WLI

Cattle futures continued higher Thursday with ongoing bullish fundamentals and expectations of steady to higher cash trade, given cattle feeders’ recent marketing resolve.

Feeder Cattle futures closed an average of $1.10 higher.

Live Cattle futures an average of 81¢ higher. 

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

Although there were too few transactions to trend in any region, there were some early FOB live trades in the western Corn Belt at $188-$189/cwt and a few in Kansas at $186.

Last week, FOB live prices were $180/cwt. in the Southern Plains and $188 in Nebraska and the western Corn Belt. Dressed prices were $295 in a light test.

Choice boxed beef cutout value was $1.49 lower Thursday afternoon at $302.03/cwt. Select was 97¢ lower at $277.80/cwt.

Net U.S. beef export sales (2023) for the week ending Aug. 3 of 14,800 metric tons were 19% more than the previous week, but 8% less than the prior four-week average. Increases were primarily for South Korea, Japan, China, Mexico and Hong Kong, according to the weekly U.S. Export Sales report.

As for the other side of the ledger, Grain and Soybean futures firmed Thursday with likely positioning ahead of Friday’s widely anticipated World Agricultural Supply and Demand Estimates, with forecast yields top of mind for many.

Corn futures closed mostly fractionally higher to 2¢ higher.

KC HRW Wheat closed 3¢ to 5¢ higher.

Soybean futures closed 8¢ to 10¢ higher, except for old-crop contracts.

******************************

Although gains faded by the end of the session, major U.S. financial indices edged higher Thursday, supported by slightly cooler inflation than expected. The Consumer Price Index for All Urban Consumers rose 0.2% in July on a seasonally adjusted basis, according to the U.S. Bureau of Labor Statistics. Over the last 12 months, the all items index increased 3.2% before seasonal adjustment.

The Dow Jones Industrial Average closed 52 points higher. The S&P 500 closed 1 point higher. The NASDAQ was up 15 points.

West Texas Intermediate Crude Oil futures (CME) closed 99¢ to $1.58 lower through the front six contracts.

******************************

U.S. beef exports in June continued to trend lower year over year but with hints of renewed strength.

Beef exports totaled 115,107 metric tons (mt) in June, down 12% from a year ago and slightly below the May volume, according to data released by USDA and compiled by the U.S. Meat Export Federation (USMEF). June export value was $909.5 million, down 13% year-over-year but the highest since October and 4% above the value posted in May.

For January-June, U.S. beef exports were 10% below last year’s record pace at 669,176 mt. Export value was just under $5 billion – down 19% from a year ago but still 8% above the first half of 2021.

Beef export value equated to $407.12 per head of fed slaughter in June, down 9% from a year ago. The first-half average was $394.39, down 17%.

“It was a challenging first half for beef exports, especially when compared to the blistering pace established a year ago,” says Dan Halstrom, USMEF president and CEO. “But we are encouraged to see that exports are still accounting for a consistently high percentage of total beef production, and variety meat exports have held up very well considering the decline in U.S. slaughter. These metrics continue to illustrate the important contribution of exports in maximizing beef carcass value.”

June beef exports to Taiwan were the largest in 14 months, while exports to Mexico continued to build momentum and shipments to Canada, Hong Kong, South Africa and the Dominican Republic posted year-over-year gains. June exports to South Korea, China and Japan were below last year’s large totals, though shipments to Japan improved notably in value from the previous month.

June pork exports totaled 245,964 metric tons (mt), up 12% from a year ago, while export value climbed 6% to $691.4 million. Through the first half of 2023, exports were 14% above last year’s pace at 1.47 million mt, valued at $4.05 billion (up 12%).

Weaker corn futures and an uptick in wholesale beef prices helped lift Cattle futures Wednesday.

Feeder Cattle futures closed an average of 77¢ higher.

Live Cattle futures an average of 39¢ higher. 

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

Last week, FOB live prices were $180/cwt. in the Southern Plains and $188 in Nebraska and the western Corn Belt. Dressed prices were $295 in a light test.

Choice boxed beef cutout value was $1.13 higher Wednesday afternoon at $303.52/cwt. Select was $1.98 higher at $278.14/cwt.

Favorable weather, and perhaps skittishness ahead of Friday’s WASDE, pressured grain futures on Wednesday.

Corn futures closed mostly 1¢ to 4¢ lower.

KC HRW Wheat closed mostly 3¢ to 6¢ lower.

Soybean futures closed 1¢ to 4¢ higher through Aug ‘24 and then mostly fractionally higher.

******************************

Major U.S. financial indices closed lower again Wednesday, perhaps defensive pressure ahead of Thursday’s next read on inflation — the monthly CPI. 

