WLI

Feeder Cattle futures rallied back Monday, closing an average of $1.63 higher (65¢ higher at the back to $2.20 higher). They recovered the previous session’s losses, helped along by lower Corn futures and carried Live Cattle along.

Live Cattle futures an average of an average of 47¢ higher, also helped by higher wholesale values.

Choice Boxed beef cutout value was $3.70 higher Monday afternoon at $268.68/cwt. Select was 22¢ higher at $245.24.

Corn futures closed 18¢ to 20¢ lower through new-crop contracts on the positive weather outlook.

Higher crude oil and vegetable oil prices helped boost Soybean futures mostly 5¢ to 8¢ higher through Jly ‘23 

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 $137-$138/cwt. in the Southern Plains, $145-$148 in the Northern Plains and $145-$150 in the western Corn Belt. Dressed prices were $234-$240.

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Major U.S. financial indices closed lower Monday as investors appeared to await further direction from weekly data before taking the recent rally another step.

The Dow Jones Industrial Average closed 62 points lower. The S&P 500 closed 11 points lower. The NASDAQ was down 83 points.

West Texas Intermediate Crude Oil futures on the CME closed $1.51 to $1.95 higher through the front six contracts.

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Given another month of record-large on-feed numbers, Derrell Peel, Extension livestock marketing specialist at Oklahoma State University says, “It is reasonable to ponder why feedlots have maintained record inventories this year despite declining cattle numbers since 2019. 

In his weekly market comments, he explains, generally speaking, expectations would have pegged peak feeder supplies in 2019 and peak feedlot production in 2020.

Then came delays due to the pandemic, less heifer retention —more heifers directed to the feedlot — stemming from cyclical herd contraction and then drought. Likewise, placement weights in recent months suggest feedlots have been pulling available supplies forward.

“It will take much of the remainder of the year for feedlots to work through the current inventory and we can’t be sure what additional impacts the drought may have in the coming months,” Peel says. He explains, we may continue to see feedlot placements pulled ahead and more heifers shifted into feedlots for a period, but it is inevitable that cattle supplies will tighten significantly in the coming months and feedlot inventories will fall.  The longer it takes to see that process begin, he says the more sudden and dramatic it will be. Although the timing is always tricky, Peel says the latest placement data may indicate that process has begun.

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

For the week, live prices were $3-$4 lower in the Southern Plains at $137/cwt., steady in Colorado at $145, steady to $5 higher in Nebraska at $145-$150 and $2-$5 higher in the western Corn Belt at $147-$150. Dressed prices were $4-$8 higher at $234-$238.

Through Thursday, the five-area direct average fed steer price was 77¢ higher on a live basis at $144.50/cwt. The average price in the beef was $5.18 higher at $234.91.

Estimated total cattle slaughter last week of 666,000 head was 1,000 head fewer than the previous week but 6,000 head more than the same week last year. Estimated year-to-date total cattle slaughter of 16.24 million head was 159,000 more than last year. Estimated year-to-date beef production of 13.45 billion lbs. was 127.10 million lbs. more than the same time last year.

Live Cattle futures closed narrowly mixed, from an average of 26¢ lower to an average of 16¢ higher.

Choice Boxed beef cutout value was 32¢ higher Friday afternoon at $264.98/cwt. Select was 8¢ higher at $245.02.

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Major U.S. financial indices rallied higher Friday. That was despite the closely watched University of Michigan Consumer Sentiment Index declining 0.2 points to a record low 50.0. Apparently, investors were emboldened by a slight easing of long-term inflation expectations within the report.

The Dow Jones Industrial Average closed 823 points higher. The S&P 500 closed 116 points higher. The NASDAQ was up 375 points.

West Texas Intermediate Crude Oil futures on the CME closed $1.70 to $3.35 higher through the front six contracts.

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On the surface, markets could view the latest monthly Cattle on Feed report as neutral to slightly bearish with another record number of cattle on feed but fewer placements than analyst expectations ahead of the report.

