WLI

Negotiated cash fed cattle prices were steady Wednesday at $138/cwt. on a live basis in the Southern Plains (slow trade and light demand) and Nebraska (moderate trade and good demand), according to the Agricultural Marketing Service. Dressed prices were also steady in Nebraska at $221.

Trade was limited on light demand in the western Corn Belt with a few dressed sales at $221, but too few to trend. Last week, prices were $140-$142 on a live basis and $222 in the beef.

Choice Boxed beef cutout value was $1.63 higher Wednesday afternoon at $261.60/cwt. Select was $1.35 higher at $253.24.

Cattle futures mainly batted on either side of steady, pressured by rising feed costs, steady cash and lower outside markets, but supported by strengthening wholesale beef prices.

Feeder Cattle futures closed an average of 40¢ higher (2¢ to $1.20 higher) except for unchanged to 22¢ lower in three contracts.

Live Cattle futures closed an average of 25¢ higher except for unchanged in spot Apr and 7¢ lower toward the back.

Corn futures closed mostly 2¢ to 4¢ higher.

Soybean futures closed 10¢ to 227¢ higher through Nov ’22 and then mostly 5¢ to 6¢ higher.

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Major U.S. financial indices closed sharply lower Wednesday, as oil and other commodity prices continued to climb. 

The Dow Jones Industrial Average closed 448 points lower. The S&P 500 closed 55 points lower. The NASDAQ was down 186 points.

West Texas Intermediate Crude Oil futures (CME) were $3.62 to $5.66 higher in the front six contracts.

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Consumers are more comfortable shopping and dining in person, although some pandemic behaviors appear to be lasting, according to a recent RaboResearch report. Among the highlights:

Foodservice demand is demonstrating excellent resilience with increased food traffic at dine-in establishments.

Where consumers previously grabbed breakfast on-the-go, they now pop out for lunch while at home, and there are somewhat fewer evening dinners and drinks, so long as people are working from home.

Consumption of food at home has sustained strong demand above pandemic levels, bolstered by higher average spend (inflation included), the return of in-person shopping (to 2019 levels), and structurally higher online grocery orders.

Inflation is driving consumers to discount grocers, driving growth in share of traffic. On the opposite end, foot traffic at premium and natural stores remains far from the good old times.

Online groceries seem to have reached a steady cap of 2.8 orders per month per active client, still significantly above pre-pandemic levels but below the levels of the initial months of hoarding. The average order amount is 16% higher than pre-pandemic, as clients add more items to their virtual carts.

Grain and Soybean futures extended the previous session’s gains Tuesday with Corn futures closing mostly 2¢ to 6¢ higher and Soybean futures closing 5¢ to 7¢ higher.

Stronger Grain futures continued to cap Cattle futures.

Feeder Cattle futures closed an average of 40¢ lower, except for 22¢ higher in spot Mar.

Live Cattle futures closed an average of 39¢ lower.

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

Live prices last week were at $138/cwt. in the Southern Plains and Nebraska and at $140 in the western Corn Belt. Dressed prices were at $221 in Nebraska at $222 and in the western Corn Belt.

Choice Boxed beef cutout value was $1.47 higher Tuesday afternoon at $259.97/cwt. Select was 61¢ lower at $251.89.

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Major U.S. financial indices rebounded Tuesday, helped along by bank stocks with rising interest rates.

The Dow Jones Industrial Average closed 254 points higher. The S&P 500 closed 50 points higher. The NASDAQ was up 270 points.

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Although short-run fed cattle supplies are less than a year ago, Matthew Diersen, risk and business management specialist at South Dakota State University says packer forward contracting of cattle is also less.

“Seasonally, this is the time of year when packers tend to try to have a larger share of cattle forward contracted for delivery. As a result, April through June tends to have larger shares contracted than other months,” Deirsen says, in the latest issue of In the Cattle Markets. “As of March 14, 2022, feedlots had contracted 235,000 cattle for delivery in April and 139,000 head for June. A year ago at this time of year, there had been 271,000 head contracted for April and 170,000 for June. Thus, the contracting pace is running behind last year’s levels. In other words, packers do not have as many cattle lined up even though short-run supplies of cattle on feed are similar to a year ago.”

Grain and Soybean futures pressed higher Monday with support from higher crude oil prices and the lingering Russian war on Ukraine.

Corn futures closed 12¢ to 18¢ higher through Sep ‘23 and then mostly 6¢ to 8¢ higher.

Soybean futures closed mostly 20¢ to 24¢ higher.

Loftier grain futures helped pressure Feeder Cattle futures an average of $1.12 lower, while the upturn on wholesale beef prices helped Live Cattle to a mixed close, from 36¢ lower across the front half to an average of 28¢ higher.

Negotiated cash fed cattle trade ranged from 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 at $138/cwt. in the Southern Plains and Nebraska and at $140 in the western Corn Belt. Dressed prices were at $221 in Nebraska at $222 and in the western Corn Belt.

The five-area direct average steer price last week was 80¢ higher at $139.10/cwt. The average steer price in the beef was $1.57 higher at $221.68.

