WLI

Cattle futures extended gains Friday with support from higher wholesale beef prices and despite higher Corn futures.

Feeder Cattle futures closed an average of 61¢ higher (25¢ at the back to 75¢ higher).

Live Cattle futures closed an average of 92¢ higher (25¢ higher at the back to $1.75 higher at the front).

Choice Boxed beef cutout value was $1.35 higher Friday afternoon at $259.42/cwt. Select was $1.99 higher at $238.58/cwt.

Negotiated cash fed cattle trade was mostly inactive on light demand in all cattle feeding regions through Friday afternoon, according to the Agricultural Marketing Service.

For the week, live prices were $1 lower in the Southern Plains at $141/cwt., $2 lower in Nebraska at $143 and $4 lower in the western Corn Belt at $143-$144. Dressed prices were $4 lower in Nebraska at $228 and $2-$4 lower in the western Corn Belt at $228-$232.

Estimated year-to-date total cattle slaughter Sept. 2 was 22.7 million head, which was 282,000 head more (+1.3%) than the same time last year. Estimated year-to-date beef production was 18.74 billion lbs., which was 192.1 million lbs. more (+1.0%) than a year earlier.

Corn and Soybean futures bounced back Friday with support including positive export announcements.

Corn futures closed mostly 6¢ to 7¢ higher. Soybean futures closed mostly 21¢ to 25¢ higher through Aug. 23 and then mostly 14¢ higher.

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Major U.S. financial indices closed lower Friday after early support from the anticipated bullish jobs report.

Total non-farm employment increased by 315,000 in August, according to the U.S. Bureau of Labor Statistics. That was slightly less than estimates ahead of the report. The nation’s unemployment rate edged higher to 3.7%.

Average hourly earnings for all employees on private non-farm payrolls increased 10¢ in August to $32.36.

The Dow Jones Industrial Average closed 337 points lower. The S&P 500 closed 42 points lower. The NASDAQ was down 154 points.

West Texas Intermediate Crude Oil futures on the CME closed 16¢ to 26¢ higher through the front six contracts.

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Walmart and Sustainable Beef LLC announced last week that Walmart signed an agreement to acquire a minority stake in Sustainable Beef LLC, a rancher-owned company based in North Platte, Neb. Walmart’s equity investment is part of a broader strategic partnership to source top-quality Angus beef from Sustainable Beef LLC’s new beef processing facility, according to a Walmart news release.

“We set out on a journey two years ago to create a new beef processing plant to add some capacity to the industry and provide an opportunity for producers to integrate their business of raising quality cattle with the beef processing portion of the industry and do it in a sustainable manner, said David Briggs, CEO of Sustainable Beef LLC. “During this journey we found that Sustainable Beef and Walmart aligned on continuing to improve how we care for our animals and crops and provide consumers the positive experience of enjoying quality beef.”

Walmart’s investment will help Sustainable Beef LLC open their beef processing facility in North Platte, Neb. The facility is expected to break ground next month and open by late 2024, creating more than 800 new jobs. As part of the investment, Walmart will also have representation on Sustainable Beef’s board.

“At Walmart, we are dedicated to providing high-quality, affordable beef to our customers, and an investment in Sustainable Beef LLC will give us even more access to these products,” says Tyler Lehr, senior vice president of merchandising for deli services, meat and seafood, Walmart U.S. “We know Sustainable Beef LLC has a responsible approach to beef processing, one that includes creating long-term growth for cattle ranchers and family farmers. This investment provides greater visibility into the beef supply chain and complements Walmart’s regeneration commitment to improve grazing management.”

Sharply lower Corn futures helped lift Feeder Cattle futures an average of $1.15 higher (70¢ to $1.37 higher).

Corn and Soybean futures continued lower Thursday as it appeared funds continued to liquidate positions on concerns about slowing demand. Corn futures closed mostly 11¢ to 12¢ lower. Soybean futures closed mostly 19¢ to 27¢ lower.

Live Cattle futures closed an average of 24¢ higher, except for unchanged to 17¢ lower in three contracts, despite the week’s softer cash market.

So far this week, live prices are $1 lower in the Southern Plains at $141, $2 lower in Nebraska at $143 and $4 lower in the western Corn Belt at $143-$144. Dressed prices are $4 lower in Nebraska at $228 and $2-$4 lower in the western Corn Belt at $228-$232.

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

Choice Boxed beef cutout value was 27¢ lower Thursday afternoon at $258.07/cwt. Select was $1.15 lower at $236.59/cwt.

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Major U.S. financial indices closed mixed Thursday with more optimism late in the session, perhaps tied to speculation about Friday’s employment report.

The Dow Jones Industrial Average closed 145 points higher. The S&P 500 closed 11 points higher. The NASDAQ was down 31 points.

