WLI

Cattle futures bounced back Monday, helped along by higher wholesale beef values.

Choice Boxed beef cutout value was $2.19 higher Monday afternoon at $245.94/cwt. Select was $1.18 higher at $221.31/cwt.

Feeder Cattle futures closed an average of $1.23 higher.

Live Cattle futures closed an average of 89¢ higher.

Negotiated cash fed cattle trade was at a standstill in all major cattle feeding regions through Monday 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 3¢ higher through Jly ‘23 and then 1¢ to 2¢ lower.

Soybean futures closed 5¢ to 9¢ higher.

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Major U.S. financial indices rallied back Monday with the start of the new week and quarter. Support included oversold conditions and a decline in bond yields.

The Dow Jones Industrial Average closed 765 points higher. The S&P 500 closed 92 points higher. The NASDAQ was up 239 points.

West Texas Intermediate Crude Oil futures (CME) closed $2.91 to $4.14 higher though the first six contracts.

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As the last leg of the current cattle cycle unfolds with herd contraction since 2018-19, Josh Maples, Extension livestock economist at Mississippi State University, offers insights to the current cattle cycle, likely cyclically high prices ahead and the trigger for expansion.

“How long we continue to contract will be directly impacted by drought and pasture conditions. The current drought draws comparisons to the 2011-2013 and has led to similar liquidation impacts on the cattle inventory. Herd expansion will be difficult until the drought abates,” Maples explains in the latest Cattle Market Notes Weekly.

“Producer profitability will be the key driver of when the next expansion phase occurs and when the next cattle cycle begins.”

Maples offers 2014-15 as an example. Record high prices were achieved during the last cycle low for cattle numbers, which was driven by drought and seven years of herd contraction.

“Just a few years ago, the thought of reaching those record price levels again seemed far-fetched. However, we are again experiencing many of the same ingredients that led to the 2014-15 market,” Maples says. “Cattle futures markets for 2023 are at levels not seen since 2015. The timing is still up in the air, and beef demand will certainly matter, but the end of the current cattle cycle may ultimately not look all that different from the end of the last one.”

Feeder Cattle futures tanked Friday with pressure from Corn futures surging in response to USDA’s Grain Stocks report Friday (see below).

Corn futures closed 5¢ to 8¢ higher through Jly ’23 and then 2¢ to 3¢ higher.

Feeder Cattle futures closed an average of $2.68 lower.

Live Cattle futures closed an average of 53¢ lower (17¢ to 85¢ lower), except for unchanged in the back contract.

Soybean futures closed 32¢ to 46¢ lower through Aug. ’23 and then mostly 21¢ to 25¢ lower, reacting to softer oil prices and the Grain Stocks report.

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

For the week, live prices were steady at $143/cwt. in the Southern Plains and at $144-$145 in Nebraska. Prices were steady to $3 lower in the western Corn Belt at $145. Dressed prices were steady to $1 higher in Nebraska at $228-$233 and at the bottom of last week’s range in the western Corn Belt at $228.

Choice boxed beef cutout value was $2.33 lower Friday afternoon at $243.75/cwt. Select was 35¢ higher at $220.13.

Estimated total cattle slaughter was 3,000 head less week over week at 664,000 head, but was 24,000 head more than the same week last year. Year-to-date estimated total cattle slaughter of 25.36 million head was 385,000 head more (+1.5%) than the same time last year. Estimated total year-to-date beef production of 20.91 billion lbs. was 282 million lbs. more (+1.4%).

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Major U.S. financial indices continued to fall Friday with growing concerns about inflation and tightening monetary policy squelching economic growth here and abroad. The Personal Consumption Expenditure (PCE) Index excluding food and energy grew 0.6% from July to August, which was more than anticipated. Year over year, the PCE was 4.9% higher, according to the U.S. Bureau of economic analysis.

The Dow Jones Industrial Average closed 500 points lower. The S&P 500 closed 54 points lower. The NASDAQ was down 161 points.

West Texas Intermediate Crude Oil futures (CME) closed $1.61 to $1.74 lower through the front six contracts.

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Old crop corn stocks stored in all positions on Sept. 1 totaled 1.38 billion bu., up 12% year over year, but less than trade expectations, according to USDA’s quarterly Grain Stocks report. Of the total stocks, 510 million bu. were stored on farms, which was 29%. more than a year earlier. Off-farm stocks of 867 million bu. were 3% more than the prior year.

NASS analysts say 2021 corn production was revised 41.4 million bu. lower with downward revisions in planted area (93.3 million acres), harvested area (85.3 million acres) and grain yield (176.7 bu./acre).

Old crop soybean stocks of 274 million bu. stored in all positions on Sept. 1 were 7% more than the previous year and more than the trade expected.

Soybean stocks stored on farms totaled 62.9 million bu., down 8% from a year ago. Off-farm stocks of 211 million bu. were 12% more year over year.

Soybean production was 30.2 million bu. more with harvested area revised higher (86.3 million acres), as well as yield (51.7 bu./acre).

All wheat stored in all positions Sept. 1 totaled 1.78 billion bu., which was less than 1% more than the previous year and in line with trade expectations.

On-farm wheat stocks were estimated at 591 million bu., up 41% from last September. Off-farm stocks of 1.18 billion bu. were 13% less than a year earlier.

Cattle futures finally rallied back Thursday, supported by oversold conditions.

Feeder Cattle futures closed and average of $2.19 higher. Live Cattle futures closed an average of $1.02 higher.

Negotiated cash fed cattle trade was limited on light demand in all major cattle feeding regions through Thursday afternoon with too few transactions to trend, according to the Agricultural marketing Service.

