WLI

Negotiated cash fed cattle trade was limited on light demand in Nebraska and the Western Corn Belt through Friday afternoon, according to the Agricultural Marketing Service. There were a few live sales at $122/cwt., however not enough in either region for a full market trend. Trading was at a standstill in the Southern Plains. 

Live prices last week were steady in the Texas Panhandle at $124/cwt., steady to $1 lower in Kansas at $123-$124, $2 lower in Nebraska at $122 and steady to $1 lower in the western Corn Belt at $122-$123. Dressed prices were $2 lower in Nebraska at $196 and steady to $1 lower in the western Corn Belt at $192-$196.

Cattle futures ended the week mixed as traders continued to position for the new month. Conditions remain as oversold as buyer interest is limited.

Feeder Cattle futures closed mixed from an average of 66¢ lower in four contracts (7¢ to $1.95 lower) to an average of 57¢ higher (20¢ to $1.95 higher).

Live Cattle futures closed mixed, an average of 38¢ lower through the front four contracts to an average of 21¢ higher in the back four contracts.

Choice boxed beef cutout value was $2.62 lower at $292.36/cwt. Select was $4.48 lower at $264.84/cwt.

Corn futures closed mostly 6¢ to 9¢ higher.

Soybean futures closed 6¢ to 9¢ lower in the front four contracts, 3¢ to 5¢ lower through Jan ’23 and then mostly 1¢ lower to fractionally higher.

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Major U.S. financial indices gained some lost ground on Friday, closing higher after a run of down days. Part of the market optimism came from Merck’s announcement of promising trial data for a pill that could be a game changer for treatment of Covid-19. Friday the Labor Department reported improvement in the jobs market – payrolls increased by about 500,000 in September, almost twice that of August. The unemployment rate is forecast at 5.1% compared to 5.2% a month earlier.

The Dow Jones Industrial Average closed 483 points higher. The S&P 500 closed 50 points higher. The NASDAQ was up 118 points. 

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Glynn Tonsor, agricultural economist at Kansas State University (K-State) shared price forecasts from the Livestock Marketing Information Center (LMIC) during last week’s K-State Beef Stocker Field Day.

In his Beef Cattle Outlook, according to Tonsor, LMIC sees steer calves (basis 500-600 lbs., the Southern Plains) averaging $175-$178/cwt. next year with average prices at $167-$170 in the first quarter, $172-$176 in the second, $179-$189 in the third and $177-$187 in the fourth quarter. The annual average price in 2023 is projected at $193-$203.

For feeder steers (basis 700-800 lbs., Southern Plains) LMIC projects next year’s annual average price at $156-$160, with average prices at $153-$156 in the first quarter, $154-$159 in the second, $157-$167 in the third and $155-$165 in the fourth quarter. The annual average price in 2023 is projected at $170-$180.

LMIC projects the 2022 average fed steer price (five-area direct) at $128-$130 with average prices at $127-$130 in the first quarter, $132-$136 in the second, $122-$130 in the third and $126-$134 in the fourth quarter. The annual average price in 2023 is projected at $134-$144.

Negotiated cash fed cattle trade was limited on light demand in all major feeding regions through Thursday afternoon with too few transactions to trend, according to the Agricultural Marketing Service.

So far this week, Live prices are steady in the Texas Panhandle at $124/cwt., steady to $1 lower in Kansas at $123-$124, $2 lower in Nebraska at $122 and steady to $1 lower in the western Corn Belt at $122-$123. Dressed prices are $2 lower in Nebraska at $196 and steady to $1 lower in the western Corn Belt at $192-$196.

Position squaring for the end of the week, month and quarter, along with softer cash prices and sharply lower outside markets helped push Cattle futures lower Thursday.

Feeder Cattle futures closed an average of $2.35 lower, except for 35¢ lower in expiring Sep.

Live Cattle futures closed an average of $1.60 lower.

Choice boxed beef cutout value was $2.35 lower Thursday afternoon at $294.98/cwt. Select was $2.46 lower at $269.32/cwt.

Corn futures closed lower and Soybean futures closed sharply lower Thursday. Pressure included higher projected stocks than anticipated (see below) and the recently stronger dollar weighing on exports. As with cattle, week-end and month-end and positioning likely also contributed.

Corn futures closed mostly 2’2¢ to 2’6¢ lower.

Soybean futures closed 21¢ to 28¢ lower through Aug ’22 and then 15¢ lower to 3¢ higher.

