WLI

Cattle futures softened with the week’s weaker cash prices.

Feeder Cattle futures closed an average of 80¢ lower, from 2¢ lower in waning spot May to $1.32 lower.

Live Cattle futures closed an average of 33¢ lower, except for an average of 8¢ higher in the front two contracts.

Negotiated cash fed cattle trade ranged from slow trade on light demand to mostly inactive on very light demand through Thursday afternoon, according to the Agricultural Marketing service.

Although too few to trend, there were a few live trades in Kansas at $136/cwt. and a few dressed trades in Nebraska at $224.

Established live cattle prices so far this week are $1 lower in the Southern Plains at $137, steady to $2 lower in Nebraska at $140 and $2 lower in the western Corn Belt at $140. Dressed prices are $3 lower in Nebraska at $223.

Choice Boxed beef cutout value was $1.04 higher Thursday afternoon at $263.97/cwt. Select was 37¢ higher at $244.43.

Corn futures closed mixed, 3¢ to 5¢ lower in new-crop contracts and then mostly fractionally higher to 1¢ higher.

Soybean futures closed 30¢ to 45¢ higher through Jan ’23 and then mostly 13¢ to 24¢ higher, helped along by oil prices. 

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Major U.S. financial indices bounced higher Thursday, likely driven by oversold conditions and positive employment news. Initial unemployment insurance claims for the week ending May 14 of 210,000 was 8,000 fewer than the previous week.

The Dow Jones Industrial Average closed 516 points higher. The S&P 500 closed 79 points higher. The NASDAQ was up 305 points.

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The Creighton University Rural Mainstreet Index (RMI) declined to 57.7 in May from 62.0 a month earlier but remained above growth neutral for the eighteenth consecutive month.

“Much like the nation, the growth in the Rural Mainstreet economy is slowing. Supply chain disruptions from transportation bottlenecks and labor shortages continue to constrain growth. Farmers and bankers are bracing for escalating interest rates — both long-term and short-term,” says Ernie Goss, the Jack A. MacAllister Chair in Regional Economics at Creighton University’s Heider College of Business.

The RMI is based on a monthly survey of bank CEOs in rural areas of a 10-state region dependent on agriculture and/or energy.

The region’s farmland price index for May declined to 72.0 from 80.0 in April, marking the twentieth straight month that the index was above growth neutral. Over the past several months, the Creighton survey has registered the most consistent and strongest growth in farmland prices since the survey began in 2006.

On average, cash rents have risen by 9.6% to $250 per acre for non-irrigated crop land over the past 12 months, according to bankers.

Escalating costs of farm inputs pushed borrowing in the region to its highest reading since May 2020.

Negotiated cash fed cattle trade was slow to moderate on moderate demand in Nebraska through Wednesday afternoon, according to the Agricultural Marketing Service. Live prices were $2 lower at $140/cwt. and dressed prices were generally $3 lower at $222-$225.

Elsewhere, trade was limited on light demand with too few transactions to trend.

Earlier in the week, live prices were $1 lower in the Southern Plains at $137.

Last week, live prices were $142 in Colorado and the western Corn Belt. Dressed prices in the Western Corn Belt were $223-$227.

Choice Boxed beef cutout value was 72¢ lower Wednesday afternoon at $262.93/cwt. Select was $1.29 lower at $244.06.

Feeder Cattle futures eased an average of 33¢ higher, except for an average of 11¢ lower in two contracts, helped along by weaker Corn futures.

Live Cattle futures closed an average of 29¢ lower, except for an average of 34¢ higher in the back three contracts, struggling with lower cash prices and the likelihood seasonal beef prices are near the peak.

Grain futures were under pressure Wednesday, due to planting progress, China’s announcement that it will begin importing corn from Brazil and Russia’s announcement that it would allow grain exports from Ukraine in exchange for the easing of some current sanctions.

Corn futures closed mostly 2¢ to 7¢ lower.

Soybean futures closed 10¢ to 12¢ lower in old-crop contracts, 1¢ 4¢ lower through May ’23 and then mostly 1¢ higher.

