WLI

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

Live prices last week were 50¢ to $1.50 higher in the Texas Panhandle at $119.00-$119.50/cwt., steady to $1 higher in Kansas at $119-$120, $2 higher in Nebraska at $120, and $1 higher in the western Corn Belt at $118-$120. Live prices in Colorado two weeks ago were at $119-$120.

Dressed prices were $1-$4 higher in Nebraska last week at $191. Prices were at $187-$190 in the western Corn Belt the prior week.

Through Thursday, the five-area direct average steer price was $1.35 higher than the previous week at $119.70/cwt., on a live basis. The average five-area direct dressed steer price was $2.01 higher at $190.48.

Feeder Cattle futures mostly gained back on Friday what was lost in the previous session, helped by continued pressure on grain markets.

Feeder Cattle futures closed an average of 52¢ higher, except for an average of 30¢ lower in the back two contracts.

Live Cattle futures mostly extended losses, amid stagnant cash trade and softer Lean Hog futures.

Live Cattle futures closed an average of 44¢ lower, except for an average of 12¢ higher in the back three contracts.

Choice boxed beef cutout value was 16¢ higher Friday afternoon at $316.94/cwt. Select was $2.72 lower at $293.19.

Estimated total cattle slaughter for the week was 2,000 head more than the prior week at 640,000 head. Year-to-date estimated total cattle slaughter of 12.2 million head is 658,000 more than the pandemic-ravaged harvest the same week last year. Estimated beef production for the week of 527.6 million lbs. was 300,000 lbs. more than the previous week. Year-to-date estimated beef production of 10.2 billion lbs. is 660.8 million lbs. more than the same time last year.

Forecast rain in Brazil and the U.S. Corn Belt, reopening barge traffic on the Mississippi River and chatter about private analysts projecting significantly more corn acres all added pressure to Corn futures Friday.

Corn futures closed mostly 13¢ to 15¢ lower, after 20¢ to 34¢ lower in the front three contracts.

Soybean futures closed mostly 2¢ to 6¢ higher, except for 8¢ lower in spot May.

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Major U.S. financial indices continued higher Friday, following the steep selloff earlier in the week. That was despite ongoing inflation worries and flat national retail sales.

Advance estimates of U.S. retail and food services sales for April were $619.9 billion, virtually unchanged from the previous month, according to the U.S. Census Bureau.

The Dow Jones Industrial Average closed 369 points higher. The S&P 500 closed 61 points higher. The NASDAQ was up 304 points.

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Tight corn supplies, coupled with strong international demand, pushed corn prices to their highest level in more than a decade. In turn, higher corn prices are altering the price prospects of other products.

“The key for folks to understand is that corn prices roll through everything else,” said David Anderson, Extension livestock economist at Texas A&M University (TAMU). “High grain prices mean meat will eventually cost more because input costs are up. And corn overlaps with other important crops like wheat and soybeans because prices influence what is planted on the available crop acres.” He explained the ripple effect in a consumer-focused interview last week.

In the same interview, Mark Welch, TAMU Extension grain economist, said the corn market is highly speculative currently, due to current supply and demand, coupled with uncertainty about domestic and foreign production this growing season.

Besides higher corn prices currently trying to buy more acres, Welch pointed out U.S. corn planting started early than usual this season, which typically means planted acres will be more than projected in USDA’s March Prospective Plantings report.

“If we see more acres planted, the weather improves in South America and domestic corn-producing states, then we could see things settle down. If corn stocks get lower, there are problems with corn crops and things get tighter, then we could see all-time high record corn prices,” Welch said.

Negotiated cash fed cattle trade was limited on light demand in Kansas, Nebraska and the western Corn Belt through Thursday afternoon, according to the Agricultural Marketing Service. Elsewhere, trade was mostly inactive on very light demand.

So far this week, live trade is $1 higher in Kansas at $119-$120/cwt., 50¢ to $1 higher in the Texas Panhandle at $119.00 to $119.50, steady to $1 higher in Nebraska at $120 and unevenly steady in the western Corn Belt at $118-$120. Dressed trade is steady to $1 higher in Nebraska at $191.

Live Cattle futures plunged Thursday. Besides the break in Lean Hog futures, likely explanations for the reversal include sluggish cattle slaughter due in part to pandemic safety measures, but also reports that labor availability is adding constraint. Achieving feedlot currentness becomes more challenged.

Live Cattle futures closed an average of $2.40 lower ($1.95 lower at the back to $3.00 lower in spot Jun).

That was too much for Feeder Cattle to withstand, despite the sharp selloff in Corn.

Feeder Cattle futures closed an average of 48¢ lower (2¢ to 87¢ lower), except for 70¢ higher in spot May.

