WLI

Corn futures climbed 9¢ to 13¢ through July ’23 Monday, in response to the latest monthly World Agricultural Supply and Demand Estimates, which reduced expected production (see below).

Soybean futures closed 60¢ to 76¢ higher through Jly ‘23 and then mostly 32¢ to 40¢ higher.

Feeder Cattle futures closed an average of $1.32 lower (30¢ lower at the back to $2.45 lower toward the front).

Live Cattle edged an average of 19¢ higher, maintaining the previous session’s gains with some optimism for cash trade this week.

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

Last week, live prices were steady to $1 higher in the Southern Plains at $141/cwt., steady to $3 lower in Nebraska at $142-$143 and steady to $1 higher in the western Corn Belt at $143-$146. Dressed prices were $2-$4 lower in Nebraska at $226 and $2-$3 lower in the western Corn Belt at $225-$230.

The five-area direct fed steer price last week was $142.48 on a live basis, which was 40¢ less than the previous week. The average five-area direct steer price in the beef was $2.10 lower at $226.68.

Choice Boxed beef cutout value was $1.68 higher through Monday afternoon at $258.94/cwt. Select was $1.03 higher at $235.76/cwt.

******************************

Major U.S. financial indices extended gains Monday on what some are terming a relief rally. 

The Dow Jones Industrial Average closed 229 points higher. The S&P 500 closed 43 points higher. The NASDAQ was up 154 points.

West Texas Intermediate Crude Oil futures on the CME closed 99¢ to $1.21 higher  higher through the front six contracts.

******************************

The latest World Agricultural Supply and Demand Estimates (WASDE) provided price support for corn with the estimated season average farm price (SAFP) received by producers 10¢ higher than the previous month’s estimate at $6.75/bu.

WASDE reduced projected 2022-23 production 415 million bu. less at 13.9 billion bu. based on yields down 2.9 bu./acre at 172.5. Harvested area for grain was forecast at 80.8 million acres, down 1.0 million. Ending stocks were projected 169 million bu. less at 1.2 billion.

U.S. soybean production for 2022-23 was projected 152 million bu. less than the previous month at 4.4 billion bu., on yield forecast at 50.5 bu./acre, which was 1.4 bu. less than the previous estimate. Harvested area was also projected to be 0.6 million acres less.

Even so, the projected SAFP remained unchanged with soybeans at $14.35/bu., soybean meal at $390/short ton and soybean oil at 69.0¢/lb.

The outlook for wheat supply and use was unchanged. The expected SAFP declined 25¢ to $9.00/bu., which would be record high.

Corn futures closed 11¢ to 24¢ higher through Sep ’23, then 6¢ to 8¢ higher on expectations Monday’s USDA crop report will show a reduction in yields.

Soybean futures closed mostly 17¢ to 26¢ higher.

Feeder Cattle futures closed an average of 66¢ higher, helped along by strong cash demand.

Live Cattle futures closed an average of $1.00 higher, apparently with some speculation that cash prices will move higher next week, given ho-hum interest from packers the last couple of weeks.

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

Regionally, negotiated cash fed cattle prices last week were mainly steady to lower. Live prices were steady to $1 higher in the Southern Plains at $141/cwt., steady to $2 lower in Nebraska at $143 and steady in the western Corn Belt at $143-$145. Dressed prices were $2-$4 lower in Nebraska at $226. The previous week, dressed prices were $228-$232 in the western Corn Belt.

Choice Boxed beef cutout value was 75¢ lower at $257.26/cwt. Select was $1.31 lower at $243.73/cwt.

******************************

Major U.S. financial indices closed higher on Friday.

The Dow Jones Industrial Average closed 377 points higher. The S&P 500 closed 61 points higher. The NASDAQ was up 250 points.

West Texas Intermediate Crude Oil futures on the CME closed $3.14 to $3.29 higher through the front six contracts.

