WLI

Surging Corn futures prices took Feeder Cattle futures down a peg Monday.

Feeder Cattle futures closed an average of $2.10 lower (80¢ lower toward the back to $2.75 lower toward the front).

Grain futures spiked higher with heightened concerns about Russia’s ongoing war on Ukraine.

Corn futures closed 10¢ to 15¢ higher through Sep ’23 then mostly 8¢ to 9¢ higher.

Soybean futures closed 5¢ to 7¢ higher through Sep ’23 and then mostly 2¢ to 3¢ higher.

Live Cattle futures were unable to fade the strong pressure, closing an average of 75¢ lower (52¢ to $1.05 lower).

Negotiated cash fed cattle trade ranged from a standstill to mostly inactive on light demand in all major cattle feeding regions through Monday afternoon, with too few transactions to trend, 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.

Choice Boxed beef cutout value was $1.44 lower Monday afternoon at $244.63/cwt. Select was $2.31 lower at $213.82/cwt.

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Major U.S. financial indices continued to soften Monday with hangover pressure from the previous week’s bullish employment summary prompted further concern about the aggressiveness of Fed interest rate increases.

The Dow Jones Industrial Average closed 93 points lower. The S&P 500 closed 27 points lower. The NASDAQ was down 110 points.

West Texas Intermediate Crude Oil futures (CME) closed $1.42 to $1.51 lower  though the front six contracts.

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Cattle grading and increased cattle slaughter imply Choice beef production is 4% higher year over year, which is one reason for lower Choice beef prices in recent weeks, according to David Anderson, livestock economist with Texas A&M AgriLife Extension Service.

“The Choice beef cutout has been sliding lower for a number of weeks. Last week’s average Choice cutout was $247/cwt., which is an $18/cwt. decline over the last eight weeks. It is also the lowest since the first week of April 2021,” Anderson says, in the latest issue of In the Cattle Markets from the Livestock Marketing Information Center. “Increasing supplies of Choice beef may be one reason for the decline, but it can also be an implication of some shifting demand.”

On the other hand, even with increased cattle slaughter, Prime beef production declined over the last eight weeks, leading to a $16/cwt. increase in Prime cutout value, according to Anderson.

“While consumers may be switching around between cuts of beef and other meats based on relative prices and budget constraints, available supplies certainly provide ample reason for changing cutout values,” Anderson says.

Negotiated cash fed cattle trade was limited on light demand in all major cattle feeding regions 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 $143/cwt. and $1-$3 higher in Nebraska and the western Corn belt at $146-$148. Dressed prices were $2 higher at $230.

Choice Boxed beef cutout value $1.29 lower Friday afternoon at $246.07/cwt. Select was 86¢ lower at $216.13.

Cattle futures limped to a narrowly mixed close on Friday.

Feeder Cattle futures closed mixed from an average of 38¢ lower through May ’23, then up 13¢ to 38¢.

Live Cattle futures closed mixed, down 15¢ to up 28¢.

The strong U.S. dollar capped Grain and Soybean futures Friday.

Corn futures closed mixed, 4¢ to 8¢ higher through Jul ’24 then down 1¢.

Soybean futures closed 3¢ to 9¢ higher through Sep ’24 and then 3¢ lower.

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Major U.S. financial indices sank Friday with investors apparently viewing the strong as another reason for the Fed to keep aggressively shoving interest rates higher.

Total non-farm payroll employment increased by 263,000 in September, and the unemployment rate edged down to 3.5%, according to the U.S. Bureau of Labor Statistics.

In September, average hourly earnings for all employees on private non-farm payrolls rose by 10¢ to $32.46. Over the past 12 months, average hourly earnings have

increased by 5.0%.

The Dow Jones Industrial Average closed 630 points lower. The S&P 500 closed 105 points lower. The NASDAQ was down 421 points.

West Texas Intermediate Crude Oil futures (CME) closed $2.50 to $4.19 higher higher though the front six contracts.

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“The lack of available grazing and a low hay supply is likely to bring cattle to market a few weeks early as many producers are facing conditions that may force them to begin feeding hay earlier than is typical,” says Andrew P. Griffith, agricultural economist at the University of Tennessee, in his weekly market comments. “The price of freshly weaned calves has been declining the past several weeks and will likely continue to decline through the month of October. The driver of lower prices is not simply the seasonal tendency due to the seasonal increase in supply. Higher feed prices and increased concern of the general economy have many folks concerned about the consumers ability to purchase beef, which has resulted in a softening of price expectations for calves and feeder cattle moving through the spring months.”

Although declining cattle supplies ahead will support prices, Griffith explains continuing high feed costs and lower cash fed cattle prices than previously suggested by Cattle futures pose headwinds.

“If feed costs continue to maintain current price levels and finished cattle prices do not increase considerably then cattle feeders will be forced to continue leaning on lower feeder cattle prices,” Griffith says. “There should be some positive price movement closer to the end of the year, but prices are unlikely to make a large move through the month of October and early November.”

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

So far this week, live prices are $1 higher in the Southern Plains at $143/cwt. and $1-$2 higher in Nebraska at $146-$147. Dressed prices are $2 higher at $230. Live prices in the western Corn Belt last week were $145.

Despite stronger cash prices, Cattle futures faded a bit.

Feeder Cattle futures closed an average of 37¢ lower (17¢ to 82¢ lower) except for an average of 25¢ higher in the back two contracts.

Live Cattle futures closed an average of 10¢ lower except for unchanged in one contract and 65¢ higher in spot Oct.

Choice Boxed beef cutout value was 30¢ higher Thursday afternoon at $247.36/cwt. Select was $2.23 lower at $216.99/cwt.

Grain futures weakened Thursday, pressured by slowing exports impeded by the strength of the U.S. Dollar.

Corn futures closed 6¢ to 8¢ lower through Jly ‘23 and then mostly 1¢ lower to 3¢ higher.

Soybean futures closed 7¢ to 11¢ lower through Jly ‘23 and then mostly 1¢ to 2¢ lower.

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Major U.S. financial indices softened Thursday with jitters ahead of Friday’s national employment summary. 

The Dow Jones Industrial Average closed 346 points lower. The S&P 500 closed 38 points lower. The NASDAQ was down 75 points.

West Texas Intermediate Crude Oil futures (CME) closed 69¢ to $1.04 higher though the first six contracts.

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U.S. beef export value topped $1 billion in August for the seventh time this year, according to data released by USDA and compiled by the U.S. Meat Export Federation (USMEF).

August beef exports totaled 133,832 mt, up 1% year-over-year and the second largest volume on record – trailing only May 2022. Export value was just under $1.04 billion, slightly below the then-record total achieved in August 2021, which was the first time monthly exports topped the $1 billion mark.

“We speak often about the importance of developing a wide range of markets for U.S. red meat, and the August export results are a great illustration of that,” says USMEF President and CEO Dan Halstrom. “Exports face significant headwinds in some key destinations, with weakened currencies topping the list. But the emphasis on broad-based growth really pays dividends in these situations, allowing the overall export picture to remain very positive. I also cannot say enough about the loyalty of our international customers, many of whom have diminished purchasing power but continue to show a strong preference for U.S. red meat.”

For the first eight months of 2022, beef exports increased 5% from a year ago to 1.004 million mt, valued at $8.23 billion – a remarkable 24% above last year’s record pace. August beef export value equated to $437.98 per head of fed slaughter, down 7% from a year ago, but the January-August average was up 23% to $471.18.

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.