WLI

Negotiated cash fed cattle trade got off to a slow start for the week on Wednesday, but a start none the less. Established trade was steady at $150 in the Texas Panhandle on light demand and slow to limited trade.

Although too few to trend, there were some live sales in Kansas at $150 and some in Nebraska at $153/cwt.

Choice Boxed beef cutout value (p.m.): $1.27 lower at $257.09/cwt. Select was 41¢ lower at $231.35/cwt.

Cattle futures firmed and edged higher Wednesday. Feeder Cattle futures closed an average of 48¢ higher. Live Cattle futures closed an average of 56¢ higher.

Corn futures closed mixed, down fractionally to 1¢ through Sep ’23 then up fractionally to 1¢.

Soybean futures closed mostly 13¢ to 28¢ lower.

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Major U.S. financial indices closed lower Wednesday, on strongest retail sales in eight months, raising doubts the Federal Reserve will pause efforts to tamp down inflation.

The Dow Jones Industrial Average closed 39 points lower. The S&P 500 closed 33 points lower. The NASDAQ was down 175 points.

West Texas Intermediate Crude Oil futures (CME) closed $1.25 to $1.33 lower through the front six contracts.

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USDA’s Economic Research Service (ERS) increased expected feeder steer prices (750-800 lbs., Oklahoma City) for the fourth quarter of this year and the first quarter of next year, in the latest Livestock, Dairy and Poultry Outlook.

“Despite higher operating costs, firm feedlot demand is expected for the remainder of 2022, and with current price data the fourth-quarter 2022 price forecast for feeder steers is raised $3 to $176/ per cwt.,” say ERS analysts. “Based on current price strength, the price projection in first-quarter 2023 is raised $2 to $177 per cwt. However, expected feeder calf prices were unchanged for the remainder of the year.”

ERS projects next year’s feeder steer prices to be $190 in the second quarter and $214 in the third quarter for an annual average price of $201.25. This year’s estimated annual price is $165.68.

Grain futures gained late in Tuesday’s session, apparently on reports that Russian missiles landed in Poland, causing fatalities.

Corn futures closed mostly 4¢ to 9¢ higher and Soybean futures closed mostly 12¢ to 16¢ higher.

Feeder Cattle futures closed an average of $1.84 lower. Live Cattle futures closed narrowly mixed, from an average of 15¢ lower in six contracts to an average of 27¢ higher.

Negotiated cash fed cattle trade ranged from mostly inactive on light demand to limited on light demand through Tuesday afternoon, with too few transactions to trend, according to the Agricultural Marketing Service.

Last week, live prices were $150/cwt. in the Southern Plains $153 in Nebraska and $153-$154 in the western Corn Belt. Dressed prices were $240-$242.

Choice Boxed beef cutout value was 38¢ higher Tuesday afternoon at $258.36/cwt. Select was $1.45 lower at $231.76/cwt.

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Major U.S. financial indices closed higher Tuesday, apparently supported by another indicator that inflation may be easing.

The Producer Price Index for final demand, which reflects wholesale prices, increased 0.2% in October, according to the U.S. Bureau of Labor Statistics. That was less than expected.

The Dow Jones Industrial Average closed 56 points higher. The S&P 500 closed 34 points higher. The NASDAQ was up 162 points.

West Texas Intermediate Crude Oil futures (CME) closed $1.05 to $1.43 higher through the front six contracts.

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Through October, approximately 765,000 more beef cows and heifers were slaughtered than the same time last year, according to Josh Maples, Extension livestock economist at Mississippi State University, in the latest Cattle Market Notes Weekly.

To get a sense of how much the beef cow herd might decline this year, Maples ran a regression analysis developed by the Livestock Marketing Information Center that looks at the relationship between beef cow and heifer slaughter during the calendar year, relative to the beef cow inventory at the start of the same calendar year.

Assuming cow and heifer slaughter for the remainder of the year is similar to last year, Maples says the regression analysis suggests the beef cow herd declining 4-5% in 2022.

“We will know more when the next Cattle Inventory report is released in January. There could also be revisions to data from prior years that could affect the year-over-year changes. Regardless, all signs point to fewer cows and heifers to calve next year and continued supply-side support for stronger cattle prices,” Maples says.

As reported in Cattle Current last week, early-release tables for USDA’s Agricultural Projections report from the Economic Research Service ERS project the beef cow inventory to be 1.1 million head fewer year over year when the new year begins at about 29 million head. That would be 3.6% less than the same time a year earlier.

