WLI

Feeder Cattle futures blasted higher Tuesday, more than gaining back the previous session’s steep declines. Corn futures were down for the day, but more than anything, Feeder Cattle were likely falling back into fundamental line after what appeared to be a technical-based, algo-fueled late-session selloff the previous day.

Feeder Cattle futures closed an average of $3.80 higher ($3.17 to $4.40 higher).

Live Cattle rallied on the stronger cash outlook and higher wholesale beef values after being anchored by Feeder Cattle the previous day.

Live Cattle closed an average of $1.56 higher (95¢ to $1.97 higher).

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

Live prices last week were at $124-$126 in the Texas Panhandle, $126 in Kansas, $127 in Nebraska and $126-$127 in the western Corn Belt. Dressed trade was at $200. Early indications point to steady, but likely higher prices this week.

Corn futures closed lower mostly 3¢ to 5¢ lower.

Soybean futures closed mostly 6¢ to 9¢ higher.

*******************************

Major U.S. financial indices closed higher again Tuesday on continued positive quarterly corporate earnings reports.

The Dow Jones Industrial Average closed 138 points higher. The S&P 500 closed 16 points higher. The NASDAQ was up 53 points.

*******************************

Overall pasture conditions are finishing the growing season similar to last year, but poorer in the severest drought areas.

Based on the USDA Crop Progress report for the week ending Oct. 17, the Livestock Marketing Information Center (LMIC) reported 34% of pasture and range was classified as Poor or Very Poor in the Great Plains region (CO, KS, MT, NE, ND, SD, WY). That was 12% more than a year earlier. The region is home to 29% of the nation’s beef cows, according to LMIC.

“Pasture conditions in Montana are the most severe of any state in the country, with 65% of pastures rated Very Poor (moderating from 69% the prior week),” say LMIC analysts, in the latest Livestock Monitor. “Within the same region, Nebraska had 13% of its pastures rated Very Poor compared to 30% very poor rating in the same week a year ago.”

In Oklahoma and Texas — representing 22% of the nation’s beef cow herd — 34% of the pastures were rated as Good or Excellent, which was 10% more than a year earlier, according to LMIC. Analysts there say, “Notable in this region was the condition of pastures this past spring when 14% were rated Very Poor, the worst spring rating since 2014 for that region.”

LMIC analysis the middle of October indicated 23% of the beef cow herd was in states with 40% of the pastures rated Good to Excellent, unchanged from a year earlier. States where 40% of the pastures were rated Poor or Very Poor accounted for 25% of the beef cow herd, down from 33% a year earlier.

Most recently, national pasture and range conditions held about steady for the week ending Oct. 31, according to the latest Crop Progress report.

26% of pasture and range was rated as Good (23%) or Excellent (3%), which was 2% more than the previous week but 6% more than a year earlier. On the other end of the scale, 42% was rated as Poor (20%) or Very Poor (22%), which was 1% less than the previous week and 1% less than a year earlier.

87% of winter wheat was planted, which was 1% less than a year earlier but 1% more than average. 67% was emerged, which was 3% less than a year earlier and 1% less than average. 45% was in Good (40%) or Excellent (5%) condition, which was 2% more than a year earlier. 21% was in Poor (14%) or Very Poor (7%) condition, which was 2% more year over year.

74% of corn was harvested, compared to 81% last year and 66% for the five-year average.

79% of soybeans were harvested, compared to 86% last year and 81% for average.

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

Live prices last week were steady to $2 higher in the Texas Panhandle at $124-$126/cwt., $2 higher in Kansas at $126, $2-$3 higher in Nebraska at $127 and $2 higher in the western Corn Belt at $126-$127. Dressed trade was $4 higher at $200.

The five-area average direct fed steer price last week was $1.90 higher than the previous week at $126.29/cwt. on a live basis. The average steer price in the beef was $4.06 higher at $199.89.

Choice boxed beef cutout values were $1.86 higher Monday afternoon at $287.58/cwt. Select was $1.02 higher at $264.39.

Feeder Cattle futures closed an average of $2.22 lower, battered by rising Corn and Wheat futures.

Corn futures were 10¢ higher through the front four contracts and then mostly 5¢ to 7¢ higher.

K.C. Wheat futures were mostly 18¢ to 21¢ higher.

Weakness in Feeder Cattle helped pressure Live Cattle futures an average of 38¢ lower.

*******************************

Major U.S. financial indices edged higher Monday, buoyed by energy prices.

The Dow Jones Industrial Average closed 94 points higher. The S&P 500 closed 8 points higher. The NASDAQ was up 97 points.

*******************************

Winter wheat pasture prospects improved with October rains, according to Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly market comments.

“While wheat for grain-only is still being planted or is newly planted, wheat for forage or dual purpose has progressed significantly with recent rains,” Peel says. “Driving across Oklahoma recently I observed wheat in stages from planting to barely emerged to several inches tall.  Most wheat pasture will not be ready for grazing until December, later than usual, but I have heard reports that some wheat grazing may begin by mid-November.”

Overall, however, Peel says ongoing drought conditions are slightly worse year over year.

