WLI

Cattle futures continued lower Thursday with follow-through pressure from stronger Corn futures, steady to lower cash fed cattle prices, declining open interest and perhaps some defensiveness ahead of Friday’s monthly Cattle on Feed report.

Feeder Cattle futures closed an average of $1.51 lower.

Live Cattle futures closed an average of 72¢ lower.

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

So far this week, FOB live prices are $1 lower in the Southern Plains at $179/cwt., steady to mostly $2 lower in Nebraska at $185-$188 and steady to mostly $1 lower in the western Corn Belt at mainly $187.

Last week, dressed delivered prices were $295.

Wholesale beef prices continued to trend higher. Choice boxed beef cutout value was $5.15 higher Thursday afternoon at $314.14/cwt. Select was $1.49 higher at $286.26/cwt.

Hotter, drier weather helped Corn futures firm further Thursday; fractionally higher to 4¢ higher.

KC HRW Wheat closed mostly 4¢ to 11¢ lower through May ‘25 and then fractionally higher.

Soybean futures closed 2¢ to 9¢ higher through May ‘24 and then 10¢ to 15¢ higher.

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Major U.S. financial indices closed lower Thursday, supported by rising Treasury-note yields, in response to the Fed’s continued wariness about upside inflation risk.

The Dow Jones Industrial Average closed 290 points lower. The S&P 500 closed 33 points lower. The NASDAQ was down 157 points.

West Texas Intermediate Crude Oil futures (CME) closed 58¢ to $1.01 higher through the front six contracts.

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USDA’s Economic Research Service (ERS) raised the expected feeder steer price for the remainder of this year and next, in the August Livestock, Dairy and Poultry Outlook. That basis 750-800-pound steers selling at Oklahoma City.

Based on recent price strength, ERS increased the forecast price by $9 to $250/cwt. in the third quarter and $255 in the fourth quarter. The 2023 annual average price increased $4.50 to $224.99. Prices for next year were forecast $3 higher in the first and second quarter at $248 and $247, respectively. The 2024 annual average price was also estimated $3 higher at $253.25.

As noted recently in Cattle Current, ERS increased the projected third-quarter five-area direct fed steer price by $6 compared to the previous month to $184/cwt., and the fourth-quarter price by $7 to $190 for an annual average of $178.50, which was $3.20 more than the previous estimate. Projected fed steer prices increased $2 for next year at $188 in the first quarter, $186 in the second quarter and $186 for the 2024 average.

“Second-half 2023 production is forecast to decline 180 million pounds from last month on a slower pace of fed cattle marketings, which is only partially offset by higher expected cow slaughter. This resulted in a temporal shift of marketings from late 2023 to 2024,” ERS analysts explain. “Higher projected placements in late 2023 and early 2024 raises anticipated marketings next year. Projected 2024 production is increased 465 million pounds based on the shift in marketings from 2023 to 2024 and an increase in placements.”

Cattle futures continued to edge lower Wednesday, pressured by an uptick in Corn futures and steady to lower cash fed cattle prices.

Feeder Cattle futures closed an average of 32¢ lower.

Live Cattle futures closed an average of 35¢ lower, except for an average of 8¢ higher in two contracts.

Grain futures firmed overnight and through yesterday’s session as traders added some risk premium based on recent Russian attacks in Ukraine

Corn futures closed mostly 3¢ to 6¢ higher.

KC HRW Wheat closed mostly 4¢ to 5¢ higher.

Soybean futures closed mostly 11¢ to 18¢ higher.

Negotiated cash fed cattle trade was mainly limited on light to moderate demand through Wednesday afternoon, according to the Agricultural Marketing Service.

So far this week, FOB live prices are $1 lower in the Southern Plains at $179/cwt. and steady in the western Corn Belt at $188.

Last week, FOB live prices in Nebraska were $188. Dressed prices were $295.

Choice boxed beef cutout value was $1.73 higher Wednesday afternoon at $308.99/cwt. Select was $1.74 higher at $284.77/cwt.

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Major U.S. financial indices closed lower again Wednesday, apparently pressured mostly by minutes from the last Federal Reserve meeting, which indicated future interest rate increases were as likely as not.

“With inflation still well above the Committee’s longer-run goal and the labor market remaining tight, most participants continued to see significant upside risks to inflation, which could require further tightening of monetary policy,” according to the minutes. “… “Participants noted the recent reduction in total and core inflation rates. However, they stressed that inflation remained unacceptably high and that further evidence would be required for them to be confident that inflation was clearly on a path toward the Committee’s 2% objective.”

The Dow Jones Industrial Average closed 180 points lower. The S&P 500 closed 33 points lower. The NASDAQ was down 156 points.

West Texas Intermediate Crude Oil futures (CME) closed 98¢ to $1.61 lower through the front six contracts.

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The market for plant-based meats has likely reached a tipping point as the initial period of exceptional sales growth appears to be over, according to a new report from CoBank’s Knowledge Exchange.

