WLI

Corn futures surged mostly 9¢ to 13¢ higher Friday, fueled by significantly lower yield estimates by the Pro Farmer Tour, compared to USDA’s most recent forecast. Soybean futures closed mostly 20¢ to 30¢ higher.

Resurgent Corn futures pressured Feeder Cattle an average of $1.63 lower, except for 67¢ higher in the newly minted back contract.

Generally softer cash trade pressured Live Cattle futures an average of 55¢ lower.

Negotiated cash fed cattle trade ranged from limited on light demand to mostly inactive on light demand through Friday afternoon, according to the Agricultural Marketing Service. There were a few live trades in the western Corn Belt at $147/cwt., but too few to trend.

For the week, live prices were steady to $1 higher in the Southern Plains at $142/cwt., generally steady to $1 lower in Nebraska at $145-$148 and $2 lower in the western Corn Belt at $146-$148. Dressed prices in Nebraska were $1-$2 lower at $232-$233. Dressed prices in the western Corn Belt the previous week were $234.

Through Thursday, the five-area direct average fed steer price was $2.22 lower on a live basis at $144.54. The average steer price in the beef was $1.15 lower at $232.88.

Choice Boxed beef cutout value was 78¢ lower Friday afternoon at $262.76/cwt. Select was $1.22 higher at $238.76/cwt.

Total estimated cattle slaughter last week was 17,000 head more than the previous week at 678,000 head. Year-to-date estimated total cattle slaughter of 22.1 million head was 262,000 head more (+1.2%) than the same time last year. Estimated year-to-date beef production of 18.2 billion lbs. was 175.3 million lbs. more (+0.97%) than the prior year.

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

Major U.S. financial indices plunged Friday, apparently in reaction to hawkish comments from Federal Reserve Chair Jerome Powell, regarding further interest rate hikes.

“Restoring price stability will take some time and requires using our tools forcefully to bring demand and supply into better balance,” Powell explained at the closely watched economic policy symposium in Jackson Hole, WY. “Reducing inflation is likely to require a sustained period of below-trend growth. Moreover, there will very likely be some softening of labor market conditions. While higher interest rates, slower growth, and softer labor market conditions will bring down inflation, they will also bring some pain to households and businesses. These are the unfortunate costs of reducing inflation. But a failure to restore price stability would mean far greater pain.”

The Dow Jones Industrial Average closed 1,008 points lower. The S&P 500 closed 141 points lower. The NASDAQ was down 497 points.

West Texas Intermediate Crude Oil futures on the CME closed mixed, from 34¢ lower to 54¢ higher through the front six contracts.

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

Total pounds of beef in freezers July 31 were 1% less than the previous month but 27% more year over year, according to USDA’s latest Cold Storage report. The 510.8 million lbs. of beef in cold storage were record high for the date.

“To put this in perspective, this is less than one week of federally inspected beef production,” says Andrew P. Griffith, agricultural economist at the University of Tennessee, in his weekly market comments. “However, the quantity of beef in cold storage in July 2022 exceeded the previous July’s quantity by 110 million lbs., and the quantity of beef in cold storage this year has not experienced its typical second-quarter decline. This simply means the marketplace started the second half of the year with more beef in cold storage than is typical and that quantity is expected to continue increasing through the fourth quarter of the year.”

If heifer and cow slaughter remain elevated, Griffith explains beef in cold storage could exceed 600 million lbs. by the end of the year. “This is not necessarily a bad thing as beef supplies will begin to tighten the second half of 2023,” Griffith says.

Frozen pork supplies were 2% less than the prior month but 20% higher year over year.

Total red meat supplies in freezers were 1% less than the previous month but 23% more than the same time last year.

Total poultry supplies on cold storage were 5% more than the previous month and 6% more than the prior year.

Feeder Cattle futures closed an average of 95¢ higher Thursday, strengthened by lower Corn futures.

Grain futures softened with likely profit taking. Corn futures closed mostly 4¢ to 8¢ lower. Soybean futures closed mostly 16¢ to 25¢ lower.

Live Cattle futures closed an average of 19¢ higher, except for an average of 15¢ lower in the front three contracts. 

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 to $1 higher in the Southern Plains at $142/cwt., generally steady to $1 lower in Nebraska at $145-$148 and $2 lower in the western Corn Belt at $146-$148. Dressed prices in Nebraska are $1-$2 lower at $232-$233. Dressed prices in the western Corn Belt last week were $234.

Choice Boxed beef cutout value was 71¢ higher Thursday afternoon at $263.54/cwt. Select was 8¢ lower at $237.54/cwt.

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

Major U.S. financial indices closed higher Thursday. Support included fewer weekly initial unemployment insurance claims than expected, as well as a slight improvement to previous-quarter GDP.

Initial unemployment insurance claims were 2,000 less week to week at 243,000 for the week ending Aug. 20, according to the U.S. Department of Labor.

As for domestic GDP, the U.S. Bureau of Economic Analysis revised its second quarter estimate to a decline of 0.6%, versus a decline of 0.9% in the initial estimate.

