WLI

Cattle futures gapped lower Monday with apparent nervousness about the inability of boxed beef prices to catch a strong seasonal grip and chatter about declining long fund positions.

Feeder Cattle futures closed an average of $3.39 lower.

Live Cattle futures closed an average of $2.64 lower.

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

Last week, FOB live prices were steady to $1 higher in the Southern Plains at $185/cwt., Prices in the North were also $185, at the upwards end of the previous week’s trading range. Dressed delivered prices were $2 higher at $292.

Choice boxed beef cutout value was 62¢ lower Monday afternoon at $301.72/cwt. Select was $1.65 lower at $270.36/cwt.

Turning to row crops, Soybean futures closed 11¢ to 13¢ higher through Aug ‘24  Monday with follow-through support from bearish weather forecasts in South America.

Corn futures closed mostly unchanged to fractionally higher.

KC HRW Wheat closed mostly 1¢ to 2¢ higher.

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Major U.S. financial indices edged higher Monday with follow-through support from last week’s steamy gains.

The Dow Jones Industrial Average closed 34 points higher. The S&P 500 closed 7 points higher. The NASDAQ was up 40 points.

West Texas Intermediate Crude Oil futures (CME) closed 31¢ to 63¢ higher through the front six contracts.

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Domestic consumer beef demand continues strong despite historically high prices.

In fact, Derrell Peel, Extension livestock marketing specialist at Oklahoma State University says post-pandemic beef demand has been exceptional since 2021 with per capita beef consumption last year of 58.9 pounds, which was equal to 2021.

Moreover, in his weekly market comments, Peel points out inflation-adjusted retail all-fresh beef prices were record high in 2021 and just slightly lower in 2022. By way of comparison, he notes the all-fresh beef price in 2015 was similar to 2021-22 but per capita beef consumption back then was 8.3% less at 54.0 pounds.

So far this year, Peel says retail all-fresh beef prices continue increasing and reached a new record monthly high in September at $7.82 per pound.

“There are certainly plenty of macroeconomic and geopolitical uncertainties to keep the industry nervous about beef demand,” Peel says. “However, the increasingly high quality and consumer preferences for beef continue to be reflected in strong beef demand. These factors, combined with tightening beef supplies, will keep wholesale and retail beef prices strongly supported in the coming months.”

Cattle futures closed lower Friday on likely profit taking and week-end positioning.

Feeder Cattle futures closed an average of $1.74 lower (80¢ to $2.42 lower). However, they were an average of $3.89 higher week to week ($3.45 to $5.02 higher).

Live Cattle futures closed an average of 59¢ lower on Friday (37¢ to $1.20 lower). They gained back a lion’s share of the previous week’s losses, closing an average of $3.19 higher week to week on Friday ($1.65 higher at the front to $3.92 higher at the back).

Soybean futures rallied Friday on bearish weather reports in South America, leading Corn and Wheat futures higher.

Soybean futures closed 19¢ to 24¢ higher through Nov ‘24 and then 10¢ to 17¢ higher.

Corn futures closed mostly 5¢ to 7¢ higher.

KC HRW Wheat closed mostly 2¢ higher.

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

Although too few to trend, there were some FOB live prices at $185/cwt. in Nebraska and the western Corn Belt, and a few dressed delivered at $292.

The previous week, FOB live prices were $185/cwt. in the Southern Plains, $183-$186 in Nebraska and mostly $183-$184 in the western Corn Belt. Dressed delivered prices were $290.

Choice boxed beef cutout value was $2.19 lower Friday afternoon at $302.34/cwt. Select was $2.33 lower at $272.01/cwt.

Estimated total cattle slaughter last week was 4,000 head fewer than the previous week at 632,000 head, which was 32,000 head fewer year over year. Estimated total year-to-date cattle slaughter of 27.4 million was 1.3 million head fewer (-4.6%). Estimated year-to-date beef production of 22.5 billion pounds was 1.2 billion pounds less (-5.2%) than the same time last year.

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Major U.S. financial indices extended gains with fewer month-to-month employment gains than expected.

Total nonfarm employment increased by 150,000 in October, leaving the unemployment rate little changed at 3.9%. Average hourly earnings for all employees on private nonfarm payrolls rose by 7¢ to $34.00. Over the past 12 months, average hourly earnings have increased by 4.1%.

