WLI

Negotiated cash fed cattle trade was slow on light demand in Nebraska through Monday afternoon, according to the Agricultural Marketing Service. Early live sales traded steady to $2 higher than last week at $125/cwt. Dressed sales there last week were at $196-$202/cwt.

Trading in the Western Corn Belt was mostly inactive on very light demand. Last week, live sales traded from $124-$126/cwt. and dressed sales were at $196-$202/cwt.

In all other major trading regions, trading was at a standstill. Last week in the Texas Panhandle, live sales traded at $120/cwt. In Kansas, live sales were at $119-$120/cwt.

Live Cattle futures gained Monday, supported by higher prices forecast in the latest World Agricultural Supply and Demand Estimates (see below).

Live Cattle futures closed an average of 52¢ higher.

Feeder Cattle futures faltered with another session of higher Corn futures.

Feeder Cattle futures closed an average of 70¢ lower.

Choice boxed beef cutout value was $3.59 lower Monday afternoon at $275.00/cwt. Select was $1.36 higher at $258.77.

Grain futures closed higher, supported by the WASDE.

Corn futures closed 15¢ to 16¢ higher through new-crop contracts, and then mostly 11¢ to 12¢ higher.

Soybean futures closed mostly 18¢ to 20¢ higher.

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Major U.S. financial indices closed higher on Monday, reaching all-time highs, with second-quarter earnings reports due this week.

The Dow Jones Industrial Average closed 126 points higher. The S&P 500 closed 15 points higher. The NASDAQ was up 31 points.

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USDA’s Economic Research Service (ERS) boosted expected fed cattle prices in the latest World Agricultural Supply and Demand Estimates (WASDE).

Specifically, based on recent price strength, ERS forecast the annual average five-area direct fed steer price $2.20 higher than the previous month at $119.20/cwt. Average prices are projected at $120 in the third quarter, $123 in the fourth quarter and $127 in the first quarter of next year.

Beef production for this year was estimated to be the same as the previous month at 27.91 billion lbs., which would be 731 million lbs. more (+2.69%) than last year. Projected beef production next year of 27.33 billion lbs. would be 580 million lbs. less (-2.08%) than this year.

Total red meat and poultry production is forecast to be 107.14 billion lbs. this year, which would be 580 million lbs. more (+0.54%) than last year. Next year’s total red meat and poultry production is forecast at 107.19 billion lbs.

Corn

Corn production for 2021-22 was projected 175 million bu. higher than the previous month based on increased planted and harvested area. National average corn yield was unchanged at 179.5 bu./acre.

With supply rising more than use, ending stocks were projected 75 million bu. more than the previous month.

The season-average farm price received by producers was lowered 10¢ to $5.60/bu. 

Soybeans

Soybean production was projected at 4.4 billion bu., the same as last month with harvested area of 86.7 million acres unchanged, as well as forecast yield of 50.8 bu./acre. With offsetting changes in supply and use, ending stocks were unchanged at 135 million bu.

The U.S. season-average soybean price for 2020-21 was forecast at $11.05/bu., down 20¢ from the previous month based on early-season sales at lower prices. The soybean meal price was projected at $395.00/short ton, down $10 from last month. The soybean oil price was forecast at 57.5¢/lb., down 1.5¢.

Wheat

All wheat production was lowered 152 million bu. to 1,746 million. The forecast all wheat yield of 45.8 bu./acre was 4.9 bu. less than last month. Beginning stocks were reduced on the latest NASS Grain Stocks report.

Projected exports and feed and residual usage were lowered to 875 and 170 million bu., respectively, on the reduction in durum and other spring wheat supplies. These would be the smallest U.S. wheat exports since the 2015-16 marketing year. Projected 2021-22 ending stocks were reduced 105 million bu. to 665 million, the lowest since 2013-14.

The projected 2021-22 season-average farm price was raised 10¢/bu. to $6.60.

