WLI

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

Last week, live prices ended up $3-$4 higher in the Southern Plains at $140/cwt., $2-$4 higher in the Northern Plains at $145 and mostly steady to $4 higher in the western Corn Belt at $140-$146. Dressed prices were $4-$5 higher at $230.

The five-area direct fed steer price through Thursday was $3.21 higher at $143.73. The average steer price in the beef was $3.71 higher at $229.73.

Estimated total cattle slaughter last week of 667,000 head was 7,000 fewer than the previous week but 3,000 head more than the same week last year. Year-to-date total estimated cattle slaughter of 15.58 million head was 156,000 more (+1.0%) than the same period last year. Total estimated year-to-date beef production of 12.92 billion lbs. was 130.5 million lbs. more (+0.8%).

Choice Boxed beef cutout value was 90¢ lower through Friday afternoon at $266.26/cwt. Select was $1.15 higher at $246.53.

Cattle futures continued to gain Friday with the week’s higher cash prices, aggressive fed cattle slaughter and weaker Corn futures.

Feeder Cattle futures closed an average of $1.32 higher (40¢ higher at the back to $1.65 higher in spot Aug). 

Live Cattle futures closed an average of 38¢ higher.

Corn futures closed mostly 4¢ to 7¢ lower.

Soybean futures closed mostly 5¢ to 7¢ lower.

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Major U.S. financial indices closed mixed Friday after a volatile back-and-forth session.

The Dow Jones Industrial Average closed 38 points lower. The S&P 500 closed 8 points higher. The NASDAQ was up 152 points.

West Texas Intermediate Crude Oil futures on the CME tumbled Friday, $6.28 to $8.03 lower in the front six contracts, presumably on fears about economic slowdown as central banks around the work raise interest rates and inflation continues unabated.

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“Drought and pasture conditions improved from last month, but the situation is still very poor compared to last year and previous years,” say analysts with USDA’s Economic Research Service, in the recent monthly Livestock, Dairy and Poultry Outlook. They explain, drought and increased input costs are likely much of the impetus behind the 15% year-over-year increase in beef cow slaughter so far this year.

“Based on weekly actual slaughter data reported by the Agricultural Marketing Service through May 28, the pace of beef cow slaughter was almost 10,000 head per week on average above last year for the first four weeks of May,” ERS analysts say. “Based on the pace of beef cow slaughter to date, the anticipated slaughter of beef cows is raised in the second and third quarters of 2022. However, that should leave fewer beef cows available for slaughter in the fourth quarter.”

At the same time, those analysts note weekly fed cattle slaughter is finally back to pre-COVID levels, reducing the need for heavy Saturday slaughter.

“Further, weekday highs have hit thresholds not seen since 2013. Subsequently, it appears that limits to packers’ processing capacity is improving to a point where the fed cattle market is emerging from what may have restricted the market these past two years,” ERS analysts say.

Grain and soybean futures rallied Thursday with extreme heat and dry conditions forecast for the Corn Belt.

Corn futures closed 11¢ to 14¢ higher through Jly ‘23, and then mostly 3¢ to 5¢ higher.

Soybean futures closed mostly 14¢ to 19¢ higher.

Stouter corn prices helped pressure Feeder Cattle futures an average of $1.66 lower.

Live Cattle futures mostly held their ground, supported by stronger cash prices, closing an average of 30¢ lower, except for unchanged to an average of 13¢ higher in three contracts.

Negotiated cash fed cattle trade was slow on light demand in all major cattle feeding regions through Thursday afternoon, according to the Agricultural Marketing Service. Live sales were $3 higher than last week in Kansas at $140 and $2-$4 higher than Tuesday in the Texas Panhandle at $140.

Elsewhere, for the week, live prices are $2-$4 higher in the Northern Plains at $145 and $3 higher in the western Corn Belt at $144-$146. Dressed prices are $4-$5 higher at $230.

Choice Boxed beef cutout value was $1.06 lower through Thursday afternoon at $267.16/cwt. Select was 30¢ lower at $267.16.

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Major U.S. financial indices closed sharply lower Thursday on more data indicating slowing economic growth.

Privately owned housing starts in May of 1.55 million were 14.4% less than the revised April estimate, according to the U.S. Census Bureau. That was significantly more bearish than the trade expected and 3.5% less year over year.

The Dow Jones Industrial Average closed 741 points lower. The S&P 500 closed 123 points lower. The NASDAQ was down 453 points.

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USDA’s Economic Research Service (ERS) lowered the expected average feeder steer price for the second quarter $2 to $157/cwt., based on recent price data. In the latest Livestock, Dairy and Poultry Outlook, ERS forecast the average feeder steer price (basis 750-800 lbs., Oklahoma City) at $166 in the third quarter, and $170 in the fourth quarter for an annual average price of $162.76. Next year, the first-quarter price is projected at $170 and the annual average price is forecast to be $198.25.

