WLI

Negotiated cash fed cattle trade ranged from a standstill to mostly inactive with very light demand through Monday afternoon, according to the Agricultural Marketing Service. Prices last week were generally steady. Live sales were at $121/cwt. in the Southern Plains, $123-$126 in Nebraska and $125-$126 in the western Corn Belt. Dressed sales were at $198 in Nebraska and at $198-$203 in the western Corn Belt.

Live Cattle futures rode surging wholesale beef values higher through nearby contracts.

Choice boxed beef cutout value was $4.97 higher Monday afternoon at $329.80/cwt. Select was $5.53 higher at $303.55/cwt.

Live Cattle futures closed an average of 81¢ higher through the front three contracts on Monday and then an average of 45¢ lower.

Feeder Cattle futures softened on likely profit taking and wariness about sustained strength. They closed an average of 71¢ lower, except for 17¢ higher toward the back of the board.

Corn futures closed 2¢ to 4¢ lower through new-crop contracts, and then mostly fractionally lower to 1¢ higher.

Soybean futures closed mostly 3¢ to 5¢ higher.

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Major U.S. financial indices closed mixed on Monday. Investors look to Tuesday’s town hall with Federal Reserve Chairman Jerome Powell for possible signals on how and when the Fed may taper bond buying.

The Dow Jones Industrial Average closed 110 points higher. The S&P 500 12 points higher. The NASDAQ closed 29 points lower.

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Although production costs are unknown at this time, especially the cost of wheat pasture, early budgets suggest decent return potential for fall stocker programs, according to Derrell Peel, Extension livestock marketing specialist at Oklahoma State University.

Using prices in his state, Peel explains over the last four weeks 450 lb. steers (Med. and Lg. #1) averaged $186.08/cwt., while 750 lb. steers averaged $156.31. That adds up to $1.12/lb. for 300 lb. of gain.

“Values of stocker gain are higher this year and reflect the increased feedlot cost of gain due to high feed grain prices,” Peel explains. “Stocker value of gain is expected to remain elevated in the coming months. The value of gain reflects the broad market environment for adding weight to feeder cattle.  Actual profitability will, of course, depend on actual purchase and sale prices and production costs for stockers.”

Further, Peel points out March Feeder Cattle futures are in the $166-$167 range. For Oklahoma producers, where basis is about $2 for 750 lb. steers, the estimated average March price is $168-$169.

“Another question for stocker producers is the expected purchase price of stocker calves later in the fall. The price of 450-500 lb. steers typically decreases seasonally from summer to an October low, dropping about 4.5% from August to October. This suggests a price of roughly $177/cwt., for 450 lb. steers in October,” Peel says. “However, cattle markets are trending higher and may offset the seasonal price patterns. Current October feeder futures plus average basis for calves suggests a price for 450 lb. steers of roughly $196/cwt. I suspect the most likely calf price for October will be between these values, perhaps in the range from $180-$190/cwt.”

Peel points out multiple factors — including the size and timing of fall calf marketings — will determine actual calf prices.

“Good pasture conditions could result in some delay in calf weaning and marketing this fall,” Peel explains. “Stocker prices will also be affected by the development, availability and supply of wheat pasture. Conditions may be favorable for early wheat planting but the threat of armyworms appears to be elevated this year.”

Negotiated cash fed cattle trade ranged from mostly inactive to limited on light demand through Friday afternoon, according to the Agricultural Marketing Service. Prices for the week were generally steady. Live sales were at $121/cwt. in the Southern Plains, $123-$126 in Nebraska and $125-$126 in the western Corn Belt. Dressed sales were at $198 in Nebraska and at $198-$203 in the western Corn Belt.

Cattle futures softened in front-month contracts Friday, but strengthened in away months, supported by improving supply fundamentals.

Live Cattle futures closed an average of 28¢ higher, except for an average of 30¢ lower in the front three contracts.

Feeder Cattle futures closed an average of 67¢ higher (15¢ to $1.40 higher), except for an average of 56¢ lower in the front two contracts.Choice boxed beef cutout value was $6.90 higher Friday afternoon at $324.83/cwt. Select was $7.71 higher at $298.02/cwt.

Corn futures wavered on the positive weather outlook.

