WLI

Higher wholesale beef values and some stronger cash prices in the North helped lift Live Cattle futures Friday, which drug Feeder Cattle along.

Choice Boxed beef cutout value was $1.65 higher Friday afternoon at $248.93/cwt. Select was 71¢ higher at $221.26/cwt.

Live Cattle futures closed an average of 84¢ higher (2¢ to $1.62 higher), except for 7¢ lower in the back contract.

Feeder Cattle futures closed an average of 29¢ higher.

Negotiated cash fed cattle trade was light to moderate on moderate demand in the Southern Plains through Friday afternoon, according to the Agricultural Marketing Service. Prices were mixed with live sales in the Texas Panhandle steady to $2 lower at $153-$155/cwt. and steady to $1 higher in Kansas at $155-$156.

Trade was light on moderate demand in Colorado at steady money of $157.

Elsewhere, trade was light on light to moderate demand with too few transactions to trend. For the week, live prices were $1-$3 lower in Nebraska at $156 and steady in the western Corn Belt at $157-$158. Dressed prices were $1-$2 lower in Nebraska at $247 but steady in the western Corn Belt at $249.

Estimated total cattle slaughter last week was 652,000 head, which was 11,000 head fewer than the previous week and 16,000 head fewer than the same week last year. Estimated total year-to-date cattle slaughter of 31.95 million head was 443,000 more (+1.4%) than the same time last year. Year-to-date estimated beef production of 26.41 billion lbs. was 334.5 million lbs. more (+1.3%).

Corn futures closed mostly 1¢ to 2¢ lower, except for 1¢ to 2¢ higher in the front three contracts.

Soybean futures closed 2¢ lower through Aug ‘23, and then fractionally lower to 1¢ lower.

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Major U.S. financial indices closed lower Friday with another set of data indicating stronger inflation than expected. The Producer Price Index for final demand advanced 0.3% in November, seasonally adjusted, according to the U.S. Bureau of Labor Statistics. Final demand prices also rose 0.3% in both October and September.

The Dow Jones Industrial Average closed 305 points lower. The S&P 500 closed 29 points lower. The NASDAQ was down 77 points.

West Texas Intermediate Crude Oil futures (CME) closed 19¢ to 44¢ lower through the front six contracts.

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USDA’s Economic Research Service left the projected five-area direct weighted average fed steer price unchanged in the December World Agricultural Supply and Demand Estimates (WASDE). Prices were forecast at $153/cwt. in the first quarter of next year, $154 in the second and $166 in the third quarter with an annual average price of $156. This year’s annual average price was projected at $144.15.

Estimated beef production for next year was unchanged at 26.27 billion lbs., which would be 2.14 billion lbs. less (-7.5%) than this year’s production of 28.42 billion lbs.

Among other WASDE highlights…

Corn

The 2022/23 U.S. corn outlook was for lower exports and increased ending stocks. Exports were lowered 75 million bu. from the previous month’s estimate as competition from other exporters and relatively high U.S. prices have resulted in slow sales and shipments through early December. Corn ending stocks were raised 75 million bu. The season-average corn price received by producers was lowered 10¢ to $6.70/bu. based on observed prices to date.

Soybeans

Soybean supply and use projections for 2022/23 were unchanged from last month. Based on a review of EPA’s recent proposed rule for renewable fuel obligation targets, soybean oil used for biofuel for 2022/23 was reduced 200 million lbs. to 11.6 billion. Soybean oil exports were reduced on historically low export sales through November. With reduced use of soybean oil for biofuel and exports, food use and ending stocks were raised. The U.S. season-average soybean price forecast was unchanged at $14.00.bu. The soybean oil price was lowered 1¢/lb. to 68¢. The soybean meal price forecast was increased $10.00 to $410.00/short ton.

Wheat

The 2022/23 U.S. wheat supply and use outlook was unchanged. The 2022/23 season-average farm price was forecast 10¢/bu. lower at $9.10, based on prices received to date and expectations for futures and cash prices for the remainder of 2022/23.

Cattle futures firmed and gained Thursday with more trader interest and perhaps more confidence wholesale price volatility may be gentler.

Feeder Cattle futures closed an average of $1.62 higher ($1.15 to $2.75 higher).

Live Cattle futures closed an average of 42¢ higher (10¢ to 57¢ higher), except for 10¢ lower in the back contract.

Corn futures closed mostly 1¢ lower, except for 1¢ to 4¢ higher in the front four contracts.

Soybean futures closed mixed, 2¢ to 14¢ higher through Sep ’23 and then mostly 1¢ to 3¢ lower.

Negotiated cash fed cattle trade ranged from light on moderate demand in the Texas Panhandle to limited on moderate demand in the other regions through Thursday afternoon, with too few transactions to trend, according to the Agricultural Marketing Service.

Live prices were $1 lower in Nebraska on Wednesday at $156/cwt. and dressed prices were $1-$2 lower at $247.

Last week, live prices were at $155 in the Southern Plains and $157-$158 in the western Corn Belt where dressed prices were $248-$249.

Choice Boxed beef cutout value was $1.68 lower Thursday afternoon at $247.28/cwt. Select was 78¢ higher at $220.55/cwt.

