WLI

Cattle futures rose Wednesday as fundamental strength returned.

Feeder Cattle futures closed an average of $1.52 higher (57¢ higher at the back to $2.12 higher toward the front).

Live Cattle futures closed an average of 46¢ higher.

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

Live prices last week were $143/cwt. in the Southern Plains and $145 in Nebraska and the western Corn Belt. Dressed prices were $228.

Choice Boxed beef cutout value was 98¢ lower Wednesday afternoon at $247.06/cwt. Select was $2.69 lower at $219.22.

Corn futures closed 1¢ to 2¢ higher.

Soybean futures closed 10¢ to 13¢ lower through Sep ‘23 and then mostly 7¢ lower.

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Major U.S. financial indices settled slightly lower Wednesday as investors took a breather and profits, apparently, in a volatile session that started out sharply lower before recovering most of the ground by the end. 

The Dow Jones Industrial Average closed 42 points lower. The S&P 500 closed 7 points lower. The NASDAQ was down 27 points.

West Texas Intermediate Crude Oil futures (CME) closed $1.24 to $1.86 higher higher though the first six contracts.

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Less beef is grading Choice in recent months and the Choice-Select spread is growing due in part to less beef production from steers and heifers and more from cows, says Brenda Boetel, extension livestock economist at the University of Wisconsin-River Falls.

In the latest issue of In the Cattle Markets, Boetel explains beef production was 1.7% higher year over year through the first three quarters of 2022, but steer slaughter is down 1.7%, while heifer slaughter is up 0.9% and cow slaughter is up 0.7%.

“Combining weekly slaughter and dressed weights leaves fed beef production about 1.6% higher than a year ago while cow beef is up 4.3%,” Boetel says. “The percent of carcasses presented for grading over the last month that are grading Prime and Choice are running about 1.4% and 0.7% below a year ago, respectively. About 0.7% more carcasses are grading Select than a year ago.”

The Choice-Select spread since September 1 has averaged $24.26/cwt. since Sept. 1, compared to $31.69 last year, according to Boetel.

“The Choice-Select spread tends to increase seasonally from the end of January until mid-June and then decrease until end of September, before resuming an increase until before the December holidays,” Boetel explains. “Except for a short-lived dip after Labor Day, the Choice-Select spread has been steadily increasing since the end of February when the spread was at a negative $2.00 on February 23, 2022 (meaning Select boxed cutout was higher than Choice boxed cutout).”

Feeder Cattle futures closed an average of 64¢ lower Tuesday, pressured by higher Corn futures.

Live Cattle futures closed narrowly mixed, from an average of 24¢ lower to an average of 17¢ higher, supported by wholesale beef prices showing signs of reaching the seasonal bottom.

Choice Boxed beef cutout value was $2.10 higher Tuesday afternoon at $248.04/cwt. Select was 60¢ higher at $221.91/cwt.

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

Live prices last week were $143/cwt. in the Southern Plains and $145 in Nebraska and the western Corn Belt. Dressed prices were at $228.

Corn futures closed 2¢ to 4¢ higher, helped along by the export-positive decline in the Dollar.

Soybean futures closed mostly 11¢ to 16¢ higher with support from the rally in Crude Oil futures.

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Major U.S. financial indices continued to rally for a second consecutive session Tuesday. Although the weaker Dollar and lower bond yields were supportive, there’s no making sense of investors’ collective day-to-day whims. 

The Dow Jones Industrial Average closed 825 points higher. The S&P 500 closed 112 points higher. The NASDAQ was up 360 points.

West Texas Intermediate Crude Oil futures (CME) closed $2.66 to $2.89 higher though the first six contracts.

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Agricultural producer sentiment declined from August to September, according to the latest Purdue University/CME Group Ag Economy Barometer. It declined 5 points to a reading of 112 in September, driven mostly by producers’ weakened perception of current conditions. The Current Conditions Index declined 9 points to 109. However, the Index of Future Expectations also weakened, declining 3 points from a month earlier to a reading of 113.

