WLI

Corn futures eased mostly 3¢ to 4¢ lower, providing some lift to Cattle futures.

Feeder Cattle futures closed an average of $1.26 higher (75¢ at the back to $2.25 in spot Sep). Live Cattle futures closed an average of 67¢ higher.

Negotiated cash fed cattle trade ranged from slow on light demand to a standstill through Tuesday afternoon, according to the Agricultural Marketing Service. Although too few to trend, there were a few early live sales in Nebraska at $145/cwt.

Last week, live prices were $142 in the Southern Plains, $145 in Nebraska 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 $3.25 lower Tuesday afternoon at $259.79/cwt. Select was $3.07 lower at $239.68/cwt.

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Major U.S. financial indices continued lower with carryover pressure from more interest rate hikes on the horizon here and abroad. 

The Dow Jones Industrial Average closed 308 points lower. The S&P 500 closed 44 points lower. The NASDAQ was down 134 points.

West Texas Intermediate Crude Oil futures on the CME closed $3.65 to $5.37 lower through the front six contracts. Pressure appeared to include a new COVID outbreak reported in China. 

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“The global economic outlook for 2022 and 2023 is growing more uncertain due to the continued materialization of downside risks. Previous growth projections are moderated due to ongoing trade disruptions, above-target inflation rates, and rising energy prices,” says analysts with USDA’s Economic Research Service (ERS), in the latest quarterly Outlook for U.S. Agricultural Trade.

ERS analysts say global real gross domestic product (GDP) is projected to increase by 3.2% this year, down 0.4% from the previous forecast. Global GDP is projected to increase by 2.9% in 2023.

“The Russian invasion of Ukraine is ongoing and continues to impose far-reaching economic disruptions. The disruptions have thus far led to elevated energy prices that continue to disproportionately affect the European market,” ERS analysts explain. “Supply chain complications have slowly abated, but spot shipping rates remain elevated compared with their pre-pandemic levels. Central banks around the world, including the Federal Reserve, have begun monetary tightening cycles to combat rising inflation rates. The tightening of monetary policy counters inflation but also typically presents short-term barriers to economic growth.”

Against this economic backdrop, U.S. agricultural exports in fiscal year (FY) 2023 are projected at $193.5 billion, down $2.5 billion from the revised forecast for FY 2022.

“This decrease is primarily driven by lower exports of cotton, beef, and sorghum that are partially offset by higher exports of soybeans and horticultural products,” say ERS analysts.

Beef exports are forecast down $1.1 billion to $9.8 billion as higher prices fail to offset lower volumes driven by tight U.S. supplies.

“Evidence of declining consumer confidence in the face of slowing economies and rising inflation is building. In general, beef markets are resilient to changes in economic conditions. However, we see movement within supply channels and price points that tend to favor cheaper options, such as ground beef and quick-service restaurants, over more expensive cuts and consumption channels,” says RaboBank analysts, in the third-quarter Beef Quarterly from RaboResearch.

“With economic conditions slowing, we expect consumers to favor lower-priced beef cuts in second-half 2022, which is positive for trimmings demand. If the US cow kill slows, there is pricing upside potential for lean trimmings…” explain RaboBank analysts.

Corn futures continued higher Monday with carryover support from last week’s significantly lower yield estimates by the Pro Farmer Tour, compared to USDA’s most recent forecast.

Corn futures closed 11¢ to 18¢ higher through Sep ‘23 and then mostly 4¢ to 7¢ higher.

Another day of rising Corn futures took Feeder Cattle future down another peg, an average of $2.05 lower (70¢ lower at the back to $2.32 lower).

Steady to higher beef values helped Live Cattle futures trickle an average of 22¢ lower., except for 75¢ higher in waning spot Aug.

Choice Boxed beef cutout value was 28¢ higher Monday afternoon at $263.04/cwt. Select was $3.99 higher at $242.75/cwt.

Negotiated cash fed cattle trade ranged from mostly inactive on very light demand to a standstill through Monday afternoon, according to the Agricultural Marketing Service.

Last week, live prices were steady to $1 higher in the Southern Plains at $142/cwt., $1 to $3.50 lower in Nebraska at $145 and $1-$2 lower in the western Corn Belt at $147-$148. Dressed prices were $2 lower in Nebraska at $232 and steady to $2 lower in the western Corn Belt at $232-$234.

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Major U.S. financial indices extended the previous session’s steep decline, which was fueled by hawkish comments from Federal Reserve Chair Jerome Powell, regarding further interest rate hikes.

The Dow Jones Industrial Average closed 184 points lower. The S&P 500 closed 27 points lower. The NASDAQ was down 127 points.

West Texas Intermediate Crude Oil futures on the CME closed $2.75 to $3.95 higher through the front six contracts, spurred on by supply concerns related to geopolitical tensions.

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Recent rains improved the opportunity to plant winter wheat in a few parts of the Southern Plains but more is needed for broader opportunity.

In Oklahoma, for instance, there are a few areas with sufficient topsoil moisture to support winter wheat planting soon, but just a few areas, says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly market comments. He explains wheat for forage or for dual-purpose grazing and grain is typically planted in September.

