WLI

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.

Live Cattle firmed, closing narrowly mixed, from an average of 38¢ lower to an average of 14¢ higher. However, contra-seasonally lackluster wholesale beef prices and the dwindling premium in deferred contracts continued to cast a gloomy pall.

Feeder Cattle futures closed an average of 76¢ lower (52¢ to $1.72 lower) amid extremely light trade.

Corn futures closed mixed, mostly 4¢ lower to 2¢ higher.

Soybean futures closed mostly 12¢ to 15¢ higher. 

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

So far this week, live prices are $2 lower in the Southern Plains at $138, $2-$4 lower in Nebraska at $140-$142 and $2-$3 lower in the western Corn Belt at $142. Dressed prices are $4 lower in Nebraska at $226.

Last week, live prices were $140-$144 in Colorado. Dressed prices were $227-$230 in the western Corn Belt.

Choice Boxed beef cutout value was $1.23 higher Thursday afternoon at $261.70/cwt. Select was 4¢ lower at $246.06.

Net U.S. beef export sales of 23,300 metric tons for the week ending May 12 were 18% less than the previous week but 35% more than the previous four-week average, according to the U.S. Export Sales report. Increases were primarily for Japan, South Korea, China, Taiwan, and Canada.

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Major U.S. financial indices softened further Thursday with more news of major retailers struggling with earnings.

The Dow Jones Industrial Average closed 236 points lower. The S&P 500 closed 22 points lower. The NASDAQ was down 29 points.

West Texas Intermediate Crude Oil futures on the CME closed $2.30 to $2.85 higher through the front six contracts.

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“Drought conditions and higher operating costs have encouraged the rapid culling of beef cows in first-quarter 2022 to levels not seen in decades,” say analysts with USDA’s Economic Research Service (ERS), in the latest Livestock, Dairy and Poultry Outlook. “Also, based on USDA Agricultural Marketing Service reports for actual weekly slaughter under federal inspection, April 2022 showed the highest number of beef cows slaughtered for the month since 1996. There were over 5 million more beef cows on January 1 of 1996 than January 1 of this year. Subsequently, the outlook weakens for the potential calf crops in 2022 and 2023, further reducing potential cattle placements year over year in late 2022 and early 2023.”

According to ERS, the pastureland condition index at the beginning of this year’s grazing season was the lowest since the series began in 1995, reflecting two years of drought.

“As more calves are placed in feedlots sooner than normally expected due to drought conditions, marketings in 2022 are pulled forward into the second and third quarters, partially offsetting an expected decline in marketings in late 2022,” say ERS analysts.

However, these analysts note the expected increase in cow and bull slaughter more than offsets the net decline in fed cattle marketings this year. ERS projects beef production at 27.8 billion lbs. this year and 6.8% less next year at 26.0 billion lbs. That would be the least production since 2016.

Cattle futures trended lower pressured by bearish outside markets. Feeder Cattle futures closed an average of 69¢ lower. Live Cattle futures closed an average of $1.46 lower.

Grain futures were also pressured by pessimistic outside markets.  Corn futures closed mostly 10¢ to 20¢ lower. Soybean futures closed 14¢ to 26¢ lower. 

Negotiated cash fed cattle trade was slow on light demand in Nebraska at $140/cwt., which was $2 less than earlier in the week. Elsewhere, trade was limited on light demand through Wednesday afternoon with too few transactions to trend.

So far this week, live prices are $2 lower in the Southern Plains at $138, $2-$4 lower in Nebraska at $140-$142 and $2-$3 lower in the western Corn Belt at $142. Dressed prices are $4 lower in Nebraska at $226.

Last week, live prices were $140-$144 in Colorado. Dressed prices were $227-$230 in the western Corn Belt.

Choice Boxed beef cutout value (p.m.): 1¢ lower at $260.47/cwt. Select was $2.17 lower at $246.02.

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Major U.S. financial indices plunged Wednesday Tuesday, in the wake of mega-retailers Walmart and Target posting weaker than expected earnings as inflation weighs.

“Bottom-line results were unexpected and reflect the unusual environment. U.S. inflation levels, particularly in food and fuel, created more pressure on margin mix and operating costs than we expected,” according to Doug McMillon, Walmart president and CEO.

Likewise, Brian Cornell, Target Corp, chairman and chief executive officer explains, “Throughout the quarter, we faced unexpectedly high costs, driven by a number of factors, resulting in profitability that came in well below our expectations, and well below where we expect to operate over time.”

The Dow Jones Industrial Average closed 1,164 points lower. The S&P 500 closed 165 points lower. The NASDAQ was down 566 points.

West Texas Intermediate Crude Oil futures on the CME closed $2.59 to $2.83 lower through the front six contracts.

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USDA’s Economic Research Service (ERS) projects cattle prices next year to increase for a second consecutive year and approach the record-high levels of 2014, when the U.S. cattle inventory was the least since 1952.

“With a smaller 2022 calf crop and higher anticipated beef cow slaughter in 2022, calf supplies are expected to contract in 2023,” say ERS analysts, in the latest Livestock, Dairy and Poultry Outlook. “The average annual feeder steer price is expected to climb to $198.00/cwt. in 2023, $35 (+22%) than the projection for 2022.”

So far this year, ERS analysts point out the faster pace of placements and slower than expected fed cattle marketing resulted in the largest on-feed numbers recorded for the month of April.

“This has likely kept feeder calf prices restrained, given late-2022 fed cattle prices implied by the futures market for late 2022,” say ERS analysts. “The third-quarter 2022 price forecast is raised $1, but the fourth-quarter 2022 price is lowered $2, for an annual forecast of $162.80/cwt., 20¢ lower than last month’s forecast.”

Specifically, ERS projects feeder steers prices (basis 750-800 lbs. in Oklahoma City) at $159 in the second quarter, $166 in the third quarter and $170 in the fourth quarter. Price for the first quarter of next year is projected at $168.