WLI

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

Last week, live prices were at $122-$123/cwt. in the Southern Plains at $123/cwt. Live and dressed sales were at $128 and $202-$208, respectively, in Nebraska and the western Corn Belt.

Lower Corn futures helped boost Feeder Cattle futures Monday. They closed an average of 62¢ higher (10¢ to $1.75), except for spot Sep, down 60¢.

Recent sluggishness in the pace of packer buying continued to pressure Live Cattle futures again Monday. They closed an average of 57¢ lower (18¢ to $1.75). 

Choice boxed beef cutout value was $2.56 lower Monday afternoon at $342.78/cwt. Select was $2.97 lower at $312.55/cwt.

Front-month Corn and Soybean futures fell hard with barge delivery uncertainty stemming from Hurricane Ida.

Corn futures closed 6¢ to 17¢ lower through new-crop contracts and then mostly 3¢ lower.

Soybean futures closed 11¢ to 54¢ lower in the front seven contracts and then mostly 4¢ to 7¢ lower.

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Major U.S. financial indices closed mixed on Monday, with tech stocks pushing the S&P 500 to its 12th all-time high in August. The after-effects of Hurricane Ida pushed gasoline higher but hurt insurers.

The Dow Jones Industrial Average closed 56 points lower. The S&P 500 19 points higher. The NASDAQ was up 136 points. 

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Logic and current calf prices suggest the nation’s calf crop may be less than what USDA estimated in the semiannual Cattle report released last month, according to the Livestock Marketing Information Center (LMIC).

“Steer calf prices in the Southern Plains have been robust in 2021. Calves weighing 500-600 lbs. have averaged between 6% and 16% higher from June through mid-August. The calf market is incredibly hot, given the higher cost of feed,” say LMIC analysts, in the latest Livestock Monitor. “Reports of droughts and liquidation would have implied early weaning was a given in 2021 but the data has shown little signs that is happening to a large degree.”

For instance, they point to the most recent monthly Cattle on Feed report, which pegged 15% fewer July placements weighing less than 700 lbs., compared to the previous year.

“High feed costs should drive calf prices lower, reducing the incentive to place lighter weight cattle into feedlots. Drought affected areas should have started early weaning and shipped more small animals to feedlots,” say LMIC analysts. “Given the limited forage and high hay costs, it would seem likely that more calves would be moving at these prices that are substantially higher than a year ago. These incongruent signals point towards a smaller calf crop (July 1 estimate). That would explain both the higher prices and limited number of placements seen in July. August might show greater movement of smaller feeders, and the timing may be slower than initially thought.”

Despite the lack of sustained follow-through support from the most recent Cattle on Feed report, volatile outside markets and an apparent top in wholesale beef values, cash cattle and futures mainly gained last week.

Live Cattle futures closed an average of $1.02 higher (7¢ to $1.45 higher) week to week on Friday, except for $2.27 lower in almost-spent spot Aug.

On the cash side of the fence, negotiated fed cattle prices last week, were $1-$2 higher on a live basis in the Southern Plains at $123/cwt. However, the anemic pace of trade meant there was  no established trend in the North. Live prices the previous week were at $125-$127 in Nebraska and at $127 in the westerner Corn Belt. Dressed trade the previous week was at $200 in Nebraska and at $200-$205 in the western Corn Belt.

Sluggish trade pressured Live Cattle futures on Friday. Part of that stemmed from reports of mechanical problems at various plants last week.

Through Thursday, USDA’s Agricultural Marketing Service (AMS) reported 33,363 head traded direct in the five-area regions, compared to 60,342 at the same time the previous week and 65,386 head a year earlier.

Live Cattle futures closed an average of 52¢ lower through the front four contracts (5¢ lower to $1.27 lower in spot Aug) and then an average of 28¢ higher.

Overall, though, recently expanding open interest provided support, as does the reality of improving supply-side fundamentals.

As Derrell Peel, Extension livestock marketing specialist at Oklahoma State University pointed out in his weekly market comments,

“August represents the sixth consecutive monthly decline in feedlot inventories from the February peak, a decrease of 1.032 million head or 8.5% over the six months. In the previous five years, he says the average feedlot inventory decline from the spring high to summer low has been 6.2%.” 

Moreover, Peel notes lighter year-over-year carcass weights also provide more indication that feedlots are getting more current. He adds lower carcass weights also reflect the impact and incentives stemming from sharply higher feedlot cost of gain, which should help hold carcass weights in check.

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“Auction calf and stocker prices have moved counter-seasonally higher in July-August, while feeder cattle markets, which typically increase through the summer, have shown a strong seasonal price increase,” Peel says.