The Dow Jones Industrial Average closed 222 points higher. The S&P 500 closed 40 points higher. The NASDAQ was up 184 points.

West Texas Intermediate Crude Oil futures (CME) closed $1.57 to $1.95 lower through the front six contracts.

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USDA’s Economic Research Service (ERS) forecasts total cash labor expenses for U.S. agriculture at $43.35 billion this year. That would be 1.8% more than last year.

“The projected 2023 level would remain below the high set in 2017 in inflation-adjusted labor expenses,” say ERS analysts. “… For every $100 spent on production expenses, almost $10 goes toward labor. Total labor expenses include contract and hired labor payments but exclude non-cash employee compensation.”

Feeder Cattle led Live Cattle futures higher Thursday, supported by renewed trader interest, recently oversold conditions and stronger outside markets.

Feeder Cattle futures closed an average of $3.93 higher.

Live Cattle futures closed an average of $1.43 higher.

Negotiated cash fed cattle trade was at a standstill in all major cattle feeding regions through Thursday afternoon, with too few transactions to trend, according to the Agricultural Marketing Service.

Last week, FOB live prices were $185/cwt. in the Southern Plains, $183-$186 in Nebraska and $183-$185 in the western Corn Belt. Dressed delivered prices were $290.

Choice boxed beef cutout value was $2.35 higher Thursday afternoon at $304.53/cwt. Select was $4.21 lower at $274.34/cwt.

Net U.S. beef export sales of 17,100 metric tons for 2023, for the week ending Oct. 26, were 2% less than the previous week, but 71% more than the prior four-week average. Increases were primarily for China, Japan, Taiwan, South Korea and Canada.

Corn futures closed 2¢ to 5¢ lower through Sep ‘24 and then mostly fractionally lower.

KC HRW Wheat closed mostly 2¢ higher.

Soybean futures closed 11¢ to 13¢ higher through Sep ‘24 and then 9¢ higher.

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Major U.S. financial indices rallied higher Thursday with increasing investor confidence the Fed may be done raising interest rates this year. Declining Treasury Note yields and weaker labor data underscored the optimism.

Unit labor costs of nonfarm labor decreased 0.8% in the third quarter, according to the U.S. Department of Labor. As well, weekly initial unemployment insurance claims increased 5,000 to 217,000, which was more than expected.

The Dow Jones Industrial Average closed 564 points higher. The S&P 500 closed 79 points higher. The NASDAQ was up 232 points.

West Texas Intermediate Crude Oil futures (CME) closed $2.01 to $2.07 higher through the front six contracts.

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Drought conditions continue to improve nationwide, according to the latest U.S. Drought Monitor. As of Oct. 31, 36.5% of the continental United States was enduring one degree of drought or another, compared to 62.8% a year earlier, but 28.1% three months earlier.

Snubbed to a different post, 37% of the nation’s cattle were in areas affected by drought Oct. 31, compared to 76% a year earlier.

However, drought lingers and expands in some areas. According to the latest weekly USDA Crop Progress report for the week ending Oct. 29, the states with 50% or more of pasture and range rated as Poor or Very Poor included: Kansas (55%), Louisiana (61%), Minnesota (52%), Mississippi (61%), Missouri (52%), Oregon (50%), South Carolina (52%), Texas (62%) and Washington (69%).

As for row crops, 71% of corn was in the bin compared to 74% a year earlier and 66% for average. Similarly, 85% of soybeans were harvested, which was 2% less year over year but 7% more than the five-year average.

Cattle futures closed higher Wednesday amid growing open interest and thoughts cash fed cattle prices will gain this week.

Feeder Cattle futures closed an average of 88¢ higher (57¢ to $1.27 higher).

Live Cattle futures closed an average of 71¢ higher (7¢ to $1.20 higher).

Negotiated cash fed cattle trade ranged from mostly inactive on light demand to a standstill in all major cattle feeding regions through Wednesday afternoon, with too few trades to trend, according to the Agricultural Marketing Service.

Last week, FOB live prices were $185/cwt. in the Southern Plains, $183-$186 in Nebraska and $183-$185 in the western Corn Belt. Dressed delivered prices were $290.

Choice boxed beef cutout value was $3.00 lower Wednesday afternoon at $302.18/cwt. Select was 95¢ lower at $278.55/cwt.

