WLI

Negotiated cash fed cattle trade got off to a sluggish start for the week on Thursday with a few live trades in the Southern Plains steady with last week at $106/cwt. There were a few live trades in Nebraska at $103. However, there were too few transactions to trend in any region, according to the Agricultural Marketing Service.

The average dressed steer weight for the week ending Oct. 17 was 929 lbs., which was 1 lb. heavier than the prior week and 29 lbs. heavier than the previous year, according to USDA’s Actual Slaughter Under Federal Inspection report. The average dressed heifer weight of 850 lbs. was 4 lbs. heavier than the prior week and 19 lbs. heavier than the previous year.

Cattle futures continued higher Thursday, with the outlook for seasonally higher cash prices, as well as technical support.

Live Cattle futures closed an average of $1.64 higher, from 42¢ higher in almost spent spot Oct. to $3.30 higher.

Feeder Cattle futures closed an average of $1.32 higher, from 27¢ higher at the back to $1.82 higher toward the front.

Choice boxed beef cutout value was $1.53 higher Thursday afternoon at $207.32/cwt. Select was $1.65 higher at $191.23.

Net U.S. beef export sales for 2020 totaled 18,900 metric tons for the week ending Oct. 22, according to the weekly U.S. Export Sales report from USDA’s Foreign Agricultural Service. That was 13% less than the previous week and 6% less than the prior four-week average. Increases were primarily for China, Japan, South Korea, Mexico and Taiwan.

Nearby Corn and Soybean futures contracts softened a bit more, while the remainder of the board firmed after the previous session’s steep selloff.

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

Soybean futures closed 1¢ to 5¢ lower through Mar ’21 and then mainly fractionally mixed.

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Major U.S. financial indices rebounded Thursday from the previous session’s selloff, buoyed by positive economic news.

Real gross domestic product (GDP) increased at an annual rate of 33.1% in the third quarter, according to the U.S. Bureau of Economic Analysis. It decreased 31.4% in the second quarter.

As well, weekly initial unemployment insurance claims of 751,000 were 40,000 fewer than the prior week, according to the U.S. Department of Labor. That was more positive than the trade expected.

The Dow Jones Industrial Average closed 139 points higher. The S&P 500 closed 39 points higher. The NASDAQ was up 180 points. 

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Each year, for more than three decades, the NPD Group publishes the Eating Patterns in America report—top-line trends based on a year’s worth of data from its daily tracking. As you’d expect, the pandemic shoved this year’s numbers and trends around.

“With mandated shelter-at-home and restaurant dine-in restrictions across most of the country during the pandemic, we have had few options other than to prepare most of our meals at home,” says David Portalatin, NPD food industry advisor and author of Eating Patterns in America. “Working from home, schooling at home, and preparing more meals means more of our meal times are a departure from the norm, with most consumers describing their meals as atypical.”

Examples of how America’s eating patterns changed as a result of the pandemic include:

For several years, 80% of meals have been sourced from home and 20% from restaurants and other foodservice outlets. During the pandemic, the gap widened to as much as 87% of meals sourced from home.

The use of online and digital orders for groceries and restaurant foods leapt years ahead in their growth trend trajectory. By May 2020, 40% of shoppers ordered edible groceries online compared to 28% a year earlier. Consumers more than tripled their share of restaurant meals ordered digitally during the April-May-June 2020 quarter. Digital restaurant carryout made up the larger share of restaurant digital orders.

Visits to full service restaurants, which are primarily on-premises operations, declined nearly 80% during the height of the mandated dine-in closures. Quick service restaurants, already set up for drive-thru, carryout, and delivery, realized double-digit declines as well but not as steep as full service restaurants.

“What a year it will be moving forward as we evolve our perspective and the effects of a global pandemic that has caused such tumultuous change,” Portalatin says. “It is my profound hope that next year when we’re compiling the 36th annual Eating Patterns in America, we’re telling the story of recovery.”

Negotiated cash fed cattle trade was mostly inactive on light demand in all cattle feeding regions through Wednesday afternoon, according to the Agricultural Marketing Service. There were too few transactions to trend in any region.

Live prices last week were at $106/cwt. in the Southern Plains, $105 in Nebraska and $103-$105 in the western Corn Belt. Dressed prices were $162-$166 in Nebraska and $163-$165 in the western Corn Belt.

Cattle feeders offered 2,012 head in the weekly Fed Cattle Exchange. Of those, 1,257 head sold: 766 head at an average of $106.04/cwt. for delivery at 1-9 days; 630 head for an average of $105.80 for delivery at 1-17 days.

