WLI

Feeder Cattle futures rallied an average of $2.13 higher Tuesday, propelled by lower Corn futures and ongoing cash demand strength.

Corn futures closed 13¢ to 15¢ lower through new-crop contracts on weather pressure and then mostly 7¢ to 8¢ lower.

Soybean futures closed 17¢ to 22¢ lower through Jly ‘23 and then mostly 9¢ to 12¢ lower.

Positive outside markets, Feeder Cattle and higher wholesale beef values helped pull Live Cattle futures an average of 48¢ higher.

Choice Boxed beef cutout value was $2.02 higher Tuesday afternoon at $272.57/cwt. Select was $1.07 higher at $243.73/cwt.

Negotiated cash fed cattle trade was $1 lower in the Texas Panhandle on Tuesday at $136/cwt. with moderate trade and light to moderate demand.

Elsewhere, trade was mostly inactive on light demand with too few transactions to trend, according to the Agricultural Marketing Service.

Last week, live prices were $137 in Kansas, $140-$145 in Nebraska and $143.50 to $145.00 in the western Corn Belt. Dressed prices were $230 in Nebraska and $228-$230 in the western Corn Belt.

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Major U.S. financial indices rallied Tuesday, with various analysts attributing the surge to investors betting the bottom is in or near.

The Dow Jones Industrial Average closed 754 points higher. The S&P 500 closed 105 points higher. The NASDAQ was up 353 points.

West Texas Intermediate Crude Oil futures on the CME closed 73¢ to $1.62 higher through the front six contracts. 

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USDA’s Economic Research Service (ERS) raised the expected feeder steer price (750-800 lbs., Oklahoma City) for the remainder of this year based on stronger than expected placements in May, current price data and tighter supplies than expected.

In the latest Livestock, Dairy and Poultry Outlook, ERS forecast the average feeder steer price $2 higher for the third quarter at $168/cwt., $1 higher in the fourth quarter at $171 and $1 higher for the annual average price at $163. Likewise, the expected first-quarter price increased $1 to $169. Next year’s annual average price is $199.25.

As for fed steer prices, ERS analysts point out the five-area average price July 10 was $22 higher year over year at $144.35/cwt., supported by the faster slaughter pace, lighter carcass weights and strong beef prices.

The fed steer price was projected at $139/cwt. in the third quarter and at $141.30 for the annual average. Next year’s annual average price was forecast at $153.

“Conditions continue to elevate beef cow culling rates and placement of calves on feed at a faster than expected pace,” ERS analysts say. “Lower expected carcass weights in second-half 2022 are more than offset by higher expected fed cattle slaughter in the fourth quarter. This raised projected 2022 production slightly, however, lower weights were carried into first-quarter 2023, marginally reducing next year’s production.”

Soybean futures closed sharply higher Monday, boosted by a bounce in oil prices, carrying Corn along for the ride. Extreme heat in the short-term forecast added support.

Soybean futures closed 31¢ to 38¢ higher through Sep ‘23 and then mostly 26¢ to 27¢ higher.

Corn futures closed mostly 5¢ to 6¢ higher.

Even so, Cattle futures firmed Monday, supported by stronger wholesale beef values.

Choice Boxed beef cutout value was $1.64 higher Monday afternoon at $270.55/cwt. Select was 87¢ higher at $242.66/cwt.

Live Cattle futures closed an average of 42¢ higher (42¢ to $1.05 higher).

Feeder Cattle futures closed an average of 37¢ higher, except for an average of 18¢ lower in two nearby contracts.

There was no established negotiated cash fed cattle trade through Monday afternoon, according to the Agricultural Marketing Service.

Last week, live prices were $137/cwt. in the Southern Plains, $140-$145 in Nebraska and $143.50-$145.00 in the western Corn Belt. Dressed prices were $228-$230.

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Major U.S. financial indices gave back some of the previous session’s gains on Monday, with mixed earnings reports and lingering concerns about inflation and economic growth.

