WLI

Cattle futures extended gains Monday, supported by stronger cash fed cattle prices late last week and more positive outside markets.

Feeder Cattle futures closed an average of 68¢ higher.

Live Cattle futures closed an average of 88¢ higher (12¢ higher in spot Oct to $1.30 higher at the back).

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 $184-$185/cwt., steady to $4 lower in Nebraska at $183-$186 and $2-$3 lower in the western Corn Belt at $183-$185. Dressed delivered prices were mainly $4 lower at $290.

The weighted average five-area direct FOB fed steer price was $2.12 lower at $184.02. The weighted average dressed delivered steer price was $3.51 lower at $290.06.

Choice boxed beef cutout value was $1.71 higher Monday afternoon at $309.28/cwt. Select was 77¢ higher at $280.89/cwt.

Corn futures closed lower Monday on likely month-end profit taking. They were 2¢ lower through new crop contracts and then fractionally higher to 2¢ higher.

KC HRW Wheat closed mostly 1¢ higher.

Soybean futures closed 7¢ to 14¢ lower.

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Major U.S. financial indices bounced back Monday on presumably oversold conditions and positioning ahead of this week’s Fed meeting.

The Dow Jones Industrial Average closed 511 points higher. The S&P 500 closed 49 points higher. The NASDAQ was up 146 points.

West Texas Intermediate Crude Oil futures (CME) closed $2.48 to $3.23 lower through the front six contracts. 

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Although less than the previous month — due to weaker expected fed cattle prices — projections are mainly positive for cattle feeding returns through June of next year, based on the latest Historical and Projected Kansas Feedlot Net Returns.

For October through June, net returns for steers are projected to be positive in six months — from $46.48 per head in March to $233.93 in November. Feedlot cost of gain for those months ranges from $110.74/cwt. in May to $133.02 in October.

Negative steer returns are projected in three months, from -$28.22 per head in April to -$2.91 in June. Projected feedlot cost of gain for those months ranges from $108.43 to $119.29.

Keep in mind that estimates assume no price risk management.

Projections follow a similar pattern for fed heifers with positive returns estimated for October through June, except for one month. During the period, positive returns range from $25.94 per head in June to $190.97 in October. Feedlot cost of gain expectations range from $115.67/cwt. in June to $142.24 in October. A negative return of $2.97 per head is projected in April with a feedlot cost of gain of $119.50.

Cattle futures closed higher Friday with likely positioning, helped along by stronger cash fed cattle prices as the week wore on.

Feeder Cattle futures closed an average of 51¢ higher, except for 32¢ lower in newly minted away Oct. However, they were an average of $9.06 lower week to week.

Live Cattle futures closed an average of $1.60 higher on Friday (35¢ to $2.92 higher). They were an average of $3.84 lower week to week.

Negotiated cash fed cattle trade and demand were moderate in the Southern Plains on Friday, according to the Agricultural Marketing Service. FOB live prices were $185/cwt., which was steady in the Texas Panhandle and steady to $1 higher in Kansas.

Elsewhere, trade was slow on moderate demand. Although too few to trend, there were some FOB live trades in Nebraska at $186 and a few in the beef at $290-$292.

Established FOB live prices for the week in Nebraska and the western Corn Belt were $2-$3 lower at $183-$185. Dressed delivered prices were $4 lower at $290.

Choice boxed beef cutout value was 72¢ higher Friday afternoon at $307.57/cwt. Select was 43¢ higher at $280.12/cwt.

Estimated total cattle slaughter last week of 636,000 head was 2,000 head fewer than the previous week and 31,000 head fewer than the same week last year. Year-to-date estimated total cattle slaughter of 26.8 million head was 1.3 million head fewer (-4.6%) than the same time last year. Year-to-date estimated beef production of 21.9 billion pounds was 1.2 billion pounds less (-5.2%).

Net U.S. beef export sales of 17,400 metric tons (2023) for the week ending Oct. 19 were up noticeably from the previous week and up 72% from the prior four-week average, according to USDA’s weekly Export Sales report. Increases primarily were for South Korea, China, Japan, Hong Kong and Taiwan.

Turning to row crops, Corn futures closed 1¢ to 3¢ higher. KC HRW Wheat closed mostly 2¢ to 6¢ lower. Soybean futures closed 14¢ to 19¢ higher.

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Major U.S. financial indices mostly closed lower Friday. Besides week-end squaring, investors appeared to be rattled about higher third-quarter GDP and consumer spending than expected, and how that may push the Fed to raise interest rates further.

