WLI

Cattle futures gave back most of what they gained in the previous session, amid sluggish trade and a lack of weekly cash direction.

Feeder Cattle futures closed an average of $1.16 lower (88¢ to $1.43).

Live Cattle futures closed an average of 93¢ lower, (53¢ to $1.25 lower).

Corn futures closed 1¢ to 5¢ lower, with follow-through pressure from last week’s positive crop progress and ratings.

KC HRW Wheat closed unchanged to 1¢ lower.

Soybean futures closed 12¢ to 18¢ lower.

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

Last week, FOB live prices were $178-$179/cwt. in the Texas Panhandle, $179 in Kansas. $185-$188 in Nebraska and $186-$188 in the western Corn Belt. Dressed delivered prices were $294-$295 in Nebraska and $290-$295 in the western Corn Belt.

However, wholesale beef prices were up. Choice boxed beef cutout value was $1.49 higher Tuesday afternoon at $317.05/cwt. Select was $2.18 higher at $289.51/cwt.

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

Major U.S. financial indices closed mixed Tuesday, pressured by the recent peak in Treasury-note yields, as well as bank stocks.

The Dow Jones Industrial Average closed 174 points lower. The S&P 500 closed 12 points lower. The NASDAQ was up 8 points.

West Texas Intermediate Crude Oil futures (CME) closed 29¢ to 48¢ lower through the front six contracts.

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

Despite slacker Feeder Cattle futures prices recently, Andrew P. Griffith, agricultural economist at the University of Tennessee points out they continue to trade in the same $10 range since the end of June.

“The question now is if the market will trade lower than the established range or does it have the ability to make a run to even higher prices?” Griffith says, in his weekly market comments.  “There is no way of knowing the answer, but the market sure seems to be finding little to no support for higher prices at this time. This would mean it is more likely for feeder cattle to stay in its current trading range or to soften.”

According to Griffith, as strong as market fundamentals are, it’s possible prices have outpaced the support.

 “A good example of this was in 2014 and 2015 when prices ascended rapidly and then descended rapidly through 2016 and 2017,” Griffith says. “This commentary is not saying cattle prices should be higher, lower, or exactly where they are, but it is saying the market is expected to be efficient. This simply means the market will adjust such that price is in line with supply and demand.”

Cattle futures closed higher Monday, supported by the bullish Cattle on Feed report and lower Corn futures.

Feeder Cattle futures closed an average of $1.84 higher.

Live Cattle futures closed an average of 74¢ higher, (45¢ to $1.12 higher).

There was no afternoon report from AMS for negotiated cash fed cattle trade.

Based on the latest available report, FOB live prices last week were $1-$3 lower in the Southern Plains at $177-$179, 50¢ to $3 lower in Nebraska at $185-$187.50 and $2 lower in the western Corn Belt at mainly $186. Dressed delivered prices were $1 lower to $2 higher at $294-$297.

The five-area direct weighted average fed steer price last week was $185.04/cwt. on a live basis, which was 84¢ less than the previous week. The five-area direct steer price in the beef was $1.84 lower at $293.76.

Choice boxed beef cutout value was 55¢ lower Monday afternoon at $315.56/cwt. Select was $1.03 lower at $287.33/cwt.

Positive crop progress and conditions weighed on Corn futures Monday.

Corn futures closed 9¢ to 10¢ lower through Jly ‘24 and then mostly 3¢ lower.

Wheat futures were down 7¢ to 12¢ on harvest pressure.

Soybean futures closed 4¢ to 8¢ higher through Aug ‘24 and then mostly 1¢ higher, supported the hot, dry forecast and export news.

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

Major U.S. financial indices closed mixed Monday, supported by tech but pressured by increased Treasury-note yields.

The Dow Jones Industrial Average closed 36 points lower. The S&P 500 closed 30 points higher. The NASDAQ was up 206 points.

West Texas Intermediate Crude Oil futures (CME) closed 28¢ to 54¢ lower through the front six contracts.