Choice boxed beef cutout value was $1.70 higher Thursday afternoon at $316.78/cwt. Select was $1.25 lower at $295.91

The average dressed steer weighing for the week ending May 1 was 891 lbs., which was 5 lbs. lighter than the previous week and 2 lbs. lighter than last year, according to USDA’s Actual Slaughter Under Federal Inspection report. The average dressed heifer weight of 824 lbs. was 1 lb. lighter than the previous week and 2 lbs. lighter than the same week last year.

Improved weather conditions, including moisture in the Corn Belt forecast, and the previous day’s World Agricultural Supply and Demand Estimates applied heavy pressure to grain futures Thursday.

Corn futures closed 33¢ to 40¢ lower through Jly ‘22 and then mostly 22¢ lower.

Soybean futures closed 45¢ to 58¢ lower through Jan ‘22, then mostly 15¢ to 29¢ lower.

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Major U.S. financial indices bounced back from the previous day’s selloff, supported by new recommendations from the Centers for Disease Control and Prevention that those fully vaccinated against COVID-19 can resume pre-pandemic activities including doing away with masks and social distancing.

The Dow Jones Industrial Average closed 433 points higher. The S&P 500 closed 49 points higher. The NASDAQ was up 93 points.

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Geography will help determine price impacts from potential partial beef cow herd liquidation due to drought, says Elliott Dennis, Extension livestock economist at the University of Nebraska-Lincoln. He points out drought impacts are currently most severe in the Mountain region and parts of the Northern Plains.

Using data from USDA’s Economic Research Service, Dennis says average grazed pasture acres per beef cow is 55.56 acres in the Mountain Region, 19.17 acres in the Southern Plains, 16.49 acres in the Pacific region and 13.78 acres in the Northern Plains. Those are the nation’s lowest stocking rates and where the most beef cows exist.

“Under a situation of worsening drought, more feeder cattle will enter feedlots earlier than expected lowering feeder cattle prices,” Dennis explains, in the latest issue of In the Cattle Markets. “Areas with lower stocking rates are likely areas that are at more risk to adverse weather conditions since they rely upon either seasonal or harvested feed resources to sustain a beef cow herd. Further, in the absence of seasonal forage, there are not large amounts of crop residues or protein concentrates from ethanol plants to supplement the lack of forage.”

If producers in the Mountain and Pacific regions are forced to liquidate, then Dennis explains feedlots in the Northern Plains and Southern Plains will likely be able to buy feeder cattle cheaper, decreasing demand for calves in the Southeast and Appalachia regions.

On the other hand, Dennis says cull cow prices are more likely to decrease in the Mountain and Northern Plains regions because those prices are generally assumed to be regional.

“A drought scenario combined with elevated corn and soybean prices is a worst-case scenario,” Dennis says. “With elevated feed costs, feedlots would have further incentives to delay feeder cattle placements, especially lighter feeder cattle, since the cost of gain would be too high. This would put further downward pressure on feeder cattle prices. Risk management in the form of USDA-RMA Livestock Risk Protection or CME futures and options can help mitigate some of these potential downward price movements and likely merit a closer look by producers this production year.”

Negotiated cash fed cattle trade was slow on light demand in the Southern Plains through Wednesday afternoon. Live prices were steady to $1.50 higher in the Texas Panhandle at mostly $119/cwt. There were a few live trades in Kansas at $120, but too few to trend; $119 last week.

Trade was limited on light demand in Nebraska. Dressed trade was at $191, steady with the previous day and $1 to $3 higher than last week. There were a few live trades at $120, but too few to trend; $118 last week.

Elsewhere, trade was mostly inactive on light demand.

Live prices in the western Corn Belt Tuesday were $118-$120, compared to $119 last week. Dressed prices last week were $187-$190.

Cattle feeders offered 2,469 head in Central Stockyards’ weekly Fed Cattle Exchange Auction. Of those, 1,588 head sold (1,114 heifers and 474 steers) for a weighted average price of $119.93/cwt., via live weight and bid-the-grid. The majority was from Texas.

Slaughter steers sold $1-$2 higher at Sioux Falls Regional in South Dakota and slaughter heifers traded steady to $1 higher. There were 168 Choice 3-4 steers weighing an average of 1,534 lbs., bringing an average of $119.56.

Choice steers and heifers sold $4.25 to $5.75 higher at the fat auction in Tama, IA. There were 152 Choice 2-4 steers weighing an average of 1,442 lbs., bringing an average of $125.65.

