WLI

Overall, Cattle futures extended gains Friday as nearby Corn futures continued to soften.

Feeder Cattle futures closed an average of 58¢ higher. They were an average of $6.23 higher week to week on Friday as Corn futures declined an average of 40.3¢ through the front six contracts during the same period.

Live Cattle futures closed mixed on Friday, down 3¢ to 28¢ in the front two contracts, then up an average of 21¢. Week to week, however, they were an average of $1.96 higher.

Negotiated cash fed cattle trade was limited on light demand through Friday afternoon, with too few transactions to trend accord to the agricultural Marketing Service. 

For the week, live prices were $2 lower in the Southern Plains at $135/cwt., $1 lower in Nebraska at $139 and steady to $2 lower in the western Corn Belt at $140. Dressed prices were $1-$2 lower in Nebraska at $222 and steady to $5 lower in the western Corn Belt at $222.

Wholesale beef prices continued to gain last week. Choice boxed beef cutout value was $1.84 higher week to week on Friday at $267.26/cwt. Select was $3.52 higher at $250.02.

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Major U.S. financial indices ended with week on a slide Friday, after the May jobs report showed 390,000 jobs were added. Many analysts expected a lower number and now think the Federal Reserve will continue hiking interest rates aggressively as the labor market remains tight, increasing fears the economy will end up in a recession.

The Dow Jones Industrial Average closed 349 points lower. The S&P 500 closed 68 points lower. The NASDAQ was down 304 points.

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Although total red meat in cold storage at the end of April was the most in two years, stock levels were still 3% less than the five-year average, according to analysts with the Livestock Marketing Information Center (LMIC).

“Total red meat in cold storage has been rising since the start of the year,” say LMIC analysts, in the latest Livestock Monitor. “In April, nearly 1.1 billion lbs. of red meat were in cold storage, up more than 10% from the start of the year and 16% from last year. April marked the highest level in two years when total red meat in cold storage was almost 1.3 billion lbs.”

Higher than normal beef stocks drove increased levels of total red meat in freezers. In April, 531.7 million lbs. of beef were in cold storage, up 18.5% or 82.9 million lbs. from a year ago.

“The typical seasonal pattern for beef in cold storage is for levels to generally decline during the first part of the year before rising the second half of the year,” LMIC analysts say. “This year, beef in cold storage has stayed above 525 million lbs. for the first four months.”

Cattle futures extended the previous day’s rally, apparently helped along by technical support and perhaps emboldened by corn planting progress and recent rains across the country.

Feeder Cattle futures closed an average of $2.70 higher.

Live Cattle futures closed an average of $1.74 higher, from 83¢ in spot June to $2.15 in Dec.

Choice Boxed beef cutout value was 77¢ lower Thursday afternoon at $266.65/cwt. Select was 72¢ higher at $249.63.

Negotiated cash fed cattle trade was limited on light demand in all major cattle feeding regions through Thursday afternoon, with too few transactions to trend accord to the agricultural Marketing Service. 

For the week, live prices are $2 lower in the Southern Plains at $135/cwt., $1 lower in Nebraska at $139 and steady to $2 lower in the western Corn Belt at $140. Dressed prices are $1-$2 lower in Nebraska at $222 and steady to $5 lower in the western Corn Belt at $222.

Corn futures closed mostly 1¢ to 3¢ higher.

Soybean futures closed 21¢ to 39¢ higher through Jly ‘23 and then mostly 10¢ to 18¢ higher.

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Major U.S. financial indices saw gains on Thursday after two days of losses. Market reports were mixed for the day, but investors seem to expect Friday’s payroll report to show some softening in the labor market. If they are right, that might have a dampening effect, to a degree, on inflation.

The Dow Jones Industrial Average closed 435 points higher. The S&P 500 closed 76 points higher. The NASDAQ was up 322 points.

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Food inflation and rising costs contributed to a year-over-year 4% decline in consumer visits to U.S. restaurants in April, according to The NPD Group. Restaurant traffic in April was 11% below the pre-pandemic level in April 2019. The 1% increase in consumer spending at restaurants in April versus a year ago was more a reflection of higher prices than increased use of restaurants, according to NPD’s daily tracking of the U.S. foodservice industry. Those analysts note the price of a foodservice meal was 9% higher than April of 2019.

“For many consumers, it’s more affordable to eat at home,” says David Portalatin, NPD food industry advisor. “This is when operators need to demonstrate their value to consumers struggling with inflation and be solutions-oriented to help consumers meet needs across life stages.”

