shows the Choice beef price increasing steadily from $6.48/lb. in March to $7.64 in August. During the same period, the all fresh retail beef price increased from $6.38/lb. to $7.14.

According to the Consumer Food Price Index from ERS, beef and veal values were 9.6% higher year over year in pandemic-ravaged 2020. Year over year in July, those values were 6.5% higher; 4.2% higher year to date compared to the same time last year.

By way of comparison, the Consumer Food Price Index for all food was 3.4% higher year over year in 2020, 3.4% higher year over year in July and 2.4% higher year to date.

Year over year in July, food-at-home (grocery store or supermarket food purchases) CPI increased 2.6%, while food-away-from-home (restaurant purchases) increased 4.6%, according to the ERS Food Price Outlook.

Year to date, ERS analysts say, “Of all the CPI food-at-home categories tracked by USDA-ERS, the fresh fruits category has had the largest relative price increase (4.9%) and the fresh vegetables category the smallest (0.4%). No food categories have decreased in price in 2021 compared to 2020.”

As for the overall consumer price index, according to the latest update from the U.S. Bureau of Labor Statistics, the unadjusted index for all items was 5.3% higher over the last 12 months.

Negotiated cash fed cattle trade was at a standstill in all major cattle feeding regions through Monday afternoon, according to the Agricultural Marketing Service.

Last week, live prices were at $123-$124/cwt. in the Southern Plains, $124-$126 in Nebraska and $124-$127 in the western Corn Belt. Dressed trade was at $198-$203. 

Last week’s five-area direct average steer price was $124.79/cwt. on a live basis, which was 64¢ less than the previous week. The average steer price in the beef was 97¢ lower at $200.82.

Widespread reports of an overnight for at the JBS packing facility in Grand Island, Neb. — apparently halting production, at least for Monday — shoved already faltering Cattle futures lower. Overall weakness in commodity markets also contributed pressure.

Feeder Cattle futures closed an average of $2.09 lower.

Live Cattle futures closed an average of $1.06 lower

Choice boxed beef cutout value was 57¢ lower Monday afternoon at $247.59/cwt. Select was 82¢ lower at $218.01/cwt.

Corn futures closed mostly 4¢ lower through Jly ’22 and then 1¢ to 2¢ lower.

Soybean futures closed mostly 1¢ lower through Aug ’22 and then fractionally higher to 2¢ higher.

******************************

Major U.S. financial indices closed mixed on Monday, snapping a five-day slide as investors await Tuesday’s report on consumer prices to gauge both inflation and the Federal Reserve’s timing to taper stimulus efforts. Crude oil continued to rally in part due to port disruptions spawned by Hurricane Ida.

The Dow Jones Industrial Average closed 262 points higher. The S&P 500 closed 10 points higher. The NASDAQ closed 10 points lower. 

*****************************

Beef byproduct values continue significantly higher in recent months than they were for several years. During the ebb in 2020, those values were the lowest since 2009, according to Derrell Peel, Extension livestock marketing specialist at Oklahoma State University. For perspective, he says hide and offal values were $6.93/cwt. (live fed steer basis) in July last year. They were $14.99 last month. They were $15.25 yesterday.

“The sharp jump in byproduct values is due to increases in hide values along with several other products included in the by-product totals,” Peel explains, in his weekly market comments. “The largest component of byproduct values is the hides. The August steer hide value was up 115% year over year. In recent years, hides have dropped from roughly half of total byproduct values to about 30% of the total. Despite the doubling of hide values in the past year, hides still only represent 31.7% of current byproduct value. This is because numerous other byproduct values have likewise increased sharply in the past year.”

For instance, Peel explains inedible tallow values are up 177% year over year while edible tallow values increased 85% percent. Combined, he says edible and inedible tallow represent 25.4% of August total byproduct values. Tongue prices were up 111% year over year in August and accounted for 19.5% of total byproduct values. 

“The majority of hides and offals are exported. Over the past decade, exports of hides, variety meat, and tallow have added an average of $2.42 billion to total beef industry exports. In 2020, the value of hide, variety meat and tallow exports was $1.7 billion,” Peel says.

Negotiated cash fed cattle trade was mostly inactive on light demand in all major cattle feeding regions through Friday afternoon, according to the Agricultural marketing Service.

