WLI

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?”

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.”