WLI

Negotiated cash fed cattle prices so far this week are mostly $4 higher on a live basis in the Southern Plains at $104/cwt. Live prices are $2.50-$4.00 higher in the western Corn Belt at $106.50-$107.00, where dressed trade is $2-$7 higher at $165-$170. In Nebraska, dressed trade is $2 higher at $165.

Except for the front months, Live Cattle futures edged lower Thursday, while higher corn prices helped pressure Feeder Cattle. The weekly U.S. Export Sales report (week ending Aug. 6) from the Foreign Agricultural Service offered no support. Net beef export sales of 11,600 metric tons for 2020 were down 13% from the previous week and down 46% from the prior four-week average.

Live Cattle futures closed an average of 43¢ higher in four contracts (mostly front months) and then an average of 18¢ lower.

Except for 5¢ higher in Apr, Feeder Cattle futures closed an average of 44¢ lower.

Choice boxed beef cutout value was $1.86 higher Thursday afternoon at $210.95/cwt. Select was $1.42 higher at $197.41.

Actual fed cattle slaughter for the week ending Aug. 1 was 515,150 head, which was 10,353 head more than the same week last year, according to USDA’s Actual Slaughter Under Federal Inspection report. Total cattle slaughter of 636,304 head was 3,520 head more. The average steer carcass weight that week was 905 lbs., which was 2 lbs. heavier than the previous week and 33 lbs. heavier than the prior year. The average heifer carcass weight of 828 lbs. was 1 lb. lighter than the prior week, but 23 lbs. heavier than the previous year. Beef production for the week of 530.0 million lbs. was 19.3 million lbs. more than last year.

Corn and Soybean futures bounced sharply higher Thursday, likely helped along by wonderments about crop damage in Iowa from the recent widespread storm, and mostly from the positive weekly export sales.

Net corn export sales of 377,200 metric tons (MT) for 2019-2020 were up noticeably from the previous week and up 18% from the prior four-week average.

Net soybean export sales of 570,100 MT for 2019-2020 were up 65% from the previous week and 96% from the prior four-week average, led by sales to China.

Corn futures closed 7¢ to 11¢ higher.

Soybean futures closed mostly 10¢ to 16¢ higher.

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Major U.S. financial indices closed mixed on Thursday. Positive news included weekly initial jobless claims of 963,000,which was 228,000 less than the previous week and the first time the number was less than 1 million since March.

The Dow Jones Industrial Average closed 80 points lower. The S&P 500 closed 6 points lower. The NASDAQ closed 30 points higher.

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USDA’s recent Crop Production report projects lower overall hay production for this year, compared to 2019.

The National Agricultural Statistics Service (NASS) estimated 16.35 million acres of alfalfa and alfalfa mixes harvested this year, which would be 391,000 fewer acres (-2.3%) than last year. Yield is estimated 5.2% less at 2.73 tons/acre. Production of 51.66 million tons would be 3.2 million tons less (-5.9%) than last year.

NASS estimates 347,000 more acres than last year harvested for all other hay at 36.03 million acres, but projected yield is slightly less than last year at 2.04 tons/acre. Production of other hay is projected at 73.59 million tons, which would be 399,000 tons less than last year (-0.5%).

Negotiated cash fed cattle prices continued to bounce higher Wednesday, with live prices mostly $4 higher on a live basis in the Southern Plains at $104/cwt. So far this week, live prices are $2 higher in the western Corn Belt at $105, where dressed trade is $2-$7 higher at $165-$170. In Nebraska, dressed trade is $2 higher at $165.

Cattle feeders offered 890 head—all from the Southern Plains—in the weekly Fed Cattle Exchange auction. Of those, 348 head sold for 1-9 day delivery at a weighted average price of $104.50/cwt. Another 254 head sold for delivery at 1-17 days for a weighted average price of $104.27.

Cash optimism helped lift Cattle futures Wednesday.

Live Cattle futures closed an average of 84¢ higher (15¢ higher at the back to $1.70 higher in spot Aug), except for 5¢ lower in the back contract.

Feeder Cattle futures closed an average of 81¢ higher (17¢ higher at the back to $1.47 higher toward the front).

Choice boxed beef cutout value was $1.01 higher Wednesday afternoon at $209.09/cwt. Select was 97¢ higher at $195.99.

Despite higher estimated yield and production in the monthly World Agricultural Supply and Demand Estimates (see below) forecast ending stocks, lower than expected,  boosted Corn futures, while recent Chinese buying helped Soybean futures.

Corn futures closed 3¢ higher through Jly ’21 and then mostly 1¢ higher.        

Soybean futures closed 8¢ to 12¢ higher through Jan ’21 and then mostly 5¢-7¢ higher.

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Major U.S. financial indices closed higher on Wednesday, led by tech stocks.

The Dow Jones Industrial Average closed 289 points higher. The S&P 500 closed 46 points higher. The NASDAQ closed 229 points higher.

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USDA’s Economic Research Service (ERS), in the monthly World Agricultural Supply and Demand Estimates (WASDE) increased the expected annual fed steer price for this year 50¢ from the previous month’s projection to $107.30/cwt. Forecast prices are $101 in the third quarter, $104 in the fourth quarter and $105 in the first two quarters next year.

