WLI

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

Live prices last week were steady in the Southern Plains on a live basis at $124/cwt. and steady to $2 higher at $124 in Nebraska and the western Corn Belt. Dressed prices were at $196, which was steady in Nebraska but steady to $3 higher in the western Corn Belt.

Choice boxed beef cutout value was 79¢ higher Tuesday afternoon at $280.88/cwt. Select was $1.72 higher at $261.53/cwt.

Cattle futures closed narrowly mixed Tuesday amid light trade with Feeder Cattle futures showing signs of firming.

Live Cattle futures closed mixed, from an average of 25¢ lower to an average of 13¢ higher.

Feeder Cattle futures closed mixed, from an average of 34¢ lower through the front five contracts to an average of 64¢ higher the rest of the way.

Corn futures closed mostly 1¢ to 2¢ lower.

Soybean futures closed mostly 6¢ to 8¢ higher.

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Major U.S. financial indices closed higher Tuesday, propelled once again by strong quarterly corporate earnings reports.

The Dow Jones Industrial Average closed 198 points higher. The S&P 500 closed 33 points higher. The NASDAQ was up 107 points.

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Higher costs make this a good winter to focus more intently on feed management, says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University.

Based on USDA’s Agricultural Prices for August, Peel points out national average alfalfa hay prices week 20.5% higher year over year. The national average price for other hay was up 13.4%.

“The epicenter of hay market impacts appears to be North Dakota along with surrounding states. Prices for alfalfa hay in August (North Dakota) were up 109.5% year over year with other hay prices up 69.4%,” Peel explains, in his weekly market comments. “In South Dakota, August alfalfa hay price was up 62.0% and other hay price was up 62.9%. Minnesota prices for alfalfa and other hay were up 63.1% and 54.5%, respectively. In Montana, alfalfa hay price was up 53.8% over last year in August and other hay price was up 39.3%.”

Even in the Southern Plains, where there was less drought impact, hay prices were higher. Specifically, Peel says other hay prices are 23.5% higher year over year in Oklahoma and up 10.6% in Texas. At the same time, current corn prices in the region are 40-50% higher.

“With higher prices for hay and supplement feeds, producers can reduce winter feeds costs with enhanced management. The process begins with understanding nutritional requirements of cattle by stage of production. Testing and weighing hay will help determine the nutritional contribution of hay to meet cattle needs,” Peel says. “Careful feeding of hay can help reduce waste and make hay stretch farther. Determine the additional needs for protein and energy and source supplement feeds that provide needed nutrients.”

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. There were too few transactions to trend.

Live prices last week were steady in the Southern Plains on a live basis at $124/cwt. and steady to $2 higher at $124 in Nebraska and the western Corn Belt. Dressed prices were at $196, which was steady in Nebraska but steady to $3 higher in the western Corn Belt.

The five-area direct average steer price last week was 88¢ higher at $123.84/cwt. The average steer price in the beef was 33¢ higher at $195.70.

Cattle futures started the week softer amid technical considerations and traders apparently seeking more price direction. Another day of stronger Corn futures added pressure to Feeder Cattle. Some might also be considering positions ahead of the monthly Cattle on Feed report due out Friday.

Feeder Cattle futures closed an average of $1.52 lower, (50¢ lower at the back to $2.07 lower toward the front).

Live Cattle futures closed an average of 43¢ lower, except for an average of 8¢ higher in the back two contracts.

Choice boxed beef cutout value was 15¢ lower Monday afternoon at $280.09/cwt. Select was 81¢ lower at $259.81/cwt.

Corn futures got a follow-through boost from export sales, which were 85% more than the prior four-week average, according to the latest U.S. Export Sales report for the week ending Oct. 7. They closed mostly 4¢ to 5¢ higher.

Soybean futures closed mostly 1¢ to 3¢ higher.

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Major U.S. financial indices closed mainly higher Monday, buoyed by strong quarterly corporate earnings reports.

The Dow Jones Industrial Average closed 36 points lower. The S&P 500 closed 15 points higher. The NASDAQ was up 124 points.

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USDA’s Economic Research Service lowered the projected average fourth-quarter feeder steer price (basis 750-800 lbs., Oklahoma City) by $4 compared to the previous month to $151.00/cwt., based on more quarterly feedlot placements than expected. That took about $1.00 from the average annual price projection — compared to the previous month — to $144.80.

However, in the latest monthly Livestock, Dairy and Poultry Outlook, ERS increased the projected annual average feeder steer price for next year by 50¢ to $155.50, based on expectations of tighter feeder cattle supplies in the second half of the year. Prices are forecast to average $153.00 in the first quarter, $151 in the second and $156.00 in the third quarter.

As mentioned in Cattle Current previously, ERS lowered the forecast fourth-quarter five-area direct average steer price by $4 to $127, based on seasonal trends and large supplies of fed cattle. However, the projected fed cattle price increased for the second half of 2022 on anticipated firm demand and tighter fed cattle supplies.

ERS projected the annual average fed steer price at $128.75, compared to this year’s expected average of $121.06. Average prices are forecast at $130.00 in the first quarter, $128 in the second and $126.00 in the third quarter.