The Dow Jones Industrial Average closed 191 points lower. The S&P 500 closed 31 points lower. The NASDAQ was down 162 points.

West Texas Intermediate Crude Oil futures (CME) closed $1.03 to $1.48 higher through the front six contracts, supported by chatter about reduced global production.

******************************

Although seasonally lower, wholesale beef prices continue at what some would consider a remarkably high and consistent level.

“Since the middle of April, the weekly comprehensive boxed beef cutout price has only traded outside of an $8 range for a four-week period in June and early July,” says Andrew P. Griffith, agricultural economist at the University of Tennessee, in his weekly market comments. “The cutout has spent most of its time trading on either side of $300/cwt. and there are no signs it will deviate in the near term.”

Griffith explains the loin and rib primals were the primary price drivers in June, while brisket also demonstrated strength in late June and early July.

“Middle meat prices softened through July, which is the primary reason the cutout fell off its June highs,” Griffith explains. “However, the brisket and short plate also contributed to some of the boxed beef cutout price decline. Alternatively, the chuck, round and flank primal prices have held their own the past month and continue to offer support for the comprehensive cutout.”

Although middle meats may gather added interest heading into Labor Day, Griffith says prices will likely soften again heading into the late summer and the fall months.

Firmer Corn futures helped pressure Feeder Cattle futures an average of $1.10 lower Tuesday (55¢ lower at the back to $1.67 lower).

Live Cattle futures narrowly mixed, unchanged to an average of 36¢ lower in the front five contracts and then an average of 49¢ higher. 

Negotiated cash fed cattle trade and demand were at a standstill through Tuesday afternoon, according to the Agricultural Marketing Service.

Last week, FOB live prices were $180/cwt. in the Southern Plains and $188 in Nebraska and the western Corn Belt. Dressed prices were $295 in a light test.

Choice boxed beef cutout value was 90¢ higher at $302.39/cwt. Select was $1.15 higher at $276.16/cwt.

Corn futures closed mostly 1¢ to 3¢ higher.

KC HRW Wheat closed mostly 1¢ lower through Jly ‘24 and then mostly 2¢ higher.

Soybean futures closed mostly 5¢ to 8¢ higher.

******************************

Major U.S. financial indices closed lower Tuesday, pressured as one agency downgraded credit in the banking sector.

The Dow Jones Industrial Average closed 158 points lower. The S&P 500 closed 19 points lower. The NASDAQ was down 110 points.

West Texas Intermediate Crude Oil futures (CME) closed 75¢ to 98¢ higher through the front six contracts.

******************************

Nationwide, pasture and range conditions eroded some last week, according to the Crop Progress report from USDA’s National Agricultural Statistics Service.

For the week ending Aug. 6, 38% of pasture and range was rated as Good (31%) or Excellent (7%), which was 1% less than the previous week but 14% more than a year earlier. 32% was rated as Poor (18%) or Very Poor (14%), which was 3% more than a week earlier but 17% less than a year earlier. States with more than 40% of pasture and range rated as Poor or Very Poor include: Arizona (47%); Minnesota (53%); Missouri (58%); Nevada (40%); New Mexico (44%); Texas (64%); and Washington (43%).

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

Last week, FOB live prices were $1-$2 higher in the Southern Plains at $180/cwt. Live-delivered prices in Kansas were $184.00-$185.50. Live FOB prices were $2 higher in Nebraska at $188 and $1-$3 high in the western Corn Belt at $188. Dressed-delivered prices were $1-$3 higher at $295 in a light test.

The five-area direct weighted average steer price was $1.89 higher last week on a live basis at $186.70/cwt. The weighted average fed steer price in the beef was $1.51 higher at $295.14.

Even so, Cattle futures closed lower Monday on potential profit taking and retrenching.

Live Cattle futures an average of 96¢ lower (55¢ lower at the back to $1.20 lower in spot Aug). 

Feeder Cattle futures closed an average of $2.27 lower.

Choice boxed beef cutout value was 30¢ lower Monday afternoon at $301.49/cwt. Select was $1.47 lower at $275.01/cwt.

Turning to the grain complex, Corn and Soybean futures closed lower Monday on positive weekend rains.

Corn futures closed 1¢ to 2¢ lower through Jly ‘24 and then mostly 1¢ to 2¢ higher.

Soybean futures closed 24¢ to 38¢ lower through Aug ‘24 and then mostly 8¢ to 15¢ lower.

However, KC HRW Wheat closed mostly 10¢ to 11¢ higher.

******************************

Major U.S. financial indices closed higher Monday, supported by positive corporate earnings reports from the likes of Berkshire Hathaway.

The Dow Jones Industrial Average closed 407 points higher. The S&P 500 closed 40 points higher. The NASDAQ was up 85 points.

