WLI

Although it was slow trade and light demand, negotiated cash fed cattle prices began the week $2 higher on a live basis at $140/cwt. in the western Corn Belt through Tuesday afternoon, according to the Agricultural Marketing Service. Dressed prices there last week were at mainly $217.

Elsewhere, trade ranged from a standstill to limited on light demand with too few transactions to trend. Last week, live prices were at $135/cwt. in the Southern Plains and Nebraska. Dressed trade was at $217-$218.

The stronger cash outlook and recently higher boxed beef prices helped Live Cattle futures firm. They closed an average of 24¢ higher (from 5¢ higher to $1.17 higher in almost-spent Dec).

Choice boxed beef cutout value was 18¢ higher Tuesday afternoon at $264.66/cwt. Select was 91¢ higher at $256.09/cwt.

Lower Corn futures prices helped Feeder Cattle close an average of $1.19 higher.

Corn futures closed lower on likely profit taking. Prices were 8¢ to 10¢ lower through May ‘23 and then mostly 4¢ to 5¢ lower.

Soybean futures paused from steep gains in the previous session, closing mostly 3¢ to 4¢ lower.

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Major U.S. financial indices closed narrowly mixed Tuesday

The Dow Jones Industrial Average closed 95 points higher. The S&P 500 closed 4 points lower. The NASDAQ was down 89 points.

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Consumer food prices continue to charge higher.

The Consumer Price Index (CPI) for all items in November was 6.8% higher year over year, according to the U.S. Bureau of Labor Statistics.

“Although the rate of growth is the fastest in nearly four decades, it is still below levels seen during the late 1970s and early 1980s, which were well above 6% and several months recorded double digit growth,” according to analysts with the Livestock Marketing Information Center (LMIC) in a mid-December Livestock Monitor.

The Food CPI was 6.1% higher year over year, apparently driven by surging meat and poultry prices.

“The Meat CPI continued its double-digit growth with November 16.0% above last year. During the pandemic the Meat CPI grew 16.7%, which is still below growth rates of the late 1970s which reached into the 20% range for several months. The Poultry CPI grew 8.4%, which was just below increase of 8.7% in June 2020 during the pandemic,” say LMIC analysts.

Although less startling, the annual year-to-date average monthly CPI was significantly higher through November compared to history.

The year-to-date Consumer Price Index (CPI) for all food increased an average of 3.6% through November, according to the December Food Price Outlook from USDA’s Economic Research Service (ERS). Food-at-home prices were up an average of 3.1% and food-away-from-home prices were 4.2% higher.

“Of all the CPI food-at-home categories tracked by the USDA-ERS, the beef and veal category has had the largest relative price increase (8.7%) and the fresh vegetables category the smallest (0.9%). No food categories have decreased in price in 2021 compared with 2020,” according to ERS analysts.

In 2022, ERS analysts project food-at-home prices to increase 1.5% to 2.5% and food-away-from-home prices to increase between 3.0% to 4.0%.

By way of comparison, food-at-home prices increased 3.5% in 2020 and 0.9% in 2019. The 20-year average is 2.0%.

“November Choice retail beef prices were $7.85 per pound which eased slightly (5 cents) from the prior month’s record high of $7.90. Prices for ground beef, roast, round, and sirloin all remained elevated at in November at $4.72, $7.27, $7.40, and $11.51 per pound, respectively,” according to LMIC analysts. “Retail pork prices continued to climb in November reaching $4.82 per pound, which marks the eighth consecutive month that retail pork prices set a new record. Boneless hams reached a record of $4.94 per pound while bacon and chops remain elevated at $7.27 and $4.43, respectively. The broiler composite retail price hit a record of $2.21 per pound, the fifth consecutive month for a record price.”

Cattle futures closed mixed amid light trade to start the week with front-month Feeder Cattle under the most pressure from increasing Corn futures.

Feeder Cattle futures closed mixed, from an average of 57¢ lower across the front half of the board to an average of 17¢ higher.

Live Cattle futures closed narrowly mixed (from an average of 19¢ lower to an average of 19¢ higher.

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

Last week, live prices were at $135/cwt. in the Southern Plains and Nebraska, and at $138 in the western Corn Belt. Dressed trade was at $217-$218.

The five-area direct weighted average steer price last week was $1.55 lower at $135.64. It was $1.12 lower in the beef at $217.30.

Choice boxed beef cutout value was $1.54 higher Monday afternoon at $264.48/cwt. Select was $2.23 higher at $255.18/cwt.

Nearby Corn and Soybean futures climbed on Monday, presumably in response to the continued hot and dry weather forecast in South America.

