WLI

Cattle futures closed lower Thursday, retracing some of the gains from the previous two sessions amid light trade, declining open interest, likely month-end position squaring, lower cash fed cattle prices.

Feeder Cattle futures closed an average of $1.74 lower ($1.20 to $2.25 lower).

Live Cattle futures closed an average of $1.27 lower (95¢ to $1.65 lower).

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

So far this week, FOB live prices are $174-$175/cwt. in all regions which is $2-$3 lower in the Southern Plains, $1-$2 lower in Nebraska and steady to $4 lower in the western Corn Belt.

Dressed delivered prices are $275, which is $5 lower in Nebraska and $3-$5 lower in the western Corn Belt.

Choice boxed beef cutout value was $1.99 higher Thursday afternoon at $299.02/cwt. Select was 66¢ higher at $264.75/cwt.

Grain futures closed higher Thursday, supported by positive export sales. Net weekly U.S. 2023-24 Corn export sales were a marketing year high, 35% more than the previous week and up 54% from the prior four-week average.

Corn futures closed mostly 2¢ to 6¢ higher.

KC HRW Wheat futures closed mostly 6¢ to 8¢ higher.

Soybean futures closed 2¢ to 4¢ lower through Aug ’24 and then 1¢ higher.

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Major U.S. financial indices closed mainly higher Thursday as investor confidence seemed to grow concerning inflation.

The Dow Jones Industrial Average closed 520 points higher. The S&P 500 closed 17 points higher. The NASDAQ was down 32 points.

West Texas Intermediate Crude Oil futures (CME) closed $1.90 to $2.01 lower through the front six contracts.

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Higher animal protein production costs and tighter supplies will push animal protein prices higher and constrain global consumption in 2024, according to Rabobank’s annual Global Animal Protein Outlook report.

Input costs and inflation are likely to decline, but will remain higher than pre-pandemic levels, according to the report. As well, structural changes will challenge supply chains. For instance, Rabobank analysts say demographic shifts will tighten the labor market, increasing production costs, while less population growth will slow consumption.

“Not all structural changes in the market are detrimental – many present new opportunities for businesses to improve their processes and products,” explains Justin Sherrard, Rabobank global strategist for animal protein. “Those companies that can demonstrate agility in adapting to the new environment and navigate consumer willingness to pay for certain preferences will be able to take advantage of the tighter market and come out on top.”

Closer to home, Rabobank expects U.S. beef production to be 4.5% less in 2024, compared to this year, as beef cow liquidation continues, and herd rebuilding remains on hold. This will challenge the margins of existing and developing beef packing capacity.

Cattle futures extended gains Wednesday, supported by renewed buying interest in the previous session.

Feeder Cattle futures closed an average of 63¢ higher (2¢ to $1.15 higher).

Live Cattle futures closed an average of 57¢ higher (25¢ to $1.05 higher), except for 5¢ lower in the back contract.

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

So far this week, FOB live sales are $2 lower in the Southern Plains at $175/cwt. and $1 lower in Nebraska at $175.

Last week, FOB live prices were $175-$178 in the western Corn Belt. Dressed delivered prices were mostly $280 in Nebraska and $278-$280 in the western Corn Belt.

Choice boxed beef cutout value was $1.14 lower Wednesday afternoon at $297.03/cwt. Select was $2.26 lower at $264.09/cwt.

Corn futures closed mostly 2¢ higher.

KC HRW Wheat futures closed mostly 12¢ to 16¢ higher.

Soybean futures closed mostly fractionally higher through Sep ’25. and then 1¢ to 2¢ higher.

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Major U.S. financial indices closed little changed Wednesday.

The Dow Jones Industrial Average closed 13 points higher. The S&P 500 closed 4 points lower. The NASDAQ was down 23 points.

West Texas Intermediate Crude Oil futures (CME) closed $1.23 to $1.45 higher through the front six contracts.   

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Beef demand is likely to increase seasonally heading into Christmas, but Andrew P. Griffith, agricultural economist at the University of Tennessee questions whether the support will be as strong as typical.

“It now seems apparent that consumers are feeling the squeeze on disposable income,” Griffith says in his weekly market comments. “Despite the slowdown in inflation, prices of most goods remain elevated. At the same time, sustained high energy prices are pulling on disposable income, as are higher interest rates. All of these factors are going to make it difficult for packers to push wholesale beef prices higher in the near term. The one thing that may provide support for wholesale beef prices in the near future is a reduction in beef supply, but that is probably six or more months down the road.”

Last week’s USDA Cold Storage report reflected the cusp of declining supplies.

Total pounds of beef in freezers Oct. 31 were 6% more than the previous month but 13% less year over year. Frozen pork supplies were down 6% from the previous month and down 14% from the previous year. Total red meat supplies in freezers were slightly less than the previous month and down 14% from a year earlier.

