WLI

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.”

Negotiated cash fed cattle prices were $2 higher in Kansas through Friday afternoon at $137/cwt. That was on slow to moderate trade and moderate demand, according to the Agricultural Marketing Service. There were also a few trades in the Texas Panhandle at $137, but too few to trend; established trade for the week was $1 higher at $136.

Elsewhere, trade ranged from mostly inactive on light demand to a standstill. For the week, live prices were $3 higher in Nebraska at $142-$143 and $2 higher in the western Corn Belt at $142-$143. Dressed prices were $3-$4 higher at $225-$226.

Choice Boxed beef cutout value was 22¢ higher Friday afternoon at $271.32/cwt. Select was 72¢ lower at $248.89.

Estimated total cattle slaughter last week of 674,000 head was 71,000 more than the previous holiday-shortened week and 4,000 head more than the same week last year. Estimated year-to-date total cattle slaughter of 14.9 million head is 149,000 head more than last year. Estimated year-to-date beef production of 12.4 billion lbs. is 129 million lbs. more than last year.

Cattle futures softened Friday, pressured by sharply lower outside markets and likely week-end profit taking.

Feeder Cattle futures closed an average of $1.07 lower (75¢ to $1.55 lower).

The CME Feeder Cattle Index closed $7.58 higher week to week on Thursday at $161.87/cwt.

Live Cattle futures closed an average of 64¢ lower, from 50¢ lower at the back to $1.00 lower toward the front.

Corn futures closed mostly 3¢ to 6¢ higher.

Soybean futures closed mostly 14¢ to 20¢ lower.

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Major U.S. financial indices plunged Friday on higher inflation than expected. The Consumer Price Index for All Urban Consumers (CPI-U) increased 1.0% in May on a seasonally adjusted basis after rising 0.3% in April, according to the U.S. Bureau of Labor Statistics. Over the last 12 months, the all items index increased 8.6% before seasonal adjustment

A closely watched gauge of consumer confidence added pressure. Consumer sentiment declined 14% month to month in June and was 41% lower year over year, according to the University of Michigan Consumer Sentiment Index.

The Dow Jones Industrial Average closed 880 points lower. The S&P 500 closed 116 points lower. The NASDAQ was down 414 points.

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USDA’s Economic Research Service (ERS) left the projected fed steer price for this year unchanged, despite higher forecast beef production, in the latest monthly World Agricultural Supply and Demand Estimates (WASDE).

ERS forecast the five-area direct average fed steer price for this year at $140.10/cwt.  Prices are forecast at $140 in the second quarter, $136 in the third quarter and $145 in the fourth quarter. Next year’s average price was projected at $153.

Projected beef production this year increased 65 million lbs. to 27.9 billion lbs., on increased fed cattle and cow slaughter. The total would be just 41 million lbs. less than last year. Beef production next year was projected to be 1.96 billion lbs. (-7.0%) less than this year at 25.9 billion lbs.

Total U.S. red meat and poultry production for 2022 was forecast 136 million lbs. more than the previous month at 106.5 billion lbs., on increased beef and pork production. Next year’s total U.S. red meat and poultry production was projected at 105.3 billion lbs. which would be 1.12 billion lbs. less (-1.0%) than this year.

Corn

ERS left projected corn acreage and yield unchanged, but increased beginning and ending stocks on reduced exports. The season-average farm price for corn received by producers was unchanged at $6.75/bu.

Soybeans

Beginning and ending soybean stocks were projected lower on increased exports. The season-average soybean price was projected 30¢ higher at $14.70/bu.

Wheat

Projected ending wheat stocks were increased by 8 million bu. on slightly higher yield but still would be less than 2021-22. The projected 2022-23 season-average farm price was unchanged at $10.75/bu., compared to $7.70 for 2021-22.

Cattle futures closed narrowly mixed Thursday, retaining most of the previous strong gains, supported by stronger cash fed cattle prices and aggressive slaughter.

Feeder Cattle futures closed 12¢ and 38¢ higher in the front two contracts and then an average of 45¢ lower.

Live Cattle futures closed mixed, from 33¢ lower 28¢ higher.

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

So far this week, live prices are $1 higher in the Texas Panhandle at $136/cwt., $3 higher in Nebraska at $142-$143 and $2 higher in the western Corn Belt at $142-$143. Dressed prices are $3-$4 higher at $225-$226.

Choice Boxed beef cutout value was 64¢ lower through Thursday afternoon at $271.10/cwt. Select was 20¢ higher at $249.61

Corn futures closed narrowly mixed, mostly 1¢ lower to up 3¢ higher.

Soybean futures closed 11¢ to 29¢ higher through Jan ‘23. And then mainly 1¢ to 3¢ higher.

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Major U.S. financial indices closed sharply lower Thursday with selling pressure late in the session. Some of it could have stemmed from positioning ahead of Friday’s Consumer Price Index. Also, initial unemployment insurance claims rose by 27,000 last week — more than the trade expected.

The Dow Jones Industrial Average closed 683 points lower. The S&P 500 closed 98 points lower. The NASDAQ was down 332 points.

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Among the highlights of the recently released Global Beef Quarterly from Rabobank analysts:

“The first signs of softening consumer confidence are apparent in most markets, with wholesale prices for beef coming under pressure even though production costs are higher…We expect ongoing adjustments of consumption and margins in all markets as we head into Q3 2022.”

“Lockdowns in China and biosecurity risks in Indonesia pose notable implications for trade. Lockdowns of major Chinese cities are further constraining beef demand and restricting foodservice sales. As a result, Chinese beef imports dropped in Q1, and we expect them to be down in Q2. Continuation of the lockdowns will impact China’s beef imports for 2022. In Indonesia, official reports of lumpy skin disease (early March) and foot-and-mouth disease (late April) have placed authorities in trading nations – particularly Australia and New Zealand – on high alert.”

“With increased focus on carbon over the last two years, we have seen numerous companies, industries, and governments make commitments around the reduction of greenhouse gases. Most major meat processing companies around the world have a statement on the environment and a commitment to reduce emissions – and in many cases, to reach net-zero emissions – by a specified timeframe. We see the same for major food retail and foodservice companies. Until now, most commitments have not necessarily changed what consumers see. But that is all starting to change as the first movers release climate-neutral products onto shelves.”