WLI

Cattle futures extended gains Wednesday, supported by firmer cash prices and the beef supply and price outlook provided by the World Agricultural Supply and Demand Estimates (see below).

Live Cattle futures closed an average of $1.04 higher (30¢ higher at the back to $1.65 higher toward the front).

Feeder Cattle futures closed an average of 71¢ higher.

Negotiated cash fed cattle trade was slow on light demand in the Southern Plains through Wednesday afternoon, according to the Agricultural Marketing Service. Live prices were steady in the Texas Panhandle at $140/cwt. and steady to $1 higher in Kansas at $140.

Elsewhere, trade was limited on light demand with too few transactions to trend. Last week, live prices were $140 on a live basis in Nebraska and the western Corn Belt. Dressed prices were $222 in Nebraska and $220-$222 in the western Corn Belt.

Choice Boxed beef cutout value was $1.67 lower Wednesday afternoon at $275.79/cwt. Select was $1.79 lower at $272.05.

Corn futures closed 10¢ to 14¢ higher in old-crop contracts and then mostly 6¢ to 9¢ higher.

Soybean futures closed 20¢ to 25¢ higher in the front eight contracts and then mostly 14¢ higher.

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Major U.S. financial indices closed sharply higher Wednesday, led by tech stocks and on positive quarterly corporate earnings reports.

The Dow Jones Industrial Average closed 305 points higher. The S&P 500 closed 65 points higher. The NASDAQ was up 295 points.

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USDA’s Economic Research Service (ERS) left corn prices unchanged and raised expectations for fed cattle prices in the monthly World Agricultural Supply and Demand Estimates (WASDE).

ERS increased the expected annual average five-area direct fed steer price 50¢ from the previous month to $137.50/cwt., on firm packer demand.

Prices are projected at $139 in the first quarter, $136 in the second quarter, $135 in the third quarter and $140 in the fourth quarter.

Beef production this year is projected to be 27.4 billion lbs., slightly higher than the previous month. The total would be 562 million lbs. less (-2.0.%) than last year.

“The beef production forecast is raised from the previous month as larger expected placements during first-half 2022 are marketed in the latter half of the year,” explain ERS analysts. “However, the increase in fed cattle slaughter is partly offset by lower non-fed cattle slaughter.”

Total red meat and poultry production this year is forecast to be 106.6 billion lbs., which would be 183 million lbs. less than last year (-0.2%).

Corn

U.S. corn supply and use (2021-22) was unchanged from the previous month.

The season-average farm price was unchanged at $5.45/bu.

Soybeans

The 2021-22 U.S. soybean outlook is for increased soybean crush and lower ending stocks.

The U.S. season-average soybean price was forecast at $13.00/bu., up 40¢ from last month, partly reflecting the impact of drought in South America. The soybean meal price was forecast at $410.00/short ton, up $35. The soybean oil price forecast was raised 1¢ to 66.0¢/lb.

Wheat

The outlook for 2021-22 U.S. wheat was for stable supplies, lower domestic use, reduced exports, and higher ending stocks.

Projected 2021-22 ending stocks were raised 20 million bu. to 648 million but they still would be 23% lower than last year. The projected season-average farm (SASP) price for wheat was raised 15¢/bu. to $7.30 on NASS prices reported to date and expectations for cash and futures prices for the remainder of 2021-22. This would be the highest SAFP since 2012-13.

Cattle futures closed higher Tuesday, helped along by lower Corn and Soybean futures, as well as some betting that negotiated cash fed cattle prices will edge higher again this week.

Feeder Cattle futures closed an average of $1.51 higher in the front three contracts, then an average of 40¢ higher.

Live Cattle futures closed narrowly mixed, from 23¢ lower to 40¢ higher.

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 (AMS).

Last week, live sales were at $140/cwt. in the Texas Panhandle, $139-$140 in Kansas $138-$140 in Nebraska and $140 in the western Corn Belt. Dressed trade was at $222 in Nebraska and at $220-$222 in the western Corn Belt.

Choice Boxed beef cutout value was $1.50 lower Tuesday afternoon at $277.46/cwt. Select was $1.20 lower at $273.84.

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

Soybean futures closed 2¢ to 12¢ lower through Jan ’23, then fractionally to 3¢ higher.

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Major U.S. financial indices rose Tuesday, carried higher by positive quarterly corporate earnings reports.

The Dow Jones Industrial Average closed 372 points higher. The S&P 500 closed 38 points higher. The NASDAQ was up 179 points.

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U.S. agricultural exports last year were the highest on record, in terms of value, according to data released by the U.S. Commerce Department Tuesday.

Exports of U.S. farm and food products totaled $177 billion, topping 2020 by 18% and eclipsing the previous record (2014) by 14.6%.

