WLI

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

Last week, live prices were $142/cwt. in the Southern Plains and Colorado; $140 in Nebraska and the western Corn Belt. Dressed prices were $220.

The lack of cash direction and lower wholesale beef prices helped pressure Live Cattle futures. They closed an average of 45¢ lower.

Choice boxed beef cutout value was $3.92 lower Wednesday afternoon at $264.11/cwt. Select was $2.59 lower at $253.09.

Feeder Cattle futures stepped lower amid lackluster trade and the absence of cash direction. They closed an average of $1.45 lower.

Corn futures closed mostly fractionally mixed as traders readied for Thursday’s monthly World Agricultural Supply and Demand Estimates.

Soybean futures closed 9¢ to 12¢ higher.

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Major U.S. financial indices mainly edged higher Wednesday, as investors appeared to be waiting for more direction from the weekly jobless claims report Thursday and the next read on inflation Friday, in the monthly Consumer Price Index report.

The Dow Jones Industrial Average closed 35 points higher. The S&P 500 closed 14 points higher. The NASDAQ was up 100 points.

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U.S. beef export value soared in October, up 48% year over year to $956.9 million, the second highest monthly level on record, according to data released by USDA and compiled by the U.S. Meat Export Federation (USMEF). Beef export volume was 7.5% more at 115,709 metric tons (mt).

Through the first 10 months of the year, beef export volume totaled 1.19 million mt, up 17% from a year ago. Export value increased 38% to $8.53 billion, surpassing the full-year record of $8.33 billion established in 2018.

Beef export value per head of fed slaughter equated to $439.46 in October, up 55% from a year ago. The January-October average was $394.14, up 34%.

U.S. pork exports were 7% less year over year in October at 226,206 mt  while export value slipped 3.5% to $618.8 million. For January through October, pork exports were slightly higher than the same period last year for volume. Pork export value was 8% higher at $6.84 billion.

“USMEF has always prioritized market diversification, and this is more critical than ever now that the red meat industry faces unprecedented transportation challenges and rising input costs,” says Dan Halstrom, USMEF president and CEO. “Exports (U.S. red meat) will likely reach about $18 billion in 2021, which is a remarkable achievement. While global demand is tremendous and we are cautiously optimistic about further growth in 2022, supply chain pressures are not easy to overcome and are a growing concern for exporters and their international customers.”

Negotiated cash fed cattle trade ranged from a standstill to mostly inactive on very light demand through Tuesday afternoon with too few transactions to trend, according to the Agricultural Marketing Service.

Last week, live prices were $142/cwt. in the Southern Plains and Colorado; $140 in Nebraska and the western Corn Belt. Dressed prices were $220.

Cattle futures drifted amid lackluster trading interest Tuesday.

Live Cattle futures closed an average of 19¢ lower, except for 5¢ higher in spot Dec.

Feeder Cattle futures closed an average of 56¢ lower (22¢ lower in spot Jan to $1.17 lower in the back contract).

Choice boxed beef cutout value was $4.50 lower Tuesday afternoon at $268.03/cwt. Select was $2.17 lower at $255.68.

Corn futures closed mostly 2¢ higher.

Soybean futures closed 7¢ to 11¢ lower through the front five contracts and then mostly 2¢ to 3¢ higher.

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Major U.S. financial indices extended gains decisively Tuesday, led by tech stocks.

The Dow Jones Industrial Average closed 492 points higher. The S&P 500 closed 95 points higher. The NASDAQ was up 461 points.

West Texas Intermediate Crude Oil futures on the CME closed $2.40 to $2.56 higher through the front six contracts; about $5.00 higher in the past two sessions.

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Agricultural producer sentiment is declining as production costs increase, according to the latest Purdue University/CME Group Ag Economy Barometer.

Month to month, the Ag Economy Barometer slipped 5 points to 116 in November with pessimism increasing for both current and future conditions. The Index of Current Conditions declined 7 points in November to a reading of 128 and the Index of Future Expectations fell 4 points to 110. All three measures were the lowest for this year.

