WLI

Cattle futures took a breath Tuesday and wobbled narrowly lower awaiting cash direction.

Live Cattle futures closed an average of 27¢ lower.

Feeder Cattle futures closed an average of 47¢ 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.

Live prices last week were $160/cwt. in the Texas Panhandle, $160-$161 in Kansas, $157-$160 in Nebraska and $160 in the western Corn Belt. Dressed prices were $254.

Wholesale beef prices continued their recent upward trend. Choice boxed beef cutout value was $2.11 higher Tuesday afternoon at $272.06/cwt. Select was $2.57 higher at $258.78/cwt.

Profit taking seemed to be the main order of the day in the grain complex.

Corn futures closed 1¢ to 2¢ lower through Dec ‘23 and then mostly unchanged.

KC HRW Wheat closed mostly 3¢ to 6¢ lower.

Soybean futures closed mostly 2¢ to 6¢ lower.

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Major U.S. financial indices closed mixed Tuesday with pressure from a steamier inflation reading than expected.

The Consumer Price Index for All Urban Consumers (CPI-U) rose 0.5% in January on a seasonally adjusted basis, after increasing 0.1% in December, according to the U.S. Bureau of Labor Statistics. Over the last 12 months, the all items index increased 6.4% before seasonal adjustment.

The Dow Jones Industrial Average closed 156 points lower. The S&P 500 closed 1 point lower. The NASDAQ was up 68 points.

West Texas Intermediate Crude Oil futures (CME) closed 86¢ to $1.09 lower through the front six contracts.

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USDA’s Economic Research Service (ERS) left the projected annual average feeder steer price for this year unchanged at $203/cwt., in the February Livestock, Dairy and Poultry Outlook. That was based on current price strength and narrowing supplies, as indicated in the January Cattle report.

Average feeder steer prices (750-800 lbs., Oklahoma City) were forecast to be $182/cwt. in the first quarter, $192 in the second quarter, $214 in the third quarter and $224 in the fourth quarter.

As mentioned recently in Cattle Current, ERS increased the projected five-area direct fed steer price to $158/cwt. in the first quarter of this year and to $159 in the second quarter with an annual average price of $159.

“Based on the January Cattle on Feed data, greater than expected market-ready supplies of fed cattle Jan. 1 increased the anticipated pace of marketings in first-quarter 2023,” ERS analysts say. “However, smaller than expected placements in December lowered the outlook for marketings in the second quarter. Further, a faster pace of cow slaughter is anticipated in the first half. As a result, in first-quarter 2023, total cattle slaughter was raised but was partially offset by lower expected weights, leaving production up 140 million pounds from last month.”

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

Last week, live prices were $2 higher in the Texas Panhandle at $160/cwt., $2 higher in Kansas at $160-$161, $1-$2 higher in Nebraska at $157-$160 and steady to $64 higher in the western Corn Belt at $160. Dressed prices were $4 higher at $254.

Last week’s stronger cash trade and recently higher wholesale beef values helped lift Cattle futures Monday.

Live Cattle futures closed an average of 77¢ higher.

Feeder Cattle futures closed an average of 77¢ higher.

Choice boxed beef cutout value was 29¢ higher Monday afternoon at $269.95/cwt. Select was $1.92 higher at $256.21/cwt.

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

Soybean futures closed 2¢ to 3¢ higher.

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Major U.S. financial rose Monday with investors apparently anticipating Tuesday’s CPI report will reflect cooling inflation.

The Dow Jones Industrial Average closed 376 points higher. The S&P 500 closed 46 points higher. The NASDAQ was up 173 points.

West Texas Intermediate Crude Oil futures (CME) closed 41¢ to 42¢ higher  through the front six contracts.

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Both fed cattle and boxed beef prices are poised to move higher as supply fundamentals tighten, says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly market comments.

“Beef production is expected to decrease year over year going forward as cattle slaughter drops. Steer and heifer carcass weights are currently below year-ago levels, in part due to previous winter weather,” Peel explains.

In the meantime, although feedlot inventories declined since October, Peel points out cattle slaughter remains higher year over year for fed cattle, cull cows and packer bulls. He notes strong cull cow prices are expected to continue.

“Feedlots inventories should continue to tighten and cattle slaughter should decline in the coming weeks, although continued drought conditions may slow the rate of decrease if more animals are liquidated,” Peel says. 

Cattle feeders’ patience paid off once again last week as they pried generally $2-$4 more from packers.

