WLI

Negotiated cash fed cattle trade was limited on very light demand in Nebraska and at a standstill in all other major feeding regions through Monday afternoon, according to the Agricultural Marketing Service.

Cattle futures edged higher Monday with stronger wholesale beef prices and optimism for pushing cash prices higher this week.

Live Cattle futures closed an average of 31¢ higher.

Feeder Cattle futures closed an average of 53¢ higher, from 7¢ higher in spot Aug to $1.05 higher at the back.

Choice boxed beef cutout value was $2.54 higher Money afternoon at $281.00/cwt. Select was $4.19 higher at $263.38/cwt.

CME Feeder Cattle Index $1.54 higher at $155.58

Rallying wheat futures led grains higher Monday.

Corn futures closed mostly 10¢ to 14¢ higher.

Soybean futures closed mostly 4¢ to 6¢ higher through Aug ‘22, and then mostly 11¢ to 17¢ higher.

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

Major U.S. financial indices closed mixed on Monday as manufacturing growth slowed and worries about economic growth, combined with supply issues and the Delta Covid-19 variant’s continued spread all weighed on stocks.

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

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

“Cattle carcass weights will rise seasonally the remainder of the year but are expected to remain lower year over year,” says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly market comments.  “Lower steer and heifer carcass weights likely reflect several influences, including feedlots becoming more current in marketings, higher feed prices and perhaps a return to longer-term carcass weight trends. Beef production for the remainder of 2021 is predicted to be 4-5% lower year over year as a result of lower slaughter totals and lighter carcass weights.”

For the first 28 weeks this year, Peel says average weekly yearling slaughter averaged 501,392 head, fractionally higher than the same period last year. 

“However, he adds, Monday-Friday slaughter thus far in 2021 has averaged 2.7% lower than 2019 and is covered by a 31.0% increase in Saturday slaughter of steers and heifers,” Peel says. “The 2021 average Saturday yearling slaughter total is 50,430 head compared to 38,492 head in 2019. Saturday slaughter accounts for 10.4% of total yearling slaughter in 2021 compared to 7.6% of slaughter for the same period in 2019.”

Negotiated cash fed cattle prices last week were $1 higher in the Southern Plains at $122/cwt. and unevenly steady in Nebraska at $122. Dressed trade in Nebraska was $1 higher at $196. Dressed prices in the western Corn Belt were $196, compared to $195-$202 the previous week; no established trend for live trade.

Through Thursday, the average five-area direct fed steer price was $121.05/cwt., 40¢ more than the previous week. The average steer price in the beef was $197.49, which was 70¢ more.

Cattle futures softened further Friday amid week-end and month-end position squaring.

Live Cattle futures closed an average of  60¢ lower.

Feeder Cattle futures closed an average of  32¢ lower (5¢ to $1.02 lower).

Choice boxed beef cutout value was $3.24 higher Friday afternoon at $278.46/cwt. Select was $2.37 higher at $259.19/cwt.

Estimated total cattle slaughter last week of 649,000 head was 1,000 more than the previous week and 13,000 more than the same week last year. Estimated year-to-date total cattle slaughter of 19.24 million head is 826,000 more (+4.5%) than the same period last year.

Corn futures closed 10¢ 11¢ lower through new-crop contracts and then mostly 5¢ to 7¢ lower.

Soybean futures closed mostly 14¢ to 29¢ lower.

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

Major U.S. financial indices closed the week lower on Friday as concern among investors seems to be corporate earnings, while strong in the second quarter, may have peaked – especially with megacap tech companies like Amazon.

The Dow Jones Industrial Average closed 149 points lower. The S&P 500 closed 24 points lower. The NASDAQ was down 106 points. l

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

The Livestock Marketing Information Center (LMIC) revised beef production lower this year based on the reduced beef cow numbers in the recent semiannual Cattle report.

“LMIC is now projecting prices could be almost 7% higher than a year ago for fed cattle, which would support strong gains in the feeder cattle complex,” say the organization’s analysts, in the latest Livestock Monitor.

These are among specific points LMIC made regarding the Cattle report:

“The beef cow decline was expected, given year-to-date slaughter is up 9% or 152,000 head. Heifer slaughter, too, was in line with a decline, up 9% over last year.”

“One of the more surprising numbers was the calf crop, which was reported as even with a year ago, even though total cows (beef + dairy) was down by 500,000 head.” 

“…the dairy cow herd has shown stronger growth in 2021 reaching 9.5 million head, a 1.6% increase over 2020. Dairy replacements indicated that trend may continue as dairy farmers held back 2.5% more heifers than a year ago.” 

Negotiated cash fed cattle trade was slow on light to moderate demand in in all major feeding regions through Thursday afternoon, according to the Agricultural Marketing Service. In the Southern Plains compared to last week, live purchases traded $1 higher at $120/cwt.