Beneath the surface, some will likely question the accuracy of on-feed numbers continuing the record pace when cash markets in the North suggest cattle feeders are pulling green cattle forward.

Feedlots with 1,000 head or more capacity placed 1.87 million head on feed in May, which was 41,000 head fewer (-2.1%) than last year and 1.9% less than expectations ahead of the report.

In terms of placement, weights, 34% went on feed weighing 700 lbs. or less, 50% weighing 700-899 lbs. and 16% weighing 900 lbs. or more.

Marketings in May of 1.91 million head were 44,000 head more (+2.4%) than last year.

Cattle on feed June 1 of 11.70 head was 142,000 head more (+1.2%) than the previous year and 0.3% less than pre-report expectations. As mentioned, the number was record large for the date.

Feeder Cattle futures gained Thursday, closing an average of $1.11 higher and supported by the selloff in Corn futures, which closed 26¢ to 38¢ lower. Soybean futures closed 55¢ to 61¢ lower through Aug ’23 and then mostly 41¢ to 45¢ lower. Grain futures were pressured by the crop-friendly weather forecast in the Corn Belt and an overall meltdown in commodities.

Despite higher cash prices in the North, lower wholesale beef values and looming larger supplies helped pressure Live Cattle an average of 96¢ lower.

Premiums for fed cattle up north continued to climb Thursday.

Negotiated cash fed cattle trade and demand were moderate in Nebraska on Thursday with live prices steady to $3 higher at $145-$148/cwt. Dressed prices were $4 higher at $234.

Trade in the western Corn Belt was slow to moderate with moderate demand. Live prices were $2-$3 higher than the previous day at $150. Dressed prices the previous day were $8-$10 higher than last week at $238-$240.

In Colorado, trade was slow on light demand with live prices steady at $145.

Trade in Kansas was slow on light demand. Live prices were steady to $4 lower than previous day at $137. Prices in the region last week were $140.

Trade was mostly inactive on light demand in the Texas Panhandle. So far this week, prices are mainly $3 lower at $137.

The average dressed steer weight for the week ending June 11 was 879 lbs., which was 3 lbs. less than the prior week and year, according to the USDA Actual Slaughter Under Federal Inspection report. The average dressed heifer weight of 814 lbs. was the same as the previous week but 3 lbs. heavier than the prior year. Total fed cattle slaughter of 528,748 head was 5,089 head fewer than the same week last year. Beef production of 542.8 million lbs. was 4 million lbs. less year over year.

Choice Boxed beef cutout value was $1.91 lower through Thursday afternoon at $264.66/cwt. Select was $1.05 lower at $244.94.

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Major U.S. financial indices closed higher Thursday.

The Dow Jones Industrial Average closed 194 points higher. The S&P 500 closed 35 points higher. The NASDAQ was up 179 points.

West Texas Intermediate Crude Oil futures on the CME closed $1.92 to $3.27 lower through the front six contracts, on concerns of slowing economic growth.

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Total pounds of beef in freezers May 31 were 2% less than the previous month but 25% more than last year, according to the latest USDA Cold Storage report. The total of 519.8 million lbs. was record large for the month.

Frozen pork supplies were up 2% month over month and 17% higher year over year.

Total red meat supplies in freezers were slightly less than the previous month but were 20% more than last year.

Total frozen poultry supplies were 2% more than the previous month and 1% more than last year.

Negotiated cash fed cattle prices were mostly $2 lower on a live basis in Kansas through Wednesday afternoon at $138/cwt. That was on slow trade and moderate demand, according to the Agricultural Marketing Service. Prices were $2 lower to $2 higher at $138 in the Texas Panhandle on Tuesday.

Elsewhere, trade ranged from limited on light demand to mostly inactive on very light demand.

Last week, live prices were $145/cwt. in the Northern Plains and western Corn Belt. Dressed prices were $230.

Softer cash prices, wavering outside markets and anemic technical support pressured Cattle futures.