“Red meat numbers are unsurprising as production is mostly down across all categories,” according to the Livestock Marketing Information Center (LMIC) in the latest Livestock Monitor.

Total frozen poultry supplies were down 6% from the previous month but slightly higher than a year ago.

“Whole chickens were up 11% in broilers, and 58% in hens, while whole tom turkeys fell 3% and whole hen turkeys were even with a year ago,” LMIC analysts explain. “Parts were a different story on the turkey side with every category posting year-on-year growth. The largest increase was mechanically deboned turkey, up almost 200% from a year ago, followed by breast meat, up 82%. Chicken parts were largely lower than last year, with the exception of chicken breast, up 6%.”

Cattle futures have plenty of distance to cover before making up the ground lost in the previous two trading sessions, but they made a strong start with Tuesday’s rally as buyers were likely attracted by the extremely oversold conditions.

Feeder Cattle futures closed an average of $7.29 higher, including limit-up $8.25 in spot Jan.

Live Cattle futures closed an average of $3.44 higher ($2.87 to $4.20 higher).

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

So far this week, FOB live sales are $2 lower in the Texas Panhandle at $175/cwt.

Last week, FOB live prices were $177 in the Southern Plains, $176 in Nebraska on light trade and $175-$178 in the western Corn Belt. Dressed delivered prices were mostly $280 in Nebraska and $278-$280 in the western Corn Belt.

Choice boxed beef cutout value was 92¢ higher Tuesday afternoon at $298.17/cwt. Select was $1.45 lower at $266.35/cwt.

Soybean futures closed 10¢ to 16¢ higher.

Corn futures closed narrowly mixed, mostly fractionally lower to 1¢ higher.

KC HRW Wheat futures closed mostly 17¢ to 19¢ higher.

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Major U.S. financial indices drifted higher Tuesday on hopes the Fed may be done raising interest rates.

The Dow Jones Industrial Average closed 83 points higher. The S&P 500 closed 4 points higher. The NASDAQ was up 40 points.

West Texas Intermediate Crude Oil futures (CME) closed $1.32 to $1.55 higher through the front six contracts.  

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Creighton University’s Rural Mainstreet Index (RMI) sank below growth neutral for the third consecutive month in November to its lowest level in more than three years. It declined 4 points from the previous month to 40.4. It was 49.5 in September.

“This is the weakest recorded reading since June 2020, shortly after the beginning of the pandemic and points to weaker farm and non-farm economies,” says Ernie Goss, the Jack A. MacAllister Chair in Regional Economics at Creighton University’s Heider College of Business.

The index ranges between 0 and 100, with a reading of 50.0 representing growth neutral. The RMI is based on a monthly survey of bank CEOs in rural areas of a 10-state region dependent on agriculture and/or energy.

“Higher interest rates, deposit outflows and a slowing farm economy over the past several months continued to constrain the business confidence index to a record low 21.2 from 24.1 in October,” Goss explains. “This month’s reading is the most negative outlook recorded since Creighton began the monthly survey in January 2006.” He adds that approximately 57.7% of bankers expect economic conditions to worsen in the next six months.

Among other highlights…

• For the fifth time in the past six months, farm equipment sales declined.
• Approximately 84.5% of bankers urged the Federal Reserve to make no changes to interest rates at its next meetings in December.
• Approximately 88.5% of bank CEOs reported that available jobs outnumbered available workers in their local economy.

The Cattle Futures exodus that began Friday continued on Monday with a similar degree of momentum, likely exacerbated by month-end positioning.

Feeder Cattle futures closed an average of $6.02 lower ($4.72 to $6.52 lower). That’s an average of $12.28 lower in the past two trading sessions.

Live Cattle futures closed an average of $2.52 lower, down an average of $6.27 in the last two sessions.

Negotiated cash fed cattle trade ranged from limited on light demand to a standstill through Monday afternoon, according to the Agricultural Marketing Service. Although too few transactions to trend, there were some early FOB live trades in the Southern Plains and the western Corn Belt at $175/cwt.

Last week, FOB live prices were $1 lower in the Southern Plains at $177, $2 lower in Nebraska at $176 on light trade and steady to $3 lower in the western Corn Belt at $175-$178. Dressed delivered prices were mostly $2 lower in Nebraska at mainly $280 and $2-$4 lower in the western Corn Belt at $278-$280.

The weighted average five-area direct FOB live steer price last week was 87¢ lower at $176.99/cwt. The weighted average dressed delivered steer price was $1.76 lower at $280.09.

Choice boxed beef cutout value was 78¢ lower Monday afternoon at 297.25/cwt. Select was 96¢ lower at $267.80.

Grain futures closed lower amid a commodity-wide sell-off.

Corn futures closed mostly 5¢ to 7¢ lower.

Kansas City Wheat Futures closed 10¢ to 15¢ lower.

