WLI

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

For the week, live prices were $2 higher in the Southern Plains at $142/cwt., 50¢ to $1 higher in Nebraska at $145.00-$148.50 and $2 higher in the western Corn Belt at $148-$150. Dressed prices were $4-$5 higher at $234.

Choice Boxed beef cutout value was 11¢ lower Friday afternoon at $264.28/cwt. Select was 47¢ higher at $237.94/cwt.

Estimated total cattle slaughter last week of 661,000 head was 14,000 head more than the previous week. Estimated total year-to-date total cattle slaughter of 21.4 million head was 239,000 head more (+1.1%) year over year. Estimated year-to-date beef production of 17.65 billion lbs. was 156.1 million lbs. (+0.9%) more.

Stronger cash prices helped Live Cattle edge an average of 22¢ higher on Friday, except for an average of 6¢ lower in two contracts. Week to week they closed an average of 49¢ higher (17¢ to $1.37 higher), except for an average of 7¢ lower in two contracts.

Resurgent Corn futures prices and likely defensiveness ahead of the Cattle on Feed report pressured Feeder Cattle futures an average of 46¢ lower on Friday, except for 12¢ higher in the back contract. Week to week, they closed an average of $1.66 higher (77¢ to $2.32 higher).

Starting the week, traders will likely try to balance recent rains and improved fall grazing prospects in the Southern Plains with Friday’s bearish Cattle on Feed report (see below).

Grain and Soybean futures continued to gain Friday but remained lower week to week with concerns about economic growth in China, as well as the stronger U.S. Dollar.

Corn futures closed 6¢ to 8¢ higher through Sep ‘23 on Friday and then 1¢ to 4¢ higher. They closed an average of 16’6¢ lower through the front six contracts week to week on Friday.

Soybean futures closed mixed, mostly 1¢ lower to 1¢ higher on Friday. Week to week they closed an average of 45’7¢ lower through the front six contracts.

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Major U.S. financial indices closed lower Friday. Pressure appeared to be heightened concern over future interest rate hikes and profit taking ahead of the weekend.

The Dow Jones Industrial Average closed 292 points lower. The S&P 500 closed 55 points lower. The NASDAQ was down 260 points.

West Texas Intermediate Crude Oil futures on the CME closed 27¢ to 56¢ higher through the through the front six contracts.

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Markets will likely view Friday’s monthly Cattle on Feed report as bearish, with July placements and cattle on feed Aug. 1 (feedlots with 1,000 head or more capacity) higher than pre-report expectations.

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.

In terms of placements, 23.2% went on feed weighing less than 600 lbs., 16% weighing 600-699 lbs., 23% weighing 700-799 lbs., 23% weighing 800-899 lbs., 11% weighing 900-999 lbs and 4% weighing 1,000 lbs. or more.

Marketings in July of 1.82 million head were 74,000 head fewer (-4.0%) less than last year, which was in line with estimates ahead of the 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.

Negotiated cash fed cattle prices continued $2 higher Thursday at $142/cwt. in the Southern Plains and $148-$150 in the western Corn Belt. That was on slow trade and moderate demand, according to the Agricultural Marketing Service. There were a few dressed trades in the western Corn Belt $5 higher than last week at $234, but too few to trend.

Trade was also slow on moderate demand in Nebraska. There were some early live sales at $146-$148 and a few in the beef at $234, but too few to trend. Last week, prices there were at $144-$148 and $229-$230.

Choice Boxed beef cutout value was 5¢ higher Thursday afternoon at $264.39/cwt. Select was 42¢ lower at $237.47/cwt.

Cattle futures softened Thursday amid over-bought conditions and likely positioning ahead of Friday’s Cattle on Feed report. 

Live Cattle futures closed an average of 58¢ lower with most pressure in front contracts.

Feeder Cattle futures closed an average of $1.10 lower, from 10¢ lower at the back to $1.87 lower.

Grain and Soybean futures continued to gain Thursday, supported by international weather concerns for corn and higher oil prices for soybeans.

