WLI

Cattle futures closed higher Monday, buoyed by the bullish Cattle on Feed report, stronger cash prices last week and weaker Corn futures on the day.

Feeder Cattle futures closed an average of $1.65 higher.

Live Cattle futures closed an average of 85¢ higher (47¢ to $1.17 higher).

Corn futures closed 5¢ to 8¢ lower through Jly ‘23, and then mostly 1¢ to 3¢ lower, pressured in part by worries about economic growth in China, due to rising COVID cases.

Negotiated cash fed cattle trade was mostly inactive on light demand in all regions through Monday afternoon, according to the Agricultural Marketing Service.

Last week, live prices were mainly steady in the Texas Panhandle at mostly $150, steady to $2 higher in Kansas at $150-$152, steady to $2 higher in Nebraska at $153-$155 and steady to $2 higher in the western Corn Belt at $152-$155. Dressed prices were steady to $2 higher at $242.

Choice Boxed beef cutout value was 70¢ higher Monday afternoon at $255.57/cwt. Select was 40¢ higher at $233.23/cwt.

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Major financial indices closed lower on fears of more COVID-hampered economic growth in China.

The Dow Jones Industrial Average closed 45 points lower. The S&P 500 closed 15 points lower. The NASDAQ was down 121 points.

West Texas Intermediate Crude Oil futures (CME) closed mixed, from 35¢ lower to 51¢ higher through the front six contracts.

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Feedlot inventories appear to have peaked, and cattle slaughter should begin to decline in the next several months, says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly market comments.

“On October 1, 2022, the inventory of heifers in feedlots was higher than the previous year, with the heifer percentage of total feedlot inventories the highest in 21 years,” Peel says. “The number of heifers in feedlots should begin to decline and will drop sharply when herd rebuilding begins. Feedlot inventories are beginning to reflect the fact that feeder cattle supplies have been declining since 2019.”

Peel explains both the drought and lingering effects of the pandemic pushed peak feedlot numbers into this year, well beyond the 2018 cyclical peak in calf production.

“The pandemic in 2020 caused a backlog of cattle in feedlots and in the country. As a result, the estimated feeder supply on Jan. 1, 2021 was higher than 2020,” Peel explains. “The drought in 2021 and 2020 caused cattle to be marketed earlier than usual and resulted in reduced heifer retention and increased heifer and cow slaughter in 2021 and 2022. Early marketing of cattle, reduced heifer retention and herd liquidation have kept feedlot inventories higher in 2022 and temporarily increased beef production. Beef production is projected at a record large 28.4 billion lbs. in 2022 as a result of the highest total cattle slaughter in 15 to 20 years.”

Cattle futures edged higher Friday, helped along by firm to stronger cash fed cattle prices and likely anticipation of a bullish Cattle on Feed report (see below).

Feeder Cattle futures closed an average of 54¢ higher.

Live Cattle futures closed an average of 44¢ higher.

Negotiated cash fed cattle trade ranged from limited on light demand to mostly inactive on very light demand through Friday afternoon, according to the Agricultural Marketing Service. Although too few to trend, there were some live sales in the western Corn Belt at $155/cwt.

The last established live prices for the week were steady to $1 higher in the Texas Panhandle at $150-$151, $1-$2 higher in Kansas at $151-$152, steady to $2 higher in Nebraska at $153-$155 and $2 higher in the western Corn Belt at $154-$155. Dressed prices were steady to $2 higher at $242.

Estimated total cattle slaughter last week was 674,000 head, which was 3,000 head more than the previous week, but 6,000 head fewer than the same week last year. Year-to-date estimated total cattle slaughter of 30.1 million head was 459,000 head more (+1.5%) than the same period last year. Estimated year-to-date beef production of 24.8 billion lbs. was 346.8 million lbs. more (+1.4%).

Choice Boxed beef cutout value was $2.23 lower Friday afternoon at $254.87/cwt. Select was $1.09 higher at $232.83/cwt.

Corn futures closed mixed, from 1¢ lower to 1¢ higher.

Soybean futures closed 10¢ to 11¢ higher through Aug’23, and then mostly fractionally higher to 4¢ higher.

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Major financial indices mostly paddled in place Friday.

The Dow Jones Industrial Average closed 199 points higher. The S&P 500 closed 18 points higher. The NASDAQ was up 1 point.

West Texas Intermediate Crude Oil futures (CME) closed 96¢ to $1.56 lower through the front six contracts.

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As many expected, the latest monthly Cattle on Feed report (feedlots with capacity of 1,000 head or more) was decidedly bullish, reflecting the turn toward tighter supplies.

October placements of 2.1 million head were 138,000 head fewer than a year earlier (-6.1%) and the least for the month since the data series began in 1996.

In terms of placement weights, 48% went on feed weighing 699 lbs. or less, 39% weighing 700-899 lbs. and 13% weighing 900 lbs. or more.

October marketings of 1.8 million head were 11,000 head more (0.6%) than the prior year.

Cattle on feed Nov. 1 of 11.7 million head were 242,000 head less (-2.0%) year over year.

Cattle futures closed higher Thursday, helped along by lower Corn futures through much of the session, firm to stronger cash fed cattle prices and likely anticipation of a bullish Cattle on Feed report. The trend continued through mid-day on Friday.

Feeder Cattle futures closed an average of $1.79 higher.

Live Cattle futures closed an average of 78¢ higher.

Corn futures closed mixed, from fractionally higher to 2¢ higher through Jul ’23 then 1¢ to 3¢ lower.

Soybean futures closed mostly 10¢ to 22¢ lower through Aug’24, then down 2¢ to 5¢.

Negotiated cash fed cattle trade was slow to moderate on moderate demand in Kansas through Thursday afternoon with prices mostly $1 higher at $151/cwt., but a few up to $152, according to the Agricultural Marketing Service.

Elsewhere, trade was slow on light demand. So far this week, established live prices are steady to $1 higher in the Texas Panhandle at $150-$151, steady in Nebraska at $153 and steady to $1 lower in the western Corn Belt at $153. Dressed prices are steady at $240-$242.

Choice Boxed beef cutout value was 1¢ higher Thursday afternoon at $257.10/cwt. Select was 39¢ higher at $231.74/cwt.

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Rising bond yields pressured major financial indices on Thursday. They were treading water through mid-day Friday.

The Dow Jones Industrial Average closed 8 points lower. The S&P 500 closed 12 points lower. The NASDAQ was down 39 points.

West Texas Intermediate Crude Oil futures (CME) closed $2.46 to $3.94 lower through the front six contracts.

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Based on actual and estimated slaughter for October, weekday fed cattle slaughter was almost 1% more than last year and cow slaughter was up about 5%.

“With the poor pasture and higher operating costs than last year, beef cow slaughter is expected to remain higher than previously assumed through the end of the year,” say analysts with USDA’s Economic Research Service, in the latest Livestock, Dairy and Poultry Outlook. “In addition, anticipated fed cattle marketings were raised on a relatively strong pace of fed cattle slaughter through early November, as well as relatively high numbers of 150-plus-day cattle in feedlots. As a result, the beef production forecast for fourth-quarter 2022 was raised by 215 million lbs. on higher expected total cattle slaughter, along with slightly heavier carcass weights.”

The 2023 beef production forecast was lowered by 90 million lbs to 26.3 billion lbs., more than 7% below the 2022 projection.

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.