WLI

Cattle futures rallied Tuesday, helped along by another day of lower Corn futures, recently stronger wholesale beef prices and improving supply fundamentals.

Live Cattle futures closed an average of $1.13 higher (60¢ higher at the back to $1.87 higher toward the front).

Feeder Cattle futures closed an average of $2.03 higher ($1.60 to $2.47 higher).

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

Last week, live prices were $140/cwt. In the Southern Plains, $144-$148 in Nebraska and $146-$148 in the western Corn Belt. Dressed prices were $229-$230.

Choice Boxed beef cutout value was 98¢ higher Tuesday afternoon at $265.44/cwt. Select was 60¢ lower at $239.12/cwt.

Grain and Soybean futures continued lower Tuesday with continued pressure from uncertain Chinese demand, given slower economic growth in that nation and heightened tension with the U.S.

Corn futures closed 14¢ to 18¢ lower through Sep ‘23 and then 6¢ to 12¢ lower.

Soybean futures closed 22¢ to 39¢ lower through Aug ‘23 and then 10¢ to 17¢ lower.

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Major U.S. financial indices closed mainly higher Tuesday, led by retail stocks and positive quarterly results from the likes of Walmart and Home Depot.    

The Dow Jones Industrial Average closed 239 points higher. The S&P 500 closed 8 points higher. The NASDAQ was down 25 points.

West Texas Intermediate Crude Oil futures on the CME closed $2.17 to $2.88 lower through the through the front six contracts.

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If beef prices are strong and beef supplies are reasonably abundant, as they are currently, then the reason is demand, says Stephen Koontz, agricultural economist at Colorado State University. That’s how he responds to the number of inquiries he receives about why wholesale beef prices remain elevated.

“From a market fundamentals perspective, monthly beef production is strong, running better than 1% above the year prior. The total volume for 2022 will be slightly smaller than 2021 and comparable to 2019. These are large volumes of beef,” Koontz explains, in the latest issue of In the Cattle Markets from the Livestock Marketing Information Center. “Forecasts for the third and fourth quarters reveal drops in production but current weekly slaughter remains strong. Those declines have not yet materialized. Domestic consumption was likely flat in the second quarter but was large in the first. Again, the third and fourth quarters are forecast to be lower especially if strong beef exports persist. Current monthly beef net exports for 2022 are on path to be record large.”

Koontz points out retail beef prices remain higher than many expected following the COVID price spike, and retail margins remain strong.

“Fed cattle are trading in the high $144-$148/cwt. with some trades reported at $150. These are levels not seen since 2015,” Koontz says. “And cash prices for feeder animals across a number of regional markets – Oklahoma City, Montana, and Colorado – in the week of August 12 were also at levels not seen since 2015.” As an example, he mentions the $180.60/cwt. price for 700-750 lb. Medium and Large Number 1 feeder steers at Oklahoma City.

Cattle futures weakened Monday, apparently under technical pressure.

Live Cattle futures closed an average of 70¢ lower (25¢ to $1.07 lower). Feeder Cattle futures closed an average of 58¢ lower (37¢ to 87¢ lower), except for 30¢ higher in spot Aug.

That was despite a down day in the grain complex, where prices were challenged by the stronger dollar, weaker oil prices, positive weather and slowing economic growth in China.

Corn futures closed 12¢ to 14¢ lower through Jly ‘23 and then mostly unchanged to 3¢ lower.

Soybean futures closed 34¢ to 42¢ lower through Jly ‘23 and then mostly 20¢ to 23¢ lower.

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

Last week, live prices were $140/cwt. in the Southern Plains, $144-$148 in Nebraska and $146-$148 in the western Corn Belt. Dressed prices were $229-$230.

Choice Boxed beef cutout value was $1.09 higher Monday afternoon at $264.46/cwt. Select was 13¢ higher at $239.72/cwt.

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Major U.S. financial indices closed higher Monday, extending gains despite weaker oil and energy.  

The Dow Jones Industrial Average closed 151 points higher. The S&P 500 closed 16 points higher. The NASDAQ was up 80 points.

West Texas Intermediate Crude Oil futures on the CME closed $1.98 to $2.68 lower through the through the front six contracts.

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Reduced hay stocks and production help illustrate the degree of herd liquidation this year, according to Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly market comments.

Based on USDA’s recent Crop Production report, Peel explains total alfalfa hay production this year was forecast at 49.1 million tons, which would be 0.3% less year over year and 13.6% less than the 10-year average for 2011-2020. All other hay production for this year was forecast at 67.7 million tons, down 4.6% year over year and down 7.4% from the 10-year average. So, Peel says, total U.S. hay production for 2022 was forecast at 116.8 million tons, down 2.9% from last year and down 10.1% from the 10-year average. He points out alfalfa and other hay prices are forecast at record levels this year.