The Dow Jones Industrial Average closed 322 points higher. The S&P 500 closed 58 points higher. The NASDAQ was up 207 points.

West Texas Intermediate Crude Oil futures on the CME closed $1.98 to $2.37 lower through the front six contracts.

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

There were 34.9 million beef cows in the U.S. and Canada July 1, according to the semiannual United States and Canadian Cattle report from USDA’s National Agricultural Statistics Service (NASS). That was 812,000 head fewer (-2.3%) than a year earlier. The beef cow inventory was 750,000 head fewer (-2.4%) in the U.S. at 30.3 million head and 62,500 head fewer (-1.6%) in Canada at 3.7 million head.

Beef heifers retained for replacement in Canada of 622,100 head were 49,500 fewer (-7.4%) less than a year earlier. In the U.S., there were 150,000 head fewer (-3.5%) fewer beef replacements year over year at 4.1 million head.

Total cattle inventory in Canada of 12.3 million head was 355,000 head fewer (-2.8%) than a year earlier. Total U.S. inventory of 98.8 million head was 2.0 million head fewer (-2.0%). The combined total cattle inventory in the U.S. and Canada was 111.1 million head, which was 2.3 million head less (-2.1%) year over year.

Cattle futures edged lower Wednesday, with technical pressure and the week’s higher grain futures prices.

Live Cattle futures closed an average of 38¢ lower.

Feeder Cattle futures closed an average of 51¢ lower, except for unchanged to an average of 45¢ higher up front.

Negotiated cash fed cattle trade ranged from mostly inactive on light demand to slow on moderate demand with too few transactions to trend in any region, according to the Agricultural Marketing Service. There were a few live sales in Nebraska at $145/cwt. and a few in the western Corn Belt at $147. There were also some early dressed trades in Nebraska at $232-$233.

On Tuesday, live sales in the Southern Plains were steady to $1 higher at $142.

Last week, live prices were $146.00-$148.50 in Nebraska and $148-$150 in the western Corn Belt. Dressed prices were $234.

Choice Boxed beef cutout value was 3¢ higher Wednesday afternoon at $262.83/cwt. Select was $1.18 lower at $237.62/cwt.

Grain futures softened Wednesday with likely profit taking from the recent price surge.

Corn futures closed mostly 1¢ to 2¢ lower.

Soybean futures closed mostly 7¢ to 11¢ lower.

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

Major U.S. financial indices shifted gears and closed a touch higher Wednesday with support including higher energy prices. 

The Dow Jones Industrial Average closed 59 points higher. The S&P 500 closed 12 points higher. The NASDAQ was up 50 points.

West Texas Intermediate Crude Oil futures on the CME closed 80¢ to $1.528 higher through the front six contracts.

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

While inflation is more moderate for food away-from-home (7.6% versus a year ago) compared to food-at-home (13.1% versus a year ago), the typical away-from-home eating occasion still costs 3.4 times more than in-home food sourced from retail, according to analysts with the NPD Group (NPD) and Information Resources, Inc. To offset rising food costs, they say consumers are bargain hunting when grocery shopping, eating more meals at home and cutting back on restaurant visits.

“With inflation hitting 8.5% in July, it’s no surprise that consumers are trading down to lower-priced options and opting for more value, especially when dining out,” says Krishnakumar (KK) Davey, president of CPG and Retail Thought Leadership for IRI and NPD. “While the pandemic and recent inflationary pressures shifted demand, restaurants and foodservice outlets offering value, convenience and at-home indulgence are top of mind for consumers and will continue to grow.”

“Even with the impact of elevated grocery prices, dining out is still much more expensive than eating at home,” explains David Portalatin, senior vice president and industry advisor for Food and Foodservice for The NPD Group. “As we head into 2023, restaurant recovery will be slow and steady, as traffic begins to return to pre-pandemic levels. Current demand suggests that culinary trends are shifting to incorporate more bold flavors inspired by global and regional influences.”

The nearly $1.5 trillion at-home and away-from-home food market is forecast to grow around 8% in 2022, with at-home food (8.7% sales growth versus a year ago) outpacing away-from-home (6% versus a year ago), according to inaugural IRI and NPD inaugural joint research. It offers the first-ever comprehensive view of the Complete Food™ market, examining how consumers buy and consume food at home, use restaurants and foodservice outlets and uncovers new insights about consumers’ trade-offs to save money and splurge in the current inflationary environment. The research forecasts the Complete Food market to grow by 3-5% in 2023.

The grain complex roared ahead Tuesday, fueled by mounting concerns about yields based on recent crop ratings and private-company assessments (see Crop Progress below).

Corn futures closed 22¢ to 26¢ higher through Jly ‘23 and then mostly 13¢ to 16¢ higher.

Soybean futures closed mostly 17¢ to 25¢ higher.

Feeder Cattle futures sagged beneath the weight of sharply higher grain futures, closing an average of $1.71 lower (50¢ to $2.25 lower).

Live Cattle futures edged an average of 26¢ higher, except for unchanged in two contracts, supported by recently stronger cash prices and the aggressive packing pace.

