WLI

Cattle futures closed narrowly mixed Tuesday following the previous session’s strong showing.

Feeder Cattle futures closed an average of 26¢ lower, except for an average of 10¢ higher in two contracts.

Live Cattle futures closed an average of 26¢ higher, except for unchanged in the back contract.

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

Last week, live prices were $1 lower in the Southern Plains at $163/cwt., steady to $1 higher in Nebraska at $164-$165 and steady to $2 higher in the western Corn Belt at $164-$166. Dressed prices were $1 higher at $265.

Wholesale beef prices seem to be finding some seasonal footing. Choice boxed beef cutout value was 27¢ higher Tuesday afternoon at $280.63/cwt. Select was 64¢ higher at $270.36/cwt.

Short covering, stronger export inspections and a reduced outlook for harvested acres in Brazil helped Soybean close mostly 9¢ to 25¢ higher.

KC HRW Wheat closed 10¢ to 12¢ higher.

Corn futures closed mostly fractionally lower to 2¢ lower, except for mostly 2¢ higher in new-crop contracts.

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Major U.S. financial indices edged lower Tuesday, pressured in part by rising bond yields. 

The Dow Jones Industrial Average closed 37 points lower. The S&P 500 closed 6 points lower. The NASDAQ was down 52 points.

West Texas Intermediate Crude Oil futures (CME) closed 36¢ to 41¢ higher through the front six contracts. 

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Although still mostly positive between now and November, projected cattle feeding returns faded a bit from the previous month as cost of gains increased and anticipated fed cattle prices declined, according to Historical and Projected Kansas Feedlot Net Returns from Kansas State University.

Projected fed steer returns range from $8.47 per head in July to $146.15 in May. Returns are negative for September (-$9.31) and November (-$53.50). Feedlot cost of gain ranges from $114.08/cwt. in November to $143.35 in March.

Projected fed heifer returns follow a similar path, ranging from $6.44 in March to $101.24 per head in May. Returns are negative for July (-$11.42) and November (-$96.86). Feedlot cost of gain ranges from $125.62/cwt. in November to $164.24 in March.

The calculation process does not reflect any price risk management.

Whether it was oversold conditions or grass fever, Cattle futures found firm traction amid active trade to start the week.

Feeder Cattle futures closed an average of $2.80 higher ($2.42 to $3.82 higher).

Live Cattle futures closed an average of $1.89 higher ($1.45 to $2.27 higher).

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

Last week, live prices were $1 lower in the Southern Plains at $163/cwt., steady to $1 higher in Nebraska at $164-$165 and steady to $2 higher in the western Corn Belt at $164-$166. Dressed prices were $1 higher at $265.

The five-area direct weighted average fed steer price last week was 17¢ higher on a live basis at $164.41/cwt. The average fed steer price in the beef was $1.24 higher at $265.06.

Choice boxed beef cutout value was 48¢ higher Monday afternoon at $280.36/cwt. Select was 97¢ higher at $269.72/cwt.

Grain and Soybeans futures continued higher Monday with less skittish outside markets and perhaps some early positioning ahead of Friday’s stocks and planting intentions reports.

Corn futures closed 5¢ to 9¢ higher through Jly ‘24 and then mostly 1¢ to 2¢ higher.

KC HRW Wheat closed 11¢ to 13¢ higher.

Soybean futures closed mostly 12¢ to 15¢ higher.

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Major U.S. financial indices closed with a firmer feel Monday, buoyed by recently beleaguered and volatile regional bank stocks.

The Dow Jones Industrial Average closed 194 points higher. The S&P 500 closed 6 points higher. The NASDAQ was down 55 points.

Geopolitical tensions and more positive outside markets helped lift Crude Oil futures Monday. Texas Intermediate Crude Oil futures (CME) closed $3.30 to $3.55 higher through the front six contracts. 

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Beef production the last four weeks averaged 6.4% less year over year, stemming from fewer cattle slaughtered and lighter carcass weights, according to Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly market comments. 

“Steer slaughter is down 5.3% year over year in the last month and steer carcass weights have averaged 903 pounds, down 16 pounds from one year ago. Heifer slaughter has finally begun to decrease and is down 1.6% in the past month, with heifer carcass weights at 830 pounds, down 20 pounds year over year,” Peel says. “Cow slaughter is down 6.8% year over year in the last four weeks, including a 0.9% increase in dairy cow slaughter and a 13.6% year over year decrease in beef cow slaughter. Cow carcass weights have averaged 646 pounds the last month, 11 pounds lower than the same period last year.  Bull slaughter is down 14.6% from one year ago. Bull carcass weights have averaged 854 pounds in the last four weeks, down 26 pounds compared to one year ago.”

