WLI

Cattle futures, especially Feeder Cattle, extended gains Monday, closing an average of $1.34 higher (67¢ to $2.07 higher).

Live Cattle futures closed an average of 66¢ higher, except 7¢ lower in spot Jun.

That was with Corn futures closing 5¢ to 7¢ higher through Jly ‘24, on the coattails of Wheat futures (KC HRW), which closed 21¢ to 27¢ higher through May ‘24, fueled by follow-through support from the World Agricultural Supply and Demand Estimates, along with concerns about the Black Sea Initiative.

Soybean futures closed 5¢ to 10¢ higher through Jly ‘24.

Negotiated cash fed cattle trade was inactive on light demand in all regions through Monday afternoon, with too few transactions to trend, according to the Agricultural Marketing Service.

Last week, live prices were $2 lower in the Southern Plains at $170/cwt., mostly steady to $2 lower in Nebraska at mainly $176 and $1 lower to $3 higher in the western Corn belt at $175-$177. Dressed prices were $1 lower in Nebraska at $280 and steady to $5 lower in the western Corn Belt at $280.

The weighted average five-area direct fed steer price was 20¢ higher on a live basis last week at $174.13/cwt. but $1.46 lower in the beef at $279.48.

Choice boxed beef cutout value was $2.63 lower Monday afternoon at $301.98/cwt. Select was 3¢ higher at $284.71/cwt.

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Major U.S. financial indices closed little changed but higher Monday, with apparent optimism about the debt ceiling talks. 

The Dow Jones Industrial Average closed 47 points higher. The S&P 500 closed 12 points higher. The NASDAQ was up 80 points.

West Texas Intermediate Crude Oil futures (CME) closed $1.07 to $1.08 higher through the front six contracts.

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Despite improving moisture conditions in many parts of the country, persistent drought in key cattle states continues to impact the overall industry, says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University.

In his weekly market comments, Peel notes two recent USDA reports underscore forage challenges in the Southern Plains and Central Plains.

One is the weekly Crop Progress report for the week ending May 7.

Peel points out year-over-year pasture and range conditions were significantly worse in Kansas and Oklahoma.

As well, Peel says the recent crop production report paints a dour picture of hay inventory in those same areas.

“For the beginning of the hay crop year, May 1, U.S. hay stocks were down 13.4% year over year and were down 26.4% from the 10-year 2012-2021 average,” Peel says. “Compared to the 10-year average, in Kansas, May 1 hay stocks were down 25.5%; Nebraska was down 51.6%; Oklahoma was down 62.3%; and Texas was down 41.3%.” He adds dry conditions are challenging new hay production in four off the top 10 hay-producing states, which account for about 21% of total U.S. hay production on average: Texas, Nebraska, Kansas and Oklahoma.

“These four states accounted for 9.3 million beef cows on Jan. 1, 2023, just over 32% of the total U.S. beef cow herd and include four of the top 10 beef cow states, Texas (1), Oklahoma (2), Nebraska (4) and Kansas (6),” Peel says. “Delayed, slow and limited pasture and hay growth in these areas is likely still provoking some cattle liquidation. Total beef cow slaughter through April this year is down 11.2% from last year’s elevated level.  However, it is likely that reduced beef cow slaughter in drought-free areas is masking some additional herd liquidation in these worst drought areas … The much-anticipated herd rebuilding and corresponding market conditions in the beef cattle industry cannot begin in earnest until drought conditions ease significantly in these major beef cattle states.”

You can hear more of Peel’s market insights here.

Cattle futures closed higher Friday, supported by lower corn prices suggested by the monthly World Agricultural Supply Demand Estimates (see below).

Feeder Cattle futures closed an average of $2.20 higher on Friday and an average of $6.53 higher week to week ($2.95 to $8.20 higher).

Live Cattle futures closed an average of $1.02 higher ($1.65 higher toward the front to 12¢ higher at the back). They were an average of $2.27 higher week to week on Friday ($1.82 higher at the back to $2.95 higher toward the front).

Negotiated cash fed cattle trade was limited on light to moderate demand in all regions through Friday afternoon, with too few transactions to trend, according to the Agricultural Marketing Service.

