WLI

Negotiated cash fed cattle trade remained undeveloped through Thursday afternoon. There were a few FOB live sales in the western Corn Belt at $186/cwt., but too few to trend, according to the Agricultural Marketing Service.

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 48¢ lower Thursday afternoon at $302.86/cwt. Select was 5¢ lower at $279.76/cwt.

Net U.S. beef export sales of 21,400 metric tons (2023) for the week ending July 20 were 2% more than the previous week and 43% more than the prior four-week average. Increases were primarily for South Korea, Japan, China, and Canada.

Eroding front-month Corn futures supported Feeder Cattle futures again on Thursday. They closed an average of 54¢ higher, except for an average of 7¢ lower in two contracts.

Live Cattle futures closed an average of 31¢ lower, except for an average of 13¢ higher in two contracts.

Corn futures closed 4¢ to 7¢ lower through Jly ‘24 and then mostly 1¢ to 2¢ higher.

KC HRW Wheat closed fractionally mixed to 1¢ higher through Sep ’24 and then 3¢ to 6¢ lower.

Soybean futures closed 12¢ to 22¢ lower.

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Major U.S. financial indices closed lower Thursday despite frothier second-quarter domestic economic growth than expected.

Real gross domestic product (GDP) increased at an annual rate of 2.4% in the second quarter of this year, according to the advance estimate from the U.S. Department of Commerce. Real GDP in the first quarter was 2.0%. Gains in the second quarter primarily reflected increases in consumer spending and business investment.

The Dow Jones Industrial Average closed 237 points lower. The S&P 500 closed 29 points lower. The NASDAQ was down 77 points.

West Texas Intermediate Crude Oil futures (CME) closed $1.05 to $1.31 higher through the front six contracts.

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Members of the National Cattlemen’s Beef Association (NCBA) passed a directive earlier this week to continue the organization’s advocacy efforts for transparent labeling and inspection of cell-cultured protein products.

“Cattle producers are not afraid of a little competition, and I know that consumers will continue choosing real high-quality beef over cell-cultured imitations,” says NCBA President Todd Wilkinson, a South Dakota cattle producer. “Our priority is ensuring that consumers accurately know the difference between real beef and cell-cultured products through transparent and accurate labeling. We have already been successful at engaging the U.S. Department of Agriculture to conduct robust inspections and oversight to protect food safety.”

Earlier this year, USDA’s Food Safety Inspection Service (FSIS) issued two grants of inspection to companies producing cell-cultured chicken imitation products. These grants of inspection permit companies producing cell-cultured products to sell their products in interstate commerce. While no cell-cultured imitations of beef have received a grant of inspection, several companies are attempting to create them.

Feeder Cattle futures closed an average of 88¢ higher Wednesday, supported by lower Corn futures.

Live Cattle futures closed narrowly mixed, from an average of 16¢ lower to an average of 33¢ higher.

Sharp volatility continued in grain futures, Wednesday, with traders apparently retrieving a chunk of recent risk premiums.

Corn futures closed 13¢ to 17¢ lower through Jly ‘24 and then 4¢ to 9¢ lower.

KC HRW Wheat closed 18¢ to 47¢ lower.

Soybean futures closed 1¢ to 2¢ lower, except for 30¢ and 18¢ higher in the front two contracts.

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

Last week, live prices (FOB) live prices 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 88¢ lower Wednesday afternoon at $303.34/cwt. Select was $2.26 higher at $279.81/cwt.

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Major U.S. financial indices were mixed and little changed Wednesday, as the Fed interest rate hike (0.25%) was widely expected.

The Dow Jones Industrial Average closed 82 points higher. The S&P 500 closed fractionally lower. The NASDAQ was down 17 points.

West Texas Intermediate Crude Oil futures (CME) closed 57¢ to 85¢ lower through the front six contracts.

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Frozen beef supplies continue to decline year over year, according to the latest USDA Cold Storage report.

Total pounds of beef in freezers June 30 were 3% less than the previous month and 20% less than last year.

Frozen pork supplies were down 8% from the previous month and down 9% from the previous year.

Total red meat supplies in freezers were down 6% from the previous month and down 14% from last year.

Total frozen poultry supplies were 5% more than the previous month and 10% more than a year earlier.

Lower Corn futures helped Feeder Cattle futures firm Tuesday and close narrowly mixed, from an average of 15¢ lower to an average of 34¢ higher.

Live Cattle futures closed an average of 75¢ lower, except for 37¢ higher in in the back contract, with pressure tied, in part, to eroding open interest.