As for fed steers, ERS analysts note the weekly five-area average price peaked the first part of May at $143.42. Although prices declined since then, they explain the weekly average price of $138.07 for the week ending June 5 was $18 higher year over year.

“A generally faster pace of slaughter from packers may keep fed steer prices relatively stable for the remainder of the second quarter,” ERS analysts say. “Based on the May 2022 average monthly price of $141.34/cwt. and current daily price data, the 2022 fed steer price is forecast unchanged at $140.10. The 2023 fed steer price is also unchanged from last month at $153.00.”

ERS also left forecast beef production for this year unchanged.

“However, current poor forage conditions and high operating costs continue to push producers’ beef cow culling rates up, and calves are being placed on feed at a faster-than-expected pace,” say ERS analysts. “Higher anticipated cow slaughter and higher expected second-half 2022 fed cattle marketings more than offset lower expected carcass weights, resulting in a marginal increase in 2022 production to 27.9 billion pounds.”

ERS projects next year’s beef production to be 7% less.

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

So far this week, live prices are steady to $2 higher in the Texas Panhandle at $136-$138/cwt., $4 higher in Colorado at $145, $2-$4 higher in Nebraska at $145 and $2-$3 higher in the western Corn Belt at $144-$145. Dressed prices are $4-$5 higher at $230. Live prices in Kansas last week were $137-$138.

Cash price strength helped boost Cattle futures.

Feeder Cattle futures closed an average of $1.22 higher (55¢ to $1.97 higher).

Live Cattle futures closed an average of $1.22 higher (20¢ higher toward the back to $2.72 higher toward the front).

Choice Boxed beef cutout value was $1.22 lower through Wednesday afternoon at $268.22/cwt. Select was $1.14 lower at $245.68.

Corn futures closed mostly fractionally mixed, except for 5¢ higher in the spot month.

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

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Major U.S. financial indices closed higher Wednesday after the Fed increased the federal lending rate by 75 basis points, as was widely expected.

The Dow Jones Industrial Average closed 303 points higher. The S&P 500 closed 54 points higher. The NASDAQ was up 270 points.

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Bipartisan legislation passed by the U.S. House of Representative this week — headed to the White House for President Biden’s signature — aims to ease ongoing ocean transportation and supply chain congestion.

If signed into law, as expected, the Ocean Shipping Reform Act would strengthen the authority of the Federal Maritime Commission (FMC) by providing it with new tools to help level the playing field for American exporters and counteract anticompetitive behavior. The bill would also help FMC more efficiently resolve disputes between ocean carriers and shippers, while also taking actions at the U.S. Department of Transportation to alleviate strain across the supply chain.

“Foreign flagged ocean carriers are playing games with American agriculture exports and our bill puts an end to it,” says U.S. Rep. Dusty Johnson (R-SD) Johnson. “The Ocean Shipping Reform Act is the strongest fix to our maritime laws in a generation. Americans are facing record inflation, our bill isn’t a silver bullet, but help is on the way.”

“In these times of rising input costs, it has never been more important to maximize the value of our agricultural products, and the best way to do that is to ensure access to the international marketplace. This legislation takes important steps forward in improving the shipping services available to U.S. exporters,” according to a statement from the U.S. Meat Export Federation.

“The common-sense improvements made by this bill will provide the FMC with the tools necessary to address unreasonable practices by ocean carriers and hold them accountable for any bad-faith efforts that disenfranchise American producers, including those throughout South Dakota, who feed the world,” says U.S. Sen. John Thune (R-SD).

The Ocean Shipping Reform Act will:

• Prohibit ocean carriers from unreasonably refusing cargo space accommodations for U.S. exports and from discriminating against U.S. exporters;
• Promote transparency by requiring ocean common carriers to report to the FMC each calendar quarter on total import/export tonnage and twenty-foot equivalent units (loaded/empty) per vessel that makes port in the United States;
• Authorize the FMC to self-initiate investigations of ocean common carrier’s business practices and apply enforcement measures, as appropriate; and
• Establish new authority for the FMC to register shipping exchanges to improve the negotiation of service contracts.

Packers showed their hand early and came out swinging in Nebraska Tuesday where live prices were $4-$6 higher at $145-$149/cwt. That was on slow trade and light demand. Dressed trade there last week was $225-$226.

Elsewhere, trade was limited on light demand with too few transactions to trend, according to the Agricultural Marketing Service. However, early prices were steady to higher.

Last week, live prices were $136-$137 in the Southern Plains, $141 in Colorado and $141-$143 in the western Corn Belt, where dressed trade was $225.

Choice Boxed beef cutout value was $1.10 lower through Tuesday afternoon at $269.44/cwt. Select was 63¢ lower at $246.82.

Cattle futures closed little changed Tuesday but firmed following the previous day’s decline.

Feeder Cattle futures closed an average of 14¢ lower, except for an average of 8¢ higher in two contracts.

Live Cattle futures closed an average of 42¢ higher (7¢ to $1.20 higher).

