WLI

Although too few to trend, there were a few early negotiated cash fed cattle sales in the Texas Panhandle on Tuesday at $95/cwt. on a live basis, and a few in Kansas at $94-$95. There were also a few dressed trades in Nebraska at mostly $157-$160 and a few in the western Corn Belt at $160 (a few live sales at $100).

Cattle futures paused the recent rally, giving back a minority of gains.

Except for 25¢ higher in near Oct and 2¢ higher at the back, Live Cattle futures closed an average of 37¢ lower.

Except for 5¢ higher in Apr, Feeder Cattle futures closed an average of 60¢ lower (25¢ lower at the back to $1.22 lower in spot Aug).

Choice boxed beef cutout value was 16¢ lower Tuesday afternoon at $205.30/cwt. Select was 13¢ lower at $196.84.

Corn futures closed mostly 3¢ lower through Jul ’21 and then mostly fractionally lower.

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

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Major U.S. financial indices closed lower Tuesday, with most pressure apparently tied to surging coronavirus cases in the U.S.

The Dow Jones Industrial Average closed 396 points lower. The S&P 500 closed 34 points lower. The NASDAQ closed 89 points lower.

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Agricultural producer sentiment improved in June for the second month in a row, according to the Purdue University/CME Group Ag Economy Barometer. The index was up 14 points from May to a reading of 117.

The Index of Current Conditions rose 19% from May to a reading of 99, and the Index of Future Expectations climbed 12% from May to a reading of 126.

The Ag Economy Barometer is based on responses from 400 U.S. agricultural producers. The most recent survey was conducted June 22-26.

“This month’s survey was conducted after the USDA announced details regarding the Coronavirus Food Assistance Program (CFAP),” says James Mintert, the barometer’s principal investigator and director of Purdue University’s Center for Commercial Agriculture. “A more favorable spring planting season combined with assistance from CFAP helps explain this month’s improvement in farmer sentiment, yet a majority of producers believe additional economic assistance will be needed in 2020.”

The majority of producers (60%) indicated that CFAP somewhat (53%) or completely (7%) relieved their concerns about the impact of the virus on their 2020 farm income. However, 64% of respondents indicated that they think it will be necessary for Congress to pass another bill to provide more economic assistance to U.S. farmers.

Early dressed sales in the western Corn Belt on Monday were $5-$7 higher than last week at $160/cwt., according to USDA’s Agricultural Marketing Service. Although too few to trend, there were some live sales in Kansas at $93-$95 (steady to $2 lower) and some dressed sales in Nebraska at $155-$160 ($5-$6 higher).

Cattle futures built on the previous session’s gains, supported by surging outside markets and likely helped along by technicals.

Live Cattle futures closed an average of 96¢ higher (40¢ higher to $1.25 higher).

Feeder Cattle futures closed an average of $1.09 higher (55¢ to $1.37 higher).

Choice boxed beef cutout value was 2¢ higher Monday afternoon at $205.46/cwt. Select was $1.79 lower at $196.97.

Corn futures closed 2¢ to 4¢ higher through Jul ’21 and then fractionally higher to 1¢ higher.

Soybean futures closed mostly 7¢ to 9¢ higher.

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Major U.S. financial indices closed solidly higher Monday, led by tech stocks and despite the continuing escalation in COVID-19 infections.

The Dow Jones Industrial Average closed 459 points higher. The S&P 500 closed 49 points higher. The NASDAQ closed 226 points higher.

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Recent export demand underscores the negative global impact of COVID-19.

U.S. beef exports in May were 33% less in may than a year earlier at 79,280 metric tons (mt)—the lowest monthly total in 10 years—according to data released by USDA and compiled by the U.S. Meat Export Federation (USMEF). Value was 34% less than the same time last year at $480.1 million.

For January through May, beef exports fell 3% below last year’s pace in volume (512,596 mt) and were 5% lower in value ($3.14 billion).

