WLI

Cattle futures closed mainly lower Tuesday, pressured in part by the lack of cash direction for fed cattle and firmer nearby Corn futures.

Feeder Cattle futures closed an average of 71¢ lower (32¢ to $1.32 lower).

Live Cattle futures closed an average of 40¢ lower, except for an average of 24¢ higher in the back two contracts.

Corn futures gained Tuesday, with support from further erosion in Argentina’s crop.

Corn futures closed mostly 1¢ to 2¢ higher.

KC HRW Wheat closed mostly 9¢ to 17¢ higher.

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 $164-$167/cwt. but mostly $165. Dressed prices were $265.

Choice boxed beef cutout value was $1.05 higher Tuesday afternoon at $285.91/cwt. Select was 94¢ higher at $274.56/cwt.

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Major U.S. financial indices closed higher Tuesday, finding some footing after the recent selloff due to the closure of Silcon Valley Bank. Support included the monthly Consumer Price Index meeting trader expectations.

The Consumer Price Index for All Urban Consumers (CPI-U) rose 0.4% in February on a seasonally adjusted basis, after increasing 0.5% in January, according to the U.S. Bureau of Labor Statistics. Over the last 12 months, the all items index increased 6.0% before seasonal adjustment, which was the smallest 12-month increase since the period ending September 2021.

The Dow Jones Industrial Average closed 336 points higher. The S&P 500 closed 63 points higher. The NASDAQ was up 239 points.

West Texas Intermediate Crude Oil futures (CME) closed $3.16 to $3.47 lower through the front six contracts, with continued pressure from worries that banking woes will further slow economic growth.  

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USDA’s Economic Research Service (ERS) increased expected average feeder steer prices (basis 750-800 lbs., Oklahoma City) by $1 in the first quarter to $183/cwt. and by $1 in the second quarter to $193, in the March Livestock, Dairy and Poultry Outlook. Prices are forecast at $214 in the third quarter and $224 in the fourth quarter for an annual average of $204, which would eclipse the record-high average of 2014.

“The outlook for feeder calf prices is improved, given existing tight supplies of cattle, a projection for lower market-year average corn prices, and higher expected fed cattle prices, as well as recent price data,” according to ERS analysts.

As mentioned recently in Cattle Current, ERS forecast the annual average weighted average five-area direct fed steer price at $162/cwt. Support includes historically high seasonal composite boxed beef cutout values, underpinned by declining cattle numbers and lighter winter carcass weights.

“For the week ending February 18, steer and heifer carcass weights were lower by 15 and 21 pounds, respectively, from the same period last year,” ERS analysts say. “Further, cow and bull carcass weights are down 10 and 30 pounds, respectively. The anticipated share of cows in the slaughter mix is raised in 2023, which will contribute to lighter expected average carcass weights. The results have lowered the outlook for cattle weights the rest of year.”

Cattle futures softened further Monday. Aside from taking a pause and potentially profits from last week’s up-move in Feeder Cattle, and steady money for fed cattle, perhaps traders also were wondering about the floor for recently lower wholesale beef prices. As much as anything, though, bearish outside markets, tied to the failure of Silcon Valley Bank and worries about wider repercussions cast a pall over equity and commodity markets.

Feeder Cattle futures closed an average of 53¢ lower (32¢ to $1.17 lower).

Live Cattle futures closed an average of 41¢ lower.

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

KC HRW Wheat closed 1¢ to 3¢ higher.

Soybean futures closed 13¢ to 18¢ lower through Aug ‘24 and then mostly 7¢ lower.

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

Last week, live prices were steady at $165/cwt., except for $1 lower to $2 higher in the western Corn Belt at $164-$167. Dressed prices were steady to $3 higher in the western Corn Belt at $265 and steady in Nebraska at $265.

The five-area direct weighted average steer price last week was 38¢ higher at $165.40/cwt. The weighted average steer price in the beef was 89¢ higher at $265.32.

Choice boxed beef cutout value was 5¢ lower Monday afternoon at $284.86/cwt. Select was $2.08 higher at $273.62/cwt.

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Major U.S. financial indices closed mixed after a volatile session Monday as investors continued to assess fallout from the failure of Silicon Valley Bank (SVP).

The Dow Jones Industrial Average closed 90 points lower. The S&P 500 closed 5 points lower. The NASDAQ was up 49 points.

West Texas Intermediate Crude Oil futures (CME) closed $1.76 to $1.88 lower through the front six contracts. 

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Nationwide, steers sold $2-$6/cwt. higher, according to the Agricultural Marketing Service. Heifers traded $1-$4 higher in the North Central and South Central regions, except for $1 lower in the South Central region for heifers at 800 lbs. Heifers in the Southeast sold $7-$10 higher.