Builder confidence plunged month to month in July as high inflation and increased interest rates stalled the housing market by dramatically slowing sales and buyer traffic. In a further sign of a weakening housing market, builder confidence in the market for newly built single-family homes posted its seventh straight monthly decline in July, falling 12 points to 55, according to the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI). This is the lowest HMI reading since May 2020 and the largest single-month drop in the history of the HMI, except for the 42-point drop in April 2020.

“Production bottlenecks, rising home building costs and high inflation are causing many builders to halt construction because the cost of land, construction and financing exceeds the market value of the home,” says NAHB Chairman Jerry Konter, a home builder and developer from Savannah, Ga. “In another sign of a softening market, 13% of builders in the HMI survey reported reducing home prices in the past month to bolster sales and/or limit cancellations.”

“Affordability is the greatest challenge facing the housing market,” explains NAHB Chief Economist Robert Dietz. “Significant segments of the home buying population are priced out of the market. Policymakers must address supply-side issues to help builders produce more affordable housing.”

The Dow Jones Industrial Average closed 215 points lower. The S&P 500 closed 32 points lower. The NASDAQ was down 92 points.

West Texas Intermediate Crude Oil futures on the CME closed $3.99 to $5.01 higher through the front six contracts, supported by snug supplies and indications that Saudi Arabia will not increase production.

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When USDA issues the mid-year cattle report this Friday, Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, expects to see the beef cow inventory 2.5% to 3.0% less year over, and the smallest since 2015. In his weekly market comments, Peel points out beef cow slaughter was 14.6% more than 2021 through the first half of this year. Last year’s beef cow slaughter was 9% more year over year.

“Fed cattle slaughter was up 0.6% year over year in the first half of the year. However, fed steer slaughter was down 1.4% while fed heifer slaughter was up 3.8%. Heifer slaughter in the first half of the year was 52.1% of the January 1 inventory of other heifers. That is the highest rate of heifer slaughter in the first half of the year since 2004 and has averaged 48.3% in the past 15 years. Reduced beef heifer retention may lead to a decrease in the beef replacement heifer inventory of 2.5% or more,” Peel says.

So, it will take time to begin expanding the herd when drought eases.

“Cow culling can drop rather quickly if conditions improve but the availability of replacement heifers, especially bred heifers, may take a year or more,” Peel explains. “Heifer liquidation this year may mean that a limited supply of bred heifers is available next year.  If drought conditions improve this summer/fall, it may be possible to save some additional replacement heifer calves, but most will not calve until 2024. Even if we can and want to, the ability to rebuild the beef cow herd may be limited in 2023.  Hopefully, the upcoming report will provide some indication of what lies ahead.”

Cattle futures continued to soften Friday on the week’s lower cash fed cattle prices and ongoing recession fears.

Pressure could have also included uncertainty regarding the railroad strike set to begin Monday. Ultimately the strike was averted, at least for now, when President Biden signed an executive order Friday, creating a Presidential Emergency Board (PEB). The PEB has 30 days to recommend a resolution. The railroads and the unions then have another 30 days to negotiate a settlement.

Feeder Cattle futures closed an average of $1.29 lower (57¢ to $2.55 lower).

Live Cattle futures closed an average of 64¢ lower.

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 steady in the Southern Plains at $137/cwt., steady to $4 lower in Nebraska at $144-$145 and $2-$5 in the western Corn Belt at $145. Dressed prices were $2 lower in Nebraska at $230 and $2-$4 lower in the western Corn Belt at $228-$230.

Choice Boxed beef cutout value was $1.16 higher Friday afternoon at $268.91/cwt. Select was 12¢ lower at $241.79/cwt.

Estimated total cattle slaughter last week of 677,000 head was 84,000 head more than the previous holiday-shortened week. Total estimated year-to-date cattle slaughter of 18.2 million head was 211,000 head more (+1.2%) than last year. Estimated year-to-date beef production of 15.0 billion lbs. was 153.5 million lbs. more (+1.0%).