At the same time, Peel explains last year’s drought led to reduced hay stocks this year.

“May 1 hay stocks were down 6.9% year over year but were down 16.9% from the 2011-2020 average,” according to Peel. “The total hay supply for the 2022-2023 hay crop year (May-April) is the sum of May 1 (beginning) hay stocks and 2022 hay production. The total hay supply is projected to be down 3.4% year over year and is down 11.0% from the 10-year average.”

Next consider the fact that Eight of the top-10 ten hay states are also among the top-10 states for beef cows: Texas, Oklahoma, Missouri, Nebraska, South Dakota, Kansas, Montana and Kentucky.

“These eight states had 15.7 million beef cows on Jan. 1, 2022. The other two, California and Idaho, are the number one and three dairy cow states, respectively,” Peel says. “With the growing season winding down amid continuing drought, the 2022 hay supply data illustrate why so much herd liquidation has occurred this year. It also speaks to the continuing challenges that cattle producers will face to get through the winter before the 2023 growing season could provide the next opportunity for improved forage conditions.”

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

For the week, live prices were $4-$5 higher in the Southern Plains at $140/cwt., $4-$5 higher in Nebraska at $144-$148 and $1-$4 higher in the western Corn Belt at $145-$148. Dressed prices were $2-$3 higher in Nebraska at $229-$230 and near the top of the previous week’s trade in the western Corn Belt at $229.

Choice Boxed beef cutout value was 27¢ higher Friday afternoon at $263.37/cwt. Select was $2.13 higher at $239.59/cwt.

Estimated total cattle slaughter last week of 647,000 was 4,000 fewer than the previous week but 11,000 head more than the previous year. Total estimated year-to-date cattle slaughter of 20.77 million head was 246,000 head more (+1.2%) than a year earlier. Total estimated year-to-date beef production of 17.12 billion lbs. was 171.3 million lbs. more (+1.0%).

Although supported by the week’s stronger cash prices, Live Cattle futures wobbled Friday — an average of 37¢ lower in the front five contracts and then unchanged to an average of 4¢ higher. 

Feeder Cattle futures closed an average of $1.02 lower, pressured by Corn futures, which were 10¢ to 14¢ higher through Jly ‘23, fueled by the latest World Agricultural Supply and Demand Estimates (see below).

Soybean futures closed mostly 1¢ to 5¢ higher after 40¢ lower in spot Aug and 14¢ higher in near Sep.

Despite the latest pressure from feed prices, Feeder Cattle futures mainly maintained the previous two week’s strong gains, week to week on Friday. Week to week on Thursday, The CME Feeder Cattle Index closed $2.85 higher at $178.28/cwt. That’s almost $6 higher over the last two weeks.

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Major U.S. financial indices closed sharply higher Friday as investors speculated inflation may be at the peak.

The Dow Jones Industrial Average closed 424 points higher. The S&P 500 closed 72 points higher. The NASDAQ was up 267 points.

West Texas Intermediate Crude Oil futures on the CME closed $1.45 to $2.25 lower through the through the front six contracts.

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USDA’s Economic Research Service (ERS) increased the expected weighted average five-area direct steer price for this year 80¢ to $142.10/cwt., on current price strength. That’s from the latest World Agricultural Supply and Demand Estimates (WASDE). Next year’s projected annual price was $1 higher than the previous month’s estimate at $154. Prices were estimated at $140 in the third quarter and $147 in the fourth quarter. Prices in the first and second quarter next year were projected at $151 and $152, respectively.

Beef production for this year was projected at 27.99 billion lbs., which was 68 million lbs. more than the previous month’s estimate, based on higher expected placements in the second half of this year. Estimated beef production next year of 26.26 billion lbs. would be 1.7 billion lbs. less (-6.2%) than this year.

Total red meat and poultry production is estimated to be 106.48 billion lbs. this year, which would be 334 million lbs. less than last year (-0.3%). Projected total red meat and poultry production of 105.8 billion lbs. next year would be 673 million lbs. less (-0.6%) than this year.

Corn

Estimated 2022-23 production was reduced 146 million bu. to 14.4 billion based on yield estimates of 175.4 bu./acre, which was 1.6 bu./acre less than the previous estimate. Projected ending stocks were lowered by 82 million bu. to 1.4 billion.

The season-average farm price (SAFP) received by producers for corn was unchanged at $6.65/bu.

Soybeans

Although harvested soybean area was reduced 0.3 million acres from the previous estimate, average yield was projected 0.4 bu. higher at 51.9 bu./acre. Soybean supplies for 2022-23 were estimated to be 20 million bu. more at 2.16 billion bu. Ending stocks were projected 15 million bu. more at 245 million bu.