“These record-breaking trade numbers demonstrate that U.S. agriculture is incredibly resilient as it continues to provide high-quality, cost-competitive farm and food products to customers around the globe…” says Tom Vilsack, U.S. Secretary of Agriculture. “This is a major boost for the economy as a whole, and particularly for our rural communities, with agricultural exports stimulating local economic activity, helping maintain our competitive edge globally, supporting producers’ bottom lines, and supporting more than 1.3 million jobs on the farm and in related industries such as food processing and transportation.”

U.S. agricultural exports were record high last year to six of the 10 leading U.S. markets, including China, Mexico, Canada, South Korea, the Philippines and Colombia

China remained the top export destination, with a record $33 billion in purchases, up 25% from 2020, while Mexico inched ahead of Canada to capture the number two position with a record $25.5 billion, up 39% from the previous year.

“It’s clear that our international trading partners are responding favorably to a return to certainty from the United States,” Vilsack explains. “…We’re strengthening relationships with our trading partners and holding those partners accountable for their commitments. We’re addressing transportation and infrastructure challenges through the work of the Administration’s Supply Chain Task Force and calling out ocean carriers that are putting profits above their responsibility to serve both importers and exporters. And we’re expanding opportunities for agricultural exports by knocking down trade barriers and partnering with industry on marketing and promotion efforts worldwide.”

The five-area direct average steer price last week was $2.81 higher at $139.66/cwt. The average steer price in the beef was $3.79 higher at $221.79.

Negotiated cash fed cattle trade ranged from inactive on very light demand to a standstill through Monday afternoon, according to the Agricultural Marketing Service (AMS).

Last week, live sales were at $140 in the Texas Panhandle, $139-$140 in Kansas $138-$140 in Nebraska and $140 in the western Corn Belt. Dressed trade was at $222 in Nebraska and at $220-$222 in the western Corn Belt.

Live Cattle futures closed an average of 27¢ lower, except for unchanged to 7¢ higher in the back three contracts.

Choice Boxed beef cutout value was 85¢ lower at $278.96/cwt. Select was $1.01 lower at $275.04

Feeder Cattle futures closed an average of 63¢ lower, under pressure from Corn futures, which closed 14¢ to 15¢ higher in the front three contracts and then mostly 5¢ to 7¢ higher.

Soybean futures closed mostly 14¢ to 28¢ higher.

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Major U.S. financial indices closed mixed Monday, amid mixed quarterly earning reports and pressured most by tech stocks. 

The Dow Jones Industrial Average closed 1 point higher. The S&P 500 closed 16 points lower. The NASDAQ was down 82 points.

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Barring significant drought-spawned early feedlot placements or some other market disruption, feedlot inventories should be noticeably lower as this year continues, says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly market comments.

In fact, Peel says the ratio of feedlot inventories to feeder cattle supplies — a measure of how intensively the feeder cattle supply is being used — was record low Jan. 1 at 57.5%.

“Stated another way, there are only 1.74 head of feeder cattle available to replace the cattle currently in feedlots,” Peel says. He explains feedlot inventories peaked in February last year, on a monthly basis, but peaked in June last year when considering the 12-month moving average of feedlot inventories, which allows month to month comparisons without seasonality. 

Recent-month placements consisted mostly of light-weight cattle as feedlots sought to maintain inventory.

“Feedlots have been borrowing against the future to hold feedlot inventories as high as possible to this point, and the ability to do that will decrease in the next few months,” Peel says. “The estimated supply of feeder cattle, calculated from Jan. 1 inventories of steers over 500 lbs, other (non-replacement) heifers over 500 lbs., and calves under 500 lbs., with current feedlot inventories subtracted was at 25.54 million head, down 2.6% year over year.”

Cattle futures closed narrowly mixed Friday, closing out a dynamically positive week, fueled by the bullish Cattle inventory report.

Week to week on Friday, Feeder Cattle futures closed an average of $5.17 higher ($4.57 higher toward the back to $6.47 higher in spot Mar). The CME Feeder Cattle Index closed $1.51 higher week to week on Thursday at $160.17/cwt.

During the same period, Live Cattle futures closed an average of $3.28 higher and open interest grew by about 15,000 contracts.

On Friday, however, Feeder Cattle futures closed an average of 28¢ lower, except for an average of 32¢ higher in the back two contracts.

Live Cattle futures closed an average of 27¢ higher, except for 15¢ lower in near Jun and unchanged in the back contract.

Negotiated cash fed cattle trade ranged from limited on light demand to mostly inactive on very light demand through Friday afternoon, according to the Agricultural Marketing Service (AMS).

For the week, Live sales were $3 higher in the Texas Panhandle at $140, $3-$4 higher in Kansas at $139-$140, $2-$3 higher in Nebraska at $138-$140 and $2-$3 higher in the western Corn Belt at $140. Dressed trade was $4 higher at $222.