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Major U.S. financial indices closed sharply lower Thursday to close out a volatile month of trade, with investor frets including slowing economic growth, stimulus tapering, rising inflation and interest rates along with the Congressional war over the budget.

The Dow Jones Industrial Average closed 546 points lower. The S&P 500 closed 51 points lower. The NASDAQ was down 63 points.

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USDA’s quarterly Grain Stocks report offered some market surprises.

Although, estimated old-crop corn stocks Sept. 1 were 36% less year over year at 1.24 billon bu., they were more than the trade expected. Of the total stocks, 395 million bu. were stored on farms, down 47% from a year earlier. Off-farm stocks, of 842 million bu. were 28% less than a year ago.

Likewise, old-crop soybean stocks of 256 million bu. were 51% less than a year earlier, but more than trade expectations. Soybean stocks stored on farms totaled 68.1 million bu., down 52% from a year ago. Off-farm stocks, of 188 million bu. were 51% less year over year. 

All wheat stored in all positions was bullish at 1.78 billion bu. which was 18% less year over year and less than expected. On-farm stocks were estimated at 419 million bu., down 41% from last September. Off-farm stocks of 1.36 billion bu. were 6% less year over year.

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

Live sales traded steady in the Texas Panhandle at $124/cwt. and steady to $2 lower in Nebraska at $122-$124/cwt. Dressed trade in Nebraska was $2 lower at $196.

Although too few to trend, there were some live sales in Kansas at $123-$124 and some in the western Corn Belt at $121.00-$123.50.

Those softer prices and declining wholesale beef values pressured Live Cattle futures Wednesday, which closed an average of 26¢ lower, except for 10¢ higher in away Oct and unchanged in away Dec.

Choice boxed beef cutout value was $4.23 lower Wednesday afternoon at $297.33/cwt. Select was $2.57 lower at $271.78/cwt.

Weakness on the live side and a day of stronger Corn futures added pressure to Feeder Cattle, which closed an average of $1.08 lower.

Corn futures closed mostly 4¢ to 6¢ higher.

Soybean futures closed mostly 4¢ to 6¢ higher through Aug ‘22 and then mainly 2¢ to 4¢ higher.

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Major U.S. financial indices closed mixed Wednesday with the third straight day of losses in NASDAQ, while the dollar rose to its highest level since November 2020.

The Dow Jones Industrial Average closed 91 points higher. The S&P 500 closed 7 points higher. The NASDAQ closed 34 points lower.

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Although the global economy is growing more than expected a year ago — buoyed by extraordinary support from governments and central banks — recovery remains uneven, according to the latest Interim Economic Outlook from the Organization for Economic Cooperation and Development (OECD).

“Large differences in vaccination rates between countries are adding to the unevenness of the recovery,” according to the report. “Renewed outbreaks of the virus are forcing some countries to restrict activities, resulting in bottlenecks and adding to supply shortages.” 

Similarly, inflationary price pressure is variable. OECD notes inflation is rising rapidly in the U.S. and some emerging economies, but remains relatively low in many other advanced economies, particularly in the euro area.

“A rapid increase in demand as economies reopen pushed up prices in key commodities such as oil and metals as well as food, which has a stronger effect on inflation in emerging markets,” according to OECD. “The disruption to supply chains caused by the pandemic has added to cost pressures. At the same time, shipping costs have increased sharply.”

OECD projects inflation in the G20 countries to peak toward the end of this year and then slow throughout 2022.

OECD forecasts strong global growth of 5.7% this year and 4.5% in 2022.

“Even in the countries where output or employment have recovered to their pre-pandemic levels, the recovery is incomplete, with jobs and incomes still short of the levels expected before the pandemic,” according to the Interim Economic Outlook.

Short covering and lower Corn futures helped Feeder Cattle futures mostly rebound from the previous day’s pressure.

Feeder Cattle futures closed an average of $1.00 higher.

Live Cattle futures closed mixed, from an average of 17¢ lower in four contracts to an average of 39¢ higher.

Negotiated cash fed cattle trade was mostly inactive on very light demand in all major feeding regions through Tuesday afternoon with too few transactions to trend, according to the Agricultural Marketing Service.

Fed cattle prices last week were generally steady on a live basis at $123-$124/cwt. Dressed trade was $2 lower at $198 in Nebraska and $194-$198 in the western Corn Belt.

Choice boxed beef cutout value was $1.14 lower Tuesday afternoon at $301.56/cwt. Select was 3¢ lower at $274.35.

Corn futures closed 5¢ to 7¢ lower through new-crop contracts and then 2¢ lower to 1¢ higher.

