WLI

Negotiated cash fed cattle trade ranged from limited on light demand to a standstill through Thursday afternoon, according to the Agricultural Marketing Service. There were a few live FOB sales in the western Corn Belt at $188/cwt., but too few to trend.

Last week, live FOB prices were $178-$179/cwt. in the Southern Plains, $186 in Nebraska, and $185-$186 in the western Corn Belt. Dressed delivered prices were $292-$295.

Choice boxed beef cutout value was $1.17 lower Thursday afternoon at $302.01/cwt. Select was 84¢ higher at $278.31/cwt.

Cattle futures on Thursday mainly regained what was lost in the previous session as traders returned the focus to fundamentals rather than the selloff triggered by the downgrading of U.S. credit.

Live Cattle futures an average of 76¢ higher (12¢ to $1.17 higher). 

Feeder Cattle futures closed an average of $1.35 higher.

Corn futures continued lower Thursday with the more favorable production outlook coupled with continued anemic international demand.

Corn futures closed 6¢ to 7¢ lower through May ‘24 and then mostly 2¢ to 3¢ lower.

KC HRW Wheat closed 9¢ to 19¢ lower.

Soybean futures closed mostly 3¢ to 5¢ higher.

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

Major U.S. financial indices were little changed but softer again Thursday.  

The Dow Jones Industrial Average closed 66 points lower. The S&P 500 closed 11 points lower. The NASDAQ was down 13 points.

West Texas Intermediate Crude Oil futures (CME) closed $1.69 to $2.06 higher through the front six contracts.

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

“Most of the decline in beef production compared to a year ago stems from reduced beef cow slaughter, steer slaughter, and lighter slaughter weights,” says Andrew P. Griffith, agricultural economist at the University of Tennessee, in his weekly market comments. “Beef cow slaughter is down more than 12% while steer slaughter has declined close to 5%. Alternatively, dairy cow slaughter has increased nearly 6% compared to a year ago due to declining milk prices.”

Griffith points out heifer slaughter is less 1% lower year over year, further affirming that fact that heifer retention has yet to begin.

“All of these points should support beef prices remaining elevated in the near term and in the longer term,” Griffith explains. He adds that “It will be interesting to see how imports are adjusting to meet the demand for lean grinding beef, given the production decline domestically.

Commodity and equity markets saw widespread selling Wednesday on the news that Fitch Ratings downgraded the long-term credit rating for United States.

The lack of weekly cash fed cattle price direction and profit taking may also have pressured Cattle futures.

Live Cattle futures an average of 86¢ lower (50¢ lower at the back to $1.47 lower in spot Aug). 

Feeder Cattle futures closed an average of $1.15 lower (57¢ lower toward the back to $1.80 lower toward the front).

Corn futures closed mostly 2¢ to 8¢ lower.

KC HRW Wheat closed 10¢ to 17¢ lower through Dec ‘24 and then 9¢ lower.

Soybean futures closed mostly 14¢ to 20¢ lower through Jly ‘24 and then mostly 8¢ to 9¢ lower.

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

Last week, live FOB prices were $178-$179/cwt. in the Southern Plains, $186 in Nebraska, and $185-$186 in the western Corn Belt. Dressed delivered prices were $292-$295.

Choice boxed beef cutout value was $2.92 lower Wednesday afternoon at $303.18/cwt. Select was $2.13 lower at $277.47/cwt.

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

Major U.S. financial indices closed lower Wednesday, pressured by the aforementioned lowering of the U.S. credit rating. 

The Dow Jones Industrial Average closed 348 points lower. The S&P 500 closed 63 points lower. The NASDAQ was down 310 points.

West Texas Intermediate Crude Oil futures (CME) closed $1.53 to $1.88 lower  through the front six contracts.

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

Strong demand and underlying U.S. economic strength are fueling cattle prices even more than snugger cattle supplies and beef production, says Stephen Koontz, agricultural economist at Colorado State University, in the latest issue of In the Cattle Markets from the Livestock Marketing Information Center (LMIC).

“Within the important underlying fundamentals, slaughter weights are seasonally tight, cattle on feed over 120 days are very tight compared to prior years, packer margins and feedlot margins are very strong. These are all bullish signals,” Koontz says. “At some point in the future, we will need to be concerned about competing meat supplies, trade volumes, the strength of the dollar, and interest rates versus inflation. But this summer the cattle and beef market just continue to show dramatic strength. And this is largely due to the underlying strength in the domestic economy.”