Feeder Cattle futures continued their nascent rally Wednesday, supported by more optimistic projections of the balance sheet for corn, in the monthly World Agricultural Supply and Demand Estimates. Live Cattle closed narrowly mixed with some likely profit taking and sharply lower outside markets.

Live Cattle futures closed an average of 38¢ higher, except unchanged in two contracts and down an average of 12¢ in two.

Feeder Cattle futures closed an average of $1.79 higher ($1.42 higher at the front of the board to $2.20 higher at the back).

Choice boxed beef cutout value was $2.71 higher Wednesday afternoon at $315.08/cwt. Select was 82¢ higher at $297.16.

The monthly World Agricultural Supply and Demand Estimates (see below) stoked Soybean futures Wednesday, but dampened new-crop Corn futures.

Corn futures closed mostly 13¢ to 18¢ lower through the new crop year and then mostly 2¢ to 9¢ lower.

Soybean futures closed 11¢ to 23¢ higher through Jan ‘22, then mostly 15¢ to 17¢ lower.

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Major U.S. financial indices closed sharply lower Wednesday, pressured by indicators of higher inflation than investors expected.

The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.8% in April, according to the U.S. Bureau of Labor Statistics. That followed an increase of 0.6% the previous month. The all items index is up 4.2% over the last 12 months, the steepest rise since the period ending September 2008.

The Dow Jones Industrial Average closed 681 points lower. The S&P 500 closed 89 points lower. The NASDAQ was down 357 points.

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USDA’s latest monthly World Agricultural Supply and Demand Estimates pegged beef production for this year at 27.9 billion lbs., which would be 260 million lbs. more (0.94%) than the previous month and 726 million lbs. more (2.67%) than last year. Increased fed and non-fed slaughter projections drove the adjustment.

The forecast annual average five-area direct fed steer price was projected at $116.30/cwt., which was 30¢ higher than the previous month. Projected average prices are $118 in the second quarter, $114 in the third quarter and $120 in the fourth quarter.

Hay stocks on farms May 1 of 18.0 million tons were 2.4 million tons less than the same time last year, according to the USDA Crop Production report.

Projections for total red meat and poultry production increased 161 million lbs. (0.15%) month to month. That would be 693 million lbs. more (0.65%) than last year.

Corn

The new corn crop is projected at 15.0 billion bu., up from last year on increased area and a return to trend yield of 179.5 bu./acre. With beginning stocks sharply lower year over year, total corn supplies are forecast to increase modestly to 16.3 billion bu.

The season-average corn price received by producers in 2021-22 was projected at $5.70/bu., up $1.35 from a year ago.

Soybeans

The soybean crop was projected at 4.4 billion bu., up 270 million from last year on increased harvested area and trend yields. With lower beginning stocks, soybean supplies were projected 3% less than last year.

With prices for fall delivery above $14.00/bu. in some locations, the 2021-22 U.S. season-average soybean price was projected at $13.85/bu., up $2.60 from 2020-21. Soybean meal prices were forecast at $400 per short ton, down $5.00 from the revised forecast for 2020-21. Soybean oil prices were forecast at 65.0¢/lb., up 10¢ from the revised 2020-21 forecast.

Wheat

Projected 2021-22 ending stocks were projected 11% lower than last year at 774 million bu., the lowest level in seven years. That’s based on lower carry-in stocks and production increasing 3%.

The projected 2021-22 season-average farm wheat price was $6.50/bu., which would be $1.45 higher than last year’s revised price.

Negotiated cash fed cattle trade was limited on light to moderate demand in Nebraska and the western Corn Belt through Tuesday afternoon, according to the Agricultural Marketing Service.

Although too few transactions to trend, there were a few dressed trades in Nebraska at $191/cwt., which was $1-$3 higher than last week; a few lives trades in the western Corn Belt at $120, which was $1-$3 higher. Elsewhere, trade was mostly inactive on light demand or at a standstill.

Cattle futures maintained gains from the previous session, supported by the outlook for higher cash prices and continued wholesale strength.

Live Cattle futures closed an average of $1.14 higher (40¢ to $1.70 higher). 

Feeder Cattle futures closed an average of 25¢ higher, except for 12¢ lower in spot May. 

Choice boxed beef cutout value was $3.26 higher Tuesday afternoon at $312.37/cwt. Select was $2.58 higher at $296.34

Grain futures recovered from sharp losses the previous day to surge ahead again in the front months, with likely profit taking and positioning ahead of Wednesday’s monthly World Agricultural Supply and Demand Estimates.

Corn futures closed 10¢ to 11¢ higher in the front two contracts, and then mostly 2¢ to 5¢ higher.

Soybean futures closed 16¢ to 27¢ higher through Jan ‘22,  then mostly 4¢ to 11¢ higher.

