WLI

Cattle futures and other commodities gained on Monday with the weight of a potential government shutdown averted, if only temporarily. However, Cattle futures closed a ways from session highs.

Feeder Cattle futures closed an average of $1.05 higher.

Live Cattle futures closed an average of 55¢ higher.

Grain and Soybean futures also closed higher Monday, buoyed by the averted government shutdown and new-month positioning.

Corn futures closed mostly 10¢ to 12¢ higher.

KC HRW Wheat closed mostly 11¢ to 12¢ higher.

Soybean futures closed 5¢ to 9¢ higher, except for 2¢ to 4¢ higher in the front four contracts.

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 steady in the Southern Plains at $183/cwt., steady to $1 lower in Nebraska at $184 and $1-$2 lower in the western Corn Belt at $184. Dressed delivered prices were $2 lower at $290.

The five-area direct weighted average steer price last week was $183.64/cwt. on a live basis, which was $1.09 less than the previous week. The weighted average fed steer price in the beef was $1.72 lower at $290.27.

Choice boxed beef cutout value was $2.30 higher Monday afternoon at $303.08/cwt. Select was 94¢ higher at $276.98/cwt.

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Major U.S. financial indices closed mixed Monday despite the reprieve from the government shutdown as investors focused on high interest rates and slow economic growth.

The Dow Jones Industrial Average closed 74 points lower. The S&P 500 closed fractionally higher. The NASDAQ was up 88 points.

West Texas Intermediate Crude Oil futures (CME) closed 63¢ to $1.97 lower through the front six contracts.

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Consumers continue to pay more for increased supplies of higher-grading beef.

Since 1996, Prime-graded beef has moved from just over $5/cwt. to about $15, according to analysts with the Livestock Marketing Information Center (LMIC) in the latest Livestock Monitor.

“Natural premiums are more than $30/cwt. on average. All natural premiums only began to be reported in 2016,” LMIC analysts say. “Interestingly, Certified Angus Beef (CAB) has maintained the least volatility in the premium space compared to the others but has risen substantially in the last two decades but is still not as largely incentivized as Prime. Today’s premium for CAB beef averages just under $5/cwt.”

On the other end of the quality spectrum, discounts for lower quality grades have grown significantly during the same period.

“The average discount for Standard-graded beef has nearly doubled since 1996 and is sitting at almost -$40/cwt.,” according to LMIC. “Select discounts have slightly more than doubled in that timeframe and last week averaged -$21.67/cwt.”

Cattle futures closed lower Friday with traders wary of the looming government shutdown, which was subsequently averted with a temporary spending bill approved on Saturday. Traders were also closing the book on the week, month and quarter.

Feeder Cattle futures closed an average of $2.38 lower. They were an average of $6.21 lower week to week on Friday ($5.97 lower at the back to $8.62 lower toward the front).

Live Cattle futures closed an average of $1.97 lower ($1.57 to $2.50 lower). They were an average of $3.07 lower week to week on Friday. 

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

For the week, FOB live prices were steady in the Southern Plains at $183/cwt., steady to $1 lower in Nebraska at $184 and $1-$2 lower in the western Corn Belt at $184. Dressed delivered prices were $2 lower at $290.

Choice boxed beef cutout value was 73¢ lower Friday afternoon at $300.78/cwt. Select was $1.40 lower at $276.04/cwt.

Total estimated cattle slaughter last week of 612,000 head was 13,000 head fewer than the previous week and 55,000 head fewer than the same week last year. Estimated year-to-date total cattle slaughter of 24.2 million head was 1.1 million head fewer (-4.4%) than the same time last year. Estimated year-to-date beef production of 19.8 billion pounds was 1.1 billion pounds less (-5.2%).

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Major U.S. financial indices closed mostly lower Friday as investors considered the likelihood of a government shutdown.

The Dow Jones Industrial Average closed 158 points lower. The S&P 500 closed 11 points lower. The NASDAQ was up 18 points.

West Texas Intermediate Crude Oil futures (CME) closed 64¢ to 92¢ lower through the front six contracts.

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Grain and Soybean futures closed lower Friday as traders considered a government shutdown, as well as higher soybean and wheat stocks than expected in the quarterly Grain Stocks report (see below).

Corn futures closed 7¢ to 11¢ lower through Jly ‘25 and then 2¢ to 5¢ lower.

KC HRW Wheat closed 10¢ to 21¢ lower through Dec ‘24 and then 7¢ lower.