So far this week, live prices are steady at $143/cwt. in the Southern Plains and at $144-$145 in Nebraska. Prices are steady to $3 lower in the western Corn Belt at $145. Dressed prices are steady to $1 higher in Nebraska at $228-$233 and at the bottom of last week’s range in the western Corn Belt at $228.

Choice boxed beef cutout value was $1.47 lower Thursday afternoon at $246.08/cwt. Select was 57¢ higher at $219.78.

Corn futures closed mostly fractionally higher toward the front and then 2¢ to 3¢ higher.

Soybean futures closed mostly 4¢ to 5¢ higher.

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Major U.S. financial sold off Thursday, basically giving back what was gained in the previous session with investors apparently returning their focus to a slowing economy.

The Dow Jones Industrial Average closed 458 points lower. The S&P 500 closed 78 points lower. The NASDAQ was down 314 points.

West Texas Intermediate Crude Oil futures (CME) closed 78¢ to 92¢ lower through the front six contracts.

Negotiated cash fed cattle trade was active on very good demand in Nebraska Wednesday with live prices steady at $144-$145/cwt. and dressed prices mainly steady to $4 lower at $228.

Trade was slow on moderate demand in the western Corn Belt, where there were a few live sales at $144-$145 and a few in the beef at $228, but too few to trend, according to the Agricultural Marketing Service. Prices there last week were $145-$148 and $227-$234, respectively.

Trade in the Southern Plains ranged from limited to mostly inactive on light demand. Live prices there the previous day were steady at $143.

Choice boxed beef cutout value was 88¢ lower Wednesday afternoon at $247.55/cwt. Select was $2 lower at $219.21.

Cattle futures weakened again Wednesday with hangover pessimism from recent sessions.

Feeder Cattle futures closed an average of 72¢ lower (32¢ to $1.12 lower).

Live Cattle futures closed an average of 50¢ lower except for 15¢ higher in the back contract.

Corn and Soybean futures crawled higher, perhaps on increasing Russian rhetoric and positioning ahead of Friday’s Grain Stocks report.

Corn futures closed mostly 3¢ higher.

Soybean futures closed 5¢ to 9¢ higher.

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Major U.S. financial indices rallied Wednesday, apparently based mainly on oversold conditions. 

The Dow Jones Industrial Average closed 549 points higher. The S&P 500 closed 72 points higher. The NASDAQ was up 222 points.

West Texas Intermediate Crude Oil futures (CME) closed $2.82 to $3.65 higher through the front six contracts.

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Economic conditions continue to deteriorate in the 10-state region dependent on agriculture and/or energy, monitored by the Rural Mainstreet Index (RMI).    

“The Rural Mainstreet economy is now experiencing a downturn in economic activity. Supply chain disruptions and inflationary pressures from higher farm input costs continue to constrain growth,” says Ernie Goss, Jack A. MacAllister Chair in Regional Economics at Creighton University’s Heider College of Business. “Farmers and bankers are bracing for escalating interest rates, higher farm input costs, and drought.”

The Creighton University Rural Mainstreet Index (RMI) fell for the fifth straight month, sinking below growth neutral for a fourth consecutive month, according to the monthly survey of bank CEOs.

Four of 10 bankers indicated that high and escalating farm input costs were the greatest economic challenge to their bank and area over the next 12 months.

More than one of five, or 21.4%, of bank CEOs reported drought impacts were the greatest economic challenge going forward.

Cattle futures continued lower with outside markets Tuesday.

Feeder Cattle futures closed an average of $1.02 lower.

Live Cattle futures closed an average of 67¢ lower.

Negotiated cash fed cattle trade was steady in the Southern Plains Tuesday at $143/cwt. on slow trade and moderate demand.

Elsewhere, trade was inactive on light demand.

Last week, live prices were $144-$145 in Nebraska and $145-$148 in the western Corn Belt. Dressed prices were $228-$232 in Nebraska and $227-$243 in the western Corn Belt.

Choice Boxed beef cutout value was $1.07 higher Tuesday afternoon at $248.91/cwt. Select was 1.27 lower at $222.08/cwt.

Corn futures closed 1¢ to 2¢ higher through Jly ‘23 and then mostly unchanged to fractionally lower.

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

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Major U.S. financial indices closed mixed Tuesday as a relief rally from recent steep losses fell short. 

The Dow Jones Industrial Average closed 125 points lower. The S&P 500 closed 7 points lower. The NASDAQ was up 26 points.

West Texas Intermediate Crude Oil futures (CME) closed $1.14 to $1.79 higher through the front six contracts.

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Winter wheat planting increased 10% week to week (Sept. 25), according to the latest USDA Crop Progress report.

31% of winter wheat was planted, which was 10% more than the previous week, 1% less than last year but 1% more than the five-year average. 9% was emerged, which was 7% more than the previous week, 2% more than last year and 3% more than average.

26% of pasture and range was rated as Good (22%) or Excellent (4%), which was 2% less than a week earlier but 3% more than a year earlier. Conversely, 43% was rated as Poor (23%) or Very Poor (20%), which was the same as the previous week but 3% less than a year earlier.

92% of corn was dented, which was 4% less than last year and 2% less than the five-year average. 58% was mature, which was 14% less than a year earlier and 3% less than average. 12% was harvested, which was 5% less than last year and 2% less than the average. 52% was rated as Good (42%) or Excellent (10%), which was the same as the prior week but 7% less than a year earlier. 21% was rated Poor (12%) or Very Poor (9%) the same as a week earlier but 6% more than a year earlier.

63% of soybeans were dropping leaves, which was 10% less than last year and 2% less than the average. 8% were harvested, compared to 15% last year and 13% for average. 55% were rated as Good (46%) or Excellent (9%) which was the same as the previous week and 3% less than the prior year. 15% were rated Poor (10%) or Very Poor (5%), which was the same as the previous week but 1% more than the prior year.