WLI

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. 

Stronger cash prices, the early-week, bullish Cattle report, the performance-depressing widespread winter storm and improved packer production helped Cattle futures take another step higher Wednesday.

Feeder Cattle futures closed an average of $2.17 higher ($1.55 to $3.175 higher).

Live Cattle futures closed an average of $1.14 higher (83¢ to $1.65 higher).

Negotiated cash fed cattle trade in Nebraska and the Western Corn Belt was moderate through Wednesday afternoon, according to the Agricultural Marketing Service. In Nebraska, live sales traded $3-$4 higher at $140/cwt. and dressed sales traded $4 higher at $222. In the Western Corn Belt, live sales traded $3 higher at $140-$141 and dressed prices were $4 higher at $222.

Trade in the Southern Plains was mostly inactive on light demand. Last week, live sales were $137 in the Texas Panhandle and $136 in Kansas.

Choice Boxed beef cutout value was $2.29 lower Wednesday afternoon at $283.15/cwt. Select was 65¢ lower at $279.57

Corn futures closed mostly down 2¢ to 12¢.

Soybean futures closed 1¢ to 16¢ higher through March ’23, then down 2¢ to 9¢.

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Follow-through support carried Major U.S. financial indices higher again on Wednesday.

The Dow Jones Industrial Average closed 224 points higher. The S&P 500 closed 71 points higher. The NASDAQ was up 42 points.

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CattleFax provided a strongly optimistic cattle price forecast during its Outlook Seminar in Houston Wednesday.

With cattle numbers declining, front-end fed cattle marketing approaching pre-civid levels and beef demand continuing strong, CattleFax projects the average fed steer price this year $18 higher year-over-year at $140/cwt. with a range of $130-$155. The organization forecasts the average feeder steer price (800 lbs.) at $172 with a range of $158-$184, and the average calf price (550 lbs.) at $205 with a range of $180-$230.

Moreover, CattleFax forecasts utility cows at an average of $75/cwt. with a range of $65 to $85. Bred cows are expected to bring an average $1,850/head with a range of $1,700 to $2,000 for load lots of quality, running-age cows.

The feeder cattle and calf supply will be 675,000 head fewer than last year, totaling 25.5 million head, according to CattleFax. Fed cattle slaughter will decline 400,000 head to 25.7 million head. Commercial beef production will contract over the next several years starting with a 2% decline in 2022.

Kevin Good, vice president of industry relations and analysis at CattleFax, pointed out U.S. beef cow inventories fell more than 700,000 head from last year and are nearly 1.6 million less than the cyclical peak. This year, the beef cow herd will be near 30.1 million head.

“Drought, market volatility and processing capacity challenges affected 30-40% of the cow herd over the last year. Without an improvement in weather and profitability, at least 250,000 more head will be liquidated in 2022,” Good says.

Cattle futures extended gains Tuesday after a struggle for follow-through support from the bullish Cattle report and thoughts that packer interest will improve this week.

Live Cattle futures closed an average of 72¢ higher (28¢ to 90¢).

Feeder Cattle futures closed an average of 70¢ higher (55¢ to 93¢ higher).

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

Last week, live prices were at $137/cwt. in the Texas Panhandle, at $136 in Kansas $137 in Nebraska and at $137-$139 in the western Corn Belt. Dressed trade was steady at $218.

Choice Boxed beef cutout value Tuesday afternoon was $4.96 lower at $285.44/cwt. Select was $3.05 lower at $280.22.

Corn futures closed 4¢ to 9¢ higher in the front six contracts.

Soybean futures closed 12¢ to 38¢ higher.

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Major U.S. financial indices closed Tuesday with the best three-day rally since 2020, as investors seemed to speculate the Federal Reserve will not stymie growth as it seeks to cool inflation.

The Dow Jones Industrial Average closed 273 points higher. The S&P 500 closed 31 points higher. The NASDAQ was up 106 points.

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Agricultural producer sentiment weakened in January as measured by the Purdue University/CME Group Ag Economy Barometer. The index declined 6 points from the previous month to 119, its second-lowest reading since July 2020. The Index of Current Conditions fell 13 points to a reading of 133, while the Index of Future Expectations was down 2 points to a reading of 112.

The Ag Economy Barometer is calculated each month from 400 U.S. agricultural producers’ responses to a telephone survey. This month’s survey was conducted between Jan. 17-21, 2022.

“Rising farm input costs and ongoing supply chain disruptions appear to be contributing to producers’ weaker perception of current conditions and expectations of their farm’s financial performance in 2022 when compared to last year,” says James Mintert, the barometer’s principal investigator and director of Purdue University’s Center for Commercial Agriculture.

Disruptions in the supply chain for many farm inputs, coupled with strong demand, are pushing production costs higher. In January, 57% of survey respondents said they expect farm input prices to rise by 20% or more in 2022 and 34% of producers said they expect prices to rise by 30% or more.

