WLI

Cattle futures caught some wind Monday as traders seemed to focus more on the fundamentals, including recently stronger cash fed cattle prices and the likelihood that wholesale beef prices will begin their seasonal advance.

Feeder Cattle futures closed an average of $2.00 higher (95¢ higher in spot to $2.60 higher).

Live Cattle futures closed an average of 78¢ higher (55¢ to $1.42 higher).

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

Last week, live prices were $145/cwt. in the Southern Plains and $148 in Nebraska and the Western Corn Belt. Dressed prices were $232 in Nebraska and $230-$232 in the western Corn Belt.

The five-area direct weighted average fed steer price last week was $146.99/cwt., which was 76¢ more than the previous week. The average fed steer price in the beef was $1.32 higher at $231.60.

Choice Boxed beef cutout value was $1.16 higher Monday afternoon at $248.14/cwt. Select was $2.67 higher at $219.61/cwt.

Cattle futures were also helped along by Corn futures closing mostly 4¢ to 6¢ lower. Soybean futures closed mostly 3¢ to 7¢ lower.

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Major U.S. financial indices rebounded on Monday with positive corporate earnings reports from key banks.

The Dow Jones Industrial Average closed 550 points higher. The S&P 500 closed 94 points higher. The NASDAQ was up 354 points.

West Texas Intermediate Crude Oil futures (CME) closed narrowly mixed through the front six contracts (15¢ lower to 9¢ higher).

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Drought continues to intensify across the U.S., according to the latest U.S. Drought Monitor (Oct. 13) with 82% of the nation classified from abnormally dry to exceptional drought.

“This level of arid conditions is the highest on record since the data series began in 2000 and higher than the drought of 2012,” according to analysts with the Agricultural Marketing Service (AMS). “Preliminary year-to-date cattle slaughter numbers for the first three quarters of the year were available this week and are very startling … In 2021, during this same time frame, beef cow slaughter was 9.1% higher than 2020. In 2022, it is 13.1% higher than last year and is now largest on record.”

AMS analysts add that year-to-date heifer slaughter is the largest since 2004 and 750,000 head more than the previous five-year average, as the widespread drought continues pushing replacement heifers into feed yards.

“Not surprisingly, we are tight on hay this year,” says James Mitchell, Extension livestock economist at the University of Arkansas, in the latest Cattle Market Notes Weekly. “The October Crop Production report forecasts hay production (excluding alfalfa) at 63.24 million tons or 11% lower year over year. In the August Crop Production report, USDA expected a 5% decline in hay production. This month’s report reflects a significant departure from earlier estimates.”

Volatile and bearish outside markets weighed on most commodities Friday as shorter supplies battle with demand concerns stemming from steamy inflation, higher interest rates and slowing economic growth.

Feeder Cattle futures closed an average of 79¢ lower (25¢ lower at the back to $1.32 lower toward the front).

Live Cattle futures closed an average of 62¢ lower, except for 50¢ higher in spot Oct.

Corn futures closed mostly 5¢ to 8¢ lower.

Soybean futures closed mostly 8¢ to 12¢ lower.

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

For the week, live prices were $1 higher in the Southern Plains at $145/cwt., steady to $2 higher in Nebraska at $148 and unevenly steady in the western Corn Belt at $148. Dressed prices were $2 higher at $232.

Choice Boxed beef cutout value was 45¢ higher Friday afternoon at $246.98/cwt. Select was $1.08 higher at $216.94/cwt.

Total estimated cattle slaughter last week of 660,000 head was 4,000 head fewer than the previous week but 21,000 head more than the same week last year. Total estimated year-to-date cattle slaughter of 26.7 million head was 417,000 head more (+1.6%) than the same time last year. Total estimated year-to-date beef production of 22.0 billion lbs. was 306.9 million lbs. more (+1.4%).

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Major U.S. financial indices on Friday gave back much of what was gained in the previous session as the focus returned to current and expected inflation.

The Dow Jones Industrial Average closed 403 points lower. The S&P 500 closed 86 points lower. The NASDAQ was down 327 points.

West Texas Intermediate Crude Oil futures (CME) closed $2.68 to $3.50 lower though the front six contracts.

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Kroger and Albertsons Companies — two of the nation’s top-10 grocery retailers — announced a definitive merger agreement last week. Depending on which list of top grocers in the U.S. by sales you look at, the merger would place the new entity ahead of Costco and in a head-to-head battle with Amazon, while still trailing Walmart by a long way.

Together, Albertsons Cos. and Kroger currently employ more than 710,000 associates and operate a total of 4,996 stores, 66 distribution centers, 52 manufacturing plants, 3,972 pharmacies and 2,015 fuel centers, according to joint new release.

