WLI

Negotiated cash fed cattle trade was limited on light demand in the Texas Panhandle through Thursday afternoon, but early live sales were $3 higher than last week at $138/cwt.

Elsewhere, trade was mostly at a standstill.

Earlier in the week, live prices in Nebraska and the western Corn Belt were at $140/cwt., which was $5 higher in Nebraska and $2 higher in the western Corn Belt. Dressed prices of $220-$222 were $3-$4 higher in Nebraska and $3-$5 higher in the western Corn Belt.

Cattle futures were narrowly mixed Thursday, as some traders checked out for the year. The weekly U.S. Export Sales report for the week could have added some pressure to Live Cattle. Net U.S. beef export sales for the week ending Dec. 23 were 48% less than the prior week and 55% less than the previous four-week average.

Live Cattle futures closed an average of 36¢ lower.

Feeder Cattle futures closed an average of 46¢ higher (5¢ higher at the back to 95¢ higher toward the front), except for 35¢ lower in Sep.

Choice boxed beef cutout value was 45¢ lower Thursday afternoon at $265.26/cwt. Select was $1.14 higher at $258.23/cwt.

Grain futures closed lower Thursday with rains in South America and position squaring.

Corn futures closed 9¢ to 10¢ lower in the front four contracts and then mostly 5¢ to 6¢ lower.

Soybean futures closed 20¢ to 30¢ lower in the front six contracts and then mostly 5¢ to 7¢ lower.

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Major U.S. financial indices eased lower Thursday, likely due mostly to some month-end and year-end position squaring ahead of what will be a long weekend for some. Positive news on the day included fewer initial jobless claims than expected. Weekly initial unemployment insurance claims for the week ending Dec. 25 were 198,000, which were 8,000 less than previous week, according to the U.S. Department of Labor. That was the lowest level since Oct. 25, 1969.

The Dow Jones Industrial Average closed 90 points lower. The S&P 500 closed 14 points lower. The NASDAQ was down 26 points.

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Some aspects of the U.S. restaurant industry are beginning to improve after being hampered by the pandemic, according to the NPD Group (NPD).

“The increased mobility this fall contributed to year-over-year gains at key restaurant dayparts, although visits are not fully back to pre-pandemic levels,” says David Portalatin, NPD food industry advisor.

In the last three months, ending in November, online and physical visits to restaurants for breakfast increased by 11% compared to a 10% decline during the same period a year ago. From a pre-pandemic view, breakfast traffic is now at the same level as the September through November period in 2019. Morning snack visits improved 6% over the last three months compared to a 7% decline last year and a 1% decline for the same period in 2019. Lunch improved by 4% in the reported period compared to a year ago when visits were down by 11%, but are still 7% below pre-pandemic levels, according to NPD’s continual tracking of the U.S. foodservice industry. 

“We’re in a steady state for the next several months, perhaps with a bump up or down here and there, but we expect to lag pre-pandemic traffic levels through 2022 slightly,” Portalatin says.

Negotiated cash fed cattle trade was limited on light demand in Nebraska and the western Corn Belt through Wednesday afternoon, with too few transactions to trend, according to the Agricultural Marketing Service. So far this week live prices in those regions are at $140/cwt., which is $5 higher in Nebraska and $2 higher in the western Corn Belt. Dressed prices of $220-$222 are $3-$4 higher in Nebraska and $3-$5 higher in the western Corn Belt.

Trade in the Southern Plains was at a standstill. Live prices there last were $135.

Cattle futures, especially Feeder Cattle, climbed higher Wednesday, buoyed by cash market gains and higher wholesale beef prices.

Feeder Cattle futures closed an average of $1.79 higher (97¢ to $2.82 higher with most strength in the front months).

Live Cattle futures closed an average of $1.01 higher (65¢ higher to $1.37 higher).

Choice boxed beef cutout value was $1.05 higher Wednesday afternoon at $265.71/cwt. Select was $1.00 higher at $257.09/cwt.

