WLI

Feeder Cattle futures gained Thursday, closing an average $1.33 higher, helped by declining front-month Corn futures.

Live Cattle futures edged higher, supported by climbing wholesale beef prices, despite the sluggish packing pace. They closed an average 40¢ higher, except for unchanged in the back contract.

Choice Boxed beef cutout value was $2.93 higher Thursday afternoon at $282.86/cwt. Select was $1.78 higher at $272.76.

Negotiated cash fed cattle trade ranged from limited on light demand to a standstill through Thursday afternoon, according to the Agricultural Marketing Service. There were too few transactions to trend.

So far this week, live prices are $1-$2 lower in the Texas Panhandle at $136-$137/cwt. and $135-$136 in Kansas. They’re $1-$3 lower in Nebraska at $137 and steady to $3 lower in the western Corn Belt at $137-$138. Dressed trade is $2 lower at $218.

Corn futures closed 3¢ to 11¢ lower through the front four contracts, and then mostly 1¢ to 2¢ higher. 

Soybean futures closed 11¢ to 26¢ lower through the front six contracts, and then mostly 2¢ to 3¢ higher.

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Major U.S. financial indices closed lower Thursday with most of the pressure in tech stocks.

Despite strong quarterly corporate earnings reports, weekly jobless claims came in more than expected.

The advance figure for seasonally adjusted initial unemployment insurance claims was 230,000 for the week ending Jan. 8, according to the U.S. Department of Labor. That was 23,000 more than the previous week. The four-week moving average increased, too.

Although less than some feared, another closely-watched inflation barometer underscored the run-up in prices.

The Producer Price Index (PPI) for final demand increased 0.2% in December, seasonally adjusted, according to the U.S. Bureau of Labor Statistics. This rise followed advances of 1.0% in November and 0.6% percent in October. On an unadjusted basis, final demand prices moved up 9.7% in 2021, the largest calendar-year increase since data were first calculated in 2010.

The PPI measures the average change over time in the selling prices received by domestic producers for their output.

Prices for final demand less foods, energy, and trade services rose 0.4% in December, following a 0.8% increase in November. In 2021, the index for final demand less foods, energy, and trade services moved up 6.9%, following a 1.3% advance in 2020.

The Dow Jones Industrial Average closed 176 points lower. The S&P 500 closed 76 points lower. The NASDAQ was down 381 points.

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USDA’s Foreign Agricultural Service (FAS) estimates global beef production this year at 58.2 million metric tons (mt) in the latest Livestock and Poultry World Markets and Trade. That’s slightly more than projected in the previous quarterly report (Oct.). It would be 585,000 mt more than 2021 (+1.0%).

“Brazil beef production is lowered 2% for 2021 due to disrupted sales to China in the fourth quarter. In September, Brazil reported detection of atypical bovine spongiform encephalopathy (BSE), causing China to temporarily restrict beef imports, leading to delayed slaughter of cattle over this time period,” according to the report. “In Australia, 2022 production is higher than previously forecast with herd rebuilding well underway and some slaughter deferred in December under adverse weather impacting transportation.”

FAS analysts note China’s beef supply is expected to be down nearly 1% this year with steady imports but lower projected domestic production. “Imports continue to make up an increasing share of consumption as the Chinese diet evolves and as domestic product struggles to compete on both price and quality,” they say.

In the meantime, net U.S. beef export sales for the week ending Jan. 6 were primarily to Japan, Mexico, South Korea, China and Egypt, according to the weekly U.S. Export Sales report.

Negotiated cash fed cattle trade was slow on light demand in Kansas through Wednesday afternoon, with live trade $1 lower than the previous day and $3 lower than the previous week at $135/cwt.

Although too few transactions to trend, dressed trade in Nebraska was $2 lower at $218. Live prices there last week were $138-$140.

Trade was limited on light demand in the Texas Panhandle, where live prices last week were $138 and in the western Corn Belt where prices were $138-$140. Dressed trade in the western Corn Belt last week was at $220.

