WLI

Cattle futures lost some steam Wednesday with the lack of cash direction and likely profit taking.

Feeder Cattle futures closed an average of $1.34 lower (70¢ lower at the back to $2.15 lower at the front).

Live Cattle futures closed an average of 59¢ lower.

Negotiated cash fed cattle trade continued at a standoff through Wednesday afternoon, but popular sentiment expected at least steady prices this week.

Last week, live prices were $140-$141/cwt. in the Southern Plains and $143-$145 in Nebraska and the western Corn Belt. Dressed prices were $228-$232.

Choice Boxed beef cutout value was 87¢ higher Wednesday afternoon at $261.34/cwt. Select was $1.79 lower at $237.51/cwt.

Corn futures weakened Wednesday — 4¢ to 6¢ lower through Jly ‘23 and then mostly 1¢ 3¢ lower — presumably due mostly to profit taking.

Soybean futures closed mostly 12¢ to 15¢ lower through Jly ‘23 and then mostly 5¢ lower, pressured by Crude Oil once again.

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Major U.S. financial indices rebounded Wednesday with support including lower bond yields on the day.

The Dow Jones Industrial Average closed 435 points higher. The S&P 500 closed 71 points higher. The NASDAQ was up 246 points.

West Texas Intermediate Crude Oil futures on the CME closed $4.38 to $4.94 lower through the front six contracts, pressured by global demand concerns.

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“It is becoming more apparent that the supply of calves is going to be very tight this fall,” says Kenny Burdine, Extension livestock marketing and management specialist at the University of Kentucky. “Given the continued reduction in the size of the beef cow herd, this was likely to be a smaller fall calf run had weather not been a challenge. But, when combining that with the drought implications, fundamentals are setting up for a seller’s market for feeder calves.”

In a recent issue of Cattle Market Notes Weekly, Burdine notes beef cow slaughter levels remain 14% higher year over year.

Similarly, in is weekly market comments, Derrell Peel, Extension livestock marketing specialist at Oklahoma State University explains, “Typically, calf prices reach the seasonal low around October. However, calf prices have moved counter-seasonally higher this summer as part of a general trend of higher cattle prices. That trend is expected to continue and is reflected in Feeder Cattle futures prices … The futures prices show a roughly $14/cwt. uptrend in prices in the next year.”

Stronger recent wholesale beef values helped lift Cattle futures Tuesday.

Choice Boxed beef cutout value was $1.05 higher through Tuesday afternoon at $260.47/cwt. Select was 72¢ higher at $239.30/cwt.

Live Cattle futures closed an average of 79¢ higher (50¢ higher at the front to $1.37 higher at the back).

Feeder Cattle futures closed an average of 56¢ higher (30¢ at the back to $1.15 higher).

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 $140-$141/cwt. in the Southern Plains and $143-$145 in Nebraska and the western Corn Belt. Dressed prices were $228-$232.

The five-area direct weighted average steer price last week was $1.91 lower on a live basis at $142.88. The average steer price in the beef was $4.10 lower at $228.78.

Corn futures gained Tuesday, mostly 8¢ to 11¢, perhaps with some positioning ahead of next Monday’s Crop Production report which could include changes to expected yield.

Soybean futures faded with lower outside markets and weak Crude Oil futures. They closed mostly 19¢ to 21¢ lower through Aug ‘23 and then mostly 13¢ 14¢ lower.

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Major U.S. financial indices weakened Tuesday amid more investor squeamishness over rising interest rates and the slowing global economy.

The Dow Jones Industrial Average closed 173 points lower. The S&P 500 closed 16 points lower. The NASDAQ was down 85 points.

West Texas Intermediate Crude Oil futures on the CME closed 1¢ to 37¢ higher through the front six contracts.

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Agricultural producer sentiment increased in August, according to the Purdue University/CME Group Ag Economy Barometer. The overall producer sentiment index rose 14 points to a reading of 117. It was driven by increases in both the Index of Current Conditions, which rose 9 points to 118 and the Index of Future Expectations, which climbed 16 points to 116.

“Producers in the August survey were less worried about their farm’s financial situation than in July, although they remain concerned about a possible cost/price squeeze,” says James Mintert, the barometer’s principal investigator and director of Purdue University’s Center for Commercial Agriculture.

The Farm Financial Performance Index improved 11 points to a reading of 99, indicating more producers expect better financial performance for their farms this year and next. Corn and soybean prices rallied from their July lows into mid-August which, along with expectations for good yields, helped explain some of the improved outlook.

At the same time, producer uncertainty continues regarding the future cost of items purchased both for operations and family usage. When asked about their biggest concerns for the next year, more than half (53%) of respondents chose higher input costs, followed by rising interest rates (14%), input availability (12%), and lower output prices (11%).

Approximately four out of 10 producers expect crop input prices in 2023 to be either unchanged or possibly decline by as much as 10%, compared to 2022. On the other hand, just over half of all producers expect input prices to rise from 1 to 20%.

