WLI

Corn futures closed sharply higher and Soybean futures closed sharply lower Thursday, all fueled by the Prospective Plantings and quarterly Grain Stock reports from USDA (see below).

Corn futures closed 20¢ to 27¢ higher in new-crop contracts.

Soybean futures closed 36¢ to 49¢ lower through Sep ‘23 and then 23¢ to 27¢ lower.

The sharp bounce higher in Corn futures helped push Feeder Cattle futures an average of $2.25 lower, except for 7¢ lower in expiring Mar.

Sharply lower outside markets helped pressure Live Cattle an average of 49¢ lower, except for unchanged in away Apr.

Negotiated cash fed cattle trade was slow to moderate on good demand in Nebraska and the western Corn Belt through Thursday afternoon, according to the Agricultural Marketing Service.

Live prices were steady to $2 higher than last week in Nebraska at $138-$140/cwt. Dressed prices were $1 higher at $222.

In the western Corn Belt, live prices were $1-$2 higher at $140-$143. Dressed prices there last week were $221-$225.

So far this week, live prices are steady in the Southern Plains at $138.

Choice Boxed beef cutout value was $1.35 higher Thursday afternoon at $268.39/cwt. Select was $4.88 higher at $262.34.

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Major U.S. financial indices sank Thursday, with the end of the month and quarter, and as 2-year and 10-year Treasury yields inverted, which some view as signal of coming recession.

The Dow Jones Industrial Average closed 550 points lower. The S&P 500 closed 72 points lower. The NASDAQ was down 221 points.

West Texas Intermediate Crude Oil futures on the CME closed $4.26 to $7.54 lower through the front six contracts.

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USDA’s Prospective Plantings report drove grain markets Thursday with significantly fewer corn acres than many expected and significantly more soybean acres.

Corn planted area for all purposes in 2022 was estimated at 89.5 million acres, down 4% or 3.87 million acres from last year. Planted acreage is expected to be down or unchanged in 43 of the 48 estimating States.

Corn stocks in all positions on March 1, of 7.85 billion bu. were 2% more than a year earlier, according to USDA’s quarterly Grain Stocks report. Of the total stocks, 4.08 billion bu. were stored on farms, up 1% from a year earlier. Off-farm stocks of 3.77 billion were 3% more than the previous year.

Soybean planted area for 2022 was estimated at a record 91.0 million acres, up 4% from last year. Compared with last year, planted acreage is up or unchanged in 24 of the 29 estimating States.

Soybeans stored in all positions on March 1 totaled 1.93 billion bu., up 24% year over year. Soybean stocks stored on farms were estimated at 750 million bu., up 26% from a year ago. Projected off-farm stocks of 1.18 billion bu. were 22% more than last March.

All wheat planted area for 2022 was estimated at 47.4 million acres, up 1% from 2021. If realized, this represents the fifth lowest all wheat planted area since records began in 1919.

All wheat stored in all positions March 1 totaled 1.02 billion bu., down 22% from a year earlier. On-farm stocks were estimated at 174 million bu., down 39% from last March. Off-farm stocks of 850 million bushels were 17% less. 

All hay harvested area this year is projected at 50.33 million acres, which would be 404,000 fewer acres than last year.

Cattle futures closed mostly lower Wednesday, under pressure from higher grain futures prices, but they retained the majority of the previous day’s gains.

Feeder Cattle futures closed an average of 92¢ lower (50¢ to $1.32 lower), giving back about a third of what was gained in the previous session.

Live Cattle futures closed an average of 47¢ lower, except for an average of 6¢ higher in three contracts.

Rising Grain futures prices on the day were likely due in part to Russia’s continued bombardment on Ukraine, despite optimism surrounding ceasefire talks a day earlier.

Corn futures closed mostly 3¢ to 5¢ higher, except for 11¢ higher in the front two contracts.

Soybean futures closed mostly 13¢ to 21¢ higher.

Negotiated cash fed cattle trade was moderate on moderate demand in the Southern Plains through Wednesday afternoon at steady money of $138/cwt., according to the Agricultural Marketing Service.

Elsewhere, trade ranged from slow on light demand to limited on light demand with too few transactions to trend. There were a few early live trades in Nebraska at $138-$140. Live prices there last week were $138; $221 in the beef. Live and dressed prices in the western Corn Belt last week were $138-$142 and 221-$225, respectively.

Choice Boxed beef cutout value was $2.04 higher Wednesday afternoon at $266.54/cwt. Select was $2.62 higher at $257.46.

