WLI

Cattle futures edged lower Thursday, amid light trade and likely positioning ahead of the holiday weekend — the CME is closed Friday in observance of Good Friday.

Live Cattle futures closed an average of 18¢ lower, except for 5¢ higher in the spot month and unchanged in Dec.

Feeder Cattle futures closed an average of 26¢ lower.

Corn futures closed 1¢ to 6¢ higher in the front three contracts and then fractionally lower to 3¢ higher.

Soybean futures closed mixed, mostly 4¢ lower to 1¢ higher, except for 6¢ higher and fractionally higher in the front two contracts.

Negotiated cash fed cattle trade ranged from mostly inactive on 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 $1 higher in the Southern Plains at $139/cwt., $2 higher in Nebraska at $140-$142, $3 higher in the western Corn Belt at $143 (a few up too $145) and $2-$4 higher in Colorado at $140-$142.

Dressed prices are $4 higher at $226; a few up to $231.

Choice Boxed beef cutout value was 50¢ lower Thursday afternoon at $271.86/cwt. Select was 34¢ lower at $259.71.

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Major U.S. financial indices closed lower Thursday, led by tech stocks, amid rising Treasury yield rates and fretting over steep inflation.

The Dow Jones Industrial Average closed 113 points lower. The S&P 500 closed 54 points lower. The NASDAQ was down 292 points

West Texas Intermediate Crude Oil futures (CME) closed $1.65 to $2.70 higher through the front six contracts.

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USDA’s Economic Research Service (ERS) increased the anticipated annual feeder steer price this year to $163/cwt., in the latest monthly Livestock, Dairy and Poultry Outlook.

“With higher placements in the first quarter, it is likely that calves that might have remained on pastures later in the year were pulled forward. As a result, from last month, tighter anticipated feeder cattle supplies in second-half 2022 will likely support elevated prices,” say ERS analysts.

The projected third-quarter average feeder steer price (basis 750-800 lbs. Oklahoma City) was raised $4 to $165; the fourth-quarter price was bumped $6 higher to $172.

Based on elevated beef cow slaughter, it appears calf numbers will be less than previously thought going forward. Through the first quarter of this year, weekly, federally inspected (FI) beef cow slaughter averaged 18% higher year over year, while dairy cow slaughter declined 3%.

“Typically, cow slaughter would display this volume in the fourth quarter. However, higher feed costs, drought conditions plaguing much of the nation, and historically high prices for cull cows have cow-calf producers making further cuts to their herds,” say ERS analysts. “The macroeconomic situation has also changed from last year with higher fuel prices, feed costs, and operating costs that may be affecting producer decisions as well.”

Total FI non-fed cattle slaughter in the first quarter was the most since the mid-1980s.

ERS analysts point out 69% of the country was experiencing some level of drought the week of March 29, compared with about 63% the same week last year. That’s the widest drought coverage since about 67% in April 2013.

Spun another way, ERS analysts say 61% of the nation’s cattle inventory is in areas experiencing drought, compared to 35% at the same time last year.

“Based on the economic and environmental factors noted, expectations for cow and bull slaughter were raised in each quarter of 2022,” say ERS analysts. “Despite the highest cow slaughter volume typically occurring at the end of the year, the volume in fourth-quarter 2022 will likely not surpass the first quarter. The 2022 price forecast for live cutter cows was raised to $79/cwt. This is 22% above the 2021 average of $64.91 and the highest price since 2015.”

Negotiated cash fed cattle prices continued to gain ground Wednesday on slow trade and moderate demand, according to the Agricultural Marketing Service.

So far this week, live prices are $1 higher in the Southern Plains at $139/cwt., $2 higher in Nebraska at $140-$142, $3 higher in the western Corn Belt at $143 (a few up to $145) and $2-$4 higher in Colorado at $140-$142.

Dressed prices are $4 higher at $226; a few up to $231.

Choice Boxed beef cutout value was $1.11 lower Wednesday afternoon at $272.36/cwt. Select was $1.34 lower at $259.37.

Cash market strength helped Cattle futures once again.

