WLI

Grain and Soybean futures rallied higher Friday, apparently mostly due to a wetter, drier forecast. 

Corn futures closed mostly 25¢ to 31¢ higher through Jly ‘23 and then mostly 10¢ to 22¢ higher.

Soybean futures closed mostly 24¢ to 39¢ higher through Aug ’24 and then mostly 10¢ to 21¢ higher.

Stronger grain futures pressured Feeder Cattle futures an average of $1.28 lower, (from 75¢ lower to $1.58 lower).

Live Cattle futures closed mixed, from an average of 53¢ lower through the front four contracts to an average of 21¢ higher, except for unchanged in the back contract. The anemic weekly export sales report could have provided some pressure. Net U.S. beef export sales the week ending the week of June 30 were 3% less than the previous week and 23% less than the prior four-week average, according to USDA.

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, with too few transactions to trend.

For the week, live prices were steady to $1 lower in the Southern Plains at $137/cwt., $1-$2 lower in Nebraska at $144-$149 and steady in the western Corn Belt at $147-$150. Dressed prices in Nebraska were $2 lower at $232.

Choice Boxed beef cutout value 18¢ lower through Friday afternoon at $267.89/cwt. Select was 73¢ lower at $241.85

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Major U.S. financial indices closed narrowly mixed on Friday. The June jobs report was stronger expected, but it remains to be seen if the recent rally can overcome bearish news and technical resistance. 

The Dow Jones Industrial Average closed 46 points lower. The S&P 500 closed 3 points lower. The NASDAQ was up 14 points.

West Texas Intermediate Crude Oil futures on the CME closed $2.06 to $2.39 higher through the front six contracts.

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U.S. beef exports set new volume and value records in May, topping $1 billion for the fourth time this year, according to data released by USDA and compiled by the U.S. Meat Export Federation (USMEF).

May beef exports reached 135,006 metric tons (mt), up 1% from the previous high posted in May 2021. Export value climbed 20% to $1.09 billion, breaking the March 2022 record. For January through May, beef exports increased 4% from a year ago to 613,266 mt, valued at $5.14 billion (up 34%). Exports to leading markets South Korea, Japan and China/Hong Kong already topped $1 billion each through May, while shipments also trended significantly higher to Taiwan, the Caribbean, the ASEAN region, the Middle East and Central America.

“For U.S. beef exports to maintain a $1 billion-per-month pace is tremendous under any circumstances, but it is especially remarkable given the strong U.S. dollar, continued shipping and logistical challenges and the economic uncertainty our industry and international customers face today,” said USMEF President and CEO Dan Halstrom. “Across a wide range of markets, the momentum for retail beef sales achieved during the pandemic continues, and it’s now complemented by a strong rebound in the foodservice sector. May volume was actually down slightly to both Japan and South Korea, and yet exports still set a new record. That’s a great indication of soaring, broad-based demand for U.S. beef.”

May beef export value averaged $505.02 per head of fed slaughter, up 17% from a year ago, breaking the previous record ($503.68) set in January 2022. Through May, per-head value averaged $483.49, up 34% from the first five months of 2021.

Negotiated cash fed cattle trade was moderate on moderate demand through Thursday afternoon in the Southern Plains and Nebraska. Live prices were steady to $1 lower in the Texas Panhandle at $137/cwt., mostly $1 lower in Kansas at $137 and $1-$2 lower in Nebraska at $144-$149, where dressed prices were $2 lower at $232.

Trade was limited on light to moderate demand in the western Corn Belt. Live prices the previous day were $150 — the top of last week’s range — and dressed prices were steady at $234.

Choice Boxed beef cutout value was 2¢ higher Thursday afternoon at $268.07/cwt. Select was 35¢ lower at $242.58.

Stronger grain futures pressured Feeder Cattle Thursday, while firmer beef values helped Live Cattle stay the course.

Feeder Cattle futures closed an average of 82¢ lower (42¢ to $1.05 lower).