“Although there have been some regional changes in drought situation, the overall picture has not changed much. The country started this growing season with the worst average pasture and range conditions on record and is ending the year in the same condition,” Peel explains. “The reemerging La Niña increases the chances for moisture in the northern half of the country and Canada but simultaneously increases the odds of drier conditions redeveloping in the Southwest. In any event, not much will change regarding forage supplies in the next 6-7 months.”

On the upside, cattle prices should continue to improve, according to Peel, as cattle numbers shrink cyclically.

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

Live prices last week were $2 higher in the Southern Plains at $126/cwt., $2 higher in the western Corn Belt at $126-$127 and $2-$3 higher in Nebraska at $127. Dressed trade was $4 higher at $200.

Total estimated cattle slaughter last week was 668,000 head, which was 7,000 more than the previous week and 28,000 more than the same week last year. Total estimated year-to-date cattle slaughter of 27.60 million head was 847,000 head more (+3.17%) than the same time last year. Total estimated beef production of 22.83 billion lbs. was 616.2 million lbs. more (+2.77%) than a year earlier.

Cattle futures closed lower Friday, likely mostly due to week-end and month-end position squaring, given improving fundamentals.

Live Cattle futures closed an average of 94¢ lower, except for $2.87 higher in expiring Oct and 12¢ higher at the back.

Feeder Cattle futures closed an average of 96¢ lower (35¢ to $1.45 lower).

Corn futures closed 4¢ to 5¢ higher through near Jly and then mostly 1¢ higher.

Soybean futures closed 2¢ to 3¢ higher through Jan ‘23 and then mostly  fractionally higher to 1¢ higher.

*******************************

Major U.S. financial indices closed higher Friday, despite Apple and Amazon missing quarterly earnings estimates.

The Dow Jones Industrial Average closed 89 points higher. The S&P 500 closed 8 points higher. The NASDAQ closed 50 point higher.

*******************************

“It’s a challenging time for crop producers to manage input price risk. Input prices for fertilizer, crop protection (chemicals), machinery, fuel, labor, rent, and insurance are up substantially compared to last year at this time,” says Aaron Smith, crop marketing specialist at the University of Tennessee, in his weekly market comments. “Additionally, availability and timeliness of delivery are a major concern.”

Fertilizer prices underscore the dramatic increase in the cost of crop production.

“All three major nutrients—nitrogen, phosphorus and potassium—used in the production of primary row crops in the U.S. have experienced varying degrees of upward price pressure since late 2020,” say members of the Ag CEO Council (ACC). “Since mid-2020, nitrogen prices have climbed from approximately $450 per ton to $750 per ton, phosphorus prices from $400 per ton to more than $700 per ton and potassium prices from over $300 per ton to over $600 per ton.” That’s in a recent letter from the ACC to Michael Shapiro, Deputy Assistant Secretary for Economic Policy, in response to a request for comments to President Biden’s Executive Order on America’s Supply Chains.

According to the Ag CEO Council, supply chain disruptions, higher crop prices and escalating natural gas prices are all drivers of increasing fertilizer cost.

“The primary feedstock and process fuel for ammonia production is natural gas. The recent doubling of the Henry Hub natural gas price is increasing the cost of ammonia production – the building block for all nitrogen fertilizers,” according to the ACC letter.

ACC members explain multiple trade actions continue to affect both phosphorus and potassium prices. That includes U.S. tariffs on phosphorous imports from Morocco and Russia, in response to unfair subsidization from those countries, as well as China banning phosphorous exports through June of next year.

“Most common fertilizers have more than doubled compared to last year. As such, producers are seeking strategies to reduce input costs,” Smith says. “Two recommendations, as a starting point, are soil sampling (know what you’ve got) and crop selection (know current relative cost and revenue relationships for commodities produced on your farm). Unfortunately, there is no ‘silver bullet’ to mitigate rising input costs and availability concerns. So, producers will need to be creative in their approach and con-sider numerous strategies.”

Cattle futures softened Thursday with a sense of retrenching as market fundamentals improve.

Live Cattle futures closed an average of $1.30 lower (80¢ lower to $2.72 lower in spot Oct).

Rising Corn futures prices continued to pressure Feeder Cattle futures, which closed an average of $1.50 lower (82¢ to $2.02 lower), except for 17¢ higher in expiring Oct.

Corn futures closed 5¢ higher through near Jul and then mostly 1¢ higher.

Soybean futures closed mixed, 2¢ to 5¢ lower through Sep ’22 and then mostly 2¢ to 3¢ higher.

Negotiated cash fed cattle trade was mostly inactive on light demand in all major cattle feeding regions through Thursday afternoon, according to the Agricultural Marketing Service (AMS).

So far this week, live prices are $2 higher in the Southern Plains at $126/cwt., $2 higher in the western Corn Belt at $126-$127 and $2-$3 higher in Nebraska at $127. Dressed trade is $4 higher at $200.

Choice boxed beef cutout value was $1.26 higher Thursday afternoon at $284.89/cwt. Select was 95¢ higher at $262.64.