First-quarter cattle prices are higher than originally forecast by the Livestock Marketing Information Center (LMIC), but those analysts caution there could be some correction depending on how weather and forage develop heading into spring.

In the latest Livestock Monitor, LMIC analysts note steers weighing 500-600 lbs. last week sold for $250/cwt. in Montana, $242 in South Dakota and at a combined auction average of $226 in Texas, the highest price of the year.

“These auction prices, by our estimation, are very high, given the spring forage situation is very much unknown, and hay is expensive,” LMIC analysts say. “The big concern in the short term is how spring shapes up. Will all of the country have great early grass growth? Are these buyers able to source and feed reasonably priced feedstuffs until grass shows up? The outlook for the spring contains the probability that La Niña may not withdraw until summer, which may point to a cool wet spring in the Northern Plains and continued dryness in the Southern Plains.”

At the same time, LMIC analysts point out Dec corn futures prices are significantly lower than current cash prices.

Cattle futures closed lower for the second consecutive day on Friday as Corn futures gained and cash fed cattle prices remained steady to cloudy.

Feeder Cattle futures closed an average of 1.72¢ lower. However, they were $3.66 higher week to week.

Live Cattle futures closed an average of 76¢ lower.

Corn futures closed 4¢ to 6¢ higher.

KC HRW Wheat closed mostly 18¢ to 20¢ higher.

Soybean futures closed mostly 1¢ to 4¢ lower through Sep ‘24 and then mostly 3¢ higher.

Negotiated cash fed cattle trade was slow on moderate demand in Kansas, Nebraska and the western Corn Belt through Friday afternoon, according to the Agricultural Marketing Service. Elsewhere, trade was very limited on light demand.

For the week, live prices were mostly steady at $165/cwt., except for steady to $1 higher in the western Corn Belt at $165-$166. Dressed prices were steady to $3.50 higher in Nebraska at $265.00-$268.50 and steady in the western Corn Belt at $265.

Choice boxed beef cutout value was 31¢ higher Friday afternoon at $284.91/cwt. Select was $4.51 lower at $271.54/cwt.

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Major national financial indices closed lower Friday, pressured by news that Silicon Valley Bank (SVB), in Santa Clara, Calif. was shuttered by the California Department of Financial Protection and Innovation, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver.

Apparently, as a tech-focused lender, SVB ran into a massive cash crunch between clients, such as venture groups, making more withdrawals than anticipated, while increasing interest rates devalued the bank’s bond assets. Silicon Valley Bank had 17 branches in California and Massachusetts.

According to the FDIC, this was the first closure of an FDIC-insured institution since October of 2020.

The Dow Jones Industrial Average closed 345 points lower. The S&P 500 closed 56 points lower. The NASDAQ was down 199 points.

West Texas Intermediate Crude Oil futures (CME) closed 88¢ to 96¢ higher through the front six contracts.

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The U.S. restaurant industry continues to recover from the impact of Covid restrictions and pandemic-related closures, according to The NPD Group (NPD). Although still less than pre-pandemic counts, the number of restaurants in the U.S. grew by 18,000 locations, according to NPD’s fall 2022 restaurant census, which includes restaurants open as of September 30, 2022. Total foodservice traffic, restaurants and retail foodservice combined, was up 2%, and restaurant visits were up 3% in January over visit losses due to the omicron variant last year. Foodservice consumer spending rose 7% in the month compared to a year ago.  

In January, dine-in visits at restaurants were up 24% over a gain of 41% in January 2022. Even with the increases, dine-in or on-premises traffic is still recovering from the steep pandemic-related declines in 2020.

Off-premises — primarily drive-thru and delivery — was a default beneficiary of pandemic restrictions, and visits for both order modes remain up, 9% and 88%, respectively, versus three years ago. Traffic at morning meal, including breakfast and A.M. snack periods, has fully recovered from pandemic declines. Restaurant visits at breakfast and A.M. snack increased 13% in January compared to a year ago, and are up 3% versus three years ago, according to NPD.

“Although the pandemic is still informing the foodservice industry narrative, there are areas of meaningful growth and recovery,” says David Portalatin, NPD food industry advisor. “Consumers still need and want foodservice experiences and convenience, and we see the light at the end of this long tunnel peek through.”

Cattle futures closed lower Thursday with likely profit taking, the lack of weekly cash fed cattle direction and outside market bearishness.

Feeder Cattle futures closed an average of 90¢ lower.

Live Cattle futures closed an average of 66¢ lower, except for 60¢ higher in the back contract.

