WLI

Cattle future closed lower Tuesday, amid retrenching and a risk-off atmosphere in commodities and equites tied to growing concerns about recession.

Feeder Cattle futures closed an average of 59¢ lower (10¢ to $1.00 lower).

Live Cattle futures closed an average of 73¢ lower (17¢ lower to $1.00 lower toward the front).

Negotiated cash fed cattle trade ranged from mostly 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 prices were $2-$4 higher in the Texas Panhandle at $165-$167/cwt., $4 higher in Kansas at $167, $4-$7 higher in Nebraska at $168-$172 and $4-$6 higher in the western Corn Belt at $170. Dressed prices were $5-$7 higher at $270-$272.

Wholesale beef prices extended gains Tuesday. Choice boxed beef cutout value was $2.85 higher Tuesday afternoon at $287.94/cwt. Select was $3.77 higher at $277.95/cwt.

Corn futures closed 3¢ to 9¢ lower.

KC HRW Wheat closed 1¢ to 3¢ lower.

Soybean futures closed mostly 8¢ to 12¢ lower.

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Major U.S. financial indices closed lower Tuesday as investors grappled with the inflationary force of higher Crude Oil prices in tandem with signs the economy is slowing.

On the last business day of February, the number and rate of job openings decreased 632,000 to 9.9 million and 6.0%, respectively, according to the U.S. Bureau of Labor Statistics.

The Dow Jones Industrial Average closed 198 points lower. The S&P 500 closed 23 points lower. The NASDAQ was down 63 points.

West Texas Intermediate Crude Oil futures (CME) closed 20¢ to 29¢ higher through the front six contracts. 

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Agricultural producer sentiment weakened again in March, according to the Purdue University/CME Group Ag Economy Barometer. It declined 8 points from the previous month to 117. Both of the barometer’s sub-indices declined 8 points in March, leaving the Current Conditions Index at 126 and the Future Expectations Index at 113.

“Rising interest rates and weaker prices for key commodities including wheat, corn, and soybeans from mid-February through mid-March were key factors behind this month’s lower sentiment reading,” says James Mintert, the barometer’s principal investigator and director of Purdue University’s Center for Commercial Agriculture. “Although the March survey did not include any questions directly related to the bank closures, during an open-ended comment question posed at the end of each survey, multiple respondents voiced concerns about the banking sector’s problems and its potential to hurt the economy. These problems also likely weighed on producer sentiment.”

The Farm Financial Performance Index remained unchanged from February at a reading of 86. Producers point to higher input costs and rising interest rates as their number one concern for the year ahead. Notably, concern about higher input cost has been falling since last summer’s peak.

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 March 13-17, which coincided with the demise of Silicon Valley Bank and Signature Bank.

Cattle future closed lower Monday, especially Feeder Cattle, as traders retrenched following the previous session’s new contract highs.

Feeder Cattle futures closed an average of 91¢ lower (5¢ lower at the back to $2.10 lower toward the front).

Live Cattle futures closed an average of 35¢ lower, except for an average of 10¢ higher in two contracts.

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

Last week, live prices were $2-$4 higher in the Texas Panhandle at $165-$167/cwt., $4 higher in Kansas at $167, $4-$7 higher in Nebraska at $168-$172 and $4-$6 higher in the western Corn Belt at $170. Dressed prices were $5-$7 higher at $270-$272.

The weekly weighted average five-area direct fed steer price was $4.33 higher on a live basis last week at $168.74/cwt. The weekly average steer price in the beef was $5.30 higher at $270.36.

Wholesale beef prices continued to gain Monday. Choice boxed beef cutout value was 3.02 higher in the afternoon at 285.09/cwt. Select was $3.46 higher at $274.18/cwt.

As for grains and soybeans, Corn futures closed narrowly mixed, mostly 1¢ lower to 1¢ higher.

KC HRW Wheat closed mostly 1¢ to 2¢ lower through Mar ‘24, and then 1¢ higher.

Soybean futures closed 13¢ to 19¢ higher through Aug ‘24, and then mostly 8¢ to 9¢ higher.

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Major U.S. financial indices closed mostly higher Monday with carryover support from the previous session and despite the prospect of higher inflation, associated with higher crude oil prices spurred by the announced production cuts by OPEC+ nations.

The Dow Jones Industrial Average closed 327 points higher. The S&P 500 closed 15 points higher. The NASDAQ was down 32 points.

West Texas Intermediate Crude Oil futures (CME) closed $3.76 to $4.75 higher through the front six contracts. 

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Assuming drought conditions improve significantly, bred cow and heifer prices will likely increase dramatically, says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly market comments. He adds the price jump could come as early as this fall and into 2024.

As it stands currently, though, Peel notes lingering drought conditions appear to be keeping bred cow prices relatively lower than would be expected heading into April’s typical seasonal increase.