Beef production for this year is forecast at 27.03 billion lbs. That’s 94 million lbs. more than the previous month’s forecast, based on the faster pace of steer and heifer slaughter. Beef production for next year was projected at 27.62 billion lbs., which was 100 million lbs. less than the previous month, as forecast slaughter in the second half of 2021 will reflect lower expected placements in the first half of the year.

Forecast total red meat and poultry production for this year was projected 59 million lbs. less than the previous month at 106.48 billion lbs., as decreases in pork production more than offset higher beef and poultry production. Total red meat and poultry production for 2021 was unchanged at 107.99 billion lbs., which would be 1.5 billion lbs. more than this year.

Among other WASDE highlights:

Corn production for this year was forecast 278 million bu. more than the previous month at 15.3 billion bu., with the season’s first survey-based yield forecast at a record 181.8 bu./acre. With the outlook for larger supplies, greater feed and residual use, increased exports, and higher ending stocks, the season-average corn price received by producers was lowered 25¢ to $3.10/bu. 

As for soybeans, U.S. supply and use changes for 2020-21 include lower beginning stocks and higher production, crush, exports, and ending stocks. Soybean production was forecast at 4.425 billion bu., up 290 million bu. on higher forecast yields of 53.3 bu./acre, which would be 5.9 bu. more than last year.

The U.S. season-average soybean price for 2020-21 was forecast at $8.35/bu., down 15¢ from last month. The soybean meal price was forecast at $290 per short ton, down $10. The soybean oil price was forecast at 30.0¢/lb., up 1¢.

The outlook for 2020-21 U.S. wheat is for increased production offset by lower imports, higher exports, and lower ending stocks. Projected U.S. wheat production was raised 14 million bu. to 1,838 million with increased Hard Red Spring (HRS) and Durum production more than offsetting lower winter wheat production.

With offsetting supply changes and increased use, ending stocks were lowered 17 million bu. to 925 million. If realized, these would be the lowest wheat ending stocks in six years. However, the season-average farm wheat price was decreased 10¢ per bushel to $4.50, on lower U.S. corn prices and reduced wheat price expectations for the remainder of the market year. 

Although too few to trend, there were a few early negotiated cash fed cattle sales in Kansas on Tuesday at $103/cwt. on a live basis, and a few in the western Corn Belt at $105.

The recent bump higher in fed cattle prices and a promising outlook for more of the same this week, along with higher wholesale beef values, helped Cattle futures gain a little ground Tuesday.

Live Cattle futures closed an average of 73¢ higher (50¢ to $1.15 higher), except for 7¢ lower in the back contract.

Feeder Cattle futures closed an average of 93¢ higher.

Choice boxed beef cutout value was 88¢ higher Tuesday afternoon at $208.08/cwt. Select was $1.09 higher at $195.02.

Grain futures mainly hovered on Tuesday as traders awaited Wednesday’s monthly World Agricultural Supply and Demand Estimates.

Corn futures closed fractionally higher to 1¢ higher through May ’21 and then mostly fractionally lower. 

Soybean futures closed unchanged to 1¢ higher through Mar ’21 and then fractionally lower to 3¢ lower.

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Major U.S. financial indices closed lower on Tuesday, apparently pressured mostly by confusion surrounding government attempts to develop another round of COVID economic stimulus.

The Dow Jones Industrial Average closed 104 points lower. The S&P 500 closed 26 points lower. The NASDAQ closed 185 points lower.

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For all of the change spawned by the pandemic, overall inclusion of beef and pork in daily meals remained steady from February through June, according to the first multi-month summary from the Meat Demand Monitor (MDM). That project, partly funded by the beef and pork checkoffs, tracks U.S. consumer preferences, views, and demand for meat, with separate analysis for retail and food service channels.

Launched in February, the MDM summary includes data from over 10,000 survey respondents.

Among highlights:

**Grocery meat demand peaked in April, while food service meat demand was lowest in April.

**Taste, Freshness, Safety, and Price persistently rank highest in importance to protein purchasing decisions, with Price increasing in importance since the pandemic began.

**Away-from-home consumption of beef and pork for all three daily meals declined since February.

**Across restaurant groups, the Fast Casual group gained share, perhaps reflecting drive-thru or curbside capabilities, while the Local Independent group lost share.

**Across sources of protein for at-home consumption, the Grocery Store group gained prevalence while the Mass Merchandiser group lost share.

Agricultural economists at Kansas State University and Purdue University provide MDM coordination and analysis.

The weekly five-area weighted average steer price last week was $101.34/cwt. on a live basis, which was $2.68 more than the previous week. The average dressed steer price was $163.20, which was $3.17 higher.

Stronger cash fed cattle prices and firmer wholesale beef values helped Cattle futures gain a little ground Monday.

Live Cattle futures closed an average of 67¢ higher.

Feeder Cattle futures closed an average of 32¢ higher (2¢ to 85¢ higher).

