WLI

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.”

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.”