Live Cattle futures closed an average of 18¢ higher, except for 10¢ lower in near Oct.

Grain and Soybean futures rallied back Thursday on oversold conditions and supportive outside markets.

Corn futures closed mostly 9¢ to 11¢ higher through Jly ‘23 and then mostly 2¢ to 5¢ higher.

Soybean futures closed mostly 38¢ to 43¢ higher through Jly ‘23 and then mostly 12¢ to 20¢ higher.

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Major U.S. financial indices rallied higher Thursday, buoyed by a bounce-back in crude oil prices and perhaps optimism about the nation’s monthly employment report due out Friday.   

The Dow Jones Industrial Average closed 346 points higher. The S&P 500 closed 57 points higher. The NASDAQ was up 259 points.

West Texas Intermediate Crude Oil futures on the CME closed $3.56 to $4.27 higher through the front six contracts.

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The Purdue University/CME Group Ag Economy Barometer continued to decline in June, down 2 points to a reading of 97. The Index of Future Expectations fell 5 points to a reading of 96, marking the lowest level since October 2016. However, producers were slightly more optimistic regarding current conditions — the Index of Current Conditions improved 5 points to 99.

“Rising input costs and uncertainty about the future continue to weigh on farmer sentiment,” says James Mintert, the barometer’s principal investigator and director of Purdue University’s Center for Commercial Agriculture. “Many producers remain concerned about the ongoing escalation in production costs as well as commodity price volatility, which could lead to a production cost/income squeeze in 2023.”

The Farm Financial Performance Index, which is primarily reflective of income expectations for the current year, improved 2 points to a reading of 83 in June, yet remains at one of the index’s lowest readings over the past two years. When asked about expectations for their farm’s financial condition in June 2023 compared to June 2022, 51% of survey respondents said they expect their farms to be worse off financially. That was the most negative response to the benchmark question since data collection began in 2015.

Primary producer concerns continue to be input prices (43%), followed by input availability (21%), government policies (18%), and lower output prices (17%). Looking ahead to 2023, a majority of farmers expect to see another round of large input cost increases with 63% of producers expecting higher costs in 2023, on top of the large increases experienced in 2022.

The Ag Economy Barometer is calculated each month from 400 U.S. agricultural producers’ responses to a telephone survey. This month’s survey was conducted between June 13-17.

Cattle futures gained Wednesday, helped along by a bounce higher in wholesale beef values.

Choice Boxed beef cutout value was $3.39 higher Wednesday afternoon at $268.05/cwt. Select was $3.06 higher at $242.93.

Feeder Cattle futures closed an average of $1.17 higher (60¢ higher in spot Aug to $1.32 higher at the back).

Live Cattle futures closed an average of 96¢ higher ($1.57 higher in spot Aug to 12¢ higher at the back).

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

Last week, live prices were $137-138/cwt. in the Southern Plains, $145 in Colorado, $145-$151 in Nebraska and $147-$150 in the western Corn Belt. Dressed prices were $234.

Grain and Soybean futures firmed Wednesday as traders re-trenched after recent steep losses.

Corn futures closed 5¢ to 7¢ higher through new-crop contracts and then 2¢ to 5¢ higher.

Soybean futures closed 4¢ to 7¢ higher through Jan ‘23 and then mostly fractionally higher to 1¢ higher.

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Major U.S. financial indices eased higher Wednesday as some investors were apparently cheered by comments in the latest Federal Reserve minutes reaffirming commitment to containing inflation.  

The Dow Jones Industrial Average closed 69 points higher. The S&P 500 closed 13 points higher. The NASDAQ was up 39 points.

West Texas Intermediate Crude Oil futures on the CME closed 97¢ to $1.59 lower through the front six contracts.

