WLI

Negotiated cash fed cattle trade remained undeveloped through Wednesday afternoon, based on USDA reports. There were a few early live sales in the western Corn Belt at $111/cwt.—$1 more than the top of the range for the region last week—but too few to trend.

There were 768 head offered in the weekly Fed Cattle Exchange Auction and no takers.

Cattle futures continued to edge higher, except for a strong bounce in spot Live Cattle, supported by recent cash strength and gains in wholesale beef values.

After $1.35 higher in spot Oct, Live Cattle futures closed an average of 17¢ higher.

Except for 15¢ lower in Nov, Feeder Cattle futures closed an average of 27¢ higher.

Wholesale beef values were steady to firm on moderate demand and offerings, according to the Agricultural Marketing Service.

Choice boxed beef cutout value was 26¢ higher Wednesday afternoon at $218.28/cwt. Select was 11¢ lower at $191.37.

Corn futures closed mostly fractionally mixed

Soybean futures closed 3¢ to 6¢ lower through Sep ‘20 and then mostly 1¢ to 2¢ lower.

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Major U.S. financial indices softened Wednesday, despite continued positive quarterly corporate earnings reports. Pressure was mostly ascribed to the month-to-month decline in retail sales. The U.S. Commerce Department estimated U.S. retail and food service sales 0.3% less in September at $525.6 billion. However, sales were 4.1% more than last year.

The Dow Jones Industrial Average closed 22 points lower. The S&P 500 closed 5 points lower. The NASDAQ was down 24 points.

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A couple of observations shared by Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly market comments:

“Globally, the middle class is projected to expand from 2 billion to 4.9 billion people by 2030. China, alone, is projected to add 850 million new middle class consumers by 2030. It is well documented that meat consumption increases as growing incomes support better quality diets and increased protein consumption.

“It appears at this time, that swine and pork losses in China, Vietnam, North and South Korea, and the Philippines, along with other outbreaks of African Swine Fever in Europe and Africa are creating a protein deficit that cannot be currently filled by all proteins in the world.”

Negotiated cash fed cattle trade was undeveloped through Tuesday afternoon, based on USDA reports. Early expectations are for steady to higher prices.

Cattle futures ended up mostly narrowly higher amid two-sided action, awaiting direction from this week’s cash market.

Live Cattle futures closed an average of 31¢ higher, except for unchanged in near Dec.

Feeder Cattle futures closed mixed, unchanged to 55¢ lower in the front three contracts and then an average of 31¢ higher.

Wholesale beef values were higher on Choice and sharply higher on Select with moderate to good demand and moderate offerings, according to the Agricultural Marketing Service.

Choice boxed beef cutout value was 80¢ higher Tuesday afternoon at $218.02/cwt. Select was $2.15 higher at $191.48.

Corn futures closed 2¢ to 4¢ lower through May ’20 and then mostly fractionally lower.

Soybean futures closed 3¢ to 6¢ lower through Aug ‘20 and then mostly fractionally lower to 1¢ lower.

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Major U.S. financial indices closed higher Tuesday on positive corporate earnings and optimism over a resolution to Brexit.

The Dow Jones Industrial Average closed 237 points higher. The S&P 500 closed 29 points higher. The NASDAQ was up 100 points.

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Pasture and range conditions continued to erode last week, compared to the same time last year, according to the most recent weekly USDA Crop Progress report for the week ending Oct. 13.

96% of the corn crop was dented, which was 4% less than last year and the average. 73% of corn was mature, compared to 96% a year earlier and 92% for the five-year average. 22% was harvested, which was 16% less than last year and 14% less than average. 55% was in Good (44%) or Excellent (11%) condition, which was 1% less than the previous week and 13% less than last year. 15% was in Poor (11%) or Very Poor condition (4%), which was the same as a week earlier and 3% more than a year earlier.

85% of soybeans were dropping leaves, which was 9% less than the previous year and 8% less than the average. 26% were harvested, which was 11% less than a year earlier and 23% less than average. 54% were rated in Good (45%) or Excellent (9%) condition, 1% more than a week earlier and 12% less than a year ago. 14% were in Poor (10%) or Very Poor (4%) condition, which was 1% less than a week earlier and 3% more than a year earlier.

