WLI

Cattle futures continued lower Wednesday, with follow-through pressure from outside markets and concerns that beef demand may falter. Stronger Corn futures added weight.

Feeder Cattle futures closed an average of $2.01 lower ($1.07 to $2.70 lower).

Live Cattle futures closed an average of 85¢ lower (30¢ to $1.07 lower), except for 10¢ higher in spot Oct.

Negotiated cash fed cattle trade ranged from slow on light demand to inactive on light demand through Wednesday afternoon, according to the Agricultural Marketing Service.

So far this week, FOB live sales are steady in the Southern Plains at $183/cwt. and steady to $1 lower in Nebraska and the western Corn Belt at $184 in a light test. Dressed delivered prices in Nebraska are $2 lower at $290 (a few up to $291) and steady to $2 lower in the western Corn Belt at $290-$292.

Choice boxed beef cutout value was $1.41 higher Wednesday afternoon at $300.95/cwt. Select was 59¢ lower at $278.51/cwt.

Corn futures closed mostly 3¢ to 4¢ higher.

KC HRW Wheat closed mostly 10¢ to 15¢ lower.

Soybean futures closed mostly 4¢ to 7¢ higher.

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Major U.S. financial indices closed mixed Wednesday after significant early pressure from higher crude oil prices driven by supply concerns and higher bond yields related to fears of persistent inflation.

The Dow Jones Industrial Average closed 68 points lower. The S&P 500 closed fractionally higher. The NASDAQ was up 29 points.

West Texas Intermediate Crude Oil futures (CME) closed $1.20 to $3.29 higher through the front six contracts. 

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The Rural Mainstreet Index (RMI) sank below growth neutral in September, for the first time since March, according to the monthly survey of bank CEOs in rural areas of a 10-state region dependent on agriculture and/or energy.

Specifically, the region’s overall reading for September fell to 49.5 from August’s 50.0. The index ranges between 0 and 100, with a reading of 50.0 representing growth neutral.  

“This is the weakest recorded reading since March of this year. Bankers indicated that the biggest challenge to community bank profitability over the next 12 months will be a downturn in farm income,” says Ernie Goss, Jack A. MacAllister Chair in Regional Economics at Creighton University’s Heider College of Business.

Higher interest rates, deposit outflows and a rising regulatory environment continued to constrain the business confidence index to a much weaker 26.8 from 38.9 in August. “This month’s reading is the most negative outlook recorded since July 2022. Over the past 12 months, the regional confidence index has fallen to levels indicating a very negative outlook,” Goss says. “Approximately half of bankers expect economic conditions to worsen in the next six months.”

Even so, the region’s farmland price index climbed to 65.4 from 60.0 in August. This was the 36th straight month that the index has advanced above 50.0.  “Creighton’s survey continues to point to healthy growth in farmland prices, even as farming conditions weaken,” Goss says.

Cattle futures closed sharply lower Tuesday, pressured by pessimistic outside markets, demand worries, and likely some month-end and quarter-end position squaring.

Feeder Cattle futures closed an average of $4.56 lower ($1.27 to $5.82 lower).

Live Cattle futures closed an average of $1.88 lower (85¢ lower at the back to $2.85 lower).

Negotiated cash fed cattle trade ranged from slow on light demand to a standstill through Tuesday afternoon, with too few transactions to trend, according to the Agricultural Marketing Service.

Last week, FOB live prices were $183/cwt. in the Southern Plains, $184-$185 in Nebraska and $185-$186 in the western Corn Belt. Dressed delivered prices were $292.

Choice boxed beef cutout value was $1.94 lower Tuesday afternoon at $299.54/cwt. Select was $1.35 lower at $279.10/cwt. That’s the first time since May that Choice cutout dropped below $300.

Grain and soybean futures appeared to jockey for some position ahead of Friday’s Grain Stocks report.

Corn futures closed 1¢ lower through Sep ‘24 and then mostly fractionally mixed.

KC HRW Wheat closed 1¢ to 4¢ lower through Jly ‘24 and then mostly fractionally higher.

Soybean futures closed 4¢ to 5¢ higher.

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Major U.S. financial indices closed sharply lower Tuesday, pressured by negative economic news.

Consumer confidence sagged lower than expected. The Conference Board Consumer Confidence Index^® declined for a second consecutive month to 103.0 (1985=100), down from an upwardly revised 108.7 in August.

“September’s disappointing headline number reflected another decline in the Expectations Index, as the Present Situation Index was little changed, says Dana Peterson, Chief Economist at The Conference Board. Write-in responses showed that consumers continued to be preoccupied with rising prices in general, and for groceries and gasoline in particular. Consumers also expressed concerns about the political situation and higher interest rates. The decline in consumer confidence was evident across all age groups, and notably among consumers with household incomes of $50,000 or more.”

