WLI

Negotiated cash fed cattle trade was very limited on light demand in the Southern Plains through Tuesday afternoon. Early live sales were mostly $1 lower in the Texas Panhandle at $137/cwt. and mostly $1-$3 lower in Kansas at $135-$137. 

Trade was mostly inactive on light demand in Nebraska and the western Corn Belt. Prices in those regions last week were $138-$140 on a live basis and $220 in the beef.

Choice Boxed beef cutout value was $2.18 higher Tuesday afternoon at $278.22/cwt. Select was $2.13 higher at $268.63.

Cattle futures found some traction Tuesday with support from higher outside markets and healthier looking packer processing, for a day at least.

Feeder Cattle futures closed an average of 57¢ higher (10¢ to $1.15 higher), except for 67¢ lower in the back contract.

Live Cattle futures closed an average of 52¢ higher (12¢ to $1.42 higher), except for 5¢ lower toward the back.

Corn and Soybean futures paddled in place ahead of Wednesday’s World Agricultural Supply and Demand Estimates.

Soybean futures closed mostly unchanged to fractionally mixed after 1¢ to 2¢ higher in the front four contracts.

Corn futures closed mostly fractionally mixed.

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Major U.S. financial indices rallied back on Tuesday, supported by a slightly lower treasury yield rate and led by tech stocks as it appeared investors took advantage of the recent sell-off to take a stake.

The Dow Jones Industrial Average closed 183 points higher. The S&P 500 closed 42 points higher. The NASDAQ was up 210 points.

CME WTI Crude Oil futures closed $2.63 to $2.99 higher through the front six contracts.

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“Cattle continue the move into the New Year with optimism,” says Stephen Koontz, agricultural economist at Colorado State University, in the latest issue of In the Cattle Markets. “Some related markets have shown short periods of weakness but the underlying perspective of a comprehensive look at cattle and beef markets is strength.”

Although prices were wobbly in recent days, Koontz points out, “The weekly five-area weighted average fed price fell to $138.41 in the second week of January, but this market peaked in the first week of December at $140.44, and the last time this market was in the $140s was the first week of May 2017. USDA Choice boxed beef cutout values were $262.14 for the second week of January, and this is down from the peaks in late August and early June approaching $350, but these are valuations from a market which was rarely above $250 outside of the pandemic shutdown period. Similarly, beef animal hide and offal values fell to $13.62/cwt. of live animal from $16 peaks, but these valuations have spent the last five years at or below $12.”

Koontz adds any weakening in consumer retail prices for animal protein is from record-high levels.

“These high retail prices — albeit flawed, as in not capturing actual purchase price discounts — combined with strong volumes of protein production clearly indicate very strong demand by domestic consumers. We are approaching two-years into the pandemic and the overall domestic economy is clearly signaling strength.”

Nearer term, Andrew P. Griffith, agricultural economist at the University of Tennessee, says in his weekly market comments, “Both slaughter cattle and lightweight calf prices would typically be expected to seasonally increase as the market approaches spring calving and the spring stocker grazing season, which seems certain to occur. However, the price increase is shaping up to be stronger than the seasonal tendency. Lightweight calf prices could easily push as high as $180/cwt. by the end of March and early April while slaughter cow prices may push the $75/cwt. price mark.”

Inflation jitters weighed on most commodities and outside markets Monday. Cattle futures were also pressured by recently slower packer processing and fears of back-logging cattle.

Live Cattle futures closed an average 86¢ lower (17¢ lower at the back to $1.47 lower toward the front), amid heavy trade .

Feeder Cattle futures closed an average 81¢ lower (5¢ lower at the back to $1.42 lower).

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

Last week, live prices were steady in the Texas Panhandle at $138/cwt., but steady to $2 lower at $136-$138 in Kansas and at $138-$140 in Nebraska and the western Corn Belt. Dressed trade was also steady to $2 lower at $220.

The five-area direct average steer price was $1.18 lower on a live basis last week at $138.41/cwt. The average price in the beef was 91¢ lower at $219.98.

Choice Boxed beef cutout value was $4.22 higher Monday afternoon at $276.04/cwt. Select was $5.40 higher at $266.50/cwt.

As for grains, Soybean futures softened to start the week with rains forecast for South America.

