WLI

Negotiated cash fed cattle trade was inactive on light demand in all major cattle feeding regions through Tuesday afternoon, with too few transactions to trend according to the Agricultural marketing Service.

Last week, live prices were at $123-$124/cwt. in the Southern Plains and $124-$127 in the North. Dressed trade was at $198-$203.

Cattle futures were finally oversold and cheap enough to generate buying interest Tuesday. Support included the fact that the JBS plant in Grand Island — offline Monday due to a fire on the rendering side — was reportedly back up and running.

Feeder Cattle futures closed an average of $2.96 higher ($2.57 to $3.45 higher).

Live Cattle futures closed an average of $2.16 higher ($1.65 to $2.82 higher).

Choice boxed beef cutout value was $3.04 lower Tuesday afternoon at $322.89/cwt. Select was $1.54 lower at $290.62.

Corn futures closed 3¢ to 7¢ higher across the front half of the board and then fractionally higher to 3¢ higher.

Soybean futures closed 1¢ to 2¢ lower, except for 4¢ higher in spot Sep.

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Major U.S. financial indices weakened after a respite the previous day and despite the fact that the closely watched Consumer Price Index (CPI) was slightly less than the trade expected month over month and year over year. The CPI for All Urban Consumers (CPI-U) increased 0.3% in

August on a seasonally adjusted basis after rising 0.5% in July, according to the U.S. Bureau of Labor Statistics. The unadjusted index for all items was 5.3% more than 12 months earlier.

The Dow Jones Industrial Average closed 292 points lower. The S&P 500 closed 25 points lower. The NASDAQ was down 67 points.

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Wholesale beef prices continue to decline, while retail beef prices edge higher.

Although wholesale beef prices remain elevated, Choice boxed beef prices continue downward, from a recent summer high in of $348.03/cwt. in August to $322.89 yesterday afternoon. Likewise, Select declined from $319.59 to $290.62.

Conversely, the most recent summary of retail beef prices, published by USDA’s Economic Research Service (ERS) yesterday shows the Choice beef price increasing steadily from $6.48/lb. in March to $7.64 in August. During the same period, the all fresh retail beef price increased from $6.38/lb. to $7.14.

According to the Consumer Food Price Index from ERS, beef and veal values were 9.6% higher year over year in pandemic-ravaged 2020. Year over year in July, those values were 6.5% higher; 4.2% higher year to date compared to the same time last year.

By way of comparison, the Consumer Food Price Index for all food was 3.4% higher year over year in 2020, 3.4% higher year over year in July and 2.4% higher year to date.

Year over year in July, food-at-home (grocery store or supermarket food purchases) CPI increased 2.6%, while food-away-from-home (restaurant purchases) increased 4.6%, according to the ERS Food Price Outlook.

Year to date, ERS analysts say, “Of all the CPI food-at-home categories tracked by USDA-ERS, the fresh fruits category has had the largest relative price increase (4.9%) and the fresh vegetables category the smallest (0.4%). No food categories have decreased in price in 2021 compared to 2020.”

As for the overall consumer price index, according to the latest update from the U.S. Bureau of Labor Statistics, the unadjusted index for all items was 5.3% higher over the last 12 months.

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

Last week, live prices were at $123-$124/cwt. in the Southern Plains, $124-$126 in Nebraska and $124-$127 in the western Corn Belt. Dressed trade was at $198-$203. 

Last week’s five-area direct average steer price was $124.79/cwt. on a live basis, which was 64¢ less than the previous week. The average steer price in the beef was 97¢ lower at $200.82.

Widespread reports of an overnight for at the JBS packing facility in Grand Island, Neb. — apparently halting production, at least for Monday — shoved already faltering Cattle futures lower. Overall weakness in commodity markets also contributed pressure.

Feeder Cattle futures closed an average of $2.09 lower.

Live Cattle futures closed an average of $1.06 lower

Choice boxed beef cutout value was 57¢ lower Monday afternoon at $247.59/cwt. Select was 82¢ lower at $218.01/cwt.

Corn futures closed mostly 4¢ lower through Jly ’22 and then 1¢ to 2¢ lower.

Soybean futures closed mostly 1¢ lower through Aug ’22 and then fractionally higher to 2¢ higher.