Live Cattle futures closed an average of 53¢ higher (35¢ to $1.00 higher).

Feeder Cattle futures closed an average of 57¢ higher (30¢ to $1.02 higher).

That was despite Corn futures closing mostly 4¢ to 7¢ higher.

Soybean futures closed 4¢ to 5¢ higher in the front three contracts and then 1¢ to 2¢ lower.

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Major U.S. financial indices closed higher Wednesday, apparently buoyed by initial quarterly corporate earnings that beat expectations. That was despite the Consumer Price Index the previous day indicating the steepest inflation in four decades. It was also despite Wednesday’s monthly Producer Price Index registering the highest historical 12-month increase of 11.2%.

The Dow Jones Industrial Average closed 344 points higher. The S&P 500 closed 49 points higher. The NASDAQ was up 272 points

West Texas Intermediate Crude Oil futures (CME) closed $2.75 to $3.65 higher through the front six contracts.

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Consumers grew more comfortable preparing more meals at home through the pandemic and now health and wellness are becoming more significant drivers of their eating choices, according to America’s Health Pulse: Closing the Gap Between Wants and Needs, a new report from the NPD Group (NPD). Specifically, consumers are focusing more on customized diets, nutrient intake, and functional foods.

Wellness now directly impacts 21% of all eating occasions, amounting to billions of occasions annually, according to the report. With most meals sourced from home — a behavior established long before the pandemic — NPD expects wellness as a consumption driver to remain elevated into the foreseeable future.

Although consumers seek wellness overall, NPD analysts say they are homing in on specific areas. For example, the COVID-19 pandemic brought a new focus on the food-as-medicine movement. Concern over the highly contagious and potentially deadly virus led many to consider their food choices to help build immunity. The importance of strong immunity remains a top wellness focus from a holistic standpoint rather than specifically fighting the virus. Additionally, the aging boomer population is looking to food as medicine to find remedies to either cure or manage health conditions.  

Consumers customize their health and wellness eating goals with a variety of tools. These tools include social media and following social media influencers, personalized eating and fitness plans from healthcare providers or trainers, apps and technology-enabled exercise equipment, and forecasting health using genetic markers. 

“The pattern of consumer attention to health and wellness shows increasing awareness and adaptation across the board,” says Darren Seifer, NPD food and beverage industry analyst. “This means consumers no longer think of health and wellness as an add-on, but as an integrated part of how they live their lives; that, in turn, opens opportunity for brands to become a permanent solution.”

Negotiated cash fed cattle prices gained $1 in Kansas at $139/cwt. on active trade and good demand through Tuesday afternoon, according to the Agricultural Marketing Service. Although too few to trend there were also some early trades $2 higher in Nebraska and the western Corn Belt at $142.

Choice Boxed beef cutout value was $1.36 higher Tuesday afternoon at $273.47/cwt. Select was 42¢ higher at $260.71.

Stronger cash trade helped boost Cattle futures.

Live Cattle futures closed an average of 75¢ higher (62¢ to $1.50 higher), also supported by increasing open interest the past couple of days.

Feeder Cattle futures closed an average of 55¢ higher (22¢ to $1.10 higher) except for 15¢ lower and unchanged in the back two contracts.

That was despite another day of higher Corn futures.

As if they needed more help, Corn futures climbed 11¢ to 14¢ higher through Jly ‘23, boosted by President Biden’s announcement that the higher-blend 15% ethanol gas (E15) could be sold through the summer in an effort to curb rising fuel costs. Previously, E15 sales were prohibited during the summer months.

Soybean futures closed 14¢ to 22¢ higher.

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Major U.S. financial indices softened further Tuesday with the highest inflation since 1981, according to the latest Consumer Price Index (CPI) for all urban consumers from the U.S. Bureau of Labor Statistics. It increased 1.2% in March after rising 0.8% in February, up 8.5% over the last 12 months.

The Dow Jones Industrial Average closed 87 points lower. The S&P 500 closed 15 points lower. The NASDAQ was down 40 points

West Texas Intermediate Crude Oil futures (CME) closed $4.71 to $6.31 higher through the front six contracts.