Corn and Soybean futures closed narrowly mixed Friday as traders positioned following the massive selloff earlier in the week.

Corn futures closed mixed from fractionally lower to 2¢ higher through Sep ‘23, and then 1¢ to 2¢ lower.

Soybean futures closed mostly fractionally mixed to 1¢ higher through Sep ‘23 and then 1¢ to 2¢ lower.

Net U.S. beef export sales for the week ending July 7 were a market-year low, down 17% from the previous week and 35% lower than the prior four-week average, according to the U.S. Export Sales report.

Increases were primarily for Japan, Mexico, Canada, China and Taiwan.

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Major U.S. financial indices bounced higher Friday, supported by major bank earnings and stronger consumer spending than expected.

Advance estimates of U.S. retail and food services sales for June were 1% more than the previous month — slightly more than expected — and 8.4% more year over year, according to the U.S. Census Bureau. Also, though still near record lows, the University of Michigan Index of Consumer Sentiment rose from 50.0 in June to 51.1 in July.

The Dow Jones Industrial Average closed 658 points higher. The S&P 500 closed 72 points higher. The NASDAQ was up 201 points.

West Texas Intermediate Crude Oil futures on the CME closed $1.51 to $1.81 higher through the front six contracts.

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Greenhouse gas (GHG) emissions from U.S. agriculture declined from 2019 to 2020, according to data from USDA’s Economic Research Service (ERS). Agricultural production accounted for 699 metric tons of carbon dioxide equivalent in 2019 versus 670 million metric tons in 2020. Farming and ranching accounted for 11.2 % of U.S. GHG emissions in 2020 (see chart below).

“The Environmental Protection Agency estimated that in 2020 agriculture produced 5.6% (of GHG) as nitrous oxide. 4.2% as methane, 0.8% as on-farm carbon dioxide, and 0.6% emitted indirectly through the electricity that agriculture consumes,” according to ERS. “Emissions come from cropping activities that emit nitrous oxide, such as fertilizer application and manure storage and management, and enteric fermentation (a normal digestive process in animals), which produces methane.”

Industry (excluding agriculture) accounted for most of the nation’s GHG emissions in 2020 (30.3%) followed by transportation (27.3%).

Cattle futures ran out of steam Thursday amid higher Corn futures, softer cash fed cattle prices and continued volatility in outside markets. Perhaps the possibility of a U.S. railroad strike on Monday also played a role.

Feeder Cattle futures closed an average of $1.29 lower (87¢ to $1.90 lower).

Live Cattle futures closed an average of $1.33 lower through the front four contracts, then an average of 79¢ lower.

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

So far this week, live prices are steady in the Southern Plains at $137/cwt., steady to $4 lower in Nebraska at $144-$145 and $2-$5 lower in the western Corn Belt at $145. Dressed prices are $2 lower in Nebraska at $230 and $2-$4 lower in the western Corn Belt at $228-$230.

Choice Boxed beef cutout value was 30¢ lower through Thursday afternoon at $267.75/cwt. Select was 65¢ lower at $241.91/cwt.

A hotter, drier forecast helped lift Corn futures mostly 5¢ to 8¢ higher, except for 45¢ lower in spot Jly. However, declining oil prices weighed on Soybean futures, which were mostly 7¢ to 13¢ lower, except for 22¢ higher in spot Jly.

So far Friday, Cattle futures are trending lower.

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Major U.S. financial indices finished mixed on Thursday, with investors processing the unexpected inflation increase, and the real possibility of a more aggressive rate hike by the Federal Reserve.

The Dow Jones Industrial Average closed 143 points lower. The S&P 500 closed 11 points lower. The NASDAQ was up 4 points.

West Texas Intermediate Crude Oil futures on the CME closed 52¢ to $1.43 lower through the front six contracts.

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Consumers returned to spending more money for food away from home than at home last year, according to the Weekly Spotlight from USDA’s Economic Research Service (ERS).