Softer cash prices in the North, after weakness in the South, helped pressure Cattle futures Wednesday.

Feeder Cattle futures closed an average of 62¢ lower (10¢ to $1.35 lower).

Live Cattle futures closed an average of 55¢ lower (17¢ to $1.10 lower), except for unchanged to 37¢ higher in the back three contracts.

Choice Boxed beef cutout value was $1.71 higher Wednesday afternoon at $279.93/cwt. Select was $2.35 higher at $270.98

Soybean futures closed mostly 10¢ to 13¢ higher, likely supported by the World Agricultural Supply and Demand Estimates.

Corn futures closed mostly fractionally higher to 6¢ higher, except for 1¢ to 2¢ lower in the front three contracts.

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Major U.S. financial indices managed to eke out gains Wednesday, despite confirmation of the steamiest inflation in about four decades.

The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.5% in December on a seasonally adjusted basis after rising 0.8% in November, according to the U.S. Bureau of Labor Statistics. Over the last 12 months, the all items index increased 7.0% before seasonal adjustment, the largest 12-month increase since the period ending June 1982.

The Dow Jones Industrial Average closed 38 points higher. The S&P 500 closed 13 points higher. The NASDAQ was up 34 points.

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USDA’s Economic Research Service (ERS) increased the 2022 average expected fed steer price $2 to $137/cwt., compared to the previous month’s projection, in the latest World Agricultural Supply and Demand Estimates (WASDE). For reference, the projected annual price for 2021 was $122.40.

Average prices are forecast at $139 in the first quarter, $136 in the second quarter, $134 in the third quarter and $138 in the fourth quarter.

That’s with beef production this year forecast at 27.17 billion lbs., which would be 785 million lbs. less (-2.8%) than last year.

Total red meat and poultry production is projected at 106.67 billion lbs., which would be 168 million lbs. less (-0.16%) than last year.

Negotiated cash fed cattle trade was very limited on light demand in the Southern Plains through Tuesday afternoon. Early live sales were mostly $1 lower in the Texas Panhandle at $137/cwt. and mostly $1-$3 lower in Kansas at $135-$137. 

Trade was mostly inactive on light demand in Nebraska and the western Corn Belt. Prices in those regions last week were $138-$140 on a live basis and $220 in the beef.

Choice Boxed beef cutout value was $2.18 higher Tuesday afternoon at $278.22/cwt. Select was $2.13 higher at $268.63.

Cattle futures found some traction Tuesday with support from higher outside markets and healthier looking packer processing, for a day at least.

Feeder Cattle futures closed an average of 57¢ higher (10¢ to $1.15 higher), except for 67¢ lower in the back contract.

Live Cattle futures closed an average of 52¢ higher (12¢ to $1.42 higher), except for 5¢ lower toward the back.

Corn and Soybean futures paddled in place ahead of Wednesday’s World Agricultural Supply and Demand Estimates.

Soybean futures closed mostly unchanged to fractionally mixed after 1¢ to 2¢ higher in the front four contracts.

Corn futures closed mostly fractionally mixed.

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Major U.S. financial indices rallied back on Tuesday, supported by a slightly lower treasury yield rate and led by tech stocks as it appeared investors took advantage of the recent sell-off to take a stake.

The Dow Jones Industrial Average closed 183 points higher. The S&P 500 closed 42 points higher. The NASDAQ was up 210 points.

CME WTI Crude Oil futures closed $2.63 to $2.99 higher through the front six contracts.

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“Cattle continue the move into the New Year with optimism,” says Stephen Koontz, agricultural economist at Colorado State University, in the latest issue of In the Cattle Markets. “Some related markets have shown short periods of weakness but the underlying perspective of a comprehensive look at cattle and beef markets is strength.”