81% of sorghum was mature, which was 1% more than last year but 1% less than average. 40% was harvested, which was 2% less than last year and 6% less than the average. 65% was in Good (51%) or Excellent (14%) condition, which was 10% more than a year earlier. 7% was rated as Poor (6%) or Very Poor (1%), compared to 17% last year.

65% of winter wheat was planted, which was 1% more than the previous year and on par with the average. 41% had emerged, compared to 42% last year and 40% for average.

43% of the nation’s pasture and range was rated in Good (35%) or Excellent (8%) condition, which was 2% less than a week earlier and 6% less than a year earlier. 28% was rated as Poor (18%) or Very Poor (10%), which was 1% more than the previous week and 7% more than a year earlier.

Negotiated cash fed cattle trade ended up higher last week. Live prices in the Southern Plains were $1-$3 higher at $109/cwt. in the Texas Panhandle and at $108-$109 in Kansas. Live trade in the Northern Plains ranged from steady to $4 higher in Nebraska at $109-$111, to $1 lower to $2 higher on a light test in Colorado at $108-$111. Dressed trade in Nebraska and the western Corn Belt was mainly $2 higher at mostly $172. Live sales in the western Corn Belt were $1 higher at $108-$110.

Stronger cash prices lifted Cattle futures.

Live Cattle futures closed an average of $1.09 higher (72¢ to $1.60 higher). 

Feeder Cattle futures closed an average of $1.54 higher.

Wholesale beef values were firm on moderate to good demand and offerings, according to the Agricultural Marketing Service.

Choice boxed beef cutout value was $1.56 higher Monday afternoon at $217.22/cwt. Select was 65¢ higher at $189.33.

Corn futures closed mostly unchanged to fractionally lower.

Soybean futures closed 3¢ to 4¢ higher through Jan ’21 and then mostly 2¢ lower to 2¢ higher.

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Major U.S. financial indices softened Monday as investors contemplated the potential breadth, depth and timing of the phased U.S.-China trade deal bandied about Friday.

The Dow Jones Industrial Average closed 29 points lower. The S&P 500 closed 4 points lower. The NASDAQ was down 8 points.

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“Relatively tight supplies of Prime and Choice beef are contributing to historically wide price spreads and high values for high quality-grade beef,” says David Anderson, Extension livestock economist at Texas A&M University.

In the latest issue of In the Cattle Markets, Anderson explains the Prime boxed beef cutout averaged $279.55/cwt. during the last month, which is a staggering $64.74 more than a year earlier. During the same period, the Choice cutout was $13.28 more at $215.76.

So, the Prime-Choice spread was $63.80/cwt., compared to $12.33 last year. The average Choice-Select spread was $25.76, compared to about $11 last year and for the five-year average.

“The Choice-Select spread tends to increase seasonally this time of the year and that seasonal trend is again occurring, but at a much higher price level this year,” Anderson says.

The spread is being magnified by less year-over-year fed beef production and a decline in carcasses grading Choice and higher.

“Over the last four weeks, total beef production is more than 0.5% below the same period a year ago,” Anderson says. “Over this period, fed steer and heifer slaughter is down 1.7%, while cow slaughter is up 4.2%. Digging in a little deeper, fed steer slaughter is down 6.5% while fed heifer slaughter is up 6.7%. Dressed weights continue to be down about 2 lbs. per head over the last month for steers, heifers, and cows. Combining weekly slaughter and dressed weights leaves fed beef production about 2.2% lower than a year ago, while cow beef is up 3.8%.”

Also for the last month, Anderson says Prime is running about 1.6% less than same period a year earlier and Choice is about 2.6% less. Approximately 7.7% more carcasses graded Select.

“Combining the percentage of carcasses by grade and pounds of fed steer and heifer beef produced indicates that over the last month Prime beef production has been almost 4% below a year ago. Choice beef production is almost 5% lower than a year ago, while Select production is about 5% higher,” Anderson says.

