WLI

Cattle future closed higher Tuesday with renewed buying interest on oversold conditions and the hopes of some that a bottom was carved with the recent aggressive selling.

Feeder Cattle futures closed an average of $3.59 higher ($2.77 at the back to $4.17 higher in spot Jan).

Live Cattle futures closed an average of $1.34 higher (90¢ to $1.90 higher).

Negotiated cash fed cattle trade was mostly inactive on light demand in all regions through Tuesday afternoon, according to the Agricultural Marketing Service.

A day earlier, FOB live prices in Kansas were $3-$4 lower at mostly $171/cwt.

Last week, FOB live prices were $175 in the Texas Panhandle, $174-$175 in Nebraska and $173-$175 in the western Corn Belt.

Dressed delivered prices last week were mostly $275 in Nebraska and $274-$275 in the western Corn Belt.

Choice boxed beef cutout value was $1.24 lower Tuesday afternoon at $293.75/cwt. Select was $3.70 lower at $259.13/cwt.

Corn futures closed 4¢ to 8¢ higher through Jly ’24 and then mostly 1¢ to 2¢ higher.

KC HRW Wheat futures closed 1¢ to 5¢ higher.

Soybean futures closed mostly fractionally higher through Aug ’25 and then mostly 2¢ to 3¢ higher.

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Major U.S. financial indices closed narrowly mixed Tuesday with the most support coming from tech stocks.

The Dow Jones Industrial Average closed 79 points lower. The S&P 500 closed 2 points lower. The NASDAQ was up 44 points.

West Texas Intermediate Crude Oil futures (CME) closed 72¢ to 92¢ lower through the front six contracts.

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Agricultural producer sentiment increased for the second consecutive month in November, according to the latest Purdue University/CME Group Ag Economy Barometer. The overall index rose 5 points to a reading of 115, up 12% from a year earlier. Increased optimism was mostly attributed to farmers’ improved perceptions of their farms’ financial conditions and prospects.

“Farmers’ expectations regarding financial performance have improved, with fewer producers’ expecting worse performance than a year ago,” says James Mintert, the barometer’s principal investigator and director of Purdue University’s Center for Commercial Agriculture.

The Index of Current Conditions rose 12 points to 113 while the Index of Future Expectations improved by 2 points to 116.

Top concerns for the upcoming year include higher input costs (32%), rising interest rates (26%) and lower crop and/or livestock prices (20%). Notably, there has been a shift in concern throughout the year, with fewer producers expressing worry over higher input costs compared to the beginning of the year. Instead, more producers are now concerned about rising interest rates and lower crop and livestock prices.

This month’s Ag Economy Barometer survey was conducted from November 13-17, 2023.

Cattle futures continued lower Monday with follow-through pressure from lower cash fed cattle prices and eroding boxed beef cutout values.

Feeder Cattle futures closed an average of $3.78 lower.

Live Cattle futures closed an average of $1.65 lower ($1.27 to $2.05 lower).

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

Last week, FOB live prices were $2-$3 lower in the Southern Plains at $174-$175/cwt., $1-$2 lower in Nebraska at $174-$175 and $2-$3 lower in the western Corn Belt at $173-$175.

Dressed delivered prices were mostly $5 lower in Nebraska at $275 and $4-$5 lower in the western Corn Belt at $274-$275.

The weighted average five-area direct FOB live steer price last week was $2.32 lower at $174.45/cwt. The weighted average dressed delivered steer price was $4.14 lower at $274.59.

Choice boxed beef cutout value was $2.47 lower Monday afternoon at $294.99/cwt. Select was $2.66 lower at $262.83/cwt.

Corn futures closed mostly fractionally lower to 1¢ lower.

KC HRW Wheat futures closed mostly 7¢ to 11¢ higher.

Soybean futures closed mostly 11¢ to 19¢ lower through Sep ’24 and then 6¢ to 9¢ lower.

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Major U.S. financial indices softened Monday with investors apparently waiting for firmer direction.

The Dow Jones Industrial Average closed 41 points lower. The S&P 500 closed 24 points lower. The NASDAQ was down 119 points.

West Texas Intermediate Crude Oil futures (CME) closed 28¢ to $1.03 lower through the front six contracts.

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Calf and feeder cattle prices were a mixed bag last week. Steers and heifers sold steady to $10/cwt. higher in the North Central and Southeast, according to the Agricultural Marketing Service. The exception was $6 lower in the Southeast for steers weighing 600 lbs. In the South Central Region, steers sold $6-$17 lower and heifers traded $17-$19 lower.