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

Beef imports to the U.S. are higher year over year so far, as expected, with declining U.S. production.

Imports in the first half of 2023 totaled nearly 1.9 billion pounds, about 1% more than the same time last year, according to USDA’s Economic Research Service (ERS), in the latest Livestock, Dairy and Poultry Outlook. Cumulative imports from Australia increased 26% from the same period last year. ERS analysts add that Australia’s exports to the world were up 20% year over year as higher production provided more exportable supplies.

Snubbed to a different post, U.S. imports during the first half of this year were 13.3% of total domestic beef disappearance (production + net trade + net stocks), which was slightly higher than the same time last year. Imports for the full year are expected to be 12.8% of total disappearance, compared to an average of 11.7% for 2018-22.

“That percentage is expected to increase to about 13.8% in 2024 as domestic production declines and imports increase,” say ERS analysts.

On the other side of the fence, U.S. beef export value for the first half of this year was the second highest on record, although 19% less year over year.

Cattle futures finally found some traction on Friday, perhaps fueled by position squaring ahead of the monthly Cattle on Feed report (see below), which turned out to be bullish.

Feeder Cattle futures closed an average of $1.21 higher.

Live Cattle futures closed an average of 53¢ higher, except for unchanged in the back contract.

Packers succeeded in holding cash fed cattle prices steady to mainly lower last week, while also ratcheting wholesale beef prices higher as they restrict production.

Negotiated cash fed cattle trade was slow on light to demand through Friday afternoon, according to the Agricultural Marketing Service. There were some FOB live trades in the Texas Panhandle at $178/cwt. but too few to trend.

For the week, based on the latest established trends, FOB live prices were $1-$3 lower in the Southern Plains at $177-$179, 50¢ to $3 lower in Nebraska at $185-$187.50 and $2 lower in the western Corn Belt at mainly $186. Last week, dressed delivered prices were $1 lower to $2 higher at $294-$297.

Choice boxed beef cutout value was $1.97 higher Friday afternoon at $316.11/cwt. Select was $2.10 higher at $288.36/cwt.

Total estimated cattle slaughter last week of 616,000 head was 13,000 head more than the previous week but 48,000 head fewer than the same week last year. Year-to-date total estimated cattle slaughter of 20.6 million head was 876,000 head fewer (-4.1%) the the same time a year earlier. Year-to-date estimated beef production of 16.8 billion pounds was 876.8 million pounds less (-5.0%).

Hotter, drier weather helped lift grain futures again on Friday.

Corn futures closed mostly 2¢ to 6¢ higher.

KC HRW Wheat closed 14¢ to 20¢ higher through Sep ‘24 and then mostly 10¢ higher.

Soybean futures closed 16¢ to 26¢ higher through Aug ‘24 and then mostly 7¢ to 12¢ higher.

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

Major U.S. financial indices closed narrowly mixed Friday, pressured by increased Treasury-note yields and some lackluster earnings reports.

The Dow Jones Industrial Average closed 25 points higher. The S&P 500 closed fractionally lower. The NASDAQ was down 26 points.

West Texas Intermediate Crude Oil futures (CME) closed 60¢ to 86¢ higher through the front six contracts.

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

If anything, markets will likely view the monthly Cattle on Feed report for feedlots with 1,000 head or more capacity as slightly bullish, based on placement numbers.

Placements in July were 146,000 head fewer (-8.3%) than the previous year at 1.62 million head. That was 2.8% less than pre-report expectations.

In terms of placement weights, 38% went on feed weighing 699 pounds or less, 46% weighing 700-899 pounds and 16% weighing 900 pounds or more.

Marketings in July of 1.73 million head were 97,000 head fewer (-5.3%) than the previous year, which was in line with expectations.

Cattle on feed Aug. 1 of 11.03 million head were 259,000 head fewer (-2.3%) than the previous year, which was slightly less than expectations ahead of the report.

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.

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

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.

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

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.

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

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.

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

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.