WLI

Cattle futures started the trading week lower with pressure from last week’s weaker fed cattle prices, increasing feed costs, lower wholesale beef values and bearish outside markets.

Live Cattle futures closed an average of $1.49 lower ($1.02 to $2.02 lower).

Feeder Cattle futures closed an average of $2.25 lower ($1.47 to $2.77 lower).

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

Last week, live prices were $182/cwt. in the Southern Plains, $185-$189 in Nebraska and $186-$188 in the western Corn Belt. Dressed prices were $296 in Nebraska and $294-$300 in the western Corn Belt.

Choice boxed beef cutout value was $3.23 lower Tuesday afternoon at $336.91/cwt. Select was $2.83 lower at $307.93/cwt.

Corn and Soybean futures retained last week’s sharp gains on Tuesday as new-crop conditions erode (see below).

Corn futures closed mostly 2¢ to 6¢ higher.

Soybean futures closed mostly 1¢ to 7¢ higher.

KC HRW Wheat closed mostly narrowly mixed from 4¢ lower to 1¢ higher.

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Major U.S. financial indices closed lower Tuesday, led by energy stocks. That was despite positive economic news including more housing starts than expected.

Privately‐owned housing starts in May were at a seasonally adjusted annual rate of 1,631,000, according to the U.S. Census Bureau. That was 21.7% more than the revised April estimate of 1,340,000 and 5.7% more than the May 2022 rate of 1,543,000.

The Dow Jones Industrial Average closed 245 points lower. The S&P 500 closed 20 points lower. The NASDAQ was down 22 points.

West Texas Intermediate Crude Oil futures (CME) closed 74¢ to $1.28 lower through the front six contracts.

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

For the week ending June 18, 44% of pasture and range was rated as Good (35%) or Excellent (9%), which was 1% less than the previous week but 11% more than a year earlier. 21% was rated as Poor (14%) or Very Poor (7%), which was 1% more than a week earlier but 21% less than a year earlier. States with more than 40% of pasture and range rated as Poor or Very Poor include: Illinois (42%); Michigan (56%) and Pennsylvania (48%).

Corn and soybean condition continued to deteriorate.

55% of corn was rated, Good (47%) or Excellent (8%) condition, compared to 61% the previous week and 70% the previous year. 12% was as Poor (9%) or Very Poor (3%), which was 4% more than previous week and 6% more than a year earlier.

54% of soybeans were rated in Good (47%) or Excellent (7%) condition, which was 5% less than the previous week and 14% less than the same week last year. 12% of soybeans were in Poor (9%) or Very Poor (3%) condition, versus 9% the previous week and 6% the previous year.

15% of winter wheat was harvested, which was 8% less than last year and 5% less than the average. 38% was rated in Good (32%) or Excellent (6%) condition, the same as a week earlier and 8% more than a year earlier. 29% was rated Poor (18%) or Very Poor (11%), which was 2% less than the previous week and 14% less than a year earlier. 

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

Last week, live prices were $3-$4 lower in the Southern Plains at $182/cwt., $2-$5 lower in Nebraska at $185-$189 and $2-$4 lower in the western Corn Belt at $186-$188. Dressed prices were $4 lower in Nebraska at $296 and steady to $4 lower in the western Corn Belt at $294-$300.

The five-area direct weighted average fed steer price for the week was $3.83 lower at $184.92 on a live basis. The weighted average in the beef was $3.14 lower at $296.07.

Choice boxed beef cutout value was $2.95 lower Monday afternoon at $340.14/cwt. Select was 9¢ lower at $310.76/cwt.

Futures markets and equity markets were closed Monday in observance of Juneteenth.

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Despite recent week-to-week declines in Cattle futures, Andrew P. Griffith, agricultural economist at the University notes cash prices should remain strong based on fundamentals.

“The cattle supply is unchanged from expectations, but drought concerns across the Plains and much of the Midwest are resulting in higher corn prices, which means a higher cost of gain in the feedlot,” Griffith explains in his weekly market comments. “At the same time, there appears to be continued inflationary concern as consumers are still paying more at the grocery store. Thus, there are some real concerns that could drive the cattle market lower than its current mark.”

Even though prices may decline some, Griffith points out $200/cwt. for a steer weighing 800 pounds would still be an historically high price.

“If drought conditions persist in the Corn Belt and the Plains then there may be much tougher decisions ahead than when to sell a group of calves,” Griffith says. “It cannot not be stressed enough that producers should maintain good culling practices in the cow herd. Just as calf prices are strong, so are slaughter cows. Calf prices will never be high enough to retain a cow that should be culled based on the typical culling criteria.”

Cattle futures continued to bounce back Friday with another day of higher wholesale beef values and perhaps some positioning ahead of the long weekend.

Live Cattle futures closed an average of $1.26 higher. They were an average of 92¢ higher week to week.

Feeder Cattle futures closed an average of 71¢ higher (42¢ to $1.02 higher). Week to week on Friday, they closed an average of $3.56 lower ($3.20 to $4.07 lower).