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Major U.S. financial indices closed mixed on Monday, snapping a five-day slide as investors await Tuesday’s report on consumer prices to gauge both inflation and the Federal Reserve’s timing to taper stimulus efforts. Crude oil continued to rally in part due to port disruptions spawned by Hurricane Ida.

The Dow Jones Industrial Average closed 262 points higher. The S&P 500 closed 10 points higher. The NASDAQ closed 10 points lower. 

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Beef byproduct values continue significantly higher in recent months than they were for several years. During the ebb in 2020, those values were the lowest since 2009, according to Derrell Peel, Extension livestock marketing specialist at Oklahoma State University. For perspective, he says hide and offal values were $6.93/cwt. (live fed steer basis) in July last year. They were $14.99 last month. They were $15.25 yesterday.

“The sharp jump in byproduct values is due to increases in hide values along with several other products included in the by-product totals,” Peel explains, in his weekly market comments. “The largest component of byproduct values is the hides. The August steer hide value was up 115% year over year. In recent years, hides have dropped from roughly half of total byproduct values to about 30% of the total. Despite the doubling of hide values in the past year, hides still only represent 31.7% of current byproduct value. This is because numerous other byproduct values have likewise increased sharply in the past year.”

For instance, Peel explains inedible tallow values are up 177% year over year while edible tallow values increased 85% percent. Combined, he says edible and inedible tallow represent 25.4% of August total byproduct values. Tongue prices were up 111% year over year in August and accounted for 19.5% of total byproduct values. 

“The majority of hides and offals are exported. Over the past decade, exports of hides, variety meat, and tallow have added an average of $2.42 billion to total beef industry exports. In 2020, the value of hide, variety meat and tallow exports was $1.7 billion,” Peel says.

Negotiated cash fed cattle trade was mostly inactive on light demand in all major cattle feeding regions through Friday afternoon, according to the Agricultural marketing Service.

Last week, live prices were steady to $1 lower at $123-$124/cwt. in the Southern Plains, $124-$125 in Nebraska and $124-$127 in the western Corn Belt. Dressed trade was $2-$5 lower in Nebraska at $198 and steady to $3 lower in the western Corn Belt at $203.

Cattle futures continued lower Friday, pressured by growing concerns about rising Delta variant infections hampering economic recovery and demand.

Feeder Cattle futures closed an average of $1.47 lower (50¢ lower in the back contract to $2.10 lower in Nov ’21).

Live Cattle futures closed an average of 76¢ lower, (33¢ lower in the front contract to $1.13 lower at the back).

Choice boxed beef cutout value was $5.36 lower Friday at $327.22/cwt. Select was $3.08 lower at $298.37.

The average dressed steer weight the week ending Aug. 28 was 901 lbs., which was 2 lbs. lighter than the previous week and 15 lbs. lighter than the same week last year, according to USDA’s Actual Slaughter Under Federal Inspection report. The average dressed heifer weight of 821 lbs. was 1 lb. heavier than the previous week but 13 lbs. lighter than the previous year.

Estimated total cattle slaughter the holiday shortened week was 577,000 head, according to USDA, which was 47,000 head fewer than the previous week. Year-to-date estimated total cattle slaughter of 23.04 million head is 834,000 more (+3.76%) than the same period last year.

Estimated year-to-date total beef production of 19.03 billion lbs. was 648.1 million lbs. more (+3.53%) than the same time the previous year.

Corn futures closed higher Friday, despite bearish World Agricultural Supply and Demand Estimates that increased ending stocks with more projected planted acres and higher estimated yield (see below).

Corn futures closed mostly 1¢ to 9¢ higher.

Soybean futures closed 15¢ to 19¢ higher.

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Major U.S. financial indices closed lower Friday as investors continued to fret over growing cases of the Delta variant and its impact on economic growth, while inflation indicators continue to rise. For instance, the Producer Price Index for final demand increased 0.7% in August, according to the U.S. Bureau of Labor Statistics. On an unadjusted basis, the final demand index rose 8.3% for the 12 months ended in August, the largest advance since 12-month data were first calculated in November 2010.

The Dow Jones Industrial Average closed 271 points lower. The S&P 500 closed 34 points lower. The NASDAQ was down 132 points.