Corn futures softened Tuesday with likely profit taking, closing mostly 2¢ to 3¢ lower.

Soybean futures closed mostly 4¢ to 5¢ lower.

KC HRW Wheat closed mostly 4¢ to 6¢ higher through Mar ‘25.

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

Last week, live prices (FOB) live prices 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 6¢ higher Tuesday afternoon at $304.22/cwt. Select was 56¢ higher at $277.55/cwt.

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Major U.S. financial indices edged higher Tuesday, amid mixed quarterly corporate earnings.

The Dow Jones Industrial Average closed 26 points higher. The S&P 500 closed 12 point higher. The NASDAQ was up 85 points.

West Texas Intermediate Crude Oil futures (CME) closed 60¢ to 89¢ higher through the front six contracts.

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Rural economic growth continues, at least in one region, according to Creighton University’s Rural Mainstreet Index (RMI). Although it remained above growth-neutral for the fourth consecutive month, the RMI declined from 56.9 in June to 55.6 in July. The index ranges between 0 and 100, with a reading of 50.0 representing growth neutral. It is based on a survey of bank CEOs in rural areas of a 10-state region dependent on agriculture and/or energy.

“After negative growth during the first quarter of this year, the Rural Mainstreet economy experienced positive but slow economic growth for the second quarter and has now started the third quarter on a healthy note,” says Ernie Goss, Jack A. MacAllister Chair in Regional Economics at Creighton University’s Heider College of Business.

The region’s farmland price index rose to 64.6 from 59.3 in June and 56.3 in May. This was the 34th straight month that the index has advanced above 50.0. 

Bankers reported that, on average, non-farm investors secured approximately 17.1% of farmland sales in their area over the past six months. This is almost double the 9.1% reported by bankers in April 2022 when the same question was asked. 

Bank CEOs were asked to comment on the Federal Reserve’s current short-term interest rate policy. More than nine of 10 (92.5%) indicated that the Fed should cease raising rates. Only 7.5% indicated that the Fed should continue to raise short-term interest rates.

“Higher short-term interest rates produced by Federal Reserve’s rate hikes over the past year have posed a significant threat to community banks by expanding the costs of customer deposits while the rates on bank loans have risen little over the same time period,” Goss says.

Feeder Cattle futures took stepped lower Monday, pressured by sharply higher Corn futures and Friday’s bearish Cattle on Feed report which indicated June feedlot placements were 2.7% more than the previous year and 4.6% more that the average of analyst expectations ahead of the report.

Headlines of Russia bombing Ukrainian ports fueled grain and Soybean futures Monday.

Corn futures closed 27¢ to 33¢ higher through the front five contracts and then 9¢ to 19¢ higher.

KC HRW Wheat closed 46¢ to 58¢ higher through Jly ‘24 and then 32¢ to 40¢ higher.

Soybean futures closed mostly 19¢ to 22¢ higher.

Live Cattle futures faded most of the heat, supported by last week’s stronger cash trade.

Live Cattle futures closed an average of $1.08 higher (32¢ to $1.82 higher), except for an average of $1.24 lower in the front three contracts.

Negotiated cash fed cattle trade was inactive on very light demand in all major cattle feeding regions through Monday afternoon, according to the Agricultural Marketing Service.

Last week, live prices (FOB) were $2 higher in the Southern Plains at $180/cwt., $2 higher in Nebraska at $188 and $3-$4 higher in the western Corn Belt at $188. Dressed prices (FOB) were $3-$5 higher in Nebraska at $295 and steady to $5 higher in the western Corn Belt at $295.

The weighted average five-area fed steer price last week was $1.92 higher at $186.19/cwt. on alive basis. The weighted average dressed fed steer price was $3.38 higher at $294.72.

Choice boxed beef cutout value was $1.42 higher Monday afternoon at $304.16/cwt. Select was 26¢ higher at $276.99/cwt.

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Major U.S. financial indices closed higher Monday, buoyed by energy stocks.

The Dow Jones Industrial Average closed 183 points higher. The S&P 500 closed 18 point higher. The NASDAQ was up 26 points.

West Texas Intermediate Crude Oil futures (CME) closed $1.41 to $1.67 higher through the front six contracts.

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Reflecting on Friday’s semiannual USDA Cattle report, Derrell Peel, Extension Livestock Marketing Specialist at Oklahoma State University notes this is the fifth year of smaller beef cow inventories since the 2018 cyclical peak, with the beef cow herd down 3.0 million head, a five-year decrease of 9.3%.