“If wheat pasture does become available, it may be used somewhat differently than usual this fall and winter,” Peel says. “Given the limited hay supply, proportionally more wheat pasture is likely to be used for cow herds than for stocker production. Even if there is wheat pasture, stocker demand may be somewhat lighter than usual this year. However, the fall run of calves may also be smaller than usual. In the past seven weeks, the Oklahoma combined auction total for feeder cattle has been up 13.6% year over year as feeder cattle have been marketed earlier than usual. Additionally, the auction volume of cull cows has been up 108.1% year over year in the same period as producers continue to adjust cow herds to match the limited forage supplies available for fall and winter.” 

Corn futures surged mostly 9¢ to 13¢ higher Friday, fueled by significantly lower yield estimates by the Pro Farmer Tour, compared to USDA’s most recent forecast. Soybean futures closed mostly 20¢ to 30¢ higher.

Resurgent Corn futures pressured Feeder Cattle an average of $1.63 lower, except for 67¢ higher in the newly minted back contract.

Generally softer cash trade pressured Live Cattle futures an average of 55¢ lower.

Negotiated cash fed cattle trade ranged from limited on light demand to mostly inactive on light demand through Friday afternoon, according to the Agricultural Marketing Service. There were a few live trades in the western Corn Belt at $147/cwt., but too few to trend.

For the week, live prices were steady to $1 higher in the Southern Plains at $142/cwt., generally steady to $1 lower in Nebraska at $145-$148 and $2 lower in the western Corn Belt at $146-$148. Dressed prices in Nebraska were $1-$2 lower at $232-$233. Dressed prices in the western Corn Belt the previous week were $234.

Through Thursday, the five-area direct average fed steer price was $2.22 lower on a live basis at $144.54. The average steer price in the beef was $1.15 lower at $232.88.

Choice Boxed beef cutout value was 78¢ lower Friday afternoon at $262.76/cwt. Select was $1.22 higher at $238.76/cwt.

Total estimated cattle slaughter last week was 17,000 head more than the previous week at 678,000 head. Year-to-date estimated total cattle slaughter of 22.1 million head was 262,000 head more (+1.2%) than the same time last year. Estimated year-to-date beef production of 18.2 billion lbs. was 175.3 million lbs. more (+0.97%) than the prior year.

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Major U.S. financial indices plunged Friday, apparently in reaction to hawkish comments from Federal Reserve Chair Jerome Powell, regarding further interest rate hikes.

“Restoring price stability will take some time and requires using our tools forcefully to bring demand and supply into better balance,” Powell explained at the closely watched economic policy symposium in Jackson Hole, WY. “Reducing inflation is likely to require a sustained period of below-trend growth. Moreover, there will very likely be some softening of labor market conditions. While higher interest rates, slower growth, and softer labor market conditions will bring down inflation, they will also bring some pain to households and businesses. These are the unfortunate costs of reducing inflation. But a failure to restore price stability would mean far greater pain.”

The Dow Jones Industrial Average closed 1,008 points lower. The S&P 500 closed 141 points lower. The NASDAQ was down 497 points.

West Texas Intermediate Crude Oil futures on the CME closed mixed, from 34¢ lower to 54¢ higher through the front six contracts.

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Total pounds of beef in freezers July 31 were 1% less than the previous month but 27% more year over year, according to USDA’s latest Cold Storage report. The 510.8 million lbs. of beef in cold storage were record high for the date.

“To put this in perspective, this is less than one week of federally inspected beef production,” says Andrew P. Griffith, agricultural economist at the University of Tennessee, in his weekly market comments. “However, the quantity of beef in cold storage in July 2022 exceeded the previous July’s quantity by 110 million lbs., and the quantity of beef in cold storage this year has not experienced its typical second-quarter decline. This simply means the marketplace started the second half of the year with more beef in cold storage than is typical and that quantity is expected to continue increasing through the fourth quarter of the year.”

If heifer and cow slaughter remain elevated, Griffith explains beef in cold storage could exceed 600 million lbs. by the end of the year. “This is not necessarily a bad thing as beef supplies will begin to tighten the second half of 2023,” Griffith says.

Frozen pork supplies were 2% less than the prior month but 20% higher year over year.

Total red meat supplies in freezers were 1% less than the previous month but 23% more than the same time last year.

Total poultry supplies on cold storage were 5% more than the previous month and 6% more than the prior year.

Feeder Cattle futures closed an average of 95¢ higher Thursday, strengthened by lower Corn futures.

Grain futures softened with likely profit taking. Corn futures closed mostly 4¢ to 8¢ lower. Soybean futures closed mostly 16¢ to 25¢ lower.

Live Cattle futures closed an average of 19¢ higher, except for an average of 15¢ lower in the front three contracts. 

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

So far this week, live prices are steady to $1 higher in the Southern Plains at $142/cwt., generally steady to $1 lower in Nebraska at $145-$148 and $2 lower in the western Corn Belt at $146-$148. Dressed prices in Nebraska are $1-$2 lower at $232-$233. Dressed prices in the western Corn Belt last week were $234.