Except for some early sales in the North, negotiated cash fed cattle trade remained undeveloped through Friday afternoon, based on USDA reports.

Early dressed sales in Nebraska were $2 higher than the previous week at $172/cwt. Early dressed sales also were trading for $172 in the western Corn Belt, but too few to trend. Live sales in the western Corn Belt were steady to $2 higher than the previous week at $109. Live sales were at $109-$110 in Nebraska, but too few to trend.

Feeder Cattle futures closed mostly narrowly lower, while Live Cattle moved higher, helped along by stronger cash prices, the uptick in wholesale beef values and outside market support.

Live Cattle futures closed an average of 70¢ higher.

Except for 12¢ and 5¢ higher toward the front of the board, Feeder Cattle futures closed an average of 12¢ lower.

Wholesale beef values were steady on Choice and higher on Select with moderate to fairly good demand and light offerings, according to the Agricultural Marketing Service.

Choice boxed beef cutout value was 3¢ higher Friday afternoon at $215.66/cwt. Select was $2.02 higher at $188.68.

Corn futures closed 14¢ to 17¢ higher through Jul ’20 and then mostly 1¢ to 4¢ higher.

Soybean futures closed 7¢ to 12¢ higher through Aug ’20 and then mostly 1¢ to 2¢ higher.

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Major U.S. financial indices closed sharply higher Friday with various reports indicating the U.S. and China agreed to a phased trade deal that suspends tariff increases originally scheduled to begin next week.

The Dow Jones Industrial Average closed 319 points higher. The S&P 500 closed 32 points higher. The NASDAQ was up 106 points.

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By all accounts, it’s going to take a long while for China to rebuild its pork supply in the wake of African Swine Fever (ASF). It likely will also take plenty of time to rebuild Chinese pork demand which faltered first due to fears of the disease— though it has no consequence for human health—and then from the high prices related to limited supplies.

“In Beijing, industry contacts observed a roughly 15% decline in consumption during the first half of the year,” explains agricultural economist, Lindsay Kuberka, in the recent Livestock and Poultry: World Markets and Trade, from USDA’s Foreign Agricultural Service (FAS). “They attributed much of the decline to voluntary shifts from pork to other proteins out of disease concern. In addition, food service operators sought to minimize exposure to pork price inflation by substituting other proteins like poultry meat.”

Preventive herd culling and lessened demand bolstered supplies and kept price increases at bay for the first half of this year. By the first week of October, though, Kuberka says pork prices in China were 84% higher than a year earlier.

For perspective, FAS estimates Chinese pork production 14% less this year than in 2018 and 25% less next year. China’s total swine herd is forecast to decline to 275 million head by the end of 2020, down nearly 40% since the beginning of 2018, before the crisis began.

“Consumers have reacted to high pork prices by cutting back purchases and pork prices are expected to reach record levels through the peak demand season—autumn holidays and Chinese New Year,” Kuberka says. “Supplies are expected to be released from the national pork reserve during this period to offset prices. In some areas, retail subsidies may also cushion the impact for consumers. Initiatives to lower pork prices will help some consumers but are expected to have limited impact overall.”

Moreover, Kuberka says high pork prices will encourage Chinese consumers and food service operators to purchase alternative proteins, such as beef, poultry, lamb and seafood.

“Retail prices for competing proteins are rising as a result, with chicken meat up 24% and beef up 20% year over year during the first week of October,” Kuberka explains. “Chicken meat is expected to benefit from the biggest boost in demand, given prices remain well below the cost of pork. Substitution to beef and lamb will be more limited as prices are close to double that of pork.”

Even so, China is projected to import 2.4 million metric tons (mt) of beef this year, which would be 63.6% more than last year and 146.4% more than in 2017. Forecasts see China’s beef imports increasing to 2.9 million mt next year, another 20.1% than this year.

Negotiated cash fed cattle trade remained undeveloped through Thursday afternoon.

Feeder Cattle futures crept mostly higher, while Live Cattle hovered amid sluggish two-sided trading.