Negotiated cash fed cattle trade was at a standstill in the Texas Panhandle though Friday afternoon, according to the Agricultural Marketing Service. Elsewhere, trade was limited on light demand.

For the week, live prices were generally steady to $2 lower in the Southern Plains at $119-$120/cwt. and steady to either side of steady at $123-$126 in the north. Dressed trade was steady in the western Corn Belt at $196-$202 but steady to $4 higher in Nebraska at  $198-$202.

The five-area direct average steer price through Thursday was $122.01/cwt. on a live basis, which was $1.81 less than the same period a week earlier. The average steer price in the beef was 34¢ higher at $198.48.

Feeder Cattle futures faded pressure through much of the session to close higher Friday, perhaps supported by some positioning ahead of Monday’s monthly World Agricultural Supply and Demand Estimates.

Feeder Cattle futures closed an average of $1.68 higher ($1.30 to $2.12 higher).

Live Cattle futures managed to edge higher but remained under pressure from declining wholesale beef values. Monday’s markets could come under pressure from the Executive order signed by President Biden Friday, aimed at a number of broad issues, including concentration and competition in several industries, including agriculture (see below).

Live Cattle futures closed an average of 51¢ higher, except for 5¢ lower in spot Aug.

Choice boxed beef cutout value was $3.38 lower Friday afternoon at $278.59/cwt. Select was $2.65 lower at $257.41

Corn futures closed 6¢ to 8¢ lower through new-crop contracts, and then fractionally higher to 3¢ lower.

Soybean futures closed mostly 10¢ to 14¢ higher.

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Major U.S. financial indices closed higher Friday amid general economic optimism.

The Dow Jones Industrial Average closed 448 points higher. The S&P 500 closed 48 points higher. The NASDAQ up up 142 points. 

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Buckle Up.

President Biden signed an Executive order and USDA announced intentions Friday that could have plenty to say about producer marketing opportunities in decades to come.

“The COVID-19 pandemic led to massive disruption for growers, food workers, and consumers alike. It exposed a food system that was rigid, consolidated, and fragile. Meanwhile, those growing, processing and preparing our food are earning less each year in a system that rewards size over all else,” said Agriculture Secretary Tom Vilsack. “To shift the balance of power back to the people, USDA will invest in building more, better, and fairer markets for producers and consumers alike. The investments USDA will make in expanding meat and poultry capacity, along with restoration of the Packers and Stockyards Act, will begin to level the playing field for farmers and ranchers. This is a once in a generation opportunity to transform the food system so it is more resilient to shocks, delivers greater value to growers and workers, and offers consumers an affordable selection of healthy food produced and sourced locally and regionally by farmers and processors from diverse backgrounds. I am confident USDA’s investments in expanded capacity will spur millions more in leveraged funding from the private sector and state and local partners as our efforts gain traction across the country.”

Specifically, USDA intends to invest $500 million in American Rescue Plan funds to expand meat and poultry processing capacity, “…so that farmers, ranchers, and consumers have more choices in the marketplace.” USDA also announced more than $150 million for existing small and very small processing facilities.

“Concentration in food processing has contributed to bottlenecks in America’s food supply chain, too. Just a few meatpackers, with a few large processing facilities, process most of the livestock that farmers and ranchers raise into the meat that we buy,” according to the announcement. “For example, just four large meat-packing companies control over 80% of the beef market alone. One of the lessons from the COVID-19 pandemic is that this system is too rigid and too fragile. When COVID slowed or shuttered meat processing, many farmers had no place to go. Farmers were forced to depopulate their animals, while grocery store shelves went bare and demand for food assistance spiked. These vulnerabilities are not new. And, given current concerns about climate and cybersecurity, these risks are likely to grow even more sharply in the future.”

For the record, I’m unaware of any cattle depopulation due to the processing backlog, never mind other hyperbole in the USDA statements.