Soybean futures closed 14¢ to 25¢ lower through Aug ‘24 and then 5¢ to 10¢ lower.

Old-crop corn stocks in all positions on Sept. 1, 2023 totaled 1.36 billion bushels, down 1% year over year. Of the total stocks, 605 million bushels were stored on farms, up 19% from a year earlier. Off-farm stocks of 756 million bushels were 13% less than the prior year. The 2022 corn for grain production estimate was revised down 15.0 million bushels from the previous estimate.

Old-crop soybeans stored in all positions totaled 268 million bushels, down 2% from the previous year. Soybean stocks stored on farms totaled 72.0 million bushels, up 14% from a year ago. Off-farm stocks of 196 million bushels were down 7% year over year. Soybean production for 2022 was revised down 5.93 million bushels from the previous estimate.

All wheat stored in all positions Sept. 1 totaled 1.78 billion bushels, up slightly from a year ago. On-farm stocks were estimated at 598 million bushels, up 1% from last September. Off-farm stocks of 1.18 billion bushels were down less than 1% from a year ago.

Cattle futures rebounded Thursday, helped along by more positive outside markets, including a lower U.S. dollar and weaker crude oil prices, as well as recently higher Choice boxed beef cutout values and positive weekly exports.

Net U.S. export sales for 2023 sales of 17,700 metric tons were up 29% from the previous week and up 42% from the prior four-week average, according to the Weekly U.S. Export Sales report for the week ending Sept. 21. Increases were primarily for, South Korea, China, Canada, and Mexico.

Feeder Cattle futures closed an average of $2.31 higher (80¢ to $2.87 higher).

Live Cattle futures closed an average of $1.75 higher ($1.10 to $2.50 higher).

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

So far this week, FOB live sales are steady in the Southern Plains at $183/cwt. and steady to $1 lower in Nebraska and the western Corn Belt at $184. Dressed delivered prices are $2 lower at $290.

Choice boxed beef cutout value was 56¢ higher Thursday afternoon at $301.51/cwt. Select was $1.07 lower at $277.44/cwt.

Turning to grains, ahead of Friday’s stocks report, Corn futures closed mostly 3¢ to 5¢ higher through new-crop contracts and then mostly 1¢ to 2¢ higher. KC HRW Wheat closed 6¢ to 9¢ lower through May ‘25 and then 1¢ lower. Soybean futures closed mostly 3¢ to 4¢ lower.

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Major U.S. financial indices closed higher Thursday as investors prepared to end the month and the quarter

The Dow Jones Industrial Average closed 116 points higher. The S&P 500 closed 25 points higher. The NASDAQ was up 108 points.

West Texas Intermediate Crude Oil futures (CME) closed $1.18 to $1.97 lower through the front six contracts.

Cattle futures continued lower Wednesday, with follow-through pressure from outside markets and concerns that beef demand may falter. Stronger Corn futures added weight.

Feeder Cattle futures closed an average of $2.01 lower ($1.07 to $2.70 lower).

Live Cattle futures closed an average of 85¢ lower (30¢ to $1.07 lower), except for 10¢ higher in spot Oct.

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

So far this week, FOB live sales are steady in the Southern Plains at $183/cwt. and steady to $1 lower in Nebraska and the western Corn Belt at $184 in a light test. Dressed delivered prices in Nebraska are $2 lower at $290 (a few up to $291) and steady to $2 lower in the western Corn Belt at $290-$292.

Choice boxed beef cutout value was $1.41 higher Wednesday afternoon at $300.95/cwt. Select was 59¢ lower at $278.51/cwt.

Corn futures closed mostly 3¢ to 4¢ higher.

KC HRW Wheat closed mostly 10¢ to 15¢ lower.

Soybean futures closed mostly 4¢ to 7¢ higher.

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Major U.S. financial indices closed mixed Wednesday after significant early pressure from higher crude oil prices driven by supply concerns and higher bond yields related to fears of persistent inflation.

The Dow Jones Industrial Average closed 68 points lower. The S&P 500 closed fractionally higher. The NASDAQ was up 29 points.

West Texas Intermediate Crude Oil futures (CME) closed $1.20 to $3.29 higher through the front six contracts. 

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The Rural Mainstreet Index (RMI) sank below growth neutral in September, for the first time since March, according to the monthly survey of bank CEOs in rural areas of a 10-state region dependent on agriculture and/or energy.