That was with Corn and Soybean futures continuing to chug higher, riding the rails of drought worries.

Corn futures closed mostly 13¢ to 24¢ higher through Sep ‘24 and then mostly 9¢ to 11¢ higher. Week to week, they were an average of 58’9¢ higher through the front six contracts.

Soybean futures closed 31¢ to 50¢ higher through Aug ‘24 and then mostly 20¢ higher. Week to week on Friday, there were about $1.20 higher through the front six contracts.

KC HRW Wheat closed mostly 21¢ to 31¢ higher on Friday.

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Negotiated cash fed cattle trade remained largely undeveloped through Friday afternoon.

Although too few to trend, there were some live sales in the Southern Plains at $182/cwt. on limited trade and light demand, according to the Agricultural Marketing Service. Prices there the previous week were $185-$186.

Live prices in the western Corn Belt the previous week were $190 on a live basis and $298-$300 in the beef.

Established regional trade for the week occurred in Nebraska with live prices $5-$6 lower at $185 and dressed prices $4 lower at $296.

The five-area direct weighted average fed steer price was $186.78 on a live basis week to week on Thursday, which was $2.28 lower. The weighted average in the beef was $3.06 lower at $396.08.

Choice boxed beef cutout value was $1.02 higher Friday afternoon at $343.09/cwt. Select was $1.37 higher at $310.95/cwt. Week to week on Friday, Choice was up $10.16 and Select was $5.24 higher.

Estimated total cattle slaughter last week of 634,000 head was 18,000 head more than the previous week but 34,000 fewer than the same week last year. Year-to-date cattle slaughter of 15.0 million was 571,000 head fewer (-3.7%) than a year earlier. Estimated year-to-date beef production of 12.3 billion pounds was 623.5 million pounds less (-4.8%).

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Major U.S. financial indices closed lower Friday with likely profit taking ahead of the three-day weekend.

The Dow Jones Industrial Average closed 108 points lower. The S&P 500 closed 16 points lower. The NASDAQ was down 93 points.

West Texas Intermediate Crude Oil futures (CME) closed 96¢ to $1.16 higher through the front six contracts.

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USDA announced last week that it is ramping up efforts to strengthen the substantiation of animal-raising claims.

Animal-raising claims, such as “grass-fed” and “free-range,” are voluntary marketing claims highlighting certain aspects of how the source animals for meat and poultry products are raised. These claims must be approved by USDA’s Food Safety and Inspection Service (FSIS) before they can be included on the labels of meat and poultry products sold to consumers.

“FSIS has received several petitions, comments, and letters from a wide range of stakeholders asking the agency to reevaluate its oversight of animal-raising claims, specifically, how they are substantiated,” according to the announcement. “In addition, the veracity of “negative” antibiotics claims (e.g., “raised without antibiotics” or “no antibiotics ever”) has come into question.”

FSIS, in partnership with USDA’s Agricultural Research Service (ARS), will conduct a sampling project to assess antibiotic residues in cattle destined for the “raised without antibiotics” market. The results of this project will help inform whether FSIS should require that laboratory testing results be submitted for the “raised without antibiotics” claim or start a new verification sampling program.

FSIS will also be issuing a revised industry guideline to recommend that companies strengthen the documentation they submit to the agency to substantiate animal-raising claims. The agency plans to strongly encourage use of third-party certification to verify these claims.

Live Cattle futures edged higher Thursday, supported by higher wholesale beef values. Live Cattle closed an average of 25¢ higher, except for 10¢ lower in the back contract.

Negotiated cash fed cattle trade ranged from slow with light to moderate demand in the North to mostly inactive with very light demand in the South through Thursday afternoon, according to the Agricultural Marketing Service.

Although too few to trend, there were some early live sales in Nebraska at $185/cwt. and $188 in the western Corn Belt. There were a few dressed sales in Nebraska at $294.00-$296.50.

Last week, live prices were $185/cwt. in the Texas Panhandle, $186 in Kansas, $189-$192 in Nebraska and $190 in the western Corn Belt. Dressed prices were $300 in Nebraska and $298-$300 in the western Corn Belt.

Choice boxed beef cutout value was $3.01 higher Thursday afternoon at $342.07/cwt. Select was 32¢ higher at $309.58/cwt.

Feeder Cattle futures closed an average of $1.53 lower, pressured by significantly higher Corn futures prices and the related stall to improving conditions.

According to the latest weekly U.S. Drought Monitor (beginning June 13), drought conditions existed in 25% of the continental U.S. versus 22% a week earlier. For the same time period, 42% of cattle inventory was affected by the drought, which was 2% more than the previous week and 6% more than two weeks earlier.

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Corn futures roared higher mostly 12¢ to 25¢ higher Tuesday, fueled by expanding drought in the Corn Belt, with 57% of current corn production affected by drought, compared to 45% a week earlier and 34% two weeks earlier.

