WLI

Cattle futures have plenty of distance to cover before making up the ground lost in the previous two trading sessions, but they made a strong start with Tuesday’s rally as buyers were likely attracted by the extremely oversold conditions.

Feeder Cattle futures closed an average of $7.29 higher, including limit-up $8.25 in spot Jan.

Live Cattle futures closed an average of $3.44 higher ($2.87 to $4.20 higher).

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

So far this week, FOB live sales are $2 lower in the Texas Panhandle at $175/cwt.

Last week, FOB live prices were $177 in the Southern Plains, $176 in Nebraska on light trade and $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 92¢ higher Tuesday afternoon at $298.17/cwt. Select was $1.45 lower at $266.35/cwt.

Soybean futures closed 10¢ to 16¢ higher.

Corn futures closed narrowly mixed, mostly fractionally lower to 1¢ higher.

KC HRW Wheat futures closed mostly 17¢ to 19¢ higher.

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Major U.S. financial indices drifted higher Tuesday on hopes the Fed may be done raising interest rates.

The Dow Jones Industrial Average closed 83 points higher. The S&P 500 closed 4 points higher. The NASDAQ was up 40 points.

West Texas Intermediate Crude Oil futures (CME) closed $1.32 to $1.55 higher through the front six contracts.  

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Creighton University’s Rural Mainstreet Index (RMI) sank below growth neutral for the third consecutive month in November to its lowest level in more than three years. It declined 4 points from the previous month to 40.4. It was 49.5 in September.

“This is the weakest recorded reading since June 2020, shortly after the beginning of the pandemic and points to weaker farm and non-farm economies,” says Ernie Goss, the Jack A. MacAllister Chair in Regional Economics at Creighton University’s Heider College of Business.

The index ranges between 0 and 100, with a reading of 50.0 representing growth neutral. The RMI is based on a monthly survey of bank CEOs in rural areas of a 10-state region dependent on agriculture and/or energy.

“Higher interest rates, deposit outflows and a slowing farm economy over the past several months continued to constrain the business confidence index to a record low 21.2 from 24.1 in October,” Goss explains. “This month’s reading is the most negative outlook recorded since Creighton began the monthly survey in January 2006.” He adds that approximately 57.7% of bankers expect economic conditions to worsen in the next six months.

Among other highlights…

• For the fifth time in the past six months, farm equipment sales declined.
• Approximately 84.5% of bankers urged the Federal Reserve to make no changes to interest rates at its next meetings in December.
• Approximately 88.5% of bank CEOs reported that available jobs outnumbered available workers in their local economy.

The Cattle Futures exodus that began Friday continued on Monday with a similar degree of momentum, likely exacerbated by month-end positioning.

Feeder Cattle futures closed an average of $6.02 lower ($4.72 to $6.52 lower). That’s an average of $12.28 lower in the past two trading sessions.

Live Cattle futures closed an average of $2.52 lower, down an average of $6.27 in the last two sessions.

Negotiated cash fed cattle trade ranged from limited on light demand to a standstill through Monday afternoon, according to the Agricultural Marketing Service. Although too few transactions to trend, there were some early FOB live trades in the Southern Plains and the western Corn Belt at $175/cwt.

Last week, FOB live prices were $1 lower in the Southern Plains at $177, $2 lower in Nebraska at $176 on light trade and steady to $3 lower in the western Corn Belt at $175-$178. Dressed delivered prices were mostly $2 lower in Nebraska at mainly $280 and $2-$4 lower in the western Corn Belt at $278-$280.

The weighted average five-area direct FOB live steer price last week was 87¢ lower at $176.99/cwt. The weighted average dressed delivered steer price was $1.76 lower at $280.09.

Choice boxed beef cutout value was 78¢ lower Monday afternoon at 297.25/cwt. Select was 96¢ lower at $267.80.

Grain futures closed lower amid a commodity-wide sell-off.

Corn futures closed mostly 5¢ to 7¢ lower.

Kansas City Wheat Futures closed 10¢ to 15¢ lower.

Soybean futures closed narrowly mixed but mostly fractionally higher.

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Major U.S. financial indices edged lower Monday.

The Dow Jones Industrial Average closed 56 points lower. The S&P 500 closed 8 points lower. The NASDAQ was down 9 points.

West Texas Intermediate Crude Oil futures (CME) closed 48¢ to 68¢ lower through the front six contracts. 

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Based on beef cow slaughter so far this year, the beef cow inventory at the beginning of next year is likely to be at least 2.5% less year over year, says Derrell Peel, Extension livestock marketing specialist in his weekly market comments.