West Texas Intermediate Crude Oil futures (CME) closed 57¢ to 88¢ lower through the front six contracts.

******************************

Despite price levels offering the economic incentive, national herd expansion has yet to lift off. More specifically, Derrell Peel, Extension livestock marketing specialist at Oklahoma State University explains in his weekly market comments that rebuilding is slower than what occurred following the 2011-13 drought that shoved cattle numbers to a cyclical low in 2014.

“Continuing Drought is still an issue in significant regions of cattle country,” Peel says.  “While drought is not likely causing a great deal of additional herd liquidation from a broader market perspective, it surely is preventing herd expansion in those drought-stricken areas.”

Moreover, he explains areas already emerged from drought need two to three years to heal and also to replenish hay supplies.

Similarly, Peel says, “Many cattle operations have suffered from considerable financial stress from drought and high input costs. The short-run need to realize immediate returns from higher cattle prices may be causing continued heifer and cull cow sales for now.”

Next, Peel cites the uncertainty surrounding input costs.

“Record hay prices and elevated supplemental feed costs have had a huge impact in drought regions. Record or near-record high fertilizer, chemical and fuel costs have been a significant challenge for producers, especially in regions of introduced pastures,” Peel says. “Though some input prices have moderated in 2023, input price uncertainty has producers reacting cautiously to higher cattle prices.”

Plus, he points to significantly higher interest cost and a much slower economy than existed during the previous herd expansion.

Perhaps a less obvious reason for expansion reluctance is producer expectations.

“Until enough cow-calf producers anticipate enough returns for a long enough period of time, herd expansion will be tempered,” Peel says. “In the meantime, cattle supplies will continue to tighten. Market prices for calves and feeder cattle will continue to increase as the market provides more price incentives that will eventually strengthen producer expectations and jump-start herd expansion. That process is likely to begin in earnest in the remainder of 2023 and into 2024.”

Cattle futures closed higher Friday, helped along by the weekly decline in Corn futures and the hint of higher cash prices.

Live Cattle futures an average of $1.40 higher (92¢ higher at the back to $2.40 higher in spot Aug). 

Feeder Cattle futures closed an average of $1.91 higher.

Negotiated cash fed cattle demand and trade were moderate in the western Corn Belt through Friday afternoon, according to the Agricultural Marketing Service. For the week, live FOB prices were $2-$3 higher at $188/cwt. Dressed delivered prices the previous week were $294-$295.

Elsewhere, trade ranged from mostly inactive on very light demand to limited on light demand.

Although too few to trend, there were a few live delivered sales in Kansas at $184.00-$185.50 and a few live FOB sales in Nebraska at $188.

The previous week, live FOB prices were $178-$179/cwt. in the Southern Plains and $186 in Nebraska, where dressed delivered prices were $292-$295.

Choice boxed beef cutout value was 22¢ lower Friday afternoon at $301.79/cwt. Select was $1.83 lower at $276.48/cwt.

Corn and Soybean futures firmed on Friday but continued to be capped by the favorable weather outlook.

Corn futures closed mostly 2¢ to 3¢ higher.

Soybean futures closed mostly 5¢ to 10¢ higher.

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

******************************

Major U.S. financial indices closed lower Friday. Pressure included a less robust jobs report than expected.

Total non-farm payroll employment rose by 187,000 in July, according to the U.S. Bureau of Labor Statistics. The unemployment rate was little changed at 3.5%.

Average hourly earnings in July for all employees on private non-farm payrolls rose by 14¢ (0.4%) to $33.74. Over the past 12 months, average hourly earnings have increased by 4.4%. 

The Dow Jones Industrial Average closed 150 points lower. The S&P 500 closed 23 points lower. The NASDAQ was down 50 points.

West Texas Intermediate Crude Oil futures (CME) closed $1.00 to $1.27 higher through the front six contracts.

******************************

United States farm real estate value — a measurement of the value of all land and buildings on farms, averaged $4,080 per acre for 2023, up $280 per acre (+7.4%) from 2022, according to Land Values-2023 Summary from USDA’s National Agricultural Statistics Service.

United States cropland value averaged $5,460 per acre in 2023, which was $410 more per acre (+8.1%) than the previous year. Regionally, value increased from a low of 2.2% in the Delta states (AR, LA and MS) with an average value of $3,260/acre, to a high of 14.1% in the Northern Plains (KS, NE, ND and SD) with an average value of $4,200 per acre.

United States pasture value averaged $1,760 per acre in 2023, which was $110 more per acre (+6.7%) than the previous year. Regionally, value increased from a low of 2.4% in the Delta states (AR, LA and MS) with an average value of $2,940/acre, to a high of 13.5% in the Northern Plains (KS, NE, ND and SD) with an average value of $1,510 per acre.