Choice steers and heifers sold $2.50-$2.75 lower at the fat auction in Tama, IA. There were 219 Choice 2-4 steers weighing an average of 1,488 lbs. bringing an average price of $102.97.

At Sioux Falls Regional in South Dakota, slaughter steers and heifers sold steady to $1 higher. There were 171 Choice 2-3 steers weighing an average of 1,464 lbs. bringing an average of $103.62.

Cattle futures, especially Feeder Cattle, continued to gain Wednesday, helped along by lower grain futures.

Live Cattle futures closed an average of 47¢ higher, from 10¢ higher to $1.00 higher in spot Oct.

Feeder Cattle futures closed an average of $1.06 higher, from 45¢ higher toward the back to $1.65 higher toward the front.

Choice boxed beef cutout value was 91¢ lower Wednesday afternoon at $205.79/cwt. Select was 91¢ higher at $189.58.

Grain futures closed sharply lower Wednesday, likely pressured by anemic outside markets, profit taking, positioning ahead of next week’s election and improved growing conditions and Russia and South America.

Corn futures closed 10¢ to 14¢ lower through Sep ’21 and then mostly 5¢ to 7¢ lower.

Soybean futures closed 15¢ to 25¢ lower through Aug ’21 and then mostly 10¢ to 13¢ lower.

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Major U.S. financial indices crumbled Wednesday as daily domestic coronavirus cases continued to set records and as Germany and France renewed strict pandemic restrictions amid increasing cases in those countries.

The Dow Jones Industrial Average closed 943 points lower. The S&P 500 closed 119 points lower. The NASDAQ was down 426 points.

WTI Crude Oil futures on the CME closed $1.90 to $2.18 lower through the front six contracts.

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Even as the pandemic threatens to further hamstring the economy, recent economic data suggests improvement before the latest upswing in cases was sluggish.

“Throughout the pandemic we have looked at the advanced estimates of monthly retail sales for clues as to the depth of the recession as well as the recovery.  September data was released last week and showed that improvements are slow,” according to analysts with the Livestock Marketing Information Center (LMIC), in the latest Livestock Monitor. “The retail sector continues to be one of the hardest hit sectors of the economy. Clothing and accessory stores are down 32.6% in the first nine months of 2020 compared to a year ago. Department stores are still off 17.8%, and electric and appliance stores are still down 15.8%. Gas stations are off 16.4% and food service and bars are down 20.1%.”

More specifically, with food in mind, the LMIC folks explain sales at food service and drinking establishments were 14% less year over year, while grocery store sales were 10% higher. Although total retail and food service sales were 10% higher in September year over year, they are 0.8% less for the year to date.

“With the holiday season upon us, there is considerable question as to what this year’s spending will look like, and how much another round of stimulus could affect it,” say LMIC analysts. “December is the highest total retail sales month in every single year back to 1992, with the only exception being 2008. The fourth quarter of the year is routinely more than 25% of where total annual retail sales are spent. Last year the fourth quarter represented 26.6% of the annual figure, up from 26.4% the prior year. The 7% year-over-year increase in September looks promising and is easily the highest September on record.” 

Negotiated cash fed cattle trade was mostly inactive on very light demand in Nebraska and the Texas Panhandle through Tuesday afternoon. Elsewhere, it was at a standstill, according to the Agricultural Marketing Service. There were too few transactions to trend in any region.

Cattle futures rallied Tuesday, likely helped along by the performance-depressing winter storm, as well as apparent fund positioning.

Live Cattle futures closed an average of $1.01 higher, from 65¢ higher toward the front of the board to $1.30 higher toward the back.

Feeder Cattle futures closed an average of $1.41 higher, from 60¢ higher in spot Oct to $1.72 higher.

Choice was $1.13 lower at $206.70. Select was 18¢ higher at $188.67.

Corn futures closed 1¢ to 2¢ lower across the front half of the board and then fractionally higher to 1¢ higher.

Soybean futures closed 4¢ to 8¢ lower through Jan ’22 and then fractionally lower to 3¢ lower.

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Except for the tech sector, Major U.S. financial indices closed lower again Tuesday as COVID cases continued to spike higher.

The Dow Jones Industrial Average 222 points lower. The S&P 500 closed 10 points lower. The NASDAQ was up 72 points.

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“Drought conditions will likely play an important part of placements this year,” says David Anderson, Extension livestock economist at Texas A&M University, in the latest issue of In the Cattle Markets.

Reflecting on the recent Cattle on Feed report, Anderson explains “Difficult wheat pasture establishment and development may force more to feedlots. Drought in the West and Texas may force some more placements. More feeder cattle continue to come from Mexico adding to available supplies for placement.”