“The available supply of bred heifers (heifers expected to calve), combined with beef cow culling this year will determine the change in the beef cow inventory this year,” Peel says. “From the beginning of the year, the supply of bred heifers meant that beef cow slaughter in 2023 would have to decrease sharply — in excess of 18% year over year — in order to avoid additional herd liquidation this year. Cumulative beef cow slaughter reached a maximum year-over-year decrease of 13.8% in early September, a significant decrease, but not enough to prevent additional herd liquidation. The July Cattle report confirmed that the beef cow herd was down by 2.6% from 2022 levels by mid-year.”

Peel points out the beef cow inventory of 28.9 million head at the beginning of this year were 3.6% less than the previous year and the fewest since 1962. More importantly, he says the inventory of beef replacement heifers at the time — 5.16 million head — was 5.8% less year over year. Replacement heifers and heifers expected to calve were the fewest since 2011.

Moreover, Peel notes the inventory of heifers available for breeding (total replacement heifer inventory minus heifers expected to calve) at the beginning of the year was the fewest in 23 years of available data.

“It seems likely that the available supply of bred heifers will remain limited in 2024.  The beef cow herd will be smaller in 2024 and holding the inventory stable next year may be the most likely outcome,” Peel says.

Keeping in mind the holiday-shortened week and the abbreviated session to end the week, Cattle futures took a steep step lower Friday, pressured by lower cash fed cattle prices, light trade and apparent technical selling.

Feeder Cattle futures closed an average of $6.66 lower ($5.62 to $6.80 lower).

Live Cattle futures closed an average of $3.75 lower.

Negotiated cash fed cattle trade ranged from light on light demand to a standstill through Friday afternoon, according to the Agricultural Marketing Service.

Based on the last established trade for the week, FOB live price were $1 lower in the Southern Plains at $177/cwt. and steady to $1 lower in the western Corn Belt at $177-$178. Dressed delivered prices were $7 lower in Nebraska at $275.

The previous week, FOB live prices in Nebraska were $178 and dressed delivered prices in the western Corn Belt were $282.

Choice boxed beef cutout value was $1.03 higher Friday afternoon at $298.03/cwt. Select was $1.14 higher at $268.76/cwt.

Estimated total cattle slaughter last week of 538,000 head was 98,000 head fewer than the previous week and 51,000 head fewer than the same week last year. Year-to-date estimated total cattle slaughter of 29.2 million head was 1.5 million head fewer (-4.7%) than the same time last year. Year-to-date estimated beef production of 24.0 billion lbs. was 1.4 billion lbs. less (-5.4%).

Net U.S. 2023 beef export sales for the week ending Nov. 16 were 10,000 metric tons, which was 12% more than the previous week but 30% less than the prior four-week average. Increases primarily were for China, Hong Kong, South Korea, Japan and Mexico.

Traders doused the weather premium in Soybean futures on Friday with the wetter forecast in Brazil, taking the grain complex along for the wide.

Soybean futures closed 20¢ to 25¢ lower through Jan ’25 and then 14¢ to 18¢ lower.

Corn futures closed mostly 2¢ to 5¢ lower.

KC HRW Wheat futures closed mostly 9¢ to 12¢ lower.

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Major U.S. financial indices closed mostly higher Friday, led by retail stocks as the holiday season begins.

The Dow Jones Industrial Average closed 117 point higher. The S&P 500 closed 2 points higher. The NASDAQ was down 15 points.

West Texas Intermediate Crude Oil futures (CME) closed $1.22 to $1.56 lower through the front six contracts. 

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Choice wholesale beef prices found some seasonal footing last week with the cutout value $4.16 higher week to week on Friday at $298.03/cwt. Select was $1.94 lower at $268.76.

“The demand index for beef appears to be resetting closer to pre-pandemic levels but may lose further ground as price increases are expected to continue in the next few years,” say analysts with the Livestock Marketing Information Center (LMIC) in the latest Livestock Monitor.

LMIC’s demand index for all fresh beef was 115 in the second quarter of 2023, slightly higher than 111 in 2019, but lower than 2020-22. LMIC analysts note a similar trend for the third quarter an index value of 110. That was in line with the same time in 2014 but has declined every year since 2020.

“Pork demand has been more inconsistent in recent years, surging to a 20-year high in 2019 and then out-pacing that high again in 2022,” LMIC analysts say. “However, the years in between have seen it drop back to levels seen over the most recent decade.”

Cattle futures closed lower Wednesday, following early support, amid light pre-holiday trade and positioning.

Feeder Cattle futures closed an average of $1.14 lower (67¢ to $1.22 lower).

Live Cattle futures closed an average of 48¢ lower.

Negotiated cash fed cattle trade was light to moderate on light to moderate demand in the Southern Plains through Wednesday afternoon, according to the Agricultural Marketing Service. FOB live prices were $1 lower at $177/cwt.