Last week, live prices were steady to $1 lower at $123-$124/cwt. in the Southern Plains, $124-$125 in Nebraska and $124-$127 in the western Corn Belt. Dressed trade was $2-$5 lower in Nebraska at $198 and steady to $3 lower in the western Corn Belt at $203.

Cattle futures continued lower Friday, pressured by growing concerns about rising Delta variant infections hampering economic recovery and demand.

Feeder Cattle futures closed an average of $1.47 lower (50¢ lower in the back contract to $2.10 lower in Nov ’21).

Live Cattle futures closed an average of 76¢ lower, (33¢ lower in the front contract to $1.13 lower at the back).

Choice boxed beef cutout value was $5.36 lower Friday at $327.22/cwt. Select was $3.08 lower at $298.37.

The average dressed steer weight the week ending Aug. 28 was 901 lbs., which was 2 lbs. lighter than the previous week and 15 lbs. lighter than the same week last year, according to USDA’s Actual Slaughter Under Federal Inspection report. The average dressed heifer weight of 821 lbs. was 1 lb. heavier than the previous week but 13 lbs. lighter than the previous year.

Estimated total cattle slaughter the holiday shortened week was 577,000 head, according to USDA, which was 47,000 head fewer than the previous week. Year-to-date estimated total cattle slaughter of 23.04 million head is 834,000 more (+3.76%) than the same period last year.

Estimated year-to-date total beef production of 19.03 billion lbs. was 648.1 million lbs. more (+3.53%) than the same time the previous year.

Corn futures closed higher Friday, despite bearish World Agricultural Supply and Demand Estimates that increased ending stocks with more projected planted acres and higher estimated yield (see below).

Corn futures closed mostly 1¢ to 9¢ higher.

Soybean futures closed 15¢ to 19¢ higher.

******************************

Major U.S. financial indices closed lower Friday as investors continued to fret over growing cases of the Delta variant and its impact on economic growth, while inflation indicators continue to rise. For instance, the Producer Price Index for final demand increased 0.7% in August, according to the U.S. Bureau of Labor Statistics. On an unadjusted basis, the final demand index rose 8.3% for the 12 months ended in August, the largest advance since 12-month data were first calculated in November 2010.

The Dow Jones Industrial Average closed 271 points lower. The S&P 500 closed 34 points lower. The NASDAQ was down 132 points.

*****************************

The monthly World Agricultural Supply and Demand Estimates published Friday increased expected fed steer prices and lowered expected corn prices.

ERS lowered projected beef production for this year by 130 million lbs. to 27.74 billion lbs. based on lower expected steer and heifer slaughter and lighter carcass weights more than offsetting higher cow slaughter. However, the total would be 586 million lbs. more (+2.1%) than last year. Total beef production next year is forecast to be 26.87 billion lbs., which would be 867 million lbs. less (-3.1%) than this year.

ERS increased this year’s expected five-area direct annual average fed steer price by $1 to $122.20/cwt. Average projected prices are $124 in the third quarter, $131 in the fourth quarter and $133 in the first quarter of next year. Expectations for next year’s annual average price increased by $2 to $128.

Total red meat and poultry production  this year is projected to be 106.6 billion lbs., which would be 59 million lbs. more than last year. Next year, total red meat and poultry production is forecast to be 204 million lbs. (+0.19%) more than this year on increased pork and poultry production.

Corn

USDA forecast corn production for 2021-22 at 15.0 billion bu., up 246 million from last month on increases to harvested area and yield. The national average yield is forecast at 176.3 bu./acre, up 1.7 bu. Harvested area for grain is forecast at 85.1 million acres, up 0.6 million. With projected supply rising more than use, ending stocks increased 166 million bu. to 1.4 billion. The season-average corn price received by producers was lowered 30¢ to $5.45/bu. 

Soybeans

Soybean production is projected at 4.4 billion bu., up 35 million with lower harvested area more than offset by a higher yield forecast of 50.6 bu./acre. Ending stocks are projected at 185 million bushels, up 30 million from last month.

The U.S. season-average soybean price was forecast at $12.90/bu., down 80¢. The soybean meal price was forecast $25 less at $360 per short ton. The soybean oil price forecast was unchanged at 65¢/lb. 

Wheat

Projected 2021-22 ending wheat stocks were reduced 12 million bu. to 615 million and would be 27% less than last year, the lowest in eight years. The projected 2021-22 season-average farm price was lowered 10¢/bu. to $6.60 on reported NASS prices to date and price expectations for the remainder of 2021-22.