WLI

Cattle futures ran out of steam Wednesday as traders were apparently waiting for more cash direction.

Feeder Cattle futures closed an average of 24¢ lower.

Live Cattle futures closed an average of 34¢ lower.

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

Last week, live prices were at $153-$155/cwt. in the Texas Panhandle, $155-$156 in Kansas, $156-$158 in Nebraska and $156 in the western Corn Belt. Dressed prices were $246-$247.

Choice Boxed beef cutout value was $4.88 lower Wednesday afternoon at $250.07/cwt. Select was $1.23 higher at $226.69/cwt.

Corn futures closed 2¢ to 4¢ lower through Jly ‘23 and then mostly fractionally mixed.

Soybean futures closed narrowly mixed, mostly 1¢ lower to 1¢ higher.

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Major U.S. financial indices closed lower Wednesday, pressured by hawkish comments from Federal Reserve Chair, Jerome Powell, taking wind from the sails of those who had hoped the central bank would begin taking a softer monetary stance.

“The Committee anticipates that ongoing increases in the target range will be appropriate in order to attain a stance of monetary policy that is sufficiently restrictive to return inflation to 2% over time,” according to an FOMC statement. Although less than recent increases, the Fed raised the target range for the federal funds rate another half-point to 4.25% to 4.50%.

The Dow Jones Industrial Average closed 142 points lower. The S&P 500 closed 24 points lower. The NASDAQ was down 85 points.

West Texas Intermediate Crude Oil futures (CME) closed $1.37 to $1.89 higher through the front six contracts.

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Last year, 26% of U.S. beef production came from small family operations and 57% came from mid-size and large-scale family operations, according to the 2022 edition of America’s Farms and Ranches at a Glance.

Most U.S. operations are small family farms (89%) that operate on nearly 50% of U.S. agricultural land and account for 18% of the total value of production. Large-scale family farms accounted for 46% of the total value of production and 27% of agricultural land in 2021. Mid-size family farms accounted for 18% of agricultural land and 18% of the total value of production.

Small family farms had gross cash farm income of less than $350,000 for the year. For mid-size operations, the range of gross cash farm income was $350,000 to $999,999. It was $1 million or more for large-scale family operations.

Higher outside markets and recently surging wholesale beef prices helped Cattle futures mostly extend gains Tuesday.

Feeder Cattle futures closed an average of 36¢ higher.

Live Cattle futures closed narrowly mixed, from an average of 24¢ higher in the front four contracts to an average of 17¢ lower through the back, except for unchanged in Aug.

Choice Boxed beef cutout value was $2.07 lower Tuesday afternoon at $254.95/cwt. Select was 22¢ lower at $225.46/cwt. But, Choice was $3.31 higher in the morning report and the previous day’s CME Boxed Beef Index was $1.52 higher.

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

Last week, live prices were at $153-$155/cwt. in the Texas Panhandle, $155-$156 in Kansas, $156-$158 in Nebraska, $157 in Colorado and $156 in the western Corn Belt. Dressed prices were $246-$247.

Corn futures closed mostly 1¢ lower.

Soybean futures closed 15¢ to 19¢ higher through Aug ‘23, and then 4¢ to 8¢ higher.

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Major U.S. financial indices rose again Tuesday with another hopeful sign that inflation is easing. The Consumer Price Index for All Urban Consumers rose 0.1% in November on a seasonally adjusted basis, after increasing 0.4% in October, according to the U.S. Bureau of Labor Statistics. The index was 7.1% higher over the last 12 months, less than the trade expected.

The Dow Jones Industrial Average closed 103 points higher. The S&P 500 closed 29 points higher. The NASDAQ was up 113 points.

West Texas Intermediate Crude Oil futures (CME) closed $1.83 to $2.22 higher through the front six contracts.

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Global beef production is forecast to decrease slightly in 2023, as declining beef production in the U.S. and European Union will more than offset increasing beef production in Australia, Mexico and India, says Derrell Peel, Extension livestock Marketing specialist at Oklahoma State University, in his weekly market comments. He adds that changing beef production and consumption will impact global beef exports and imports.

Brazil is expected to remain the largest beef exporter with beef production increasing slightly next year, according to Peel. He explains Brazilian exports are limited by decreased beef imports to China.

“Australia, after drought in recent years decreased cattle numbers and beef production, is now in rebuilding mode,” Peel explains. “Cattle prices are falling from historically high levels in Australia and beef exports are forecast to increase, helping Australia regain the number two spot.” 

Declining beef production, higher beef prices and a continued strong dollar will likely make the U.S. the fourth largest beef exporter in 2023, according to Peel.

Cattle futures mostly edged higher Monday with carryover support from last week’s strong close and the bounce higher in wholesale beef prices.

Choice Boxed beef cutout value was $8.09 higher Monday afternoon at $257.02/cwt. Select was $4.42 higher at $225.68/cwt.

Live Cattle futures closed an average of 39¢ higher.

Feeder Cattle futures closed an average of 14¢ higher, except for unchanged to 27¢ lower in three contracts.

Negotiated cash fed cattle trade was at a standstill in all major cattle feeding regions through Monday afternoon, according to the Agricultural Marketing Service.

Last week, live prices were at $153-$155/cwt. in the Texas Panhandle, $155-$156 in Kansas, $156-$158 in Nebraska and $156 in the western Corn Belt. Dressed prices were $246-$247.

The five-area direct weighted average fed steer price last week was 63¢ lower at $155.79/cwt. The average steer price in the beef was $1.73 lower at $246.82.

Corn futures closed 3¢ to 10¢ higher. Reportedly, bargain hunting was a primary driver.

Soybean futures closed 18¢ to 23¢ lower through Sep ‘23, and then mostly 10¢ to 14¢ lower., pressured by positive rains in South America.

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Major U.S. financial indices closed higher Friday, recovering some recent losses. The main driver appeared to be bets on the next CPI indicating a touch lower inflation.

The Dow Jones Industrial Average closed 528 points higher. The S&P 500 closed 56 points higher. The NASDAQ was up 139 points.

West Texas Intermediate Crude Oil futures (CME) closed $1.82 to $2.15 higher through the front six contracts.

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Volatility continues in wholesale beef prices as buyers dust up holiday shopping and prepare for the calendar to turn, with a stronger floor than many would have expected.

For perspective, the precipitous drop in Choice boxed beef cutout values early last week spooked the market. Week to week on Monday, though, it was $13.71 higher at $257.02/cwt., following a decline of $11.22 for the same period a week earlier. Select was $4.57 higher week to week on Monday at $225.68.

Along the way, Andrew P. Griffith, agricultural economist at the University of Tennessee says the Choice-Select spread underscores consumer demand for higher quality beef.

“The Choice-Select spread typically narrows during the winter months when consumers begin using the slow cooker more frequently. The retail to consumer market is not quite to that point, but the wholesale to retail market should be trading for retailers needs during the winter months,” Griffith explains, in his weekly market comments. “Retailers are demonstrating the demand consumers will have for beef grading higher than Select during the winter months. Consumers have determined that a chuck roast that grades Choice is better than one that grades Select. The Choice-Select spread will narrow in January and February, but it is unlikely those spreads will narrow as much as has been seasonally typical the past decade.”

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.