“We are bringing together two purpose-driven organizations to deliver superior value to customers, associates, communities and shareholders,” says Rodney McMullen, Kroger Chairman and Chief Executive Officer, who will continue serving as Chairman and CEO of the combined company. “Albertsons Cos. brings a complementary footprint and operates in several parts of the country with very few or no Kroger stores. This merger advances our commitment to build a more equitable and sustainable food system by expanding our footprint into new geographies to serve more of America with fresh and affordable food and accelerates our position as a more compelling alternative to larger and non-union competitors…”

“We have been on a transformational journey to evolve Albertsons Cos. into a modern and efficient omnichannel food and drug retailer focused on building deep and lasting relationships with our customers and communities. I am proud of what our 290,000 associates have accomplished, delivering top-tier performance while furthering our purpose to bring people together around the joys of food and to inspire well-being. Today’s announcement is a testament to their success,” says Vivek Sankaran, CEO of Albertsons Cos.

In connection with obtaining the requisite regulatory clearance necessary to consummate the transaction, Kroger and Albertsons Cos. expect to make store divestitures.

Negotiated cash fed cattle trade ranged from limited on light demand in the Southern Plains to slow on light to moderate demand in the North through Thursday afternoon, according to the Agricultural Marketing Service.

So far this week, live prices are $1 higher in the Southern Plains at $145/cwt., steady to $2 higher in Nebraska at $147-$148 and unevenly steady in the western Corn Belt at $148. Dressed prices are $2 higher at $232.

Choice Boxed beef cutout value was 13¢ lower Thursday afternoon at $246.53/cwt. Select was $1.60 higher at $215.86/cwt.

Cattle futures softened Thursday amid volatile outside markets and despite higher cash trade.

Feeder Cattle futures closed an average of 65¢ lower, except for 5¢ higher in Aug.

Live Cattle futures closed an average of 23¢ lower, except for 27¢ higher in spot Oct.

Corn futures closed mostly 3¢ to 4¢ higher.

Soybean futures closed mostly 4¢ to 6¢ higher, except for fractionally lower to 2¢ higher in the front four contracts.

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Major U.S. financial indices sank early Thursday and then boomeranged back in dramatic fashion. Pressure stemmed from higher inflation than expected in the monthly Consumer Price Index (CPI). Apparently, the same information provided support later with speculation that it was the last gasp for price hikes. Energy also provide support.

The CPI for all urban consumers rose 0.4% month to month in September, according to the U.S. Bureau of Economic Analysis. CPI was up 8.2% over the last 12 months.

The Dow Jones Industrial Average closed 827 points higher. The S&P 500 closed 92 points higher. The NASDAQ was up 232 points.

West Texas Intermediate Crude Oil futures (CME) closed $1.81 to $1.91 higher  though the front six contracts.

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Here’s something from the For What It’s Worth Department:

Land O’Lakes, in partnership with Wakefield Research, recently polled a nationally representative sample of U.S. consumers seeking to find out what they know about where their food comes from.

Among the findings:

On average, Americans believe that less than half of U.S. farms are family owned and operated, although the fact is that 98% are. Similarly, just 43% of respondents believe the food they buy comes from these family-owned operation, when in fact 88% does.

Despite some prevailing misconceptions, most Americans express interest in the source of their food with 87% of respondents at least somewhat interested in knowing where their groceries were grown or produced. Millennials were most likely to be extremely or very interested in knowing where their food comes from.

Finally, 94% of respondents say it’s at least somewhat important that their groceries be grown or sourced sustainably — yet when it comes to sustainable farming, 26% are unaware of the potential for sustainability in farming to increase farmers’ profits.

Weekly negotiated cash fed cattle trade remained undeveloped through Wednesday afternoon, according to the Agricultural Marketing Service.

Last week, live prices were $144/cwt. in the Southern Plains, $145-$148 in Nebraska and $145-$149 in the western Corn Belt. Dressed prices were $230.

Cattle futures edged higher, though, with the mainly friendly World Agricultural Supply and Demand Estimates (see below).

Feeder Cattle futures closed an average of 29¢ higher, except for unchanged and 12¢ lower in two away contracts.

Live Cattle futures closed an average of 31¢ higher, except for 12¢ lower in near Dec.

Corn futures closed mostly fractionally mixed through May ‘24 then mostly 1¢ to 3¢ higher.

Soybean futures closed 12¢ to 19¢ higher through Jly ‘23, and then mostly fractionally lower to 2¢ lower.