Negotiated cash fed cattle trade ranged from slow on light demand to mostly inactive on light demand, through Friday afternoon, according to the Agricultural Marketing Service.

For the week, live prices were $2 higher in the Texas Panhandle at $160/cwt., $1-$2 higher in Kansas at $160 and steady to $4 higher in the western Corn Belt at $160. The previous week, live sales in Nebraska were at $155-$159.

Last week, dressed prices were $4 higher at $254.

Choice boxed beef cutout value was 37¢ higher Friday afternoon at $269.66/cwt. Select was 28¢ higher at $254.29/cwt.

Total cattle slaughter last week of 630,000 head was 11,000 head fewer than the previous week and 30,000 head less than the same time a year earlier. Year-to-date total cattle slaughter of 3.80 million head was 39,000 head fewer (-1.0%) than last year. Year-to-date beef production of 3.13 billion pounds was 93.2 million pounds less (-2.9%).

Stronger cash prices helped lift Live Cattle futures Friday.

Live Cattle futures closed an average of 21¢ higher, except for unchanged in away-Apr.

Feeder Cattle futures closed an average of 25¢ lower, except for 35¢ higher in the back contract.

Grain and Soybean futures were up on geopolitical news Friday. Russia’s announcement that it would cut oil production fueled recently stronger Crude Oil prices, dragging Corn and Soybeans along. For Wheat, it was a shakeup in Moldova’s government — a neighbor to Ukraine — which added wonderment of Black Sea exports.

Corn futures closed mostly 4¢ to 5¢ higher.

KC HRW Wheat closed 21¢ to 30¢ higher through Jly ‘24 and then mostly 16¢ higher.

Soybean futures closed 18¢ to 23¢ higher through Aug ‘23 and then mostly 9¢ to 13¢ higher.

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Major U.S. financial closed mixed Friday but lower on the week.

The Dow Jones Industrial Average closed 169 points higher. The S&P 500 closed 8 points higher. The NASDAQ was down 71 points.

West Texas Intermediate Crude Oil futures (CME) closed $1.53 to $1.66 higher through the front six contracts.

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Domestic consumer beef demand continues to be strong.

“Based on calculations made by the Livestock Marketing Information Center, beef demand in the third and fourth quarter of 2022 declined relative to the previous year. However, the index value for all fresh beef demand in 2022 ranked as the second highest index value since the turn of the century behind 2021,” says Andrew P. Griffith, agricultural economist at the University of Tennessee, in his weekly market comments.

Although inflation’s pressure on disposable incomes is a concern, Griffith points out consumers continue to make it clear that they want beef.

“The full force of many analysts’ fears has not been realized at the meat counter,” Griffith says. “This is not to say that those fears will not be realized, but it does support the inclination that maybe those fears are overstated at this time. It is fairly clear the beef supply will decline in coming months, but that does not mean beef prices will skyrocket. What it could mean is that some of the packer margins slip to producers in earlier stages of production.”

Feeder Cattle futures edged an average of 34¢ higher, except for unchanged in Apr., supported by lower Corn futures.

Live Cattle languished, waiting for cash direction. They closed an average of 21¢ lower, except for 2¢ higher spot Feb.

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

Last week, live prices were $158/cwt. in the Texas Panhandle, $158-$159 in Kansas, $155-$159 in Nebraska and $154-$160 in the western Corn Belt. Dressed prices were $250.

Choice boxed beef cutout value was $2.09 higher Thursday afternoon at $269.29/cwt. Select was 85¢ higher at $254.01/cwt.

Grain and Soybean futures were down on South American weather and anemic weekly export data.

Corn futures closed 3¢ to 7¢ lower through Jly ‘24 and then mostly 1¢ lower.

KC HRW Wheat closed 11¢ to 17¢ lower.

Soybean futures closed mostly 3¢ to 5¢ lower.

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Major U.S. financial indices closed lower Thursday as bears turned back early gains tied to positive corporate earnings reports.

The Dow Jones Industrial Average closed 249 points lower. The S&P 500 closed 36 points lower. The NASDAQ was down 120 points.

West Texas Intermediate Crude Oil futures (CME) closed 41¢ to 49¢ lower through the front six contracts.

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U.S. beef exports set annual records for both volume and value in 2022, according to year-end data released by USDA and compiled by the U.S. Meat Export Federation (USMEF).