West Texas Intermediate Crude Oil futures on the CME closed $2.37 to $2.94 lower through the front six contracts.

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The recent Baseline Update for U.S. Agricultural Markets from the Food and Agricultural Policy Research Institute (FAPRI) at the University of Missouri offers added perspective regarding potential cattle numbers and prices over the next five years.

FAPRI pegs the beef cow inventory at 29.3 million Jan. 1 of next year, which would be 800,000 fewer (-2.7%) year over year. FAPRI projects the inventory at 28.7 million head in 2024 and then 28.5 million head the next two years before rising to 28.7 million in 2027.

Forecast cattle prices increase during most of the next five years — all higher than this year.

FAPRI forecasts the weighted average five-area direct fed steer price this year at $142.35/cwt. For 2023 through 2027, projected prices are, respectively, $150.98, $156.53, $158.87, $159.39 and $157.81.

FAPRI estimates this year’s average price for feeder steers (600-650 lbs., Oklahoma City) to be $180.54. For 2023 through 2027, projected prices are, respectively, $197.54, $211.62, $219.03, $220.45 and $218.22.

Updated projections are based on information available in mid‐August 2022 this year.

Among other update highlights:

• Drought conditions in important cow‐calf areas are causing producers to send animals to slaughter early, lifting beef production in the short term but leading to fewer cows and higher prices in the years to come.
• Sharply higher feed and other input costs help keep projected total U.S. meat production nearly flat in 2022 and 2023. The last time meat production failed to grow in consecutive years was 2003 and 2004. Strong U.S. consumer demand for meat offsets a decline in exports.
• Tight global supplies result in record prices for wheat and cotton and near‐record prices for corn and soybeans. For the 2022/23 marketing year, wheat prices are projected to exceed $9/bu., corn tops $6/bu. and soybean prices are more than $14/bu. 
• Prices for fertilizer, fuel and many other farm inputs are also up sharply in 2022. For example, variable corn production expenses increase by an estimated $164 per acre in 2022. Projected input costs moderate in the years ahead but remain well above the 2021 level.
• If better growing conditions result in trendline crop yields in 2023 and later years, crop prices could decline from current levels. In 2023/24, projected average corn prices drop to $5.22/bu., wheat falls to $7.11/bu. and soybean prices decline to $12.36/bu.
• The CPI for food is projected to increase 9.0% in 2022. Food‐at‐home prices increase 10.6%, well above the increase in prices of food away‐from‐home for the first time since 2011.
• The increase in the food CPI moderates to 2.3% in 2023, as commodity prices and food marketing costs decline. This still outpaces the 1.7% average annual increase from 2010‐2019.

Sluggish cash trade with weaker undertones and recent significant declines in wholesale beef value pressured Cattle futures Wednesday.

Feeder Cattle futures closed an average of 40¢ lower, except for an average of 24¢ higher in the front two contracts.

Live Cattle futures closed an average of 77¢ lower (32¢ to $1.32 lower).

Negotiated cash fed cattle trade ranged from slow on light demand to a standstill through Wednesday afternoon, according to the Agricultural Marketing Service. Live sales on Tuesday were steady in Nebraska at $145/cwt.

Last week, live prices were $142 in the Southern Plains 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 $1.45 lower Wednesday afternoon at $258.34/cwt. Select was $1.94 lower at $237.74/cwt.

Corn futures continued to weaken Wednesday, closing 2¢ to 6¢ lower with pressure including concerns about global economic growth. Soybean futures closed mostly 5¢ to 9¢ lower.

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Major U.S. financial indices and Crude Oil futures closed lower again Wednesday with resurgent concerns about possible recession as central banks boost interest rates to combat inflation.

The Dow Jones Industrial Average closed 280 points lower. The S&P 500 closed 31 points lower. The NASDAQ was down 66 points.

West Texas Intermediate Crude Oil futures on the CME closed $1.61 to $2.15 lower through the front six contracts.

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Retail food prices increased 8.9% in the first seven months of this year, higher than the rate over the same period in 2021 (1.9%) and 2020 (3.1%), according to USDA’s Economic Research Service (ERS). The 20-year historical average for the same months from 2001 to 2020 was 1.7%.

All food categories saw price increases of at least 4% in the first seven months of this year.

“Prices for three food categories increased by more than 10%: eggs (20.9%), fats and oils (13.4%), and poultry (11.8%),” ERS analysts explain. “Inflationary pressures differ by food category. For example, eggs and poultry prices are currently much higher than their historical average in part because of an outbreak of highly pathogenic avian influenza (HPAI). Fresh vegetables historically experienced higher midyear average price increases compared to most categories, but prices for fresh vegetables increased the least of all categories over the first seven months of both 2022 (4.9%) and 2021 (0.4%).”

ERS projects food-at-home prices will increase between 10% and 11% in 2022.

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.”