WLI

Negotiated cash fed cattle prices ended last week $3-$4 higher on a live basis at $130/cwt. in all major cattle feeding regions. Dressed trade was $4 higher at $204.

Trade was slow to moderate on moderate to good demand through Friday afternoon, according to the Agricultural Marketing Service.

Choice boxed beef cutout value was 68¢ lower Friday afternoon at $289.54/cwt. Select was 70¢ lower at $267.52/cwt.

Total estimated cattle slaughter last week of 650,000 head was 18,000 fewer than the previous week, according to the Agricultural Marketing Service. Year-to-date estimated cattle slaughter of 28.25 million head is 847,000 head more (+3.1%) than the same time last year. Total year-to-date estimated beef production of 23.37 billion lbs. is 610,000 lbs. more (+2.7%) than a year earlier.

Cattle futures closed higher Friday with support from cash prices breaking higher.

Live Cattle futures closed an average of 95¢ higher (50¢ higher at the back to $1.27 higher toward the front).

Feeder Cattle futures closed an average of $1.16 higher (77¢ to $1.45 higher toward the front).

******************************

Major U.S. financial indices closed higher Friday, buoyed by a stronger employment situation than expected.

Total non-farm payroll employment increased by 531,000 in October and the unemployment rate edged 0.2% lower to 4.6%, according to the U.S. Bureau of Labor Statistics.

The Dow Jones Industrial Average closed 203 points higher. The S&P 500 closed 17 points higher. The NASDAQ was up 31 points. 

******************************

U.S. beef exports remained on a record pace through September, according to data released by USDA and compiled by the U.S. Meat Export Federation (USMEF). Beef exports posted one of the best months on record in September, with value climbing nearly 59% above last year at $954.1 million, the second highest monthly total on record. Volume for the month was 20% higher than a year earlier at 123,628 metric tons (mt), the fourth largest on record.

September beef export value equated to $447.46 per head of fed slaughter, up 63% from a year ago.

Through the first three quarters of 2021, beef exports increased 18% from a year ago to 1.08 million mt, valued at $7.58 billion – up more than $2 billion (36%) from the same period last year. Compared to the record year of 2018, January-September exports were 7% higher in volume and up 24% in value. For January through September, U.S. beef export value averaged $389.08 per head (up 32%).

U.S. pork exports are on a record pace, too. For January through September, exports were 1% above last year’s record pace at 2.24 million mt, while value climbed 9% to $6.23 billion.

“Facing significant logistical headwinds and higher costs, these outstanding results are really a testament to the loyalty and strong demand from our international customers and to the innovation and determination of the U.S. industry,” says USMEF President and CEO Dan Halstrom.

Cattle futures on Thursday paused from the week’s rally, but stronger cash prices and indicators of feedlot marketing currentness suggest there’s room to roam higher.

For instance, the dressed steer weight the week ending Oct. 23 was 918 lbs., according to USDA’s Actual Slaughter Under Federal Inspection report. That was 4 lbs. lighter than the previous week and 13 lbs. lighter year over year. The average dressed heifer weight of 842 lbs. was 2 lbs. heavier week to week but 5 lbs. lighter year over year.

Live Cattle futures closed an average of 43¢ lower (12¢ lower toward the back to $1.02 lower in spot Dec).

Feeder Cattle futures closed an average of 87¢ lower (47¢ lower at the back to $1.15 lower in spot Nov).     

That was despite another day of lower Corn futures which were down mostly 2¢ to 4¢. Weakness came in the face of increased net U.S. corn export sales the week ending Oct. 28, according to USDA’s weekly U.S. Export Sales report. Net U.S. export sales of 1.22 million metric tons for 2021-22 were 37% more than the previous week and 10% more than the prior 4-week average.

U.S. net soybean exports of 1.86 million metric tons were 58% more than the previous week and 19% more than the prior four-week average, but Soybean futures closed 19¢ to 22¢ lower through Sep ‘22 and then mostly 14¢ to 17¢ lower, pressured by oil prices and chatter about a potential record crop in Brazil.

