WLI

Cattle futures closed narrowly mixed Tuesday in the face of higher grain futures and the lack of cash direction.

Feeder Cattle futures closed an average of 18¢ lower, except for unchanged and 32¢ higher toward the front.

Live Cattle futures closed an average of 35¢ higher.

Corn and Wheat futures rebounded Tuesday with likely short covering.

Corn futures closed 5¢ to 10¢ higher through Jly ‘24 and then mostly 2¢ higher.

KC HRW Wheat futures closed mostly 14¢ higher.

Soybean futures firmed, too, closing fractionally lower to 2¢ lower through Sep ‘24 and then 1¢ to 5¢ 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 $155/cwt. in the Southern Plains and Nebraska, and $156-$158 in the western Corn Belt. Dressed prices were $248-$250.

Choice boxed beef cutout value was $1.80 lower Tuesday afternoon at $269.64/cwt. Select was $2.10 lower at $252.39/cwt.

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Major U.S. financial indices wobbled to a mixed close Tuesday amid up-and-down quarterly earnings reports.

The Dow Jones Industrial Average closed 104 points higher. The S&P 500 closed 2 points lower. The NASDAQ was down 30 points.

West Texas Intermediate Crude Oil futures (CME) closed $1.45 to $1.49 lower through the front six contracts, from 2¢ lower to 37¢ higher.

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With the national hay supply 9% less year over year Dec. 1, and 6% less than the previous record low, analysts with the Livestock Marketing Information Center (LMIC) say record and near-record hay prices will likely continue through most of this year.

“Hay prices have reached record levels in the last two years, outpacing the last drought. The hay stock data confirmed supplies are now tighter than they were back in 2012,” LMIC analysts say, in the latest Livestock Monitor. “Absent an exceptional early hay crop, prices are expected to hold near or above record levels through most of 2023. This will add to the decision of cow-calf producers and affect their ability to maintain/expand/contract their breeding herds. Our assessment is that forage/feed availability conditions are unlikely to allow for expansion in 2023.”

As it is, LMIC analysts explain hefty feedlot placements last year, may have left relatively few cattle to place after winter grazing, which could create a significant hole in supplies.

“During the last major drought season in 2011, cattle on feed dropped 1.2 million head over the summer compared to January 1 levels, and in 2012, cattle on feed numbers dropped about 800,000 head. If cattle on feed this year drops similar to those years, that would put the summer low between 9.0-9.4 million head on feed,” according to the LMIC folks.

Cattle futures extended gains Monday, buoyed by sharply lower Corn futures, and an apparently neutral view of Friday’s Cattle on Feed report.

Feeder Cattle futures closed an average of $1.47 higher (85¢ to $2.30 higher).

Live Cattle futures closed an average of 63¢ higher.

Corn and Soybean futures eroded Monday, apparently mostly due to moisture in South America over the weekend.

Corn futures closed 8¢ to 10¢ lower through Jly ‘24 and then mostly 2¢ to 3¢ lower.

Soybean futures closed mostly 10¢ to 13¢ lower.

KC Wheat on the CME closed 22¢ to 29¢ 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 $155/cwt. in the Southern Plains and Nebraska, and $156-$158 in the western Corn Belt. Dressed prices were $248-$250.

Choice boxed beef cutout value was 28¢ lower Monday afternoon at $271.44/cwt. Select was $1.94 lower at $254.49/cwt.

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Major U.S. financial indices bounced higher Monday with more investor speculation that the Fed may be ready to begin easing interest rate increases.

The Dow Jones Industrial Average closed 254 points higher. The S&P 500 closed 47 points higher. The NASDAQ was up 223 points.

West Texas Intermediate Crude Oil futures (CME) closed narrowly mixed through the front six contracts, from 2¢ lower to 37¢ higher.

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Reflecting on Friday’s Cattle on Feed report, Derrell Peel, Extension livestock marketing specialist at Oklahoma State University points out the feedlot heifer inventory Jan. 1 was 0.5% less year over year, the first decrease since July 2021.

“Large heifer numbers in feedlots supported the 4.8% year over year increase in heifer slaughter in 2022 and was the largest heifer slaughter total since 2004,” Peel says. “The decrease in feedlot heifers does not, at this point, reflect heifer retention but simply a lack of heifers due to large heifer slaughter the past two years.”