Corn futures closed fractionally lower to 1¢ lower through Jly ‘23 and then mostly 5¢ lower.

Soybean futures closed 5¢ to 11¢ lower through Aug ‘23 and then mostly fractionally lower.

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Volatile two-sided trade left major U.S. financial indices lower Tuesday, as investors await the Fed’s next crack at interest rates later this week. The latest producer price index for final demand added pressure, indicating wholesale prices in May rose 10.8% year over year, according to the U.S. Bureau of Labor Statistics.

The Dow Jones Industrial Average closed another 151 points lower. The S&P 500 closed 14 points lower. The NASDAQ was up 19 points.

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Year-to-date beef cow slaughter was 15% more than last year through the end of May and likely will end the year with a double-digit increase, says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University.

“While some drought reduction regionally has improved pasture conditions (Oklahoma is a good example), range and pasture conditions nationally are still at the worst level ever for this time of year,” Peel explains in his weekly market comments. “In other areas, drought continues to expand. Colder than normal weather in northern regions this spring and reduced fertilizer use everywhere are also contributing to delayed and reduced pasture and hay production. The most recent weeks of slaughter data have year-over-year beef cow slaughter increasing rather than decreasing, as the reality of reduced pasture and hay production becomes clear moving into June.”

Peel points out this year’s beef cow slaughter increase comes after last year’s elevated level, which was 9% more than the previous year for a net herd culling rate of 11.6%. Beef cows in the Jan. 1 inventory were 2.3% less than the prior year — 4.9% less than the recent peak number in 2019.

“Given beef cow slaughter so far this year a significant level of culling is guaranteed,” Peel says. “In order for the level of beef cow slaughter to just hold steady with last year, beef cow slaughter for the remainder of the year would have to drop 9.4% year over year. That is extremely unlikely. Note that beef cow slaughter in 2021 was 3.56 million head.  A 2022 beef cow slaughter level equal to that implies herd liquidation, given the 3.41 million heifers expected to calve this year, even if every one of those heifers actually entered the herd.

“Just holding cow slaughter for the remainder of this year equal to last year would still result in an annual increase in cow slaughter of 5.9% because of slaughter so far this year.  That would result in a record herd culling level of 12.5% in 2022. That also seems unlikely at this point. The current level of beef cow slaughter suggests a culling rate in excess of 13% this year and a potential beef cow herd decline of 1 million head or more.”

On a related note, Peel explains the net impacts of heifer retention and cow culling drive changes in annual beef cow numbers.

“Heifer retention for 2022 is already determined at this point. We know that we started the year with 5.61 million beef replacement heifers, which was 18.6% of the Jan. 1 beef cow inventory. Of those, 3.41 million head are expected to calve in 2022,” Peel says.

Cattle futures sagged Monday beneath the weight of continued sharply lower outside markets as traders try to navigate everything from slowing economic growth, to increasing COVID cases in China and Russia’s war with Ukraine.

Feeder Cattle futures closed an average of $2.04 lower ($1.42 to $3.15 lower).

Live Cattle futures closed an average of $1.97 lower ($1.52 to $2.32 lower).

Corn futures closed mostly fractionally mixed to 1¢ higher.

Soybean futures closed 27¢ to 38¢ lower through Jly ‘23 and then mostly 19¢ to 21¢ lower.

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

Live prices last week were $136 in the Texas Panhandle, $137 in Kansas, $141 in Colorado, and $141-$143 in Nebraska and the western Corn Belt. Dressed prices were $225-$226.

Choice Boxed beef cutout value was 78¢ lower through Monday afternoon at $270.54/cwt. Select was $1.44 lower at $247.45.

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Jittery investors continued the sell-off on Wall Street Monday, pushing major U.S. financial indices sharply lower, amid worries about inflation, recession, stagflation and all of the rest.

The Dow Jones Industrial Average closed another 876 points lower. The S&P 500 closed 151 points lower. The NASDAQ was down 530 points.

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The recent and sudden decline in chicken breast prices could hint at protein demand challenges as consumers grapple with fading discretionary income, according to analysts with the Livestock Marketing Information Center (LMIC), in the latest Livestock Monitor.

“The last two weeks have been the only week-over-week declines in boneless skinless chicken breasts in six months,” say LMIC analysts. “Legs and drumsticks also dropped significantly this week down 4% a piece.”

Even so, LMIC analysts explain boneless skinless chicken breast value is 65% higher year over year. Legs are up 46% higher. Wing prices are about 40% less, though.

“Consumer sentiment came out this week and showed the lowest value on record back to 1978 at 50.2. The number is shocking, given it’s lower than during the Great Recession, but also speaks to the volume of stress consumers may be facing,” say LMIC analysts. “How this will impact meat case purchases is uncertain, but to see chicken prices have a strong two weeks of pullback after so many weeks of gains might be an indication that consumers have reached their limit even for one of the least expensive animal proteins.”