As it is, in his weekly market comments, Derrell Peel, Extension livestock marketing specialist at Oklahoma State University says total feedlot placements during the third quarter (July-September) were 8.5% more year over year. More specifically, during that same period, he explains year-over-year feedlot placements were 17.0% higher in Kansas, 14.5% more in Nebraska, 13.4% higher in Oklahoma, up 9.3% in Colorado, 2% higher in Texas and 1.9% higher in Iowa.

“The Kansas Focus on Feedlots data shows that feedlot average daily gains have been above year-ago levels all year with improved feed conversions, as well,” Peel says. “Improved gains and feed efficiency have pulled feedlot cost of gain below year-ago levels. Excellent feedlot performance has contributed to heavy cattle weights thus far this year.” He expects steer carcass weights to average more than 900 lbs. this year for the first time in history.

On a related note, analysts with the Livestock Marketing Information Center (LMIC) point out that heifers as a percentage of cattle on feed climbed last year but remained steady so far this year.

“Evidence of the slaughter plant disruptions were evident in quarter-three figures, where heifers on feed climbed to 38.5%, up from 37.3% in the prior quarter. Heifers, because of smaller carcass weights, were likely held longer to allow for very heavy steers to have slaughter priority,” say LMIC analysts, in the latest Livestock Monitor. “The heifer count as of Oct. 1 moved a full percent lower, even as cattle numbers on feed increased significantly. The fourth quarter proportion is 37.6% of steers and heifers on feed.”

The LMIC folks also point out beef cow slaughter since July 1 is higher year over year in the Pacific Northwest, West Coast and Southern Plains.

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

In regional negotiated cash trade last week, live prices were at $106/cwt. in the Southern Plains; $105 in Nebraska and at $103-$105 in the western Corn Belt. Dressed prices were at $162-$166 in Nebraska and at $163-$165 in the western Corn Belt.

The five-area direct average steer price last week was $2.45 less than the previous week on a live basis at $105.07/cwt., with the average weight 14 lbs. lighter at 1,467 lbs. The average steer price in the beef was $163.95, which was $4.40 less week to week. The average carcass weight was 7 lbs. lighter at 977 lbs.

Cattle futures rebounded Monday, despite sharply lower outside markets and the bearish nature of Friday’s Cattle on Feed report. Potential rationale includes oversold conditions, adequate positioning ahead of the report and thoughts that a near-term bottom is in the books.

Live Cattle futures closed an average of 69¢ higher, from an average of 22¢ to $1.12 higher, except for an average of 20¢ lower in two nearby contracts.

Feeder Cattle futures closed an average of 76¢ higher, from 17¢ higher in spot Oct to $1.22 higher.

Choice boxed beef cutout value was 34¢ higher Monday afternoon at $207.83/cwt. Select was $1.91 lower at $188.49.

Corn futures closed 1¢ to 2¢ lower.

Soybean futures closed 1¢ to 4¢ higher through Mar ’21 and then mostly fractionally lower to 1¢ lower.

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Major U.S. financial indices closed sharply lower on Monday, with spiking coronavirus cases and a more bearish tone to economic stimulus talks.

The Dow Jones Industrial Average closed 650 points lower. The S&P 500 closed 64 points lower. The NASDAQ was down 189 points.

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So far, China purchased more than $23 billion worth of agricultural products, approximately 71% of its target under the Phase One Agreement, according to a recent progress report from the U.S. Trade Representative (USTR) and USDA.

“Since the Agreement entered into force eight months ago, we have seen remarkable improvements in our agricultural trade relationship with China, which will benefit our farmers and ranchers for years to come,” says U.S. Trade Representative Robert Lighthizer.

Highlights of the report include:

Beef: U.S. beef and beef product exports to China through August 2020 were more than triple the total for 2017.

Pork: U.S. pork exports to China hit an all-time record in the first five months of 2020.

Corn: Outstanding sales of U.S. corn to China are at an all-time high of 8.7 million tons.

Soybeans: U.S. soybeans sales for marketing year 2021 are off to the strongest start in history, with outstanding sales to China double 2017 levels.

Sorghum: U.S. exports of sorghum to China from January to August 2020 totaled $617 million, up from $561 million for the same period in 2017.

Additionally, USDA expects 2020 sales to China to hit record or near-record levels for numerous other U.S. agricultural products including pet food, alfalfa hay, pecans, peanuts, and prepared foods.

“This agreement finally levels the playing field for U.S. agriculture and is a bonanza for America’s farmers, ranchers, and producers,” says U.S. Secretary of Agriculture Sonny Perdue. “Being able to participate in this market in a more fair and equitable way has generated more sales that are supporting higher prices and strengthening the rural economy.”