“Farmers are facing sharp rises in production costs coinciding with fluctuating crop and livestock prices, the prospect of changing environmental and tax policy, uncertainty over COVID-19, as well as a host of other issues, all of which are negatively impacting farmer sentiment” says James Mintert, the barometer’s principal investigator and director of Purdue University’s Center for Commercial Agriculture.

In November, 43% of survey respondents said they expect farm input prices to rise by more than 16% in the upcoming year. This compares with the actual average rate of farm input price inflation over the past decade of less than 2%.

Somewhat surprisingly, given the concerns about rising input costs, 52% of corn/soybean producers expect cash rental rates to rise in 2022, compared to 43% in October. This marks the highest percentage of producers reporting that they expect rental rates in 2022 to rise since the May 2021 survey.

Negotiated cash fed cattle trade ranged from a standstill to mostly inactive on very light demand through Monday afternoon with too few transactions to trend, according to the Agricultural Marketing Service.

Last week, live prices were $142/cwt. in the Southern Plains and Colorado; $140 in Nebraska and the western Corn Belt. Dressed prices were $220.

Cattle futures closed mostly higher Monday, buoyed by higher outside markets, recently stronger cash prices and prospects of higher money this week.

Feeder Cattle futures closed an average of 91¢ higher.

Live Cattle futures closed an average of 40¢ higher, except for an average of 13¢ lower in two contracts toward the back.

Choice boxed beef cutout value was $1.83 lower Monday afternoon at $272.53/cwt. Select was 79¢ lower at $257.85.

Corn futures closed mainly fractionally lower to mostly fractionally higher.

Soybean futures closed 2¢ to 5¢ lower through the front six contracts and then mostly unchanged to fractionally mixed.

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Investors started the week, apparently unafraid of the new COVID variant’s impact on the global economy. According to various reports, on Sunday, Dr. Anthony Fauci, Director of the National Institute of Allergy and Infectious Diseases said preliminary reports suggest omicron is less severe than the preceding delta variant. Major U.S. financial indices rocketed higher Monday

The Dow Jones Industrial Average closed 646 points higher. The S&P 500 closed 53 points higher. The NASDAQ was up 139 points.

West Texas Intermediate Crude Oil futures on the CME closed $2.95 to $3.23 higher through the front six contracts.

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“Drought in the wintertime is generally not a major cattle market issue with limited exceptions, such as the winter wheat crop (winter wheat grazing). However, the extent and level of drought in the U.S. at this time is troubling because of the potential for drought to extend into the next growing season, at least in some regions,” says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly market comments. 

Peel points out dry conditions have lingered in some areas since last year.

“Many beef cattle operations have already made significant adjustments and will have very little flexibility if the current drought extends into 2022. This could result in another severe round of cow liquidation in the first half of next year,” Peel says. “A decade ago, severe drought caused the unplanned liquidation of some 2 million beef cows and affected cattle markets for several years, arguably up to the current time. It is possible it could happen again.”

Based on the U.S. Drought Monitor at the end of November, 69% of the U.S. was abnormally dry or worse with more than 53% in some degree of drought (D1-D4). At the same time last year, 67% of the nation was abnormally dry or worse and 48% was in some degree of drought.

“Beef cow slaughter is up 8.6% for the year to date and includes some drought liquidation but from exactly where is unclear,” Peel says.

He created an ad-hoc index that incorporates the Drought Severity and Coverage Index, as well as the number of beef cows in the West and High Plains regions where current drought has ben most severe. With drought impacts heavily weighted, Peel says the index suggests the most significant impact on the U.S. beef cow herd this year came from North Dakota, Montana, California and South Dakota.

“The annual Cattle report, due out Jan. 31, 2022, will reveal exactly where and how much beef cow inventories changed along with other cattle inventory data,” Peel says.

Widely volatile outside markets, stemming from worries about the potential impact of the new COVID variant (omicron), pressured Cattle futures last week, despite another solid gain in cash prices. Yet, buoyant cash prices and fundamental strength continued to provide optimism.

For the week, negotiated cash fed cattle prices were $2 higher on a live basis at $142/cwt. in the Southern Plains and Colorado. They were steady to $4 higher in Nebraska at $140 and steady to $5 higher in the western Corn Belt at $140. Dressed prices were $3 higher in Nebraska at $220; $3-$7 higher in the western Corn Belt at $220.