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Major U.S. financial indices softened Wednesday, pressured by tech stocks and another day of higher oil prices. West Texas Intermediate Crude Oil futures (CME) closed $3.43 to $3.67 higher in the front six contracts.

The Dow Jones Industrial Average closed 65 points lower. The S&P 500 closed 29 points lower. The NASDAQ was down 177 points.

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Depending on your particular leanings, details released earlier this week regarding a previously announced modification to the Cattle Price Discovery and Transparency Act does little to appease opponents or proponents.

For those opposed, regional mandates remain, dictating specific levels of cash trade, thereby also dictating how many cattle producers can market by various means.

On the other hand, those in favor of mandates likely are disappointed at the relatively innocuous penalty proposed for packers who violate the mandated cash minimum.

According to Senator Deb Fischer’s (R-Neb.) office, who introduced the modified bill with fellow Senators, Chuck Grassley (R-Iowa), Jon Tester (D-Mont.) and Ron Wyden (D-Ore.), the updated bill would:

Require the Secretary of Agriculture to establish five to seven regions encompassing the continental U.S. and then establish minimum levels of fed cattle purchases made through approved pricing mechanisms. Approved pricing mechanisms are fed cattle purchases made through negotiated cash, negotiated grid, at a stockyard, and through trading systems that multiple buyers and sellers regularly can make and accept bids.

Establish a maximum penalty for covered packers of $90,000 for mandatory minimum violations. Covered packers are defined as those packers that during the immediately preceding five years have slaughtered five percent or more of the number of fed cattle nationally.

The bill also includes provisions to create a publicly available library of marketing contracts, mandating box beef reporting to ensure transparency, expediting the reporting of cattle carcass weights, and requiring a packer to report the number of cattle scheduled to be delivered for slaughter each day for the next 14 days. The contract library would be permanently authorized and specify key details about the contents that must be included in the library like the duration of the contract and provisions in the contract that may impact price such as schedules, premiums and discounts, and transportation arrangements.

As debate continues, surely all on both sides recognize price improvements and narrowing packer margins as cattle markets continue to rebalance and normalize following the extreme shocks of the past few years. Markets reacted as economics expected them to during the shocks and are now in the aftermath.

“Supply and demand has already driven the cattle markets back into balance without the radical government interference and convoluted mandates called for in the latest draft of the Grassley-Fischer bill. “Make no mistake, the bill still contains government mandates directing how producers market their cattle,”says Meat Institute President and CEO Julie Anna Potts. “If this bill becomes law, there will be cattle producers who want alternative marketing arrangements but will instead be forced to sell on the cash-market, and the industry will turn back time to the days of commodity cattle, or worse, to government-controlled markets.”

Potts shared an observation made by Stephen Koontz, agricultural economist at Colorado State University, during the recent American Farm Bureau Federation Annual Convention: “Mandated cash trade is not going to get you better price discovery. It’s going to put a $50 cost on calves impacted.” Ultimately, the cost likely would be borne by cow-calf producers.

Continuing optimism about a ceasefire between Russia and Ukraine helped drag grain futures sharply lower again Tuesday.

Corn futures closed 7¢ to 22¢ lower through Jly ‘23 and then 2¢ to 7¢ higher.

Soybean futures closed 12¢ to 23¢ lower through Jly ‘23 and then mostly 6¢ to 10¢ lower.

The continued break in grains helped boost Cattle futures.

Feeder Cattle futures closed an average of $2.62 higher (60¢ to $4.32 higher).

Live Cattle futures closed an average of 86¢ higher.

Negotiated cash fed cattle trade ranged from mostly inactive with very light demand to a standstill through Tuesday afternoon, according to the Agricultural Marketing Service.

Live prices last week were at $138/cwt. in the Southern Plains and Nebraska and at $138-$142 in the western Corn Belt. Dressed prices were $221 in Nebraska and $221-$225 in the western Corn Belt.

Choice Boxed beef cutout value was 63¢ higher Tuesday afternoon at $264.50/cwt. Select was $1.48 lower at $254.84.

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Major U.S. financial indices closed higher Monday, apparently buoyed by signs of optimism regarding peace talks between Russia and Ukraine.

The Dow Jones Industrial Average closed 338 points higher. The S&P 500 closed 56 points higher. The NASDAQ was up 264 points.

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RaboResearch analysts expect higher corn, soybean and wheat prices to continue along a higher plane, according to a new report.

While the sudden shutdown of trade in the Black Sea region has sent corn and wheat prices to their highest in a decade, the 10-year outlook for all major crops has shifted up to a new price level, according to the report, which cites transformative geo-political changes, continued increases in demand and limited acreage availability as the drivers.