Corn received added support from the weekly U.S. Export Sales report (week ending June 8). Net U.S. sales for corn exports (2022-23) were 58% more than the previous week and noticeably higher than the prior four-week average.

Soybean futures closed mostly 27¢ to 50¢ higher.

Drought is affecting 51% of soybean production, compared to 39% a week earlier and 28% two weeks earlier.

Kansas City HRW Wheat futures closed 21¢ to 27¢ higher.

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Major U.S. financial indices rallied sharply higher Thursday with investors apparently emboldened that the Fed pausing interest rates could suggest an end to monetary tightening sooner rather than later.

The Dow Jones Industrial Average closed 428 points higher. The S&P 500 closed 53 points higher. The NASDAQ was up 156 points.

West Texas Intermediate Crude Oil futures (CME) closed $2.30 to $2.36 higher through the front six contracts.

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USDA’s Economic Research Service (ERS) raised projected feeder steer prices (750-800 pounds, Oklahoma City) for the remainder of this year, in June’s Livestock, Dairy and Poultry Outlook. Forecast increases were based on recent price strength and improving summer grazing opportunities.

Prices were forecast $5 higher in the second quarter at $209/cwt., $10 higher in the third quarter at $224 and $6 higher in the fourth quarter at $226. The annual average price for this year was projected $6 higher at $227.

For reference, the highest recorded weekly price for feeder steers was $243.58/cwt. in October 2014, according to ERS.

“The ongoing story of tight cattle supplies combined with improving pasture conditions and lower year-over-year feed costs continues to push feeder cattle prices higher,” say ERS analysts. “Demand for limited supplies of feeder cattle remains strong. Feedlots are looking to fill their feedyards to take advantage of lower feed costs and the prospects for higher fed cattle prices, while recent rains have improved the drought situation in a few areas, likely creating some demand for cattle to go on grass.”

ERS projected the feeder steer price in the first quarter of 2024 at $222 with an annual average next year of $226.50.

As reported recently in Cattle Current, ERS raised the projected quarterly five-area direct average fed steer price $5-$9 for the remainder of the year to an annual average of $171.70/cwt.

Cattle futures closed sharply lower Wednesday, apparently driven by fund selling and likely pressure from outside markets.

Live Cattle futures closed an average of $2.53 lower ($1.97 to $2.95 lower).

Feeder Cattle futures closed an average of $4.35 lower.

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

Last week, live prices were $185/cwt. in the Texas Panhandle, $186 in Kansas, $189-$192 in Nebraska and $190 in the western Corn Belt. Dressed prices were $300 in Nebraska and $298-$300 in the western Corn Belt.

Choice boxed beef cutout value was $1.07 higher Wednesday afternoon at $339.06/cwt. Select was 22¢ lower at $309.26/cwt.

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

Soybean futures closed mostly fractionally mixed.

KC HRW Wheat closed mostly 10¢ lower.

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Major U.S. financial indices closed mixed Wednesday after dropping sharply lower following the Federal Reserve’s decision to let current interest rates ride at its meeting this week, as expected. However, the nation’s bank also insinuated more hikes were likely to come later.

“Holding the target range steady at this meeting allows the Committee to assess additional information and its implications for monetary policy,” according to an FOMC statement. “Tighter credit conditions for households and businesses are likely to weigh on economic activity, hiring, and inflation. The extent of these effects remains uncertain.”

The Dow Jones Industrial Average closed 232 points lower. The S&P 500 closed 3 points higher. The NASDAQ was up 53 points.

West Texas Intermediate Crude Oil futures (CME) closed 99¢ to $1.15 lower through the front six contracts.

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Rapid escalation of wholesale beef prices since Memorial Day suggests beef demand remains positive, according to David P. Anderson, Extension livestock economist at Texas A&M University.

“Beef production will continue to be lower than a year ago, supporting higher wholesale beef prices. Normally, beef production increases seasonally in the summer months,” Anderson explains, in the latest issue of In the Cattle Markets. “Even though production may increase from current levels, it will be below last year. Reduced beef production combined with positive beef demand has drawn down beef in cold storage dramatically since the first of the year. Since January cold storage beef stocks have declined 86 million pounds, or 16%.”

As mentioned recently in Cattle Current, estimated year-to-date beef production of 11.8 billion pounds last week was 592.5 million pounds less (-4.8%) than a year earlier.

“It would appear beef demand actually changed post-coronavirus, when compared to the previous time period,” explains Andrew P. Griffith, agricultural economist at the University of Tennessee, in his weekly market comments. “…In the short term, beef supply is being impacted by slaughter rates and slaughter weights. Total steer and heifer slaughter continue to run below year-ago levels, but strong boxed beef prices incentivize growing animals to a larger weight. In recent weeks, cattle dressed weights have been catching up to year-ago weights, and it is likely cattle feeders will attempt to push finished weights higher than last year’s weights. This is about the only way to influence beef production in the short term.”