Choice boxed beef cutout value was $1.73 higher Monday afternoon at $207.20/cwt. Select was $1.18 higher at $193.93.

Corn futures closed 1¢ to 2¢ higher.            

Soybean futures closed mostly 3¢ to 4¢ higher.

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Major U.S. financial indices closed mixed on Monday, pressured by profit taking in tech stocks, but buoyed by Executive Order from president Trump that would extend some of the recently-ended coronavirus aid to the unemployed.

The Dow Jones Industrial Average closed 357 points higher. The S&P 500 closed 9 points higher. The NASDAQ closed 42 points lower.

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Cattle feeding returns appear to be more promising for the fourth quarter, but plenty of uncertainty remains, according to the Livestock Marketing Information Center (LMIC).

On the up side, LMIC analysts point to lower projected breakeven levels and more optimistic Live Cattle futures for the fourth quarter. LMIC projections for fed cattle prices are in line with the recent futures prices, if not slightly more optimistic for December and into 2020.

In the meantime, LMIC projects cattle feeding returns to continue in the red. The organization estimated losses for cattle marketed in July at about $200 per head, the fifth consecutive month of red ink.

For perspective, LMIC estimates assume feeding out a 750-lb. steer in a commercial Southern Plains feedlot and include all costs of production. The estimates are not survey-based and presume normal weather conditions. Cash prices are used; neither fed cattle prices nor feedstuff costs are hedged. Estimates assume a normal marketing window, based on a standard cost of gain.

“Fed cattle prices in Kansas averaged $95.23/cwt. in July, leaving only $200-$300 to cover variable costs during the feeding timeframe per animal,” explain LMIC analysts. “For most feedlots, regardless of feeding 120 days or 180 days, it was not enough to cover costs. KSU feedlot data suggests that the cost of gain was about $500 per head in May to feed a steer to slaughter weight…September marketed cattle face a lower breakeven, which in early August indicated a net return very close to $0 per head.”

With expected lower feed costs, fed cattle prices remain the primary risk, according to LMIC.

Negotiated cash fed cattle trade for the week was mainly $3 higher through Friday afternoon at $103/cwt. on a live basis and at $163 in the beef.

Through Thursday, the five-area direct weighted average steer price was $101.28 on a live basis, which was $2.79 higher than the previous week. The average dressed steer price was $163.19, which was $3.17 higher than the prior week. Compared to the same time last year, though, those prices were $12.83 less and $19.38 less, respectively.

Cattle futures edged lower on Friday, entrenched in the long-worn sideways channel, and with some likely profit taking.

Except for 17¢ higher in spot Aug, Live Cattle futures closed an average of 51¢ lower (7¢ to 87¢ lower).

Except for 22¢ and 7¢ higher in two away contracts, Feeder Cattle futures closed an average of 37¢ lower.

Choice boxed beef cutout value was 81¢ higher Friday afternoon at $205.47/cwt. Select was 74¢ higher at $192.75.

Corn futures closed mostly 2¢ lower. 

Soybean futures closed mostly 9¢ to 10¢ lower.

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Major U.S. financial indices closed mainly sideways on Friday as investors weighed the impasse over additional federal coronavirus aid against stouter employment numbers than expected.

Total non-farm employment increased 1.8 million month-to-month in July and the national unemployment rate declined 0.9% to 10.2%, according to the U.S. Bureau of Labor Statistics.

Average hourly earnings for all employees on private non-farm payrolls rose by 7¢ to $29.39.

The Dow Jones Industrial Average closed 46 points higher. The S&P 500 closed 2 points higher. The NASDAQ closed 97 points lower.

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Recently expired COVID-19 unemployment benefits could hamstring the struggling recovery in the U.S. restaurant sector, according to the NPD Group (NPD).

“Up until July 31, somewhere between 25 and 30 million Americans were receiving Federal Pandemic Unemployment Compensation as part of the federal government’s CARES Act, which has provided $600 a week of enhanced unemployment benefits,” explains David Portalatin, NPD food industry advisor. “These unemployment benefits translated to between $15-$18 billion per week being put into consumers’ bank accounts, and for context, total restaurant industry sales right now are a bit less than $8 billion per week.”

For the week ending July 26, U.S. major restaurant chain customer transactions were down 11%, compared to a year earlier, but 1% more positive than the previous week, according to NPD’s CREST^®Performance Alerts.

Customer transactions at major quick service restaurant chains were even with the prior week and down 11% year over year. Full service restaurants chain transactions were 24% less than the same week last year, but improved 3% week to week.

The NPD folks note that full service restaurants were still recovering from the Great Recession, which ended more than 10 years ago, when the COVID pandemic prompted shelter-at-home orders and mandated dine-in closures. Along the way, consumers began leaning more toward quick service restaurants, too.

“Long before COVID, consumers were already favoring quick service restaurants and off-premises dining, and this trend has accelerated during the pandemic and will most likely be a behavior that will stick,” Portalatin says. “For full service restaurants it will mean more flexible operations, delivering on the on-premises experience and optimizing off-premises services. I see this as a sea change for the U.S. restaurant industry.”