RaboResearch analysts explain the war in Ukraine effectively closed trade routes shipping agricultural products grown from the Black Sea region to other parts of the world. Continuing conflict will cut supplies of corn and wheat available to the global market. RaboResearch expects the U.S. to increase its exports to help fill the gap, which should increase prices paid to farmers. According to their analysis, a 200 million bushel increase in exports for each commodity would increase the 2022-23 average on-farm price for corn by approximately 13% and wheat by approximately 50%.

Figuring an increase of 200 million bu., and accounting for local basis, RaboResearch estimates the 2022-23 average on-farm price for corn at $5.77/bu.; $10.50 for wheat.

This year’s report is the first annual outlook from the organization to incorporate the expected expansion of U.S. soybean crush capacity into the 10-year acre and price estimates. Fueled by the growing demand for soybean oil as an ingredient for renewable diesel, RaboResearch analysts say crush capacity expansion is an important transformation driving long-term commodity prices to a higher level.

All things considered, Monday’s action in Cattle futures might be considered a victory of sorts, given the bearish placements in the latest Cattle on Feed report, although it tightens cattle supplies further down the line.

Feeder Cattle futures closed an average of 29¢ lower amid light trade.

Live Cattle futures closed an average of 44¢ lower.

Negotiated cash fed cattle trade was at a standstill in all 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 Nebraska and at $138-$142 in the western Corn Belt. Dressed prices were $221 in Nebraska and $221-$225 in the western Corn Belt.

The five-area direct average steer price was 15¢ lower at $138.95/cwt. The average steer price in the beef was 22¢ lower at $221.46.

Choice Boxed beef cutout value was $1.23 higher Monday afternoon at $263.87/cwt. Select was $4.18 higher at $256.32.

Grain futures softened Monday, led by wheat and soybeans, apparently with more optimism regarding a resolution to Russia’s war on Ukraine.

Soybean futures closed 16¢ to 46¢ lower.

Corn futures closed 2¢ to 5¢ lower through Jly ‘23 and then 3¢ lower to 3¢ higher.

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Major U.S. financial indices closed higher Monday, led. By tech stocks and perhaps emboldened by continued peace talks between Russia and Ukraine.

The Dow Jones Industrial Average closed 94 points higher. The S&P 500 closed 32 points higher. The NASDAQ was up 185 points.

West Texas Intermediate Crude Oil futures (CME) closed $5.50 to $7.94 lower in the front six contracts.

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“Feedlots will have plenty of cattle to market for another few months, but tighter placements are ahead and feedlot production will decline in the second half of the year, says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly market comments. “If drought conditions persist, feedlots may perhaps continue to borrow against the future with early-weaned calves available through the spring and summer before facing the full reality of tighter feeder cattle supplies. On the other hand, if drought conditions abate, higher cattle prices might result in increased heifer retention by the end of the year, thereby squeezing feeder supplies even more and more quickly.”

Noting the 9.3% increase in February feedlot placements revealed in Friday’s Cattle on Feed report, Peel says the bulge will likely be offset by sharply lower placements in March.

Total cattle slaughter for this year surpassed the previous year’s year-to-date total last week.

Estimated total cattle slaughter last week of 659,000 head was 15,000 more than the previous week and 10,000 head more than the same time last year. Estimated total year-to-date cattle slaughter of 7.76 million head was 2,000 head more year over year.

Estimated year-to-date beef production of 6.51 billion lbs. was 20.9 million lbs. more (+0.3%) than the same time last year.

Those numbers speak to apparently mostly recovered packing capacity and the massive numbers of cattle on feed. Judging by the latest Cattle on Feed report (see below), increased production will continue in the near term.

Negotiated cash fed cattle trade was limited on light demand in all major cattle feeding regions through Friday afternoon, with too few transactions to trend, according to the Agricultural Marketing Service.

Live prices last week were steady in the Southern Plains and Nebraska at $138/cwt. and steady to $1 lower in the western Corn Belt at $139-$142. Dressed prices were steady in Nebraska at $221 and steady to $1 lower in the western Corn Belt at $221.

Feeder Cattle futures closed an average of 88¢ lower Friday (35¢ to $1.17 lower), pressured by grain futures and perhaps some prescient trepidation about the Cattle on Feed report (see below).

Corn futures closed mostly 2¢ to 3¢ higher, while Soybean futures closed mostly 3¢ to 7¢ higher.

Live Cattle futures closed an average of 45¢ higher in the front four contracts and then an average of 12¢ lower, except for 12¢ higher in away Apr.