Corn futures closed mixed, fractionally lower to 1¢ higher through new-crop contracts and then mostly 3¢ lower to 2¢ higher.

Soybean futures gained on confirmed strong weekly exports.

Soybean futures closed 11¢ to 26¢ higher through Aug ’22 and then 5¢ to 9¢ higher

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Major U.S. financial indices closed slightly higher on Friday. Consumer sentiment, as measured by the University of Michigan index, fell 11 points to the lowest level since 2011. Analysts believe consumers are growing more concerned about the ongoing surge in the Covid virus and its effects on slowing the economy, as well as inflation.

The Dow Jones Industrial Average closed 15 points higher. The S&P 500 closed 7 points higher. The NASDAQ was up 7 points.

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Weather the remainder of this year and Chinese demand will continue to bolster domestic feed grain prices, says Mike Murphy, CattleFax vice president of research and risk management services.

“As China rebuilds its pork industry following their battle with African Swine Fever, they are looking for higher quality feed ingredients, such as corn and soybeans” Murphy explained, during last week’s CattleFax Outlook Seminar in Nashville, Tennessee. “Exceptional demand from China is leading U.S. corn exports to a new record in the current market year, and strong demand for U.S. soybeans has elevated prices in the last 12 months.”

CattleFax expects spot soybeans prices to be $13 to $16/bu. for the next 18 months. They forecast Corn futures at $4.75 to $6.25 during the same period.

As for weather, long-time CattleFax meteorologist, Art Douglas, professor emeritus at Creighton University, forecasts La Niña conditions to return this fall, which would intensify drought in the West and Plains into early 2022. He adds that the precipitation outlook for fall through early next year suggests drought increasing in the Pacific Northwest with above-normal precipitation across the inter-mountain West – leaving the Midwest drier. He expects less tropical storm activity to reduce Southeast rainfall into late fall.

Drier weather in the Northern Plains and West will pressure hay production and quality in the 2021 season – supporting prices into the next year, according to Murphy.

“May 1 on-farm hay stocks were down 12% from the previous year, at 18 million tons,” Murphy explains. “The USDA estimates hay acres are down 700,000 from last year at 51.5 million acres. So, expect current-year hay prices to average near $170/ton; 2022 average prices should be steady to $10 higher due to tighter supplies and stronger demand.”

Negotiated cash fed cattle trade continued at a listless pace Thursday. Although too few transactions to trend, there were some live trades in Nebraska at $123-$126/cwt. and at $198 in the beef, compared to $125 and $198, respectively, last week. Elsewhere, trade was inactive to limited.

Feeder Cattle futures started Thursday’s session strong, retreated in the face of higher Corn futures — in the wake of the monthly World Agricultural Supply and Demand Estimates (WASDE) — and then mostly firmed by the end of the session.

Feeder Cattle futures closed mixed, from an average of 14¢ lower to an average of 38¢ higher.

Surging wholesale beef prices helped lift Live Cattle futures, but sluggish cash trade limited the potential. Choice boxed beef cutout value was $7.13  higher Thursday afternoon at $317.93/cwt. Select was $2.32 higher at $290.31/cwt.

Live Cattle futures closed an average of 64¢ higher.

The average dressed steer weight the week ending July 31 was 3 lbs. lighter than the previous week at 891 lbs., according to USDA’s Actual Slaughter Under Federal Inspection report. The average dressed heifer weight was 2 lbs. lighter at 814 lbs.

Corn futures gained on the WASDE report, amid volatile intra-day trading. They closed 9¢ to 14¢ higher through new-crop contracts and then mostly 1¢ to 3¢ higher.

Soybean futures closed mixed, mostly 3¢ lower to 2¢ higher.

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Major U.S. financial indices closed higher on Thursday, supported by the third consecutive decline in weekly initial unemployment insurance claims.

The Dow Jones Industrial Average closed 15 points higher. The S&P 500 closed 13 points higher. The NASDAQ closed 51 points higher.

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USDA’s Economic Research Service (ERS) increased the projected annual average five-area direct fed steer price this year by $2 to $121.20/cwt., based on current price strength and firm demand. The estimated annual price for next year increased by $4 to $126.