In August, 9% of respondents said they have engaged in discussions with companies offering payments for carbon capture — the highest percentage of respondents since the question was first included in the survey. Of those who engaged in discussions, 75% said the payment rate per metric ton of carbon offered was less than $20 and just 1% said they have signed a carbon contract. Respondents who engaged in discussions and chose not to sign a contract were asked the minimum payment per acre they would accept to enroll their farm in a carbon capture program. Two-thirds of those respondents said the payment rate needed to be at least $30 per acre, suggesting that payment rates need to rise to encourage more participation in carbon capture programs.

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 August 15-19, after USDA released both the August Crop Production report and World Agricultural Supply and Demand Estimates.

Cattle futures extended gains Friday with support from higher wholesale beef prices and despite higher Corn futures.

Feeder Cattle futures closed an average of 61¢ higher (25¢ at the back to 75¢ higher).

Live Cattle futures closed an average of 92¢ higher (25¢ higher at the back to $1.75 higher at the front).

Choice Boxed beef cutout value was $1.35 higher Friday afternoon at $259.42/cwt. Select was $1.99 higher at $238.58/cwt.

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

For the week, live prices were $1 lower in the Southern Plains at $141/cwt., $2 lower in Nebraska at $143 and $4 lower in the western Corn Belt at $143-$144. Dressed prices were $4 lower in Nebraska at $228 and $2-$4 lower in the western Corn Belt at $228-$232.

Estimated year-to-date total cattle slaughter Sept. 2 was 22.7 million head, which was 282,000 head more (+1.3%) than the same time last year. Estimated year-to-date beef production was 18.74 billion lbs., which was 192.1 million lbs. more (+1.0%) than a year earlier.

Corn and Soybean futures bounced back Friday with support including positive export announcements.

Corn futures closed mostly 6¢ to 7¢ higher. Soybean futures closed mostly 21¢ to 25¢ higher through Aug. 23 and then mostly 14¢ higher.

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Major U.S. financial indices closed lower Friday after early support from the anticipated bullish jobs report.

Total non-farm employment increased by 315,000 in August, according to the U.S. Bureau of Labor Statistics. That was slightly less than estimates ahead of the report. The nation’s unemployment rate edged higher to 3.7%.

Average hourly earnings for all employees on private non-farm payrolls increased 10¢ in August to $32.36.

The Dow Jones Industrial Average closed 337 points lower. The S&P 500 closed 42 points lower. The NASDAQ was down 154 points.

West Texas Intermediate Crude Oil futures on the CME closed 16¢ to 26¢ higher through the front six contracts.

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Walmart and Sustainable Beef LLC announced last week that Walmart signed an agreement to acquire a minority stake in Sustainable Beef LLC, a rancher-owned company based in North Platte, Neb. Walmart’s equity investment is part of a broader strategic partnership to source top-quality Angus beef from Sustainable Beef LLC’s new beef processing facility, according to a Walmart news release.

“We set out on a journey two years ago to create a new beef processing plant to add some capacity to the industry and provide an opportunity for producers to integrate their business of raising quality cattle with the beef processing portion of the industry and do it in a sustainable manner, said David Briggs, CEO of Sustainable Beef LLC. “During this journey we found that Sustainable Beef and Walmart aligned on continuing to improve how we care for our animals and crops and provide consumers the positive experience of enjoying quality beef.”

Walmart’s investment will help Sustainable Beef LLC open their beef processing facility in North Platte, Neb. The facility is expected to break ground next month and open by late 2024, creating more than 800 new jobs. As part of the investment, Walmart will also have representation on Sustainable Beef’s board.

“At Walmart, we are dedicated to providing high-quality, affordable beef to our customers, and an investment in Sustainable Beef LLC will give us even more access to these products,” says Tyler Lehr, senior vice president of merchandising for deli services, meat and seafood, Walmart U.S. “We know Sustainable Beef LLC has a responsible approach to beef processing, one that includes creating long-term growth for cattle ranchers and family farmers. This investment provides greater visibility into the beef supply chain and complements Walmart’s regeneration commitment to improve grazing management.”

Sharply lower Corn futures helped lift Feeder Cattle futures an average of $1.15 higher (70¢ to $1.37 higher).

Corn and Soybean futures continued lower Thursday as it appeared funds continued to liquidate positions on concerns about slowing demand. Corn futures closed mostly 11¢ to 12¢ lower. Soybean futures closed mostly 19¢ to 27¢ lower.

Live Cattle futures closed an average of 24¢ higher, except for unchanged to 17¢ lower in three contracts, despite the week’s softer cash market.

So far this week, live prices are $1 lower in the Southern Plains at $141, $2 lower in Nebraska at $143 and $4 lower in the western Corn Belt at $143-$144. Dressed prices are $4 lower in Nebraska at $228 and $2-$4 lower in the western Corn Belt at $228-$232.

Negotiated cash fed cattle trade ranged from slow on light demand to mostly inactive on light demand through Thursday afternoon, according to the Agricultural Marketing Service.

Choice Boxed beef cutout value was 27¢ lower Thursday afternoon at $258.07/cwt. Select was $1.15 lower at $236.59/cwt.

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Major U.S. financial indices closed mixed Thursday with more optimism late in the session, perhaps tied to speculation about Friday’s employment report.

