WLI

Negotiated cash fed cattle trade was limited on light demand in Nebraska through Thursday afternoon, according to the Agricultural Marketing Service. There were a few live trades at $114/cwt., and a few in the beef at $182, but too few to trend.

There were also a few dressed trades in the western Corn Belt at $182, but too few to trend.

Last week, live sales were at $114 in the Southern Plains and Nebraska; $114-$115 in the western Corn Belt. Dressed trade was at $180-$182.

Cattle feeders offered 790 head (6 lots) in Central Stockyards’ special Fed Cattle Exchange auction Thursday, all from the Southern Plains. None sold. Reserve prices were $115-$116 and bids were $114.25 to $114.50.

Cattle futures closed mixed Thursday. Weaker Corn futures, tied to lower export sales and profit taking, helped Feeder Cattle.

Feeder Cattle futures closed an average of 35¢ higher.

Sharply lower outside markets, the continued lack of cash direction and weaker export sales helped to mostly pressure Live Cattle.

Net U.S. beef export sales of 8,500 metric tons for 2021 were 63% less than the previous week and 66% less than the prior four-week average, according to the U.S. Export Sales report for the week ending Feb. 18. Increases were primarily for South Korea, Japan, Mexico, Canada, and Taiwan.

Live Cattle futures closed an average of 33¢ lower, except for an average of 17¢ higher in three contracts.

Choice boxed beef cutout value was 36¢ lower Thursday afternoon at $240.39/cwt. Select was $1.00 lower at $228.79.

The average dressed steer weight the week ending Feb. 13 was 919 lbs., the same as a week earlier, but 14 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 2 lbs. heavier than the prior week and 17 lbs. heavier than the previous year. Fed cattle slaughter of 468,241 head was 40,812 head less than the previous week; 20,542 head less than the prior year.

Corn futures closed 3¢ to 7¢ lower through Sep ‘21, and then mostly 1¢ to 2¢ lower.

Soybean futures closed 5¢ to 18¢ lower through Jan ‘22, and then mostly fractionally higher to 1¢ higher.

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Major U.S. financial indices closed sharply lower Thursday with investors apparently rattled by a surge in Treasury bond yield rates. That came in the face of a more positive unemployment report than the trade expected.

Weekly initial unemployment insurance claims were 730,000 the week ending Feb. 20, down 111,000 from the previous week, according to the U.S. Department of Labor.

The Dow Jones Industrial Average closed 559 points lower. The S&P 500 closed 96 points lower. The NASDAQ was down 478 points. 

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Beef byproduct values continue to gain after sinking to a pandemic low of $6.57/cwt. the latter part of last April. Prices mostly gradually increased since then to $9.78 by Feb. 24; about 7% more than a year earlier.

“Beef and beef byproducts are typically produced in nearly fixed proportions; however, when packers experienced line disruption in 2020, many plants changed fabrication methods to keep more whole muscles/primals intact and keep less offal to maximize line speed,” explains Brenda Boetel, livestock economist at the University of Wisconsin-River Falls, in the latest issue of In the Cattle Markets. “The decrease in beef and offal provided less opportunities for exports and byproduct values decreased…When these edible offal products are not exported, they will often go into rendering or into pet food and ultimately decrease the overall value of the finished steer.”

Total offal value plus hides accounted for 20.7% of U.S. beef export value in 2020, down from 22% in 2019, according to Boetel.

For perspective, basis a steer at 1,400 lbs., byproduct value increased $44.94 per head to $136.92 at the end of February, compared to the pandemic low.

“With the continued recovery from COVID disruptions, byproduct production has mostly returned to pre-COVID levels. Given the relatively fixed pounds of byproducts per 1,400 lb. steer, the byproduct drop value contributions have been increasing due primarily to changes in demand,” Boetel says.

Negotiated cash fed cattle tradewas limited on light demand in all major cattle feeding regions through Wednesday afternoon, according to the Agricultural Marketing Service. There were a few live trades in the Southern Plains steady with last week at $114/cwt., but too few to trend.

Cattle feeders offered 1,145 head (9 lots) in Central Stockyards’ (CS) Fed Cattle Exchange auction Wednesday, all from the Southern Plains. Of those, 409 head sold (250 heifers and 159 steers) for a weighted average price of $114.25/cwt. CS will host a special sale Thursday.

On the other hand, slaughter steers sold steady to $3 lower, with instances of $4 lower at Sioux Falls Regional in South Dakota. There were 534 head of Choice 3-4 steers weighing an average of 1,654 lbs., bringing an average of $112.06, which was $2-$3 lower than cash trade in the region last week.

Cattle futures closed higher Wednesday, helped along by sharply higher outside markets, broad commodity support and recent strength in Lean Hog futures.