Rising restaurant prices have had the most impact on lower-income households and households with kids, according to NPD. For consumers in households with annual incomes of less than $50,000, restaurant visits declined by 11% in April 2022 compared to the same month a year ago. Traffic from households with kids younger than 6 was down 8%; traffic decreased by 9% for households with kids ages 6 to 12.

A second consecutive day of sharply lower new-crop Corn futures prices helped Feeder Cattle futures roar an average of $3.87 higher.

Corn futures closed 17¢ to 22¢ lower through Jly ‘23, and then mostly 11¢ to 13¢ lower.

Soybean futures closed 4¢ to 7¢ higher through Jly ‘23 and then mostly 4¢ to 6¢ lower.

Live Cattle futures closed an average of $1.41 higher, from 25¢ higher at the back to $2.52 higher toward the front. That was despite the softer start to negotiated cash fed cattle prices this week of $2 lower in the Southern Plains at $135/cwt.

Live prices last week were $140 in Nebraska and $140-$142 in the western Corn Belt. Dressed prices were $223-$224 in Nebraska and $222-$227 in the western Corn Belt.

Choice Boxed beef cutout value was 12¢ lower Wednesday afternoon at $267.42/cwt. Select was 26¢ higher at $248.91.

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Major U.S. financial indices continued lower for the second consecutive session Wednesday.

The Dow Jones Industrial Average closed 399 points lower. The S&P 500 closed 57 points lower. The NASDAQ was down 86 points.

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Cattle feeders and other industry stakeholders would like to see the feeder cattle market become more objective in its pricing methods, according to a recent survey conducted by the Red Angus Association of America. Specifically, respondents to the survey believe the current emphasis on hide color needs to be replaced.

“These results portray the sentiment of the cattle feeding sector and many others involved in the beef industry,” says Tom Brink, RAAA CEO and administrator of the survey. “The logic of moving in the direction they desire certainly makes sense. A market that rewards objective value characteristics above superficial traits sends a strong signal for real improvement in feeder cattle quality and value.”

There is recognition by those surveyed that market emphasis on a black hide did help the beef industry improve historically, leading to higher-quality feeder cattle. However, survey data indicates 92% want changes for the future. Price discovery using specific genetic and genomic information on individual groups of feeder cattle can lead the industry in the direction of consistently better feeder cattle quality in the years ahead, and is preferred over hide color for that purpose.

“Going in the direction of genetics would be beneficial for producers and cattle feeders. It would open doors for both,” says survey participant Stacy McCasland, Palo Duro Feeders, Gruver, Texas.

Results indicate that cattle feeders want change in the way value is assigned. They seek a more objective market that establishes prices with little or no influence from hide color. Cattle feeders want pricing decisions based on value-oriented, objectively determined attributes, such as the genetic potential for growth, efficiency and carcass performance.

Cattle futures took a step lower Tuesday to start the trading week, caught in the broader commodity market downdraft and amid month-end positioning.

Feeder Cattle futures closed an average of $1.20 lower.

Live Cattle futures closed an average of $1.31 lower, from 20¢ lower at the back to $2.02 lower toward the front.

Corn futures closed 15¢ to 23¢ lower through old-crop contracts, and then mostly 7¢ lower.

Soybean futures closed 30¢ to 49¢ lower through Sep ‘23 and then 23¢ to 24¢ lower.

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

Live prices last week were $137/cwt. in the Southern Plains, $140 in Nebraska and $140-$142 in the western Corn Belt. Dressed prices were $223-$224 in Nebraska and $222-$227 in the western Corn Belt.

Choice Boxed beef cutout value was $2.12 higher Tuesday afternoon at $267.54/cwt. Select was $2.15 higher at $248.65.

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Major U.S. financial indices closed lower Tuesday but retained much of the previous session’s gain.

The Dow Jones Industrial Average closed 222 points lower. The S&P 500 closed 26 points lower. The NASDAQ was down 49 points.

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National pasture and range conditions last week gained slightly, according to the latest USDA Crop Progress report for the week ending May 29.

24% of pasture and range was rated as Good (22%) or Excellent (2%), which was 2% more than the previous week but 7% less than a year earlier. Conversely, 46% was rated as Poor (24%) or Very Poor (22%), compared to 50% a week earlier and 39% a year earlier.

Planting progress continued to make strides last week.