Choice Boxed beef cutout value was 34¢ higher Monday afternoon at $258.50/cwt. Select was $1.85 higher at $252.50.

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Major U.S. financial indices pivoted Monday to close lower, following Federal Reserve Chair, Jerome Powell’s hawkish inflation comments at the 38th Annual Economic Policy Conference of the National Association for Business Economics.

“We will take the necessary steps to ensure a return to price stability. In particular, if we conclude that it is appropriate to move more aggressively by raising the federal funds rate by more than 25 basis points at a meeting or meetings, we will do so. And if we determine that we need to tighten beyond common measures of neutral and into a more restrictive stance, we will do that as well,” Powell explained. “…“The median projection that accompanied last week’s 25 basis point rate increase shows the federal funds rate at 1.9% by the end of this year and rising above its estimated longer-run normal value in 2023. The latest FOMC statement also indicates that the Committee expects to begin reducing the size of our balance sheet at a coming meeting. I believe that these policy actions and those to come will help bring inflation down near 2% over the next three years.”

The Dow Jones Industrial Average closed 201 points lower. The S&P 500 closed 1 point lower. The NASDAQ was down 55 points.

West Texas Intermediate Crude Oil futures on the CME closed $4.75 to $7.42 higher in the front six contracts.

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“The pre-war (Russia-Ukraine) highs in February may be the seasonal spring peak in calf and stocker prices, although another run at spring peaks could happen in the next month. Moreover, a strong uptrend in feeder prices is reflected in Feeder futures prices at this time, which may offset typical seasonal patterns,” says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University.

In his weekly market comments, Peel explains the value of stocker gain appears to have decreased significantly since last fall, but current prices don’t reflect the unfolding transition in feeder cattle markets.

“The current price for August Feeder futures is about $181/cwt., compared to about $158/cwt. for nearby March. The August futures price would suggest an Oklahoma cash price for 800-lb. steers of $179-$180/cwt. in August, well above the current price of $159/cwt. In that case, the value of 300 lbs. of gain from April to August is roughly $1.45/lb.,” according to Peel.

By way of contrast, he says the value of adding 300 lbs. to a 5-weight steer in November was $1.24/lb., roughly in line with increased cost of feedlot gain last year. However, current Oklahoma auction prices suggest the value of stocker gain is about $0.73/lb., for putting 300 lbs. on a 500-lb. steer.

“Running the current August Feeder futures price for 800 lb. steers though a feedlot budget finishing in January 2023 results in a fed breakeven price of $162-$165/cwt., depending on the feedlot cost of gain. Current Live futures for February 2023 are at roughly $153/cwt. These discrepancies suggest that more transition is yet to come,” Peel says. “Either the Feeder futures are too high or the Live futures are too low, or perhaps some of both. The take-home message is that imbalances in feeder markets, and between feeder and fed markets, likely mean more transition as markets rebalance. Markets are volatile and likely to remain so. Cattle producers at all levels may see opportunities to price cattle or lock in margins but markets are expected to continue to be very dynamic and such opportunities may be fleeting.”

See Peel’s overview of the market situation here.

Softer feed futures prices, late-week firmness in cash trade and higher outside markets helped support Cattle futures Friday.

Corn futures closed 2¢ to 12¢ lower in old-crop contracts and then mostly 1¢ lower to 1¢ higher.

Soybean futures closed fractionally lower to 3¢ lower through Jan ’23 and then mostly 11¢ to 13¢ higher.

Feeder Cattle futures closed an average of $1.25 higher (45¢ higher in spot Mar to $1.57 higher).

Live Cattle futures closed an average of 66¢ higher, from 35¢ to $1.15 higher.

Negotiated cash fed cattle trade ranged from slow on light demand to mostly inactive on light demand with too few transactions to trend in any region, according to the Agricultural Marketing Service.

Live prices last week were steady in the Southern Plains and Nebraska at $138/cwt. They were steady to $2 higher in the western Corn Belt at $140. Dressed prices were $1 higher in Nebraska at $221 and steady to $3 higher in the western Corn Belt at $222.

Estimated total cattle slaughter last week of 644,000 head was the same as a week earlier but 15,000 head more than the same week last year. Total estimated year-to-date cattle slaughter of 7.1 million head is just 2,000 head fewer than the same time last year. Total estimated year-to-date beef production is 13.3 million lbs. more at 5.96 billion lbs.

The seasonal turn in wholesale beef prices was also supportive.

Choice Boxed beef cutout value was $1.11 higher Friday afternoon at $258.16/cwt. Select was 3¢ lower at $250.65.

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Major U.S. financial indices continued to scale higher Friday, extending the mid-week relief rally, as investors apparently grew more comfortable with the Fed trajectory for interest rates, as well as potential fallout from Russia’s attack on Ukraine.

The Dow Jones Industrial Average closed 274 points higher. The S&P 500 closed 51 points higher. The NASDAQ was up 279 points.

West Texas Intermediate Crude Oil futures on the CME closed $1.21 to $1.72 higher in the front six contracts.

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Elevated prices for beef middle meats and Australia’s shift to more grain-fed production could further underpin slaughter bull and slaughter cow prices going forward, says Andrew P. Griffith, agricultural economist at the University of Tennessee, in his weekly market comments.