Peel also notes feedlot inventories have declined four consecutive months. The Jan. 1 inventory for feedlots with 1,000 head or more capacity was 11.68 million head, which was 2.9% less than the prior year.

“It looks increasingly like the early November seasonal peak will hold,” Peel says. “If so, the November total was 4.1% below the previous seasonal peak in February 2022 and suggests sharply tighter feedlot numbers going forward.”

Cattle futures mainly gained Friday helped along by higher outside markets.

Feeder Cattle futures closed an average of 74¢ higher (30¢ to $1.42 higher), except for 17¢ lower in spot Jan.

Live Cattle futures closed an average of 48¢ higher (12¢ higher at the back to 80¢ higher near the front).

Corn futures firmed and closed fractionally mixed with stronger weekly U.S. export sales.

Soybean futures were down again — mostly 12¢ to 13¢ lower — with more favorable moisture in Argentina.

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

For the week, live prices were $1 lower in the Southern Plains at $155/cwt. and $1-$2 lower in Nebraska at $155. Dressed sales in Nebraska were $2-$4 lower at $248. Live and dressed sales in the Western Corn Belt the previous week were $158 and $250-$252, respectively.

Choice boxed beef cutout value was 21¢ higher Friday afternoon at $271.72/cwt. Select was 74¢ higher at $256.43/cwt.

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Major U.S. financial indices rebounded Friday, perhaps with some bargain hunting.

The Dow Jones Industrial Average closed 330 points higher. The S&P 500 closed 73 points higher. The NASDAQ was up 288 points.

West Texas Intermediate Crude Oil futures (CME) closed 94¢ to $1.04  higher through the front six contracts.

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Markets could view Friday’s monthly Cattle on Feed report as neutral, to a touch bearish with slightly more placements and cattle on feed than expected and slightly fewer cattle marketed. The report reflects feedlots with 1,000 head or more one-time capacity.

Placements in December of 1.80 million head were 156,000 head fewer (-7.9%) than the previous year. That was 0.6% more than pre-report estimates.

In terms of placement weights, 49% went on feed weighing 699 lbs. or less, 40% weighing 700-899 lbs. and 11% weighing 900 lbs. or more.

Marketings in December of 1.74 million head were 113,000 head fewer (-6.1%). That was 0.8% fewer than expectations ahead of the report.

Cattle on feed Jan. 1 of 11.68 million head were 355,000 head fewer (-2.9%) than the prior year, but 0.3% more than estimates ahead of the report.

Cattle futures softened Thursday with the lack of direction in weekly cash fed cattle prices and perhaps with some positioning ahead of Friday’s monthly Cattle on Feed report.

Feeder Cattle futures closed an average of 82¢ lower (2¢ lower toward the back to $1.40 lower near the front), except for 35¢ higher in the back contract.

Live Cattle futures closed an average of 75¢ lower.

Corn futures continued to soften — mostly 4¢ to 5¢ lower — with the wetter outlook for Argentina.

Soybean futures closed 8¢ to 10¢ lower through Jan ‘24. And then mostly 2¢ to 5¢ lower.

Negotiated cash fed cattle trade was limited on light demand through Thursday afternoon, with too few transactions to trend, according to the Agricultural Marketing Service. There were some early live trades in Kansas at $155/cwt., as well as some early dressed sales at $248-$249 in Nebraska and $248 in the western Corn Belt.

Last week were $156/cwt. on a live basis in the Southern Plains, $156-$157 in Nebraska and $158 in the western Corn Belt. Dressed prices were $250-$252.

Choice boxed beef cutout value was $2.57 lower Thursday afternoon at $271.51/cwt. Select was $1.83 higher at $255.69/cwt.

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Major U.S. financial indices continued lower Thursday as investors fretted over the Fed maintaining its hawkish stance on interest rates, despite recent signs of easing inflation. Strong employment reflected in weekly initial jobless claims added to their angst. The advance figure for seasonally adjusted initial unemployment insurance claims for the week ending Jan. 14 was 190,000, which was 15,000 fewer than the previous week.

The Dow Jones Industrial Average closed 252 points lower. The S&P 500 closed 30 points lower. The NASDAQ was down 104 points.

West Texas Intermediate Crude Oil futures (CME) closed 81¢ to 85¢ higher through the front six contracts.