Annual food spending (real or inflation-adjusted) in the United States increased every year since 1997, except in 2008, 2009 and 2020, according to ERS. Sales for food at home (FAH) and food away from home (FAFH) increased from 1997 to 2019. During the same period, real FAH spending increased at a slower rate (43.5%) than for FAFH (73.9%). In 2020, during the Coronavirus (COVID-19) pandemic, real total food expenditures declined 6.6% year over year.

“U.S. consumers’ food-spending patterns changed as efforts were made to limit the spread of COVID-19, which included stay-at-home orders,” ERS analysts explain. “FAFH spending decreased by 15.8% in 2020, while FAH spending increased by 3.9%. In 2021, real total food expenditures increased 12.2% from 2020. With increased household income during the economic recovery and relaxed safety measures around indoor dining and social distancing, FAFH spending increased by 21.1% in 2021 from the previous year and was the primary driver of the overall food spending increase.” FAH spending increased by 4% during the same period.

Strong cash demand continued to bolster Feeder Cattle futures, Wednesday, helping Live Cattle to continue edging higher.

Feeder Cattle futures closed an average of $1.17 higher. Live Cattle futures closed an average of 30¢ higher, except for unchanged in one contract.

Negotiated cash fed cattle trade was moderate in the Southern Plains and Nebraska through Wednesday afternoon, according to the Agricultural Marketing Service. Live prices were steady in the Southern Plains at $137/cwt. and steady to $4 lower in Nebraska at $144-$145, where dressed prices were $2 lower at $230.

Trade was limited on light demand in the western Corn Belt with too few transactions to trend. Last week, live prices were $145-$150 on a live basis and $232 in the beef.

Choice Boxed beef cutout value was 46¢ lower through Wednesday afternoon at $268.05/cwt. Select was 91¢ lower at $241.26/cwt.

Grain markets firmed Wednesday as traders retrenched following recent steep losses.

Corn futures closed mostly 7¢ to 8¢ higher. Soybean futures closed mostly 6¢ to 12¢ higher.

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Major U.S. financial indices closed lower Wednesday, pressured by higher inflation than the trade expected in the Consumer Price Index (CPI). It increased 1.3% month to month in June and was 9.1% higher over the last 12 months before seasonal adjustment. That was the largest 12-month increase since the period ending Nov. 1981.

The Dow Jones Industrial Average closed 208 points lower. The S&P 500 closed 17 points lower. The NASDAQ was down 17 points.

West Texas Intermediate Crude Oil futures on the CME closed 46¢ to 97¢ higher through the front six contracts.

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Despite sizzling hype the last few years surrounding plant-based alternatives to real meat, investor interest appears to be fizzling.

Consider that the share price for Beyond Meat^® — the publicly traded posterchild for alternative meat protein — was about $30.62 on Wednesday. A year earlier, it was approximately 76% more at $127.92.

According to the company’s financial results for the first quarter, net revenues increased 1.2% year over year to $109.5 million and the total volume of products sold increased 12.4%. But, net loss was $100.5 million compared to $27.3 million in the first quarter last year. That was before a couple of recent lawsuits filed against the company, alleging the company’s products contain significantly less protein than advertised and are not all-natural as claimed.

Elsewhere, in its first-quarter financials, Maple Leaf Foods — Canada’s largest prepared meats and poultry producer — told investors it no longer expects spectacular growth in its alternative meat category, but does anticipate slower, steadier growth.

According to data from the Good Food Institute and data company, SPINS, sales of plant-based meat alternatives in the United States last year total $1.4 billion, the same as a year earlier.

Perhaps the most logical conclusion is that minor consumer interest will continue for alternatives, but the gleam for investors has faded amid increasing competition within the category, alongside the lack of explosive sales growth and underwhelming profit potential. In other words, the alternative may not be going anywhere, but then again, it appears they really aren’t going to go anywhere.