WLI

Negotiated cash fed cattle trade was at a standstill through Tuesday afternoon, according to the Agricultural Marketing Service.

Last week, live prices were at $138/cwt. in the Southern Plains and $140 in Nebraska and the western Corn Belt. Dressed trade was at $220-$222.

Surging corn futures took Cattle futures down a peg Tuesday, especially Feeder Cattle.

Feeder Cattle futures closed an average of $1.99 lower (70¢ lower toward the back to $3.57 lower in spot Jan).

Live Cattle futures closed an average of 77¢ lower (5¢ to $1.52 lower).

Choice boxed beef cutout value was 79¢ higher Tuesday afternoon at $266.82/cwt. Select was 33¢ higher at $259.23/cwt.

Bearish South American weather lit a fuse beneath soybeans, leading other grain futures along for the ride.

Soybean futures closed 27¢ to 34¢ higher through Aug ‘22 and then 12¢ to 18¢ higher in the next four contracts; mostly 2¢ higher the rest of the way.

Corn futures closed 10¢ to 20¢ higher through the front four contracts and then mostly 4¢ to 8¢ higher.

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Major U.S. financial indices closed mixed Tuesday, with most of the pressure coming from tech stocks. 

The Dow Jones Industrial Average closed 214 points higher. The S&P 500 closed 3 points lower. The NASDAQ was down 210 points.

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“The pandemic has significantly altered how our economy functions, with the greatest impact coming from what we consume. Through October, in 2021 Americans spent 18% more on goods and about 1% less on services than they did in 2019. Compounded by a labor shortage, it is easy to see why supply chains have become one of the biggest economic challenges of the pandemic — demand has significantly exceeded the capacity of our existing system,” according to the 2022 Year Ahead Report from CoBank’s Knowledge Exchange.

CoBank analysts expect the U.S. farm economy to continue struggling with the ongoing supply chain dysfunction and cost inflation issues that emerged in the summer of 2021. They say historically strong prices will be more than offset by increases in cost structure for nearly all crop production including row crops, fruits and vegetables, and hay. They do not anticipate any significant pullback in farm-level costs until the third quarter of this year, at the earliest.

Moreover, according to the report, “Wage rates and overall labor costs are expected to remain firmly higher in 2022 as the industry seeks solutions to reduced labor availability. Automation capital expenditures at the plant level will continue in earnest despite the rapidly rising costs of machinery and equipment. Most processors view this as a necessary cost of doing business moving forward.”

However, CoBank analysts also explain, “Livestock producer margins should continue to be generally favorable overall, with the effect of shrinking beef cattle supplies finally showing up in higher prices at the producer level.”

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

Last week live prices were at $138/cwt. in the Southern Plains and $140 in Nebraska and the western Corn Belt. Dressed trade was at $220-$222.

The five-area direct average steer price last week of $139.59/cwt. on a live basis was $3.95 higher than the previous week. The average steer price in the beef was $3.58 higher at $220.89.

Year-to-date estimated total cattle slaughter through Dec. 27 was 32.66 million head, according to USDA. That was 958,000 head more (+3.0%) than a year earlier. Total estimated beef production of 27.05 billion lbs. was 694.4 million lbs. more (+2.6%).

Cattle futures eased lower Monday awaiting cash direction.

Live Cattle futures closed an average of 38¢ lower, not counting newly minted away-Jun.

Feeder Cattle futures closed an average of 45¢ lower.

Choice boxed beef cutout value was 77¢ higher Monday afternoon at $266.03/cwt. Select was 67¢ higher at $258.90/cwt.

Corn futures closed mostly 1¢ to 2¢ higher, except for fractionally lower to 4¢ lower in the front four contracts.

Soybean futures closed 12¢ to 16¢ higher through Sep ‘23 and then 7¢ to 8¢ higher.

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Major U.S. financial indices climbed higher Monday, buoyed by tech stocks.

The Dow Jones Industrial Average closed 246 points higher. The S&P 500 closed 30 points higher. The NASDAQ was up 187 points.

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“During December the price for 500-600-lb. steers in South Dakota briefly averaged above $190/cwt. for a couple of weeks, a level last observed in early 2016,” says Matthew Diersen, risk and business management specialist at South Dakota State University, in the latest issue of In the Cattle Markets. “The value of calves depends on the expectations for their ultimate value as finished animals. Thus, the price of calves expected in 2022 depends on where the trade thinks the price of fed cattle will be in mid-2023. The LMIC (Livestock Marketing Information Center) projections have the price of fed cattle higher in 2022 than in 2021 with a further increase expected in 2023. That bodes well for calf price expectations and the LMIC projections are for higher calf prices in 2022, but prices can still fluctuate.”

On the other side of the equation, Derrell Peel, Extension livestock marketing specialist at Oklahoma State University stresses the need to focus on feed cost management in order to capitalize on the optimistic revenue outlook.

“In part, marketing forage involves considering cattle production and marketing alternatives that represent higher value for forage,” Peel explains, in his weekly market comments. “For cow-calf producers, this includes considerations for marketing calves at weaning or retaining calves for backgrounding/stocker production as well as marketing cull breeding animals.