Negotiated cash fed cattle trade was mostly inactive on light demand in all major cattle feeding regions through Thursday afternoon. So far this week, the only established sales are $2 higher in the Southern Plains at $128/cwt., according to the Agricultural Marketing Service

Last week, live prices were at $124-$126/cwt. in the Texas Panhandle, at $126 in Kansas, $127 in Nebraska and at $126-$127 in the western Corn Belt. Dressed trade was at $200.

Choice boxed beef cutout values were $1.73 higher Thursday afternoon at $290.22/cwt. Select was 50¢ higher at $268.22/cwt.

Net U.S. beef export sales for the week ending Oct. 28 of 16,700 metric tons were 13% less than the prior week but 15% more than the previous four-week average. Increases were primarily for South Korea, China, Japan, Taiwan, and Canada.

******************************

Major U.S. financial indices were mixed Thursday, as investors await the monthly employment report due out Friday.

Positive news included initial weekly unemployment insurance claims of 269,000 for the week ending Oct. 30, according to the U.S. Department of Labor. That was the fewest since March 14 last year and fewer than expected.

The Dow Jones Industrial Average closed 33 points lower. The S&P 500 closed 19 points higher. The NASDAQ was up 128 points.

CME WTI Crude Oil futures closed 94¢ to $2.05 lower in the front six contracts, with follow-through pressure from the previous session.

******************************

Beef and pork demand indexes reflected strength in the second quarter but weakened during the summer months as rising wholesale beef prices started to dampen retail enthusiasm, according to the Livestock Marketing Information Center (LMIC), in the latest Livestock Monitor.

“The third-quarter all-fresh beef demand index fell from 124 last year to 121 this year, but 2021 was the second highest level behind 2020,” according to LMIC analysts. “The pork demand index for the third quarter posted a significant reduction falling from 124 last year (a record) to 100…Record retail price levels will likely be a headwind to demand in the near term, but meat demand indexes are still showing relatively strong levels.”

As mentioned previously in Cattle Current, retail prices in September were record high for beef, pork and broilers. According to LMIC, the all-fresh beef retail price was 17.8% more year over year in September at $7.40/lb. Retail pork prices were 16.4% higher at $4.72/lb. and the broiler composite price was 8.0% higher at $2.16/lb.

The September Consumer Price Index (CPI) was 5.4% more year over year.

“The meat index reported a jump of 12.6% over last year, while the poultry index increased 6.1% from a year ago,” say LMIC analysts. “The September CPI and retail price data also provide the information needed to calculate third-quarter demand indexes. Livestock Marketing Information Center demand indexes use a base year of 2000. Demand indexes, although not exact, do give an indication as to relative changes. Given the record levels for beef, pork, and broiler prices, the third-quarter demand indexes showed a slight pull back from the second quarter and a year ago.”

Negotiated cash fed cattle trade ended up fully $2 higher in the Southern Plains on Tuesday at $128/cwt. on a live basis. That and rallying Cattle futures seem to have bolstered cattle feeder resolve to hold packers’ feet to the fire this week.

Through Wednesday afternoon, trade was limited on light demand in all major cattle feeding regions with too few transactions to trend, according to the Agricultural Marketing Service.

Live prices last week were at $124-$126/cwt. in the Texas Panhandle, at $126 in Kansas, $127 in Nebraska and at $126-$127 in the western Corn Belt. Dressed trade was at $200.

The stronger cash outlook and follow-through fundamental support helped Cattle futures take another step higher Wednesday.

Live Cattle futures closed an average of $1.01 higher (17¢ higher toward the back to $1.70 higher in spot Dec), amid heavy trade and expanding open interest.

Feeder Cattle futures closed an average of $1.35 higher (37¢ higher toward the back to $2.20 higher toward the front). They were helped along by Corn futures closing 8¢ to 9¢ lower through Jly ‘22. Corn futures were down on likely profit taking, harvest pressure and chatter about yields coming in at the top of range expectations.

