WLI

Cattle futures firmed and closed mostly higher Tuesday, supported by recently lower Corn futures and cash fed cattle demand strength.

Feeder Cattle futures closed an average of 53¢ higher (7¢ to $1.12 higher), except for an average of 37¢ lower in the back three contracts.

Live Cattle futures closed an average of 18¢ higher.

Corn futures closed 1¢ to 3¢ lower in the front four contracts, and then mostly fractionally higher.

Soybean futures closed fractionally higher to 5¢ higher through Sep ‘24 and then fractionally lower.

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 $154-$155/cwt. in the Texas Panhandle, $155 in Kansas, $157-$158 in Nebraska and $155-$157 in the western Corn Belt. Dressed prices were $245.

Choice Boxed beef cutout value was 21¢ higher Tuesday afternoon at $254.74/cwt. Select was $2.71 lower at $225.82/cwt.

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Major U.S. financial indices closed little changed Tuesday with investors apparently awaiting key economic data this week.

The Dow Jones Industrial Average closed 3 points higher. The S&P 500 closed 6 points lower. The NASDAQ was down 65 points.

West Texas Intermediate Crude Oil futures (CME) closed 95¢ to $1.01 higher through the front six contracts.

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U.S. agricultural exports next year are projected at $190.0 billion, according to the latest quarterly Outlook for U.S. Agricultural Trade from USDA’s Economic Research Service (ERS) and the Foreign Agricultural Service (FAS). The projection is $3.5 billion less than the August forecast, mostly driven by lower export expectations for soybeans, cotton and corn.

Beef exports were forecast $500 million higher to $10.3 billion on increased higher unit values with expectations domestic beef production will decline.

“The global economic outlook for calendar year 2023 remains uncertain due to inflation, changing monetary policy conditions, and trade disruptions caused by the Russian invasion of Ukraine,” explains ERS-FAS analysts. “Previous growth projections are moderated due to tempered economic growth in Europe and North America.”

Lackluster interest in Cattle futures carried over from last week.

Feeder Cattle futures closed an average of 92¢ lower.

Live Cattle futures closed an average of 39¢ 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.

Last week, live prices were $154-$155/cwt. in the Texas Panhandle, $155 in Kansas, $157-$158 in Nebraska and $155-$157 in the western Corn Belt. Dressed prices were $245.

Choice Boxed beef cutout value was $2.70 higher Monday afternoon at $254.53/cwt. Select was $5.84 lower at $228.53/cwt.

Corn futures closed mostly fractionally higher.

Soybean futures closed 19¢ to 21¢ higher through Aug ‘23 and then 12¢ to 16¢ higher, supported by chatter about OPEC cutting production.

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Major U.S. financial indices closed lower Monday with pressure from weekend COVID-policy demonstrations in China raising supply chain concerns.

The Dow Jones Industrial Average closed 497 points lower. The S&P 500 closed 62 points lower. The NASDAQ was down 176 points.

West Texas Intermediate Crude Oil futures (CME) closed 61¢ to 96¢ higher through the front six contracts.

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Year-to-date beef cow and beef heifer slaughter represent the steepest decline of female beef cattle inventories in more than three decades, says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly market comments.

Specifically, beef cow slaughter is up 12.3% year over year, Peel says. “If beef cow slaughter were to decline to equal year-ago levels for the remaining weeks of the year, total beef cow slaughter for the year would be up 10.5% year over year,” Peel explains. “This would be a net beef cow herd culling rate of 13.1% for the year, a new record level. The actual culling rate is likely to be a little higher.”

Weekly beef cow slaughter has been higher year over year for 70 consecutive weeks, according to Peel. During that time, he says there were only four weeks when the year-over-year increase was less than 3%. Beef cow slaughter was 2.7%, according to the latest weekly data.

Peel points out beef heifer slaughter remains higher year over year, as well.

“The Oct. 1 quarterly Cattle on Feed report showed that the number of heifers in feedlots was still up 1.7% year over year,” Peel says. “Since that report, weekly heifer slaughter has continued to be up over 4% year over year with the most recent week up 5.8% over the same week one year ago.”  He adds that lower feedlot placements in October presumably mean fewer heifers entering feedlots and reduced heifer slaughter in the future.