New residential home sales in August also missed expectations to the downside. Sales of new single‐family houses in August 2023 were at a seasonally adjusted annual rate of 675,000, according to estimates released jointly today by the U.S. Commerce Department. That was 8.7% below the revised July rate of 739,000.

The Dow Jones Industrial Average closed 388 points lower. The S&P 500 closed 63 points lower. The NASDAQ was down 207 points.

West Texas Intermediate Crude Oil futures (CME) closed 32¢ to 71¢ higher through the front six contracts. 

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Placements have decreased year over year for 10 of the last 12 months, with total placements down 897,000 head in the last year, says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, reflecting on the recent Cattle on Feed report.

“A 12-month moving average of placements shows that the peak annual average monthly placements occurred in December 2019, consistent with the cyclical peak in the calf crop in 2018,” Peel says, in his weekly market comments. “However, pandemic delays from 2020 into 2021and drought-enhanced placements in 2021 and 2022 have kept feedlot placements high until the last few months.” 

Peel explains the current 12-month moving average of placements for August dropped to the lowest level since May of 2017. He says average placements are expected to continue declining for the foreseeable future.

As for the on-feed inventory, the 12-month moving average peaked in September 2022 at 11.836 million head, according to Peel. 

“The September 2023 12-month moving average is 11.507 million head, down 2.8 % from the peak,” Peel says.  “Following the drought a decade ago, the 12-month moving average dropped below 11 million head in April 2013 and remained below that level for 58 months through January 2018. This was the period of rapid herd expansion in the last cattle cycle and a similar situation is likely going forward, beginning in 2024.”

Cattle futures basically paddled in place Monday, looking for further direction and amid firmer Corn futures.

Feeder Cattle futures closed an average of 33¢ lower, except for 25¢ higher in the back contract.

Live Cattle futures closed mixed, from an average of 15¢ lower to an average of 19¢ higher.

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

Last week, FOB live prices were steady to $1 higher in the Southern Plains at $183/cwt., steady in Nebraska at $184-$185 and steady to $1 higher in the western Corn Belt at $185-$186. Dressed delivered prices were steady at $292.

The weighted average five-area direct fed steer price was 69¢ higher on a live basis at $184.73/cwt. and 15¢ higher in the beef at $291.99.

Choice boxed beef cutout value was $1.85 lower Monday afternoon at $301.48/cwt. Select was 2¢ higher at $280.45/cwt.

Grain and soybean futures strengthened on Monday.

Corn futures closed 2¢ to 4¢ higher.

KC HRW Wheat closed mostly 3¢ to 4¢ higher.

Soybean futures closed mostly 3¢ to 5¢ higher.

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Major U.S. financial indices gained to start the week as investors seemed to ignore rising bond yields on the day.

The Dow Jones Industrial Average closed 43 points higher. The S&P 500 closed 17 points higher. The NASDAQ was up 59 points.

West Texas Intermediate Crude Oil futures (CME) closed 4¢ to 35¢ lower through the front six contracts.

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Total pounds of beef in freezers Aug. 31 were 3% more than the previous month but 18% less year than last year, according to the latest USDA Cold Storage report.

Frozen pork supplies were up slightly from the previous month but down 13% from last year.

Total red meat supplies in freezers were up 1% percent from the previous month but down 15% from last year.

Total frozen poultry supplies were down slightly from the previous month but up 1% from a year ago.

Cattle futures bounced back from the previous day’s widespread commodity and equity sell-off, supported by stronger-late-week cash fed cattle prices and ongoing bullish fundamentals.

Feeder Cattle futures closed an average of $1.34 higher (82¢ to $1.62 higher).

Live Cattle futures closed an average of $1.48 higher ($1.22 to $2.10 higher).

Negotiated cash fed cattle trade ranged from slow on light to moderate demand to inactive on light demand through Friday afternoon, according to the Agricultural Marketing Service.

For the week, FOB live prices were steady to $1 higher in the Southern Plains at $183/cwt., steady in Nebraska at $184-$185 and steady to $1 higher in the western Corn Belt at $185-$186. Dressed delivered prices were steady at $292.

Choice boxed beef cutout value was $1.40 higher Friday afternoon at $303.33/cwt. Select was $1.43 higher at $280.43/cwt.

Estimated total cattle slaughter last week of 625,000 head was 7,000 head fewer than the previous week and 46,000 head fewer (-6.9%) than the same week last year. Year-to-date estimated total cattle slaughter of 23.6 million head was 1.1 million head fewer (-4.3%) than the same time last year. Estimated year-to-date beef production of 19.3 billion pounds was 1 billion pounds less (-5.1%) than a year earlier.