For the week, live prices were $2 lower in the Southern Plains at $170/cwt., mostly steady to $2 lower in Nebraska at mainly $176 and $1 lower to $3 higher in the western Corn belt at $175-$177. Dressed prices were $1 lower in Nebraska at $280 and steady to $5 lower in the western Corn Belt at $280.

Estimated cattle slaughter last week of 646,000 head was 23,000 head more than the previous week but 15,000 head fewer than the same week last year. Year-to-date estimated cattle slaughter of 11.9 million head was 386,000 head fewer (-3.1%). Estimated year-to-date beef production of 9.8 billion pounds was 483.8 million pounds less (-4.7%).

Choice boxed beef cutout value was $1.11 lower Friday afternoon at $304.61/cwt. Select was 10¢ higher at $284.68/cwt.

USDA’s Economic Research Service increased forecast fed steer prices (five-area direct) higher for the remainder of this year, in the latest monthly World Agricultural Supply and Demand Estimates (WASDE). Prices were projected $3 higher in the second quarter at $172/cwt., and $2 higher in the third and fourth quarters at $164 and $169, respectively. The annual average price estimate increased $2 to $166.50.

“The 2023 cattle price forecast is raised on recent data and tighter supplies expected later in the year,” ERS analysts say. “For 2024, cattle prices are forecast above 2023 on tighter supplies.”

Estimated beef production this year would be 1.4 million pounds less than last year (-4.8%).

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As mentioned, Corn and Soybean futures closed lower Friday with the World Agricultural Supply and Demand Estimates forecasting record or near record production and increased ending stocks for both.

Corn futures closed mostly 2¢ to 4¢ lower, except for fractionally higher to 4¢ higher in remaining old-crop contracts. Week to week, they closed an average of 21’7¢ lower through the front six contracts.

The WASDE 2023/24 U.S. corn outlook was for larger production, greater domestic use and exports, and higher ending stocks. ERS projected the corn crop at a record 15.3 billion bushels, up more than 10% from last year on increases to both area and yield. The yield projection of 181.5 bushels per acre was based on a weather-adjusted trend assuming normal planting progress and summer growing season weather. With beginning stocks up slightly, total corn supplies were forecast at 16.7 billion bushels, the highest since 2017/18.

The season-average farm price was projected at $4.80 per bushel, down $1.80 from 2022/23.

Soybean futures closed mostly 17¢ to 24¢ lower on Friday. They were an average of 50’4¢ lower through the front six contracts lower week to week.

The 2023/24 outlook for U.S. soybeans was for higher supplies, crush, and ending stocks, and lower exports compared with 2022/23. The soybean crop was projected at 4.51 billion bushels, up 5% from last year’s crop mainly on higher yields. With lower beginning stocks partly offsetting increased production, soybean supplies were forecast at 4.75 billion bushels, up 4% from 2022/23.

The 2023/24 U.S. season-average soybean price was forecast at $12.10 per bushel, which would be $2.10 less than 2022/23. Soybean meal prices were forecast $90 less than last year at $365 per short ton. Soybean oil prices were forecast 6¢ less at 58¢ per pound.

KC HRW Wheat closed 20¢ to 35¢ higher through May ‘24, and then 4¢ to 7¢ higher, supported by the WASDE.

U.S. wheat supplies were forecast lower than last year with smaller beginning stocks and only slightly larger production. All wheat production was projected at 1,659 million bushels, up modestly from last year on increased harvested area. All wheat yield was projected at 44.7 bushels per acre, which would be 1.8 bushels lower than last year.

Ending stocks were projected 11% lower than last year and the lowest in 16 years. The projected 2023/24 season-average farm price was $8.00 per bushel, down 85¢ from last year’s record.

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Major U.S. financial indices closed little changed but lower Friday, with continued concerns about regional bank health and overall economic growth.

The Dow Jones Industrial Average closed 8 points lower. The S&P 500 closed 6 points lower. The NASDAQ was down 43 points.

West Texas Intermediate Crude Oil futures (CME) closed 83¢ to 88¢ lower through the front six contracts.