Corn futures closed 1¢ to 3¢ lower. KC HRW Wheat closed mostly 5¢ to 8¢ higher. Soybean futures closed mostly 1¢ to 4¢ higher.

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Major U.S. financial indices continued higher Wednesday, buoyed by the Fed’s decision to hold interest rates steady.

The Dow Jones Industrial Average closed 221 points higher. The S&P 500 closed 44 points higher. The NASDAQ was up 210 points.

West Texas Intermediate Crude Oil futures (CME) closed 24¢ to 58¢ lower through the front six contracts. 

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Recent heavy moisture is propping up wheat pasture prospects in key states.

For instance, in Oklahoma, Darrell Peel, Extension livestock marketing specialist at Oklahoma State University says, “In recent extension meetings, many producers have indicated that they expect to have wheat pasture, if somewhat later than usual, in many cases. Some producers have already purchased stockers, betting on the come, while others will be in the market now.”

Wheat planting overall is running about even with the five-year average, according to the most recent weekly Crop Progress report — 84% planted and 64% emerged. Condition is running ahead of last year with 47% rated Good and Excellent and 18% rated Poor and Very Poor.

“Current cash and futures prices imply a value of gain from November 1 to early March of about $1.50/lb. for a 475-lb. stocker steer,” Peel explains, in his most recent weekly market comments. “Depending on specific cost assumptions, this is about equal to the breakeven for winter grazing, providing returns to wheat pasture and labor but nothing beyond that for the cattle. If Feeder Cattle futures rebound somewhat, as I expect, there may be better opportunities to lock in additional returns in the coming weeks.”

Moreover, Peel says stocker calf prices are unlikely to show any seasonal weakness in the coming weeks, given fewer calves available year over year and stronger wheat pasture demand.

Cattle futures closed mainly higher Tuesday amid choppy trade and following early pressure.

Feeder Cattle futures closed an average of 25¢ higher, except for unchanged and 5¢ lower in two away contracts.

Live Cattle futures closed an average of 75¢ higher, except for 37¢ lower in expiring Oct.

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

Last week, FOB live prices were $185/cwt. in the Southern Plains, $183-$186 in Nebraska and $183-$185 in the western Corn Belt. Dressed delivered prices were $290.

Choice boxed beef cutout value was $4.10 lower Tuesday afternoon at $305.18/cwt. Select was $1.39 lower at $279.50/cwt.

Corn futures closed mostly fractionally higher to 1¢ higher.

KC HRW Wheat closed mostly 12¢ to 15¢ lower.

Soybean futures closed mostly 1¢ to 4¢ higher.

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Major U.S. financial indices continued higher Tuesday as investors closed out the month.

The Dow Jones Industrial Average closed 129 points higher. The S&P 500 closed 26 points higher. The NASDAQ was up 61 points.

West Texas Intermediate Crude Oil futures (CME) closed 79¢ to $1.29 lower through the front six contracts.

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The Rural Mainstreet Index (RMI) sank below growth neutral for the second consecutive month in October, according to the latest survey of bank CEOs in rural areas of a 10-state region dependent on agriculture and/or energy.

Specifically, the overall RMI declined 5.1 month to month to a reading of 44.4. The index ranges between 0 and 100, with a reading of 50.0 representing growth neutral. 

“This is the weakest recorded reading for 2023 and points to weaker farm and non-farm economies,” explains Ernie Goss, Jack A. MacAllister Chair in Regional Economics at Creighton University’s Heider College of Business. “Despite this weakness, only 26.8% of banks reported tightening credit standards for farmers while 34.5% indicated that their bank had tightened credits standards for businesses in their area.”

The region’s farmland price index dropped 9.8 points to 55.6 in October. “Creighton’s survey continues to point to solid, but slowing, growth in farmland prices as farm commodity prices weaken,” Goss says.

According to bankers, these are the greatest challenge to farm and ranch profitability over the next 12 months, in approximate numbers:

          *44.4% named low or falling crop prices.

          *22.2% identified rising or high interest rates.

          *14.8% pointed to rising or high farm input costs.

          *7.4% said it was trade barriers and trade restrictions.

“Regarding the top farm challenge for the next 12 months, it is really the combination of higher interest rates, lower crop prices, high input costs and trade barriers. It would seem that the perfect storm is beginning to fester up,” says Jeff Bonnett, president of Havana National Bank in Havana, Ill.