“The market environment in 2022 may provide more possibilities with reduced cattle numbers favoring weaned calf production and marketing, yet at the same time, higher grain prices and elevated feedlot cost of gain increase the value of added forage-based weight gain on feeder cattle. Producers will have more options and potential to add value, and planning now can improve returns to cattle and forage production later.”

You can watch Peel share his market outlook for next year here.

Negotiated cash fed cattle prices gained last week amid holiday-lightened trade. For the week, based on USDA reports available through Thursday, live prices were $2 higher in Nebraska at $140/cwt., $3 higher in the Texas Panhandle at $138 and $5 higher in the western Corn Belt at $140. Dressed prices of $220-$222 were $3-$4 higher in Nebraska and $3-$5 higher in the western Corn Belt.

Live Cattle futures traded sideways amid light trade on Friday. They closed narrowly mixed, from an average of 16¢ lower in the front three contracts to an average of 33¢ higher.

Feeder Cattle futures were traded lightly, too, but had the benefit of further erosion in front-month Corn futures. They closed an average of 81¢ higher (5¢ higher at the back to 95¢ higher toward the front), except for 35¢ lower in Sep.

Stronger cash prices and stabilizing wholesale beef prices enabled Cattle futures to gain from Monday through Friday.

Live Cattle futures closed an average of $1.06 higher (42¢ to $1.60 higher). Feeder Cattle futures closed an average of $4.15 higher during the same period ($2.37 higher at the back to $6.67 higher toward the front). The CME Feeder Cattle Index closed $5.99 higher week to week on Thursday at $165.21/cwt.

Choice boxed beef cutout value was 78¢ higher on Thursday at $265.26, compared to Monday. Select was $3.05 higher at $258.23.

Grain futures lost ground throughout the week, due in part to rains in South America.

Corn futures closed an average of 17¢ lower on Friday through the front six contracts, compared to Monday, except for fractionally lower in spot Mar. During the same period, Soybean futures closed an average of 28¢ lower through the front six contracts,

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Major U.S. financial indices eased lower again Friday as investors closed out positions for the year, amid lighter holiday trade.

The Dow Jones Industrial Average closed 59 points lower. The S&P 500 closed 12 points lower. The NASDAQ was down 96 points.

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Restaurant customers can expect to see health taking center stage on restaurant menus in 2022, according to the National Restaurant Association’s (NRA) recent annual What’s Hot Culinary Forecast. It details topics, trends, and products expected to drive restaurant menus in the coming year across a variety of categories.

For instance, after demand for comfort food surged during the height of the pandemic, consumers are refocusing on better-for-you options, with foods that are believed to have immunity-boosting qualities and plant-based sandwiches making up three of the Top 10 Trends for 2022. The report adds plant-based proteins are growing in popularity on menus and less expensive cuts of protein, such as thighs instead of wings, will have a greater presence in the year to come.

Moreover, according to NRA, sustainability will continue to influence menus and how restaurants make decisions across the board. From reusable and recyclable packaging to zero-waste options, restaurants are continuing to prioritize sustainable initiatives. As consumers continue to utilize off-premises options in all dayparts, restaurants are looking to translate their dine-in experience outside the four walls of the restaurant with thoughtful packaging that maintains food quality, retains temperature, and is tamper-proof.

“In addition to a return to health-focused menu offerings and more eco-friendly, improved off-premises packaging, all of which rated high in the top trends, we’re expecting operators to look across their menus for transformative opportunities,” said Hudson Riehle, senior vice president of Research for the Association. “Look for trends that fuse the traditional meal daypart items with other dayparts and an increasing popularity of snacking and its allied items. Also, with the popularity of cocktails-to-go during the pandemic, restaurants will look to expand both alcoholic and non-alcoholic craft beverage options.”

Negotiated cash fed cattle trade was limited on light demand in the Texas Panhandle through Thursday afternoon, but early live sales were $3 higher than last week at $138/cwt.

Elsewhere, trade was mostly at a standstill.

Earlier in the week, live prices in Nebraska and the western Corn Belt were at $140/cwt., which was $5 higher in Nebraska and $2 higher in the western Corn Belt. Dressed prices of $220-$222 were $3-$4 higher in Nebraska and $3-$5 higher in the western Corn Belt.

Cattle futures were narrowly mixed Thursday, as some traders checked out for the year. The weekly U.S. Export Sales report for the week could have added some pressure to Live Cattle. Net U.S. beef export sales for the week ending Dec. 23 were 48% less than the prior week and 55% less than the previous four-week average.

Live Cattle futures closed an average of 36¢ lower.

Feeder Cattle futures closed an average of 46¢ higher (5¢ higher at the back to 95¢ higher toward the front), except for 35¢ lower in Sep.

Choice boxed beef cutout value was 45¢ lower Thursday afternoon at $265.26/cwt. Select was $1.14 higher at $258.23/cwt.

Grain futures closed lower Thursday with rains in South America and position squaring.