Total estimated cattle slaughter last week of 676,000 head was 110,000 head more than the previous holiday-shortened week and 7,000 more than the same week last year. Year-to-date estimated total cattle slaughter of 30.8 million head was 872,000 head more (+2.9%) than the same period last year. Estimated total year-to-date beef production of 25.52 billion lbs. was 610.9 million lbs. more (+2.5%) than a year earlier.

“Fed cattle prices have increased nearly $18/cwt. since the first week of October. Compare that to October 2020 when it took until the first week of April for the market price to increase $18 and reach the spring price peak,” says Andrew P. Griffith, agricultural economist at the University of Tennessee, in his weekly market comments. “Cattle feeders should be satisfied with the way prices have been moving the past two months, but upside potential looks to be minimal moving from today through the spring. In other words, the market may hold its own the next several weeks or months, but pushing much higher will be a challenge. There should be price support moving into the spring as demand will seasonally increase exiting the winter. However, the market has probably already experienced it largest gains from fall to spring.”

Live Cattle futures closed an average of 36¢ lower on Friday, except for 2¢ higher in spot Dec. Week to week, they closed an average of 95¢ lower week to week on Friday (10¢ to $2.25 lower) except for 12¢ higher in away Dec.

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Calf and feeder cattle prices last week were mainly higher to sharply higher, based on weekly auctions monitored by Cattle Current.

“…demand remains strong while buyers are trying to make quick work of purchasing cattle as there is an expectation that prices will continue strengthening,” Griffith says. “There is no doubt a fire has been lit under the cattle markets as calf prices are following feeder cattle prices and feeder cattle prices are following finished cattle prices.”

Feeder Cattle futures closed an average of $1.18 lower on Friday, amid some likely profit taking from the previous day’s session as well as week-end positioning. Week to week, though, they closed broadly mixed, from an average of $1.31 lower in the front three contracts (2¢ to $3.02 lower) to an average of 54¢ higher (20¢ to $1.07 higher).

The CME Feeder Cattle Index was $3.63 higher week to week on Friday at $161.58.

After fractionally lower in spot Dec, Corn futures closed an average of 9.5¢ lower in the next five contracts week to week on Friday.

Week to week on Friday, Soybean futures closed an average of 11.2¢ lower through the front six contracts.

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Wholesale beef prices continued lower last week, although there could be another holiday bump or two along the way.

Choice boxed beef cutout value was $5.65 lower week to week on Friday at $274.36/cwt. Select was $3.64 lower at $258.64. Steer byproduct value declined 72¢ to $14.24/cwt., with likely pressure from global economic concerns related to the new COVID variant.

Despite the sizable price decline in boxed beef prices since the last week of August, and the increase in fed cattle prices, Griffith says packer profitability remains strong.

“There is no reason at this time to expect beef demand to soften, which should continue supporting wholesale beef prices and the cattle complex,” Griffith says. “There may still be a little more holiday buying that needs to take place, but most holiday purchases will have been completed at this point. The expectation moving forward will be for a strong restocking of the beef counter following consumer holiday purchasing and some of the focus shifting from middle meats to end cuts as winter establishes a hold on the market.”

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Volatility continued in equity markets Friday. Besides the seesawing uncertainty through the week, tied to the COVID variant, pressure came from significantly fewer new jobs than the trade expected.

Employment increased 210,000 from October to November, according to the Employment Situation Summary from the U.S. Bureau of Labor Statistics. Average hourly earnings increased by 8¢ to $31.03.

The Dow Jones Industrial Average closed 59 points lower. The S&P 500 closed 38 points lower. The NASDAQ was down 295 points.

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Supply chain disruptions and inflation continue helping propel fertilizer prices to record and near-record highs.

“According to the USDA Agricultural Marketing Service (AMS) Illinois Production Cost Report (a bi-weekly report) the average price for anhydrous ammonia last week was $1,434.38/ton, the highest on record according to data going back to 2008 and a more than three-fold increase from the same week a year ago,” say analysts with the Livestock Marketing Information Center (LMIC), in the latest Livestock Monitor. “Since the start of the year, anhydrous ammonia prices have increased 186.5% or $934 per ton, and since late-September prices have jumped 82.0% or $646.”