Corn futures closed 9¢ through the front three contracts and then mostly 2¢ to 3¢ higher.

Soybean futures closed 26¢ to 30¢ higher through the front five contracts and then mostly 7¢ to 10¢ higher.

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Major U.S. financial indices bounced higher Monday, buoyed by optimistic early reports of holiday spending.

Holiday retail sales, excluding automotive, increased 8.5% year over year during the holiday season Nov. 1 through Dec. 24, according to Mastercard SpendingPulseTM, which measures in-store and online retail sales across all forms of payment. Online sales grew 11.0% compared to the same period last year.

“Shoppers were eager to secure their gifts ahead of the retail rush, with conversations surrounding supply chain and labor supply issues sending consumers online and to stores in droves,” says Steve Sadove, senior advisor for Mastercard and former CEO and Chairman of Saks Incorporated. “Consumers splurged throughout the season, with apparel and department stores experiencing strong growth.”

The Dow Jones Industrial Average closed 351 points higher. The S&P 500 closed 65 points higher. The NASDAQ was up 217 points.

Higher oil prices added support. West Texas Intermediate Crude Oil futures on the CME were $1.72 to $1.78 higher in the front six contracts.

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More lighter-weight cattle placed in feedlots in November — compared to previous months in 2021 — speaks to several unfolding realities, according to Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly market comments.

As noted in the last Cattle Current, November feedlot placements were 3.6% more year over year, according to the latest USDA Cattle on Feed report. Peel points out the increase was comprised of cattle weighing less than 700 lbs., which were 7.0% more than the previous year. Cattle placed on feed at weights heavier than 700 lbs. were 0.7% less.

“Placements of lightweight cattle are typically high in November with seasonally large numbers of spring-born calves. However, the increase may be somewhat exaggerated this year for several reasons,” Peel explains. “Drought limitations are likely contributing to increased placements, the result of reduced opportunities for backgrounding calves this winter. Additionally, drought may also be causing fewer heifers to be held as replacements and further increasing lightweight placements.

“Finally, feedlots may be placing more lightweight cattle simply because overall feeder supplies are declining. As feeder supplies decrease, feedlots will, for a few months, be able to hold feedlot inventories by placing smaller cattle, essentially borrowing against future feeder supplies. Lightweight placements will also add more days on feed and further extend feedlot inventories for a period of time. However, as 2022 proceeds, smaller feeder cattle supplies will result in more pronounced decreases in feedlot inventories.”

Markets head into what will be a long holiday weekend for many on a positive note.

Cattle futures gained again Thursday with traders apparently content to position on the plus side heading into the long weekend. Although trade was holiday-light, open interest in Live Cattle expanded the last two days. Higher outside markets added support.

Feeder Cattle futures closed an average of $1.25 higher (72¢ higher at the back to $1.82 higher toward the front).

Live Cattle futures closed an average of $1.22 higher (70¢ higher toward the back to $2.25 higher toward the front).

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

For the week, live prices are $1 lower in the Texas Panhandle at $135/cwt. and $1-$3 lower in Kansas and Nebraska at $135. Dressed trade in Nebraska is steady to $1 lower at $217-$218. Last week, live prices were at $138 in the western Corn Belt and dressed trade was at $217-$218.

Choice boxed beef cutout value was $1.08 higher Thursday afternoon at $262.94/cwt. Select was $2.12 higher at $252.95/cwt.

Corn futures closed mostly 1¢ to 3¢ higher.

Soybean futures closed 3¢ to 7¢ higher through Sep ‘22 and then mostly 6¢ lower.

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Major U.S. financial indices rolled higher Thursday. Apparently FDA’s emergency use authorization of the Pfizer COVID treatment pill and Thursday’s authorization of an antiviral pill from Merck added confidence.

The Dow Jones Industrial Average closed 196 points higher. The S&P 500 closed 29 points higher. The NASDAQ was up 131 points.

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Logic says markets should view the latest monthly Cattle on Feed report (1,000 head and more capacity) as neutral to a touch friendly.

Cattle feeders placed 1.97 million head in November, which was 68,000 head more (+3.6%) than a year earlier. That was in line with pre-report expectations.

In terms of placement weights, 53.3% went on feed weighing 699 lbs. or less, 35.5% weighing 700-899 lbs. and 11.2% weighing 900 lbs. or more.

Marketings in November of 1.87 million head were 94,000 head more (+5.3%) than a year earlier. That was a touch more than pre-report expectations.

Cattle on feed Dec. 1 of 11.98 million head were 51,000 head fewer (-0.4%) than the same time last year.