“With drought continuing, it is not clear what to expect for cow and heifer slaughter going forward,” Peel says. “It seems likely that many producers have adjusted herd inventories, given hay and feed supplies, to be able get through the winter. This might mean that cow culling will slow down through the winter. If La Niña persists next spring, more liquidation can be expected going into the next growing season.” 

Negotiated cash fed cattle trade was limited on light demand in all regions through Friday afternoon, according to the Agricultural Marketing Service, with too few transactions to trend.

For the week, live prices were $4-$5 higher in the Texas Panhandle at $154-$155/cwt., $3-$5 higher in Kansas at $155, $3-$4 higher in Nebraska at $157-$158 and $2-$5 higher in the western Corn Belt at $157. Dressed prices were $3 higher at $245.

Choice Boxed beef cutout value was 73¢ lower Friday afternoon at $251.83/cwt. Select was $1.04 higher at $234.37/cwt.

Estimated total cattle slaughter for the holiday-shortened week was 93,000 head fewer than the previous week at 581,000 head. Year-to-date estimated total cattle slaughter of 30.6 million head was 472,000 head more (+1.6%) than the same time last year. Year-to-date estimated beef production of 25.3 billion lbs. was 356.3 million lbs. more (+1.4%).

Cattle slaughter in October of 2.9 million head was 2% more than a year earlier, according to USDA’s Livestock Slaughter report. Commercial beef production was also 2% more year over year at 2.4 billion lbs.

Cattle futures drifted lower on holiday-lightened trade again Friday, despite fundamental strength for the week. Higher Corn futures prices added pressure.

Feeder Cattle futures closed an average of 76¢ lower (17¢ to 95¢ lower), except for 27¢ higher and unchanged in the back two contracts.

Live Cattle futures closed an average of 19¢ lower, except for 10¢ higher in away Dec.

Corn futures closed 4¢ to 5¢ higher through Jly ’23 and the mostly 1¢ to 2¢ higher.

Soybean futures closed fractionally higher to 3¢ higher.

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Major financial indices closed narrowly mixed after a short trading session Friday.

The Dow Jones Industrial Average closed 152 points higher. The S&P 500 closed 1 point lower. The NASDAQ was down 58 points.

West Texas Intermediate Crude Oil futures (CME) closed $1.35 to $1.66 lower through the front six contracts.

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Annual rural population growth was near zero over the last decade, the percentage of the working age population decreased and rural employment growth increased in service areas such as health care and professional services.

Those are among conclusions in the 2022 edition of Rural America at a Glance from USDA’s Economic Research Service (ERS).

“The overall decline in population growth and increase in average age in rural areas affect the makeup and availability of the rural labor force. In 2021, people 65 years and older made up more than 20% of the nonmetro population for the first time in U.S. census history, up from 16% in 2010,” according to ERS analysts. “In metro areas, just 16% of the population was 65 and older in 2021. During the 2010–20 decade, the nonmetro working-age population declined by 4.9% and the population under age 18 declined by 5.7%, while the population 65 years and older grew by 22%.”

There were 23.6 million rural (nonmetropolitan) jobs in 2019, versus 178 million metro Jobs, according to the report.

“Rural America has become more economically diverse over time, with increasing employment in health care, hospitality, and other service industries,” ERS analysts say. “Since 2001, the number of jobs in agriculture, retail, and manufacturing all declined, but a slight recovery occurred in manufacturing after 2010. Government jobs, which include Federal, State, and local government, remained steady over the last two decades.”

Packers were aggressive buyers Wednesday, pushing negotiated cash fed cattle prices $3-$5/cwt. higher on a live basis with moderate trade and good demand in all regions, according to the Agricultural Marketing Service.

Live prices were mostly $4-$5 higher in the Texas Panhandle at $154-$155, $3-$5 higher in Kansas at $154 to mostly $155, $3 higher in Nebraska at $156-$158 and $2 higher in the western Corn Belt at $155-$157. Dressed prices were $3 higher at $245.

Choice Boxed beef cutout value was $4.07 lower Wednesday afternoon at $252.56/cwt. Select was 85¢ lower at $233.33/cwt.