Soybean futures closed 21¢ to 26¢ lower through Nov ‘22 then 14¢ to 19¢ lower through Sep ’23 and mostly 4¢ lower across the rest of the board.

Corn futures closed fractionally mixed to 7¢ lower through May ’23 and then mostly 4¢ to 5¢ higher.

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Major U.S. financial indices continued to sag Monday, beneath the weight of concerns surrounding higher forthcoming interest rates. However, they clawed back some earlier-session losses by the end of the trading day.

The Dow Jones Industrial Average closed 162 points lower. The S&P 500 closed 6 points lower. The NASDAQ was up 6 points.

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“Beef and cattle trade is projected to be generally supportive in 2022,” says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his latest weekly marketing comments. “Beef exports are forecast to pull back slightly in the coming year but lower imports are also forecast. After more than a year of extremely rapid growth, the China/Hong Kong market for U.S. beef was growing at a slower pace at the end of 2021, but continued growth is expected and could push China/Hong Kong above South Korea or possibly Japan in the foreseeable future.”

As mentioned in the last issue of Cattle Current, U.S. beef exports continued at a record pace through November in terms of both volume and value.

Beef exports to China/Hong Kong were on pace to exceed $2 billion in 2021. Through November, exports to the region nearly doubled from a year ago to 219,264 mt (up 98%) and increased 125% in value to $1.9 billion, according to the U.S. Meat Export Federation (USMEF). Direct exports to China, bolstered by greatly improved market access achieved in the U.S.-China Phase One Economic and Trade Agreement, increased more than 400% from a year ago to 172,257 mt, valued at $1.43 billion (up 502%).

However, Japan will finish 2021 as the leading volume destination for U.S. beef exports, but is in a neck-and-neck race with South Korea on export value, according to USMEF data.

For January through November, U.S. beef exports to Korea were record high at 258,552 mt valued at $2.17 billion – up 13% and 36% respectively. 

During the same period, exports to Japan were 6% above last year’s pace at 297,354 mt. Export value reached $2.16 billion, up 22% and exceeding $2 billion for the first time since 2018. Growth to Japan has been in the chilled beef category and in tongues, skirts and other variety meat.

“Beef by-products, which are mostly exported, had significantly higher value in 2021, averaging nearly 54% higher year over year,” Peel says. “By-product value increases were led by sharply higher tallow prices, both edible and inedible, (up 71% and 95%, respectively) and hide prices (up 62% year over year). Prices were also higher for liver, tongue, tripe and cheek meat. Weekly by-product values peaked in November and declined to the end of the year but were still 51% higher year over year in late December.”

Negotiated cash fed cattle trade was limited on light demand in all feeding regions through Friday afternoon, according to the Agricultural Marketing Service, with too few transactions to trend.

For the week, live prices were steady in the Southern Plains at $138/cwt., but steady to $2 lower at $138-$140 in Nebraska and the western Corn Belt. Dressed trade was also steady to $2 lower at $220.

Cattle futures closed narrowly mixed Friday, with support from higher wholesale beef prices, but with continued concern about slower cattle harvest.

Estimated cattle slaughter last week of 620,000 head was 32,000 head fewer than the same week last year.

Feeder Cattle futures closed narrowly mixed, from an average of 36¢ lower to an average of 36¢ higher.

Live Cattle futures closed an average 20¢ higher, except for an average of 29¢ lower in three contracts.

Choice boxed beef cutout value was $3.26 higher Friday afternoon at $271.82/cwt. Select was 46¢ higher at $26.10.

Grain futures gained Friday with ongoing bearish weather in South America and expectations to see corn and soybean estimates in that region trimmed when the monthly World Agricultural Supply and Demand Estimates come out Wednesday.

Soybean futures closed 19¢ to 24¢ higher through the front six contracts and then mostly 11¢ to 14¢ higher.  

Corn futures closed mostly 3¢ higher through Sep ’23 and then mostly 7¢ to 8¢ higher.

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Major U.S. financial indices continued to decline Friday. Pressure included rising treasury yield rates and a monthly jobs report that was less robust than expected.