Choice Boxed beef cutout value was 23¢ higher Friday afternoon at $262.64/cwt. Select was 45¢ lower at $252.14. Week to week, Choice was $4.48 higher and Select was $1.49 higher. 

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Major U.S. financial indices closed the week mainly higher Friday.

The Dow Jones Industrial Average closed 153 points higher. The S&P 500 closed 22 points higher. The NASDAQ was down 22 points.

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Cattle markets likely will start the week on a dour note, pressured by USDA’s monthly Cattle on Feed report issued Friday (feedlots with 1,000 head or more capacity).

February placements of 1.85 million head were a staggering 9.3% more (+157,000 head) year over year. That was 3% more than average analyst estimates ahead of the report, underscoring expanding drought impacts.

In terms of placement weights, 37.1% went on feed weighing 699 lbs. or less, 52.6% weighing 700-899 lbs. and 10.3% weighing 900 lbs. or more.

Marketings in February of 1.82 million head were 4.9% more (+86,000 head) than the prior year, which was 0.6% more than estimated ahead of the report.

Cattle on feed March 1 of 12.16 million head were 1.4% more (+163,000 head) than the same time last year. That was 0.3% more than expectations and the most on feed for the date since the data series began in 1996.

Cattle futures gained a little ground Thursday with softer Corn futures. Positioning ahead of Friday’s Cattle on Feed report could have also played a role.

Feeder Cattle futures closed an average of 57¢ higher except for unchanged in the back contract.

Live Cattle futures closed an average of 32¢ higher.

Grain futures backed up a pace, pressured in part by bearish weekly U.S. export sales and perhaps some skittishness over next week’s Planting Intentions report.

Corn futures closed 4¢ to 9¢ lower through Jly ’23 and then mostly 1¢ to 5¢ higher.

Soybean futures closed 13¢ to 18¢ lower through Jan ’23 and then unchanged to 10¢ lower.

Negotiated cash fed cattle trade was limited on light demand in all major cattle feeding regions through Thursday afternoon, with too few transactions to trend, according to the Agricultural Marketing Service.

So far this week, live prices are steady in the Southern Plains and Nebraska at $138/cwt. and steady to $1 lower in the western Corn Belt at $139-$142. Dressed prices are steady in Nebraska at $221 and steady to $1 lower in the western Corn Belt at $221.

Choice Boxed beef cutout value was 81¢ higher Thursday afternoon at $262.41/cwt. Select was 65¢ lower at $252.59.

Net U.S. beef export sales of 27,500 MT (2022) for the week ending March 17 were a marketing-year high, according to the U.S. Export Sales report. Sales were 40% more than the previous week and 29% more than the prior four-week average.

Increases were primarily for South Korea, China, Japan, Hong Kong and Taiwan.

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Major U.S. financial indices continued what has become the daily back and forth seesaw, to the upside this time. Positive news included the fewest weekly initial unemployment insurance claims since September 1969 at 187,000.

The Dow Jones Industrial Average closed 349 points higher. The S&P 500 closed 63 points higher. The NASDAQ was up 269 points.

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A new agreement should further enhance U.S. beef exports to Japan.

United States Trade Representative (USTR) Katherine Tai and United States Secretary of Agriculture Tom Vilsack announced yesterday that the United States and Japan reached an agreement to increase the beef safeguard trigger level under the U.S.-Japan Trade Agreement. The new three-trigger safeguard mechanism will allow U.S. exporters to meet Japan’s growing demand for high-quality beef and reduce the probability that Japan will impose higher tariffs in the future.

U.S. beef exports to Japan exceeded 320,000 metric tons in 2021 and set a new value record at $2.38 billion. But U.S. beef was subject to a higher tariff than its competitors for 30 days, from mid-March to mid-April, after imports exceeded the safeguard volume, according to the U.S. Meat Export Federation (USMEF).

“USMEF greatly appreciates the efforts of USTR and USDA to adjust Japan’s safeguard on U.S. beef. The U.S.-Japan Trade Agreement was a tremendous breakthrough for the U.S. meat industry, including the significant reduction in Japan’s tariffs on U.S. beef, but the playing field has not been entirely level due to this safeguard. The changes announced today reduce the potential impact of the safeguard and make it less disruptive for U.S. exporters and their customers in Japan,” explains Dan Halstrom, USMEF president and CEO.

“This is a win-win for American ranchers and Japanese consumers,” says United States Ambassador to Japan, Rahm Emanuel. “It ensures certainty for years and shows American beef can compete and win anywhere anytime.”