WLI

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.

Cattle futures took a breather Tuesday amid light trade as traders await weekly cash direction.

Feeder Cattle futures closed an average of 69¢ lower.

Live Cattle futures closed an average of 67¢ lower.

Negotiated cash fed cattle trade was limited on light demand in Kansas through Tuesday afternoon, according to the Agricultural Marketing Service. Although too few to trend, there were some early live sales at $159/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 15¢ higher Tuesday afternoon at $266.72/cwt. Select was $3.61 higher at $257.33/cwt.

Grain and Soybean futures Tuesday likely reflected some positioning ahead of Wednesday monthly World Agricultural Supply and Demand Estimates.

Corn futures closed 2¢ to 5¢ lower.

KC HRW Wheat closed 3¢ to 9¢ higher through May ‘24, and then mostly fractionally higher.

Soybean futures closed 1¢ to 6¢ lower through Aug ‘23 and then mostly 1¢ to 3¢ higher.

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Major U.S. financial indices rebounded Tuesday, apparently fueled by dovish comments from Federal Reserve Chair Jerome Powell at The Economics Club of Washington, D.C. His comments underscored the notion that inflation is easing and that it could be a year or more before inflation meets the target of federal monetary policy.

The Dow Jones Industrial Average closed 265 points higher. The S&P 500 closed 52 points higher. The NASDAQ was up 226 points.

West Texas Intermediate Crude Oil futures (CME) closed $2.52 to $3.03 higher through the front six contracts.

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Agricultural producer sentiment improved for the second consecutive month in January, as measured by the Purdue University/CME Group Ag Economy Barometer.

The Ag Economy Barometer increased 4 points from December to January, rising to 130. The increase was primarily due to better expectations for the future as the Future Expectations Index improved by 5 points to 127. The Index of Current Conditions rose 1 point to a reading of 136.

“Although producers were a bit more optimistic about the future this month, they again reported expectations for tighter margins in 2023 than in 2022,” says James Mintert, the barometer’s principal investigator and director of Purdue University’s Center for Commercial Agriculture.

Each January, starting in 2020, the survey asks respondents if they expect to have a larger operating loan compared to the previous year and if so, the reason for the larger loan. In January, 22% of respondents said they expect to have a larger 2023 farm operating loan compared to 2022, down from 27% last year. Among respondents who expect to have a larger operating loan, 80% indicated it was due to increased input costs. Only 5% said it was due to carrying over unpaid operating debt, significantly fewer than 13% a year earlier and 20% in January 2021.

“The sharp decline in the percentage of producers expecting to carry over unpaid operating debt is important,” Mintert says. “It supports the idea that the vast majority of producers are entering 2023 in a strong financial position despite the rise in production costs.”

The Ag Economy Barometer is calculated each month from 400 U.S. agricultural producers’ responses to a telephone survey. This month’s survey was conducted from January 16-20.

Cattle futures extended gains again Monday, supported by last week’s stronger cash prices and notions they can move higher again this week.

Feeder Cattle futures closed an average of $1.28 higher.

Live Cattle futures closed an average of 45¢ higher.

When all the counting was in last week, negotiated cash fed cattle prices were $2 higher on a live basis in the Texas Panhandle at $158/cwt. and then $2-$3 higher at $158-$159 in Kansas, $155-$159 in Nebraska and $154-$160 in the western Corn Belt. Dressed prices were $2 higher at $250.

The five-area direct weighted average fed steer price last week was $2.92 higher at $158.17/cwt. The weighted average steer price in the beef was $2.16 higher at $249.88.

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

Choice boxed beef cutout value was $1.83 higher Monday afternoon at $266.57/cwt. Select was $2.11 higher at $253.72/cwt.

Corn futures closed 1¢ to 3¢ higher through Jly ‘24, buoyed by exports, and then fractionally lower to 2¢ lower.

Soybean futures closed 8¢ to 11¢ lower through the front four contracts and then unchanged to 2¢ lower.

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Major U.S. financial indices extended losses Monday, pressured by rising bond yields.

The Dow Jones Industrial Average closed 34 points lower. The S&P 500 closed 25 points lower. The NASDAQ was down 119 points.

West Texas Intermediate Crude Oil futures (CME) closed 72¢ to 84¢ higher through the front six contracts.

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Reflecting on last week’s Cattle inventory report, analysts with the Livestock Marketing Information Center (LMIC) note the year-over-year decline of 2.8 million head across all classes was the most since 1989.

“One key difference is that in 1989 the largest drop occurred in animals under 500 pounds — down 1.5 million head of the drop in total cattle inventory,” LMIC analysts explain in the latest Livestock Monitor. “This year, over 1 million cows were lost, predominantly in the beef breeding herd.”

The nation’s beef cow inventory of 28.92 million head was 1.06 million fewer (-3.6%). Total beef cow inventory is the smallest since 1962, according to the Agricultural Marketing Service (AMS).

Beef replacement heifers of 5.16 million head were 317,800 head fewer, down 5.8%.

“Low retention and a much smaller ‘other’ heifer number represent the significant undercutting that has happened to the beef cattle herd,” LMIC analysts explain. “It will take a significant amount of time to rebuild to normal cull rates and gain back the time lost in genetic improvement by culling heifers.  There is very likely to be significant opportunities in the bred heifer markets, but 2023 might be a touch early to see the most benefits of that game plan.”

“With the liquidation in full swing, as well as a greater number of heifers being harvested in 2022, the question will be how long it takes for rebuilding to take place,” say AMS analysts. “The last time this happened a decade ago, the beef cow number grew by 2.2 million cows from 2014 to 2017.”

However, among other challenges, AMS analysts point out there’s more competition today for shifting forage acres into crop production.