“As protective measures related to COVID-19 were being implemented, plant disruptions peaked in early May with a corresponding temporary slowdown in exports,” explains USMEF President and CEO Dan Halstrom. “Unfortunately, the impact was quite severe, especially on the beef side. Exports also faced some significant economic headwinds, especially in our Western Hemisphere markets, as stay-at-home orders were implemented in key destinations and several trading partners dealt with slumping currencies.”

Halstrom notes that the recent rebound in beef and pork production will help exports regain momentum in the second half of 2020. The global economic outlook is challenging, but he looks for export volumes to recover quickly in most markets as U.S. red meat remains an important staple, not only in the United States but for many international consumers as well.

“In what has been a remarkably turbulent year, consumer demand for U.S. red meat has proven very resilient,” Halstrom says. “Now that production has substantially recovered, the U.S. industry is better able to meet the needs of both domestic and international customers. While the foodservice and hospitality sectors face enormous challenges, they are on the path to recovery in some markets while retail demand remains strong. Retail sales have also been bolstered by a surge in e-commerce and innovations in home meal replacement, as convenience remains paramount.”

May U.S. pork exports of 243,823 mt were 12% more than a year earlier but down 13% from the monthly average for the first quarter of 2020. Export value was $620.9 million, up 9% year-over-year but 16% below the first quarter monthly average.

Negotiated cash fed cattle trade ended the holiday-shortened week steady to $2 lower on a live basis in the Southern Plains at $93-$95/cwt.; steady to $1 higher in Nebraska at $95-$96 and unevenly steady in the western Corn Belt at $96-$97. Dressed trade was $1 lower in Nebraska at $154-$155 and steady to $4 lower in the western Corn Belt at $152-$155.

Cattle futures extended gains, though, for no apparent reason.

Live Cattle futures closed an average of $1.08 higher (32¢ higher to $2.10 higher in spot Aug).

Feeder Cattle futures closed an average of $1.78 higher ($1.47 to $2.55 higher).

Choice boxed beef cutout value was 6¢ higher Thursday afternoon at $205.44/cwt. Select was 33¢ higher at $198.76.

The average dressed steer weight for the week ending June 20 was 890 lbs., which was 6 lbs. lighter than the previous week, but 36 lbs. heavier than the previous year, according to USDA’s Actual Slaughter Under Federal Inspection report. The average dressed heifer weight of 823 lbs. was 1 lb. lighter than the previous week, but 33 lbs. heavier than the same week a year earlier.

Grain futures softened Thursday, following strong gains earlier in the week. Pressure likely included week-end positioning and profit taking, as well as the bearish weekly Export Sales report (week ending June 25) from USDA’s Foreign Agricultural Service.

Net export corn sales of 361,100 metric tons (mt) for 2019-2020 were down 22% from the previous week and 32% from the prior four-week average.

Net soybean export sales of 241,700 mt for 2019-2020 were a marketing-year low, down 60% from the previous week and 63% from the prior four-week average.

Corn futures closed mostly 3¢ to 7¢ lower.

Soybean futures closed fractionally lower to 2¢ lower.

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Major U.S. financial indices climbed higher Thursday on the back of a national employment report that shattered expectations to the upside.

Total nonfarm payroll employment rose by 4.8 million in June, according to the Employment Situation Summary from the U.S. Bureau of Labor Statistics. The unemployment rate declined to 11.1%.

“These improvements in the labor market reflected the continued resumption of economic activity that had been curtailed in March and April due to the coronavirus (COVID-19) pandemic and efforts to contain it,” according to the report. “In June, employment in leisure and hospitality rose sharply. Notable job gains also occurred in retail trade, education and health services, other

services, manufacturing, and professional and business services.”

Average hourly earnings for all employees on private nonfarm payrolls in June fell by 35¢ to $29.37.

The Dow Jones Industrial Average closed 92 points higher. The S&P 500 closed 14 points higher. The NASDAQ closed 53 points higher.