“…To facilitate effective enforcement of the Act (Packer and Stockyards), USDA will be conducting three rulemakings,” according to the announcement. “First, the rulemakings will clarify the conduct that USDA considers a violation of the Packers and Stockyards Act, including conduct that is unfair, deceptive, or unjustly discriminatory against farmers and growers. Second, they will address oppressive practices in chicken processing. Third, the rulemakings will reinforce the longstanding USDA position that it is not necessary to demonstrate harm or likely harm to competition in order to establish a violation of the Act.”

Lots to ponder in all of that, and to monitor closely.

Negotiated cash fed cattle trade was limited on light demand in the Southern Plains through Thursday afternoon, according to the Agricultural Marketing Service.

Elsewhere, trade was slow with moderate demand.

For the week, live prices are generally steady to $2 lower in the Southern Plains at $119-$120/cwt. and steady to either side of steady at $123-$125 in the north. Dressed trade is steady in the western Corn Belt at $196-$202 but steady to $4 higher in Nebraska at  $198-$202.

Cattle futures closed lower Thursday, pressured by declining wholesale beef prices and softer cash prices.

Feeder Cattle futures closed an average of $1.28 lower.

Live Cattle futures closed an average of $1.24 lower.

Choice was boxed beef cutout value was $2.93 lower Thursday afternoon at $281.97/cwt. Select was $2.02 lower at $260.06

Favorable weather continued to pressure Corn and Soybean futures Thursday.

Corn futures closed down between 6¢ and 14¢ lower through the front six contracts.

Soybean futures closed between 1¢ and 7¢ lower through the front six contracts, except for spot July, up 3¢.

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Major U.S. financial indices fell on Thursday on fears prompted by the continued spread of the Delta variant of Covid-19. Reports suggest traders have gone from worrying that economic growth would fuel inflation to fears the virus will cause further damage economically.

The Dow Jones Industrial Average closed 260 points lower. The S&P 500 37 points lower. The NASDAQ was down 105 points.

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“Domestic beef demand looks to continue strong in the second half of the year and beef exports are expected to increase as well,” says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly market comments. “Strong beef demand and year-over-year decreases in beef production in the third and fourth quarters is expected to continue supporting wholesale beef values for the remainder of the year.”

The seasonal increase in boxed beef cutout prices was stronger than usual this year, according to Peel. He explains weekly average Choice boxed beef prices increased 63.8% from early January to early June. 

“Among the four major beef primals, values were higher across the board, led by the loin (up 93.0%), rib (up 60.0%), round (up 43.8%) and chuck (up 39.0%),” Peel says. “The smaller primals were also up strongly with increases for brisket (up 99.3%), short plate (up 107.5%) and flank (up 85.7%).”

According to Peel, wholesale price strength stemmed from a number of factors, including increased seasonal beef demand, strong export demand and food service inventory rebuilding, all underpinned by generally strong domestic protein demand.

Boxed beef prices declined since the early June peak but remain up since the beginning of the year. 

Negotiated cash fed cattle trade was moderate with moderate demand in the Texas Panhandle through Wednesday afternoon, according to the Agricultural Marketing Service. In Kansas, trading was slow on moderate demand. Live sales in both regions were steady to $2 lower at $120/cwt.

Trading in Nebraska and the Western Corn Belt was limited on light demand.

In Nebraska, a few dressed sales traded at $198-$202/cwt. Prices last week were $198 in the beef and $125.00-$126.50 on a live basis.

In the Western Corn Belt, a few live sales traded at $125/cwt. and a few dressed from $200-$202/cwt. Last week, prices were $124-$126 and $197-$202, respectively.

Feeder Cattle futures closed an average of $1.71 lower Wednesday amid likely profit taking from solid gains in the previous session.

Live Cattle futures closed an average of $1.15 lower with the steady to lower cash market and continued decline in wholesale beef values.

Choice boxed beef cutout value was $1.78 lower Wednesday afternoon at $284.90/cwt. Select was $1.23 lower at $262.08

Corn futures continued under pressure from the wetter, cooler forecast: 3¢ and 9¢ lower through the front six contracts.

