WLI

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

Cash fed cattle prices last week were $1 higher in the Southern Plains at $122/cwt., $1-$2 higher in Nebraska at $125-$127 and $1-$2 higher in the western Corn Belt at $127. Dressed trade was mostly $2 higher in Nebraska at $200; from $1 to $2 higher to $4 lower in the western Corn Belt at $200.

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.

Lower year-over-year July feedlot placements and fewer cattle on feed year over year — based on the latest Cattle on Feed report — helped boost Cattle futures Monday, amid heavy and active trade.

Choice boxed beef cutout value was $2.97 higher Monday afternoon at $348.03/cwt. Select was 87¢ higher at $319.40.

Corn futures closed mainly narrowly mixed from 1¢ lower to 1¢ higher.

Soybean futures closed 2¢ to 9¢ higher through Sep ’22 and then mostly 11¢ to 14¢ higher.

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Major U.S. financial indices climbed Monday, due in part to FDA’s full approval of the Pfizer-BioNTech COVID vaccine.

The Dow Jones Industrial Average closed 215 points higher. The S&P 500 closed 37 points higher. The NASDAQ was up 227 points.

Crude Oil futures (CME-WTI) roared back Monday, up an average of $3.42 through the front six contracts.

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“August is a tough time for fed cattle markets to move higher, but the market seems poised to break out from the constraints of the first half of the year as we move into the last part of the third quarter,” says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly market comments. “Meanwhile, 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.” He adds cull cow prices remain above year-ago levels, although they’re less than summer peak prices.

Reflecting on the monthly Cattle on Feed report that came out Friday, Peel notes feedlot inventories continue to fall, partly seasonally, but also reflecting the cleanup of the backlog of feedlot cattle from earlier in the year. 

“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, the average feedlot inventory decline from the spring high to summer low has been 6.2%.” 

Moreover, lighter year-over-year carcass weights also provide more indication that feedlots are getting more current. 

“Steer and heifer carcass weights dropped below year-ago levels in May and continue below year-earlier levels,” Peel says. “Carcass weights reached a seasonal low in June, a tad later than the normal May low and are rising seasonally into the last part of the year. Most recently, weekly steer carcass weights were 896 lbs., down 10 lbs. year over year but still 18 lbs. heavier than 2019 levels. Heifer carcass weights are currently 817 lbs., down 15 lbs. from last year but 11 lbs. above 2019.”

Peel adds that 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.

“Cash feeder cattle markets continue to adjust to higher feed costs, partly in terms of general price levels but particularly in the relative prices of lightweight and heavy feeder cattle,” Peel says. “The flattening of the price line across weights translates into higher value of gain potential for added feeder cattle weight gain.”

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

Live prices last week were $1 higher in the Southern Plains at $122/cwt., $1-$2 higher in Nebraska at $125-$127 and $1-$2 higher in the western Corn Belt at $127. Dressed trade was mostly $2 higher in Nebraska at $200; $2 higher to $4 lower in the western Corn Belt at $200.

The down day in grain futures Friday sparked Feeder Cattle futures, as did likely positioning ahead of what turned out to be a positive Cattle on Feed report (see below).

Feeder Cattle futures closed an average of $1.47 higher (75¢ to $2.60 higher). Week to week on Friday, they were an average of $1.17 higher.

Live Cattle futures closed an average of 53¢ higher, except for unchanged and 5¢ lower toward the back. Strength in wholesale beef values and slightly higher cash fed cattle prices provided support.

Choice boxed beef cutout value was $3.43 higher Friday afternoon at $345.06/cwt. Select was $2.12 higher at $318.53.

Corn futures closed down an average of 13¢ lower through the front six contracts, then mostly 5¢ to 9¢ lower.

Soybean futures closed an average of 27¢ lower through the front six contracts, then mostly 9¢ to 18¢ lower.

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Major U.S. financial indices closed higher Friday after a week of volatility. Investors have seemed concerned the Federal Reserve will initiate tapering plans just as the rapid spread of the delta variant may slow the economy. This week’s Jackson Hole symposium – now virtual – may offer more clues to what the Fed’s plans are for tapering.

The Dow Jones Industrial Average closed 226 points higher. The S&P 500 closed 36 points higher. The NASDAQ was up 173 points.

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Heading into Monday, it seemed likely traders would view Friday’s monthly Cattle on Feed report (feedlots with 1,000 head or more capacity) as neutral to somewhat friendly.

Placements in July of 1.74 million head were 154,000 head fewer (-8.1%) than the previous year. The average of analyst expectations ahead of the report projected a 7.0% decline.