Feeder Cattle futures closed an average of 60¢ higher on Friday (15¢ higher toward the front to $2.40 higher at the back). Week to week they closed an average of 88¢ higher, except for 85¢ lower in new spot Sep. That was with Corn futures closing an average of 16.4¢ higher through the front six contracts.

The CME Feeder Cattle Index was $3.60 higher week to week on Thursday at $159.39.      

In his weekly market comments, Andrew P. Griffith, agricultural economist at the University of Tennessee explains stronger prices suggested by Feeder Cattle futures are helping keep cash prices higher for lighter weight calves than would be normally expected this time of year.

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Wholesale beef values appeared to top last week with Labor Day purchases mostly in the books.

Choice boxed beef cutout value was 28¢ higher week to week on Friday at $345.34/cwt. Select was $3.01 lower at $315.52.

However, Griffith points out beef in cold storage at the end of July was the least since November of 2014 when slaughter was light and beef prices were elevated.

“Strong beef prices in the current market are again what is reducing the quantity of beef in cold storage,” Griffith says. “Generally, 91% or more of the beef in cold storage is boneless beef, which is primarily made up of grinding beef. As is evident in wholesale beef prices, beef demand remains strong and continues to support higher prices. This strong demand and strong prices will likely continue to result in beef in cold storage remaining below year-ago levels. However, beef in cold storage will seasonally increase throughout the remainder of the year as cattle weights increase and more animals enter the slaughter mix. The big question is how long can wholesale beef prices remain at such strong levels. The answer is not clear, but prices are not expected to collapse in the near future.”

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Major U.S. financial indices closed higher Friday, buoyed by comments from Federal Reserve Chair Jerome Powell.

“The timing and pace of the coming reduction in asset purchases will not be intended to carry a direct signal regarding the timing of interest rate liftoff, for which we have articulated a different and substantially more stringent test,” explained Powell. “We have said that we will continue to hold the target range for the federal funds rate at its current level until the economy reaches conditions consistent with maximum employment, and inflation has reached 2% and is on track to moderately exceed 2% for some time. We have much ground to cover to reach maximum employment, and time will tell whether we have reached 2% inflation on a sustainable basis.”

The Dow Jones Industrial Average closed 242 points higher. The S&P 500 closed 39 points higher. The NASDAQ was up 183 points.

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Consumer prices for food surged in July, compared to the previous year but overall year-to-date prices remain closer to the 20-year average.

Consumer at-home food prices were 2.6% higher year over year in July, according to the Change in Food Price Indexes from USDA’s Economic Research Service. At-home meat prices were 5.9% higher — beef and veal prices were 6.5% more, pork prices were up 7.8% and poultry prices were 5.3% higher. Prices for food away from home were up 4.6% year over year.

Year to date, at-home food prices were up 1.9% — beef and veal prices were 4.2% more, pork prices were up 4.4% and poultry prices were 2.6% higher. Prices for food away from home were up 3.1% year over year.

The forecast is for at-home prices to be up an average 2.5% to 3.5% this year — beef and veal prices are projected 4.0% to 4.5% higher, pork prices are forecast 5.0% to 6.0% higher and poultry prices are projected 3.0% to 4.0% higher. Prices for food away from home are projected to 3.5% to 4.5% higher.

For perspective, the 20-year average annual price change for at-home food prices is 2.0% — 4.4% for beef and veal prices, 2.2% for pork prices and 2.1% for poultry prices. The annual average change for food away from home is 2.8%.

Negotiated cash fed cattle trade was mostly inactive on light demand in Kansas through Thursday afternoon, according to the Agricultural Marketing Service. Elsewhere, it was slow on light demand.

Live sales in the Texas Panhandle were $1-$2 higher at $123/cwt. Although too few to trend, early live sales were $1-$3 higher in Nebraska at $128 and $1 higher in the western Corn Belt at $127. Early dressed sales were $1-$2 higher at $202 in Nebraska and $202.00-$206.50 in the western Corn Belt.

Weaker outside markets and the lack of follow-through support pressured Cattle futures Thursday.

Feeder Cattle futures closed an average of 95¢ lower, except for 15¢ higher spot Aug.

Live Cattle futures closed an average of 55¢ lower, except for 15¢ higher in the back contract.

Choice boxed beef cutout value was 38¢ higher Thursday afternoon at $347.27/cwt. Select was $3.90 higher at $319.59.

Corn futures closed mostly 1¢ to 6¢ lower, except for 1¢ higher in spot Sept.

Soybean futures closed mostly 6¢ to 10¢ lower, except for 21¢ higher in spot Sept.

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Major U.S. financial indices closed lower on Thursday after explosions in Kabul, outside an airport gate, killed both U.S. service members and civilians. Investors are also uncertain whether the Federal Reserve will give a clear signal this week for timing on tapering emergency support.