Beyond higher prices, 28% of survey respondents said they have had difficulty purchasing crop inputs from suppliers for the 2022 season. In a follow-up question posed to those experiencing difficulty in procuring crop inputs, respondents reported difficulty in purchasing a broad spectrum of crop inputs including herbicides, insecticides, fertilizer, and farm machinery parts.

Monday’s big news was the Cattle report from USDA, with the Jan. 1 cattle inventory. Herd contraction was expected, but numbers are less than many expected.

Beef cows of 30.125 million head were 718,500 head fewer (-2.3%) than the same time last year. That is the fewest numbers since 2015 and was the largest year-over-year decline since 1996-97, according to David Anderson, Extension livestock economist at Texas A&M University. He adds the report included a significant revision of 314,000 fewer head in the previous year’s beef cow inventory.

Although drought contributed to the decline in beef cows, Anderson adds calf prices, relative to costs, also has forced some culling.

Beef heifers held for replacement of 5.611 million head were 191,600 head fewer (-3.3%) than the previous year.

“That is the fewest replacement heifers held back since Jan. 1, 2014,” Anderson says, in the latest issue of In the Cattle Markets. “While fewer replacements would be needed with a smaller cow herd, a reduction this large indicates some expectations of more herd contraction.”

The calculated feeder supply outside of feedlots of 25.537 million head was 676,000 head fewer (-2.6%) than last year.

Dairy cows of 9.375 million head were 67,400 head fewer (-0.7%)

All cattle and calves of 91.902 million head were 1.888 million head fewer (-2.0%).

“The inventory report indicates that we are headed towards less beef production and higher prices,” Anderson says. “A cow herd of this size should also lead to some expectations of calf prices approaching the rarified air of the years following the Texas 2010-2012 drought. The current drought and its development over the coming months will dictate a lot about the cow herd over this year. But, good beef demand should also pull prices higher on top of available supplies.”

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Cattle futures closed higher with likely positioning ahead of the aforementioned  bullish Cattle report.

Live Cattle futures closed an average of $1.18 higher (88¢ to $1.42).

Feeder Cattle futures closed an average of $2.64 higher ($1.75 to $3.40 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 $137/cwt. in the Texas Panhandle, at $136 in Kansas $137 in Nebraska and at $137-$139 in the western Corn Belt. Dressed trade was steady at $218.

Choice Boxed beef cutout value was 2¢ lower Monday afternoon at $290.40/cwt. Select was 14¢ lower at $283.27.

Corn futures closed mixed, from 10¢ lower to 4¢ higher.

Soybean futures closed 13¢ to 20¢ higher through Aug ’23 and then 2 higher to 3¢ lower.

Judging by estimated weekly cattle slaughter, the beef packing pace continues to improve but remains hindered.

Total cattle slaughter last week of 643,000 head was 7,000 head more than the previous week but 13,000 head less than the same week last year.

Oversold conditions and higher wholesale beef prices helped Cattle futures regain some ground Friday.

Choice Boxed beef cutout value was $1.31 higher Friday afternoon at $290.42/cwt. Select was $4.31 higher at $283.41.

Live Cattle futures closed an average of 89¢ higher, except for unchanged in the back contract.

Feeder Cattle futures closed an average of 71¢ higher (12¢ to $1.37 higher).

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

For the week, live prices were steady in the Texas Panhandle at $137/cwt., $1 lower in Kansas at $136, steady to $1 lower in Nebraska at $137 and steady in the western Corn Belt at $137-$139. Dressed trade was steady at $218.

Keep in mind, USDA will release Jan. 1 cattle inventory numbers Monday afternoon.

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Resurgent tech stocks helped major U.S. financial indices close sharply higher Friday.

The Dow Jones Industrial Average closed 564 points higher. The S&P 500 closed 105 points higher. The NASDAQ was up 417 points.

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South American weather and the tension between Russia and Ukraine continued to bolster grain prices and market volatility last week.

In his weekly comments, Aaron Smith, crop marketing specialist at the University of Tennessee points out Brazil and Argentina account for 58% of global soybean exports and 40% of global corn exports.

As for political tension in eastern Europe, Smith explains, “Russia has increased its share of global wheat exports from less than 10% in the early 2000s to approximately 20% and has been the top global supplier of wheat in recent years. For the 2021-22 marketing year, Ukraine is projected to provide 12% of global exports of wheat and 16% of global exports of corn…Conflict between the two countries could restrict supplies and disrupt logistics in the region, causing importing countries to seek supplies elsewhere.”

Soybeans received another boost Friday from worries over reduced global palm oil exports. Soybean futures closed 11¢ to 21¢ higher through Jan ‘23 and then mostly fractionally higher to 4¢ lower. Soybean futures closed an average of 45.5¢ higher through the front six contracts week to week on Friday. Those contracts were an average of 80.9¢ higher over the last two weeks.

Corn futures closed 10¢ higher in the front three contracts on Friday and then mostly 2¢ higher. They were an average of 18.9¢ higher through the front three contracts week to week.