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“To further aid in a gentle transition back toward economic normality, federal economic policy will have to shift from sending families money to maintain social distancing to helping businesses maintain employment,” says Jeffrey Dorfman, professor of agricultural and applied economics at the University of Georgia. That’s part of a recent publication from the Council for Agricultural Science and Technology (CAST): Macroeconomic Impacts and Policies in the Face of COVID-19.

Although the government extended forgivable loans to small businesses through the Paycheck Protection Program, Dorfman explains the current unemployment bonus of $600 per week could make it harder for some businesses to reopen.

“Workers are currently making more from unemployment than from working, particularly in the retail, hospitality, and personal services sectors that are home to so many small businesses,” Dorfman says. “With the unemployment bonus, not working can pay the equivalent of about $50,000 per year. Few small businesses can compete with that when roughly half of all workers made less than that just a few months ago.”

Worker challenges aside Dorfman says, economic recovery requires customers feeling safe about returning to restaurants, local shops, movie theaters and all of the rest.

“Until a vaccine and/or effective treatments are widely available, the best confidence restorer will be clearly posted and followed safety protocols that minimize the risk of frequenting public businesses and maximize the amount of economic activity that can safely take place,” Dorfman says. “But a full recovery requires either a vaccine or treatment that convinces people contracting the virus is more a nuisance than a mortal risk.”

Negotiated cash fed cattle prices Wednesday were steady to $2 lower in the Southern Plains at $95/cwt. on a live basis; steady to $1 higher in Nebraska at $95-$96. Dressed trade for the week is $1 lower in Nebraska at $154-$155; steady to $4 lower in the western Corn Belt at $152-$155.

Cattle feeders offered 1,814 head in the weekly Fed Cattle Exchange Auction. There were 144 head—one lot of Kansas steers—selling for a weighted average price of $95/cwt., for delivery at 1-9 days. Two other lots were passed out at $93.

Cattle futures wobbled to start the day but picked up steam as the day progressed. Depending on your leanings, Live Cattle seem to be looking past the current backlog of fed cattle, or largely priced it in a ways back.

Live Cattle futures closed an average of $1.31 higher.

Feeder Cattle futures closed an average of 80¢ higher (22¢ higher in spot Aug to $1.42 higher).

Choice boxed beef cutout value was $1.59 lower Wednesday afternoon at $205.38/cwt. Select was $1.47 lower at $198.43.

Grain futures extended gains Wednesday, buoyed by USDA’s recent reports.

Corn futures closed 8¢ to 10¢ higher through Jul ’21 and then 3¢ to 4¢ higher.

Soybean futures closed 16¢ to 19¢ higher.

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Major U.S. financial indices closed mixed on Wednesday, with nervousness about the economy’s start-and-stop reopening countered by positive employment news.

Private sector employment increased by 2.37 million in June, according to the ADP National Employment Report^®.

“As the economy slowly continues to recover, we are seeing a significant

rebound in industries that once experienced the greatest job losses. In fact, 70% of the jobs added this month were in the leisure and hospitality, trade and construction industries,” says Ahu Yildirmaz, vice president and co-head of the ADP Research Institute.

The Dow Jones Industrial Average closed 77 points lower. The S&P 500 closed 15 points higher. The NASDAQ closed 95 points higher.

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“Slaughter cow prices have been one of the few bright spots for cattle producers over the past few months. Slaughter cow prices in the Southern Plains averaged $57.84/cwt. over the past six weeks of available data, which is 19.5% above the same period in 2019. Generally, cull cow markets are most directly related with ground beef demand,” says Josh Maples, Extension livestock economist at Mississippi State University, in the latest issue of In the Cattle Markets.

Total cow slaughter so far this year is about par with 2019, with beef cow slaughter up about 2% and dairy cow slaughter down about 2%, according to Maples. He notes the 6.7% increase in beef cow slaughter during the first two weeks of June is likely due in part to delayed marketing by some producers.

“Lower calf prices could drive increased beef cow culling later in the year,” Maples says. “Dairy slaughter is near the seasonal low point and milk prices have rebounded, which may prevent significant dairy cow culling. While the supply picture is becoming a little clearer, ground beef demand will continue to be key for support of beef cow cull prices.”