The Dow Jones Industrial Average closed 366 points lower. The S&P 500 closed 19 points lower. The NASDAQ was up 47 points.

West Texas Intermediate Crude Oil futures (CME) closed $1.63 to $2.33 higher through the front six contracts.

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Total pounds of beef in freezers Sept. 30 were 6% more than the previous month but 20% less than last year, according to the latest USDA Cold Storage report. Analysts with the Livestock Marketing Information Center (LMIC) say the year-over-year reduction was driven by similar declines in both boneless and beef cuts.

“Beef stores have failed to follow the normal seasonal trend of building substantially after June and are 55 million pounds behind the five-year average. If this trend continues, then it will likely allow wholesale meat values to rise,” LMIC analysts explain, in the latest Livestock Monitor. “However, USDA NASS’s Cold Storage report does not provide a product breakout, so the increases may not be evenly distributed across product types.”

Frozen pork supplies were down 1% from the previous month and down 14% from the previous year.

Total red meat supplies in freezers were up 2% from the previous month but were 17% less than the same time last year.

Total frozen poultry supplies were down 1% from the previous month and slightly less than a year earlier.

Cattle futures closed mostly lower Thursday, following stronger support early in the session.

Feeder Cattle futures closed an average of $1.56 lower, except for 57¢ higher in expiring Oct. 

Live Cattle futures closed an average of 72¢ lower, (10¢ to $1.10 lower) except for 57¢ higher in waning spot Oct.

Negotiated cash fed cattle trade was slow on light to moderate demand through Thursday afternoon, according to the Agricultural Marketing Service. Although too few to trend in any region, there were some FOB live trades in the Southern Plains at $183/cwt., in Nebraska at $183-$185 and in the western Corn Belt $183.

In established trade so far this week, FOB live prices are $2-$3 lower in the western Corn Belt at $183-$185. Dressed delivered prices are $4 lower in Nebraska and the western Corn Belt at $290.

Last week, FOB live prices were $184-$185/cwt. in the Southern Plains and $186-$187 in Nebraska.

Choice boxed beef cutout value was 65¢ lower Thursday afternoon at 306.85/cwt. Select was $1.97 lower at $279.69/cwt.

Corn futures closed mostly fractionally lower to 1¢ lower.

Soybean futures closed 7¢ to 8¢ lower through Jly ‘24 and then mostly 2¢ lower to fractionally higher.

KC HRW Wheat closed 3¢ to 5¢ higher.

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Major U.S. financial indices closed lower Thursday, led by tech stocks.

The Dow Jones Industrial Average closed 251 points lower. The S&P 500 closed 49 points lower. The NASDAQ was down 225 points.

West Texas Intermediate Crude Oil futures (CME) closed $1.69 to $2.18 lower through the front six contracts.

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Global agricultural commodity prices this year are projected lower year over year but higher than the previous decade, according to the Baseline Update for International Agricultural Markets from the Food and Agricultural Policy Research Institute (FAPRI) at the University of Missouri.

“Many international commodity market prices surged in 2022. So far in 2023 prices have fallen in most cases, sometimes significantly as input costs have fallen, production recovered in key areas, and uncertainty regarding China’s economy weigh on the sector,” FAPRI analysts explain.

FAPRI projects global growth in real GDP for this year near 2.4% and below 3% for the remainder of the 7-year projection period.

“Inflation is expected to come under control and return to close to pre-COVID levels from 2024,” FAPRI analysts say. “Volatility in these markets in the near term is to be expected and it is important to note that the path these markets take will be more unpredictable than what is projected here (in the report). Furthermore, the numbers presented in this report should not be interpreted as forecasts but as projections.”

Cattle futures gained Wednesday, with apparent technical support, continued bullish long-term fundamentals and continued erosion in Corn futures.

Feeder Cattle futures closed an average of $1.47 higher (55¢ to $2.62 higher). 

Live Cattle futures closed an average of 60¢ higher (32¢ higher at the back to $1.12 higher in spot Oct).

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

So far this week, FOB live prices are $2-$3 lower in the western Corn Belt at $183-$185/cwt., and dressed delivered prices are $4 lower in Nebraska at $290 in a light test.

Last week, FOB live prices were $184-$185/cwt. in the Southern Plains and $186-$187 in Nebraska. Dressed delivered prices were $294.

Choice wholesale beef prices continued the seasonal turn higher. Choice boxed beef cutout value was $1.52 higher Wednesday afternoon at 307.50/cwt. Select was $2.34 lower at $281.66/cwt.