“Concerns about input costs and, in some cases, availability are key factors behind the relative weakness in this month’s sentiment,” says James Mintert, the barometer’s principal investigator and director of Purdue University’s Center for Commercial Agriculture. “However, a growing number of producers are also concerned about the impact of rising interest rates on their farm operations.”

Higher input costs remain the primary concern. In September, 44% of respondents chose “higher input costs” as their number one concern, while 23% chose “rising interest rates,” and 14% chose “availability of inputs.”

When asked to look ahead to 2023, the largest share (38%) of respondents expect input prices to rise from 1% to 9%, compared to 2022 prices. Nearly a fourth (24%) of producers expect input prices to rise from 10% to 19%; and 9% of survey respondents said they expect an input price rise of 20% or more.

The Farm Capital Investment Index declined to a record low of 31 in September, as producers continue to indicate now is not a good time to make large investments in their operations. Among respondents indicating now is a bad time to make large investment, 46% said increasing prices for farm machinery and new construction was the reason. As well, 21% indicated that rising interest rates were a primary reason, up from 14% in August.

Producers’ perspective on farmland values continues to soften. The Short-Term Farmland Value Expectations Index fell 5 points to 123. The Long-Term Farmland Value Expectations Index fell 7 points to 139. Compared to a year ago, the short-term index is down 21%, while the long-term index is 12% lower. 

The Ag Economy Barometer is calculated each month from 400 U.S. agricultural producers’ responses to a telephone survey. This month’s survey was conducted between September 19-23.

Cattle futures bounced back Monday, helped along by higher wholesale beef values.

Choice Boxed beef cutout value was $2.19 higher Monday afternoon at $245.94/cwt. Select was $1.18 higher at $221.31/cwt.

Feeder Cattle futures closed an average of $1.23 higher.

Live Cattle futures closed an average of 89¢ higher.

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

Live prices last week were $143/cwt. in the Southern Plains and $145 in Nebraska and the western Corn Belt. Dressed prices were at $228.

Corn futures closed 3¢ higher through Jly ‘23 and then 1¢ to 2¢ lower.

Soybean futures closed 5¢ to 9¢ higher.

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Major U.S. financial indices rallied back Monday with the start of the new week and quarter. Support included oversold conditions and a decline in bond yields.

The Dow Jones Industrial Average closed 765 points higher. The S&P 500 closed 92 points higher. The NASDAQ was up 239 points.

West Texas Intermediate Crude Oil futures (CME) closed $2.91 to $4.14 higher though the first six contracts.

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As the last leg of the current cattle cycle unfolds with herd contraction since 2018-19, Josh Maples, Extension livestock economist at Mississippi State University, offers insights to the current cattle cycle, likely cyclically high prices ahead and the trigger for expansion.

“How long we continue to contract will be directly impacted by drought and pasture conditions. The current drought draws comparisons to the 2011-2013 and has led to similar liquidation impacts on the cattle inventory. Herd expansion will be difficult until the drought abates,” Maples explains in the latest Cattle Market Notes Weekly.

“Producer profitability will be the key driver of when the next expansion phase occurs and when the next cattle cycle begins.”

Maples offers 2014-15 as an example. Record high prices were achieved during the last cycle low for cattle numbers, which was driven by drought and seven years of herd contraction.

“Just a few years ago, the thought of reaching those record price levels again seemed far-fetched. However, we are again experiencing many of the same ingredients that led to the 2014-15 market,” Maples says. “Cattle futures markets for 2023 are at levels not seen since 2015. The timing is still up in the air, and beef demand will certainly matter, but the end of the current cattle cycle may ultimately not look all that different from the end of the last one.”

Feeder Cattle futures tanked Friday with pressure from Corn futures surging in response to USDA’s Grain Stocks report Friday (see below).

Corn futures closed 5¢ to 8¢ higher through Jly ’23 and then 2¢ to 3¢ higher.

Feeder Cattle futures closed an average of $2.68 lower.

Live Cattle futures closed an average of 53¢ lower (17¢ to 85¢ lower), except for unchanged in the back contract.