Higher Corn futures and light holiday trade pressured Cattle futures Wednesday.

Feeder Cattle futures closed an average of $1.66 lower ($1.10 to $2.43 lower).

Live Cattle futures closed an average of 51¢ lower, except for 5¢ higher in the back contract.

Corn futures closed 2¢ to 7¢ higher.

Soybean futures closed 1¢ to 6¢ higher through Nov ‘23 and then 1¢ to 2¢ lower.

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Major financial indices closed higher Wednesday, buoyed by a more dovish tone in the latest Federal Reserve minutes, suggesting less aggressive interest rate hike may be coming soon.

The Dow Jones Industrial Average closed 95 points higher. The S&P 500 closed 23 points higher. The NASDAQ was up 110 points.

West Texas Intermediate Crude Oil futures (CME) closed $1.66 to $3.01 lower through the front six contracts.

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“The price of beef at all levels is expected to be supported the next few years as the domestic beef supply is expected to decline due to fewer breeding females,” says Andrew P. Griffith, agricultural economist at the University of Tennessee, in his weekly market comments. “However, if inflation slows or consumers transition discretionary spending away from beef, then those factors will pressure prices lower.”

Although 30¢/lb. less than a year earlier, Griffith points out the average all fresh retail beef price in October remained at $7.25/lb. For perspective, he says the price in 2019 was $5.80/lb

“Seasonal tendencies have the ability to push retail prices higher or lower from month to month but strong demand and inflation are what have pushed prices to the levels experienced in 2022,” Griffith says.

Cattle futures traded mostly narrowly lower Tuesday after early support, pressured by holiday-lightened trade.

Feeder Cattle futures closed an average of 45¢ lower, except for 15¢ higher in May.

Live Cattle futures closed an average of 15¢ lower, except for unchanged to 25¢ higher in three contracts.

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, with too few transactions to trend.

Last week, live prices were $150/cwt. in the Texas Panhandle, $150-$152 in Kansas, $153-$155 in Nebraska and $152-$155 in the western Corn Belt. Dressed prices were $242.

Choice Boxed beef cutout value was $1.06 higher Tuesday afternoon at $256.63/cwt. Select was 95¢ higher at $234.18/cwt.

Corn futures closed mostly 1¢ to 3¢ lower.

Soybean futures closed mostly 2¢ to 4¢ lower.

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Major financial indices closed higher Tuesday, supported by positive quarterly earnings reports, lower bond yields and, according to some, investors betting on easing inflation.

The Dow Jones Industrial Average closed 397 points higher. The S&P 500 closed 53 points higher. The NASDAQ was up 149 points.

West Texas Intermediate Crude Oil futures (CME) closed 54¢ to 91¢ higher through the front six contracts.

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Economic growth in rural areas continues to decline, according to the latest monthly Creighton University Rural Mainstreet Index (RMI). It fell below growth neutral for the sixth consecutive month in November, although it did increase from 44.2 in October to 45.7. The RMI is based on a survey of bank CEOs in rural areas of a 10-state region dependent on agriculture and/or energy. It ranges between 0 and 100 with a reading of 50.0 representing growth neutral.

“The Rural Mainstreet economy is now experiencing a downturn in economic activity. Last month, almost one in four bankers, or 23.1%, reported that the economy was already in a recession,” says Ernie Goss, the Jack A. MacAllister Chair in Regional Economics at Creighton University’s Heider College of Business.

The November loan volume index dropped to a still-strong 65.8 from 76.8 in October. “Higher farm input costs, greater farm equipment sales, and drought conditions in portions of the region supported strong borrowing from farmers,” Goss explains.

The farm equipment-sales index jumped to a strong 59.5 from October’s weak 47.8. The index has risen above growth neutral for 22 of the last 24 months.

Bankers were asked if their banks were asking for increased upfront financial commitments for farm loans. Only 13.6% indicated an increase; the remaining 86.4% reported no change in upfront commitments for farm loans.

Slowing economic activity, strong energy prices, higher borrowing costs and elevated agriculture input costs pushed the business confidence index down to 27.3 from 30.8 in October. That was the lowest reading for the confidence index since May 2020, according to Goss.