Corn futures closed 9¢ to 10¢ lower in the front four contracts and then mostly 5¢ to 6¢ lower.

Soybean futures closed 20¢ to 30¢ lower in the front six contracts and then mostly 5¢ to 7¢ lower.

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Major U.S. financial indices eased lower Thursday, likely due mostly to some month-end and year-end position squaring ahead of what will be a long weekend for some. Positive news on the day included fewer initial jobless claims than expected. Weekly initial unemployment insurance claims for the week ending Dec. 25 were 198,000, which were 8,000 less than previous week, according to the U.S. Department of Labor. That was the lowest level since Oct. 25, 1969.

The Dow Jones Industrial Average closed 90 points lower. The S&P 500 closed 14 points lower. The NASDAQ was down 26 points.

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Some aspects of the U.S. restaurant industry are beginning to improve after being hampered by the pandemic, according to the NPD Group (NPD).

“The increased mobility this fall contributed to year-over-year gains at key restaurant dayparts, although visits are not fully back to pre-pandemic levels,” says David Portalatin, NPD food industry advisor.

In the last three months, ending in November, online and physical visits to restaurants for breakfast increased by 11% compared to a 10% decline during the same period a year ago. From a pre-pandemic view, breakfast traffic is now at the same level as the September through November period in 2019. Morning snack visits improved 6% over the last three months compared to a 7% decline last year and a 1% decline for the same period in 2019. Lunch improved by 4% in the reported period compared to a year ago when visits were down by 11%, but are still 7% below pre-pandemic levels, according to NPD’s continual tracking of the U.S. foodservice industry. 

“We’re in a steady state for the next several months, perhaps with a bump up or down here and there, but we expect to lag pre-pandemic traffic levels through 2022 slightly,” Portalatin says.

Negotiated cash fed cattle trade was limited on light demand in Nebraska and the western Corn Belt through Wednesday afternoon, with too few transactions to trend, according to the Agricultural Marketing Service. So far this week live prices in those regions are at $140/cwt., which is $5 higher in Nebraska and $2 higher in the western Corn Belt. Dressed prices of $220-$222 are $3-$4 higher in Nebraska and $3-$5 higher in the western Corn Belt.

Trade in the Southern Plains was at a standstill. Live prices there last were $135.

Cattle futures, especially Feeder Cattle, climbed higher Wednesday, buoyed by cash market gains and higher wholesale beef prices.

Feeder Cattle futures closed an average of $1.79 higher (97¢ to $2.82 higher with most strength in the front months).

Live Cattle futures closed an average of $1.01 higher (65¢ higher to $1.37 higher).

Choice boxed beef cutout value was $1.05 higher Wednesday afternoon at $265.71/cwt. Select was $1.00 higher at $257.09/cwt.

Corn futures closed mostly 2¢ to 4¢ higher after fractionally mixed in the front three contracts. 

Soybean futures closed mostly 2¢ to 8¢ higher through Jan ‘23 and then 6¢ to 13¢ higher.

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Major U.S. financial indices closed narrowly mixed again Wednesday with holiday-lightened trade and little news to shove it one direction or the other.

The Dow Jones Industrial Average closed 90 points higher. The S&P 500 closed 6 points higher. The NASDAQ was down 15 points.

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Creighton University’s Rural Mainstreet Index (RMI) remained above growth neutral in December for the 12th consecutive month.

“Solid grain prices, the Federal Reserve’s record-low interest rates, and growing exports have underpinned the Rural Mainstreet Economy. USDA data show that 2021 year-to-date agriculture exports are more than 20.7% above the same period in 2020. This has been an important factor supporting the Rural Mainstreet economy,” says Ernie Goss, Ph.D., Jack A. MacAllister Chair in Regional Economics at Creighton University’s Heider College of Business.

The RMI stems from a monthly survey of bank CEOs in rural areas of a 10-state region dependent on agriculture and/or energy. It slipped one point month to month in December to 66.7. The index ranges between 0 and 100 with a reading of 50.0 representing growth neutral.

“Seven of 10 bankers described their local economy as expanding, while only 6.7% indicated that their local economy was in a modest economic downturn,” says Goss.

More specifically, Todd Douglas, CEO of First National Bank in Pierre, South Dakota, explains, “With the paycheck protection program (PPP) monies, and good commodity prices, even with some areas of reduced yields due to lack of moisture, agriculture borrowers should be in good shape for 2022.”

The region’s farmland price index rose to a record high of 90.0 in December, up from 85.5 in October. The index has been above growth neutral for 15 consecutive months. Bank CEOs say annual cash rents for non-irrigated, non-pasture farmland soared to $262 from $218 one month prior to the pandemic in February 2020.

Jeff Bonnett, CEO of Havana State Bank in Havana Illinois, cautions, “Inflation is real and affecting folks in our service areas.”

“Yields and prices ended being up over projections for 2021 but it appears land costs and all crop inputs will be up significantly in 2022,” says Steve Simon, CEO of South Story Bank & Trust in Huxley, Iowa.