“Whatever their reason for purchase, plant-based offerings appear to have fallen short of consumers’ expectations in terms of either cost or performance,” says Billy Roberts, senior food and beverage economist for CoBank. “Market participants should be able to address the cost issues with greater economies of scale and minimized supply chain expenses. However, innovation around taste, texture and mouthfeel will be essential to capture more mass-market consumers.”

For added perspective, the price per share for Beyond Meat, Inc. — the poster child for plant-based fake meat—was trading at $12.28 noon yesterday. It was $35.83 a year earlier and $117.35 two years earlier.

Plant-based meat sales peaked in 2020 when consumers had more discretionary income and were curious about broadening their food spend in the wake of pandemic-era food shortages, according to CoBank. But fewer than half of Americans who tried the products at the time repeated their purchase, per data from consumer research firm Mintel.

Sales of meat alternatives have fallen steadily since 2021 and more sharply over the last year. Volume sales dropped 20.9% for the 52-week period ending July 2, 2023, according to consumer behavior research firm Circana.

Consumers have consistently cited health as a top reason for purchasing plant-based offerings. However, according to the CoBank report, shoppers who initially sought plant-based meats thinking these were healthier options would later voice doubts about the healthfulness of the products, specifically as it relates to their typically complex ingredient legend.

Negotiated cash fed cattle trade was slow on light demand in the Western Corn Belt through Tuesday afternoon, according to the Agricultural Marketing Service. Live FOB prices were steady at $188/cwt. Dressed delivered prices last week were $295/cwt.

Elsewhere, trade ranged from inactive on light demand to a standstill with too few transactions to trend.

Last week live FOB prices were $180/cwt. in the Southern Plains and $188 in Nebraska, where dressed delivered prices were $295.

Choice boxed beef cutout value was $1.76 higher Wednesday afternoon at $307.26/cwt. Select was $2.58 higher at $283.03/cwt.

However, Cattle futures edged lower Tuesday, pressured by lower outside markets as much as anything.

Feeder Cattle futures closed an average of 27¢ lower, except for 5¢ higher in the back contract.

Live Cattle futures an average of 56¢ lower. 

Weaker outside markets and improved crop conditions weighed on grain and Soybean futures Tuesday.

Corn futures closed 9¢ to 12¢ lower through Sep ‘24 and then mostly 5¢ to 6¢ lower.

KC HRW Wheat closed 13¢ to 16¢ lower through Mar ‘25.

Soybean futures closed 10¢ to 29¢ lower through Sep ‘24 and then 7¢ to 10¢ lower.

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Major U.S. financial indices closed lower Tuesday, pressured by anemic economic growth in China and weaker U.S. bank stocks tied to a potential downgrade in credit ratings.

The Dow Jones Industrial Average closed 361 points lower. The S&P 500 closed 51 points lower. The NASDAQ was down 157 points.

West Texas Intermediate Crude Oil futures (CME) closed $1.15 to $1.52 lower through the front six contracts.

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Feeder cattle prices are driving feedlot breakevens significantly higher, according to recent estimates from the Livestock Marketing Information Center (LMIC).

For perspective, in order to be profitable, LMIC analysts peg a closeout price exceeding $188/cwt. in January for cattle placed in July. They note it is close to the current level of the February Live Cattle contract.

“Feeder steers in Dodge City have increased since December of last year, jumping from $172 to the $180s, then the $190s, and were at $242/cwt. in July, a 40% increase in eight months. During that time, breakeven prices have increased 27%,” LMIC analysts explain, in the latest Livestock Monitor.

Projected breakevens at the beginning of next year represent a significant departure from apparent feedlot profits this year. LMIC estimated returns were as high as $400 per head earlier this summer. Analysts there estimated July feedlot returns at $300 per head, followed. By positive returns for the remainder of the year.

Keep in mind, estimates do not account for price risk management.

“Through the rest of 2023, breakevens are estimated to be between $150 and $176/cwt.,” LMIC analysts say. “The futures market has most contracts ahead of breakevens by $10 to more than $20/cwt., ensuring that cattle feeding returns will likely be profitable in 2023. LMIC is estimating the average per head return annually will be close to $250 per head, like the 2014 average.”

Cattle futures closed lower Monday on lackluster trade and static to declining open interest.

Feeder Cattle futures closed an average of $1.08 lower.

Live Cattle futures an average of 61¢ lower. 

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

Live FOB prices last week were steady at $180/cwt. in the Southern Plains and $188 in the north where dressed delivered prices were steady at $295.

Choice boxed beef cutout value was $2.89 higher Monday afternoon at $305.50/cwt. Select was $3.22 higher at $280.45/cwt.

Corn futures closed mostly fractionally higher to 1¢ higher.

Soybean futures closed mostly 10¢ to 18¢ higher.

KC HRW Wheat closed mostly 9¢ to 15¢ lower.

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Major U.S. financial indices edged higher Monday, supported by tech stocks.