Choice Boxed beef cutout value was 9¢ lower Wednesday afternoon at $246.66/cwt. Select was $1.41 higher at $214.26/cwt.

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Major U.S. financial indices closed little changed again Wednesday after another whipsaw session.

The Dow Jones Industrial Average closed 28 points lower. The S&P 500 closed 11 points lower. The NASDAQ was down 9 points.

West Texas Intermediate Crude Oil futures (CME) closed $1.54 to $2.08 lower through the front six contracts.

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USDA raised the expected annual five-area direct fed steer price for this year to $143.15/cwt., in the latest World Agricultural Supply and Demand Estimates (WASDE). That was 35¢ more than the previous month’s estimate, based on current strength in packer demand

Projected fed steer prices are $148 in the fourth quarter. Next year’s annual price projection is $154, with prices at $151 in the first quarter and $152 in the second quarter.

Beef production next year is projected to be 1.77 billion lbs. less than this year (-6.3%) at 26.43 billion lbs.

Compared to the previous month’s estimates:

Corn

USDA reduced expected 2022-23 corn production 49 million bu. to 13.895 billion bu. with reduced yield of 171.9 bu./acre. Corn ending stocks for 2022-23 were cut 47 million bu.

The season-average price received by producers was raised 5¢ to $6.80/bu.

Soybeans

Soybean production was forecast at 4.3 billion bu., down 65 million bu. on lower yields. Soybean yield was projected 0.7 bu. less at 49.8 bu./acre.

The U.S. season-average soybean price for 2022-23 was forecast at $14.00/bu., down 35¢. Soybean meal and oil prices were unchanged at $390.00/short ton and 69¢/lb., respectively.

Wheat

Production for 2022-23 was reduced 133 million bu. to 1,650 million on lower harvested area and yield. Projected ending stocks were lowered 34 million bu. to 576 million, which would be the lowest since 2007-08.

The season-average farm price was raised 20¢/bu. to $9.20 on reported NASS prices to date and expectations for futures and cash prices for the remainder of 2022-23.

Feeder Cattle futures bounced an average of $2.34 higher Tuesday, regaining some of the recent losses. Support included Corn futures closing 3¢ to 5¢ lower through Sep ’23 and then mostly 1¢ lower.

Feeder Cattle also received support from Live Cattle futures closing an average of 91¢ higher (22¢ higher at the back to $1.57 higher toward the front), likely due in part to notions that cash fed cattle prices can build on last week’s advance.

Negotiated cash fed cattle trade ranged from a standstill to limited on light demand through Tuesday afternoon, according to the Agricultural Marketing Service. There were a few early live sales in the western Corn Belt at $146/cwt., but too few to trend.

Last week, live prices were $144/cwt. in the Southern Plains, $145-$148 in Nebraska and $145-$149 in the western Corn Belt. Dressed prices were $230.

Choice Boxed beef cutout value was $2.12 higher Tuesday afternoon at $246.75/cwt. Select was 97¢ lower at $212.85/cwt.

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Major U.S. financial indices closed little changed Tuesday with investors apparently waiting for more direction from weekly economic reports.

The Dow Jones Industrial Average closed 36 points higher. The S&P 500 closed 23 points lower. The NASDAQ was down 115 points.

West Texas Intermediate Crude Oil futures (CME) closed $1.75 to $1.84 lower though the front six contracts.

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Drought continues to expand and deepen, according to the latest U.S. Drought Monitor for the week of Oct. 4.

77.4% of the nation was classified from abnormally dry (D0) to exceptional drought (D4), compared to 62.4% at the same time last year. 52.6% was ranged from moderate (D1) to exceptional drought compared to 47.5% a year earlier. However, 32.4% was classified as severe (D2) to exceptional drought compared to 36.5% for the same week in 2021.

Approximately 66% of the U.S. cattle inventory was in areas experiencing drought, according to U.S. Crop and Livestock in Drought from NOAA and the National Integrated Drought Information System. At the same time last year, 35% of the nation’s cattle were in areas experiencing drought.

Derrell Peel, Extension livestock marketing specialist at Oklahoma State University provides some state perspective in his weekly market comments; virtually all of Oklahoma was in some stage of drought.

“There is little prospect for winter wheat grazing this fall. Hay supplies are very tight and a wide range of hay types and qualities are being offered. Failed summer crops are being baled for hay including grain sorghum and soybeans,” Peel says. “The water situation may soon be the most critical, even more than forage, for many producers. Water quantity and quality is low and decreasing rapidly. Oklahoma relies heavily on surface water ponds, which are filled by spring and summer thunderstorms. Ponds rarely get replenished in the winter, even in a normal year.”