The U.S. season-average soybean price for 2022-23 was forecast at $14.35/bu., down 5¢ from last month. Soybean meal and oil price forecasts were unchanged at $390 per short ton and 69.0¢/lb., respectively.

Wheat

Estimated U.S. wheat production for 2022-23 was raised 2 million bu. from the previous month to 1,783 million bu. with all wheat yield projected 0.2 bu. more than the previous months at is 47.5 bu./acre. Projected 2022-23 ending wheat stocks were lowered 29 million bu. to 610 million.

The projected 2022-23 season-average farm price was reduced by $1.25 to $9.25/bu., based on prices received for marketings to date, which are lower than previously expected. However, the projected SAFP would still surpass the record of $7.77/bu. in 2012-13.

Negotiated cash fed cattle trade was moderate on moderate demand in the Southern Plains through Thursday afternoon, according to the Agricultural Marketing Service. Live prices were $4-$5 higher in the Texas Panhandle at $140/cwt. and $4 higher in Kansas at $140.

Elsewhere, trade was limited on light demand with too few transactions to trend. On Wednesday, live prices were $4-$5 higher in Nebraska at $144-$148 and mostly $4 higher in the western Corn Belt at $145-$148. Dressed prices were $2-$3 higher in Nebraska at $229-$230 and toward the top of last week’s trading range in the western Corn Belt at $229.

Choice Boxed beef cutout value was 13¢ lower Thursday afternoon at $263.10/cwt. Select was 38¢ higher at $237.46/cwt.

Cattle futures closed narrowly mixed Thursday, up for Live Cattle with stronger cash prices and lower for Feeder Cattle amid higher Corn futures.

Feeder Cattle futures closed an average of 37¢ lower.

Live Cattle futures closed an average of 35¢ higher (7¢ higher toward the back to $1.40 higher in spot Aug).

Corn and soybean futures rose Thursday, with likely positioning ahead of Friday’s World Agricultural Supply and Demand Estimates.

Corn futures closed mostly 4¢ to 8¢ higher.

Soybean futures closed mostly 19¢ to 20¢ higher.

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Major U.S. financial indices wobbled after an early run and then closed narrowly mixed, on likely profit taking, but they retained a lion’s share of the previous session’s strong gains.

The Dow Jones Industrial Average closed 27 points higher. The S&P 500 closed 2 points lower. The NASDAQ was down 74 points.

West Texas Intermediate Crude Oil futures on the CME closed $1.92 to $2.41 higher through the through the front six contracts.

Cattle futures closed higher Wednesday, buoyed by higher outside markets and the positive outlook for cash prices this week.

Feeder Cattle futures closed an average of $1.56 higher ($1.22 to $2.50 higher). Live Cattle futures closed an average of 99¢ higher (57¢ to $1.30 higher).

Negotiated cash fed cattle trade ranged from mostly inactive on light demand to slow on light to moderate demand, according to the Agricultural Marketing Service. Although too few to trend, there were some early live sales at $146/cwt. in Nebraska and the western Corn Belt and some early dressed sales in Nebraska at $229.

Last week, live prices were $135-$136/cwt. in the Texas Panhandle, $136 in Kansas, $140-$143 in Nebraska and $141-$147 in the western Corn Belt. Dressed prices were $227 in Nebraska and $225-$232 in the western Corn Belt.

Choice Boxed beef cutout value was $1.50 lower Wednesday afternoon at $263.23/cwt. Select was 62¢ lower at $237.08/cwt.

Corn futures closed mostly 3¢ to 4¢ higher. Soybean futures closed mixed but mostly fractionally higher to 3¢ higher.

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Major U.S. financial indices closed sharply higher Wednesday, fueled by one inflation gauge that was lower than expected.

The Consumer Price Index for all consumers was unchanged in July according to the U.S. Bureau of Labor Statistics. The index is up 8.5% over the last 12 months.

The Dow Jones Industrial Average closed 535 points higher. The S&P 500 closed 87 points higher. The NASDAQ was up 360 points.

West Texas Intermediate Crude Oil futures on the CME closed $1.43 to $1.63 higher through the through the front six contracts.

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U.S. beef imports were 18.1% higher than last year through June but were 15.3% less year over year for the month of June at the lowest level since 2019, according to Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly market comments. He explains imports declined in the face of increased domestic cow slaughter and lean beef production.

On the other side of the scale, as mentioned in Cattle Current, U.S. beef exports through June were 6% more year over year for volume and 33% more for value, according to data released by USDA and compiled by the U.S. Meat Export Federation.

“Beef trade has been generally supportive thus far this year, but the future is uncertain,” Peel says. “Global and U.S. economic forecasts have been reduced as global economies continue to struggle. The U.S. dollar continues strong, which will be a headwind for future exports. U.S. beef production is expected to decline in the last part of the year and beyond reducing available beef supplies. All of these will likely impact beef trade going forward.”