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The monthly World Agricultural Supply and Demand Estimates published Friday increased expected fed steer prices and lowered expected corn prices.

ERS lowered projected beef production for this year by 130 million lbs. to 27.74 billion lbs. based on lower expected steer and heifer slaughter and lighter carcass weights more than offsetting higher cow slaughter. However, the total would be 586 million lbs. more (+2.1%) than last year. Total beef production next year is forecast to be 26.87 billion lbs., which would be 867 million lbs. less (-3.1%) than this year.

ERS increased this year’s expected five-area direct annual average fed steer price by $1 to $122.20/cwt. Average projected prices are $124 in the third quarter, $131 in the fourth quarter and $133 in the first quarter of next year. Expectations for next year’s annual average price increased by $2 to $128.

Total red meat and poultry production  this year is projected to be 106.6 billion lbs., which would be 59 million lbs. more than last year. Next year, total red meat and poultry production is forecast to be 204 million lbs. (+0.19%) more than this year on increased pork and poultry production.

Corn

USDA forecast corn production for 2021-22 at 15.0 billion bu., up 246 million from last month on increases to harvested area and yield. The national average yield is forecast at 176.3 bu./acre, up 1.7 bu. Harvested area for grain is forecast at 85.1 million acres, up 0.6 million. With projected supply rising more than use, ending stocks increased 166 million bu. to 1.4 billion. The season-average corn price received by producers was lowered 30¢ to $5.45/bu. 

Soybeans

Soybean production is projected at 4.4 billion bu., up 35 million with lower harvested area more than offset by a higher yield forecast of 50.6 bu./acre. Ending stocks are projected at 185 million bushels, up 30 million from last month.

The U.S. season-average soybean price was forecast at $12.90/bu., down 80¢. The soybean meal price was forecast $25 less at $360 per short ton. The soybean oil price forecast was unchanged at 65¢/lb. 

Wheat

Projected 2021-22 ending wheat stocks were reduced 12 million bu. to 615 million and would be 27% less than last year, the lowest in eight years. The projected 2021-22 season-average farm price was lowered 10¢/bu. to $6.60 on reported NASS prices to date and price expectations for the remainder of 2021-22.

Negotiated cash fed cattle trade was slow on light demand in Nebraska through Thursday afternoon. Although there were too few transactions to trend, there was some live trade at $124-$125/cwt. and some in the beef at $198. The previous day, established trend was as $126 and $203, respectively.

Trade was limited on light demand in Kansas with a few live sales steady with the previous day at $123.

Trade was limited on light demand in the western Corn Belt. Live prices the previous day were at $124-$125; $203 dressed.

Trade was at a standstill in the Texas Panhandle. Live prices the previous day were at $123-$124.

Cattle futures offered hope again early in yesterday’s session but closed lower yet again, except for front-month Live Cattle.

Feeder Cattle futures closed an average of 69¢ lower (2¢ lower toward the front to $1.28 lower at the back).

Live Cattle futures closed an average of 51¢ lower, except for 2¢ to 65¢ higher in the front three contracts.

Choice boxed beef cutout value was $2.28 lower Thursday afternoon at $332.58/cwt. Select was $1.72 lower at $296.45.

Corn futures closed mostly 2¢ to 5¢ lower.

Soybean futures closed 7¢ to 12¢ lower with most of the pressure in new-crop contracts.

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Major U.S. financial indices closed down for the second consecutive day on Thursday amid volatile trade. First-time unemployment claims fell to the lowest level since the pandemic started, but more large companies like Microsoft announced plans to delay reopening due to the continued spread of the delta variant of Covid-19.

The Dow Jones Industrial Average closed 152 points lower. The S&P 500 closed 21 points lower. The NASDAQ was down 38 points. 

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“Boxed beef prices have started what is expected to be a slow and long price decline following the Labor Day holiday. There may be some buying in the next week or so to restock meat counters, but beef prices are expected to soften until fourth-quarter holiday buying takes center stage,” says Andrew P. Griffith, agricultural economist at the University of Tennessee, in his weekly market comments. “Beef is the major value determinant of cattle, but the drop credit is also important to finished cattle value. Hide and offal does not play into the boxed beef valuation equation, but packers count on its value to pay the bills. In 2020, the hide and offal value peeked at $9.41/cwt., which is about where it started the current year. However, hide and offal values have been on a linear trajectory and averaged $15.14 last week, which is nearly 44% higher than the five-year average price for the last week of August. Current hide and offal values are at the highest level since January 2015 when cattle supplies were tight, and prices may be destined to go higher.”