There was no Afternoon Slaughter Cattle Review from USDA at press time. However, the Direct Slaughter Cattle Reporting Dashboard from AMS had live cattle on Tuesday bringing an average of just over $97/cwt.; close to $153 in the beef.

Cattle futures started the day in positive territory before USDA’s grain-friendly Acreage and Grain Stocks reports pounded Feeder Cattle futures.

Other than $3.35 lower in expiring spot Jun and 20¢ higher in the back contract, Live Cattle futures closed an average of 20¢ lower.

Feeder Cattle futures closed an average of $1.00 lower (65¢ lower in spot Aug to $1.20 lower).

Choice boxed beef cutout value was $1.39 lower Tuesday afternoon at $206.97/cwt. Select was 81¢ lower at $199.90.

Corn and soybean futures bounced higher Tuesday, buoyed by the aforementioned USDA reports.

Corn futures closed 12¢ to 15¢ higher through Jul ’21 and then 4¢ to 7¢ higher.

Soybean futures closed 16¢ to 20¢ higher through Mar ’21 and then mostly fractionally higher to 12¢ higher.

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Major U.S. financial indices closed higher again Tuesday, led by tech stocks and despite continuing concerns about increasing coronavirus cases.

In remarks to the U.S. House Committee on Financial Services, Federal Reserve Chair, Jerome Powell put it this way: “Output and employment remain far below their pre-pandemic levels. The path forward for the economy is extraordinarily uncertain and will depend in large part on our success in containing the virus. A full recovery is unlikely until people are confident that it is safe to reengage in a broad range of activities.”

The Dow Jones Industrial Average closed 217 points higher. The S&P 500 closed 47 points higher. The NASDAQ closed 184 points higher.

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USDA projects acres of all hay harvested this year at 52.38 million acres, which would be 44,000 fewer acres (-0.08%) than last year, according to the Acreage report from the National Agricultural Statistics Service (NASS).

The decline comes in forecast acres of alfalfa and alfalfa mixtures at 16.35 million acres, which would be 381,000 fewer acres (-2.33%) than last year. All other hay acres of 36.03 million acres would be 347,000 acres more (+0.97%) than the previous year.

Corn acreage is projected at 92.01 million acres, which would be 2.31 million acres more (+2.57%) than last year. However, the projection is about 5 million acres less than the initial outlook in USDA’s Prospective Plantings report that came out at the end of March. Acreage harvested for grain is forecast at 84.02 million acres, which would be 2.70 million acres more (+3.32%) than last year.

Corn stocks in all positions June 1 totaled 5.22 billion bu., according to USDA’s Grain Stocks report. That’s 21.43 million bu. more (+0.41%) than the same time last year.

Of total corn stocks, 3.03 billion bu. are stored on farms, up 3% from a year earlier. Off-farm stocks, at 2.20 billion bu., are down 2% percent from a year ago.

Soybean acres are estimated to be 7.73 million acres more (+3.32%) than last year at 83.83 million acres. That’s about 325,000 acres more than the Prospective Plantings projection. Harvested soybean acres are forecast at 83.02 million acres, which would be 8.07 million acres more (+10.77%) than the previous year.

Soybean stocks in all positions June 1 of 1.39 billion bu. were 397.09 million bu. less (-22.7%) than the same time a year earlier.

On-farm soybean stocks totaled 633 million bu., down 13% from a year ago. Off-farm stocks, at 753 million bu., were 28% less than a year ago.

Acreage for all wheat this year is estimated at 44.25 million acres, which would be 908,000 fewer acres (-2.01%) than last year and the least since records began in 1919. Harvested wheat acres are projected at 36.68 million acres, which would be 484,000 fewer acres (-1.30%) than the prior year.

Wheat stocks stored in all positions June 1 of 1.04 billion bu. were 35.92 million bu. less (-3.32%) than the prior year.

On-farm all wheat stocks were estimated at 232 million bu., up 12% from a year earlier. Off-farm stocks of 812 million bu., are 7% less.