The Dow Jones Industrial Average closed 145 points higher. The S&P 500 closed 11 points higher. The NASDAQ was down 31 points.

West Texas Intermediate Crude Oil futures on the CME closed $2.37 to $2.94 lower through the front six contracts.

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The recent Baseline Update for U.S. Agricultural Markets from the Food and Agricultural Policy Research Institute (FAPRI) at the University of Missouri offers added perspective regarding potential cattle numbers and prices over the next five years.

FAPRI pegs the beef cow inventory at 29.3 million Jan. 1 of next year, which would be 800,000 fewer (-2.7%) year over year. FAPRI projects the inventory at 28.7 million head in 2024 and then 28.5 million head the next two years before rising to 28.7 million in 2027.

Forecast cattle prices increase during most of the next five years — all higher than this year.

FAPRI forecasts the weighted average five-area direct fed steer price this year at $142.35/cwt. For 2023 through 2027, projected prices are, respectively, $150.98, $156.53, $158.87, $159.39 and $157.81.

FAPRI estimates this year’s average price for feeder steers (600-650 lbs., Oklahoma City) to be $180.54. For 2023 through 2027, projected prices are, respectively, $197.54, $211.62, $219.03, $220.45 and $218.22.

Updated projections are based on information available in mid‐August 2022 this year.

Among other update highlights:

• Drought conditions in important cow‐calf areas are causing producers to send animals to slaughter early, lifting beef production in the short term but leading to fewer cows and higher prices in the years to come.
• Sharply higher feed and other input costs help keep projected total U.S. meat production nearly flat in 2022 and 2023. The last time meat production failed to grow in consecutive years was 2003 and 2004. Strong U.S. consumer demand for meat offsets a decline in exports.
• Tight global supplies result in record prices for wheat and cotton and near‐record prices for corn and soybeans. For the 2022/23 marketing year, wheat prices are projected to exceed $9/bu., corn tops $6/bu. and soybean prices are more than $14/bu. 
• Prices for fertilizer, fuel and many other farm inputs are also up sharply in 2022. For example, variable corn production expenses increase by an estimated $164 per acre in 2022. Projected input costs moderate in the years ahead but remain well above the 2021 level.
• If better growing conditions result in trendline crop yields in 2023 and later years, crop prices could decline from current levels. In 2023/24, projected average corn prices drop to $5.22/bu., wheat falls to $7.11/bu. and soybean prices decline to $12.36/bu.
• The CPI for food is projected to increase 9.0% in 2022. Food‐at‐home prices increase 10.6%, well above the increase in prices of food away‐from‐home for the first time since 2011.
• The increase in the food CPI moderates to 2.3% in 2023, as commodity prices and food marketing costs decline. This still outpaces the 1.7% average annual increase from 2010‐2019.

Sluggish cash trade with weaker undertones and recent significant declines in wholesale beef value pressured Cattle futures Wednesday.

Feeder Cattle futures closed an average of 40¢ lower, except for an average of 24¢ higher in the front two contracts.

Live Cattle futures closed an average of 77¢ lower (32¢ to $1.32 lower).

Negotiated cash fed cattle trade ranged from slow on light demand to a standstill through Wednesday afternoon, according to the Agricultural Marketing Service. Live sales on Tuesday were steady in Nebraska at $145/cwt.

Last week, live prices were $142 in the Southern Plains and $147-$148 in the western Corn Belt. Dressed prices were $232 in Nebraska and $232-$234 in the western Corn Belt.

Choice Boxed beef cutout value was $1.45 lower Wednesday afternoon at $258.34/cwt. Select was $1.94 lower at $237.74/cwt.

Corn futures continued to weaken Wednesday, closing 2¢ to 6¢ lower with pressure including concerns about global economic growth. Soybean futures closed mostly 5¢ to 9¢ lower.

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Major U.S. financial indices and Crude Oil futures closed lower again Wednesday with resurgent concerns about possible recession as central banks boost interest rates to combat inflation.

The Dow Jones Industrial Average closed 280 points lower. The S&P 500 closed 31 points lower. The NASDAQ was down 66 points.

West Texas Intermediate Crude Oil futures on the CME closed $1.61 to $2.15 lower through the front six contracts.

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Retail food prices increased 8.9% in the first seven months of this year, higher than the rate over the same period in 2021 (1.9%) and 2020 (3.1%), according to USDA’s Economic Research Service (ERS). The 20-year historical average for the same months from 2001 to 2020 was 1.7%.

All food categories saw price increases of at least 4% in the first seven months of this year.

“Prices for three food categories increased by more than 10%: eggs (20.9%), fats and oils (13.4%), and poultry (11.8%),” ERS analysts explain. “Inflationary pressures differ by food category. For example, eggs and poultry prices are currently much higher than their historical average in part because of an outbreak of highly pathogenic avian influenza (HPAI). Fresh vegetables historically experienced higher midyear average price increases compared to most categories, but prices for fresh vegetables increased the least of all categories over the first seven months of both 2022 (4.9%) and 2021 (0.4%).”

ERS projects food-at-home prices will increase between 10% and 11% in 2022.