WLI

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

Live prices last week were $157/cwt. in the Southern Plains and Nebraska and $158-$160 in the western Corn Belt. Dressed prices were $252.

Choice boxed beef cutout value was $1.61 lower Tuesday afternoon at $284.53/cwt. Select was $1.27 lower at $258.33/cwt.

Cattle futures closed narrowly mixed Tuesday, despite early Corn futures momentum.

Feeder Cattle futures closed from an average of 16¢ lower to an average of 26¢ higher.

Live Cattle futures closed an average of 17¢ higher, except for unchanged in spot Feb.

Corn futures closed mostly 1¢ to 3¢ lower.

Soybean futures closed widely mixed.

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Major U.S. financial indices eased higher Tuesday with little conviction.

The Dow Jones Industrial Average closed 186 points higher. The S&P 500 closed 27 points higher. The NASDAQ was up 106 points.

West Texas Intermediate Crude Oil futures (CME) closed 30¢ to 49¢ higher through the front six contracts.

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Without a doubt, most market fundamentals point to a considerably stronger cattle market across all sectors this year, says Kenny Burdine, Extension livestock economics specialist at the University of Kentucky, in the latest Cattle Market Notes Weekly.

“The calf market improved in 2022, but higher production costs kept most cow-calf operators from fully enjoying the price improvement. Reduced fall pasture growth and poor wheat grazing conditions also prevented the fall calf market from reaching levels it would have seen otherwise,” Burdine explains. “As we move into spring, the impacts of expensive feed will be somewhat overshadowed by grazing opportunities. In truth, the calf market has improved quite a bit since fall. However, with fall 2023 CME Feeder cattle futures well above $2/lb., we are likely to see calf price levels that we have not seen since 2015 once we start seeing some spring pasture growth.”

Cattle futures strengthened Monday with firm to bullish fundamental support.

Feeder Cattle futures closed an average of 84¢ higher.

Live Cattle futures closed an average of 96¢ higher.

Corn and Soybean futures wavered to start the week as traders await the WASDE this week.

Corn futures closed mostly 1¢ lower.

Soybean futures closed mostly 4¢ to 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.

Live prices last week were $157/cwt. in the Southern Plains and Nebraska and $158-$160 in the western Corn Belt. Dressed prices were $252.

Choice boxed beef cutout value was $3.15 higher Monday afternoon at $286.14/cwt. Select was 26¢ higher at $259.60/cwt.

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Major U.S. financial indices closed mixed Monday.

The Dow Jones Industrial Average closed 112 points lower. The S&P 500 closed 2 points lower. The NASDAQ was up 66 points.

West Texas Intermediate Crude Oil futures (CME) closed 86¢ to $1.02 higher through the front six contracts.

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Calf and feeder cattle buyers are rolling into the new year with a bang.

Demand was good to very good at auctions last week, according to the Agricultural Marketing Service (AMS). Volume was heavy, as is typically the case during the first week of the year — 262,300 head at auction and 338,700 head when combined with direct and video-internet sales.

Prices so far are generally $15-$20/cwt. higher than the previous year, according to AMS.

As an example, the price of 500-lb. Medium and Large #1 steers at Oklahoma auctions averaged $227.50/cwt. the first week of 2023, up 19.3% year over year, according to Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly market comments. The price of 800-lb. steers averaged $180.97/cwt., which was 14.7% more than a year earlier.

“The cattle and beef market momentum at the end of 2022 has carried over into the first week of the new year,” Peel says. “The new year looks to contrast with last year with noticeably tighter cattle numbers, especially at the feedlot level, driven by previous herd liquidation and sharply lower feeder cattle supplies.”

Peel notes Feeder Cattle futures anticipate higher prices and tightening supply fundamentals, given the $26 price increase from the nearby Jan contract of about $182 to the $209 price for Nov.

“Drought remains the biggest issue for many producers aggravated by persistently high feed costs,” Peel says. “The revenue side of cattle production will be less of a concern in 2023, at least as far as cattle prices go. However, managing and maintaining production and managing the rising cost of production will continue to be major challenges for cattle producers this year.”

Negotiated cash fed cattle trade was slow on light demand in Nebraska through Friday afternoon, according to the Agricultural Marketing Service. Live prices for the week were $1 lower at $157/cwt., and dressed prices were steady at $252.

Elsewhere, trade ranged from limited on light demand to mostly inactive on very light demand with too few transactions to trend.

For the week, live prices were steady in the Southern Plains at $157 and steady to $1 higher in the western Corn belt at $158-$160, where dressed prices were steady to $2 higher at $252.

Choice boxed beef cutout value was $1.36 higher Friday afternoon at $282.99/cwt. Select was $2.39 higher at $259.34/cwt.