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

Live prices last week were steady in the Southern Plains on a live basis at $124/cwt. and steady to $2 higher at $124 in Nebraska and the western Corn Belt. Dressed prices were at $196, which was steady in Nebraska but steady to $3 higher in the western Corn Belt.

Estimated total cattle slaughter last week of 646,000 head was 11,000 head fewer than the previous week. Year-to-date estimated total cattle slaughter of 26.3 million head is 806,000 head more than last year (3.2%). Year-to-date estimated total beef production of 21.72 billion lbs. is 588.9 million lbs. more than a year earlier (+2.8%).

Live Cattle futures closed an average of 50¢ higher with follow-through support from the previous session tied to firmer cash prices and higher outside markets.

Feeder Cattle futures closed an average of 71¢ lower, pressured by a surge in Corn futures and week-end positioning.

Corn futures closed mostly 7¢ to 9¢ higher.

Soybean futures closed mostly 9¢ to 11¢ higher.

Choice boxed beef cutout value was 8¢ lower Friday afternoon at $280.24/cwt. Select was 6¢ lower at $260.62.

The average dressed steer weight for the week ending Oct. 2 was 916 lbs., according to USDA’s Actual Slaughter Under Federal Inspection report. That was 2 lbs. heavier than the previous week but 8 lbs. lighter than a year earlier. The average dressed heifer weight of 836 lbs. was 3 lbs. heavier than the previous week but 7 lbs. lighter than the same week last year.

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Major U.S. financial indices closed higher again Friday, boosted by follow-through support and another day of strong corporate quarterly earnings reports. U.S. food service and retail sales also grew more than expected in September — up 0.7%, according to the U.S. Census Bureau.

The Dow Jones Industrial Average closed 382 points higher. The S&P 500 closed 33 points higher. The NASDAQ was up 73 points.

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Due to increasing natural gas prices, nitrogen fertilizer prices are relatively high compared to recent years and are expected to remain high and possibly increase through next spring, says Dave Franzen, Extension soil science specialist at North Dakota State University.

“China has supplied about a third of the world’s phosphate, and it has essentially banned exports through 2022,” Franzen explains. “That puts the burden of supply on other countries, including the United States.”

According to Franzen, the U.S. is not in a great position for mine and production expansion due to serious environmental concerns. This means that phosphate prices, which are already high, will continue to increase at least through 2022.

As for the Nitrogen side of the equation, the price for taking winter delivery of natural gas is now trading at a seven-year high as global scarcity concerns and a more measured return to domestic production growth have fueled early buying, according to the latest quarterly report from CoBank’s Knowledge Exchange Division (CKE).

“The market appears to be concerned that the demand for U.S. natural gas exports is so strong that there may be little flexibility in meeting domestic demand, should another cold winter unfold. Exports have risen significantly, with the U.S. now exporting about 10% of its dry gas production, a 30% increase compared to year ago levels,” say CoBank analysts.

As mentioned in Cattle Current last week, the CKE report explains rapidly rising input costs and product shortages are hitting agriculture particularly hard, as agricultural commodity prices have flattened and inflation compresses margins. In part, input shortages and increasing input costs stem from ongoing supply chain disruptions spun by the pandemic.

“Supply chain snarls are likely to persist well into 2022, and so will elevated inflation,” says Dan Kowalski, CKE vice president. “The latest producer price index data for August was up 20% year-over-year, while the consumer price index increased just 5.2%. So it’s clear that many businesses are passing only a small portion of those cost increases on to the final consumer. We expect that will change in the months ahead and many businesses will raise prices.”

Noting recent volatility in grain markets, Andrew P. Griffith, agricultural economist at the University says,  “At the end of the day, most of this volatility stems from a broader uncertainty in the U.S. economy and abroad as fertilizer prices continue to skyrocket and as energy prices do the same.”

“This means cattle producers need to put an increased focus on managing input prices,” Griffith says, in his weekly market comments. “Producers do not control the price of an input, but a producer does control how much of each input they utilize. High input prices will likely mean cattle producers will be forced to pick and choose the most important inputs for their operation and look for alternative solutions for the other inputs.”

Negotiated cash fed cattle trade was limited on moderate demand in Nebraska and the western Corn Belt through Thursday afternoon, according to the Agricultural Marketing Service. Live sales were steady to $2 higher in the western Corn Belt at $124/cwt., while dressed prices were steady at $196. There were too few to trend in Nebraska, where prices the previous day were steady to $2 higher at $124; steady in the beef at $196.

Trade in the Southern Plains was mostly inactive on light demand with too few transactions to trend. On Wednesday, live prices were steady at $124.

Higher outside markets and the slight increase in some regional cash prices helped draw more buying interest to Cattle futures Thursday.

Live Cattle futures closed an average of 78¢ higher (35¢ higher toward the back to $1.30 higher toward the front).

Feeder Cattle futures closed an average of 84¢ higher.

Choice boxed beef cutout value was 30¢ higher Thursday afternoon at $280.32/cwt. Select was $1.98 higher at $260.68.

Corn futures closed mostly 1¢ to 3¢ higher.