The CME Feeder Cattle Index was $7.11 lower week to week on Friday at $223.27.

“A volatile futures market has caused some confusion between buyers and sellers in the auction barns,” says AMS analysts. They note the spot contract for Live Cattle declined $6.50 in the past two weeks while spot Feeder Cattle plunged $15.

“Calf and feeder cattle prices are reeling in the current environment,” says Andrew P. Griffith, agricultural economist at the University of Tennessee, in his weekly market comments. “The futures market has been in an utter freefall for two and a half months, and market participants do not know what to do, given the expectations for cattle in the future based on the futures market. Thus, feedlots are bidding less for cattle ready to be placed on feed, which means everyone down the line has to bid lower for lighter-weight cattle.”

Griffith adds that prices declining faster than they rose is reminiscent of the dramatic upsurge and plunge witnessed in 2014-16, when cattle numbers were similarly sparse.

“The primary difference is that cattle producers have not started retaining heifers and growing the beef cattle herd,” Griffith explains. “This means there has been no work on the pipeline to supply feeder cattle in the coming years. Thus, the market has likely overreacted to pushing prices too low just as the market pushed prices too high earlier this year.”

Lower cash fed cattle prices helped pressure Cattle futures on Friday.

Feeder Cattle futures closed an average of $5.21 lower ($4.75 to $5.60 lower).

Live Cattle futures closed an average of $2.10 lower ($1.55 to $2.80 lower).

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

For the week, FOB live prices were $174-$175/cwt. in all regions which was $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 were $275, which was $5 lower in Nebraska and $3-$5 lower in the western Corn Belt.

Estimated total cattle slaughter last week of 635,000 head was 97,000 head more than the previous holiday-shortened week but 25,000 head fewer than the same week last year. Estimated year-to-date cattle slaughter of 29.8 million head was 1.5 million head fewer (-4.7%) than the same time last year. Estimated year-to-date beef production of 24.5 billion pounds was 1.4 billion pounds less (-5.3%).

Grain futures edged higher Friday with likely short covering.

Corn futures closed mostly 1¢ to 2¢ higher.

KC HRW Wheat futures closed mostly 2¢ to 4¢ higher.

Soybean futures closed mostly 10¢ to 17¢ lower through Aug ’24 , as traders took back some of the weather premium, given the wetter outlook in Brazil.

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Major U.S. financial indices closed higher Friday on declining Treasury yields and continued investor optimism that the Fed is done raising interest rates.

The Dow Jones Industrial Average closed 294 points higher. The S&P 500 closed 26 points higher. The NASDAQ was up 78 points.

West Texas Intermediate Crude Oil futures (CME) closed $1.43 to $1.89 lower through the front six contracts.

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Livestock, poultry, and dairy exports for Fiscal Year (FY) 2024 were forecast $1.3 billion lower to $36.3 billion, compared to the previous quarterly report, according to USDA’s latest Outlook for U.S. Agricultural Trade.

Beef exports were projected $300 million lower to $8.2 billion based on reduced supplies as herd contraction lowers domestic production.

Total U.S. agricultural exports in FY 2024 were projected at $169.5 billion, down $2.5 billion from the August forecast. The revision was primarily driven by reductions in grain and feed, as well as livestock, poultry, and dairy exports.

On the other side of the balance sheet, FY 2024 livestock, poultry, and dairy imports were forecast $500 million higher than the August Outlook to $27.0 billion as increased beef, pork, and dairy imports far exceed lower poultry imports. Beef imports were forecast $400 million higher to $8.9 billion as tight domestic supplies are expected to encourage increased imports.

For context, global real Gross Domestic Product (GDP) growth was forecast to slow from 3.5% in calendar year (CY) 2022 to 3.0% percent in CY 2023 and 2.9% in CY 2024.

“The global and domestic economies continue to grow and recover from escalations in the cost of living. However, economic growth is hindered by wars in Ukraine and the Middle East, slower economic growth projections for China, and tight monetary policies,” according to analysts with USDA’s Economic research Service and Foreign Agricultural Service. “Despite these challenges, economic growth continues for many countries, though gains have been uneven.”

Domestically, analysts note the U.S. economy continues to outperform forecasts, lowering concerns about recession.

“Forecast growth for the United States’ real GDP in CY 2023 is 2.1%. CY 2024 growth is forecast at 1.5%, up from the previous 1.0% forecast,” analysts say. “This adjustment is supported by resilient consumer spending and a strong labor market. Inflation continues above targets set by the U.S. Federal Reserve.”

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%.”