Estimated total cattle slaughter last week of 639,000 head was 4,000 head fewer than the previous week and 13,000 head fewer than the same week last year. So far this year, estimated total cattle slaughter of 3.16 million head is 185,000 head fewer (-5.5%) than the same time last year.

Corn futures closed mostly 5¢ higher through Jly ’23 and then 1¢ to 2¢ higher.

Soybean futures closed 9¢ to 11¢ higher in the front four contracts and then 3¢ to 6¢ higher through Aug. ’23, followed by mostly 1¢ lower.

Week to week on Friday, Corn futures closed an average of 11.6¢ lower in old-crop contracts and Soybean futures closed an average of 68.8¢ higher through the front six contracts.

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Major U.S. financial indices closed mixed Friday, although tech stocks, such as Amazon, blossomed on strong quarterly earnings.

The monthly Employment Situation Summary also revealed stronger results than expected.

Total non-farm payroll employment rose by 467,000 in January, according to the U.S. Bureau of Labor Statistics. The unemployment rate was little changed at 4.0%.

Average hourly earnings in January for all employees on private non-farm payrolls increased by 23¢ to $31.63. Over the past 12 months, average hourly earnings have increased by 5.7%. 

The Dow Jones Industrial Average closed 21 points lower. The S&P 500 closed 23 points higher. The NASDAQ was up 219 points.

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La Niña remains firmly in control of the ocean-atmosphere system, and that is unlikely to change this spring, said meteorologist Matt Makens, during the CattleFax Outlook Seminar in Houston last week.

Barring any change to the La Niña outlook or sudden warming in the Gulf of Alaska, Makens explained that likely means dryness continues across the Southwest and South with warm temperatures. The Northern Plains and Corn Belt are expected to have wetness farther east this spring and drier conditions for this summer, with temperatures closer to normal versus last year.

With that weather outlook in mind, CattleFax expects planted corn acres this coming season to be 91.8 million, with a trend-line yield of 180 bu./acre. CattleFax expects soybean acres to remain near steady at 87.2 million acres.

“Exceptional demand from China is leading U.S. corn exports to new records and expanded interest could easily push exports higher in 2022,” according to Mike Murphy, CattleFax vice president of research and risk management services.

Murphy noted that weather is likely to continue influencing hay prices with much of the Central Plains and the West battling some level of dryness or drought. He explains, on-farm hay stocks Dec. 1 were 6% less year over year at 79 million tons.

“Expect current-year hay prices to average near $186/ton, $10 higher than 2021 prices due to tighter supplies and stronger demand,” Murphy said.

Negotiated cash fed cattle trade was moderate on moderate demand in the Southern Plains through Thursday afternoon, according to the Agricultural Marketing Service (AMS).

Live sales in the Texas Panhandle were $3 higher at $140 and $3-$4 higher in Kansas at $139-$140. Earlier in the week, live trade was $2-$3 higher in Nebraska at $138-$140 and in the western Corn Belt at $140. Dressed trade was $4 higher at $222.

Cattle futures closed mixed to a touch lower Thursday on likely profit taking from the recent run-up.

Feeder Cattle futures closed an average of 21¢ lower (5¢ to 55¢).

Live Cattle futures closed mixed, from an average of 16¢ lower to an average of 33¢ higher. 

Choice Boxed beef cutout value was $1.69 lower Thursday afternoon at $281.46/cwt. Select was $3.10 lower at $276.47.

Soybean futures closed mostly fractionally higher to 3¢ higher.

Corn futures closed 1¢ to 5¢ lower.

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Tech stocks sent major U.S. financial indices on downward plunge Thursday. Meta stock, the parent company of Facebook fell 26% on missed fourth-quarter earnings.

Spot Crude oil futures (WTI-CME) added pressure as it rose to more than $90 for the first time since 2014 amid ongoing geopolitical turmoil.

The Dow Jones Industrial Average closed 518 points lower. The S&P 500 closed 112 points lower. The NASDAQ was down 539 points.

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Wholesale beef demand will likely slow in the coming year, but cutout value should hold steady near an average of $280/cwt., says Kevin Good, CattleFax vice president of industry relations and analysis.

During the CattleFax Outlook Seminar in Houston this week, Good explained global protein demand continues to rise, and U.S. beef exports are expected to grow by 5% this year to 3.7 billion lbs., supported in part by tightening global protein supplies.

Likewise, CattleFax sees continued domestic consumer beef demand strength this year.

Good explains inflation is also driving beef prices to a higher trading range. The USDA All-Fresh Beef Retail Price should average near $7.15/lb. this year, ultimately resulting in more margin in the system.

While U.S. median household income increased last year, historically high inflation is affecting low-to-middle income Americans the most, Good says.