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Major U.S. financial indices ended their recent skid Thursday. Apparently, it was a situation of bad news being good news. In this case, weekly unemployment insurance claims were a bit higher than expected.

Seasonally adjusted initial claims for the week ending Dec. 3 were 4,000 more than the previous week at 230,000. The advance number for seasonally adjusted insured unemployment during the week ending Nov. 26 was 1.67 million, which was 62,000 more than the previous week’s revised level, according to the U.S. Department of Labor.

The Dow Jones Industrial Average closed 183 points higher. The S&P 500 closed 29 points higher. The NASDAQ was up 123 points.

West Texas Intermediate Crude Oil futures (CME) closed 55¢ to 82¢ lower through the front six contracts.

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Earlier this week, the U.S. Department of Agriculture published the final rule that will require packers to submit contractual information for the purchase of cattle. The rule applies to beef packers that slaughtered an average of not less than 5% of the number of fed cattle slaughtered nationally during the immediately preceding five calendar years.

The rule stems from the Consolidated Appropriations Act of 2022, which directed the Agricultural Marketing Service (AMS) to create a Cattle Contracts Library Pilot Program (library) to increase market transparency for cattle producers.

Publication of the final rule, which goes into effect on Jan. 6, 2023, aims to ensure complete reporting of contractual information and volumes purchased against the contracts, including: supplemental information on cattle requirements; associated schedules of premiums and discounts; delivery and transportation terms and payments; appendices and agreements of financing, risk-sharing, or profit sharing; or other financial arrangements associated with such contracts, whenever new contracts are offered, or existing contracts are updated.

“We are pleased that USDA listened to feedback from stakeholders like NCBA while crafting the final rule on the Cattle Contract Library Pilot Program. We are hopeful that this pilot program will strike an appropriate balance between offering cattle producers additional insight into the market while also protecting their proprietary business information,” says Tanner Beymer, Senior Director of Government Affairs for the National Cattlemen’s Beef Association (NCBA). “A Cattle Contract Library is just one of many tools NCBA has advocated for to help producers make informed business decisions and capture the most value possible for their cattle.”

All information related to the library pilot is posted on the AMS Cattle Contract Library webpage here.

Bearish sentiment from the sharp volatility in Choice boxed beef cutout values helped pressure negotiated cash fed cattle prices lower Wednesday. Live prices in Nebraska were $1 lower on a live basis at $156/cwt. and $1-$2 lower in the beef at $247, on slow trade and light to moderate demand.

Elsewhere, trade was limited on light demand with too few transactions to trend, according to the Agricultural Marketing Service. Last week, live prices were $155 in the Southern Plains, $157 in Colorado and $157-$158 in the western Corn Belt, where dressed prices were $249.

Choice Boxed beef cutout value was $6.31 higher through Wednesday afternoon at $248.96/cwt. It was $6.62 lower on Monday. Select was 63¢ higher at $219.66/cwt.

Live Cattle futures found some footing Wednesday, while a bounce in Corn futures weighed on Feeder Cattle.

Feeder Cattle futures closed an average of 56¢ lower (25¢ to 90¢ lower).

Live Cattle futures closed an average of 35¢ higher, except for unchanged to 12¢ lower in four contracts.

Corn futures closed mostly 2¢ to 3¢ higher.

Soybean futures closed mostly 11¢ to 15¢ higher.

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Major U.S. financial indices closed little changed Wednesday as investors retrenched and assessed the likelihood of a recession.

The Dow Jones Industrial Average closed 1 point higher. The S&P 500 closed 7 points lower. The NASDAQ was down 56 points.

West Texas Intermediate Crude Oil futures (CME) closed $1.91 to $2.24 lower through the front six contracts.

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U.S. beef exports remain resilient and on a record annual pace, according to data released by USDA and compiled by the U.S. Meat Export Federation (USMEF).

October beef exports totaled 125,466 metric tons (mt), which was 8% more than a year ago. Export value was $929.8 million, down 3% from the large total reported in October 2021.

In the first 10 months of 2022, beef export value increased 18% from last year’s record pace to reach $10.05 billion – topping $10 billion in a single year for only the second time. January-October export volume was 1.25 million mt, up 4% from a year ago. October beef export value equated to $424.82 per head of fed slaughter, down 3% from a year ago, but the January-October average was still up 17% to $459.50.

“The October results were remarkable considering the headwinds facing U.S. beef, especially in our large Asian markets,” says Dan Halstrom, USMEF president and CEO. “Key currencies such as the Japanese yen and Korean won had sunk to their lowest levels in decades versus the U.S. dollar, which obviously affected importers’ buying power. COVID lockdowns in China were also a concerning factor, especially for buyers in the foodservice sector. But despite all that, U.S. beef still performed very well in Asia and achieved solid growth in North America and the Middle East. With some recent improvement in exchange rates, beef exports are well-positioned to surpass last year’s records.”

China/Hong Kong was the leading destination for U.S. beef in October, with export value topping $240 million. Export volume to Japan was steady with last year and shipments increased to South Korea, but export value to both markets was negatively impacted by slumping currencies. October beef exports achieved strong growth to the ASEAN, Middle East and Canada.