The average dressed steer weight of 922 lbs. (week ending Oct. 16) was 1 lb. heavier than the previous week but 7 lbs. lighter than the same week last year, according to USDA’s Actual Slaughter Under Federal Inspection report. The average dressed heifer weight of 840 lbs. was 1 lb. heavier week to week but 10 lbs. lighter year over year.

*******************************

Major U.S. financial indices closed higher Thursday, bolstered by continued strong quarterly corporate earnings reports.

Initial weekly unemployment insurance claims were 281,000 the week ending Oct. 23, according to the U.S. Department of Labor. That was 10,000 fewer than the previous week, the fewest since March 14 last year and fewer than expected.

On the other hand, domestic economic growth was slower than expected in the third quarter.

Real gross domestic product (GDP) increased at an annual rate of 2.0% in the third quarter of 2021, following an increase of 6.7% in the second quarter, according to the U.S. Bureau of Economic Analysis. Slower consumer spending led the deceleration, as government assistance payments decreased. Also, the resurgence of COVID-19 cases resulted in new restrictions and delays in the reopening of establishments in some parts of the country.

The Down Jones Industrial Average closed 239 points higher. The S&P 500 closed 44 points higher. The NASDAQ was up 212 points.

*******************************

Globally, companies invested more than $30 billion in sustainability initiatives in 2020, and publicly traded companies and banks are quickly moving to capitalize, according to Kim Stackhouse-Lawson, Ph.D., during the 16th annual Feeding Quality Forum in Fort Collins, Colo.

“These investments outperformed traditional stocks. There will be an influx of dollars that enters this sustainability space quickly, and it’s going to be top-down driven,” says Stackhouse-Lawson. But, consumers also believe they can influence change with their investment choices.

“Seventy-five percent of millennials believe that their investments can influence climate change, and 84% of them believe their investments can help lift people out of poverty,” Stackhouse-Lawson explains. “The Gen Z group is coming up now, and they care too.” She points out nearly all the major food processing companies are making net zero commitments to decrease their carbon emissions and footprint in the next couple of decades.

“What I want you guys to know is that when a company commits to net zero, it 100% includes their entire value chain all the way down to the kernel of corn,” she said. “And even the fertilizer that’s going to go on that kernel of corn.”

Although cattle producers have a long track record of producing more beef with fewer resources, Stackhouse-Lawson says there is room for improvement.

“You have probably heard the industry and scientists, me included, say that we have gotten better over time,” Stackhouse-Lawson explains. “And we have, but it depends on the lens in which you look through. We are efficient, but absolute emissions are still increasing.” Ranchers have a good story to tell, but she says it must be done carefully.

“The first thing I think is important to acknowledge when you talk about sustainability is that emotion and science are on equal footing,” Stackhouse-Lawson says. “If you put them in a head-to-head race, emotion wins in the sustainability space nearly every time.”

Negotiated cash fed cattle prices finally moved beyond steady money Wednesday.

Live prices were $2 higher in the Southern Plains at $126/cwt., $2 higher in the western Corn Belt at $126-$127 and $2-$3 higher in Nebraska at $127. Dressed trade was $4 higher at $200.

Trade was slow on light demand in the Southern Plains and western Corn Belt, according to the Agricultural Marketing Service. It was slow to moderate on good demand in Nebraska.

Despite stronger cash prices, Live Cattle futures closed narrowly mixed, from an average of 28¢ higher through the front five contracts to an average of 18¢ lower.

Although turning the seasonal corner higher, wholesale beef prices were lower Wednesday afternoon. Choice was down $1.13 to $283.63/cwt. Select was 85¢ lower at $261.69.

Feeder Cattle futures softened, though, in the wake of a strong surge in Corn futures.

Feeder Cattle closed and average of $1.34 lower, except for 52¢ higher in nearly spent Oct.

Corn futures closed mostly 10¢ to 13¢ higher with support from ethanol production and lower corn production in Brazil.

Soybean futures closed mostly 2¢ to 3¢ higher.

*******************************

Major U.S. financial indices closed mixed Wednesday amid what appeared to be rally fatigue, likely profit taking and skittishness about economic growth. Crude Oil futures were also down sharply on higher weekly inventories than expected.

The Dow Jones Industrial Average closed 266 points lower. The S&P 500 closed 23 points lower. The NASDAQ was up fractionally.

*******************************

“Solid grain prices, the Federal Reserve’s record-low interest rates and growing exports have underpinned the Rural Mainstreet Economy,” says Ernie Goss, Jack A. MacAllister Chair in Regional Economics at Creighton University’s Heider College of Business. “USDA data show that 2021 year-to-date agriculture exports are more than 25.4% above that for the same period in 2020. This has been an important factor supporting the Rural Mainstreet economy.”

Creighton University’s Rural Mainstreet Index (RMI) remained above growth neutral in October for the eleventh consecutive month. It rose to 66.1 from 62.5 in September. The index is based on a monthly survey of bank CEOs in rural areas of a 10-state region dependent on agriculture and/or energy.

The majority of bankers (82.1%) indicate farmers in their area are in solid cash position with little need for borrowing.

The region’s farmland price index slid to a very strong 81.5 from September’s record high 85.2. October’s reading represented the 14th straight month that the index was above growth neutral.