In Nebraska, trade was slow on light demand with dressed delivered prices $2 lower at $282. FOB live prices last week were $178.

Trade was also slow on light demand in the western Corn Belt with too few transactions to trend. Last week, FOB live prices were $178 and dressed prices were $282.

Choice boxed beef cutout value was $1.19 higher Wednesday afternoon at $297.00/cwt. Select was $1.15 lower at $267.62/cwt.

Soybean futures closed 15¢ to 20¢ lower through Aug ’24 and then 8¢ to 12¢ lower on likely profit taking.

Corn futures closed mostly 1¢ lower.

KC HRW Wheat futures closed narrowly mixed — unchanged to 1¢ lower through Sep ’24 and then mostly 1¢ to 2¢ higher.

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Major U.S. financial indices closed higher Wednesday, bolstered by softer Treasury yields.

The Dow Jones Industrial Average closed 184 points higher. The S&P 500 closed 18 points higher. The NASDAQ was up 65 points.

West Texas Intermediate Crude Oil futures (CME) closed 65¢ to 67¢ lower through the front six contracts. 

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Although historically high, cattle prices have yet to yield enough profit to trigger national herd expansion, according to James Mitchell, Extension livestock economist at the University of Arkansas in a recent issue of Cattle Market Notes Weekly.

Mitchell explains relative profitability is one of the key differences between low cattle numbers currently and the similar situation in 2014-15.

“The Livestock Marketing Information Center (LMIC) estimates 2023 cash costs at $1,088 per cow, which implies a breakeven price of $218/cwt. for a 500-pound steer. In 2014, cow costs were $879, resulting in a breakeven price of $176/cwt.,” Mitchell explains. “Enterprise budgets and cattle markets in 2023 are projecting a profit for cow-calf producers. However, relative profitability still needs to improve before seeing herd expansion on a noticeable scale.”

Moreover, Mitchell points to drought as perhaps the most important difference between today and 2014-2015. Back then, 20% of the nation’s cattle inventory were in drought areas at the end of October. This year, he notes 37% were impacted by drought.

“Other differences are due to a cattle industry that has undergone significant structural change since 2014,” Mitchell says.

Cattle futures softened Tuesday with limited interest and light trade.

Live Cattle futures closed an average of 33¢ lower, except for unchanged in away Dec.

Feeder Cattle futures closed an average of 94¢ lower (45¢ to $1.52 lower)

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

Last week, FOB live prices were $178/cwt. in all regions and dressed prices were $282.

Choice boxed beef cutout value was 6¢ higher Tuesday afternoon at $295.81/cwt. Select was $2.18 lower at $268.77/cwt.

Soybean futures closed mostly 7¢ to 11¢ higher, leading grains higher.

Corn futures closed mostly 1¢ to 2¢ higher.

KC HRW Wheat futures closed 4¢ to 6¢ higher.

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Major U.S. financial indices closed lower Tuesday, pressured by weaker retail sales and hawkish comments from the Federal Reserve regarding interest rates.

“Risks around the inflation forecast were seen as skewed to the upside, given the possibility that inflation might prove to be more persistent than expected or that additional adverse shocks to supply conditions might occur,” according to minutes from the last FOMC meeting. “… Participants noted that further tightening of monetary policy would be appropriate if incoming information indicated that progress toward the Committee’s inflation objective was insufficient.”

The Dow Jones Industrial Average closed 62 point lower. The S&P 500 closed 9 points lower. The NASDAQ was down 84 points.

West Texas Intermediate Crude Oil futures (CME) closed marginally mixed through the front six contracts. 

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Global beef trade is in the midst of transition as weather and cattle cycles drive beef production lower in the United States and higher in the Southern Hemisphere, according to a new Rabobank report.

Domestically, beef cow herd liquidation continues, fueled by drought and strong cattle prices. As production declines, Angus Gidley-Baird, Rabobank senior analyst, animal protein, explains exports will decline while the need for imports increase. Rabobank anticipates a 4.5% contraction in domestic beef production and a 3% decrease in consumption next year, amplifying the nation’s status as a net beef importer.

Conversely, beef production is rising in Australia, due to the cattle cycle there, drier conditions and liquidation of surplus stock, according to the report. Brazilian beef production also continues to increase. Gidley-Baird explains increased beef production from these and other countries will not offset production declines in Canada and the U.S.

“The volume balance for the major beef producing and consuming regions of the world (that we track) will remain relatively constant in 2024,” says Gidley-Baird.

Meanwhile, Rabobank expects aggregated consumption levels to drop by 1%, with gains in countries such as China, South Korea, and Brazil unable to offset declines in countries like Canada and the U.S.