WLI

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.”

Cattle futures firmed in cautious trade Tuesday, helped along by more optimistic outside markets.

Feeder Cattle futures closed an average of 38¢ higher, except for an average of 9¢ lower in the back two contracts.

Live Cattle futures closed mixed, from an average of 44¢ higher in the front three contracts to an average of 25¢ lower.

Lower grain and Soybean futures helped.

Corn futures closed mostly 2¢ to 4¢ lower.

KC HRW Wheat closed mostly 5¢ to 8¢ lower.

Soybean futures closed mostly 13¢ to 19¢ lower.

Negotiated cash fed cattle trade was mostly inactive on light demand in all regions through Tuesday afternoon, according to the Agricultural Marketing Service.

Last week, live prices were mainly $1 lower in the Southern Plains and Nebraska at $164/cwt., and steady to $2 lower in the western Corn Belt at $164-$165. Dressed prices were $1 lower at $264.

Choice boxed beef cutout value was $1.10 lower Tuesday afternoon at $279.92/cwt. Select was $2.39 lower at $271.55/cwt.

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Major U.S. financial indices closed higher again Tuesday, supported by comments from U.S. Treasury Secretary, Janet Yellen that the federal government was ready to provide more support to smaller lenders if needed.

In prepared remarks at Tuesday’s American Bankers Association Washington, D.C. Summit, Yellen explained actions taken to protect FDIC-insured deposits at recently failed lenders, Silicon Valley Bank and Signature Bank.

“The situation is stabilizing. And the U.S. banking system remains sound. The Fed facility and discount window lending are working as intended to provide liquidity to the banking system. Aggregate deposit outflows from regional banks have stabilized,” Yellen explained.

Apparently, investors are also speculating the banking fiasco will bring a close to monetary tightening sooner rather than later.

The Dow Jones Industrial Average closed 316 points higher. The S&P 500 closed 51 points higher. The NASDAQ was up 184 points.

West Texas Intermediate Crude Oil futures (CME) closed $1.55 to $1.85 higher through the front six contracts. 

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Despite softer Cattle futures trade and mixed cash prices last week, calf prices at auction remain on an upward trajectory, buoyed by demand for summer-grazing cattle, says Andrew P. Griffith, agricultural economist at the University of Tennessee, in his weekly market comments. He explains value of gain on forage should be strong through the spring and summer, given the high cost of feedlot gain.

“Feeder cattle prices are likely to continue increasing as the CME Feeder Cattle Index price has gained $8 to $9/cwt. since the beginning of February. However, the increase in the cash price of feeder cattle has slowed, which may be part of the reason feeder cattle futures experienced weakness,” Griffith says. “Feeder cattle prices will increase further moving through spring, summer, and fall, but their ability to reach current expectations in the futures market is uncertain.”

On the other side of the equation, Griffith says the anticipated hole in cattle supplies will come eventually but likely later than expected as there is little evidence of additional heifer retention currently.

“Cattle on feed numbers will slowly dwindle as heifer retention picks up and as fewer calves are born, which is certain to be the case this year,” Griffith says. “There remains upside potential in the finished cattle market this spring, but there may not be enough to meet my lofty expectations of $170 cattle.”

Cattle futures leaked lower Monday amid recently declining open interest and uncertainty about the health of the banking structure, and despite Friday’s friendly Cattle on Feed report.

Feeder Cattle futures closed an average of 46¢ lower, except for an average of 20¢ higher in the back two contracts.

Live Cattle futures closed an average of 41¢ lower, except for an average of 22¢ higher in the back two contracts.

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

Last week, live prices were mainly $1 lower in the Southern Plains and Nebraska at $164/cwt., and steady to $2 lower in the western Corn Belt at $164-$165. Dressed prices were $1 lower at $264.

The five-area direct weighted average steer price last week was $1.23 lower on a live basis at $164.17. The average steer price in the beef was $1.50 lower at $263.82.

Choice boxed beef cutout value was $2.33 lower Monday afternoon at $281.02/cwt. Select was $1.50 higher at $273.94/cwt.

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

KC HRW Wheat closed 6¢ to 8¢ lower.

Soybean futures closed mostly 1¢ to 4¢ lower.

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Major U.S. financial indices closed higher Monday, apparently buoyed by the forced takeover of troubled Credit Suisse over the weekend, though plenty of questions remain for the banking sector.

The Dow Jones Industrial Average closed 382 points higher. The S&P 500 closed 34 points higher. The NASDAQ was up 45 points.

West Texas Intermediate Crude Oil futures (CME) closed 79¢ to 90¢ higher through the front six contracts. 

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Considering declining feedlot supplies before herd rebuilding begins, Derrell Peel, Extension livestock marketing specialist at Oklahoma State University says 2012-17 appear to provide a useful analog to help understand how low feedlot inventories may decline and when they might turn the corner to higher levels.

“The current state of cattle inventories, especially the cow herd size, replacement heifer inventories and expected calf crops are generally analogous to the previous period beginning in late 2012,” Peel explains, in his weekly market comments. “In fact, the current situation reflects a more severe depletion of female inventories compared to the 2012-2017 period. Based on the analog period, feedlot inventories will likely decline from the feedlot inventory (12-month) moving-average peak (MA) in September 2022 to a level similar to the 2014 low in the coming months and remain relatively low for the next four years or longer.”

Peel points out feedlot inventories declined year over year for six consecutive months through March 1. Specifically, he explains the MA peaked in September 2022 at 11.8 million head. It was11.63 million head in Friday’s Cattle on Feed report, the lowest level since October 2020.

“The previous multi-year low in the feedlot inventory MA was in October 2014, after drought-forced herd liquidation in 2011-2013. The current beef cow herd is slightly smaller that the 2014 herd level,” Peel explains. “The beef cow herd is likely to drop a bit more in 2023. It is reasonable to expect that average feedlot inventories will drop close to the 2014 low of 10.375 million head or possibly even lower at some point in the coming months … The smallest calf crop of the next few years will be in 2024 at the earliest.  Feedlot inventories will decline through 2023 with the low in 2024 or beyond.”