In Nebraska, live sales traded unevenly steady at $122/cwt. and dressed sales were $1 higher at $196/cwt. In the Western Corn Belt, dressed sales traded unevenly steady at $196/cwt. while live sales last week traded from $120-$124/cwt.

Higher grain futures prices weighed on Cattle futures Thursday.

Feeder Cattle futures closed an average of $1.23 lower, from 85¢ lower at the back to $1.67 lower in spot Aug.

Live Cattle futures closed just an average of 21¢ lower. Part of the support was Lean Hog futures recovering from the previous day’s slide, when there was chatter about African Swine Fever being confirmed closer to the Continental United States — it was confirmed the Dominican Republic.

Choice boxed beef cutout value was $2.06 higher Thursday afternoon at $275.22/cwt. Select was 70¢ higher at $256.82.

The average dressed steer weight the week ending July 17 was 888 lbs., according to USDA’s Actual Slaughter Under Federal Inspection report. That was 3 lbs. heavier than the previous week but 11 lbs. lighter than the same week last year. The average dressed heifer weight of 813 lbs. was 1 lb. heavier than the prior week but 16 lbs. lighter than the previous year.

Net U.S. beef export sales were 22,500 metric tons (2021) the week ending July 22, according to the weekly U.S. Export Sales report. That was 11% less than the previous week but 28% more than the prior four-week average. Increases were primarily for South Korea, Japan and China.

Hotter, drier weather in the Corn Belt helped lift grain futures prices Thursday.

Corn futures closed 7¢ to 8¢ higher through new-crop contracts, then mostly 3¢ to 5¢ higher.

Soybean futures closed mostly 11¢ to 16¢ higher.

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

Major U.S. financial indices closed higher Thursday, despite less robust economic growth in the second quarter than traders expected. Real Gross Domestic Product in the second quarter was 6.5%, according to the U.S. Department of Commerce.

The Dow Jones Industrial Average closed 153 points higher. The S&P 500 closed 18 points higher. The NASDAQ was up 15 points.

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

Retail food prices (food at home) are 1.6% higher year over year, for the first six months of 2021, according to USDA’s Economic Research Service (ERS). That’s about equal to the pace of increase for the same periods in 2000 to 2019. Food away from home prices for the same period are 2.8% higher. The Consumer Price Index (CPI) for all food is up an average of 2.1%.

“In addition to factors influencing prices for specific food categories, economy-wide inflation is also high and is contributing to overall price increases,” ERS analysts explain. “The Consumer Price Index (CPI) for all-items, which encompasses food, housing, transportation, and other categories, has increased 2.9% so far in 2021 compared to 2020. For context, annual all-items inflation has averaged 2.0% over the past 20 years. Inflation in 2021 is already nearly 50% higher than average annual inflation only halfway through the year. Above-average inflation is expected to continue through 2022.”

ERS expects beef and veal prices to be up between 3.0% and 4.0% this year.

Negotiated cash fed cattle trade was limited on light demand in in all major feeding regions through Wednesday afternoon, according to the Agricultural Marketing Service.

Central Stockyards offered 7,773 head in its weekly Fed Cattle Exchange auction. Of those, 1,085 head sold (436 heifers and 649 steers), all from the Southern Plains. Steers brought a weighted average price of $119.78/cwt. The weighted average price for heifers was $119.14.

Cattle futures limped to narrowly mixed trade Wednesday amid sluggish interest

Live Cattle support included another day of higher boxed beef prices.

Live Cattle futures closed marginally mixed, from an average of 7¢ lower in four contracts to an average of 9¢ higher. 

Feeder Cattle futures wavered with pressure from higher Corn futures, led by sharply higher Wheat futures. Kansas City Wheat on the CME was 14¢ to 18¢ higher through May ’23. Chicago Wheat was 10¢ to 14¢ higher through Sep ’22.

Feeder Cattle futures closed narrowly mixed, from an average of 37¢ lower through the front five contracts to an average of 19¢ higher.

Choice boxed beef cutout value was $3.43 higher Wednesday afternoon at $273.16/cwt. Select was $2.18 higher at $256.12/cwt. The CME Boxed Beef Index was $1.19 higher at $262.75.

Corn futures closed fractionally higher to 3¢ higher through the front six contracts, then mostly fractionally higher to 1¢ higher.

Soybean futures closed 13¢ higher in spot Aug, then 1¢ to 3¢ higher through Jan ’23.

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

Major U.S. financial indices closed mixed on Wednesday after Federal Reserve Chairman Jerome Powell announced interest rates would continue near zero while acknowledging the economic recovery has made progress.

The Dow Jones Industrial Average closed 128 points lower. The S&P 500 closed 1 point lower. The NASDAQ was up 102 points.

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

“Despite the challenges of the past couple of years, the beef cattle system responded remarkably well to a series of large, unexpected disruptions. Producer prices have been on the rise. Consumer demand is strong. These core facts should remain front of mind when considering changes that would significantly affect the cattle industry going forward.”