Corn futures closed mostly 2¢ to 3¢ lower.

Soybean futures closed mostly 2¢ to 7¢ lower.

KC HRW Wheat closed mostly 8¢ to 14¢ lower.

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Major U.S. financial indices closed lower Wednesday, pressured by disappointing quarterly earnings from Alphabet and resurgent 10-year Treasury yields.

The Dow Jones Industrial Average closed 105 points lower. The S&P 500 closed 60 points lower. The NASDAQ was down 318 points.

West Texas Intermediate Crude Oil futures (CME) closed $1.65 to $1.72 higher through the front six contracts.

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Food insecurity in the United States increased year over year in 2022, according to the recently published Household Food Security in the United States in 2022 from USDA’s Economic Research Service (ERS).

Last year, 12.8% of U.S. households (17 million) were food insecure at some time during the year, meaning they had difficulty providing enough food for all their members because of a lack of resources, according to the report. In 2021, the number was 10.2%. It was 10.5% in 2020.

Moreover, 5.1% of U.S. households experience very low food security in 2022, compared to 3.8% in 2021 and 3.9% in 2020. Very low food security means the food intake of some household members was reduced and normal eating patterns were disrupted.

“The 2022 Household Food Security in the United States report is a sobering reminder that, while the vast majority of Americans are able to affordably feed themselves and their families, too many of our neighbors struggle to put healthy food on the table,” says Tom Vilsack, U.S. Agriculture Secretary. “These numbers are more than statistics. They paint a picture of just how many Americans faced the heartbreaking challenge last year of struggling to meet a basic need for themselves and their children.”

The typical (median) food-secure household spent 15% more on food than the typical food-insecure household of the same size and composition, according to the report. Estimates include food purchases with Supplemental Nutrition Assistance Program (SNAP) benefits.

“About 55% of food-insecure households in the survey reported that in the previous month, they participated in one or more of the three largest Federal nutrition assistance programs,” according to the report. Those programs are: SNAP; the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC); the National School Lunch Program.

Cattle futures found some stability following the previous session’s massive selloff but still eased mostly lower as early support faded.

Feeder Cattle futures closed an average of 52¢ lower, except for $1.80 higher in spot Oct and an average of 49¢ higher in the back two contracts.

Live Cattle futures closed mixed, from an average of 29¢ lower in four contracts to an average of 51¢ higher (12¢ to $1.75 higher).

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

Established FOB live prices in the western Corn Belt are $183-$185/cwt., which is $2-$3 lower than last week.

Last week, FOB live prices were $184-$185/cwt. in the Southern Plains and $186-$187 in Nebraska. Dressed delivered prices were $294.

Choice boxed beef cutout value was $1.44 higher Tuesday afternoon at 305.98/cwt. Select was $2.98 higher at $284.00/cwt.

Corn futures closed mostly 4¢ to 6¢ lower with harvest pressure.

Soybean futures closed 5¢ to 9¢ higher through Aug ‘24 and then 1¢ to 3¢ higher.

KC HRW Wheat closed 7¢ to 9¢ lower.

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Major U.S. financial indices closed higher Tuesday, helped along by stronger quarterly earnings than expected from the likes of Coca-Cola and Spotify.

The Dow Jones Industrial Average closed 204 points higher. The S&P 500 closed 30 points higher. The NASDAQ was up 120 points.

West Texas Intermediate Crude Oil futures (CME) closed 97¢ to $1.75 lower through the front six contracts.    

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Along with the continued high percentage of heifers on feed, Derrell Peel, Extension livestock marketing specialist at Oklahoma State University notes the continued pace of beef cow slaughter.

“Monthly slaughter data through September shows that total female (cow + heifer) slaughter has averaged 51.8% of total cattle slaughter for the past twelve months,” Peel explains, in his weekly market comments. “This is the highest 12-month average female slaughter percentage since August 1986 … Year-to-date beef cow slaughter is down 12.9% from last year but will still result in a net culling rate over 11.5%, indicating continued liquidation. The beef cow herd will be smaller in January 2024, and it increasingly looks like the best that could happen in 2024 is to stabilize the herd with significant growth delayed until 2025 or beyond.”  

In sum, Peel explains smaller beef cow inventories are ahead, along with more dramatic reductions in cattle slaughter and beef production – and higher cattle prices – when herd rebuilding takes flight.

“This process looks to continue into 2026 at least,” Peel says. “The latest Cattle on Feed report may be taken as bearish for cattle markets in the short term, but it is certainly bullish for cattle markets in the coming years.”