Soybean futures closed narrowly mixed but mostly fractionally higher.

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Major U.S. financial indices edged lower Monday.

The Dow Jones Industrial Average closed 56 points lower. The S&P 500 closed 8 points lower. The NASDAQ was down 9 points.

West Texas Intermediate Crude Oil futures (CME) closed 48¢ to 68¢ lower through the front six contracts. 

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Based on beef cow slaughter so far this year, the beef cow inventory at the beginning of next year is likely to be at least 2.5% less year over year, says Derrell Peel, Extension livestock marketing specialist in his weekly market comments.

“The available supply of bred heifers (heifers expected to calve), combined with beef cow culling this year will determine the change in the beef cow inventory this year,” Peel says. “From the beginning of the year, the supply of bred heifers meant that beef cow slaughter in 2023 would have to decrease sharply — in excess of 18% year over year — in order to avoid additional herd liquidation this year. Cumulative beef cow slaughter reached a maximum year-over-year decrease of 13.8% in early September, a significant decrease, but not enough to prevent additional herd liquidation. The July Cattle report confirmed that the beef cow herd was down by 2.6% from 2022 levels by mid-year.”

Peel points out the beef cow inventory of 28.9 million head at the beginning of this year were 3.6% less than the previous year and the fewest since 1962. More importantly, he says the inventory of beef replacement heifers at the time — 5.16 million head — was 5.8% less year over year. Replacement heifers and heifers expected to calve were the fewest since 2011.

Moreover, Peel notes the inventory of heifers available for breeding (total replacement heifer inventory minus heifers expected to calve) at the beginning of the year was the fewest in 23 years of available data.

“It seems likely that the available supply of bred heifers will remain limited in 2024.  The beef cow herd will be smaller in 2024 and holding the inventory stable next year may be the most likely outcome,” Peel says.

Keeping in mind the holiday-shortened week and the abbreviated session to end the week, Cattle futures took a steep step lower Friday, pressured by lower cash fed cattle prices, light trade and apparent technical selling.

Feeder Cattle futures closed an average of $6.66 lower ($5.62 to $6.80 lower).

Live Cattle futures closed an average of $3.75 lower.

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

Based on the last established trade for the week, FOB live price were $1 lower in the Southern Plains at $177/cwt. and steady to $1 lower in the western Corn Belt at $177-$178. Dressed delivered prices were $7 lower in Nebraska at $275.

The previous week, FOB live prices in Nebraska were $178 and dressed delivered prices in the western Corn Belt were $282.

Choice boxed beef cutout value was $1.03 higher Friday afternoon at $298.03/cwt. Select was $1.14 higher at $268.76/cwt.

Estimated total cattle slaughter last week of 538,000 head was 98,000 head fewer than the previous week and 51,000 head fewer than the same week last year. Year-to-date estimated total cattle slaughter of 29.2 million head was 1.5 million head fewer (-4.7%) than the same time last year. Year-to-date estimated beef production of 24.0 billion lbs. was 1.4 billion lbs. less (-5.4%).

Net U.S. 2023 beef export sales for the week ending Nov. 16 were 10,000 metric tons, which was 12% more than the previous week but 30% less than the prior four-week average. Increases primarily were for China, Hong Kong, South Korea, Japan and Mexico.

Traders doused the weather premium in Soybean futures on Friday with the wetter forecast in Brazil, taking the grain complex along for the wide.

Soybean futures closed 20¢ to 25¢ lower through Jan ’25 and then 14¢ to 18¢ lower.

Corn futures closed mostly 2¢ to 5¢ lower.

KC HRW Wheat futures closed mostly 9¢ to 12¢ lower.

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Major U.S. financial indices closed mostly higher Friday, led by retail stocks as the holiday season begins.

The Dow Jones Industrial Average closed 117 point higher. The S&P 500 closed 2 points higher. The NASDAQ was down 15 points.

West Texas Intermediate Crude Oil futures (CME) closed $1.22 to $1.56 lower through the front six contracts. 

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Choice wholesale beef prices found some seasonal footing last week with the cutout value $4.16 higher week to week on Friday at $298.03/cwt. Select was $1.94 lower at $268.76.

“The demand index for beef appears to be resetting closer to pre-pandemic levels but may lose further ground as price increases are expected to continue in the next few years,” say analysts with the Livestock Marketing Information Center (LMIC) in the latest Livestock Monitor.

LMIC’s demand index for all fresh beef was 115 in the second quarter of 2023, slightly higher than 111 in 2019, but lower than 2020-22. LMIC analysts note a similar trend for the third quarter an index value of 110. That was in line with the same time in 2014 but has declined every year since 2020.

“Pork demand has been more inconsistent in recent years, surging to a 20-year high in 2019 and then out-pacing that high again in 2022,” LMIC analysts say. “However, the years in between have seen it drop back to levels seen over the most recent decade.”