Choice boxed beef cutout value was $1.11 higher Wednesday afternoon at $288.49/cwt. Select was $1.59 higher at $267.72/cwt.

******************************

Major U.S. financial indices closed higher Wednesday, buoyed by comments from the Fed suggesting no plan to increase interest rates any time soon.

“In light of the substantial further progress the economy has made toward the Committee’s goals since last December, the Committee decided to begin reducing the monthly pace of its net asset purchases by $10 billion for Treasury securities and $5 billion for agency mortgage-backed securities,” according to the statement issued by the FOMC.

Addressing the press in making the statement, Federal Reserve Chair, Jerome Powell, explained, “Our decision today to begin tapering our assets purchases does not imply any direct signal regarding our interest rate policy. We continue to articulate a different and more stringent test for the economic conditions that would need to be met before raising the federal funds rate.”

The Dow Jones Industrial Average closed 104 points higher. The S&P 500 closed 29 points higher. The NASDAQ was up 161 points.

CME WTI Crude Oil futures closed $2.37 to $3.05 lower in the front six contracts, apparently pressured by news that the EU and Iran will resume nuclear pact talks, would could eventually lead to lifting restrictions on Iranian oil exports.

******************************

Agricultural producer sentiment weakened in October, according to the Purdue University/CME Group Ag Economy Barometer. It declined 3 points to 121, marking the third consecutive month of declining sentiment.

“Recent weakness in farmer sentiment appears to be driven by a wide variety of issues, with concerns about input price rises topping the list,” says James Mintert, the barometer’s principal investigator and director of Purdue University’s Center for Commercial Agriculture. “Rapid run-ups in input prices, especially fertilizer for crop production, are giving rise to concerns among producers’ about their operating margins weakening. Livestock producers are also concerned about a cost-price squeeze, especially in the pork and dairy sectors.”

The Index of Current Conditions was down 5 points to 140, while the Index of Future Expectations fell 2 points to 114.

Rising input costs are also dampening expectations for farmland cash rental rates. In October, the percentage of corn and soybean producers expecting higher year-over-year farmland rental rates in 2022 dipped 7% from the previous month to 43%. Despite these concerns, producers remain bullish about farmland values. The Long-Term Farmland Value Expectations Index set a new record high in October at 161, which was 2 points higher than a month earlier. The short-term index rose 1 point to 156.

Feeder Cattle futures blasted higher Tuesday, more than gaining back the previous session’s steep declines. Corn futures were down for the day, but more than anything, Feeder Cattle were likely falling back into fundamental line after what appeared to be a technical-based, algo-fueled late-session selloff the previous day.

Feeder Cattle futures closed an average of $3.80 higher ($3.17 to $4.40 higher).

Live Cattle rallied on the stronger cash outlook and higher wholesale beef values after being anchored by Feeder Cattle the previous day.

Live Cattle closed an average of $1.56 higher (95¢ to $1.97 higher).

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

Live prices last week were at $124-$126 in the Texas Panhandle, $126 in Kansas, $127 in Nebraska and $126-$127 in the western Corn Belt. Dressed trade was at $200. Early indications point to steady, but likely higher prices this week.

Corn futures closed lower mostly 3¢ to 5¢ lower.

Soybean futures closed mostly 6¢ to 9¢ higher.

*******************************

Major U.S. financial indices closed higher again Tuesday on continued positive quarterly corporate earnings reports.

The Dow Jones Industrial Average closed 138 points higher. The S&P 500 closed 16 points higher. The NASDAQ was up 53 points.

*******************************

Overall pasture conditions are finishing the growing season similar to last year, but poorer in the severest drought areas.

Based on the USDA Crop Progress report for the week ending Oct. 17, the Livestock Marketing Information Center (LMIC) reported 34% of pasture and range was classified as Poor or Very Poor in the Great Plains region (CO, KS, MT, NE, ND, SD, WY). That was 12% more than a year earlier. The region is home to 29% of the nation’s beef cows, according to LMIC.