Soybean futures closed 32¢ to 46¢ lower through Aug. ’23 and then mostly 21¢ to 25¢ lower, reacting to softer oil prices and the Grain Stocks report.

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

For the week, live prices were steady at $143/cwt. in the Southern Plains and at $144-$145 in Nebraska. Prices were steady to $3 lower in the western Corn Belt at $145. Dressed prices were steady to $1 higher in Nebraska at $228-$233 and at the bottom of last week’s range in the western Corn Belt at $228.

Choice boxed beef cutout value was $2.33 lower Friday afternoon at $243.75/cwt. Select was 35¢ higher at $220.13.

Estimated total cattle slaughter was 3,000 head less week over week at 664,000 head, but was 24,000 head more than the same week last year. Year-to-date estimated total cattle slaughter of 25.36 million head was 385,000 head more (+1.5%) than the same time last year. Estimated total year-to-date beef production of 20.91 billion lbs. was 282 million lbs. more (+1.4%).

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Major U.S. financial indices continued to fall Friday with growing concerns about inflation and tightening monetary policy squelching economic growth here and abroad. The Personal Consumption Expenditure (PCE) Index excluding food and energy grew 0.6% from July to August, which was more than anticipated. Year over year, the PCE was 4.9% higher, according to the U.S. Bureau of economic analysis.

The Dow Jones Industrial Average closed 500 points lower. The S&P 500 closed 54 points lower. The NASDAQ was down 161 points.

West Texas Intermediate Crude Oil futures (CME) closed $1.61 to $1.74 lower through the front six contracts.

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Old crop corn stocks stored in all positions on Sept. 1 totaled 1.38 billion bu., up 12% year over year, but less than trade expectations, according to USDA’s quarterly Grain Stocks report. Of the total stocks, 510 million bu. were stored on farms, which was 29%. more than a year earlier. Off-farm stocks of 867 million bu. were 3% more than the prior year.

NASS analysts say 2021 corn production was revised 41.4 million bu. lower with downward revisions in planted area (93.3 million acres), harvested area (85.3 million acres) and grain yield (176.7 bu./acre).

Old crop soybean stocks of 274 million bu. stored in all positions on Sept. 1 were 7% more than the previous year and more than the trade expected.

Soybean stocks stored on farms totaled 62.9 million bu., down 8% from a year ago. Off-farm stocks of 211 million bu. were 12% more year over year.

Soybean production was 30.2 million bu. more with harvested area revised higher (86.3 million acres), as well as yield (51.7 bu./acre).

All wheat stored in all positions Sept. 1 totaled 1.78 billion bu., which was less than 1% more than the previous year and in line with trade expectations.

On-farm wheat stocks were estimated at 591 million bu., up 41% from last September. Off-farm stocks of 1.18 billion bu. were 13% less than a year earlier.

Cattle futures finally rallied back Thursday, supported by oversold conditions.

Feeder Cattle futures closed and average of $2.19 higher. Live Cattle futures closed an average of $1.02 higher.

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

So far this week, live prices are steady at $143/cwt. in the Southern Plains and at $144-$145 in Nebraska. Prices are steady to $3 lower in the western Corn Belt at $145. Dressed prices are steady to $1 higher in Nebraska at $228-$233 and at the bottom of last week’s range in the western Corn Belt at $228.

Choice boxed beef cutout value was $1.47 lower Thursday afternoon at $246.08/cwt. Select was 57¢ higher at $219.78.

Corn futures closed mostly fractionally higher toward the front and then 2¢ to 3¢ higher.

Soybean futures closed mostly 4¢ to 5¢ higher.

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Major U.S. financial sold off Thursday, basically giving back what was gained in the previous session with investors apparently returning their focus to a slowing economy.

The Dow Jones Industrial Average closed 458 points lower. The S&P 500 closed 78 points lower. The NASDAQ was down 314 points.

West Texas Intermediate Crude Oil futures (CME) closed 78¢ to 92¢ lower through the front six contracts.