Corn futures closed mostly 3¢ to 8¢ higher.

Soybean futures closed mostly 12¢ to 16¢ higher.

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Major U.S. financial indices closed marginally higher Thursday.    

The Dow Jones Industrial Average closed 18 points higher. The S&P 500 closed 9 points higher. The NASDAQ was up 27 points.

West Texas Intermediate Crude Oil futures on the CME closed $1.95 to $2.42 higher through the through the front six contracts.

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USDA’s Economic Research Service (ERS) increased projected feeder steer prices (750-800 lbs., Oklahoma City) based on recent price strength, in the latest monthly Livestock, Dairy and Poultry Outlook.

Based on anticipated firm feedlot demand in second-half 2022 and current price data, the feeder steer price was forecast $3 higher in the third quarter at $171 and $2 higher in the fourth quarter at $173 for an annual average of $164.60. Prices are forecast at $169 and $186 in the first and second quarters of next year, respectively, with an annual average of $199.25.

ERS analysts point out the Oklahoma City feeder steer price averaged $169.26/cwt. in July, up more than $16 from last year.

Cattle futures extended gains Wednesday, buoyed by strong cash feeder cattle prices and the growing prospects of higher money for cash fed cattle this week.

Feeder Cattle futures closed an average of $1.60 higher. Live Cattle futures edged an average of 36¢ higher.

Negotiated cash fed cattle trade was limited on light demand through Wednesday afternoon, according to the Agricultural Marketing Service. Although too few to trend, there were some live trades in the Southern Plains at $141/cwt. and a few in the western Corn Belt at $147.

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.

On Wednesday, slaughter steers and heifers sold steady to $2 higher at Sioux Falls Regional in South Dakota. At Tama Livestock in Iowa, Choice slaughter steers and heifers sold $3.50-$4.50 higher amid a light offering.

Choice Boxed beef cutout value was $1.10 lower Wednesday afternoon at $264.34/cwt. Select was $1.23 lower at $237.89/cwt.

Grain and Soybean futures firmed Wednesday.

Corn futures closed fractionally higher to 4¢ higher through Jly ‘23 and then 2¢ to 3¢ lower.

Soybean futures closed mostly 6¢ to 9¢ higher through Aug. ’23 and then mostly 1¢ higher.

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Major U.S. financial indices closed lower Wednesday, as investors took a breather from the recent rally. News for the day included mixed quarterly earnings reports for retailers.    

The Dow Jones Industrial Average closed 171 points lower. The S&P 500 closed 31 points lower. The NASDAQ was down 164 points.

West Texas Intermediate Crude Oil futures on the CME closed $1.24 to $1.58 higher through the through the front six contracts.

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Plenty of eyes will focus on July feedlot placements in the monthly Cattle on Feed report due out Friday.

“So far, 2022 feedlot placements are averaging 0.4% above 2021. However, when you remove February (Feb. 2021 winter storm), 2022 feedlot placements are averaging 1.5% below 2021,” says James Mitchell, livestock economist at the University of Arkansas, in the latest Cattle Market Notes Weekly. “In June, placements were 2.5% lower year over year. July 1 cattle on feed totaled 11.3 million head or 0.4% above July 1, 2021. Drought-induced placements in July could hold Aug. 1 cattle on feed numbers close to or slightly above August 2021 feedlot inventories.”

Seasonally speaking, Mitchell explains larger placements of feeder cattle weighing more than 700 lbs. usually come in August and September. He notes national feeder and stocker cattle auction receipts in July of 529,000 head were 1.2% less year over year.

“While total auction receipts are lower for July, the breakout by weight group suggests that we are seeing cattle come off summer pasture earlier than normal,” Mitchell says. “Last month 63% of feeder cattle auction receipts were for cattle weighing over 600 lbs. Cattle weighing over 600 lbs. accounted for 58% of auction receipts in July 2021. Auction receipt totals and these percentages imply that we sold 25,421 more head of heavy feeder cattle last month than in July 2021…The longer we delay the decline in feedlot inventories, the more significant it will become.”

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.”