Currently (last week), Peel says 1,100-1,200-pound, second-trimester, 5-8-year-old Medium/Large No. 1 cows, sold for $1,332 per head in Oklahoma. Younger cows — 2-4 years old — in second to third trimester averaged $1,300-$1,500. Based on prior research and current broader market conditions, he explains bred cow values would likely be $100-$300/head higher without drought impacts.

“The prior research also provides insights into the range of values for bred cows. The base cow described above assumes average quality. Variations from low to high quality decrease or increase value of the cow by roughly 15%, about $200 per head less for low quality, to $200/head more for high quality cows compared to average quality,” Peel says. “On average, the value of bred cows is highest at ages 3-5 and begins to drop sharply after age 7. Bred cow value is higher for later stages of gestation, with bred cows valued roughly $150/head more in the third trimester compared to the first trimester.”

All told, Peel says current bred cow values could range from less than $1,000 per head to nearly $2,000 across a wide range of quality, age, stage of gestation, and hide-color factors. 

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

For the week, live prices were $2-$4 higher in the Texas Panhandle at $165-$167/cwt., $4 higher in Kansas at $167, $4-$7 higher in Nebraska at $168-$172 and $4-$6 higher in the western Corn Belt at $170. Dressed prices were $5-$7 higher at $270-$272.

Estimated total cattle slaughter last week of 651,000 head was 25,000 head more than the previous week and 12,000 more than the same week last year. Estimated year-to-date total cattle slaughter of 8.19 million head was 193,000 head fewer (-2.3%) than the same period last year. Estimated year-to-date beef production of 6.75 billion pounds was 282 million pounds less (-4.0%).

The week’s significantly higher cash fed cattle prices continued to push Cattle futures higher Friday.

Feeder Cattle futures closed an average of $1.03 higher.

Live Cattle futures closed an average of 66¢ higher (10¢ higher at the back to $1.12 higher toward the front).

Cattle futures received added support from wholesale beef prices. Choice boxed beef cutout value was $2.87 higher Friday afternoon at $282.07/cwt. Select was $2.26 higher at $270.72/cwt.

Corn futures closed mostly fractionally lower to 4¢ lower, except for 11¢ and 8¢ higher in the front two contracts. The Perspective Plantings report (see below) applied pressure.

KC HRW Wheat closed 2¢ to 6¢ higher through May ‘24, and then 4¢ to 6¢ lower.

Soybean futures closed 10¢ to 31¢ higher through Aug ‘24, and then mostly 2¢ to 3¢ higher, helped along by the Grain Stocks report (see below).

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Major U.S. financial indices closed higher Friday, buoyed by less increase than expected in the Personal Consumptions Expenditures index (PCE), closely watch by the Fed as an inflation gauge.

The PCE increased 0.3% in February, according to the U.S. Bureau of Economic Analysis. The trade expected an increase of 0.4%.

The Dow Jones Industrial Average closed 415 points higher. The S&P 500 closed 58 points higher. The NASDAQ was up 208 points.

West Texas Intermediate Crude Oil futures (CME) closed $1.24 to $1.32 higher through the front six contracts. 

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U.S. farmers intend to plant 4% more corn acres this year than last, according to the Perspective Plantings report issued Friday.

Corn planted area for all purposes in 2023 was estimated at 92.0 million acres, which would be 3.42 million acres more than last year. That was 1.1 million acres more than expectations ahead of the report.

It’s worth noting that 800,000 acres of the added year-over-year corn acres are in North Dakota, where winter looks to linger for a while.

Soybean planted area for 2023 was estimated at 87.5 million acres, up slightly from last year, but 740,000 acres fewer than average expectations ahead of the report.

All wheat planted area for 2023 was estimated at 49.9 million acres, up 9% from 2022 and about 1 million acres more than expectations ahead of the report. Projected 2023 winter wheat planted area was 13% more than last year at 37.5 million acres.

USDA estimated harvested acres of all hay this year to be 50.6 million acres, which would be 1.1 million acres (+2.2%) more than last year.

Stocks Tighten

Overall, corn and soybean stocks were snugger than expectations ahead of the report.

Corn stocks in all positions on March 1, 2023 totaled 7.40 billion bushels, down 5% percent from a year earlier, according to the Grain Stocks report. Of the total stocks, 4.11 billion bushels were stored on farms, which was 1% more year over year.

Soybeans stored in all positions on the same date totaled 1.69 billion bushels, down 13% from a year earlier. Soybean stocks stored on farms were estimated at 750 million bushels, down slightly from a year ago.

All wheat stored in all positions on March 1 totaled 946 million bushels, down 8% from a year ago. On-farm stocks were estimated at 227 million bushels, which was 30% more than a year earlier.

Cash fed cattle prices jumped Thursday with moderate trade and good demand in all regions, according to the Agricultural Marketing Service.