Koontz notes cattle markets have the strength to move higher but there are signs of slowing momentum.

A surge in wholesale beef prices helped lift Live Cattle futures on Tuesday. They closed an average of $1.27 higher on strong volume (50¢ higher at the back to $2.30 higher near the front).

Feeder Cattle futures closed an average of $2.22 higher ($1.65 higher at the back to $2.87 higher in spot Aug).

Choice boxed beef cutout value was $4.32 higher Tuesday afternoon at $306.10/cwt. Select was $1.87 higher at $279.60/cwt.

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

Last week, live FOB prices were $178-$179/cwt. in the Southern Plains $186, in Nebraska, and $185-$186 in the western Corn Belt. Dressed delivered prices were $292-$295.

Corn futures eroded further Tuesday, closing 4¢ to 7¢ lower through Jly ‘24 and then mostly fractionally lower to 2¢ lower.

KC HRW Wheat closed 5¢ to 11¢ lower through Jly ‘24 and then mostly 1¢ higher.

Soybean futures closed mostly 5¢ to 10¢ higher.

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

Major U.S. financial indices closed mixed Tuesday.

The Dow Jones Industrial Average closed 71 points higher. The S&P 500 closed 12 points lower. The NASDAQ was down 62 points.

West Texas Intermediate Crude Oil futures (CME) closed 36¢ to 43¢ lower through the front six contracts.

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

Agricultural producer sentiment improved slightly in July, according to the Purdue University/CME Group Ag Economy Barometer. It rose 2 points to a reading of 123. The Index of Current Conditions rose 5 points to a reading of 121, while the Index of Future Expectations was up 1 point to 124.

“Producers were slightly more confident about the farming economy in July, despite recent crop price volatility and continued concerns about rising interest rates,” says James Mintert, the barometer’s principal investigator and director of Purdue University’s Center for Commercial Agriculture.

Given the volatility in commodity prices, especially crop prices, this spring and early summer, Ag Barometer analysts say it’s notable that more producers expressed concern about rising interest rates than declining output prices. Producers’ top concern for their farming operations in the upcoming year is still higher input costs, followed by rising interest rates and lower output prices.

The Ag Economy Barometer is calculated each month from 400 U.S. agricultural producers’ responses to a telephone survey. This month’s survey was conducted between July 10-14.

Despite another day of lower Corn futures, Feeder Cattle futures paddle in place on Monday, closing an average of 33¢ lower, except for unchanged to an average of 12¢ higher in the front three contracts.

Softer cash fed cattle prices last week and continued erosion in open interest helped cap Live Cattle, which closed an average of 46¢ lower, from 7¢ to 70¢ lower.

Last week, FOB negotiated cash fed cattle were $1-$2 lower at $178-$179/cwt. in the Texas Panhandle on a light test. Likewise, prices were $1-$2 lower in Kansas at $178-$179 on a light test but with a few up to $185. Live-delivered prices in Kansas were $182.50 to $184. In Nebraska, FOB live trades were mostly $2 lower at mainly $186 on a light test, but a few up to $188.50. Live prices in the western Corn Belt were $1-$3 lower at 185-$187. Dressed delivered prices were steady to $3 lower in Nebraska at $292-$295 and steady to $1 lower in the western Corn belt at $294-$295.

Trade ranged from inactive on very light demand to a standstill through Monday afternoon, with too few transactions to trend, according to the Agricultural Marketing Service.

The weighted average five-area direct fed steer price last week was $1.38 lower on a live basis at $184.81/cwt. The weighted average steer price in the beef was $1.09 lower at $293.63.

Choice boxed beef cutout value was 22¢ lower Monday afternoon at $301.78/cwt. Select was 19¢ higher at $277.73/cwt.

Significantly cooler and wetter weather forecasted for the Corn Belt pushed grain and Soybean futures sharply lower Monday.

Corn futures closed 15¢ to 17¢ lower through Jly ‘24 and then mostly 8¢ to 10¢ lower.

KC HRW Wheat closed 23¢ to 43¢ lower.

Soybean futures closed mostly 31¢ to 50¢ lower.

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

Major U.S. financial indices eked out gains Monday as investors closed out the month and geared up for another week of quarterly earnings reports.

The Dow Jones Industrial Average closed 100 points higher. The S&P 500 closed 6 points higher. The NASDAQ was up 29 points.