As for placement weights, 36.2% went on feed weighing 600 lbs. or less, 48.0% weighing 700-899 lbs. and 15.8% weighing 900 lbs. or more.

Marketings in July of 1.9 million head were 90,000 fewer (-4.5%) year over year, compared to analysts expecting a decline, on average, of 3.6%.

Cattle on feed Aug. 1 of 11.07 million head were 210,000 head fewer (-1.9%) than the same time last year. That was about even with pre-report expectations.

Through midday Monday, Feeder Cattle and Live Cattle futures are strongly higher. Live Cattle were more than $2 higher in the front months, while Feeder Cattle were an average of $2.15 higher, except for spot Aug.

Negotiated cash fed cattle trade was mainly slow on light demand through Thursday afternoon, according to the Agricultural Marketing Service. So far this week, live prices in the North are generally $1-$2 higher at $125-$127/cwt. Price are steady to $1 higher in the Southern Plains at $121-$122.

Choice boxed beef cutout value was $1.55 higher Thursday afternoon at $341.63/cwt. Select was $6.61 higher at $316.41/cwt.

Net U.S. beef export sales for the week ending Aug. 12 were 11,100 metric tons for 2021, according to USDA’s weekly U.S. Export Sales report. That was 18% less than the previous week and 42% less than the prior four-week average. Increases were primarily for Japan, South Korea, China, Taiwan, and Mexico.

Cattle futures softened Thursday. More than anything, pressure seemed mostly tied to weakness in outside markets and in commodities overall as fund managers assess the impact of surging COVID cases on economic growth.

Live Cattle futures closed an average of 53¢ lower (20¢ to 90¢)

Feeder Cattle futures closed an average of 38¢ lower (23¢ to 58¢ lower)

Corn futures closed an average of 13¢ lower through the front six contracts, then fractionally to 7¢ lower.

Soybean futures closed an average of 30¢ lower through the front six contracts, then mostly 8¢ to 25¢ lower.

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Major U.S. financial indices closed mixed Thursday amid volatile trade. As mentioned, pressure included surging delta COVID-19 infections, as well as fretting over when the Fed will begin tapering stimulus.

The Dow Jones Industrial Average closed 67 points lower. The S&P 500 6 points higher. The NASDAQ was up 15 points higher at 14,542

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Most analysts expect the monthly Cattle on Feed report, due out Friday to be neutral to friendly.

For instance, David Anderson, Extension livestock economist at Texas A&M University looks for July placements to be 6-7% less year over year.

“Over the last five years, on average, placements have tended to decline slightly from June to July with last year being the exception,” Anderson says, in the latest issue of In the Cattle Markets. “One area of interest in the report will be any evidence of drought-forced earlier placements out of the West and Northern Plains.”

Anderson expects July marketings to be 3% less and the inventory of cattle on feed Aug. 1 to be 1.5% less. He adds that on-feed inventory tends to decline seasonally from June to a low in September.

“The Cattle on Feed report will likely provide more evidence of tightening fed cattle numbers and beef production to begin in 2022,” Anderson says. “Beef production has been below a year ago for five out of the last six weeks. Average federally inspected steer and heifer dressed weights continue to run below a year ago, fueling the decline in beef production. It’s also worth noting that the amount of beef grading Choice as a percent of all beef graded has been below last year for about seven weeks…Tighter supplies of Choice beef is likely keeping the Choice-Select spread wider than at this time last year and wider than the five-year average.

Negotiated cash fed cattle trade was slow on moderate demand in the North Tuesday at steady to higher money.

Live sales in Nebraska were $2 higher at $125 to $128/cwt. Dressed sales were generally $2 higher at $200, but some up to $205.

In the western Corn Belt, live sales were $1-$2 higher at $127. Although too few to trend, there were some dressed sales at $200, compared to $198-$204 last week.

Trade in the Texas Panhandle was slow on light demand. There were some live trades at $121 to $122 — steady to $1 higher than last week — but too few to trend.

In Kansas, trade was mostly inactive.

Cattle futures retraced recent softness, led by Feeder Cattle Wednesday. Support included the outlook for steady to higher cash fed cattle prices, as well as optimism about the monthly Cattle on Feed report due out Friday.

Feeder Cattle futures closed an average of $1.74 higher ($1.35 to $2.42 higher).

Live Cattle futures closed an average of 52¢ higher (2¢ to 92¢ higher), except for 17¢ lower in the back contract.

Choice boxed beef cutout value was $2.02 higher Wednesday afternoon at $340.08/cwt. Select was $3.03 higher at $309.80.