“Pasture conditions in Montana are the most severe of any state in the country, with 65% of pastures rated Very Poor (moderating from 69% the prior week),” say LMIC analysts, in the latest Livestock Monitor. “Within the same region, Nebraska had 13% of its pastures rated Very Poor compared to 30% very poor rating in the same week a year ago.”

In Oklahoma and Texas — representing 22% of the nation’s beef cow herd — 34% of the pastures were rated as Good or Excellent, which was 10% more than a year earlier, according to LMIC. Analysts there say, “Notable in this region was the condition of pastures this past spring when 14% were rated Very Poor, the worst spring rating since 2014 for that region.”

LMIC analysis the middle of October indicated 23% of the beef cow herd was in states with 40% of the pastures rated Good to Excellent, unchanged from a year earlier. States where 40% of the pastures were rated Poor or Very Poor accounted for 25% of the beef cow herd, down from 33% a year earlier.

Most recently, national pasture and range conditions held about steady for the week ending Oct. 31, according to the latest Crop Progress report.

26% of pasture and range was rated as Good (23%) or Excellent (3%), which was 2% more than the previous week but 6% more than a year earlier. On the other end of the scale, 42% was rated as Poor (20%) or Very Poor (22%), which was 1% less than the previous week and 1% less than a year earlier.

87% of winter wheat was planted, which was 1% less than a year earlier but 1% more than average. 67% was emerged, which was 3% less than a year earlier and 1% less than average. 45% was in Good (40%) or Excellent (5%) condition, which was 2% more than a year earlier. 21% was in Poor (14%) or Very Poor (7%) condition, which was 2% more year over year.

74% of corn was harvested, compared to 81% last year and 66% for the five-year average.

79% of soybeans were harvested, compared to 86% last year and 81% for average.

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

Live prices last week were steady to $2 higher in the Texas Panhandle at $124-$126/cwt., $2 higher in Kansas at $126, $2-$3 higher in Nebraska at $127 and $2 higher in the western Corn Belt at $126-$127. Dressed trade was $4 higher at $200.

The five-area average direct fed steer price last week was $1.90 higher than the previous week at $126.29/cwt. on a live basis. The average steer price in the beef was $4.06 higher at $199.89.

Choice boxed beef cutout values were $1.86 higher Monday afternoon at $287.58/cwt. Select was $1.02 higher at $264.39.

Feeder Cattle futures closed an average of $2.22 lower, battered by rising Corn and Wheat futures.

Corn futures were 10¢ higher through the front four contracts and then mostly 5¢ to 7¢ higher.

K.C. Wheat futures were mostly 18¢ to 21¢ higher.

Weakness in Feeder Cattle helped pressure Live Cattle futures an average of 38¢ lower.

*******************************

Major U.S. financial indices edged higher Monday, buoyed by energy prices.

The Dow Jones Industrial Average closed 94 points higher. The S&P 500 closed 8 points higher. The NASDAQ was up 97 points.

*******************************

Winter wheat pasture prospects improved with October rains, according to Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly market comments.

“While wheat for grain-only is still being planted or is newly planted, wheat for forage or dual purpose has progressed significantly with recent rains,” Peel says. “Driving across Oklahoma recently I observed wheat in stages from planting to barely emerged to several inches tall.  Most wheat pasture will not be ready for grazing until December, later than usual, but I have heard reports that some wheat grazing may begin by mid-November.”

Overall, however, Peel says ongoing drought conditions are slightly worse year over year.

“Although there have been some regional changes in drought situation, the overall picture has not changed much. The country started this growing season with the worst average pasture and range conditions on record and is ending the year in the same condition,” Peel explains. “The reemerging La Niña increases the chances for moisture in the northern half of the country and Canada but simultaneously increases the odds of drier conditions redeveloping in the Southwest. In any event, not much will change regarding forage supplies in the next 6-7 months.”

On the upside, cattle prices should continue to improve, according to Peel, as cattle numbers shrink cyclically.