Grain and soybean futures firmed on Friday.

Corn futures closed mostly 2¢ higher.

KC HRW Wheat closed mostly 1¢ to 2¢ higher.

Soybean futures closed 1¢ to 3¢ higher.

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Major U.S. financial indices closed lower Friday with follow-through pressure related to a potential government shutdown and projected lingering higher interest rates.

The Dow Jones Industrial Average closed 106 points lower. The S&P 500 closed 9 points lower. The NASDAQ was down 12 points.

West Texas Intermediate Crude Oil futures (CME) closed mixed through the front six contracts, from 68¢ lower to 40¢ higher.

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Markets will likely view Friday’s monthly Cattle on Feed report as neutral, although placements were 1% more than expected. Other estimates were in line with pre-report estimates.

For feedlots with 1,000 head or more capacity, August placements of 2.0 million head were 107,000 head fewer (-5.1%) than a year earlier.

In terms of placement weights, 36% went on feed weighing 699 pounds or less, 47% weighing 700-899 pounds and 17% weighing 900 pounds or more.

Marketings in August of 1.9 million head were 120,000 head fewer (-6.0%).

Cattle on feed Sept 1 of 11.1 million head were 248,000 head fewer (-2.2%).

Cattle futures and other commodity futures closed lower Thursday with the higher dollar and apparent fund selling tied to yesterday’s comments from the Fed suggesting interest rates will stay higher for longer. Wariness over Friday’s Cattle on Feed report could have added pressure.

Feeder Cattle futures closed an average of $2.31 lower (90¢ lower in spot Sep to $2.87 lower).

Live Cattle futures closed an average of $1.80 lower ($1.57 to $2.02 lower).

Negotiated cash fed cattle trade ranged from slow on light to moderate demand to a standstill through Thursdayafternoon, according to the Agricultural Marketing Service.

Dressed delivered prices were steady in Nebraska at $292/cwt. FOB live prices last week were $184-$185.

Elsewhere last week, FOB live prices were $182-$183/cwt. in the Southern Plains and $185 in the western Corn Belt, where dressed delivered prices were $292.

Choice boxed beef cutout value was 67¢ higher Thursday afternoon at $301.93/cwt. Select was 32¢ higher at $279.00/cwt.

Net U.S. beef export sales (2023) of 13,700 metric tons were up noticeably from the previous week and up 15% from the prior four-week average, according to the U.S. Export Sales report for the week ending Sept. 14. Increases primarily for Japan, South Korea, China, Mexico and Canada.

Turning to row crops, grain and Soybean futures closed lower with the pressure from outside markets.

Corn futures closed mostly 4¢ to 7¢ lower.

KC HRW Wheat closed 12¢ to 18¢ lower through May ‘25 and then mostly fractionally lower.

Soybean futures closed mostly 16¢ to 26¢ lower.

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Major U.S. financial indices closed lower Thursday with negative economic news including higher treasury yields and threats of a U.S. government shutdown.

The Dow Jones Industrial Average closed 370 points lower. The S&P 500 closed 72 points lower. The NASDAQ was down 245 points.

West Texas Intermediate Crude Oil futures (CME) closed marginally mixed through the front six contracts.

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The Organization for Economic Cooperation and Development (OECD) expects global economic growth to moderate the rest of this year and next amid tighter monetary policy, according to the OECD Economic Outlook, Interim Report September 2023.

“Further significant stress in financial markets has been avoided so far, after the turbulence due to bank failures earlier in the year. That said, the global economy continues to confront the challenges of elevated inflation, low growth and comparatively weak trade,” says Mathias Cormann, OECD Secretary-General.

Annual GDP growth in the United States is projected at 2.2% in 2023 and 1.3% in 2024, with the slowdown driven by cooler labor markets and the effects of tighter monetary policy. In the euro area, where demand is already subdued, GDP growth is projected to ease to 0.6% in 2023, and edge up to 1.1% in 2024 as the adverse impact of high inflation on real incomes fades. China’s recovery is weaker than expected following the post-pandemic re-opening, with growth projected at 5.1% this year and 4.6% in 2024.

The Outlook highlights a range of downside risks. For instance, according to the report, inflation could continue to prove more persistent than projected, with further disruptions to energy and food markets still possible. A further slowdown in China would dampen growth in trading partners worldwide and could drag down business confidence. Public debt remains elevated in many countries, in the aftermath of significant fiscal support rolled out in response to the COVID-19 pandemic and the energy price crisis.