That’s the conclusion of testimony Wednesday from Jayson Lusk, noted agricultural economist at Purdue University, to the U.S. House Agriculture Subcommittee on Livestock and Foreign Agriculture. This was in a hearing titled, State of the Beef Supply Chain: Shocks, Recovery, and Rebuilding. You likely recall the U.S. Senate Agriculture Committee recently held a similar hearing.

Lusk explored central topics in his testimony, topics receiving much of the attention when it comes to cattle markets. Among them: packing capacity and price discovery. Here’s some of what he had to say.

Packing capacity

“My research with Purdue colleague Meilin Ma indicates that even if we would have had a more distributed packing sector consisting of more small and medium sized plants instead of a small number of larger plants, the price spread dynamics and beef supply disruptions would not have likely been appreciably different than what we witnessed. The problem at the time was not the size and localness of the plants but total industry capacity.”

“Support for small and local processors might benefit local economic ecosystems and increase custom harvest operations for producers, but these operations, because they lack economies of scale, must focus on quality and service to be competitive, and are such a small part of the national industry that investments at this size are unlikely to significantly alter the aggregate industry capacity.”

Price discovery

“In efforts to improve price discovery, an important distinction needs to be made: price levels and price volatility. Even if all cattle were traded on a negotiated cash basis, the price level would not necessarily improve; however, we might be more confident that any given transaction would be reflective of the ‘true’ underlying supply and demand conditions at the time and location. Whether, in fact, there are too few cash transactions to reflect market fundamentals is debatable.”

“The best economic case for mandating more negotiated transactions rests on the argument that price discovery is a public good. Are there less costly ways to improve price discovery…Even if a mandate were pursued, it might be made more efficient if coupled with a ‘cap and trade’ system, where obligations to secure cattle in the cash market might be bought and sold in a secondary ‘offset’ market, similar to what currently exists for fuel manufacturers to blend a given amount of biofuels…”

Negotiated cash fed cattle trade was mostly inactive on very light demand in Nebraska and the Western Corn Belt through Tuesday afternoon, according to the Agricultural Marketing Service. In Nebraska last week, live sales were at $120-$123/cwt. and dressed at $195/cwt.

In the Western Corn Belt last week, live sales traded from $120-$124/cwt. and dressed sales from $195-$202/cwt.

Trading was at a standstill in the Southern Plains. Last week in the Southern Plains, live sales traded at $119/cwt.

Cattle futures drifted lower Tuesday amid likely profit taking and with traders awaiting cash direction.

Feeder Cattle futures closed an average of 50¢ lower, except for unchanged in the back contract. 

Live Cattle futures closed an average of 42¢ lower, except for an average of 20¢ higher in the back three contracts.

Wholesale beef prices continued to gain on Labor Day stocking. Choice boxed beef cutout value was $1.80 higher Tuesday afternoon at $269.73/cwt. Select was $3.02 higher at $253.94/cwt.

Grain futures on Tuesday battled between tougher crop conditions and a mixed to favorable weather forecast.

Corn futures closed fractionally lower to 3¢ lower.

Soybean futures closed 1¢ to 5¢ higher through Jan ’22, then fractionally lower to 11¢ lower.

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

Major U.S. financial indices closed lower on Tuesday, led by declines in tech stocks and consumer-reliant companies.

The Dow Jones Industrial Average closed 86 points lower. The  S&P 500 closed 21 points lower. The NASDAQ  closed 180 points lower.

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

The International Monetary Fund (IMF) left projections for global economic growth this year at 6.0%, in the latest quarterly World Economic Outlook Update (WEOU). Compared to the last update, IMF increased expectations for global growth next year by 0.5% to 4.9% mostly based on higher expectations for advanced economies, particularly for the U.S.

IMF projections for inflation are a mixed bag.

“Recent price pressures for the most part reflect unusual pandemic-related developments and transitory supply-demand mismatches. Inflation is expected to return to its pre-pandemic ranges in most countries in 2022 once these disturbances work their way through prices, though uncertainty remains high,” according to the WEOU. “…Central banks should generally look through transitory inflation pressures and avoid tightening until there is more clarity on underlying price dynamics…There is, however, a risk that transitory pressures could become more persistent and central banks may need to take preemptive action.”

Among risks to the downside, IMF cites:

• Slower-than-anticipated COVID-19 vaccine rollout, allowing allow the virus to mutate further.
• Rapidly tightening financial conditions; for instance, stemming from a reassessment of the monetary policy outlook in advanced economies if inflation expectations increase more rapidly than anticipated.

“Vaccine access has emerged as the principal fault line along which the global recovery splits into two blocs: those that can look forward to further normalization of activity later this year (almost all advanced economies) and those that will still face resurgent infections and rising COVID death tolls,” according to the report. “The recovery, however, is not assured even in countries where infections are currently very low, so long as the virus circulates elsewhere.”