Choice Boxed beef cutout value was 71¢ higher Thursday afternoon at $263.54/cwt. Select was 8¢ lower at $237.54/cwt.

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Major U.S. financial indices closed higher Thursday. Support included fewer weekly initial unemployment insurance claims than expected, as well as a slight improvement to previous-quarter GDP.

Initial unemployment insurance claims were 2,000 less week to week at 243,000 for the week ending Aug. 20, according to the U.S. Department of Labor.

As for domestic GDP, the U.S. Bureau of Economic Analysis revised its second quarter estimate to a decline of 0.6%, versus a decline of 0.9% in the initial estimate.

The Dow Jones Industrial Average closed 322 points higher. The S&P 500 closed 58 points higher. The NASDAQ was up 207 points.

West Texas Intermediate Crude Oil futures on the CME closed $1.98 to $2.37 lower through the front six contracts.

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There were 34.9 million beef cows in the U.S. and Canada July 1, according to the semiannual United States and Canadian Cattle report from USDA’s National Agricultural Statistics Service (NASS). That was 812,000 head fewer (-2.3%) than a year earlier. The beef cow inventory was 750,000 head fewer (-2.4%) in the U.S. at 30.3 million head and 62,500 head fewer (-1.6%) in Canada at 3.7 million head.

Beef heifers retained for replacement in Canada of 622,100 head were 49,500 fewer (-7.4%) less than a year earlier. In the U.S., there were 150,000 head fewer (-3.5%) fewer beef replacements year over year at 4.1 million head.

Total cattle inventory in Canada of 12.3 million head was 355,000 head fewer (-2.8%) than a year earlier. Total U.S. inventory of 98.8 million head was 2.0 million head fewer (-2.0%). The combined total cattle inventory in the U.S. and Canada was 111.1 million head, which was 2.3 million head less (-2.1%) year over year.

Cattle futures edged lower Wednesday, with technical pressure and the week’s higher grain futures prices.

Live Cattle futures closed an average of 38¢ lower.

Feeder Cattle futures closed an average of 51¢ lower, except for unchanged to an average of 45¢ higher up front.

Negotiated cash fed cattle trade ranged from mostly inactive on light demand to slow on moderate demand with too few transactions to trend in any region, according to the Agricultural Marketing Service. There were a few live sales in Nebraska at $145/cwt. and a few in the western Corn Belt at $147. There were also some early dressed trades in Nebraska at $232-$233.

On Tuesday, live sales in the Southern Plains were steady to $1 higher at $142.

Last week, live prices were $146.00-$148.50 in Nebraska and $148-$150 in the western Corn Belt. Dressed prices were $234.

Choice Boxed beef cutout value was 3¢ higher Wednesday afternoon at $262.83/cwt. Select was $1.18 lower at $237.62/cwt.

Grain futures softened Wednesday with likely profit taking from the recent price surge.

Corn futures closed mostly 1¢ to 2¢ lower.

Soybean futures closed mostly 7¢ to 11¢ lower.

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Major U.S. financial indices shifted gears and closed a touch higher Wednesday with support including higher energy prices. 

The Dow Jones Industrial Average closed 59 points higher. The S&P 500 closed 12 points higher. The NASDAQ was up 50 points.

West Texas Intermediate Crude Oil futures on the CME closed 80¢ to $1.528 higher through the front six contracts.

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While inflation is more moderate for food away-from-home (7.6% versus a year ago) compared to food-at-home (13.1% versus a year ago), the typical away-from-home eating occasion still costs 3.4 times more than in-home food sourced from retail, according to analysts with the NPD Group (NPD) and Information Resources, Inc. To offset rising food costs, they say consumers are bargain hunting when grocery shopping, eating more meals at home and cutting back on restaurant visits.

“With inflation hitting 8.5% in July, it’s no surprise that consumers are trading down to lower-priced options and opting for more value, especially when dining out,” says Krishnakumar (KK) Davey, president of CPG and Retail Thought Leadership for IRI and NPD. “While the pandemic and recent inflationary pressures shifted demand, restaurants and foodservice outlets offering value, convenience and at-home indulgence are top of mind for consumers and will continue to grow.”

“Even with the impact of elevated grocery prices, dining out is still much more expensive than eating at home,” explains David Portalatin, senior vice president and industry advisor for Food and Foodservice for The NPD Group. “As we head into 2023, restaurant recovery will be slow and steady, as traffic begins to return to pre-pandemic levels. Current demand suggests that culinary trends are shifting to incorporate more bold flavors inspired by global and regional influences.”

The nearly $1.5 trillion at-home and away-from-home food market is forecast to grow around 8% in 2022, with at-home food (8.7% sales growth versus a year ago) outpacing away-from-home (6% versus a year ago), according to inaugural IRI and NPD inaugural joint research. It offers the first-ever comprehensive view of the Complete Food™ market, examining how consumers buy and consume food at home, use restaurants and foodservice outlets and uncovers new insights about consumers’ trade-offs to save money and splurge in the current inflationary environment. The research forecasts the Complete Food market to grow by 3-5% in 2023.