Negotiated cash fed cattle trade ranged inactive on light demand in the Southern Plains to moderate on moderate demand in the North through Thursday afternoon, according to the Agricultural Marketing Service. Although too few to trend, there were some early sales in Nebraska at $175-$176/cwt. on a live basis and $280 in the beef, and at $176-$177 and $280 in the western Corn Belt.

On Wednesday, live trade in the Southern Plains was $2 lower at $170.

Last week, live prices were $176-$178 in Nebraska and $172-$178 in the western Corn Belt. Dressed prices were $281 in Nebraska and $280-$285 in the western Corn Belt.

The five-area direct monthly weighted average price for fed steers in April was $177.09/cwt., on a live basis, which was $35.43 (+25.0%) than a year earlier. The weighted average fed steer price in the beef was $285.28, which was $56.42 more (+24.6%) year over year.

Choice boxed beef cutout value was $1.15 lower Thursday afternoon at $305.72/cwt. Select was 4¢ higher at $284.58/cwt.

Net U.S. beef export sales (2023) for the week ending May 4 were 16,600 metric tons. That was 18% less than the previous week, but 16% more than the prior four-week average, according to the weekly U.S. Export Sales report. Increases were primarily for South Korea, Japan, Canada, Mexico and Taiwan.

Cattle futures were Mixed Thursday with Feeder Cattle benefitting from lower Corn futures and Live Cattle stalling with the weaker cash outlook for the week.

Feeder Cattle futures closed an average of 86¢ higher except for $1.25 lower in spot May.

Live Cattle futures closed an average of 31¢ lower (5¢ to 82¢ lower) except for 12¢ higher in Away Aug.

Grain and soybean futures continued under pressure Thursday from the fast pace of domestic planting to positioning ahead of Friday’s monthly World Agricultural Supply and Demand Estimates.

Corn futures closed mostly 5¢ to 7¢ lower.

KC HRW Wheat closed mostly 12¢ to 13¢ lower.

Soybean futures closed mixed, mostly fractionally higher to 4¢ lower.

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Major U.S. financial indices closed mixed Thursday with pressure from regional bank stocks.

The Dow Jones Industrial Average closed 221 points lower. The S&P 500 closed 7 points lower. The NASDAQ was up 22 points.

West Texas Intermediate Crude Oil futures (CME) closed $1.61 to $1.69 lower through the front six contracts.

Cattle futures gave back some of the previous sessions gains on Wednesday amid likely profit taking and uncertainty about this week’s cash fed cattle direction.

Feeder Cattle futures closed an average of 91¢ lower except for 25¢ higher in the back contract.

Live Cattle futures closed an average of 42¢ lower except for 27¢ higher in the back contract.

Corn futures firmed Wednesday with likely short covering, while Wheat and Soybean futures eroded as traders position ahead of Friday’s World Agricultural Supply and Demand Estimates.

Corn futures closed mostly fractionally higher to 3¢ higher.

KC HRW Wheat closed mostly 1¢ to 10¢ lower.

Soybean futures closed 7¢ to 15¢ lower through Sep ‘23 and then mostly 1¢ to 3¢ lower.

Negotiated cash fed cattle trade was limited on light demand in all regions through Wednesday afternoon, according to the Agricultural Marketing Service. Although too few to trend, there were some early live sales in the Southern Plains at $170/cwt.

Last week, live prices were $172/cwt. in the Southern Plains, $176-$178 in Nebraska and $172-$178 in the western Corn Belt. Dressed prices were $281 in Nebraska and $280-$285 in the western Corn Belt.

Choice boxed beef cutout value was 51¢ lower Wednesday afternoon at $306.87/cwt. Select was 35¢ lower at $284.54/cwt.

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Major U.S. financial indices closed mixed Wednesday as investors considered lower than expected inflation, but still high inflation.

The Consumer Price Index for All Urban Consumers (CPI-U) rose 0.4% in April on a seasonally adjusted

basis, according to the U.S. Bureau of Labor Statistics. Over the last 12 months, the all items index increased 4.9% before seasonal adjustment.

The Dow Jones Industrial Average closed 30 points lower. The S&P 500 closed 18 points higher. The NASDAQ was up 126 points.

West Texas Intermediate Crude Oil futures (CME) closed 95¢ to $1.15 lower through the front six contracts.