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Willingness to pay (WTP) decreased for five evaluated retail products in June compared to the previous month, according to the latest Meat Demand Monitor from Kansas State University, funded in part by the beef checkoff. WTP declined 23¢ for ribeye steak to $17.42/lb. and 26¢ for ground beef to $8.78/lb. WTP also declined 25¢ for pork chop to $7.09/lb., 7¢ for chicken breast to $8.29/lb., 45¢ for shrimp to $9.16/lb. and 17¢ for beans and rice to $2.93/lb.

“Meanwhile, WTP decreased for seven evaluated Food Service meals,” according to the report. “Combined this broadly confirms weakening consumer demand consistent with increased general discussion around consumers being more conservative in their spending.”

Even so, in ad hoc questioning, when questioned about their response to higher retail meat prices, 31% of respondents (the most common response) said they were not making any changes in purchasing.

“Among those indicating changes, the most prevalent noted adjustment remains reducing the volume of items purchased while being steadfast in product type (brand, cut, and package size),” according to the report.

The Meat Demand Monitor tracks U.S. consumer preferences, views, and demand for meat with separate analysis for retail and food service channels. It is a monthly online survey with a sample of over 2,000 respondents reflecting the national population.

Another round of heavy fund selling — tied to recessionary fears — held sway in commodity markets Tuesday.

Corn futures closed mostly 24¢ to 29¢ lower. Soybean futures closed 70¢ to 79¢ lower through Aug ‘23 and then mostly 55¢ to 60¢ lower. Both were also pressured by favorable weather.

Cattle futures were caught in the commodity backwash with Feeder Cattle futures closing an average of $1.49 lower and Live Cattle futures closing an average of $1.65 lower.

Negotiated cash fed cattle trade was at a standstill in all major feeding regions through Tuesday afternoon with too few transactions to trend, according to the Agricultural Marketing Service.

Last week, live prices were $137-138/cwt. in the Southern Plains, $145 in Colorado, $145-$151 in Nebraska and $147-$150 in the western Corn Belt. Dressed prices were $234.

Choice Boxed beef cutout value was 84¢ higher Tuesday afternoon at $264.66/cwt. Select was 60¢ lower at $239.87.

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Major U.S. financial indices closed mixed Tuesday. Support included more durable goods orders and factory orders than expected in May. Also, the U.S. and China held discussions about easing the tariffs on Chinese goods imposed by President Trump. Reducing the tariffs could lower prices on consumer goods. However, the threat of a recession continues. Bloomberg Economics forecasts the odds of a recession in the U.S. at 38% over the next year.

The Dow Jones Industrial Average closed 129 points lower. The S&P 500 closed 6 points higher. The NASDAQ was up 194 points.

West Texas Intermediate Crude Oil futures on the CME closed $8.74 to $8.93 lower through the front six contracts.

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“The general direction of cattle and beef market forecasts for this year has not changed but annual forecasts have been modified by the way the first half of the year has played out, with implications for a significantly different second half of the year,” says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly market comments.  

For instance, Peel explains beef production through the first two quarters was higher year over year but is still expected to be less than last year across the full calendar. Likewise, he points out total cattle slaughter in 2022 is expected to be about 1% less than 2021 but was 1.4% higher through the first six months.

“The increase is due to more female slaughter with total cow and heifer slaughter up 4.5% in the first half of the year,” Peel says. “Thus far, increased female slaughter more than offsets the 1.6% year-over-year decrease in steer and bull slaughter. Total cow slaughter is up 6.1% so far this year with dairy cow slaughter down 3.1% year over year, partially offsetting the 14.6% year-over-year increase in beef cow slaughter. For the remainder of the year, total beef cow slaughter is likely to remain higher year over year by double-digits and total cow slaughter is likely to increase by 5-6% year over year. This means that reduced cattle slaughter will be realized by less steer and heifer slaughter.”

This reality implies reduced feedlot marketing rates, Peel explains.