West Texas Intermediate Crude Oil futures (CME) closed 95¢ to $1.22 higher through the front six contracts.

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

When national beef cow herd expansion finally begins, the dearth of heifers means rebuilding will likely be a slow process, according to Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly market comments.

“The previous record-high calf prices occurred after heifer retention was well underway and feeder cattle supplies were squeezed to their tightest levels. This process may begin in late 2023 but the tightest feeder supplies will not occur until 2024 at the earliest or possibly into 2025,” Peel says. “With the pipeline of beef replacement heifers and residual other heifers extremely low, heifer retention will likely begin mostly with heifer calves.”

Peel points out the inventory of calves weighing less than 500 pounds on July 1 was 26.3 million head, down 2.6% year over year, according to the semiannual USDA Cattle report. 

“Rapidly rising calf prices in 2023 have not yet provoked any heifer retention and herd rebuilding,” Peel says. “The beef replacement heifer inventory was 4.05 million head, down 2.4% from last year and is the lowest ever in the July Cattle report. Not only are replacement heifer inventories low, but the supply of other heifers that could be used for breeding is also low … The other heifer inventory includes heifers already in feedlots as well as heifers that are part of the estimated feeder supply. The July Cattle report showed an inventory of other heifers at 7.3 million head, down 5.2% year over year.”

Feedlots and packers continued their standoff on negotiated cash fed cattle trade, which remained largely undeveloped through Friday afternoon. Trade ranged from slow on light demand to a standstill, according to the Agricultural Marketing Service. There were a few FOB live sales in the western Corn Belt at $185-$186/cwt., but too few to trend.

Last week, live prices (FOB) were $180/cwt in the Southern Plains and $188 in Nebraska and the western Corn Belt, where dressed prices (FOB) were $295.

Choice boxed beef cutout value was 86¢ lower Friday afternoon at $302.00/cwt. Select was $2.22 lower at $277.54/cwt.

Further erosion in Corn futures helped Feeder Cattle futures close an average of 77¢ higher Friday.

Live Cattle futures closed narrowly mixed, from an average of 10¢ lower in the back three contracts to an average of 15¢ higher.

Corn futures continued to decline Friday, pressured by more favorable weather in the Corn Belt and less risk premium tied to Ukrainian grain shipments. They closed 11¢ to 12¢ lower through Jly ‘24 and then mostly 6¢ to 9¢ lower.

KC HRW Wheat closed 4¢ to 10¢ lower through Sep ‘24 and then mostly 2¢ lower.

Soybean futures closed mostly 8¢ to 15¢ lower through Jan ‘25 and then mostly 2¢ lower.

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

Major U.S. financial indices closed higher Friday with another gauge of cooling inflation.

The Personal Consumption Expenditures (PCE) price index increased 0.2% month to month in June, according to the U.S. Bureau of Economic Analysis. That was in line with expectations. Core PCE, excluding food and energy was slightly less than expected year over year at 4.1%.

The Dow Jones Industrial Average closed 176 points higher. The S&P 500 closed 44 points higher. The NASDAQ was up 266 points.

West Texas Intermediate Crude Oil futures (CME) closed 44¢ to 69¢ higher through the front six contracts.

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

Estimated total cattle slaughter last week of 619,000 head was 5,000 head fewer than the previous week and 47,000 head fewer (-7.1%) than the same week last year. Year-to-date estimated total cattle slaughter of 18.7 million head was 751,000 head fewer (-3.9%) year over year. Estimated year-to-date beef production of 15.3 billion pounds was 773.8 million pounds less (-4.8% less) year over year.

“Most of the decline in beef production compared to a year ago stems from reduced beef cow slaughter, steer slaughter, and lighter slaughter weights,” says Andrew P. Griffith, agricultural economist at the University of Tennessee, in his weekly market comments. “Beef cow slaughter is down more than 12% while steer slaughter has declined close to 5%. Alternatively, dairy cow slaughter has increased nearly 6% compared to a year ago due to declining milk prices.”

Griffith points out heifer slaughter is less 1% lower year over year, further affirming that fact that heifer retention has yet to begin.

“All of these points should support beef prices remaining elevated in the near term and in the longer term,” Griffith explains. “It will be interesting to see how imports are adjusting to meet the demand for lean grinding beef, given the production decline domestically. Export data will also help solidify the beef availability picture.”