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USDA’s Economic Research Service (ERS) increased projected feeder steer prices (750-800 lbs., Oklahoma City) for the first two quarters of the year, based on more November feedlot placements than expected, and tighter anticipated supplies available for placement early this year.

In the monthly Livestock Dairy and Poultry Outlook, ERS increased the projected first-quarter price by $5 to $182/cwt. and the second-quarter price by $2 to $192. Projected prices are $214 in the third quarter and $224 in the fourth quarter for an annual average of $203.

ERS also increased projected 2023 beef production 170 million lbs. to 26.4 billion lbs. based on the temporal shift in fed cattle marketings and an outlook for higher cow slaughter.

“The anticipated cow slaughter outlook for 2023 was raised on early January slaughter data and persistent poor forage conditions,” ERS analysts say. “Lighter carcass weights in fourth-quarter 2022 are carried over into early 2023. As a result, the increase in expected marketings and cow slaughter in 2023 more than offset lighter anticipated weights.”

Estimated beef production this year would be 1.8 billion lbs. less (-6.6%) than last year’s projected total.

As reported in Cattle Current last week, ERS projected the annual average five-area direct fed steer price for this year at $158.50/cwt., in the January World Agricultural Supply and Demand Estimates. That was $2.50 more than the previous month’s estimate, based on expected demand strength. By quarter and compared to the previous month, ERS increased projected prices by $4 to $157 in the first quarter, by $3 to $157 in the second quarter and by $2 to $157 in the third quarter.

Weaker Corn futures — mostly 1¢ to 4¢ lower — helped lift Feeder Cattle futures an average of 95¢ higher Wednesday (42¢ to $1.55 higher), except for 15¢ lower in spot Jan.

Live Cattle futures closed an average of 17¢ higher, except for an average of 10¢ lower in three contracts.

Soybean futures closed 13¢ to 19¢ lower.

Negotiated cash fed cattle trade ranged from limited on light demand to mostly inactive on very light demand in the North through Wednesday afternoon, with too few transactions to trend. Trade was at a standstill in the Southern Plains, according to the Agricultural Marketing Service.

Last week, prices were $156/cwt. on a live basis in the Southern Plains, $156-$157 in Nebraska and $158 in the western Corn Belt. Dressed prices were $250-$252.

Choice boxed beef cutout value was $2.58 lower Wednesday afternoon at $274.08/cwt. Select was 67¢ lower at $253.86/cwt.

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Major U.S. financial indices closed lower Wednesday. Profit taking and less of a decline in wholesale prices than expected were likely part of the pressure

The Producer Price Index for final demand declined 0.5% in December, seasonally adjusted, according to the U.S. Bureau of Labor Statistics.

The Dow Jones Industrial Average closed 613 points lower. The S&P 500 closed 62 points lower. The NASDAQ was down 138 points.

West Texas Intermediate Crude Oil futures (CME) closed 40¢ to 70¢ lower through the front six contracts.

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Recent moisture is helping dial back dryness and drought in some areas.

According to the latest U.S. Drought Monitor (USDM-Jan. 10), abnormally dry and drought conditions impacted 66.5% of the lower 48 states. That’s the least since the week of Sept. 13 last year when those same conditions covered 66.2% of the country. Current conditions are also more favorable than the same week last year when abnormally dry conditions and drought covered 71.8% of the nation.

Approximately 57% of the nation’s cattle inventory was in areas experiencing drought versus about 69% a year earlier.

“A series of atmospheric rivers led to heavy rain and high-elevation snow across parts of the West, especially across California. Precipitation totals exceeding 4 inches (liquid-equivalent) were widespread, and several areas in and near the Sierra Nevada, Cascades, and coastal ranges recorded over one foot of precipitation,” according to the weekly Drought Summary.

USDM analysts note, “Precipitation totals generally exceeded 1.5 inches along the coast and in the higher elevations of the Pacific Northwest, some higher elevations in the central and northern Rockies, part of the upper Midwest, portions of the lower Mississippi Valley, the interior Southeast, and scattered locales across the Ohio Valley and the Northeast.

“Much of the precipitation fell on areas experiencing dryness and drought, so across the country, improvement was much more common than deterioration.” 

The latest La Niña Advisory from the National Weather Service Climate Prediction Center says there is an 82% chance North America transitions from La Niña to ENSO-neutral during February to April this year.