Except for 25¢ higher in the front two contracts Live Cattle futures closed an average of 28¢ lower.

Except for 20¢ and 12¢ lower in the front two contracts, Feeder Cattle futures closed an average of 58¢ higher (10¢ to 95¢ higher). 

Wholesale beef values were firm to higher on moderate demand and offerings, according to the Agricultural Marketing Service.

Choice boxed beef cutout value was $1.03 higher Thursday afternoon at $215.63/cwt. Select was 54¢ higher at $186.66.

Corn futures closed 12¢ to 14¢ lower through Jul ’20 and then 1¢ to 4¢ lower. Thursday’s World Agricultural Supply and Demand Estimates (see below) were much more production friendly than traders and pre-report estimates expected.

Soybean futures closed fractionally lower through Aug ’20 and then mostly 2¢ to 4¢ lower.

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Major U.S. financial indices closed higher again Thursday with continuing hopes of a trade deal with China.

The Dow Jones Industrial Average closed 150 points higher. The S&P 500 closed 18 points higher. The NASDAQ was up 47 points.

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USDA increased fed steer price projections for the remainder of this year, in the latest World Agricultural Supply and Demand Estimates (WASDE), based on current price strength. The average 5-Area direct fed steer price for the fourth quarter is forecast at $110/cwt. The annual estimate increased $2 from the previous month’s projection to $115.50.

“Beef production is unchanged for the year, although a slower pace of placements in third-quarter 2019 is expected to result in lower first-quarter beef production, but higher second quarter production,” say analysts with USDA’s Economic Research Service (ERS). Projected fed steer price for the first quarter next year is $120; it’s $117 for the second quarter.

WASDE left anticipated beef production this year virtually unchanged (+5,000 lbs.) at 26.95 billion lbs., based on slower fed cattle slaughter than expected the prior month.

Estimated total red meat and poultry production for this year increased by 164 million lbs. (+0.16%) to 104.77 billion lbs., on higher forecast broiler production.

For next year, USDA projects beef production at 27.67 billion lbs. and total red meat and poultry production at 107.42 billion lbs.

USDA projects alfalfa and alfalfa mixture for hay production at 54.22 million tons, with more acres and slightly higher yield than the previous year, according to the Crop Production report. The total is 1.56 million tons more (+2.92%) than last year. All other hay production is forecast 5.75 million tons more (+7.49%) at 76.71 million tons.

Corn production is forecast at 13.779 billion bu., down 20 million from the previous month’s estimate (4% less than last year), with a decline in harvested area more than offsetting increased forecast yield. As of Oct. 1, the National Agricultural Statistics Service (NASS) estimated corn yield at 168.4 bu./acre, up 0.2 bu. from the previous forecast, but 8 bu. less than last year. According to the Crop Production report, corn area harvested for grain is forecast at 81.8 million acres, down less than 1% from the previous forecast but up slightly from 2018.

WASDE forecasts corn supplies sharply lower from last month on a reduced crop and lower beginning stocks, based on the September 30 Grain Stocks report. Corn ending stocks for 2019-20 were lowered 261 million bu. The season-average corn price received by producers was raised 20¢ to $3.80/bu.

Soybean production for beans is forecast at 3.55 billion bu., down 2% from the previous forecast and down 20% from last year, according to the Crop production report. Based on conditions as of Oct. 1, yields are expected to average 46.9 bu./acre, down 1.0 bu. from the previous forecast and down 3.7 bu. from 2018. Area harvested for beans in the United States is forecast at 75.6 million acres, down less than 1% from the previous forecast and down 14% from 2018.

WASDE projects soybean supplies for 2019-20 at 4.5 billion bu. down 175 million on lower production and beginning stocks. With a small increase in soybean crush, ending stocks are projected at 460 million bushels, down 180 million.

The U.S. season-average soybean price for 2019-20 is forecast at $9.00/bu., up 50¢, reflecting smaller supplies. The soybean meal price is forecast at $325.00/short ton, up $20.00. The soybean oil price forecast is raised 5¢ to 30¢/lb.