“2022 was a ground-breaking year for U.S. beef’s international presence, with global demand stronger than I’ve seen in all my years in the industry,” says Dan Halstrom, USMEF president and CEO. “Late in the year, exports certainly felt the impact of persistent headwinds in our large Asian markets, including depressed trading partner currencies and COVID-related challenges in China, but the long list of countries in which records were set showcases the industry’s focus on diversifying export markets. While the year ahead will be challenging due to supply constraints, the exchange rate situation has improved and we still see room for growth in the foodservice sector as more regions continue their gradual rebound from COVID.”

U.S. beef exports reached 1.47 million metric tons in 2022, up 2% from the previous high in 2021. Export value climbed to a record $11.68 billion, up 10% from 2021 and nearly 40% above the previous five-year average. The U.S. exported a record share of its record-large beef production in 2022, and at higher prices.

Beef export value equated to a record $447.58 per head of fed slaughter in 2022, up 10% from the previous high achieved in 2021.

In December, U.S. beef exports were 7% lower year over year for volume at 112,707 mt. Value was 21% less at $782.6 million. The decline was due in part to a sharp drop in exports to China/Hong Kong, where demand had been constrained by persistent zero-COVID policies. China lifted most COVID restrictions in early December and resumed some international travel in early January. Along with the recent easing of COVID-related cold chain regulations and inspections, these changes offer a more optimistic demand outlook for 2023.

Cattle futures drifted lower again Wednesday awaiting cash direction.

Feeder Cattle futures closed an average of 62¢ lower.

Live Cattle futures closed an average of 14¢ lower, except for an average of 16¢ higher in the front two contracts.

Negotiated cash fed cattle trade was limited on light demand in Nebraska through Wednesday afternoon, according to the Agricultural Marketing Service. Although too few to trend, there were some early live sales at $157/cwt. Elsewhere, trade ranged from mostly inactive on very light demand to a standstill.

Last week, live prices were $158/cwt. in the Texas Panhandle, $158-$159 in Kansas, $155-$159 in Nebraska and $154-$160 in the western Corn Belt. Dressed prices were $250.

Choice boxed beef cutout value was 48¢ higher Wednesday afternoon at $267.20/cwt. Select was $4.17 lower at $253.16/cwt.

Corn futures closed mostly 1¢ to 2¢ higher.

KC HRW Wheat closed mostly 6¢ to 9¢ higher.

Soybean futures closed fractionally higher to 4¢ higher through Nov ’23 and then mostly unchanged to 5¢ lower.

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Major U.S. financial indices closed lower Wednesday as investors seemed to grow skittish about the strong U.S. dollar and potential velocity of interest rates.

The Dow Jones Industrial Average closed 207 points lower. The S&P 500 closed 46 points lower. The NASDAQ was down 203 points.

West Texas Intermediate Crude Oil futures (CME) closed $1.20 to $1.33 higher through the front six contracts.

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USDA’s Economic Research Service (ERS) increased the expected annual five-area direct fed steer price for this year to $159/cwt., in the latest World Agricultural Supply and Demand Estimates (WASDE). Prices were forecast to be $158 in the first quarter, $159 in the second quarter, $157 in the third quarter and $162 in the fourth quarter.

Prices were raised on expected strength in first-half demand for fed cattle in the face of tightening feedlot numbers.

ERS increased projected beef production for this year by 50 million pounds to 26.49 billion pounds. That would be 1.8 billion pounds less (-6.3%) than last year’s projected total.

“Slaughter is raised for the first quarter but is partly offset by lower carcass weights as cow slaughter is larger than previously forecast,” ERS analysts explain. “For the second quarter, steer and heifer slaughter is lowered as fourth-quarter 2022 placements were lower than expected, implying fewer animals available for marketing in the second quarter. Lower fed cattle slaughter, coupled with lower average carcass weights, more than offsets higher expected cow slaughter.”

Among other WASDE highlights…

Corn

The outlook for 2022/23 U.S. corn was for 25 million bushels more ending stocks resulting from less corn used for ethanol.

The season-average corn price received by producers was unchanged at $6.70 per bushel

Wheat

The supply and demand outlook for 2022/23 U.S. wheat was for 1 million bushels more ending stocks.

The 2022/23 season-average farm price was forecast 10¢ per bushel lower at $9.00, based on prices received to date and expectations for cash prices for the remainder of 2022/23.

Soybeans

The 2022/23 U.S. soybean outlook was for 15 million bushels more ending stocks.

The U.S. season-average soybean price for 2022/23 was forecast at $14.30 per bushel, up 10¢ from last month. The soybean meal price was forecast at $450.00 per short ton, up $25. The soybean oil price forecast was unchanged at 68.0¢ per pound.