The Dow Jones Industrial Average closed 192 points lower. The S&P 500 closed 26 points lower. The NASDAQ was down 96 points.

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USDA increased expectations for U.S. beef exports during the current fiscal year, in the latest Outlook for U.S. Agricultural Trade. Compared to the last quarterly report, projected U.S. beef export value increased $800 million to $8.4 billion on higher unit values and volumes to China, Mexico, and South Korea.

Projected export value for U.S. livestock, dairy and poultry exports increased $2.2 billion to $36.4 billion due to increases in all product groups except pork.

Next year, USDA expects beef exports to be $100 million less than this year due to lower exportable supplies. Fiscal year 2022 livestock, poultry, and dairy exports were forecast $400 million higher than this year at $36.8 billion primarily due to growth in dairy and poultry products.

Forecast total U.S. agricultural export value this year increased $9.5 billion from the previous estimate to $173.5 billion, mainly due to higher livestock, poultry, and dairy exports, as well as the adoption of a new definition of agricultural products.

“Beginning with this publication, the report is adopting the World Trade Organization’s (WTO) definition of ‘Agricultural Products,’ which adds ethanol, distilled spirits, and manufactured tobacco products, among others, while removing rubber and allied products from the previous USDA definition,” according to analysts with USDA’s Economic Research Service (ERS).

U.S. agricultural exports next year were projected $4.0 billion higher than this year at $177.5 billion.

“The global COVID-19 pandemic remains the primary factor affecting economic activity across the globe. The prevalence of the Delta variant has renewed concerns over pandemic-induced pressure on public health infrastructures, softening consumer spending and global supply chain recovery,” say ERS analysts. “Microchip manufacturing and the shipping of physical goods are two aspects of the global economy that continue to observe elevated prices from supply chain disruptions. Despite these economic challenges, employment statistics and consumer confidence have remained strong, pointing to a continued economic recovery through the end of 2021. World real gross domestic product (GDP) is projected to increase by 5.7% in the remainder of 2021, and subsequently increase by 4.6% in 2022.”

Growth projections for real U.S. GDP this year were raised to 6.2% from previous estimate of 5.8%.

Negotiated cash fed cattle trade ranged from inactive to limited through Wednesday afternoon with too few transactions to trend, according to the Agricultural Marketing Service.

Last week, live sales were at $121-$122/cwt. in the Texas Panhandle, $122 in Kansas, $125-$127 in Nebraska and $127 in the western Corn Belt. Dressed sales were at $200 in Nebraska and at $200-$205 in the western Corn Belt.

There was just a light run for Wednesday’s fat cattle auction in Tama, IA (313 head), but Choice steers and heifers traded $1.50 to $1.75/cwt. higher. There were 127 Choice 2-4 steers weighing an average of 1,377 lbs., bringing an average of $131.43.

Slaughter steers sold $2-$4 lower at Sioux Falls Regional in South Dakota. Fat heifers traded steady to $1 lower. There were 313 Choice 3-4 steers weighing an average of 1,532 lbs., bringing an average of $126.52/cwt.

Lack of cash direction, positioning from strong gains to start the week and softer wholesale beef values weighed on Live Cattle futures Wednesday.

Live Cattle futures closed an average of 76¢ lower (5¢ to $1.40 lower), except for unchanged to an average of 7¢ higher in three contracts toward the middle of the board.

Higher Corn futures added pressure to Feeder Cattle.

Feeder Cattle futures closed an average of 58¢ lower, except for 72¢ higher in almost spent Aug and 17¢ higher in the back contract.

Wholesale beef prices trended lower for the second consecutive day.

Choice boxed beef cutout value was 69¢ lower Wednesday afternoon at $346.89/cwt. Select was $1.21 lower at 315.69.

Total federally inspected cattle slaughter in July of 2.8 million head was 65,800 fewer (-2.3%) than the previous year. Total cattle slaughter for January through July of 19.25 million head was 880,700 more (+4.8%) year over year.

Commercial beef production in July of 2.3 billion lbs. was 104 million lbs. less (-4.3%) year over year. For January through July, beef production of 16.2 billion lbs. was 758.1 million lbs. more (+4.9%) than the same time last year. The average live weight was down 14 lbs. from the previous year, at 1,349 lbs.

Total commercial red meat production in July of 4.4 billion lbs. was 429.5 million lbs. less (-8.9%) than the previous year. Total commercial red meat production for January through July was 32.3 billion lbs., which was 645.6 million lbs. more (+2.0%).

Corn futures closed mostly 6¢ to 12¢ higher.

Soybean futures closed mostly 8¢ to 12¢ higher, except for mainly 1¢ higher in new-crop contracts.