Weekly beef export sales offered no support. According to USDA’s weekly U.S. Export Sales report, net U.S. beef export sales for the week ending March 2 were 5,600 metric tons, a marketing-year low. The total was 31% less than the prior week and 67% less than the previous four-week average (see below).

Negotiated cash fed cattle trade got underway in the Texas Panhandle Thursday at steady money of $165/cwt. on slow trade and light demand.

Elsewhere, trade was mostly inactive on light demand with too few transactions to trend, according to the Agricultural Marketing Service.

Last week, live prices were $165/cwt. Dressed prices were $265 in Nebraska and $262-$265 in the western Corn Belt.

Choice boxed beef cutout value was 18¢ lower Thursday afternoon at $284.60/cwt. Select was $2.07 lower at $276.05/cwt.

Corn futures closed 12¢ to 16¢ lower through old-crop contracts. and then mostly 3¢ to 4¢ lower.

KC HRW Wheat closed mostly 18¢ to 22¢ lower.

Soybean futures closed mostly 8¢ to 11¢ lower.

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Major U.S. financial indices closed strongly lower Thursday amid likely positioning ahead of Friday’s monthly federal jobs report, as investors fret strong gains would tip the Fed’s hand toward higher interest rates for longer.

However, weekly initial unemployment insurance claims (week ending March 4) were higher than expected at 211,000, according to the U.S. Department of Labor. That was 21,000 more than the previous week’s revised level.

The Dow Jones Industrial Average closed 543 points lower. The S&P 500 closed 73 points lower. The NASDAQ was down 237 points.

West Texas Intermediate Crude Oil futures (CME) closed 94¢ to 97¢ lower through the front six contracts.

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U.S. beef exports are off to a slower start than the last two record-breaking years, according to data released by USDA and compiled by the U.S. Meat Export Federation (USMEF). January volume fell 15% year-over-year to 100,942 metric tons (mt) valued at $702.3 million (down 32%).

Beef inventories swelled in some key markets near the end of last year, contributing to a challenging environment for U.S. beef, according to USMEF.

January beef exports were down substantially in most Asian destinations compared to the large year-ago totals. The decline was especially sharp in South Korea, where volume dipped 36% to 18,896 mt and value fell 52% to $151.5 million.

However, U.S. beef export shipments increased sharply to Mexico, the Dominican Republic, the Philippines and Africa.

“While beef exports are off to a slow start in 2023, we remain optimistic that post-COVID foodservice demand will strengthen in additional markets as the year progresses,” explains Dan Halstrom, USMEF president and CEO.

January beef exports equated to $331.27 per head of fed slaughter, down 34% from a year ago.

Cattle futures gained Wednesday, buoyed by the friendly World Agricultural Supply and Demand Estimates (WASDE), which weighed on Corn and underscored the higher price outlook for cattle (see below).

Feeder Cattle futures closed an average of $1.84 higher.

Live Cattle futures closed an average of 30¢ higher, except for 52¢ lower in spot Apr.

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

Last week, live prices were $165/cwt. Dressed prices were $265 in Nebraska and $262-$265 in the western Corn Belt.

Choice boxed beef cutout value was $3.15 lower Wednesday afternoon at $284.78/cwt. Select was 63¢ higher at $278.12/cwt.

Corn futures closed mostly 8¢ to 9¢ lower.

KC HRW Wheat closed mostly 2¢ to 9¢ lower.

Soybean futures closed mostly 1¢ to 2¢ lower.

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Major U.S. financial indices closed narrowly mixed Wednesday with carry-over pressure from the bearish outlook on tighter monetary policy.

The Dow Jones Industrial Average closed 58 points lower. The S&P 500 closed 5 points higher. The NASDAQ was up 45 points.

West Texas Intermediate Crude Oil futures (CME) closed 83¢ to 92¢ lower through the front six contracts.

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The latest monthly World Agricultural Supply and Demand Estimates favor cattle and beef prices.

USDA projected the annual five-area direct weighted average fed steer price for this year at $162/cwt., which was $3 more than the previous estimate. Prices are forecast to be $161 in the first quarter, $163 in the second quarter, $159 in the third quarter and $164 in the fourth quarter.

USDA estimated beef production for this year at 26.7 billion pounds, which was 170 million pounds more than the previous estimate. It would be 1.62 billion pounds less (-5.7%) than last year.

“Slaughter projections are raised through the first three quarters of the year on higher cow slaughter and increased placements of cattle in feedlots in the first quarter of 2023, which will likely be marketed in the third quarter,” according to analysts with the Economic Research Service.