Corn futures closed mostly 2¢ to 4¢ higher after fractionally mixed in the front three contracts. 

Soybean futures closed mostly 2¢ to 8¢ higher through Jan ‘23 and then 6¢ to 13¢ higher.

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Major U.S. financial indices closed narrowly mixed again Wednesday with holiday-lightened trade and little news to shove it one direction or the other.

The Dow Jones Industrial Average closed 90 points higher. The S&P 500 closed 6 points higher. The NASDAQ was down 15 points.

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Creighton University’s Rural Mainstreet Index (RMI) remained above growth neutral in December for the 12th consecutive month.

“Solid grain prices, the Federal Reserve’s record-low interest rates, and growing exports have underpinned the Rural Mainstreet Economy. USDA data show that 2021 year-to-date agriculture exports are more than 20.7% above the same period in 2020. This has been an important factor supporting the Rural Mainstreet economy,” says Ernie Goss, Ph.D., Jack A. MacAllister Chair in Regional Economics at Creighton University’s Heider College of Business.

The RMI stems from a monthly survey of bank CEOs in rural areas of a 10-state region dependent on agriculture and/or energy. It slipped one point month to month in December to 66.7. The index ranges between 0 and 100 with a reading of 50.0 representing growth neutral.

“Seven of 10 bankers described their local economy as expanding, while only 6.7% indicated that their local economy was in a modest economic downturn,” says Goss.

More specifically, Todd Douglas, CEO of First National Bank in Pierre, South Dakota, explains, “With the paycheck protection program (PPP) monies, and good commodity prices, even with some areas of reduced yields due to lack of moisture, agriculture borrowers should be in good shape for 2022.”

The region’s farmland price index rose to a record high of 90.0 in December, up from 85.5 in October. The index has been above growth neutral for 15 consecutive months. Bank CEOs say annual cash rents for non-irrigated, non-pasture farmland soared to $262 from $218 one month prior to the pandemic in February 2020.

Jeff Bonnett, CEO of Havana State Bank in Havana Illinois, cautions, “Inflation is real and affecting folks in our service areas.”

“Yields and prices ended being up over projections for 2021 but it appears land costs and all crop inputs will be up significantly in 2022,” says Steve Simon, CEO of South Story Bank & Trust in Huxley, Iowa.

Although it was slow trade and light demand, negotiated cash fed cattle prices began the week $2 higher on a live basis at $140/cwt. in the western Corn Belt through Tuesday afternoon, according to the Agricultural Marketing Service. Dressed prices there last week were at mainly $217.

Elsewhere, trade ranged from a standstill to limited on light demand with too few transactions to trend. Last week, live prices were at $135/cwt. in the Southern Plains and Nebraska. Dressed trade was at $217-$218.

The stronger cash outlook and recently higher boxed beef prices helped Live Cattle futures firm. They closed an average of 24¢ higher (from 5¢ higher to $1.17 higher in almost-spent Dec).

Choice boxed beef cutout value was 18¢ higher Tuesday afternoon at $264.66/cwt. Select was 91¢ higher at $256.09/cwt.

Lower Corn futures prices helped Feeder Cattle close an average of $1.19 higher.

Corn futures closed lower on likely profit taking. Prices were 8¢ to 10¢ lower through May ‘23 and then mostly 4¢ to 5¢ lower.

Soybean futures paused from steep gains in the previous session, closing mostly 3¢ to 4¢ lower.

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Major U.S. financial indices closed narrowly mixed Tuesday

The Dow Jones Industrial Average closed 95 points higher. The S&P 500 closed 4 points lower. The NASDAQ was down 89 points.

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Consumer food prices continue to charge higher.

The Consumer Price Index (CPI) for all items in November was 6.8% higher year over year, according to the U.S. Bureau of Labor Statistics.