“Feedlots, as of June 1 had record inventories of cattle on feed, which seems to be at odds with the idea of reduced marketings in the coming months. However, feedlots have been placing larger numbers of lightweight cattle, which leads to more days on feed and slower turnover rates … slower marketing rates,” Peel explains. “Feedlots will work through current inventories in the second half of the year. May placements were down by the largest year-over-year monthly decrease since last September. Smaller placements in the coming months will lead to lower feedlot inventories by the end of the year unless drought forces even larger numbers of cattle into feedlots.”

Weaker grain futures and strong country trade helped Feeder Cattle futures take another step higher Friday.

Feeder Cattle futures closed an average of $1.57 higher, while Live Cattle futures closed an average of $1.14 higher (55¢ to $2.62 higher).

Grain and Soybean futures were down again on extended fund liquidation and plummeting open interest.

Corn futures closed mostly 7¢ to 12¢ lower. Soybean futures closed 47¢ to 62¢ lower through Aug. ‘23 and then mostly 25¢ to 37¢ lower.

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

For the week (last established) live prices were $1 lower in the Texas Panhandle at $137/cwt., steady to $1 higher in Kansas at $138, steady in Colorado at $145, steady to $3 higher in Nebraska at $145-$151 and unevenly steady ($2 lower to $3 higher) in the western Corn Belt at $148. Dressed prices were steady in Nebraska at $234 and steady to $6 lower in the western Corn Belt at $234.

The average five-area direct fed steer price was $1.60 higher on a live basis at $146.10/cwt. The average steer price in the beef was 97¢ lower at $233.94.

Choice Boxed beef cutout value was 18¢ lower Friday afternoon at $263.82/cwt. Select was 10¢ lower at $240.47.

Estimated total cattle slaughter last week of 636,000 head was 30,000 head fewer than the previous week but 8,000 more than the same week last year, according to USDA. Estimated year-to-date total cattle slaughter of 16.9 million head was 168,000 head more than the same time last year. Estimated year-to-date beef production of 13.96 billion lbs. was 127.6 million lbs. more (+0.9%) than last year.

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Major U.S. financial indices rallied late in Friday’s session to close higher, despite the lowest Manufacturing Purchasing Managers Index since June of 2020, according to the Institute of Supply Management.

The Dow Jones Industrial Average closed 321 points higher. The S&P 500 closed 39 points higher. The NASDAQ was up 99 points.

West Texas Intermediate Crude Oil futures on the CME closed $1.60 to $2.67 higher through the front six contracts.

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Opponents to the nation’s beef checkoff came up short in their latest multi-year challenge.

The Supreme Court of the United States last week denied R-CALF’s lawsuit against 13 state beef councils and the Beef Checkoff. This ruling effectively ends yet another R-CALF attack on the Beef Checkoff and prevents the activist attorneys at Public Justice, from further diverting Checkoff and beef industry resources.

“For too long we have allowed R-CALF and their attorneys to divide our industry and draw attention away from the important job of beef promotion and research. The Supreme Court’s rejection of R-CALF’s petition confirms the Beef Checkoff, and its overseers, are adhering to the letter and spirit of the laws that protect and guide producer investments in the program,” says NCBA CEO Colin Woodall.

NCBA intervened in the lawsuit in its early days to help defend state beef councils from R-CALF and their activist attorneys, who falsely attacked state beef councils and the cattlemen and women who volunteer their time to support the industry as Checkoff leaders. Multiple court decisions rejected these allegations and reaffirmed the work and direction of the Beef Checkoff and those who guide it.

“R-CALF has repeatedly attacked the Beef Checkoff, engaging lawyers who are closely aligned with extremist animal rights groups like PETA and others, in an attempt to further their efforts,” Woodall says. “It’s time that our industry stands up to R-CALF and insists that they end these attacks on the Beef Checkoff and the volunteer cattle producers who direct it.”

As an editorial aside, folks can always find details of a program they disagree with, but when you look at how much the beef checkoff accomplishes each year and over time, its mind boggling that anyone would want to derail the program. Never mind the promotion, naysayers should look at the long list of necessary product research, which has helped create new products and beef demand, and describe an alternative that would have done more.