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Record high fed cattle prices and moderating input costs fueled gains in cattle feeding returns last month, according to the Livestock Information Center (LMIC).

“April cattle feeding returns calculated by LMIC soared over $300 per head in April as live steers in the five-area recorded record-breaking highs at mid-month. Live steer prices hit a new daily high of $182.86/cwt., more than $10 higher than the previous daily high of $172.08 recorded in late November 2014,” LMIC analysts say, in the most recent Livestock Monitor. “Nearly all of April recorded prices above that previous record. The monthly simple average calculated in Dodge City (price used in the LMIC calculation) for Choice fed steers was $173.43, equivalent to what feedlots were paying for 700-800-pound steers seven months prior. LMIC calculates a breakeven price at time of placement, which was estimated at $149.96/cwt.”

LMIC analysts note, April’s calculation is based off a feeder steer price that dipped $6 from the month before.

“Seasonally, fed cattle prices should be hitting a bottom, and with higher placements than the industry expected, this fall live cattle market may not be as tight as originally expected,” say LMIC analysts. “Still, cattle feeders are expected to have an excellent year, with no month currently projected to be negative in 2023. LMIC estimates the average returns for cattle feeders will be over $200 per head in 2023. Through April, cattle feeding returns have averaged $175 per head monthly.”

Sharply lower Corn futures helped Cattle futures regain more lost ground on Tuesday.

Feeder Cattle futures closed an average of $2.94 higher.

Live Cattle futures closed an average of $1.20 higher.

Corn and Soybean futures weakened Tuesday, with pressure from the fast domestic planting pace and renewed hopes for renewal of the Black Sea Initiative. Corn received added pressure from China’s cancellation of sales of 272,000 metric tons.

Corn futures closed 9¢ to 14¢ lower through Jly ‘24, and then mostly 3¢ to 5¢ lower.

Soybean futures closed 13¢ to 18¢ lower through May ‘24 and then 9¢ to 11¢ lower.

KC HRW Wheat closed 1¢ to 15¢ higher through May ‘24 and then 1¢ to 5¢ lower.

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

Last week, live prices were $172/cwt. in the Southern Plains, $176-$178 in Nebraska and $172-$178 in the western Corn Belt. Dressed prices were $281 in Nebraska and $280-$285 in the western Corn Belt.

Choice boxed beef cutout value was $1.18 lower Tuesday afternoon at $307.38/cwt. Select was 23¢ lower at $284.89/cwt.

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Major U.S. financial indices edged lower Tuesday as investors await key inflation data later this week and ponder the outcome of debt ceiling talks. 

The Dow Jones Industrial Average closed 56 points lower. The S&P 500 closed 18 points lower. The NASDAQ was down 77 points.

West Texas Intermediate Crude Oil futures (CME) closed 55¢ to 62¢ higher through the front six contracts.

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“Tightening beef supplies, underlying general strength in beef demand and seasonal grilling demand are all pushing wholesale beef prices higher,” says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly market comments. “Consumer beef demand has continued to be remarkably resilient and wholesale beef prices are likely to go higher yet as beef production continues to decrease going forward.”

For perspective, Peel notes Choice boxed beef prices the first week of May averaged 309.41/cwt., which was 9% higher than the beginning of this year and 20% higher year over year. He explains prices so far this year are following a seasonal pattern — typically a peak in May ahead of grilling season before declining in the second half of the year.

“The May peak in boxed beef price is largely driven by retail grocery demand for Strip Loins and Sirloin cuts that move primarily through retail grocery channels. Chuck Roll prices are also very strong currently, which may be driven by export demand and retail grocery demand, including ground beef,” Peel says. “The most valuable cuts of Tenderloin and Ribeye are not typically seasonally strong this time of year, but both have been higher all year so far in 2023, reflecting continued strong restaurant demand.”

Peel adds ground beef demand typically increases during the summer due to grilling demand as well as increased consumer use of quick-service restaurants.

“The price of 90-percent lean trimmings (mostly cow beef) have been rising all year and are currently moving higher than year-ago levels,” Peel says. “More dramatically, the price of 50-percent lean trimmings has moved sharply higher to a current level that is unprecedented except for a brief spike during the pandemic in 2020.”