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“With declining beef production and increased prices, 2022 will likely see a contraction of about 4% year over year in exports,” says Brenda Boetel, livestock economist at the University of Wisconsin-River Falls. “Although exports will be lower, they are still historically high and continue to be a supportive factor for cattle prices. The bigger trade concern currently for cattle is the indirect effects from decreased trade opportunities for poultry due to highly pathogenic avian influenza (HPAI) and the decreased export potential for pork due to lower imports from China.”

In the latest issue of In the Cattle Markets from the Livestock Marketing Information Center (LMIC), Boetel explains current HPAI impacts so far are less than the outbreak in 2014-15 when about 12% of the layer hens were lost and more than 50 countries imposed import restrictions on U.S. poultry leading to a 14% decline in broiler exports and a 4% decline in domestic broiler prices. She notes export restrictions today are different than in 2015, confined to regions of infection rather than the entire nation.

“If HPAI continues to expand, though the impact on trade will grow and hence the potential to impact beef prices will continue to increase,” Boetel explains. “Beef is the highest priced animal protein in the U.S., and given the expected decline in production due to lower numbers and continued strong trade, we will likely see continued increases in retail beef prices. Additional supplies of poultry or pork on U.S. grocery shelves will put downward pressure on those prices and will eventually transfer to cattle prices.”

Live Cattle futures closed an average of 66¢ higher Monday, receiving support from the major, performance-depressing winter storm moving toward the Northern Plains, and thoughts by some that cash cattle can crawl higher this week.

In the meantime, negotiated cash fed cattle trade ranged from limited on light demand to a standstill in all major cattle feeding regions through Monday afternoon, according to the Agricultural Marketing Service.

Live prices last week were at $138/cwt. in the Southern Plains and Colorado, at $138-$140/cwt. in Nebraska and at $140 in the western Corn Belt at $140. Dressed prices were $222.

Choice Boxed beef cutout value was $1.64 higher Monday afternoon at $272.11/cwt. Select was 4¢ lower at $260.29.

Strength in the Live pit helps drag Feeder Cattle futures an average of 34¢ higher, except for 25¢ lower in Aug.

Corn futures closed mostly 2¢ to 4¢ higher Monday, except for 4¢ and 2¢ lower in the front two contracts.

Incidentally, 32% of the winter wheat crop was rated as Good (29%) or Excellent (3%) in USDA’s Crop Progress report for the week ending April 10. That was 21% less than the same time last year. 36% was rated Poor (18%) or Very Poor (18%) compared to 17% the previous year.

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Major U.S. financial indices sank Monday as traders positioned ahead of Tuesday’s monthly Consumer Price Index and the beginning of corporate earnings season.

The Dow Jones Industrial Average closed 75 points lower. The S&P 500 75 closed points lower. The NASDAQ was down 299 points

West Texas Intermediate Crude Oil futures (CME) closed $2.80 to $3.97 lower through the front six contracts.

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Beef demand, especially demand for ground beef continues to boost cutter cow values.

For perspective, analysts with the Livestock Marketing Information Center (LMIC) say national cutter cow values were $75/cwt. to start the second quarter — the highest since late 2015 — and up from $52 at the beginning of the year.

“The five-year average of 2016-2020 averaged a cutter cow price of $55/cwt. nationally across all weights,” LMIC analysts explain, in the latest Livestock Monitor. “Other cow quality grade values have improved, as well. For instance, they note values for premium white cows, those fed a concentrated diet before heading to slaughter, are 25% higher than last year. Breaker (75% lean) cow prices are 29% higher year over year and prices for boner cows (85% lean) are up 14%.

Cow cutout values mirror the trajectory of cull cow prices.

“Last week, the boxed cow cutout was $230/cwt., 31% ahead of the five-year average and 21% higher than last year,” says LMIC analysts. “Strong demand for beef has helped support these numbers, as well as consumers buying more ground beef, seasonally. The cutout offers a snapshot of all the quality grades. 