Negotiated cash fed cattle trade was slow on light demand in Nebraska and the western Corn Belt through Wednesday afternoon, according to the Agricultural Marketing Service. Although too few transactions to trend, there were a few live sales in Nebraska at $126/cwt. There were also some early dressed sales in Nebraska and the western Corn Belt at $203. Last week, live prices were $125-$126 in Nebraska and $125-$128 in the western Corn Belt. Dressed trade in the regions was at $200-$203.

Trade in the Southern Plains was limited on light demand. There were a few live sales at $124, steady with the previous day. Last week, live sales in Kansas were at $125-$126 and at $123-$124 in the Texas Panhandle.

Cattle futures tried to gain traction early in Wednesday’s session but ran out of steam amid continued concerns about declining beef values and demand uncertainty.

Feeder Cattle futures closed an average of $1.18 lower (22¢ lower at the front to $1.77 lower toward the back).

Live Cattle futures closed an average of 76¢ lower amid heavy trade.

Choice boxed beef cutout value was 33¢ lower Wednesday afternoon at $334.86/cwt. Select was $3.73 lower at $298.17.

Corn futures closed mostly fractionally lower to 1¢ lower, except for 2¢ higher in spot Sep.

Soybean futures closed fractionally higher to 2¢ higher through Sep ’22 and then fractionally lower.

For the record, 59% of the nation’s corn crop was in Good or Excellent condition (week ending Sept. 5), according to the latest USDA Crop Progress report. That was 1% less than the previous week and 2% less than the five-year average.

57% of the soybean crop was in good or excellent condition versus 56% the previous year and 65% for average

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Major U.S. financial indices softened Wednesday amid investor nervousness about inflation and economic growth.

“Economic growth downshifted slightly to a moderate pace in early July through August,” according to the Federal Reserve’s Beige Book. “…The deceleration in economic activity was largely attributable to a pullback in dining out, travel, and tourism in most Districts, reflecting safety concerns due to the rise of the Delta variant, and, in a few cases, international travel restrictions. The other sectors of the economy where growth slowed or activity declined were those constrained by supply disruptions and labor shortages, as opposed to softening demand.”

As for inflation, according to the Beige Book, “…With pervasive resource shortages, input price pressures continued to be widespread. Most Districts noted substantial escalation in the cost of metals and metal-based products, freight and transportation services, and construction materials, with the notable exception of lumber whose cost has retreated from exceptionally high levels. Even at greatly increased prices, many businesses reported having trouble sourcing key inputs. Some Districts reported that businesses are finding it easier to pass along more cost increases through higher prices. Several Districts indicated that businesses anticipate significant hikes in their selling prices in the months ahead.”

The Dow Jones Industrial Average closed 68 points lower. The S&P 500 closed 5 points lower. The NASDAQ was down 87 points.

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“Weather is and will clearly play a role as to the timing and availability of calf numbers. And will also impact the distribution of calf weight,” says Stephen Koontz, agricultural economist at Colorado State University. “There is the potential for an interesting dynamic between regional calf marketings and weights and then the resulting placement into feedlots, which may bunch marketing of fed animals well into next year. There are also interesting opportunities for retaining calves across the different regions. All are worth following.”

In the latest issue of In the Cattle Markets, Koontz explains weather — drought specifically — is creating regional variation in heifer trade.

“There is modest evidence of heifers being sold into the meat supply chain as opposed to being used as replacements into the beef production system. This is especially the case in the North and West,” Koontz says. “In the South and East there is very modest evidence – supported by discussions with producers – about retaining and actually purchasing of heifers. The regional dynamics will likely play out well into next year as the late summer saw only some drought relief for the Southern Plains and desert Southwest.”

As for recent declines in Cattle futures, from a technical standpoint, Koontz says market optimism that pushed contracts higher over the last four months is broken or simply exhausted.