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Major U.S. financial indices closed lower Tuesday as ongoing supply chain disruptions and reports of labor shortages fueled inflation worries.

The Dow Jones Industrial Average closed 473 points lower. The S&P 500 closed 36 points lower. The NASDAQ was down 12 points.

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“Weekly cattle slaughter has been averaging near 650,000 head per week, except for the first week in January and the winter storm in February. This is near post-pandemic weekly slaughter highs, which signal that COVID-related changes in processing facilities are limiting slaughter levels,” say analysts with the Livestock Marketing Information Center (LMIC), in the May 7 Livestock Monitor. “The capacity-limited flow of cattle has limited upside potential for cattle prices but has led to a rise in the Choice boxed beef cutout value since the start of the year which has increased 41.1% ($85.06) to 291.79 per cwt.” Choice price was $312.37 Tuesday.

On the other side of the trade, LMIC analysts say the five-area direct weekly weighted average steer price rose from $111.28/cwt. at the start of the year to $122.03 in mid-April. Since then, prices declined.

Tyson Foods, Inc. provided another perspective in its second-quarter financial results released Monday.

“Beef sales volume decreased during the second quarter of fiscal 2021 due to a reduction in live cattle processed, partially associated with the impacts of severe winter weather and a challenging labor environment,” according to the Tyson report. “…Average sales price increased in the second quarter and first six months of fiscal 2021 as demand for our beef products remained strong. Operating income increased in the second quarter and first six months of fiscal 2021 due to strong demand as we continued to optimize revenues relative to live cattle supply, partially offset by production inefficiencies and direct incremental expenses related to COVID-19.”

Dean Banks, Tyson Foods President and CEO, noted, “We’re seeing substantial inflation across our supply chain, which will likely create margin pressure during the back half of the year.”

Negotiated cash fed cattle trade was mostly inactive on very light demand in the western Corn Belt through Monday afternoon. Elsewhere, trade was at a standstill, according to the Agricultural Marketing Service.

Live prices last week were at $117.50-$119.00/cwt. in the Texas Panhandle, $119 in Kansas, $118 in Nebraska and $117-$119 in the western Corn Belt. Dressed prices were $187-$190.

Rain in the Corn Belt pressured Corn futures Monday, opening the gate for Cattle futures to trade higher and begin taking a swipe at extremely oversold conditions.

Live Cattle futures closed an average of $1.03 higher, an average of $1.46 higher across the front half of the board and then an average of 61¢ higher, except unchanged in the back contract.

Feeder Cattle futures closed an average of $3.36 higher ($2.35 higher toward the back to $4.42 higher toward the front).

Choice boxed beef cutout value was $3.23 higher at $309.11/cwt. Select was $3.49 higher at $293.76.

Corn futures closed 20¢ to 27¢ lower through Jly ‘22, and then mostly 4¢ to 9¢ lower.

Soybean futures closed mostly 8¢ to 9¢ lower, but as much as 19¢ lower.

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Major U.S. financial indices closed lower Monday, pressured by a selloff in big tech stocks.

The Dow Jones Industrial Average closed 34 points lower. The S&P 500 was down 34 points. The NASDAQ was down 350 points. 

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“It now appears that it will take the remainder of the second quarter and likely much of the third quarter of the year to move the fed cattle industry into tighter numbers and relieve the capacity constraints that are limiting the fed cattle market,” says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University.

In his weekly market comments, Peel provides insight to U.S. beef packing capacity over time. In the 1980’s, when much of the current capacity was constructed, he explains cattle inventories averaged 15% more than in the last decade and there was surplus capacity. That fueled closing some plants like the Tyson plant at Emporia, KS in 2008 and the Cargill plant at Plainview, TX in 2013. Before that,  ConAgra never replaced its facility that burned at Garden City, KS in 2000.

“The cyclical expansion in cattle numbers from 2014 to 2019 has now pushed cattle slaughter beyond packing industry capacity,” Peel says. “It is estimated that annual average slaughter has exceeded capacity since 2016. Although cattle numbers peaked cyclically in 2019, feedlot production is just now at a peak in early 2021, partly as a result of pandemic delays in 2020.”

Saturday harvests are used to bridge some of the gap. For instance, Saturday slaughter accounted for 2.7% of weekly slaughter in 2012 and 7.3% in 2007, according to Peel. Saturdays accounted for more than 9% of weekly slaughter in 2019 and 2020; 10% so far this year.

“Slaughter needs will be seasonally larger in the coming weeks and it will be difficult for feedlots to get more current. It will be challenging to maintain, let alone push Saturday slaughter in the coming weeks,” Peel says.