“More specifically, trimmings from lean cows are fed into the ground 90% lean beef markets, which have seen higher prices since the summer of 2021. Lean 90% ground beef averaged $363/cwt., compared to the five-year average of $222. These prices are expected to remain elevated through summer because of time of year and the relative value of other beef products in the meat case.”

Corn and soybean futures climbed again Friday with confirmation of ending stock expectations in the World Agricultural Supply and Demand Estimates (see below).

Corn futures closed mostly 5¢ to 11¢ higher.

Soybean futures closed 35¢ to 43¢ higher in the front three contracts and then 18¢ to 29¢ higher.

Cattle futures traded in a narrow range, capped by grain market strength and signs of weakening beef prices.

Feeder Cattle futures closed narrowly mixed Friday, from an average of 34¢ lower to an average of 9¢ higher. Week to week on Friday, they closed an average of $2.97 lower ($1.25 to $6.75 lower), with most of the pressure in nearby contracts.

Live Cattle futures closed narrowly mixed, from an average of 16¢ lower to an average of 24¢ higher. Week to week on Friday, they closed an average of 83¢ lower, except for an average of 50 higher in three contracts.

Negotiated cash fed cattle trade ranged from inactive on light demand to a standstill in all major cattle feeding regions through Friday afternoon, according to the Agricultural Marketing Service.

Live prices last week were steady to $1 lower in the Southern Plains at $137-$138/cwt., steady in Nebraska at $138-$140 and generally $1-$3 lower in the western Corn Belt at $140. Dressed prices were steady at $222.

Estimated total cattle slaughter last week of 676,000 head was 37,000 head more than the previous week and 3,000 head fewer than the same week last year. Year-to-date estimated total cattle slaughter of 9.1 million head is 61,000 more than the same time last year. Estimated total year-to-date beef production of 7.6 billion lbs. is 72.9 million lbs. more than the same time last year.

Choice Boxed beef cutout value was 93¢ lower Friday afternoon at $270.47/cwt. Select was 89¢ lower at $260.33.

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Major U.S. financial indices closed mixed Friday with weekly losses as investors wrestled with higher inflation and interest rates.

The Dow Jones Industrial Average closed 137 points higher. The S&P 500 closed 11 points lower. The NASDAQ was down 186 points.

West Texas Intermediate Crude Oil futures (CME) closed $1.98 to $2.23 higher through the front six contracts.

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USDA’s Economic Research Service (ERS) left the expected five-area direct fed steer price this year unchanged from the previous month at $139.50/cwt., in the latest monthly World Agricultural Supply and Demand Estimates (WASDE). That would be $17.10 more than in 2021. Prices are projected to be $139.25 in the first quarter, $139 in the second, $136 in the third and $143 in the fourth.

That’s with beef production estimated to be 140 million lbs. more than the previous month at 27.7 billion lbs., with higher expected first-quarter placements supporting increased fed cattle slaughter and with more expected non-fed cattle slaughter. The total would be 367 million lbs. less (-1.3%) than last year.

Projected total red meat and poultry production of 106.2 billion lbs. would be 624 million lbs. less (-0.58%) than last year.

Corn

ERS increased the expected 2021-22 season-average farm price for corn by 15¢ to $5.80/bu., based on observed prices to date. Ending stocks were unchanged at 1.44 billion bu. With an anticipated increase in corn used for ethanol production offsetting a reduction in feed and residual use.

Soybeans

ERS left the 2021-22 season-average farm price for soybeans unchanged at $13.25/bu. and the soybean meal price unchanged at $420/short ton, but increased the soybean oil price 2¢ to 70.0¢/lb. A lower soybean meal export forecast is offset by slightly higher domestic disappearance. Soybean ending stocks are projected at 260 million bushels, down 25 million from last month.

Wheat

ERS increased the season-average farm price for wheat 10¢ to $7.60/bu. Based on NASS prices reported to date and expectations for cash and futures prices for the remainder of 2021-22. That would be the highest price since 2012-13. That’s with projected stable supplies, lower domestic use, reduced exports and higher ending stocks.