Feeder Cattle futures closed an average of $1.38 lower.   

Live Cattle futures closed an average of $1.26 lower.

Choice Boxed beef cutout value was 99¢ lower through Wednesday afternoon at $266.57/cwt. Select was 71¢ lower at $245.99.

Corn and Soybean futures mainly extended losses, pressured by crop progress and lower Crude Oil. 

Corn futures closed 7¢ lower through new crop contracts and then 1¢ to 4¢ lower.

Soybean futures closed 30¢ to 34¢ lower through Jly ’23 and then mostly 20¢ to 27¢ lower.

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Major U.S. financial indices closed little changed Wednesday.

The Dow Jones Industrial Average closed 47 points lower. The S&P 500 closed 4 points lower. The NASDAQ was down 16 points.

West Texas Intermediate Crude Oil futures on the CME closed $2.79 to $3.35 lower through the front six contracts, on concerns of slowing economic growth.

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The U.S. Senate Agriculture Committee advanced two bills on Wednesday related to the cattle markets: the Meat and Poultry Special Investigator Act of 2022 and the Cattle Price Transparency Act of 2022.

The National Cattlemen’s Beef Association (NCBA) once again voiced opposition to both.

Among other things, the Cattle Transparency Act would mandate minimum levels of regional cash fed cattle trade, which would restrict use of the alternative marketing arrangements producers utilize to reduce risk, differentiate carcass value and earn premiums or discounts, accordingly.

“The U.S. cattle industry is home to one of the most complex set of markets in the world. Rather than embrace the freedom of that marketing system, Congress is instituting a one-size-fits-all policy that will hurt cattle producers’ livelihoods,” says Ethan Lane, NCBA vice president of government affairs. “Cattle markets are finally returning to normal after pandemic-fueled uncertainty, but these heavy-handed mandates will stifle innovation and limit marketing opportunities.”

The Meat and Poultry Special Investigator Act of 2022 would create a new special investigator position at the U.S. Department of Agriculture.

“NCBA supports oversight of the market, but creating a duplicative, bureaucratic new special investigator role is the wrong approach. Congress should be focused on the issues that are hurting producer profitability now — rising food, fuel, and feed prices,” Lane says.

Feeder Cattle futures extended gains Tuesday, closing an average of $2.37 higher on Corn futures that were 23¢ to 29¢ lower through Jly ’23, pressured by a favorable short-term weather outlook and positive crop progress and conditions. Soybean futures closed 20¢ to 28¢ lower through Mar ’23.  

Live Cattle hovered ahead of the week’s cash direction closing an average of 19¢ lower, except for an average of 35¢ higher in the back two contracts.

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 $145/cwt. in the Northern Plains and western Corn Belt. They were $140 in Kansas and $136-$140 in the Texas Panhandle. Dressed prices were $230.

Choice Boxed beef cutout value was $1.06 higher through Tuesday afternoon at $267.56/cwt. Select was 31¢ higher at $246.70.

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Major U.S. financial indices closed sharply higher Tuesday, perhaps a relief rally after last week’s steep losses.

The Dow Jones Industrial Average closed 641 points higher. The S&P 500 closed 89 points higher. The NASDAQ was up 270 points.

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Creighton University’s Rural Mainstreet Index (RMI) for May declined to the lowest level since Feb. 2021 but remained above growth neutral for the eighteenth consecutive month, according to the monthly survey of bank CEOs in rural areas of a 10-state region dependent on agriculture and/or energy.

Among highlights from the recent report: 

• Escalating costs of farm inputs pushed borrowing up to its highest reading since May 2020.
• On average, cash rents rose 9.6% to $250 per acre for non-irrigated crop land over the past 12 months.
• Approximately 40% of bankers expect 2022 farm income to be greater than 2021 farm income, while 25.9% of bankers expect 2022 farm income to be less than last year’s farm income.
• The depreciation of the U.S. dollar against the Mexican peso has been a stimulus to exports to Mexico, the top destination for the region’s farm products.