86% of corn was planted, which was 8% less than last year but just 1% less than the five-year average. 61% was emerged, compared to 79% last year and 68% for average.

66% of soybeans were in the ground, which was 17% less than last year and 1% less than the average. 39% was emerged, compared to 59% last year and 43% for average.

72% of winter wheat was headed, compared to 77% the previous year and 76% for the average. 29% was rated in Good (25%) or Excellent (4%) condition, compared to 48% a year earlier. 40% was rated Poor (17%) or Very Poor (23%) compared to 19% at the same time last year.

Wholesale beef prices gained on Friday heading into the unofficial start of grilling season. Choice Boxed beef cutout value was $1.45 higher Friday afternoon at $265.42/cwt. Select was $2.07 higher at $246.50.

Firmer beef prices helped Live Cattle futures close an average of 22¢ higher, except for an average of 18¢ lower in the front three contracts and unchanged in Apr. They were an average of 48¢ higher week to week on Friday.

Feeder Cattle futures closed an average of 67¢ lower, from 35¢ lower in new spot Aug to $1.02 lower, amid continued light trade and under pressure from higher Corn futures once gain. However, Feeder Cattle futures closed an average of $2.53 higher week to week on Friday, despite the previous week’s bearish Cattle on Feed report.

Corn futures closed 10¢ to 12¢ higher through Jly ‘23, and then mostly 4¢ higher, presumably helped along by dry weather in South America. Soybean futures closed mostly 2¢ to 4¢ higher. 

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.

For the week, live prices were $1 lower in the Southern Plains at $137/cwt., steady to $2 lower at $140 in Nebraska and $140-$142 in the western Corn Belt. Dressed prices were $3 lower in Nebraska at $223. The previous week dressed prices were $223-$227 in the western Corn belt, and live prices in Colorado were $142.

Estimated total cattle slaughter last week of 644,000 head was 36,000 head fewer than the previous week, but 14,000 head more than the same week last year. Estimated year-to-date total cattle slaughter of 13.63 million head was 92,000 head more (+0.7%) than the same period last year. Estimated year-to-date total beef production of 11.36 billion lbs. was 101.5 million lbs. more (+0.9%) than the same time last year.

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Major U.S. financial indices closed sharply higher Friday for the second consecutive session, helped along by one sign of easing inflation.

Core personal consumption expenditure price index, excluding food and energy — closely watched by the Federal Open Markets Committee — was 4.9% higher than a year earlier but eased from year-over-year increases of 5.1% to 5.3% the previous three months.

The Dow Jones Industrial Average closed 575 points higher. The S&P 500 closed 100 points higher. The NASDAQ was up 390 points.

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“The global economic outlook for 2022 remains positive, but previous growth projections are moderated due to trade disruptions, rising energy costs, rising inflation rates, and commenced tightening of monetary policy,” according to the latest quarterly Outlook for U.S. Agricultural Trade from USDA’s Economic Research Service (ERS) and Foreign Agricultural Service (FAS).

Compared to the previous Outlook, ERS and FAS analysts lowered projections for this year’s world gross domestic production to 3.6% from 4.4%.

“The Russian invasion of Ukraine has presented new challenges to global economic growth,” analysts say. “The conflict and resulting response have further elevated energy prices, most immediately impacting the European market. Continued supply chain constraints and complications remain a significant global growth headwind. Central banks are expected to respond to rising inflation rates by implementing contractionary monetary policy. The tightening of monetary policy typically presents challenges to economic growth in the short term.”

U.S. GDP was forecast at 3.7% versus 3.8% in the previous report.

Even so, U.S. agricultural exports in fiscal year (FY) 2022 are forecast at a record $191.0 billion, up $7.5 billion from the February forecast, led by increases in corn, cotton, and soybeans.

Overall U.S. livestock, poultry, and dairy exports are projected to increase by $1.2 billion to $40.4 billion, with gains across all major commodities except pork. Beef and veal exports are projected to increase by $700 million on higher unit values as demand in East Asia is expected to remain firm.

“To date, demand for U.S. red meat has been as strong as I’ve ever seen in all my years in the meat business, and remarkably resilient,” explained Dan Halstrom, president and CEO of the U.S. Meat Export Federation (USMEF) during that organization’s Spring Conference in San Antonio last week. “But the question in my mind is, at what point do these inflationary pressures start to constrict disposable income for the global consumer? At what point will we see a crack in demand?”