Live prices were $2-$4 higher in the Texas Panhandle at $165-$167/cwt., mostly $4 higher in Kansas at $167, $5-$6 higher in Nebraska at $169-$171 and mostly $4-$5 higher in the western Corn Belt at $170. Dressed prices were mostly $5 higher at $270, with a few up to $275 in Nebraska and a few up to $276 in the western Corn Belt.

Choice boxed beef cutout value was $1.09 lower Thursday afternoon at $279.20/cwt. Select was 44¢ lower at $268.46/cwt.

Stronger cash prices pulled Cattle futures higher.

Feeder Cattle futures closed an average of $1.58 higher, (from 95¢ higher in expiring Mar to $1.92 higher).

Live Cattle futures closed an average of $1.03 higher (80¢ to $1.72 higher).

Corn futures closed mostly 3¢ to 4¢ lower through Jly ‘24, and then mostly 1¢ lower.

KC HRW Wheat closed mostly 1¢ higher.

Soybean futures closed mostly fractionally lower to 3¢ lower.

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Major U.S. financial indices closed higher again Thursday. Support included an increase in weekly unemployment insurance claims, which some viewed as another prompt for the Fed to ease monetary tightening.

Initial claims were 198,000 for the week ending March 25, which was 7,000 more than the previous week, according to the U.S. Department of Labor. The four-week moving average of 198,250 was 2,000 more than the previous four-week average. 

The Dow Jones Industrial Average closed 141 points higher. The S&P 500 closed 23 points higher. The NASDAQ was up 87 points.

West Texas Intermediate Crude Oil futures (CME) closed $1.22 to $1.40 higher through the front six contracts. 

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Retail beef prices are historically high but have risen relatively less than competing meat proteins.

“The all fresh retail beef price in February was nearly $7.23 per pound, which is a slight increase from January but 6¢ lower than February of the previous year,” says Andrew P. Griffith, agricultural economist at the University of Tennessee, in his weekly market comments. “This compares to a price of $6.30 per pound in February 2021 and $5.94 per pound in 2020. Thus, the all fresh retail beef price was 22% higher in February 2023 than it was in February 2020.”

By way of comparison, compared to three years earlier, Griffith says February retail prices were 23% more for pork and 39% more for broilers. Across the same period, he notes a dozen eggs cost 191% more and a gallon of milk is 30% higher.

“These prices demonstrate some of the pressure placed on consumers for staple proteins,” Griffith says. “How consumers shift expenditures of disposable income will determine demand for each of the items.”

Cattle futures took another step higher Wednesday, helped along by more positive outside markets.

Feeder Cattle futures closed an average of $1.48 higher, except for 27¢ lower in expiring spot Mar.

Live Cattle futures closed an average of 68¢ higher (27¢ to 95¢ higher).

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

Last week, live prices were $163/cwt. in the Southern Plains, $164-$165 in Nebraska and $164-$166 in the western Corn Belt. Dressed prices were $265.

Choice boxed beef cutout value was 34¢ lower Wednesday afternoon at $280.29/cwt. Select was $1.46 lower at $268.90/cwt.

Corn futures closed mostly 1¢ lower, except for 3¢ higher and 1¢ higher in the front two contracts.

KC HRW Wheat closed 2¢ to 15¢ lower.

Soybean futures closed 4¢ to 9¢ higher in the front three contracts, and then mostly 2¢ to 5¢ lower.

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Major U.S. financial indices closed higher Wednesday, supported by stronger tech stocks and more confidence in the banking sector.  

The Dow Jones Industrial Average closed 323 points higher. The S&P 500 closed 56 points higher. The NASDAQ was up 210 points.

West Texas Intermediate Crude Oil futures (CME) closed 22¢ to 29¢ lower through the front six contracts. 

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Rural economic growth declined last month, according to the Creighton University Rural Mainstreet Index (RMI). The March index declined to 45.6 from 50.1 in February. The index ranges between 0 and 100, with a reading of 50.0 representing growth neutral. It was above growth neutral the previous three months.

“The Rural Mainstreet economy continues to experience slow, to no, to negative economic growth. Less than 1% of bankers reported improving economic conditions for the month with 92% indicating no change in economic conditions from February’s slow growth,” according to Ernie Goss, Jack A. MacAllister Chair in Regional Economics at Creighton University’s Heider College of Business.

The RMI is based on a monthly survey of bank CEOs in rural areas of a 10-state region dependent on agriculture and/or energy. It represents approximately 200 rural communities — average population of 1,300.

“Over the past 12 months, the regional confidence index has fallen to levels indicating a very negative outlook,” Goss says. The slowing economy, higher borrowing costs and labor shortages constrained the business confidence index to a weak 39.1 from 44.4 in February.

Among survey highlights:

• After advancing by more than 9% for 2022, bank CEOs expect farmland prices to expand by only 1% over the next 12 months.
• Only 13.6% of bankers tightened credit standards for farm loans this year.
• Bank savings deposits rose to a record level.