WLI

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.

Cattle futures closed lower to start the trading week, pressured by last week’s softer cash fed cattle prices, the lack of direction so far this week and stronger Corn futures.

Live Cattle futures closed an average of 35¢ lower.

Feeder Cattle futures closed an average of $1.08 lower (70¢ to $1.60 lower).

Corn futures closed mostly 3¢ to 5¢ higher.

Soybean futures closed 6¢ to 12¢ higher through Aug ‘23 and then mostly unchanged to 3¢ lower.

Negotiated cash fed cattle trade ranged from a standstill to mostly inactive on very light demand with too few transactions to trend through Tuesday afternoon, 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 77¢ lower Tuesday afternoon at $276.66/cwt. Select was $2.02 lower at $254.53/cwt.

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Major U.S. financial indices closed mixed Tuesday. Pressure included less than expected fourth-quarter earnings from Goldman Sachs.

The Dow Jones Industrial Average closed 391 points lower. The S&P 500 closed 8 points lower. The NASDAQ was up 15 points.

West Texas Intermediate Crude Oil futures (CME) closed 22¢ to 35¢ higher through the front six contracts.

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Estimated feedlot returns are positive through September for both steers and heifers, according to the latest Historical and Projected Kansas Feedlot Net Returns from Kansas State University.

For steers, estimated net returns range from $27.73 per head in February to $212.49 in May. Feeding cost of gain ranges from $117.78/cwt. in September to $141.13 in January.

On the heifer side of the fence, estimated net returns range from $27.35 per head in July to $189.79 in May. Feeding cost of gain ranges from $128.89/cwt. in September to $147.39 in February.

Projections reflect a cash market situation without implementation of price risk management strategies.

Note: Futures and equity markets were closed yesterday. As well, some AMS reports were unavailable due to the holiday.

Negotiated cash fed cattle prices last week were $156/cwt. on a live basis in the Southern Plains and Nebraska, where dressed prices were $252. Live prices in the western Corn Belt were $157-$159.

Choice boxed beef cutout value was 81¢ higher Monday afternoon at $277.43/cwt. Select was 34¢ lower at $256.55/cwt.

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Historically low hay stocks could prompt more beef cow liquidation this winter, says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly market comments.

He points out Dec. 1 hay stocks for the nation were 16.4% less than the previous 10-year average at 71.9 million tons, in the recent USDA Crop Production report. It was the least on record going back to 1973. Peel notes hay production last year was the lowest on record in data that began in 1974.

“Each of the top 10 states for hay stocks was down compared to the 10-year average and collectively were down 20.8% from the 2012-2021 average Dec. 1 stocks level,” Peel says. “The largest hay stocks on December 1 were in Texas — 25.8% below the 10-year average for the state. Other top 10 states were down from the 10-year average ranging from Tennessee (down 10.9%) to Oklahoma (down 32.7%).” 

Combined total hay production in the top 10 states represents 43% of U.S. total hay production and was down 18.7% compared to the 10-year average for those states, according to Peel. He adds that eight of the top 10 beef cow states are among the top 10 hay production states.

“The December storm already will have taken a chunk out of the reported Dec. 1 hay stocks,” Peel says. “New forage production is several months away in the south and even farther away in northern regions.”