“Not only did the report show continued cattle liquidation thus far in 2023, but there are also no clear indications that numbers will stabilize and grow anytime soon,” Peel says.  “The current inventory of beef replacement heifers is 4.05 million head, lower than the previous cyclical low of 4.2 million head in 2011 and 2012 and is the lowest in 50 years of available July 1 inventory data.”

Moreover, Peel points out the inventory of heifers in feedlots in the July Cattle on Feed report — unchanged from last year —indicates relatively large numbers of heifers continue to be fed for slaughter rather than retained for breeding. He adds that heifers currently represent 39.9% of total feedlot inventories, the highest proportion of heifers in feedlots since 2001.

“The sharp increase in feeder cattle prices this year represents a growing market incentive for the beef cattle industry to transition from liquidation to herd expansion, but it does not appear that the industry is responding yet,” Peel says. “Feeder cattle prices will continue to increase to jumpstart heifer retention, which will lead to even higher prices as feeder supplies are further squeezed with fewer heifers in the feeder cattle supply.”

Negotiated cash fed cattle trade was slow to moderate with moderate demand in all major cattle feeding regions through Friday afternoon, according to the Agricultural Marketing Service.

For the week, live prices in the Texas Panhandle were $2 higher (compared to two weeks earlier) at $180/cwt. Live prices in Kansas were unevenly steady at $180 (a few up to $187) with live delivered prices at $184-$185. Prices in Nebraska were mostly $2 higher at $188 with a few up to $190. In the western Corn Belt, live prices were mostly $3-$4 higher at $188.

Dressed prices (FOB) in Nebraska were $8-$10 higher at $300.

Choice boxed beef cutout value was 18¢ higher Friday afternoon at $302.74/cwt. Select was $2.02 higher at $276.73/cwt.

Estimated total cattle slaughter last week of 628,000 head was 5,000 head fewer than the previous week and 35,000 head fewer (-5.3%) than the previous year. Year-to-date estimated total cattle slaughter of 18.1 million head was 700,000 head fewer (-3.7%) than the same time last year. Estimated year-to-date beef production of 14.8 billion pounds was 735.5 million pounds less (-4.7%).

As for futures, Live Cattle futures closed an average of 40¢ lower Friday, except for an average of 6¢ higher in two contracts.

Conversely, stronger cash prices and softer Corn futures helped Feeder Cattle futures gain an average of $1.11. They could be challenged Monday, however, with what will likely be considered a bearish Cattle on Feed report (see below).

Corn futures softened again with likely profit taking. They closed 7¢ to 10¢ lower through Dec ‘24 and then 5¢ to 6¢ lower.

KC HRW Wheat closed mostly 14¢ to 15¢ lower.

Soybean futures closed mostly 1¢ to 2¢ lower, except for 6¢ and 2¢ higher in old-crop contracts.

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Major U.S. financial indices closed mixed and little changed Friday.

The Dow Jones Industrial Average closed 2 points higher. The S&P 500 closed 1 point higher. The NASDAQ was down 30 points.

West Texas Intermediate Crude Oil futures (CME) closed $1.10 to $1.42 higher through the front six contracts.

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Markets will likely view Friday’s Cattle on Feed report as bearish with more June placements than expected.

Placements in feedlots with 1,000 head or more capacity were 1.68 million head in June, which was 44,000 head more (+2.7%) than the previous year. That was 4.6% more that the average of analyst expectations ahead of the report.

In terms of placement weights, 39% went on feed weighing 699 pounds or less, 45% weighing 700-899 pounds and 16% weighing 900 pounds or more.

Marketings in June of 1.96 million head were 104,000 head fewer (-5.0%) year over year, which was in line with pre-report estimates.

Cattle on feed July 1 of 11.20 million head were 201,000 head fewer (-1.8%) than the previous year, which was also in line with pre-report estimates.

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National beef cow liquidation continues, and heifer retention has yet to begin, according to Friday’s semiannual USDA Cattle report.

There were 29.4 million beef cows in the U.S. July 1, which was 800,000 head fewer (-2.6%) year over year. The number of beef replacement heifers was 100,000 head fewer (-2.4%) at 4.0 million head. This year’s calf crop was estimated to be 33.8 million head, which would be 664,500 head fewer (-1.9%) than the previous year.

The calculated number of cattle outside feedlots July 1 — calves under 500 pounds, other heifers and steers weighing more than 500 pounds — was 34.4 million, which was 1.3 million head fewer (-3.6%) than the same time last year.

Total cattle and calves in the U.S. July 1 of 95.9 million was 2.7 million fewer (-2.7%) than a year earlier.