Amid declining production and resilient beef demand, Peel explains Choice boxed beef cutout value over the last month averaged $258.13/cwt., which was 11% more year over year.

“Beef production is expected to drop more sharply for the remainder of the year, adding even more supply pressure to support prices,” Peel explains. “Current estimates for 2023 have beef production decreasing in a range from 4.5% to 6.0% lower year over year. The decrease will depend, in part on whether continued drought causes additional herd liquidation and temporarily moderates declining beef production and resulting in a smaller decrease.”

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

Negotiated cash fed cattle trade was mostly inactive on light demand through Friday afternoon, with too few transactions to trend in any region, according to the Agricultural Marketing Service.

For the week, live prices were $1 lower in the Southern Plains at $163/cwt., steady to $1 higher in Nebraska at $164-$165 and steady to $2 higher in the western Corn Belt at $164-$166. Dressed prices are $1 higher at $265.

Choice boxed beef cutout value was $2.90 lower Friday afternoon at $279.88/cwt. Select was 14¢ lower at $268.75/cwt.

Estimated total cattle slaughter last week was 626,000 head, which was 5,000 head fewer than the previous week and 31,000 head fewer than the same week last year. Total estimated year-to-date cattle slaughter of 7.5 million head was 202,000 head fewer (-2.6%) than the same period a year earlier. Total estimated year-to-date beef production of 6.2 billion pounds was 282.9 million pounds less (-4.3%).

Cattle futures were mixed as declining open interest continued.

Live Cattle futures closed an average of 53¢ higher (30¢ to 85¢ higher), except for 20¢ lower in away Jun.

Feeder Cattle futures closed an average of 76¢ lower (20¢ to $1.05 lower), except for 62¢ higher in spot Mar. Pressure included a surge in Corn Futures — 11¢ to 12¢ higher in old-crop contracts and then mostly 4¢ to 8¢ higher — lifted by flash export corn sales to China.

Chatter about Russia limiting wheat exports buoyed Kansas City Wheat futures, which closed 20¢ to 28¢ higher.

Soybean futures firmed but the overall outlook remains bearish with reports from South America that Brazil’s crop is expected to override any deficits in Argentina.

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Major U.S. financial indices closed higher Friday amid another volatile trading session as investors try to make sense of overall banking health.

The Dow Jones Industrial Average closed 132 points higher. The S&P 500 closed 22 points higher. The NASDAQ was up 36 points.

West Texas Intermediate Crude Oil futures (CME) closed 66¢ to 71¢ lower through the front six contracts. 

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Although the Choice-Select spread continues to decline seasonally it remains higher year over year, as does the percentage of carcasses grading Choice and higher.

“The Choice-Select spread started the year on a high note of $27/cwt., a continuation of

the 2022 trends that capped off the year above $30,” say analysts with the Livestock Marketing Information Center (LMIC), in the latest Livestock Monitor. “Since the opening week of 2023, the Choice-Select spread has fallen almost every week and bottomed around $10/cwt. two weeks ago. The first quarter is only a few weeks shy of completion and the spread has averaged $15/cwt. over 11 weeks, even though the spread has been rapidly shrinking. Last year, the spread averaged just under $7/cwt., similar to the five-year average.”

LMIC analysts explain the spread is usually narrowest in the first quarter, widens through the second quarter before declining and then maintains a spread of approximately $15 through the last two quarters of the year. Last year, they say the spread followed the five-year average until June and then stayed at high levels through the remainder of the year with considerable volatility. From June through December last year, the average Choice-Select spread ranged between $20 and $32/cwt.

“Today’s spreads are still large for this time of year, but we are approaching the time of year where they should be widening. Starting at a higher base may give the summer peak in the spread more height,” according to LMIC analysts. “The feed cost structure and tightening cattle supplies may encourage shorter days on feed over the summer which may curb the availability of Choice product. This spring, the percent of beef grading Choice has been similar to 2022 and in recent weeks has been a higher proportion, topping 75%, compared to a five-year average of 73%.”

Negotiated cash fed cattle trade was mostly inactive on light demand through Thursday afternoon, with too few transactions to trend in any region, according to the Agricultural Marketing Service.

So far this week, live prices are $1 lower in the Southern Plains at $163/cwt., steady to $1 higher in Nebraska at $164-$165 and steady to $2 higher in the western Corn Belt at $164-$166. Dressed prices are $1 higher at $265.

Choice boxed beef cutout value was $1.48 higher Thursday afternoon at $282.78/cwt. Select was 93¢ lower at $268.89/cwt.