Soybean futures closed 5¢ to 11¢ higher through Sep ’22 and then mainly 1¢ lower.

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Major U.S. financial indices closed sharply higher Thursday, fueled by blue-chip quarterly earnings reports beating expectations. The continued rally in oil added spark, as did fewer weekly initial jobless claims than expected.

Weekly unemployment insurance claims for the week ending Oct. 9 numbered 293,000, according to the U.S. Department of Labor. That was 36,000 less than the previous week and the lowest level since March 14 of last year when they tallied 256,000.

The Dow Jones Industrial Average closed 534 points higher. The S&P 500 closed 74 points higher. The NASDAQ was up 251 points.

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Open interest in Cattle futures continues to dwindle.

For recent perspective, Live Cattle open interest declined from a high of 314,114 contracts toward the beginning of September to a low of 289,222 Sept. 21 and then bounced as high as 292,326 before the end of the month. So far in October, Live Cattle open interest ranges from a high of 292,386 contracts Oct. 4 to a low of 281,581 Oct. 13.

Matthew Diersen, risk and business management specialist in the Ness School of Management and Economics at South Dakota State University provides some insight in the latest issue of In the Cattle Markets, published by the Livestock Marketing Information Center. He uses Live Cattle futures settlement Oct. 5 and the Commitment of Traders (COT) report from Oct. 8.

“In Live Cattle, the open interest held by producers (very large feedlots and processors) has been declining by those with short positions and increasing by those with long positions. The opposite has been happening with managed money; with more shorts and fewer longs,” Diersen says. “In Feeder Cattle, the largest share of open interest is held by managed money. In recent weeks they have reduced long positions and added short positions.”

Diersen explains many commodity indexes include Live Cattle and some include Feeder Cattle.

“The COT includes a supplement with a breakdown of index traders that includes futures and options. For Live Cattle, about one-third of open interest is long positions of index traders. Generally, these would be fund managers that buy and hold futures, then repeatedly roll to new contracts, always maintaining some exposure to cattle. Their net exposure is about opposite that of commercial traders at this time,” he says. “For Feeder Cattle, the contracts held by index traders is much smaller compared to Live Cattle contracts and the balance is more evenly split between long and short positions, though they are still net long.”

Negotiated cash fed cattle trade was steady with the previous week in the Southern Plains at $124/cwt. through Wednesday afternoon, according to the Agricultural Marketing Service. Trade was limited on light demand in the Texas Panhandle; slow on moderate demand in Kansas.

Trade in other regions was slow on light demand.

Live sales in Nebraska were steady to $2 higher at $124; steady in the beef at $196. Although too few to trend, there were some early live sales in the western Corn Belt at $123-$124, and a few in the beef at $196. Price there last were $122 and $193-$196, respectively.

Cattle futures closed lower Wednesday. Along with lower outside markets early in the day, most pressure seemed tied to WASDE increasing expected beef production for this year, as wholesale beef prices decline and cash fed cattle prices remain tough to budge.

Feeder Cattle futures closed an average of 85¢ lower (22¢ to $1.32 lower).

Live Cattle futures closed an average of 71¢ lower (25¢ lower at the front to $1.15 lower.

Choice boxed beef cutout value was $1.05 lower Wednesday afternoon at $280.02/cwt. Select was $2.65 lower at $258.70.

Corn futures closed mostly 6¢ to 10¢ lower.

Soybean futures closed mostly 4¢ to 7¢ lower.

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Major U.S. financial indices closed mixed Wednesday. News was mixed, too

The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.4% in

September on a seasonally adjusted basis after rising 0.3% in August, according to the U.S. Bureau of Labor Statistics. Leave food and energy out, and the month-to-month increase was 0.2%. The all-items index increased 5.4% over the last 12 months, before seasonal adjustment.

Minutes from the Federal Reserve meeting in September suggest stimulus tapering as soon as next month, which was expected.

The Dow Jones Industrial Average closed fractionally lower. The S&P 500 closed 13 points higher. The NASDAQ was up 105 points.

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Pent-up demand provided a tailwind for the meat industry in recent months, but the full effect of inflation is expected to test consumers’ appetite for meat during the fourth quarter, according to analysts with CoBank’s Knowledge Exchange Division (CKE).

Pandemic-disrupted supply chains have plenty to do with recent inflationary price pressure.

According to a new CKE Quarterly report, supply chains are arguably in the most dire condition since the start of the pandemic, as lead times for manufacturing inputs recently reached record highs. Persistent supply chain disruptions and labor shortages are adding significant costs to business operations, and consumers will feel these effects through higher prices for months to come.

“Supply chain snarls are likely to persist well into 2022, and so will elevated inflation,” says Dan Kowalski, CKE vice president. “The latest producer price index data for August was up 20% year-over-year, while the consumer price index increased just 5.2%. So it’s clear that many businesses are passing only a small portion of those cost increases on to the final consumer. We expect that will change in the months ahead and many businesses will raise prices.”

Rapidly rising input costs and product shortages are hitting agriculture particularly hard, as agricultural commodity prices have flattened and inflation compresses margins, according to the CKE report. However, CKE analysts say robust exports have kept much of agriculture in the black.