“Higher beef prices will certainly result in some consumers reducing the quantity of steaks purchased and increase the quantity of ground beef purchased,” Griffith explains. “The shift in Australia production to include more grain-finished beef will likely reduce the supply of lean grinding beef, which is a commodity commonly imported by the United States. A reduction in this supply will increase the price of imports that in turn should increase the price of grinding beef from cows. Not to be undersold, it should also increase the value of 50-50 trimmings from finished cattle.”

Currently, Griffith notes slaughter cow and slaughter bull prices increased $8/cwt., from January to February and are likely to be another $4-$6 higher by the end of March.

“The increase in March will not likely be the end of such increases as the seasonal tendency is for slaughter cow and bull prices to continue increasing through June,” Griffith says.

As noted in the previous issue of Cattle Current beef prices and high inflation appear to be shifting some consumer buying decisions.

“There is some evidence of consumers shifting purchases to more ground beef and fewer steaks in response to high retail prices. There is also evidence of some shifting to less expensive Select beef cuts and away from higher priced Choice and Prime,” explains David Anderson, Extension livestock economist at Texas A&M University, in the latest issue of In the Cattle Markets from the Livestock marketing Information Center.

For perspective, Anderson says, “Both the cow beef cutout and wholesale 90% lean beef for ground beef are well above a year ago, at $229 and $284/cwt., respectively. Wholesale middle meat prices have dropped in recent weeks. For example, both wholesale ribeye and strip loin prices have fallen below year-ago levels.”

Grain futures rebounded from the previous session’s hard break. Kansas City Wheat set the pace — up mainly 24¢ to 32¢ — as traders apparently grew less confident in the Russia ceasefire chatter. Soybeans also received support from stronger oil prices.

Corn futures closed 20¢ to 24¢ higher in old-crop contracts and then mostly 11¢ to 14¢ higher.

Soybean futures closed 14¢ to 21¢ higher in old-crop contracts and then mostly 8¢ to 12¢ higher.

Higher grain futures weighed on Feeder Cattle futures, which closed an average of $1.13 lower.

Live Cattle futures edged an average of 13¢ higher, except for 7¢ lower in Feb.

Negotiated cash fed cattle trade waddled from the blocks at steady money of $138/cwt. on a live basis in the Southern Plains and Nebraska through Thursday afternoon, according to the Agricultural Marketing Service. That was on moderate demand and light trade in the Southern Plains; slow trade and light demand in Nebraska.

Elsewhere, trade was limited on light demand with too few transactions to trend.

Live prices in the western Corn Belt last week were at $138-$140. Dressed prices there were $219-$222; $220 in Nebraska.

Choice Boxed beef cutout value was $1.03 lower Thursday afternoon at $257.05/cwt. Select was 41¢higher at $250.68.

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Major U.S. financial indices closed sharply higher again Thursday, amid what some analysts term a relief-rally, in this case tied to confirmation of what was mainly expected in the Fed announcement the previous day, relative to interest rates.

The Dow Jones Industrial Average closed 417 points higher. The S&P 500 closed 53 points higher. The NASDAQ was up 178 points.

CME WTI Crude Oil futures closed $6.41 to $8.06 higher in the front six contracts.

West Texas Intermediate Crude Oil futures on the CME closed $6.41 to $8.06 higher in the front six contracts as Russia continued its attack on Ukraine.

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“Cow and calf prices have taken divergent paths in recent weeks due to the uncertainty of war, rising feed costs, record cattle on feed, and shifting consumer purchases,” says David Anderson, Extension livestock economist at Texas A&M University, in the latest issue of In the Cattle Markets from the Livestock marketing Information Center.

Anderson notes the price for mid-7-weight steers dropped about $9 over the last two weeks to $156/cwt., though still significantly higher than $138 a year earlier (Southern Plains). At the same time, he says cull cow prices reached $75/cwt. in the Southern Plains last week, which was $20 higher than early February. He adds 85-90% lean cull cows averaged about $46 a year earlier. The five-year average price for the first week of March was about $59.

“Cow prices are increasing in spite of large cow slaughter. Weekly cow slaughter during the first two weeks of February totaled at least 145,000 head per week. That was the largest weekly slaughter since the first week of December 2012,” Anderson says. “It was the biggest two consecutive weeks since the fall of 2011. Beef cow slaughter has been extremely large, rivaling peak fall slaughter levels. This large beef cow slaughter is coinciding with seasonally large dairy cow slaughter, which typically peaks early in the year.”

Anderson explains higher prices in tandem with increased volume speaks to consumer demand.

“Both the cow beef cutout and wholesale 90% lean beef for ground beef are well above a year ago, at $229 and $284/cwt., respectively,” Anderson says. “Wholesale middle meat prices have dropped in recent weeks. For example, both wholesale ribeye and strip loin prices have fallen below year-ago levels. There is some evidence of consumers shifting purchases to more ground beef and fewer steaks in response to high retail prices. There is also evidence of some shifting to less expensive Select beef cuts and away from higher priced Choice and Prime.”