WLI

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.

Negotiated cash fed cattle trade was slow on light demand through Wednesday afternoon, according to the Agricultural Marketing Service.

Live prices were steady to $1 higher in the Texas Panhandle at $150.00/cwt. and steady in Kansas at $150.

Last week, live prices were $153 in Nebraska and the western Corn Belt. Dressed prices were $242 in Nebraska and $240-$242 in the western Corn Belt.

Choice Boxed beef cutout value was 27¢ lower Wednesday afternoon at $264.67/cwt. Select was 83¢ lower at $235.22/cwt.

Lower outside markets helped pressure Cattle futures on Wednesday.

Feeder Cattle futures closed an average of 24¢ lower, except for an average of 11¢ higher in the back two contracts.

Live Cattle futures closed an average of 49¢ lower (20¢ to $1.47 lower).

Corn futures closed mostly 3¢ to 5¢ lower.

Soybean futures closed mostly 3¢ to 5¢ higher through Jly ‘23 and then mostly fractionally lower to 1¢ lower.

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Major U.S. financial indices sank Wednesday amid uncertainty about the ultimate outcome of the mid-term elections.

The Dow Jones Industrial Average closed 646 points lower. The S&P 500 closed 79 points lower. The NASDAQ was down 263 points.

West Texas Intermediate Crude Oil futures (CME) closed $2.77 to $3.08 lower through the front six contracts.

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USDA’s Economic Research Service (ERS) increased the forecast annual fed steer price for this year and next, in the latest World Agricultural Supply and Demand Estimates (WASDE).

ERS projected the annual average five-area direct fed steer price for this year $1 higher than the previous month at $144.15, with the fourth-quarter average at $152.00. The forecast average annual price for next year was $2 higher $156. For 2023, prices were forecast at $153 in the first quarter, $154 in the second quarter and $155 in the third. Price increases were based on stronger expected demand.

ERS increased estimated beef production for this year slightly to 28.35 billion lbs. Beef production next year was forecast at 26.27 billion lbs., which would be 2.1 billion lbs. less (-7.3%) than this year.

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

Last week, live prices were $149-$150/cwt. in the Texas Panhandle, $150 in Kansas and $153 in Nebraska and the western Corn Belt. Dressed prices were $242 in Nebraska and $240-$242 in the western Corn Belt.

Choice Boxed beef cutout value was 39¢ higher Tuesday afternoon at $264.94/cwt. Select was 13¢ higher at $236.05/cwt.

Cattle futures softened Tuesday, perhaps on election defensiveness.

Feeder Cattle futures closed mixed, from an average of 38¢ lower to an average of 4¢ to higher.

Live Cattle futures closed an average of 18¢ lower, except for unchanged and  22¢ higher in two contracts.

Corn futures closed mostly 3¢ to 8¢ lower.

Soybean futures closed mostly 3¢ to 6¢ lower.

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Major U.S. financial indices closed higher again Tuesday with investors apparently betting on a more market-friendly landscape following the midterm elections. 

The Dow Jones Industrial Average closed 333 points higher. The S&P 500 closed 21 points higher. The NASDAQ was up 51 points.

West Texas Intermediate Crude Oil futures (CME) closed $2.25 to $2.88 lower through the front six contracts.

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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. ERS projects the nation’s beef cow herd declining another 387,000 head (-1.3%) to 28.6 million head by Jan. 1 2024 before rebounding back to 29.1 million head Jan. 1, 2025. From there the herd grows slowly to 31.3 million head at the beginning of 2032.

Total cattle inventory in the projections decline 2.5 million head this year (-2.7%) to 89.4 million head and another 800,000 head next year (-0.9%) to 88.6 million head at the beginning of 2024.