That’s in the latest World Agricultural Supply and Demand Estimates (WASDE)

More specifically, the average fed steer price was projected at $124 in the third quarter, $127 in the fourth quarter and $131 in the first quarter of next year.

Some of that bullishness is based on lower expected beef production this year and next.

Total beef production this year was projected at 27.87 billion lbs., which was 33 million lbs. less than the prior month. It would be 698 million lbs. more (+2.57%) than last year. ERS analysts say the decline is mostly due to lighter expected carcass weights due to a higher expected proportion of non-fed cattle being slaughtered through the end of the year.

Total estimated beef production next year of 26.96 billion lbs. was 360 million lbs. less (-1.31%) than the previous month and would be 907 million lbs. less (-3.25%) than this year’s estimate. That’s based on  tighter expected supplies of both fed and non-fed cattle.

Lower expected beef production pushed total anticipated red meat and poultry production lower.

Projected total red meat and poultry production this year of 106.82 billion lbs. was 315 million lbs. less (-0.29%) than the previous month. That would be 265 million lbs. more (+0.25%) than last year.

Corn

ERS reduced forecast corn production for 2021-22 by 415 million bu. to 14.8 billion bu., based on projected yield of 174.6 bu./acre, which was 4.9 bu. less than the previous month’s estimate.Ending stocks were projected 190 million bu. lower at 1.2 billion.

The season-average corn price received by producers was raised 15¢ to $5.75/bu.

Soybeans

ERS reduced estimated soybean production for 2021-22 by 66 million bu. to 4.34 billion bu., based on lower projected yield. But, beginning stock estimates increased based on decreased expectations for crush and exports.

The U.S. season-average soybean price for 2021-22 was forecast at $13.70/bu., unchanged from last month. The soybean meal price was forecast at $385 per short ton, down $10. The soybean oil price forecast was unchanged at 65.0¢/lb. 

Wheat

ERS reduced estimated wheat production for 2021-22 by 49 million bu. to 1,697 million bu., based on yield of 44.5 bu./acre, which was 1.3 bu. less than the previous forecast. Projected 2021-22 ending stocks were reduced 38 million bu. to 627 million, which would be 26% less than last year.

The projected 2021-22 season-average farm price was raised 10¢/bu. to $6.70.

Negotiated cash fed cattle trade was slow on light to moderate demand in the Southern Plains through Wednesday afternoon, according to the Agricultural Marketing Service. A few early live sales traded steady with last week at $121.

In Nebraska and the Western Corn Belt, trading was limited with light demand

Last week in Kansas, live sales traded at $121. In Nebraska live sales traded at $125 and dressed at $198. In the Western Corn Belt, live sales were at $125-$126 and dressed at $198.

Stronger Corn futures and sluggish cash prices helped pressure Cattle futures Wednesday. There might have also been some defensiveness ahead of Thursday’s monthly World Agricultural Supply and Demand Estimates.

Live Cattle futures closed mixed from an average of 34¢ lower to an average of 15¢ higher

Feeder Cattle futures closed an average of 64¢ lower (22¢ lower toward the front of the board to $1.12 lower in the back contract).

Choice boxed beef cutout value was $5.48  higher Wednesday afternoon at $310.80/cwt. Select was $3.38 higher at $287.99/cwt.

Corn futures closed 2¢ to 7¢ higher through the front six contracts, then fractionally higher to 1¢ higher.

Soybean futures closed mostly fractionally higher to 2¢ higher, except for 42¢ lower in waning Spot Aug. 

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Major U.S. financial indices closed mixed on Wednesday with both the S&P 500 and the Dow Jones hitting record highs. Support included the moderating Consumer Price Index in July.

The Dow Jones Industrial Average closed 220 points higher. The S&P 500 closed 11 points higher. TheNASDAQ closed 23 points lower.

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Declining cattle numbers, finally working through backlogged cattle supplies, as well as strong beef demand are setting the stage for significantly higher cattle prices next year and beyond, according to the 2021-22 CattleFax Industry Outlook yesterday at the 2021 Cattle Industry Convention and NCBA Trade Show in Nashville.

CattleFax projects the average fed steer price next year to be $135/cwt., up $14 from this year. That’s with the forecast average carcass composite price at $265/cwt., up $5 from this year.