Cattle futures eased lower Friday pressured in part by firming Corn futures and static cash trade.

Feeder Cattle futures closed an average of 65¢ lower, from 22¢ lower at the back to $1.10 lower in spot Jan, except for 22¢ higher in the back contract.

Live Cattle futures closed an average of 44¢ lower (20¢ to 72¢ lower).

Export announcements helped Corn and especially Soybean futures close higher Friday.

Corn futures closed 1¢ higher in the front three contracts and then mostly fractionally mixed to 2¢ lower.

Soybean futures closed 13¢ to 34¢ higher through Jan ‘24 and then mostly 3¢ to 6¢ higher.

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For brief year-end perspective…

The five-area direct average steer price for 2022 was $144.52/cwt. on a live basis. That was $21.35 more (+17.3%) than the previous year and $36.33 more (+33.6%) than in 2020. The five-area average fed steer price for the year was $229.74 in the beef, which was $36.06 more than the previous year (+18.6%) and $57.47 more (+33.4%) than in 2020.

Based on the last report of the year, estimated beef production for 2022 was 27.8 billion pounds, which was 369.7 million pounds more (+1.3%) year over year. Estimated total cattle slaughter for the year was estimated to be 33.7 million head, which was 499,000 head more (+1.5%) than the previous year.

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Major U.S. financial indices surged higher Friday with a couple of reports suggesting that inflation may be cooling.

Although more jobs than expected were added in December, wage growth declined slightly from the previous month.

Total non-farm payroll employment increased by 223,000 in December, according to the U.S. Bureau of Labor Statistics. Average hourly earnings for all employees on non-farm payrolls increased 9¢ (+0.3%) to $32.82.

As well, the Institute for Supply Management purchasers index for services declined for the first time in more than two years.

The Dow Jones Industrial Average closed 700 points higher. The S&P 500 closed 86 points higher. The NASDAQ was up 264 points.

West Texas Intermediate Crude Oil futures (CME) closed 10¢ to 18¢ higher through the front six contracts.

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Economic and logistical headwinds finally caught up to U.S. beef exports in November, however export value through the first 11 months of the year already exceeded the record of $10.58 billion achieved the previous year.

November beef exports totaled 115,777 mt, down 6% from the previous year’s large volume, while export value declined nearly 20% to $846.6 million, according to data released by USDA and compiled by the U.S. Meat Export Federation (USMEF).

For the first 11 months of the year, beef export value increased 14% year-over-year to $10.9 billion. January-November export volume was 1.36 million mt, up 3% from the record pace of 2021.

November beef export value equated to $382.46 per head of fed slaughter, down 20% from a year ago, but the January-November average was up 13% to $452.42.

“Similar to the previous month, November results for U.S. beef exports reflected severe headwinds in our large Asian markets,” explains Dan Halstrom, USMEF president and CEO. “Key currencies in the region were still slumping, which impacted the buying power of importers and consumers. COVID cases and lockdowns in China were also intensifying, prompting widespread protests and the eventual lifting of many restrictions. But the U.S. dollar mainly peaked in late October and early November and global demand has remained relatively strong. Even with a high level of economic uncertainty, 2022 has been a fantastic year for U.S. beef exports and the outlook for the coming year remains positive.”

Negotiated cash fed cattle trade was light on light to moderate demand in the Southern Plains through Thursday afternoon, according to the Agricultural Marketing Service. Early live sales were steady with last week at $157/cwt.

Elsewhere, trade was limited on light demand with too few transactions to trend.

Last week, live prices were $158 in Nebraska and $157-$160 in the western Corn Belt. Dressed prices were $250-$252.

Cattle futures traders took a breather Thursday, and likely some profits, following the strong session a day earlier and awaiting more cash direction.

Feeder Cattle futures closed an average of 96¢ lower, from 65¢ lower at the back to $1.67 lower toward the front.

Live Cattle futures closed an average of 36¢ lower, except for 7¢ higher in spot Feb.

Nearby grain and Soybean futures continued to drift lower.

Corn futures closed mostly 1¢ to 4¢ lower.

Soybean futures closed mostly 12¢ lower through Aug ‘23 and then 7¢ to 9¢ lower.

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Major U.S. financial indices closed lower Thursday, with much of the pressure attributed to stronger employment numbers than expected and the notion that leaves the Fed no quarter to ease up on interest rates.

Private sector employment increased by 235,000 jobs in December and annual pay was up 7.3% year-over-year, according to the December ADP® National Employment ReportTM produced by the ADP Research Institute® in collaboration with the Stanford Digital Economy Lab.