Feeder Cattle futures closed mixed on Monday, from an average of 27¢ lower to unchanged to an average of 48¢ higher. They were supported by weaker Corn futures but challenged by softer Live Cattle futures which closed an average of 59¢ lower, except for 5¢ higher in spot Dec.

Corn futures closed mostly 2¢ to 4¢ lower.

Soybean futures closed mostly 5¢ to 9¢ lower.

Negotiated cash fed cattle trade ranged from mostly inactive on very light demand to a standstill through Monday afternoon, with too few transactions to trend, according to the Agricultural Marketing Service.

Last week, live prices were $150/cwt. in the Southern Plains $153 in Nebraska and $153-$154 in the western Corn Belt. Dressed prices were $240-$242.

Choice Boxed beef cutout value was 96¢ lower Monday afternoon at $257.98/cwt. Select was $2.06 lower at $233.21/cwt.

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Major U.S. financial indices closed lower Monday, with skittishness ahead of further reads on inflation this week.

The Dow Jones Industrial Average closed 211 points lower. The S&P 500 closed 35 points lower. The NASDAQ was down 127 points.

West Texas Intermediate Crude Oil futures (CME) closed $2.31 to $3.09 lower through the front six contracts.

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Domestic beef demand strength continues despite higher retail prices.

“Beef demand considers retail beef prices as well as the quantity of beef consumption,” explains Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly market comments. “Total commercial beef production is projected for 2022 at a record level of 28.3 billion lbs. After adjusting for beef trade, per capita retail beef consumption is projected at 59.3 lbs., up year over year from 58.9 lbs. per capita in 2021. The fact that retail beef prices this year are averaging higher at the same time as consumption is increasing is an indication of strong beef demand.”

The all-fresh retail beef price has remained in a narrow range from $7.37/lb. to $7.25/lb. this year, averaging $7.33/lb. through October, according to Peel. It was $6.95/lb. during the same period last year.

“Wholesale boxed beef prices, similar to retail prices, have traded in a narrow range for most of 2022,” Peel says. “Since March, Choice boxed beef has averaged $261.77/cwt. with a weekly maximum of 272.48/cwt. and a minimum of $246.31/cwt., leading to a range of $26.17/cwt. This follows very strong wholesale demand in 2021, which led to an average Choice boxed beef price of $279.81/cwt. with a weekly maximum of $347.02/cwt., a minimum of $206.73/cwt. and a range of $140.29/cwt. for the year.”

USDA projects domestic beef production significantly lower next year, which suggests higher beef prices.

“Consumers, thus far, have absorbed large supplies of beef at record prices,” Peel says. “As beef supplies tighten, some consumers may begin to ‘trade down’ as market prices ration a smaller supply of beef. Per capita beef consumption is expected to decrease in the coming year, not because beef demand is weak but simply because the available supply of beef will decrease.

Cattle futures sagged on Friday. Pressure included higher Corn and Soybean futures, sharply lower boxed beef prices and static cash prices. Still, it was hard to square the degree of decline with fundamentals.

Feeder Cattle futures closed an average of $2.13 lower ($1.32 lower at the back to $3.12 lower toward the front).

Live Cattle futures closed an average of $1.00 lower (52¢ lower at the back to $1.77 lower toward the front).

Negotiated cash fed cattle trade ranged from limited on light demand to mostly inactive on very light demand through Friday afternoon, with too few transactions to trend, according to the Agricultural Marketing Service.

For the week, live prices were steady in the Southern Plains at $150, steady to $3 lower in Nebraska at $150-$153 and steady to $2 higher in the western Corn Belt at $153-$155. Dressed prices were steady to $2 higher at $242.

Estimated total cattle slaughter last week of 671,000 head was 4,000 head more than the previous week and 12,000 head more than the same week last year. Year-to-date estimated total cattle slaughter of 29.38 million head was 464,000 head more (+1.6%) than the same time last year. Year-to-date estimated beef production of 24.25 billon lbs. was 350 million lbs. more (+1.5%).

Choice Boxed beef cutout value was $4.33 lower Friday afternoon at $258.94/cwt. Select was $1.56 lower at $235.27/cwt.

Grain and Soybean futures rebounded Friday, helped along by the significant decline in the U.S. dollar in the latter part of the week, making U.S. exports more competitive.

Corn futures closed mostly 2¢ to 3¢ higher through Jly ‘24, and then mostly fractionally higher.

Soybean futures closed mostly 18¢ to 25¢ higher.

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Major U.S. financial indices edged higher Friday, maintaining the previous session’s steep gains, tied to thoughts inflation may be easing.

The Dow Jones Industrial Average closed 32 points higher. The S&P 500 closed 36 points higher. The NASDAQ was up 209 points.