In turn, projected feeder steer prices (850 lbs.) are forecast $20 higher next year at an average of $165/cwt. Steer calf (550 lbs.) prices are projected to average $200/cwt., which would be $30 more than this year.

Bred cows are projected to average $1,750/head, which would be $125 more than this year.

Rounding out prices, CattleFax sees Utility cows averaging $70/cwt., up $6.

Declining Cow Numbers

CattleFax expects the beef cowherd to decline 400,000 head by Jan. 1 of next year, reaching 30.7 million head. Part of that has to do with lingering drought.

Art Douglas, professor emeritus at Creighton University expects La Niña conditions to return this fall, intensifying drought in the West and Plains into early 2022.

According to Kevin Good, CattleFax vice president of industry relations and analysis, total cattle inventory peaked at 94.8 million head. He explains those numbers remain in the system due to the COVID-19 induced slowdown in harvest over the past year. So, fed cattle slaughter will remain elevated through 2021 as carryover from pandemic disruptions works through the processing sector, which remains hindered by labor issues.

Ultimately, during the current contraction phase, CattleFax expects feeder cattle and calf supplies to decline roughly 1 million head from the cyclical peak.

“While fed cattle slaughter nearly equals 2019 highs at 26.5 million head this year, we expect a 500,000-head decline in 2022,” Good says. “This, combined with plans for new packing plants and expansions, possibly adding near 25,000 head per week of slaughter capacity over the next few years, should restore leverage back to the producer.”

Beef Demand Remains Strong

Aftershocks from the pandemic continue to keep domestic demand at elevated levels not seen since 1988, say CattleFax analysts.

“Customer traffic remained strong at restaurants and retail – even as those segments pushed on the higher costs, proving consumers are willing to pay more for beef,” Good explains. He notes the boxed beef cutout price peaked at $336/cwt. in June, while retail beef prices pushed to an annual high at $7.11/lb. Retail beef prices are expected to average $6.80/lb. in 2021 and increase to $6.85/lb. in 2022, he says.

At the same time, global U.S. beef export demand is on a record pace this year.

“Tightening global protein supplies will support stronger U.S. red meat exports in 2022,” according to Good. “U.S. beef exports are expected to grow 15% in 2021 and another 5% in 2022.”

Negotiated cash fed cattle trade was again at a standstill in the Southern Plains and Nebraska through Tuesday afternoon, according to the Agricultural Marketing Service. In the Western Corn Belt, trading was still mostly inactive on light demand.

Last week in the Texas Panhandle, live sales traded from $121 to $122. In Kansas, live sales traded at $121. In Nebraska live sales traded at $125 and dressed at $198. In the Western Corn Belt, live sales were at $125-$126 and dressed at $198.

Cattle futures firmed after early pressure to close higher Tuesday, helped along by the extraordinary run in wholesale beef prices.

Live Cattle futures closed an average of 40¢ higher (3¢ to 65¢).

Feeder Cattle futures closed an average of 34¢ higher, except for 15¢ lower in Sept.

Corn futures closed fractionally lower to 4¢ lower through the front six contracts.

Soybean futures closed 6¢ to 7¢ higher in the front six contracts, except for 14¢ higher in Spot Aug.

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Major U.S. financial indices closed mixed on Tuesday, with support including Senate passage of the trillion-dollar infrastructure bill.

The Dow Jones Industrial Average closed 163 points higher. The S&P 500 closed 4 points higher. The NASDAQ was up 72 points.

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The massive $1 trillion infrastructure bill took a long step toward fruition Tuesday with Senate passage.

According to a statement from Agriculture Secretary Tom Vilsack, “Rural America stands to benefit from this historic long-term investment in our infrastructure and economic competitiveness. From tackling some of the greatest challenges we face today, to making long-term investments in the rural areas that are the heart of our nation, the Bipartisan Infrastructure Investment and Jobs Act will ensure we build back better, stronger, and more resilient and equitable than ever before.”

If passed, Secretary Vilsack says the legislation will deliver broadband to rural homes, communities and businesses across the country, as well as increasing access to jobs, education, health care, banking, and markets for farmers and rural small businesses.

“It also upgrades our power infrastructure, improves drinking water, and connects rural communities through upgraded roads and bridges,” he says.

The bill now goes to the House for consideration.