Although prices were wobbly in recent days, Koontz points out, “The weekly five-area weighted average fed price fell to $138.41 in the second week of January, but this market peaked in the first week of December at $140.44, and the last time this market was in the $140s was the first week of May 2017. USDA Choice boxed beef cutout values were $262.14 for the second week of January, and this is down from the peaks in late August and early June approaching $350, but these are valuations from a market which was rarely above $250 outside of the pandemic shutdown period. Similarly, beef animal hide and offal values fell to $13.62/cwt. of live animal from $16 peaks, but these valuations have spent the last five years at or below $12.”

Koontz adds any weakening in consumer retail prices for animal protein is from record-high levels.

“These high retail prices — albeit flawed, as in not capturing actual purchase price discounts — combined with strong volumes of protein production clearly indicate very strong demand by domestic consumers. We are approaching two-years into the pandemic and the overall domestic economy is clearly signaling strength.”

Nearer term, Andrew P. Griffith, agricultural economist at the University of Tennessee, says in his weekly market comments, “Both slaughter cattle and lightweight calf prices would typically be expected to seasonally increase as the market approaches spring calving and the spring stocker grazing season, which seems certain to occur. However, the price increase is shaping up to be stronger than the seasonal tendency. Lightweight calf prices could easily push as high as $180/cwt. by the end of March and early April while slaughter cow prices may push the $75/cwt. price mark.”

Inflation jitters weighed on most commodities and outside markets Monday. Cattle futures were also pressured by recently slower packer processing and fears of back-logging cattle.

Live Cattle futures closed an average 86¢ lower (17¢ lower at the back to $1.47 lower toward the front), amid heavy trade .

Feeder Cattle futures closed an average 81¢ lower (5¢ lower at the back to $1.42 lower).

Negotiated cash fed cattle 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 steady in the Texas Panhandle at $138/cwt., but steady to $2 lower at $136-$138 in Kansas and at $138-$140 in Nebraska and the western Corn Belt. Dressed trade was also steady to $2 lower at $220.

The five-area direct average steer price was $1.18 lower on a live basis last week at $138.41/cwt. The average price in the beef was 91¢ lower at $219.98.

Choice Boxed beef cutout value was $4.22 higher Monday afternoon at $276.04/cwt. Select was $5.40 higher at $266.50/cwt.

As for grains, Soybean futures softened to start the week with rains forecast for South America.

Soybean futures closed 21¢ to 26¢ lower through Nov ‘22 then 14¢ to 19¢ lower through Sep ’23 and mostly 4¢ lower across the rest of the board.

Corn futures closed fractionally mixed to 7¢ lower through May ’23 and then mostly 4¢ to 5¢ higher.

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Major U.S. financial indices continued to sag Monday, beneath the weight of concerns surrounding higher forthcoming interest rates. However, they clawed back some earlier-session losses by the end of the trading day.

The Dow Jones Industrial Average closed 162 points lower. The S&P 500 closed 6 points lower. The NASDAQ was up 6 points.

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“Beef and cattle trade is projected to be generally supportive in 2022,” says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his latest weekly marketing comments. “Beef exports are forecast to pull back slightly in the coming year but lower imports are also forecast. After more than a year of extremely rapid growth, the China/Hong Kong market for U.S. beef was growing at a slower pace at the end of 2021, but continued growth is expected and could push China/Hong Kong above South Korea or possibly Japan in the foreseeable future.”

As mentioned in the last issue of Cattle Current, U.S. beef exports continued at a record pace through November in terms of both volume and value.

Beef exports to China/Hong Kong were on pace to exceed $2 billion in 2021. Through November, exports to the region nearly doubled from a year ago to 219,264 mt (up 98%) and increased 125% in value to $1.9 billion, according to the U.S. Meat Export Federation (USMEF). Direct exports to China, bolstered by greatly improved market access achieved in the U.S.-China Phase One Economic and Trade Agreement, increased more than 400% from a year ago to 172,257 mt, valued at $1.43 billion (up 502%).

However, Japan will finish 2021 as the leading volume destination for U.S. beef exports, but is in a neck-and-neck race with South Korea on export value, according to USMEF data.

For January through November, U.S. beef exports to Korea were record high at 258,552 mt valued at $2.17 billion – up 13% and 36% respectively. 