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Major U.S. financial indices closed higher Wednesday, helped along by the release of FOMC minutes detailing domestic economic strength in the face of inflation.

The Dow Jones Industrial Average closed 191 points higher. The S&P 500 closed 37 points higher. The NASDAQ was up 170 points.

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“Despite the difference in regional prices, all cattle feeding regions are expected to see lower prices as the market moves into the summer,” says Andrew P. Griffith, agricultural economist at the University of Tennessee, in his weekly market comments. “There will continue to be an ample supply of cattle for harvest the next few months, but there will soon come a time when market-ready supplies will dwindle and packers will have to compete for animals to hang on the rail. How quickly this situation presents itself is not known, but it will be sooner rather than later.”

In the meantime, Griffith points out commercial beef production through the first four months of this year totaled 9.35 billion lbs., which was 1.1% more year over year.

“The majority of this increase is from increased beef cow slaughter, Griffith explains. “Beef cow slaughter is 15.5% higher year to date compared to 2021 and is expected to remain elevated as drought continues to grip the western third of the United States.

“Increased heifer slaughter is also contributing to increased beef production as slaughter is up 1.7% compared to the same weeks in 2021, but the larger contributor is the heavier dressed weight of heifers, which are nearly 8 lbs. heavier than a year ago. Steer slaughter has decreased year to date compared to last year, but steer dressed weight is running nearly 10 lbs. heavier than a year ago. Increased beef production will pressure beef prices in the midst of this high inflationary period. Consumers will be forced to make decisions on discretionary spending that they have not had to make in several years.”

Lower Corn futures helped Feeder Cattle extend gains Tuesday. They closed an average of $2.56 higher ($1.05 higher in spot May to $3.17 higher at the back).

Live Cattle futures closed an average of 23¢ higher, except for an average of 14¢ lower in the front two contracts and unchanged at the back.

Corn futures closed 12¢ to 14¢ lower through Jly ‘23 and then mostly 2¢ lower, pressured by resurgent planting progress.

Soybean futures closed mostly unchanged to 3¢ lower, except for fractionally higher to 6¢ higher in the front three contracts.

Negotiated cash fed cattle trade in the Southern Plains was $1 lower through Tuesday afternoon at $137/cwt., according to the Agricultural marketing Service. That was on moderate trade and demand in the Texas Panhandle and slow trade on moderate demand in Kansas.

Elsewhere, trade was limited on light demand with too few transactions to trend.

Last week, live prices were $140-$142 in the Northern Plains and $142 in the western Corn Belt. Dressed prices were $226 in Nebraska and $223-$227 in the western Corn Belt.

Choice Boxed beef cutout value was 63¢ lower Tuesday afternoon at $263.65/cwt. Select was $1.12 higher at $245.35.

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Major U.S. financial indices closed mixed Tuesday, led lower by warnings of slowing social media growth.

The Dow Jones Industrial Average closed 48 points higher. The S&P 500 closed 32 points lower. The NASDAQ was down 270 points.

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Beef in cold storage Apr. 30 was record high for the date — 18% more than the previous year but 1% less than the prior month — according to USDA’s latest Cold Storage report.

Frozen pork supplies were 9% more than the previous month and 16% more than the prior year.

Total red meat supplies in freezers were up 4% compared to the previous month and up 16% year over year.

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

Apparently, Cattle futures were too cheap and/or traders had already factored in what turned out be a bearish Cattle on Feed report Friday.

Feeder Cattle closed an average of 98¢ higher (5¢ higher in spot May to $1.70 higher).  

And that was with Corn futures futures closed 5¢ to 7¢ higher through Jly ‘23 and then mostly fractionally higher to 1¢ higher.

Higher wholesale beef prices helped Live Cattle close an average of 69¢ higher, except for 2¢ lower in away Aug. 

Choice Boxed beef cutout value was $2.11 higher through Monday afternoon at $264.28/cwt. Select was $1.21 higher at $244.23.

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.