“Although the rate of growth is the fastest in nearly four decades, it is still below levels seen during the late 1970s and early 1980s, which were well above 6% and several months recorded double digit growth,” according to analysts with the Livestock Marketing Information Center (LMIC) in a mid-December Livestock Monitor.

The Food CPI was 6.1% higher year over year, apparently driven by surging meat and poultry prices.

“The Meat CPI continued its double-digit growth with November 16.0% above last year. During the pandemic the Meat CPI grew 16.7%, which is still below growth rates of the late 1970s which reached into the 20% range for several months. The Poultry CPI grew 8.4%, which was just below increase of 8.7% in June 2020 during the pandemic,” say LMIC analysts.

Although less startling, the annual year-to-date average monthly CPI was significantly higher through November compared to history.

The year-to-date Consumer Price Index (CPI) for all food increased an average of 3.6% through November, according to the December Food Price Outlook from USDA’s Economic Research Service (ERS). Food-at-home prices were up an average of 3.1% and food-away-from-home prices were 4.2% higher.

“Of all the CPI food-at-home categories tracked by the USDA-ERS, the beef and veal category has had the largest relative price increase (8.7%) and the fresh vegetables category the smallest (0.9%). No food categories have decreased in price in 2021 compared with 2020,” according to ERS analysts.

In 2022, ERS analysts project food-at-home prices to increase 1.5% to 2.5% and food-away-from-home prices to increase between 3.0% to 4.0%.

By way of comparison, food-at-home prices increased 3.5% in 2020 and 0.9% in 2019. The 20-year average is 2.0%.

“November Choice retail beef prices were $7.85 per pound which eased slightly (5 cents) from the prior month’s record high of $7.90. Prices for ground beef, roast, round, and sirloin all remained elevated at in November at $4.72, $7.27, $7.40, and $11.51 per pound, respectively,” according to LMIC analysts. “Retail pork prices continued to climb in November reaching $4.82 per pound, which marks the eighth consecutive month that retail pork prices set a new record. Boneless hams reached a record of $4.94 per pound while bacon and chops remain elevated at $7.27 and $4.43, respectively. The broiler composite retail price hit a record of $2.21 per pound, the fifth consecutive month for a record price.”

Cattle futures closed mixed amid light trade to start the week with front-month Feeder Cattle under the most pressure from increasing Corn futures.

Feeder Cattle futures closed mixed, from an average of 57¢ lower across the front half of the board to an average of 17¢ higher.

Live Cattle futures closed narrowly mixed (from an average of 19¢ lower to an average of 19¢ higher.

Negotiated cash fed cattle trade was at a standstill through Monday afternoon, according to the Agricultural Marketing Service.

Last week, live prices were at $135/cwt. in the Southern Plains and Nebraska, and at $138 in the western Corn Belt. Dressed trade was at $217-$218.

The five-area direct weighted average steer price last week was $1.55 lower at $135.64. It was $1.12 lower in the beef at $217.30.

Choice boxed beef cutout value was $1.54 higher Monday afternoon at $264.48/cwt. Select was $2.23 higher at $255.18/cwt.

Nearby Corn and Soybean futures climbed on Monday, presumably in response to the continued hot and dry weather forecast in South America.

Corn futures closed 9¢ through the front three contracts and then mostly 2¢ to 3¢ higher.

Soybean futures closed 26¢ to 30¢ higher through the front five contracts and then mostly 7¢ to 10¢ higher.

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Major U.S. financial indices bounced higher Monday, buoyed by optimistic early reports of holiday spending.

Holiday retail sales, excluding automotive, increased 8.5% year over year during the holiday season Nov. 1 through Dec. 24, according to Mastercard SpendingPulseTM, which measures in-store and online retail sales across all forms of payment. Online sales grew 11.0% compared to the same period last year.