 Live Cattle futures closed an average of 91¢ higher.

Feeder Cattle futures closed an average of $1.23 higher, from 67¢ higher at the back to $2.15 higher toward the front.

Choice boxed beef cutout value was 46¢ higher Wednesday afternoon at $240.75/cwt. Select was 74¢lower at $229.79. 

Corn futures closed mostly 3¢ to 7¢ higher.

Soybean futures closed 14¢ to 18¢ higher through Jan ‘22, and then mostly 5¢ to 10¢ higher.

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Major U.S. financial indices closed higher Wednesday, amid another volatile session. Support seemed to center around optimism for the economy picking up steam. Remarks from Federal Reserve Vice Chair, Richard Clarida also helped quell inflation worries, with remarks to the U.S. Chamber of Commerce, mirroring the dovish tone of Chair Jerome Powell a day earlier.

The Down Jones Industrial Average closed 424 points higher. The S&P 500 closed 44 points higher. The NASDAQ was up 132 points.

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Cattle markets continue to underperform, beneath the weight of record high beef production since the middle of June. But, Randy Blach, CattleFax CEO, expects cattle prices to increase from now through 2024, especially after the first half of this year. Profitability will increase significantly for cow-calf producers and margin operators, he says.

CattleFax shared its Market Outlook Wednesday, as part of the National Cattlemen’s Beef Association Winter Reboot.

Part of the price optimism has to do with declining cattle numbers, after working through current front-end supplies.

CattleFax projects modest herd liquidation of 200,000 beef cows this year and 350,000 head next year, due in part to the likelihood of expanding La Niña drought this spring and summer.

Leverage will also swing back in producers’ favor as packing plant capacity utilization declines, according to Kevin Good, CattleFax vice president of industry relations and analysis.

At the same time, CattleFax expects consumer beef demand to continue strong.

Blach explained domestic consumer beef demand last year was the strongest in more than 30 years, based on the U.S. Consumer Beef Demand Index. That was helped by consumer incomes being replaced almost entirely by government stimulus.

Internationally, CattleFax expects U.S. beef exports to increase at least 5% this year.

In terms of cattle prices, these are the CattleFax projections for this year.

                                                Annual Av.                Range

Fed steer                               $119/cwt.                  $108 to $128

800 lbs. steer                       $145/cwt.                  $135 to $160

550 lbs. steer                       $170/cwt.                  $160 to $180

Utility cows                          $64/cwt.                     $52 to $74

Bred cows                            $1,600/hd                 $1,200 to $1,900

There are headwinds, of course.

Even before considering the drought, Mike Murphy, CattleFax vice president of research and risk management services, said both supply and demand mean feed costs will likely remain elevated into the next crop marketing year.

As well, the folks at CattleFax expect inflation and interest rates to begin rising.

Negotiated cash fed cattle trade was at a standstill in Kansas through Tuesday afternoon, according to the Agricultural Marketing Service. Elsewhere, it was limited on light demand, with too few transactions to trend.

Cattle futures softened Tuesday, with spot Live Cattle soon to expire, the lack of cash direction and bearish outside markets early in the session.

Live Cattle futures closed an average of 85¢ lower, from 10¢ to $1.85 lower.

Feeder Cattle futures closed an average of $1.01 lower, from 67¢ to $1.35 lower.

Choice boxed beef cutout value was 31¢ higher Tuesday afternoon at $240.29/cwt. Select was 55¢ higher at $230.53.

Corn futures closed 1¢ to 2¢ higher through Jly ‘21, and then mostly fractionally mixed.

Soybean futures closed 10¢ to 22¢ higher through Sep ‘22, and then mostly 8¢ higher.

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Major U.S. financial indices closed mixed Tuesday, following steep early losses. Part of the turnaround stemmed from comments made by Federal Reserve Chair, Jerome Powell, which seemed to quell some inflation fears, at least for the day.

“Following large declines in the spring, consumer prices partially rebounded over the rest of last year. However, for some of the sectors that have been most adversely affected by the pandemic, prices remain particularly soft. Overall, on a 12-month basis, inflation remains below our 2% longer-run objective,” explained Powell, in his Semiannual Monetary Policy Report to the Congress. “As noted in our January policy statement, we expect that it will be appropriate to maintain the current accommodative target range of the federal funds rate until labor market conditions have reached levels consistent with the Committee’s assessments of maximum employment and inflation has risen to 2% and is on track to moderately exceed 2% for some time.”

The Dow Jones Industrial Average closed 15 points higher. The S&P 500 closed 4 points higher. The NASDAQ was down 67 points.