Specifically, the region’s overall reading for September fell to 49.5 from August’s 50.0. The index ranges between 0 and 100, with a reading of 50.0 representing growth neutral.  

“This is the weakest recorded reading since March of this year. Bankers indicated that the biggest challenge to community bank profitability over the next 12 months will be a downturn in farm income,” says Ernie Goss, Jack A. MacAllister Chair in Regional Economics at Creighton University’s Heider College of Business.

Higher interest rates, deposit outflows and a rising regulatory environment continued to constrain the business confidence index to a much weaker 26.8 from 38.9 in August. “This month’s reading is the most negative outlook recorded since July 2022. Over the past 12 months, the regional confidence index has fallen to levels indicating a very negative outlook,” Goss says. “Approximately half of bankers expect economic conditions to worsen in the next six months.”

Even so, the region’s farmland price index climbed to 65.4 from 60.0 in August. This was the 36th straight month that the index has advanced above 50.0.  “Creighton’s survey continues to point to healthy growth in farmland prices, even as farming conditions weaken,” Goss says.

Cattle futures closed sharply lower Tuesday, pressured by pessimistic outside markets, demand worries, and likely some month-end and quarter-end position squaring.

Feeder Cattle futures closed an average of $4.56 lower ($1.27 to $5.82 lower).

Live Cattle futures closed an average of $1.88 lower (85¢ lower at the back to $2.85 lower).

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.

Last week, FOB live prices were $183/cwt. in the Southern Plains, $184-$185 in Nebraska and $185-$186 in the western Corn Belt. Dressed delivered prices were $292.

Choice boxed beef cutout value was $1.94 lower Tuesday afternoon at $299.54/cwt. Select was $1.35 lower at $279.10/cwt. That’s the first time since May that Choice cutout dropped below $300.

Grain and soybean futures appeared to jockey for some position ahead of Friday’s Grain Stocks report.

Corn futures closed 1¢ lower through Sep ‘24 and then mostly fractionally mixed.

KC HRW Wheat closed 1¢ to 4¢ lower through Jly ‘24 and then mostly fractionally higher.

Soybean futures closed 4¢ to 5¢ higher.

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Major U.S. financial indices closed sharply lower Tuesday, pressured by negative economic news.

Consumer confidence sagged lower than expected. The Conference Board Consumer Confidence Index^® declined for a second consecutive month to 103.0 (1985=100), down from an upwardly revised 108.7 in August.

“September’s disappointing headline number reflected another decline in the Expectations Index, as the Present Situation Index was little changed, says Dana Peterson, Chief Economist at The Conference Board. Write-in responses showed that consumers continued to be preoccupied with rising prices in general, and for groceries and gasoline in particular. Consumers also expressed concerns about the political situation and higher interest rates. The decline in consumer confidence was evident across all age groups, and notably among consumers with household incomes of $50,000 or more.”

New residential home sales in August also missed expectations to the downside. Sales of new single‐family houses in August 2023 were at a seasonally adjusted annual rate of 675,000, according to estimates released jointly today by the U.S. Commerce Department. That was 8.7% below the revised July rate of 739,000.

The Dow Jones Industrial Average closed 388 points lower. The S&P 500 closed 63 points lower. The NASDAQ was down 207 points.

West Texas Intermediate Crude Oil futures (CME) closed 32¢ to 71¢ higher through the front six contracts. 

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Placements have decreased year over year for 10 of the last 12 months, with total placements down 897,000 head in the last year, says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, reflecting on the recent Cattle on Feed report.

“A 12-month moving average of placements shows that the peak annual average monthly placements occurred in December 2019, consistent with the cyclical peak in the calf crop in 2018,” Peel says, in his weekly market comments. “However, pandemic delays from 2020 into 2021and drought-enhanced placements in 2021 and 2022 have kept feedlot placements high until the last few months.” 

Peel explains the current 12-month moving average of placements for August dropped to the lowest level since May of 2017. He says average placements are expected to continue declining for the foreseeable future.

As for the on-feed inventory, the 12-month moving average peaked in September 2022 at 11.836 million head, according to Peel. 

“The September 2023 12-month moving average is 11.507 million head, down 2.8 % from the peak,” Peel says.  “Following the drought a decade ago, the 12-month moving average dropped below 11 million head in April 2013 and remained below that level for 58 months through January 2018. This was the period of rapid herd expansion in the last cattle cycle and a similar situation is likely going forward, beginning in 2024.”