West Texas Intermediate Crude Oil futures (CME) closed $2.32 to $2.50 higher through the front six contracts.

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Although challenging times lie ahead, Dan Halstrom, president and CEO of the U.S. Meat Export Federation (USMEF) says market diversification helped keep beef exports on a record pace through the first three quarters of this year.

Speaking to participants at the USMEF Strategic Planning Conference in Oklahoma City last week, Halstrom explained market diversification has long been an organization priority. He noted that the often-tense relationship between the U.S. and China underscores the importance of this strategy. Halstrom explained that while China is a major U.S. red meat customer, on pace to purchase $4 billion in U.S. beef and pork this year, the U.S. is not nearly as dependent on China as most other suppliers.

“Uruguay exports 58% of its beef production to China, New Zealand 44%, Brazil 18% and Australia 14%,” Halstrom said. “But even with our recent growth, just 3% of U.S. beef production is exported to China.”

Halstrom cited several mounting obstacles for U.S. exports, including global inflation, ongoing supply chain challenges and the strengthening U.S. dollar. As an example, Halstrom noted that devaluation of the Japanese yen has pushed prices for U.S. meat products 30% higher than a year ago in an extremely competitive market.

“Global demand is strong, even record-breaking, despite rising prices,” said Halstrom, “But at what point do international consumers scale back?”

Grain and Soybean futures closed lower Thursday, apparently due in part to more money flowing into equities for the day.

Corn futures closed 6¢ to 11¢ lower through Jly ‘24. Soybean futures closed mostly 20¢ to 29¢ lower.

Softer grain futures helped boost Cattle futures.

Feeder Cattle futures closed an average of $1.52 higher (90¢ to $2.05 higher).

Live Cattle futures closed an average of 90¢ higher (70¢ to $1.50 higher).

Cattle futures were lower through mid-day today as grain futures trended higher.

Negotiated cash fed cattle trade and demand were slow through Thursday afternoon, according to the Agricultural Marketing Service.

Although too few to trend, there were some live sales at $149/cwt. in the Texas Panhandle, $153.00-$153.50 in Nebraska and $153-$154 in the western Corn Belt.

So far this week, live prices are steady in the Southern Plains at $150, steady in Nebraska at $153 and steady to $1 higher in the western Corn Belt at $153. Dressed prices are steady to $2 higher at $242.

Choice Boxed beef cutout value (p.m.): $1.40 lower at $263.27/cwt. Select was $1.61 higher at $236.83/cwt.

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Major U.S. financial indices roared back Thursday, after the Consumer Price Index report for October beat expectations. The CPI showed a 7.7% increase over last year and 0.4% increase over last month, but the rate of increase was less than expected. The result on Wall Street was the biggest jump for stocks in two years as investors anticipate a potential easing in monetary policy by the Federal Reserve as it tries to rein in inflation.

The Dow Jones Industrial Average closed 1,201 points higher. The S&P 500 closed 208 points higher. The NASDAQ was up 761 points.

West Texas Intermediate Crude Oil futures (CME) closed 62¢ to 69¢ higher through the front six contracts.

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Randy Blach, CEO of CattleFax, offered market insights to the crowd gathered in Oklahoma City this week for the U.S. Meat Export Federation (USMEF) Strategic Planning Conference.

“If you’re putting an animal in a feedyard anywhere in the Central Plains – let’s say Kansas or Oklahoma – your cost to put on a pound of gain is between $1.30 and $1.40,” Blach explained. “We have not seen that historically, not even back in 2008 when we had the ethanol mandate and for a period of time corn was at $8/bu. This is an interesting time, when the market needs more corn and where it’s needed most, the corn just isn’t there.”

Blach also highlighted the remarkable efficiency and sustainability of the U.S. beef industry, which he maintains is well positioned for success even in this challenging environment.

“Whenever I ask an audience ‘who’s the biggest beef producer in the world?’ – everyone says Brazil because it has 300 million cattle,” Blach said. “But we’re producing more beef than Bazil with only one-third the number of cattle. Why? Because of our high-quality, grain-fed beef. The U.S. has the best carbon footprint of anybody on the list of top beef producers, because of the way our production systems work and the amount of production that we get on a per-head basis.”

Blach added that the U.S. achieved record beef production in 2022 with 30 million fewer cattle than in the 1970s.

“That’s what sustainability is – doing more with less, and doing it better with great animal husbandry,” Blach said.

Blach noted that larger-than-expected contraction of the cattle herd helped drive U.S. beef production and exports to record highs this year but will be a significant constraint for U.S. exporters next year.