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Major U.S. financial indices edged higher Wednesday amid optimism variant Covid infections could be peaking in the U.S.

The Dow Jones Industrial average closed 39 points higher. The S&P 500 closed 9 points higher. The NASDAQ was up 22 points.

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“Solid grain prices, the Federal Reserve’s record-low interest rates, and growing exports have underpinned the Rural Mainstreet Economy,” according to Ernie Goss, Jack A. MacAllister Chair in Regional Economics at Creighton University’s Heider College of Business. “USDA data show that 2021 year-to-date agriculture exports are more than 25% above that for the same period in 2020. This has been a prime factor supporting the Rural Mainstreet economy.”

Creighton University’s Rural Mainstreet Index (RMI) was 65.3 in August, the ninth consecutive month above the growth-neutral level of 50.0. The index is based on surveys of bank CEOs in rural areas of a 10-state region dependent on agriculture and/or energy.

Approximately, 34.4% of bank CEOs reported that their local economy expanded between July and August.

The farmland price index advanced 5.6 points from July to 76.6 in August. That was the 11th consecutive month of levels above growth-neutral. The last time such a stretch occurred was in 2012-13.

The August farm equipment-sales index declined to 64.7 from 67.2 in July. Readings over the last several months represent the strongest consistent growth since 2012.

Approximately 15.6% of bankers reported that continuing drought conditions were the greatest threat to their banking operations over the next 12 months.

“Rising COVID-19 infections, the turmoil in Afghanistan, and negative views of current infrastructure bills before Congress damaged the economic outlook of bank CEOs. Only 9.4% of bankers support passage of the $3.5 trillion infrastructure bill currently winding through Congress,” says Goss.

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

Last week’s five-area direct average steer price was $2.19 higher on a live basis at $125.47/cwt. The average steer price in the beef was 5¢ higher at $200.68.

Cattle futures closed mixed Tuesday. Follow-through support prevailed through most of the session.

Live Cattle closed mainly higher, boosted by the cash outlook and the 13,688-contract increase in open interest the previous day.

Live Cattle futures closed an average of 47¢ higher, except for an average of 45¢ lower in the front two contracts.

Choice boxed beef cutout value was 45¢ lower Tuesday afternoon at $347.58/cwt. Select was $2.50 lower at $316.90.

Rising Corn futures prices, as well as  likely position squaring and profit taking pressured Feeder Cattle.

Feeder Cattle futures closed an average of 81¢ lower, except for 37¢ higher in spot Aug.

Corn and Soybean futures closed higher Tuesday, supported by crop conditions in the weekly Crop Progress report (see below).

Corn futures closed mostly 6¢ to 9¢ higher.

Soybean futures closed 30¢ to 43¢ higher through Aug ’22 and then mostly 23¢ to 28¢ higher.

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Major U.S. financial indices closed higher Tuesday, buoyed by follow-through support from FDA’s full approval of the Pfizer-BioNTech Covid vaccine.

The Dow Jones Industrial Average closed 30 points higher. The S&P 500 closed 6 points higher. The NASDAQ was up 77 points.

Crude Oil futures (WTI-CME) continued to climb, up $1.83 to $1.91 through the front six contracts.

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Total pounds of beef in freezers July 31 were down slightly from the previous month and down 9% from last year, according to USDA’s monthly Cold Storage report.

Frozen pork supplies were up slightly from the previous month but down 4% from last year.

Total red meat supplies in freezers were up slightly from the previous month but down 8% from last year.

Total frozen poultry supplies were 2% more than last month but 17% less year over year.

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Nationally, pasture and range conditions continue to erode slightly for the week ending Aug. 22, according to the latest USDA Crop Progress report.

29% of pasture and range was rated as Good (23%) or Excellent (6%), which was the same as the previous week and 5% more than a year earlier. Conversely, 43% was rated as Poor (21%) or Very Poor (22%), which was 1% less than a week earlier and 1% more than a year earlier.

85% of corn was in the dough stage, which was 1% less than last year, but 4% more than the average. 41% was dented, the same as last year and 3% more than the average. 4% was mature, which was 1% less than last year but on par with average. 60% was in Good (46%) or Excellent (14%) condition, which was 2% less than the previous week and 4% less than a year earlier.

97% of soybeans were blooming, which 2% less than last year but the same as the five-year average. 88% were setting pods, which was 3% less than last year but 1% more than average. 3% were dropping leaves, compared to 4% last year and 3% for average. 56% were in Good (45%) or Excellent (11%) condition, which was 1% less than a week earlier and 13% less than the same week last year.

77% of spring wheat was harvested, which was 31% more than the previous year and 22% more than the five-year average.