Negotiated cash fed cattle trade ranged from limited on light demand to slow on moderate demand through Wednesday afternoon, according to the Agricultural Marketing Service. Although too few transactions to trend, various reports suggested prices were a touch higher than earlier in the week, supported by the bounce in futures.

So far this week, live prices are $1 lower in the Texas Panhandle at $135/cwt. and $1-$3 lower in Kansas and Nebraska at $135. Dressed trade in Nebraska is steady to $1 lower at $217-$218. Last week, live prices were at $138 in the western Corn Belt and dressed trade was at $217-$218.

Cattle futures extended recent gains Wednesday amid lighter pre-holiday trade.

Feeder Cattle futures closed an average of 58¢ higher (10¢ to 95¢ higher).

Live Cattle futures closed an average of 66¢ higher.

Choice boxed beef cutout value was 47¢ higher Wednesday afternoon at $261.86/cwt. Select was 91¢ higher at $250.83/cwt.

Corn futures closed 3¢ to 4¢ higher through Sep ‘22, and then mostly 1¢ higher.

Soybean futures closed 15¢ to 22¢ higher through Sep ‘22 and then mostly 7¢ to 8¢ higher.

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Major U.S. financial indices extended gains Wednesday. Support included the Food and Drug Administration’s emergency use authorization of the COVID treatment pill from Pfizer.

The Dow Jones Industrial Average closed 261 points higher. The S&P 500 closed 47 points higher. The NASDAQ was up 180 points.

CME West Texas Intermediate Crude Oil futures closed $1.05 to $1.64 higher in the front six contracts. That makes for a gain of about $3.50-$4.00 in those contracts over the last two trading sessions.

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Beef in freezers continues lower year over year, according to the latest USDA Cold Storage report. Beef in cold storage Nov. 30 was 4% more than the previous month but 4% less year over year.

Pork in cold storage was 8% less than the previous month and 3% less than the same time last year.

Total red meat supplies in freezers were 2% less than the previous month and 4% less than the prior year.

Total frozen poultry supplies were 17% less month to month and 18% less year over year.

Cattle futures bounced back Tuesday from recently oversold conditions, with more optimistic outside markets, despite softer cash prices and the shorter harvest schedule through the remainder of the year.

Feeder Cattle futures closed an average of $1.75 higher.

Live Cattle futures closed an average of 99¢ higher (85¢ to $1.17 higher).

Negotiated cash fed cattle trade ranged from limited on light demand to mostly inactive on light demand through Tuesday afternoon, according to the Agricultural Marketing Service. Although there were too few transactions for a trend, some live sales traded at $135/cwt. in the Texas Panhandle and Nebraska.

Last week, live prices were $2-$4 lower in Kansas and Nebraska at $136-$138/cwt. They were $4 lower in the Texas Panhandle at $136 and steady to $2 lower in the western Corn Belt at $138. Dressed prices were $2 lower in Nebraska at $218 and steady to $3 lower in the western Corn Belt at $217-$218.

Choice boxed beef cutout value was 99¢ lower Tuesday afternoon at $261.39/cwt. Select was 75¢ lower at $249.92/cwt.

Corn futures closed 4¢ to 8¢ higher through Jly ‘23, and then mostly 1¢ to 2¢ higher.

Soybean futures closed 10¢ to 19¢ higher through Sep ‘22 and then fractionally lower to 5¢ higher.

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Major U.S. financial indices recovered a chunk of last week’s losses Tuesday, buoyed by positive quarterly corporate earnings reports.

The Dow Jones Industrial Average closed 560 points higher. The S&P 500 closed 81 points higher. The NASDAQ was up 360 points.

CME West Texas Intermediate Crude Oil futures closed $2.27 to $2.51 higher in the front six contracts.

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Heading into Thursday’s monthly Cattle on Feed report, analysts expect to see the Dec. 1 feedlot inventory a touch less than a year earlier.

“Placements are expected to be up around 4.5% from last year. Other than last year, that would be the smallest November placements since 2016,” says David Anderson, Extension livestock economist at Texas A&M University, in the latest issue of In the Cattle Markets. “Fewer feeder cattle were imported from Mexico during the month while slightly more were imported from Canada. Placements in the expected range would follow the normal pattern of declining sharply from October’s placements.”

On the other end, November feedlot marketings are projected to be about 4.5% more year over year, due in part to one more slaughter day, according to Anderson.

“The combination of marketings and placements leaves the number of cattle on feed slightly below last year,” Anderson says. “On-feed inventories typically increase from November to December and the December inventory is often the highest for the year. December 2021 should be an exception to that with on-feed inventories in February being larger.”