Choice Boxed beef cutout value was $1.72 lower Tuesday afternoon at $262.80/cwt. Select was 44¢ higher at $238.80/cwt.

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

There were some live sales in the Southern Plains steady to $1 higher at $142/cwt. There were a few live trades in the western Corn Belt at $148 but too few to trend.

Last week, live prices were $146.00-$148.50 in Nebraska and $148-$150 in the western Corn Belt. Dressed prices were $234.

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

Major U.S. financial indices extended losses Tuesday but firmed as investors sift through concerns about global economic growth and inflation. 

The Dow Jones Industrial Average closed 154 points lower. The S&P 500 closed 9 points lower. The NASDAQ was fractionally lower.

West Texas Intermediate Crude Oil futures on the CME closed $2.56 to $3.38 higher through the front six contracts. Support included a slightly weaker dollar and suggestions the previous day that OPEC might cut production.

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

National pasture and range conditions the week ending Aug. 21 continued to deteriorate compared to the prior year, according to the latest USDA Crop Progress report.

23% of pasture and range was rated as Good (20%) or Excellent (3%), which was 2% less than a week earlier and 6% less than a year earlier. Conversely, 49% was rated as Poor (24%) or Very Poor (25%), which was 2% more than a week earlier and 6% more than a year earlier.

97% of corn was silking, which was 3% less than last year and 2% less than the five-year average. 75% was in the dough stage, compared to 83% last year and 79% for average. 31% was dented, which was 7% less than last year and 4% less than the five-year average. 4% was mature, the same as last year and the average. 55% was rated as Good (43%) or Excellent (12%), which was 2% less than the prior week and 5% less than a year earlier. 18% was rated Poor (11%) or Very Poor (7%) versus 16% a week earlier and 14% a year earlier.

97% of soybeans were blooming, which was the same as last and the average. 84% were setting pods, compared to 87% last year and 86% for average. 57% were rated as Good (47%) or Excellent (10%) which was 1% less than the previous week but 1% more than the prior year. 13% were rated Poor (9%) or Very Poor (4%), which was 2% more than the previous week but 3% less than the prior year.

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

Last week, live prices were $141-$142/cwt. in the Southern Plains, $146.00-$148.50 in Nebraska and $148-$150 in the western Corn Belt. Dressed prices were $234.

The five-area direct weighted average fed steer price last week was $146.88/cwt. on a live basis, which was $2.49 more than the previous week. The weighted average price in the beef was $4.30 higher at $234.23.

Choice Boxed beef cutout value was 24¢ higher Monday afternoon at $264.52/cwt. Select was 42¢ higher at $238.36/cwt.

Apparently, bullish supply fundamentals were enough to help Cattle futures mainly fade the bearish Cattle on Feed report, especially given higher Corn futures prices.

Live Cattle futures closed mixed, from an average of 42¢ lower to an average of 22¢ higher.

Feeder Cattle futures closed an average of 16¢ lower, except for unchanged to an average of 20¢ higher in the back two contracts.

Grain and Soybean futures gained more traction with concerns about drought in China.

Corn futures closed mostly 5¢ to 7¢ higher.

Soybean futures closed mostly 28¢ to 31¢ higher.

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

Major U.S. financial indices closed sharply lower Monday amid growing concerns about global economic growth and how more interest rate hikes will impact domestic growth.

The Dow Jones Industrial Average closed 643 points lower. The S&P 500 closed 90 points lower. The NASDAQ was down 323 points.

West Texas Intermediate Crude Oil futures on the CME closed 8¢ to 54¢ lower through the front six contracts.

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

Higher-trending feeder cattle prices could significantly reduce or offset the typical seasonal decline in calf prices this fall, says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly market comments.

Peel notes 750 lb. steers at Oklahoma auctions reached their highest levels for the year in mid-August, while 500 lb. steer calves revisited the highs of mid-March. Supplies will continue to tighten, given cow liquidation longer term and increased lightweight feedlot placements in the near term.

“Increased lightweight placements, especially since May, likely includes fall calves marketed right off the cow, early-weaned spring calves and summer stockers marketed ahead of schedule,” Peel says. “Pasture and range conditions are currently rated at 52% poor/very poor, the worst level for this time of year since 2012. It appears that the supply of calves and feeder cattle available this fall will likely be significantly smaller because many cattle have already moved to market.”

For perspective, Peel explains feedlot placements the past six months of 10.91 million head were 0.8% more than the same time in 2021.

“In those six months, placements weighing under 700 lbs. were up 3.5% year over year, while placements over 700 lbs. were down 0.7%. All of this suggests that feedlots are somewhat back-loaded with relatively tighter numbers finishing in the August – October period and recent lightweight placements finishing in November and later,” Peel says.

As noted in the last issue of Cattle Current, placements in July of 1.77 million head were 32,000 head more (+1.8%) than a year earlier and about 3% more than expectations, according to the monthly Cattle on Feed report.

Cattle on feed Aug. 1 of 11.22 million head were 150,000 head more year over year (+1.4%), which was 0.6% more than expectations ahead of the report. Inventory was the second largest for the date since the data series began in 1996.