“Shoppers were eager to secure their gifts ahead of the retail rush, with conversations surrounding supply chain and labor supply issues sending consumers online and to stores in droves,” says Steve Sadove, senior advisor for Mastercard and former CEO and Chairman of Saks Incorporated. “Consumers splurged throughout the season, with apparel and department stores experiencing strong growth.”

The Dow Jones Industrial Average closed 351 points higher. The S&P 500 closed 65 points higher. The NASDAQ was up 217 points.

Higher oil prices added support. West Texas Intermediate Crude Oil futures on the CME were $1.72 to $1.78 higher in the front six contracts.

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More lighter-weight cattle placed in feedlots in November — compared to previous months in 2021 — speaks to several unfolding realities, according to Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly market comments.

As noted in the last Cattle Current, November feedlot placements were 3.6% more year over year, according to the latest USDA Cattle on Feed report. Peel points out the increase was comprised of cattle weighing less than 700 lbs., which were 7.0% more than the previous year. Cattle placed on feed at weights heavier than 700 lbs. were 0.7% less.

“Placements of lightweight cattle are typically high in November with seasonally large numbers of spring-born calves. However, the increase may be somewhat exaggerated this year for several reasons,” Peel explains. “Drought limitations are likely contributing to increased placements, the result of reduced opportunities for backgrounding calves this winter. Additionally, drought may also be causing fewer heifers to be held as replacements and further increasing lightweight placements.

“Finally, feedlots may be placing more lightweight cattle simply because overall feeder supplies are declining. As feeder supplies decrease, feedlots will, for a few months, be able to hold feedlot inventories by placing smaller cattle, essentially borrowing against future feeder supplies. Lightweight placements will also add more days on feed and further extend feedlot inventories for a period of time. However, as 2022 proceeds, smaller feeder cattle supplies will result in more pronounced decreases in feedlot inventories.”

Markets head into what will be a long holiday weekend for many on a positive note.

Cattle futures gained again Thursday with traders apparently content to position on the plus side heading into the long weekend. Although trade was holiday-light, open interest in Live Cattle expanded the last two days. Higher outside markets added support.

Feeder Cattle futures closed an average of $1.25 higher (72¢ higher at the back to $1.82 higher toward the front).

Live Cattle futures closed an average of $1.22 higher (70¢ higher toward the back to $2.25 higher toward the front).

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

For the week, live prices are $1 lower in the Texas Panhandle at $135/cwt. and $1-$3 lower in Kansas and Nebraska at $135. Dressed trade in Nebraska is steady to $1 lower at $217-$218. Last week, live prices were at $138 in the western Corn Belt and dressed trade was at $217-$218.

Choice boxed beef cutout value was $1.08 higher Thursday afternoon at $262.94/cwt. Select was $2.12 higher at $252.95/cwt.

Corn futures closed mostly 1¢ to 3¢ higher.

Soybean futures closed 3¢ to 7¢ higher through Sep ‘22 and then mostly 6¢ lower.

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Major U.S. financial indices rolled higher Thursday. Apparently FDA’s emergency use authorization of the Pfizer COVID treatment pill and Thursday’s authorization of an antiviral pill from Merck added confidence.

The Dow Jones Industrial Average closed 196 points higher. The S&P 500 closed 29 points higher. The NASDAQ was up 131 points.

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Logic says markets should view the latest monthly Cattle on Feed report (1,000 head and more capacity) as neutral to a touch friendly.

Cattle feeders placed 1.97 million head in November, which was 68,000 head more (+3.6%) than a year earlier. That was in line with pre-report expectations.

In terms of placement weights, 53.3% went on feed weighing 699 lbs. or less, 35.5% weighing 700-899 lbs. and 11.2% weighing 900 lbs. or more.

Marketings in November of 1.87 million head were 94,000 head more (+5.3%) than a year earlier. That was a touch more than pre-report expectations.

Cattle on feed Dec. 1 of 11.98 million head were 51,000 head fewer (-0.4%) than the same time last year.