The non-farm payroll increased 199,000 in December, according to the U.S. Bureau of Labor Statistics. Average hourly earnings for all employees on private non-farm payrolls increased by 19¢ in December to $31.31. Average hourly increased by 4.7% over the previous 12 months.

The Dow Jones Industrial Average closed 4 points lower. The S&P 500 closed 19 points lower. The NASDAQ was down 144 points.

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U.S. beef export value reached another new high in November, topping $1 billion for the second time in 2021, according to data released by USDA and compiled by the U.S. Meat Export Federation (USMEF).

Beef exports for the month of 123,641 metric tons (mt), were 7% more than a year earlier and the fourth largest monthly volume in the post-BSE era. Export value was a record $1.05 billion, up 49% year-over-year and exceeding the previous high set in August 2021.

For January through November, U.S. beef exports were on a record volume pace at 1.32 million mt, up 16% from a year ago. Beef export value, which had already set a new annual record through October, increased more than $2.5 billion from a year ago, soaring 39% to $9.59 billion.

Beef export value per head of fed slaughter equated to a record $480.67 in November, up 42% from a year ago. The January-November average was $402.09, up 35%.

Through November, U.S. pork export value was $7.5 billion, up 7% from a year ago and rapidly approaching the annual record of $7.71 billion set in 2020.

“With one month of results still to be tabulated, it’s very gratifying to see red meat exports setting new annual records and achieving remarkable growth over a wide range of markets,” says USMEF President and CEO Dan Halstrom. “It is important, however, that we do not take this success for granted or allow it to detract from the challenges facing U.S. agriculture. Global demand for U.S. red meat has never been stronger, but labor and transportation obstacles and high input costs across the supply chain make it increasingly difficult to satisfy this demand. USMEF greatly appreciates the effort by lawmakers, maritime regulators and other officials to address the persistent congestion at U.S. ports, but this continues to be a costly and frustrating situation for U.S. exporters and their international customers.”

Negotiated cash fed cattle trade was limited on light demand in all feeding regions through Thursday afternoon, according to the Agricultural Marketing Service, with too few transactions to trend.

For the week, live prices are steady in the Southern Plains at $138/cwt., but steady to $2 lower at $138-$140 in Nebraska and the western Corn Belt. Dressed trade is also steady to $2 lower at $220.

Cattle futures inched higher Thursday, although skittishness remains concerning recently slower cattle harvest amid anecdotal reports of increasing health challenges among workers.

Live Cattle futures closed an average 34¢ higher, except for an average of 12¢ lower in two contracts. 

Feeder Cattle futures closed an average 69¢ higher, except for 32¢ lower in Sep.

Choice boxed beef cutout value was $1.63 higher Thursday afternoon at $268.56/cwt. Select was $1.03 higher at $260.64/cwt.

Soybean futures closed 3¢ to 7¢ lower through Aug ‘22 and then mostly 7¢ to 14¢ higher. 

Corn futures closed 1¢ to 4¢ higher at either end of the board and fractionally mixed to 8¢ higher in the middle.

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Major U.S. financial indices eased lower Thursday, with follow-through pressure from Fed minutes the previous day indicating a faster pullback in economic stimulus.

The Dow Jones Industrial Average closed 170 points lower. The S&P 500 closed 4 points lower. The NASDAQ was down 19 points.

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Higher commodity prices, favorable financial conditions and the desire for an inflation hedge all contributed to resurgent prices for quality farmland, according to Farmers National Company (FNC).

“What started as a gradual strengthening of sales prices last fall escalated into aggressive bidding the past five months to generate new highs in prices paid for farmland in many areas,” says Randy Dickhut, FNC senior vice president of real estate operations. “Prices for good quality farmland are up 15 to 35% depending on the location.” 

Most areas of the Grain Belt experienced an increase in the amount of land sold during the last 12 months, starting with additional sale activity last fall, according to FNC.

“Non-operating landowners became more active sellers of land during 2021 with the higher prices drawing their attention as well as the potential threat of tax law changes,” Dickhut explains.

Higher prices also were driven by the increased use of competitive bidding sales methods, according to FNC. In addition to the traditional public auction approach, various online auction methods are becoming commonplace.