Last week, live prices were $138/cwt. in the Southern Plains, $140-$142 in the Northern Plains and $142 in the western Corn Belt. Dressed prices were $226 in Nebraska and $223-$227 in the western Corn Belt.

The five-area weighted average fed steer price last week was $2.19 lower at $140.25/cwt. The average price in the beef was $3.02 lower at $225.80.

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Major U.S. financial indices closed higher Monday, amid what might have been a relief rally following last week’s sharply lower markets.

The Dow Jones Industrial Average closed 618 points higher. The S&P 500 closed 72 points higher. The NASDAQ was up 180 points.

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By any measure, Derrell Peel, Extension livestock marketing specialist at Oklahoma State University says national pasture and hay conditions are off to their worst start in 35 years as drought continues to grip various parts of the country.

“The Latest Drought Monitor has a Drought Severity and Coverage Index (DSCI) of 183 (out of 500 possible) for the nation, the highest DSCI in mid-May for any year of the data back to 2000,” Peel explains, in his weekly market comments. “This includes over 63% of the country abnormally dry or worse, with 21.6% percent of the country in extreme (D3) to exceptional drought (D4). USDA reported pasture and range conditions starting in May have the highest percentage of poor to very poor conditions this year in data back to 1995.”

At the same time, Peel notes national hay stocks May 1 were 15.1% less than the average for 2012-2021; hay stocks in the 17 western states were 21.7% less.

“High fertilizer and fuel prices are adding to the extraordinary cattle industry challenges in 2022. High input costs are causing some producers that are not facing drought conditions to reduce or skip fertilization of pastures and hay fields. This will result in additional forage reduction and push herd inventories even lower,” Peel says.

From January through April, Peel explains beef cow slaughter equated to 4.2% of the Jan. 1 inventory. It was 3.0% for the same period from 1986 though 2021.

“The highest previous culling percentage for the January through April period was 3.7% in 1986,” Peel says. “The beef cow herd decline this year may well be the largest since 1986, when the beef cow herd decreased 4.7% year over year, a drop of 1.65 million head in one year.”

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

For the week, live prices were $2 lower in the Southern Plains at $138/cwt., $4 lower in Nebraska at $140 and $2-$3 lower in the western Corn belt at $142. Dressed prices were $4 lower in Nebraska at $226. Dressed prices in the western Corn Belt the previous week were $227-$230.

Total estimated cattle slaughter last week was 23,000 head more than the previous week and 8,000 head more than the previous year at 680,000. Total estimated year-to-date cattle slaughter of 13.0 million head was 84,000 head more. Total estimated year-to-date beef production of 10.8 billion lbs. was 98.9 million lbs. more than last year.

Choice Boxed beef cutout value was 47¢ higher through Friday afternoon at $262.17/cwt. Select was $3.04 lower at $243.02.

Cattle futures closed lower again Friday with continued pressure from volatile outside markets, and perhaps with some prescient positioning ahead of the Cattle on Feed report (see below).

Feeder Cattle futures closed an average of 70¢ lower.

Live Cattle futures closed an average of 53¢ lower, except for 7¢ higher in spot Jun.

Corn futures closed mostly 1¢ to 4¢ lower.

Soybean futures closed mostly 8¢ to 9¢ higher. 

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Major U.S. financial indices closed flat Friday, following a day of extreme volatility as investors try to stave off a bear market. 

The Dow Jones Industrial Average closed 8 points higher. The S&P 500 closed fractionally higher. The NASDAQ was down 33 points.

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Markets will likely view Friday’s monthly Cattle on Feed report as bearish.

Feedlots with 1,000 head or more capacity placed 1.81 million head in April, which was 0.88% less than the previous year, but 3% more than estimates ahead of the report.

In terms of placement weights, 34.5% went on feed weighing 699 lbs. or less, 49.9% weighing 700-899 lbs. and 15.5% weighing 900 lbs. or more.

Marketings in April of 1.89 million head were 43,000 head fewer (-2.2%) than the previous year. That was about even with pre-report expectations.

There were 11.97 million head on feed May 1, which was 2% more than last year and about 2% more than expected. That’s the largest inventory for the date since the series began in 1996.