Also of note, October’s U.S. pork exports were the most in 16 months.

Pork exports reached 238,198 mt in October, up 5% from a year ago and the largest since June 2021. Pork export value increased 13% to $697.3 million, the highest since May 2021.

Halstrom notes that the October pork results were bolstered by outstanding growth in variety meat exports, which set a new value record at $126.2 million.

Cattle futures and some other ag commodities lost ground Tuesday with much of the pressure apparently tied to recessionary fears in outside markets. The recent sharp decline in wholesale beef prices didn’t help.

Feeder Cattle futures closed an average of $2.08 lower ($1.75 to $2.25 lower).

Live Cattle futures closed an average of $1.69 lower ($1.32 to $2.20 lower).

Corn futures closed mostly 1¢ to 3¢ lower.

Soybean futures closed 14¢ to 17¢ higher through Aug ‘23 and then mostly 4¢ to 6¢ 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 at $155/cwt. in the Southern Plains, $157 in Nebraska, $157 in Colorado and $157-$158 in the western Corn Belt. Dressed prices were $248-$249.

Choice Boxed beef cutout value was 66¢ lower Tuesday afternoon at $242.65/cwt. Select was $1.97 lower at $219.14/cwt.

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Major U.S. financial indices closed sharply lower again Tuesday as investors seemed to grow increasingly concerned about the threat of a recession as the Fed tries to rein back inflation.

The Dow Jones Industrial Average closed 350 points lower. The S&P 500 closed 57 points lower. The NASDAQ was down 225 points.

West Texas Intermediate Crude Oil futures (CME) closed $2.48 to $2.68 lower through the front six contracts.

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Agricultural producer sentiment was static month to month, according to the latest Purdue University/CME Group Ag Economy Barometer. The index in November was unchanged from the prior month at 102. However, the Current Conditions Index declined 3 points to a reading of 98 while the Future Expectations Index increased 2 points to a reading of 104.

“Even though sentiment remained relatively unchanged in November, producers are continuing to look at their bottom line,” says James Mintert, the barometer’s principal investigator and director of Purdue University’s Center for Commercial Agriculture. “Rising interest rates combined with high input and energy costs are creating a lot of uncertainty at the farm level.” 

The Farm Financial Performance Index improved modestly, up 5 points from October to 91, but it remains 14% lower year over year. Nearly a third of producers continue to express concern that their farms’ financial performance this year will be worse than the prior year. But the remainder expect their farms’ 2022 financial performance to be equal to or exceed 2021’s. Still, high input costs continue to weigh on producers’ minds with 42% of respondents in this month’s survey citing that as their top concern in the year ahead. Other concerns include rising interest rates, input availability and declining commodity prices.

Given the sharp rise in energy prices this year, the latest survey asked producers how they’ve responded to the cost increase. Just over a fourth (27%) of this month’s respondents indicated they’ve made changes in their operation because of rising prices for energy. Of those who indicated they made changes, 33% indicated they reduced tillage, 24% reduced nitrogen rates and/or changed application timing, 11% increased their use of no-till, and 8% said they reduced crop drying.

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 after the U.S. mid-term elections from November 14-18.

Cattle futures gained again Monday, supported by further erosion in Corn futures.

Feeder Cattle futures closed an average of 79¢ higher (27¢ to $1.32 higher).

Live Cattle futures closed mixed, from an average of 7¢ lower to an average of 11¢ higher.

Corn futures closed mostly 2¢ to 6¢ lower.

Soybean futures closed fractionally mixed 1¢ 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.

For the week, live prices were at $155/cwt. in the Southern Plains, $157-$159 in Nebraska, $157 in Colorado and $157-$158 in the western Corn Belt. Dressed prices were $248-$249.

Choice Boxed beef cutout value was $6.62 lower Monday afternoon at $243.31/cwt. Select was $3.45 lower at $221.11/cwt.

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Major U.S. financial indices closed sharply lower Monday with carryover concerns from last week that recently strong economic data will encourage the Fed to continue its aggressive stance on raising interest rates.

The Dow Jones Industrial Average closed 482 points lower. The S&P 500 closed 72 points lower. The NASDAQ was down 221 points.

West Texas Intermediate Crude Oil futures (CME) closed $2.39 to $3.05 lower through the front six contracts.

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“Cattle slaughter and beef production are tightening in the final weeks of the year,” says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly market comments. “Total weekly beef production was down 1.0% in the most recent weekly data. This is the largest weekly decline in weekly beef production since the first few weeks of the year. The expectations are to begin seeing consistent week-over-week decreases in beef production.”

The most recent weekly data continued pointing to fewer heifers being retained with steer slaughter down 6.4% compared to the same week last year, while heifer slaughter was up 4.6%, according to Peel.

“Beef production in 2022 has also been boosted by increased cow slaughter,” Peel says. “Beef cow slaughter is up 12.1% year over year for the year to date. However, beef cow slaughter has been up only about 3% the past two weeks, suggesting that herd liquidation may be slowing down.”