Although less drastic, price increases for other fertilizer prices are steep, too.

Citing the AMS report, compared to a year earlier, LMIC analysts say the average price for urea (46-0-0) jumped 155% ($557) to $915/ton, liquid nitrogen (28% spread) is up 166% ($351) to $564 per ton, and potash is 127% ($439) higher at $785 per ton. Diesel prices are 60% higher at $2.87/gal.

“Depending on how fertilizer prices react in the coming months may drive producer decisions on how many corn and soybean acres to plant,” LMIC analysts say. “Producers are likely to actively consider ways to minimize fertilizer costs, which will include crop planting decisions. Extension educators have been recommending producers have soil tests conducted to determine if fertilizer is needed and plan application needs as necessary.”

Negotiated cash fed cattle prices took another step higher Thursday.

Live prices were $2 higher in the Southern Plains at $142/cwt., steady to $4 higher in Nebraska at $140 and steady to $5 higher in the western Corn Belt at $140. Dressed trade in Nebraska was $3 higher at $220.

Last week, live prices in Colorado were $140 and dressed prices in the western Corn Belt were $213-$217.

Cattle futures, especially font-month Live Cattle, gained Thursday with the stronger cash prices. They closed an average of 71¢ higher, from $1.65 higher in spot Dec to 7¢ higher in the back contract.

The weekly U.S. Export Sales report added support. For the week ending Nov. 25, net U.S. beef export sales (2021) of 21,600 metric tons were 12% more than the previous week and 5% more than the prior four-week average. Increases were primarily for South Korea, China, Japan, Mexico, and Chile.

Choice boxed beef cutout value was $1.80 higher Thursday afternoon at $272.02/cwt. Select was 28¢ higher at $258.25.

Feeder Cattle gains were capped by stronger Corn futures prices. They closed an average of 36¢ higher, except for 5¢ lower in spot Jan.

Corn futures closed 3¢ to 6¢ higher in the front five contracts and then fractionally higher to 1¢ higher.

Soybean futures closed 11¢ to 16¢ higher in the front five contracts and then mostly 3¢ to 4¢ higher.

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Volatile major U.S. financial indices reversed course and closed sharply higher, putting a sizable dent into the previous day’s losses. There was little news to push them good or bad.

The Dow Jones Industrial Average closed 617 points higher. The S&P 500 closed 64 points higher. The NASDAQ was up 127 points.

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The Federal Trade Commission (FTC) ordered nine large retailers, wholesalers, and consumer good suppliers to provide detailed information that will help the FTC shed light on the causes behind ongoing supply chain disruptions and how these disruptions are causing serious and ongoing hardships for consumers and harming competition in the U.S. economy.

“Supply chain disruptions are upending the provision and delivery of a wide array of goods, ranging from computer chips and medicines to meat and lumber. I am hopeful the FTC’s new study will shed light on market conditions and business practices that may have worsened these disruptions or led to asymmetric effects,” says FTC Chair Lina M. Khan. “The FTC has a long history of pursuing market studies to deepen our understanding of economic conditions and business conduct, and we should continue to make nimble and timely use of these information-gathering tools and authorities.”

The FTC is issuing the orders under Section 6(b) of the FTC Act, which authorizes the Commission to conduct wide-ranging studies that do not have a specific law enforcement purpose. The orders are being sent to Walmart Inc., Amazon.com, Inc., Kroger Co., C&S Wholesale Grocers, Inc., Associated Wholesale Grocers, Inc., McLane Co, Inc. Procter & Gamble Co., Tyson Foods, Inc., and Kraft Heinz Co. The companies will have 45 days from the date they received the order to respond.

In addition to better understanding the reasons behind the disruptions, the study will examine whether supply chain disruptions are leading to specific bottlenecks, shortages, anticompetitive practices, or contributing to rising consumer prices.

The orders require the companies to detail the primary factors disrupting their ability to obtain, transport and distribute their products; the impact these disruptions are having in terms of delayed and canceled orders, increased costs and prices; the products, suppliers and inputs most affected; and the steps the companies are taking to alleviate disruptions; and how they allocate products among their stores when they are in short supply.