Soybean futures closed mostly 9¢ to 10¢ lower.

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Spiking treasury yield rates and the Congressional budget stalemate weighed on equity markets Tuesday.

The Dow Jones Industrial Average closed 569 points lower. The S&P 500 closed 90 points lower. The NASDAQ was down 423 points.

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Despite bad weather and the delta variant spread, consumer online and physical restaurant visits in August continued to recover from last year’s steep declines, according to the NPD Group (NPD). U.S. restaurant traffic increased by 5% over the 10% decline in August 2020 and was 5% less than the pre-pandemic level in August 2019. Larger average check sizes drove a 13% increase in dollars compared to a year ago and a 3% gain in dollars over the same month two years ago, according to NPD’s daily tracking of the U.S. restaurant industry. 

“Overall, the state of the U.S. restaurant industry today reflects the steady state of the home-centric lifestyle that has us eating more meals at home,” says David Portalatin, NPD food industry advisor. “This behavior pre-dates the pandemic and will continue into the foreseeable future. To meet the needs of today’s restaurant consumers, restaurant operators need to think about getting meals and snacks into the home.”

Quick service restaurant visits, representing most U.S. restaurant traffic, were down 3% in August compared to August 2019, up 2% versus the same time last year. Visits to full service restaurants declined by 9% this August compared to the same month two years ago, and increased by 20% versus a 25% decrease in August 2020. 

While restaurant visits improved overall, dine-in or on-premises traffic continues to struggle compared to pre-pandemic levels. Dine-in visits were down 34% in August compared to August 2019. Off-premises orders, which gained significant ground during the pandemic, represented 73%, of all restaurant visits this August. Of off-premises services, delivery continues its meteoric growth, with orders increasing by 128% in August compared to the same month two years ago, and now represents 10% of off-premises visits. Carry-out visits, which hold a 49% share of off-premises traffic, increased by 6% compared to pre-pandemic levels. Drive-thru visits rose by 11% in August compared to August 2019 and represented 41% of off-premises visits in the month. Although digital ordering has grown by triple-digits since the pandemic began, non-digital orders represented 85% in of all restaurant orders in August.

Cattle futures closed lower Monday, pressured by Friday’s Cattle on Feed report with unexpectedly higher placements. 

Live Cattle futures closed an average of 40¢ lower.

Feeder Cattle futures closed an average of $1.68 lower (38¢ to $3.00 lower). They received extra pressure from Corn futures, which closed an average of 12¢ higher in the front six contracts, apparently based on early yields.

Soybean futures closed up across the board, mostly 2¢ to 6¢ higher.

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

Live price last week were generally steady at $123-$124/cwt. Dressed trade was $2 lower at $198 in Nebraska and $194-$198 in the western Corn Belt.

 Choice boxed beef cutout value was 62¢ lower Monday afternoon at $302.70/cwt. Select was 15¢ lower at $274.38.

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Major U.S. financial indices closed mixed on Monday, after the Federal Reserve chair said last week tapering of stimulus efforts could start as soon as November. Brent crude closed at the highest mark since 2018. Two regional Fed presidents stepped down unexpectedly on Monday amid scrutiny over their 2020 stock trading.

The Dow Jones Industrial Average closed 71 points higher. The S&P 500 12 closed points lower. The NASDAQ closed 78 points lower. 

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“Going forward, the expectation is that fed cattle supplies will continue to tighten and drop below the slaughter capacity cap that has separated the fed market from beef markets,” says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University. “Beef production is expected to drop in the fourth quarter and fed markets should participate more fully in the market strength. Barring any new disruptions or “Black Swans,” cattle and beef markets should get lined up in a more typical fashion and move forward with tighter supplies and continued strong demand.”

In his weekly market comments, providing insight to Friday’s Cattle on Feed report, Peel notes cattle feeders appear to making headway with front-end supplies, albeit slowly.

“The 12-month moving average of feedlot placements peaked recently in April, with declines since, except for a slight move higher with the large August placements,” Peel explains. “Generally, declining placements imply smaller feedlot numbers, eventually. The large heavy placements in August will front-end load future production somewhat. The 12-month moving average of marketings peaked recently in June and is moving lower in July and August suggesting that the peak feedlot production is past.” He adds that the 12-month moving average feedlot inventory also peaked recently in June and is also moving lower.

As for August placements, Peel explains, the unexpected increase came almost exclusively in weights heavier than 700 lbs. For instances he points to the 15.4% year-over-year increase in cattle placed weighing more than 900 lbs.