Net U.S. beef export sales gained ground for the week ending Mar. 16, according to the U.S. Export Sales report. Net sales of 18,600 metric tons (mt) were 5% more than the previous week and 59% more than the prior four-week average. Increases primarily were for South Korea, Japan, China, Taiwan and Hong Kong.

Cattle futures wavered in their range-bound path Thursday.

Feeder Cattle futures closed mixed, from an average of 21¢ lower in three contracts to an average of 33¢ higher.

Live Cattle futures closed an average of 26¢ lower, except for an average of 7¢ higher in the back two contracts.

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

KC HRW Wheat closed 4¢ to 8¢ higher through May ’24 and then mostly 1¢ higher.

Soybean futures closed 9¢ to 29¢ lower.

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Major U.S. financial indices closed slightly higher Thursday amid volatile trading.

The Dow Jones Industrial Average closed 75 points higher. The S&P 500 closed 11 points higher. The NASDAQ was up 117 points.

West Texas Intermediate Crude Oil futures (CME) closed 73¢ to 94¢ lower through the front six contracts. 

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Total pounds of beef in freezers Feb. 28 were 6% less than the previous month and 6% less year over year, according to USDA’s latest Cold Storage report.

Frozen pork supplies were up slightly from the previous month and up 9% from last year.

Total red meat supplies in freezers were 3% less than the previous month but 2% higher than a year earlier.

Total frozen poultry supplies were up 3% from the previous month and up 10% from a year ago.

Negotiated cash fed cattle trade was moderate to active on good demand in the Southern Plains through Wednesday afternoon, according to the Agricultural Market Service, with live prices $1 lower at $163/cwt.

Trade was moderate on good demand in Nebraska where live prices were steady at $164 and dressed prices were $1 higher at $265.

In the western Corn Belt, trade was slow on moderate demand. Although too few to trend, early live sales were $165.00-$165.50 and early dressed sales were $265. Prices there last week were $164-$165 and mostly $264, respectively.

Choice boxed beef cutout value was $1.38 higher Wednesday afternoon at $281.30/cwt. Select was $1.73 lower at $269.82/cwt.

Futures traders continued their commodities selling mode Wednesday with bearish outside markets.

Feeder Cattle futures closed an average of 51¢ lower.

Live Cattle futures closed an average of 39¢ lower.

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

KC HRW Wheat closed 7¢ to 12¢ lower.

Soybean futures closed mostly 18¢ to 25¢ lower.

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Major U.S. financial indices closed lower Wednesday. Although the Fed’s decision to increase interest rates by 25 basis points was expected, apparently investors continue to gauge the stance hawkish, in light of recent bank troubles.

The Dow Jones Industrial Average closed 530 points lower. The S&P 500 closed 65 points lower. The NASDAQ was down 190 points.

West Texas Intermediate Crude Oil futures (CME) closed $1.11 to $1.25 higher through the front six contracts. 

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Food inflation at retail and foodservice last year exceeded levels reached during the Great Recession. Food inflation for the 12 months ending February 2023 was 10.2% at home and 8.4% away from home, according to Circana, formerly known as IRI and the NPD Group. Of the $2.9 trillion in consumer retail spending Circana tracks, food and foodservice spending represents the largest share, nearly $1.5 trillion.

Although the rate of away-from-home inflation isn’t as high as at home, foodservice costs are more than four times those of at-home eating occasions, with the absolute dollar gap widening, according to Circana food and beverage and foodservice industry analysts, at the company’s recent Growth Summit. 

David Portalatin, Circana food and foodservice industry advisor, explained to Growth Summit attendees that higher food costs have had an impact on discretionary spending, assome of the declines in discretionary retail spending last year were due to the need to fund higher spending on food and beverage. 

When faced with higher prices, Circana analysts say consumers will use multiple tactics to reduce or reallocate at- and away-from-home food spending. Those tactics include trading down to private label, buying in bulk, using more leftovers, or choosing a quick-service restaurant over a full-service restaurant.

“One of the behaviors consumers have historically used to manage higher food costs is trading down,” says Cara Loeys, Circana principal of CPG client engagement. “Consumers gravitate to larger pack sizes in the grocery store for a lower price per volume. They’ve also traded from premium to mainstay and value brands to get as much as possible without spending more. These behaviors are a correction from the pandemic when consumers, flushed with cash, purchased premium grocery items.”

While 2022 was about value pricing to manage budgets, Portalatin explains that 2023 will be about the other attributes that play into value.

“Price will always be important, but consumers define value differently. For example, consumers who visit a restaurant aren’t necessarily looking for the cheapest meal,” Portalatin explains. “They’re looking for the menu items they crave or foodservice outlets that offer quality and variety and enable them to treat themselves.”