Corn futures closed mostly 1¢ to 3¢ higher.

Soybean futures closed 4¢ to 10¢ lower through Jly ’22 and then mostly fractionally lower to 1¢ lower.

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Major U.S. financial indices stepped lower Wednesday, pressured by the Federal Reserve making plans to begin tapering its bond buying program, possible by the end of the year, according to FOMC minutes released yesterday.

“Almost 60% of respondents anticipated the first reduction in the pace of net asset purchases to come in January, though, on average, respondents placed somewhat more weight than in the June surveys on the possibility of tapering beginning somewhat earlier,” according to the minutes.

The Dow Jones Industrial Average closed 382 points lower. The S&P 500 closed 47 points lower. The NASDAQ was down 120 points.

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USDA increased the projected average feeder steer price (750-800 lbs., basis Oklahoma City) for the remainder of this year and the first half of next year, based on recent price strength and declining cattle numbers.

In the latest Livestock, Dairy and Poultry Outlook, analysts with USDA’s Economic Research Service (ERS) project the average feeder steer price this year at $145.13/cwt., which is $3 more than last month. Average prices are projected at $153 in the second and third quarter. Compared to the previous month, that’s $7 higher in the third quarter and $5 higher in the fourth quarter.

ERS forecasts next year’s annual average feeder steer price $5 higher at $151.50. Prices are projected to average $149 in the first quarter next year and $147.00 in the second.

“The July five-area price for fed steers was $122.03/cwt., up more than $25 year over year and about $9 higher than the July 2019 average price,” according to ERS analysts. “The average five-area steer price for the week ending August 8 was $123.83, over $22 above a year ago.”

ERS increased the forecast fed steer price $4 to $124/cwt. in the third quarter and to $127 in the fourth quarter. The projected 2021 annual price increased  $2.00 to $121.20, compared to the previous month. ERS raised the expected average fed steer price next year by $4 to $126.

Although too few to trend, there were some early live sales in the western Corn belt at $127/cwt. and a few in the beef at $204, the top end of last week’s price range in the region.

Elsewhere, trade ranged from a standstill to mostly inactive with very light demand.

Weaker outside markets and the lack of cash direction weighed on Cattle futures Tuesday.

Feeder Cattle futures closed an average of 75¢ lower (32¢ to $1.30 lower).

Live Cattle futures closed an average of 56¢ lower (22¢ to $1.00 lower) except for 5¢ higher in the back contract.

That was despite another day of strong gains for wholesale beef prices. Choice boxed beef cutout value was $8.26 higher Tuesday afternoon at $338.06/cwt. Select was $3.22 higher at $306.77/cwt.

Corn futures close mostly 4¢ to 5¢ lower.

Soybean futures closed 3¢ to 7¢ lower through Jly ’22 and then mostly fractionally lower to 1¢ lower.

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Major U.S. financial indices closed lower Tuesday, amid various reports pointing to a slowing domestic and international economy.

U.S. retail and food service sales were 1.1% less month to month in July, according to advanced estimates from the U.S. Census Bureau. That was a steeper decline than expected.

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USDA’s Agricultural Marketing Service (AMS) began publishing two new reports this month, based on Livestock Mandatory Reporting, aimed at bolstering market transparency.

The National Weekly Direct Slaughter Cattle-Formulated Base and Forward Contract Base Purchases report provides more detail about foundational prices used in cattle market formulas, grids and contracts.

More specifically, according to USDA, it enables stakeholders to see the correlation between the negotiated trade and reported formula base prices, as well as the aggregated values being paid as premiums and discounts. Ultimately, it sounds like there will be daily reports, as well.

“Daily formula base price reports will be national in scope and released in morning, summary and afternoon versions,” according to the announcement. “The weekly and monthly formula base reports will be both national and regional in scope and include forward contract base purchase information.”

The other new report, the National Weekly Cattle Net Price Distribution report details at what price and volume levels trade occurred across the weekly weighted average price for each purchase type – negotiated, negotiated grid, formula and forward contract.

“Currently, the market speculates whether large or small volumes of cattle trade on both sides of the price spread. And in fact, with premiums and discounts applied to the prices, the spreads shown on reports can be wide. Publishing a price distribution for all cattle net prices will offer more transparency to each of the purchase type categories,” according to the USDA announcement. “This report is a window into what producers are paid for cattle (net) and retains confidentiality by segregating volumes purchased in $2.00 increments (plus or minus) the daily weighted average price depending upon premiums and discounts.”