“The labor market is strong but fragmented, with hiring varying sharply by industry and establishment size,” says Nela Richardson, ADP chief economist. “Business segments that hired aggressively in the first half of 2022 have slowed hiring, and in some cases cut jobs in the last month of the year.”

The Dow Jones Industrial Average closed 339 points lower. The S&P 500 closed 44 points lower. The NASDAQ was down 153 points.

West Texas Intermediate Crude Oil futures (CME) closed 77¢ to 83¢ higher through the front six contracts. 

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Competition from both inside and outside of the industry suggest land values will remain strong this year, according to Farmers National Company (FNC), a leading landowner services provider.

“What we are seeing is a true supply/demand scenario. There are simply more buyers willing to bid on the limited amount of land coming to the market,” says Paul Schadegg, FNC Senior Vice President of Real Estate Operations. “Current commodity markets and strong cash rents provide buyers with the necessary returns to meet their investment criteria while giving them the opportunity to expand operations or add land to their investment portfolio. Our anticipation is that these values will remain strong coming into the new year with continued strength in the ag economy although we may see less and less of the record sales.”

Traditional local farmer-operators are successful buyers of farmland 75% of the time, but with plenty of active bidding from land investors, according to FNC.

“While the investor may not always be the buyer of land, they are part of the competition driving the values higher,” Schadegg says. “We also expect this trend to continue as many investors see the long-term value of farmland, the opportunity to diversify investments and the value of land as a hedge against rising inflation.”

However, Schadegg also points to escalating inflation and interest rates as caution signs.

“These factors have the impact to decrease net farm income, erode operator equity and subsequently pressure farmland value,” Schadegg explains. “So, we sit at a somewhat precarious point in time where opportunity exists for both land sellers and buyers but is dependent on the continued strength of the agriculture economy to stabilize or grow.”

Farmers National Company manages more than 5,000 farms and ranches in 30 states comprising more than 2 million acres.

Feeder Cattle futures surged higher Wednesday, buoyed by early-week cash strength and sharply lower grain futures prices. Live Cattle followed along to a lesser degree.

Feeder Cattle futures closed an average of $2.42 higher, from $1.22 higher at the back to $3.45 higher toward the front.

Live Cattle futures closed an average of 50¢ higher.

Grain and soybean futures wilted beneath the weight of paltry U.S. export inspections, the high U.S. dollar and rains in South America.

Corn futures closed 11¢ to 16¢ lower through Jly ‘24 and then mostly 6¢ lower.

Soybean futures closed 6¢ to 9¢ lower through Nov ‘23 and then mostly 2¢ to 4¢ lower.

Negotiated cash fed cattle trade ranged from light on light to moderate demand in the western Corn Belt to inactive on light demand, with too few transactions to trend, according to the Agricultural Marketing Service.

Last week, live prices were $157/cwt. in the Southern Plains, $158 in Nebraska and $157-$160 in the western Corn Belt. Dressed prices were $250-$252.

Choice boxed beef cutout value was $4.05 lower Wednesday afternoon at $282.89/cwt. Select was $1.77 higher at $256.40/cwt.

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Major U.S. financial indices closed higher Wednesday, amid mixed economic news.

The Dow Jones Industrial Average closed 133 points higher. The S&P 500 closed 28 points higher. The NASDAQ was up 71 points.

West Texas Intermediate Crude Oil futures (CME) closed $3.51 to $4.09 lower through the front six contracts, pressured by worries about economic contraction in China. 

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Although cash calf and feeder cattle markets were thinly traded over the holidays, Stephen Koontz, agricultural economist at Colorado State University points out prices for 400-500 lb. calves in the Southern Plains increased from less than $200/cwt. in October to about $230 in December.

“Many of the market watchers that I talk with had anticipated a strong counter-seasonal market but not of this magnitude,” Koontz explains, in the most recent issue of In the Cattle Markets. “While calf prices have rallied and cow prices have been strong through the fall, there are certainly warning signs in the system.”

“Likewise, beef primal prices have showed good seasonal demand but not the quantum improvements of the prior years,” Koontz says. “Higher fed cattle prices and flat boxed beef values have resulted in packer margins being squeezed. The live-to-cutout spread was about $250 per head in November and there’s no post-COVID packer that I know of that can make money with that margin.”

In terms of technicals, Koontz explains cattle chart patterns are persistent.

“There are long-term uptrends in place and resistance planes are being broken as most contracts push into life-of-contract highs,” Koontz says. “But the cattle markets do not chart like the corn or soybean markets. Cattle do not jump to new higher levels. Rather, there are persistence moves higher with periods of sharp down moves. Live Cattle contracts have trends in place and have broken resistance – these are buy signals. Feeder Cattle look similar, but it will be interesting to see contracts test life-of-contract highs from last August.”