******************************

In a recent issue of Cattle Market Notes Weekly, Burdine also notes beef cow slaughter levels remain 14% higher year over year. It is significantly more in the Southern Plains and surrounding states.

David Anderson, Extension livestock economist with Texas A&M AgriLife Extension Service provided perspective in the early-September issue of In the Cattle Markets from the Livestock Marketing Information Center. He looked at federally inspected beef and dairy cow slaughter for region 6, which includes Texas, Oklahoma, Louisiana, Arkansas, and New Mexico. He also compared cow slaughter in the region this year to levels during the last major drought (2011-12) in Texas and parts of other states.

“Cow packing plants in region 6 have processed 668,000 beef cows this year, up 31% (or 157,000 head) from last year. They have processed 217,000 dairy cows this year, just slightly below last year,” Anderson explains. “The states in region 6 reported 8.4 million beef cows on January 1, 2022. Those states had 8.8 million beef cows on January 1, 2011. While cows may come into the region for slaughter, it’s likely that a larger proportion of the herd has been culled this year than in the last major drought.”

So far this year, Anderson says 8,000 more beef cows in region 6 have been slaughtered than in 2011; 164,900 head more than in 2012.

Recent rain and moderate temperatures across Texas could slow culling in the near term, according to Anderson.

“Watch national and regional beef cow culling over the next six weeks to better gauge the impact of these storms,” Anderson says. “Seasonally, the largest cow culling weeks of the year nationally occur in October and November. Rain and earlier heavy culling rates could pull back slaughter and boost prices.”

Feeder Cattle futures edged an average of 36¢ higher Thursday, supported by weaker Corn futures that were mostly 2¢ lower.

Live Cattle futures closed mixed, from an average of 27¢ lower to an average of 8¢ higher with pressure from the steady to lower cash trade.

Live prices were steady in the Texas Panhandle and $1 higher in Kansas at $141/cwt. They were $1 lower in Nebraska at $142-$144 with dressed prices mostly $2-$4 lower at $226. Trade and demand were moderate in both regions, according to the Agricultural Marketing Service.

Trade was slow on light to moderate demand in the western Corn Belt. There were a few live trades at $143, but too few to trend. Last week, live prices were $143-$145 and dressed prices were $228-$232.

Choice Boxed beef cutout value was $3.33 lower Thursday afternoon at $258.01/cwt. Select was $1.47 lower at $236.04/cwt.

******************************

Major U.S. financial indices extended gains Thursday for the second consecutive session, but trade was volatile as investors wrestle with inflation wonderments in tandem with economic growth. 

The Dow Jones Industrial Average closed 193 points higher. The S&P 500 closed 26 points higher. The NASDAQ was up 70 points.

West Texas Intermediate Crude Oil futures on the CME closed 84¢ to $1.60 higher through the front six contracts.

******************************

U.S. beef exports topped $1 billion in July — for the sixth time this year — and posted the fifth-largest volume on record, according to data released by USDA and compiled by the U.S. Meat Export Federation (USMEF).

July beef exports totaled 126,567 metric tons (mt), up 3% year-over-year. Export value increased 7% to $1.006 billion.

For the first seven months of the year, beef exports increased 6% from a year ago to 870,471 mt, valued at $7.2 billion (up 29%). Export value per head of fed slaughter is on a record pace at more than $475.00.

“Global demand for U.S. beef continues to be amazingly resilient, especially at the retail level,” said USMEF President and CEO Dan Halstrom. “Exports have also benefited from a partial rebound in the foodservice sector but this recovery is far from complete. Many markets are still gradually easing COVID restrictions, so we definitely see opportunities for further growth as restaurant traffic returns. Headwinds remain formidable, however, including further devaluation of key trading partner currencies.”

Japan was the pacesetter for July exports, but volumes also increased year over year to China/Hong Kong, the ASEAN region, Central America, the Caribbean and Colombia. July exports eased for South Korea and Taiwan, though both markets remain on a record pace in 2022.

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.

******************************

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.

******************************

“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.

******************************

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.

******************************

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.