The Dow Jones Industrial Average closed 26 points higher. The S&P 500 closed 25 points higher. The NASDAQ was up 143 points.

West Texas Intermediate Crude Oil futures (CME) closed 62¢ to 68¢ lower through the front six contracts.

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Amid tighter feeder cattle supplies and lower feedlot cost of gain, stocker opportunities veer toward lightweight cattle with more incentive to market with less weight gain ahead of the feedlot, according to Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly market comments.

“As cattle numbers continue to tighten this year, the general incentive in the market is to push cattle into feedlots sooner and through the beef production system faster to keep beef production as high as possible,” Peel explains. “Beef production is down about 4.8% year over year thus far in 2023 but is falling more sharply recently with July beef production down 6.7% compared to one year ago.” 

Moreover, Peel says cheaper cost of gain, as corn prices moderate, provide feedlots more opportunity to compete for limited feeder cattle supplies and further enhance the general need to push cattle through the system faster. “A lower feedlot cost of gain generally means feedlots can purchase lighter weight feeder cattle and place them in feedlot earlier,” he says.

As for fall grazing, at least on Oklahoma, Peel says wheat pasture prospects are more promising than in recent years with improved soil moisture and soil temperature conditions for early-planted winter wheat.

“Dynamic cattle and grain market conditions mean that producers will need to carefully and frequently evaluate stocker budget prospects this fall prior to stocker purchase,” Peel says. “Calf prices are moving counter-seasonally higher this summer suggesting that stocker purchase costs will continue to increase this fall. The Oklahoma combined auction price for 450-500 pounds Medium/Large #1 steers in the second week of August reached $302.05/cwt., the highest weekly price since June 2015 and just 6.4% below the record high of $322.56/cwt. in November 2014.”

Negotiated cash fed cattle trade was slow on light to moderate demand in Nebraska and the western Corn Belt through Friday afternoon, according to the Agricultural Marketing Service. For the week, FOB live prices were steady in both regions at $188/cwt. and dressed-delivered prices were also steady at $295.

Trade in the Southern Plains ranged from inactive on light demand in Kansas to a standstill in the Texas Panhandle. The previous week, FOB live prices were $180 in the Southern Plains.

Choice boxed beef cutout value was 58¢ higher Friday afternoon at $302.61/cwt. Select was 57¢ lower at $277.23/cwt.

Total estimated cattle slaughter last week of 603,000 head was 10,000 head fewer than the previous week and 42,000 head fewer (-6.5%) than the same week last year. Estimated year-to-date total cattle slaughter of 19.3 million was 830,000 head fewer (-4.0%) than the same time last year. Estimate year-to-date beef production of 16.3 billion pounds was 836.9 million pounds less (-4.9%) than the same time last year.

Cattle futures closed lower Friday on likely profit taking ahead of the weekend.

Feeder Cattle futures closed an average of 32¢ lower.

Live Cattle futures an average of 84¢ lower. 

Grain and Soybean closed lower Friday, pressured by the World Agricultural Supply and Demand Estimates coming in with expected yield cuts (see below).

Corn futures closed mostly 4¢ to 8¢ lower.

KC HRW Wheat closed 11¢ to 13¢ lower through May ‘24 and then mostly 5¢ lower.

Soybean futures closed 10¢ to 14¢ lower.

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Major U.S. financial indices closed mixed on Friday with pressure from another inflation gauge that was higher than expected. The Producer Price Index for final demand increased 0.3% in July (seasonally adjusted), according to the U.S. Bureau of Labor Statistics. On an unadjusted basis, the index for final demand advanced 0.8% for the 12 months ended in July.

The Dow Jones Industrial Average closed 105 points higher. The S&P 500 closed 4 points lower. The NASDAQ was down 93 points.

West Texas Intermediate Crude Oil futures (CME) closed 12¢ to 37¢ higher through the front six contracts.

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USDA’s Economic Research Service (ERS) increased the anticipated fed steer price for the remainder of this year and next, in the August World Agricultural Supply and Demand Estimates.

Based on strong packer demand, ERS increased the projected third-quarter five-area direct fed steer price by $6 compared to the previous month to $184/cwt., and the fourth-quarter price by $7 to $190 for an annual average of $178.50, which was $3.20 more than the previous estimate. Projected fed steer prices increased $2 for next year at $188 in the first quarter, $186 in the second quarter and $186 for the 2024 average.

Beef production for 2023 was lowered on less steer and heifer slaughter and lighter dressed weights, although projected cow slaughter increased. For 2024, forecast beef production increased, reflecting higher expected placements in late 2023 and early 2024. Cow slaughter was also raised for the first part of 2024.

ERS estimated total beef production this year at 26.98 billion pounds, which would be 1.3 billion pounds less (-4.6%) than last year. Beef production in 2024 was forecast at 25.17 billion pounds, which would be 1.81 billion pounds less (-6.7%) than this year’s estimate.