During the same period, exports to Japan were 6% above last year’s pace at 297,354 mt. Export value reached $2.16 billion, up 22% and exceeding $2 billion for the first time since 2018. Growth to Japan has been in the chilled beef category and in tongues, skirts and other variety meat.

“Beef by-products, which are mostly exported, had significantly higher value in 2021, averaging nearly 54% higher year over year,” Peel says. “By-product value increases were led by sharply higher tallow prices, both edible and inedible, (up 71% and 95%, respectively) and hide prices (up 62% year over year). Prices were also higher for liver, tongue, tripe and cheek meat. Weekly by-product values peaked in November and declined to the end of the year but were still 51% higher year over year in late December.”

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

For the week, live prices were steady in the Southern Plains at $138/cwt., but steady to $2 lower at $138-$140 in Nebraska and the western Corn Belt. Dressed trade was also steady to $2 lower at $220.

Cattle futures closed narrowly mixed Friday, with support from higher wholesale beef prices, but with continued concern about slower cattle harvest.

Estimated cattle slaughter last week of 620,000 head was 32,000 head fewer than the same week last year.

Feeder Cattle futures closed narrowly mixed, from an average of 36¢ lower to an average of 36¢ higher.

Live Cattle futures closed an average 20¢ higher, except for an average of 29¢ lower in three contracts.

Choice boxed beef cutout value was $3.26 higher Friday afternoon at $271.82/cwt. Select was 46¢ higher at $26.10.

Grain futures gained Friday with ongoing bearish weather in South America and expectations to see corn and soybean estimates in that region trimmed when the monthly World Agricultural Supply and Demand Estimates come out Wednesday.

Soybean futures closed 19¢ to 24¢ higher through the front six contracts and then mostly 11¢ to 14¢ higher.  

Corn futures closed mostly 3¢ higher through Sep ’23 and then mostly 7¢ to 8¢ higher.

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Major U.S. financial indices continued to decline Friday. Pressure included rising treasury yield rates and a monthly jobs report that was less robust than expected.

The non-farm payroll increased 199,000 in December, according to the U.S. Bureau of Labor Statistics. Average hourly earnings for all employees on private non-farm payrolls increased by 19¢ in December to $31.31. Average hourly increased by 4.7% over the previous 12 months.

The Dow Jones Industrial Average closed 4 points lower. The S&P 500 closed 19 points lower. The NASDAQ was down 144 points.

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U.S. beef export value reached another new high in November, topping $1 billion for the second time in 2021, according to data released by USDA and compiled by the U.S. Meat Export Federation (USMEF).

Beef exports for the month of 123,641 metric tons (mt), were 7% more than a year earlier and the fourth largest monthly volume in the post-BSE era. Export value was a record $1.05 billion, up 49% year-over-year and exceeding the previous high set in August 2021.

For January through November, U.S. beef exports were on a record volume pace at 1.32 million mt, up 16% from a year ago. Beef export value, which had already set a new annual record through October, increased more than $2.5 billion from a year ago, soaring 39% to $9.59 billion.

Beef export value per head of fed slaughter equated to a record $480.67 in November, up 42% from a year ago. The January-November average was $402.09, up 35%.

Through November, U.S. pork export value was $7.5 billion, up 7% from a year ago and rapidly approaching the annual record of $7.71 billion set in 2020.

“With one month of results still to be tabulated, it’s very gratifying to see red meat exports setting new annual records and achieving remarkable growth over a wide range of markets,” says USMEF President and CEO Dan Halstrom. “It is important, however, that we do not take this success for granted or allow it to detract from the challenges facing U.S. agriculture. Global demand for U.S. red meat has never been stronger, but labor and transportation obstacles and high input costs across the supply chain make it increasingly difficult to satisfy this demand. USMEF greatly appreciates the effort by lawmakers, maritime regulators and other officials to address the persistent congestion at U.S. ports, but this continues to be a costly and frustrating situation for U.S. exporters and their international customers.”