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“It’s likely that you’ve heard individuals like Bill Gates claim that U.S. livestock’s contribution to climate change is immense. However, these claims are flat out wrong,” says Jerry Bohn, president of the National Cattlemen’s Beef Association, in an op-ed released yesterday. “Some activists and others like Gates often cite old claims made in the United Nation’s debunked report titled Livestock’s Long Shadow. They also use global numbers to back their claims about U.S. cattle production to back their marketing claims and sell their products.

“It’s critical that Americans understand that global GHG emissions are skewed higher because they include emissions from nations whose cattle and beef management systems are far less efficient than those in the United States. Global numbers also include countries like India, which have large bovine populations but where harvest is very low or non-existent because of cultural or religious practices. In global terms, U.S. beef cattle production counts for just 0.5% of global GHG emissions, so even if every American stopped eating beef in favor of fake meat substitutes, there would be virtually no discernible impact on our changing climate.”

In the op-ed—Beef Is, and Always Will Be Sustainable—Bohn emphasizes continued progress of the U.S. beef production system, which is already among the most productive and efficient in the world.

“Between 1975 and 2017, beef cattle emissions declined 30%. At the same time, the U.S. now produces even more beef from fewer animals and a smaller land base. Today, the U.S. produces 18% of the world’s beef with just 6% of the world’s cattle numbers,” Bohn explains. “This is possible through commitments to animal welfare, better animal nutrition and advancements in genetics. Those statistics are often overlooked or ignored by individuals like Bill Gates, the writers at OZY and others who are working to advance an agenda that drives people away from eating meat using scare tactics and unsound science to advance their cause and line their pockets with grocery money from well-meaning, concerned consumers who have been sold something they don’t want and never needed in the first place.”

Negotiated cash fed cattle trade was at a standstill in all major cattle feeding regions through Monday afternoon, according to the Agricultural Marketing Service.

Live sales last week were at $114/cwt. in the Southern Plains and Nebraska; at $114-$115 in the western Corn Belt. Dressed trade was at $180-$181 in Nebraska and at $180-$182 in the western Corn Belt.

Last week’s five-area direct average steer price was 39¢ higher on a live basis at $113.99/cwt. The average five-area dressed steer price was 47¢ higher at $180.57.

Despite rising Corn futures prices and higher feedlot placements than expected (Friday’s Cattle on Feed report), Feeder Cattle futures shook off early pressure to mostly extend gains. Live Cattle futures closed narrowly mixed, though, amid plentiful fed cattle supplies and short-term uncertainty.

Live Cattle futures closed narrowly mixed, from an average of 28¢ lower across the front half of the board to an average of 16¢ higher.

Feeder Cattle futures closed an average of 27¢ higher, except for an average of 32¢ lower in the back two contracts.

Choice boxed beef cutout value was 75¢ higher Monday afternoon at $239.98/cwt. Select was $2.08 higher at $229.98.

Grain Futures rebounded with last week’s USDA forecast during the Agricultural Outlook Forum.

Corn futures closed mostly 6¢ to 9¢ higher.

Soybean futures closed mostly 5¢ to 15¢ higher.

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Major U.S. financial indices closed mixed Monday. Primary pressure stemmed from a selloff in big tech stocks, as well as continued nervousness over rising Treasury yield rates—potential implications for higher interest rates and economic recovery. 

The Dow Jones Industrial Average closed 27 points higher. The S&P 500 closed 30 points lower. The NASDAQ was down 341 points.

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“The feedlot situation in early 2021 is a carryover from the disruptions and unusual dynamics last year,” says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly market comments. “For the entire year in 2020, feedlot placements were down 4.0%. In the last half of the year feedlot placements were almost unchanged year over year, up 0.3%.  However, this average belies dramatic dynamics as feedlot placements in the third quarter were up 8.5% year over year, while placements in the fourth quarter were down 7.0% from the prior year.”

Peel points out total estimated feeder supplies outside of feedlots Jan. 1 were 25.66 million head, down 0.2% year over year. Even when adjusted for decreased veal slaughter and increased feeder cattle imports, he says the 1.3% year-over-year decrease in the 2020 calf crop would have suggested a bigger decrease in the feeder supply to start the year.

“It appears that some feeder cattle were carried over into 2021 and likely is reflected in the relatively large January placements,” Peel says. “Feeder supplies are somewhat front-loaded early in 2021 but should tighten up in the second half of the year.”

As reported in Cattle Current Monday, feedlot placements in January were 2.017 million head, according to the latest Cattle on Feed (COF) report. That was about 3% more year over year and about 3% more than pre-report expectations.

Peel shares one other note about the COF.

“January marketings were 1.822 million head, down 5.6% from one year ago and about as expected. However, January 2021 had two less slaughter days than the year before meaning that daily average marketings this year were 3.8% higher than last year,” Peel explains.