Negotiated cash fed cattle trade was slow to moderate on moderate demand in Nebraska and the western Corn Belt through Wednesday afternoon, according to the Agricultural Marketing Service. Dressed trade in Nebraska was $2 lower at $220/cwt. Although too few to trend, there were some early live sales at $138, compared to $140 last week.

There were some early live sales in the western Corn Belt steady at $140 and a few in the beef steady to $2 lower at $220, but too few of either to trend.

Trade in the Southern Plains was limited on light demand. A light test sold steady on a live basis at $138.

Cattle futures closed mixed Wednesday, supported by moderating grain futures price gains but pressured by the weaker cash outlook. 

Live Cattle futures closed an average of 41¢ lower, except for an average of 32¢ higher in two contracts.

Feeder Cattle futures closed an average 32¢ higher, except for unchanged to an average of 36¢ lower in the front three contracts.

Choice boxed beef cutout value was 11¢ higher Wednesday afternoon at $266.93/cwt. Select was 38¢ higher at $259.61/cwt.

Soybean futures closed 4¢ to 6¢ higher through Aug ‘23 and then 2¢ to 3¢ higher.

Corn futures closed 4¢ to 7¢ lower through the front four contracts and then mostly 1¢ lower.

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Major U.S. financial indices closed sharply lower Wednesday, apparently fueled by the Fed’s most recent minutes suggesting stimulus tapering could accelerate and rate hikes could be coming sooner than anticipated. Queasiness relates to whether the Fed will begin reducing its balance sheet — taking liquidity from the market — once the bond buying program ends.

Positive news on the day included the closely-watched ADP^®National Employment^™report coming in significantly stronger than the trade expected with 807,000 private sector jobs added from November to December.

“December’s job market strengthened as the fallout from the Delta variant faded and Omicron’s impact had yet to be seen,” says Nela Richardson, ADP chief economist. “Job gains were broad-based, as goods producers added the strongest reading of the year, while service providers dominated growth. December’s job growth brought the fourth quarter average to 625,000, surpassing the 514,000 average for the year. While job gains eclipsed 6 million in 2021, private sector payrolls are still nearly 4 million jobs short of pre-COVID-19 levels.”

The Dow Jones Industrial Average closed 392 points lower. The S&P 500 closed 92 points lower. The NASDAQ was down 522 points.

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Agricultural producer sentiment grew more positive last month, according to the Purdue University/CME Group Ag Economy Barometer. It climbed 9 points month to month in December to 125, only the second increase since last May.

The Index of Current Conditions and the Index of Future Expectations also increased with stronger current conditions responsible for the barometer’s rise. December’s Index of Current Conditions rose 18 points to a reading of 146, while the Index of Future Expectations rose 4 points to a reading of 114.

“Excellent crop yields this fall combined with strong crop prices provided many producers with their most positive cash flow in recent years. That combination helps explain the year-end rise in the financial index as well as the barometer overall,” says James Mintert, the barometer’s principal investigator and director of Purdue University’s Center for Commercial Agriculture.

December marked the second consecutive month that producers reported stronger financial performance for their operations. The Farm Financial Performance Index rose 7 points to 113 in December, which is the index’s highest reading since May and 21% higher than readings obtained just before the pandemic’s onset.

Agricultural producers expressed concern about rising production costs and the availability of production inputs. When asked about the biggest concerns for their operation in the upcoming year, 47% of respondents selected higher input cost from a list that included lower crop and/or livestock prices, environmental policy, farm policy, climate policy and COVID’s impact. More than half (57%) of producers said they expect farm input prices in the upcoming year to rise by more than 20% compared to a year earlier. Nearly four out of 10 respondents said they expect input prices to rise by more than 30%.

Producers were also asked if they’ve had any difficulty purchasing crop inputs from their suppliers for the 2022 season. Nearly four out of 10 (39%) said they’ve experienced some difficulties. In a follow-up question, producers who indicated they were experiencing difficulties in making purchases were asked which crop inputs they’ve had trouble purchasing. Responses were varied, which could be an indication of problems across the supply chain, and included difficulties in purchasing fertilizer (31%), herbicides (28%), farm machinery parts (24%) and insecticides (17%).

The Ag Economy Barometer is calculated each month from 400 U.S. agricultural producers’ responses to a telephone survey. The latest survey was conducted December 8-14, 2021.