Soybean futures bounced back from the previous day’s steep decline, helped along by eroding crop conditions. They closed 20¢ and 22¢ higher through the front six contracts.

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Major U.S. financial indices rose moderately on Wednesday with the S&P 500 closing at another record high.

The Dow Jones Industrial Average closed 104 points higher. The S&P 500 closed 14 points higher. The NASDAQ was up 1 point.

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“Over the last three months, beef cow slaughter totaled 818,000 head, the most since the 837,000 during the same period in 2010,” says David Anderson, livestock economist with Texas A&M AgriLife Extension Service. “Total cow slaughter over the same period is the largest since 2013. At that time, the industry was reducing the number of beef cows due mostly to low prices and then the drought in Texas and the Southwest.”

More specifically, in the July 5 issue of In the Cattle Markets, Anderson explains beef cow slaughter for the previous three months was the most since 2011 in the region that includes Texas, New Mexico and Oklahoma. It was the most since 2013 for the region including Arizona and Nevada.

Even so, Anderson points out cull cow prices are higher year over year.

“Cull cow prices usually increase from the beginning of the year until mid-year,” Anderson explains. “Southern Plains 85-90% lean cows increased at a normal seasonal rate to about $65/cwt. at the end of June, about $8 higher than last year. National cutter cow prices hit $67 (end of June), also about $8 above a year ago.”

Negotiated cash fed cattle trade was limited on light demand in Nebraska and the Western Corn Belt through Tuesday afternoon, according to the Agricultural Marketing Service. It was at a standstill in the Southern Plains.

Last week, live prices were at $120-$122/cwt. in the Southern Plains and at $124-$126 in the North. Dressed prices were at $197-$198.

Feeder Cattle futures closed an average of $3.03 higher across the board Tuesday, taking advantage of the wide berth opened by Corn futures.

That helped support Live Cattle, despite the decline in wholesale beef prices, in tandem with climbing retail prices that could challenge demand.

Live Cattle futures closed narrowly mixed, from 40¢ higher in spot Aug to 23¢ lower in Dec with the back two contracts unchanged.

Choice boxed beef cutout value was $1.24 higher Tuesday afternoon at $286.68/cwt. Select was $1.10 lower at $263.31

Corn and Soybean futures plunged Tuesday, pressured by a wetter, cooler forecast.

Corn futures closed down between 38¢ and 41¢ lower through the front six contracts.

Soybean futures closed down between 86¢ and 95¢ lower through the front six contracts.

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Major U.S. financial indices mostly fell on Tuesday, ending seven consecutive record-high closings. However, NASDAQ closed slightly higher thanks to gains from Amazon.

The Dow Jones Industrial Average closed 209 points lower. The S&P 500 closed 9 points lower. The NASDAQ was down 24 points.

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U.S. beef exports shattered volume and value records in May, according to data released by USDA and compiled by the U.S. Meat Export Federation (USMEF). Pork exports also set a value record.

U.S. beef export volume soared to a record 133,440 metric tons (mt) for the month, up 68% from a year ago, while value increased 88% to $904.3 million. May marked the third consecutive monthly value record for beef exports, which had never exceeded $800 million before March 2021. Record-large exports to South Korea, continued growth in China and a strong rebound in Japan and Taiwan were all part of the strong month.

“The outstanding May performance is especially gratifying when you consider where red meat exports stood a year ago,” says USMEF President and CEO Dan Halstrom. “The industry faced unprecedented, COVID-related obstacles at all levels of the supply chain, and a very uncertain international business climate. These challenges are still not behind us, but international demand has been very resilient and the U.S. industry has shown a tremendous commitment to serving its global customers.”

For January through May, exports reached 587,838 mt, up 15% from a year ago, while value increased 22% to $3.84 billion.

Halstrom cautions U.S. labor availability remains a major concern and limitation for the industry, and exporters continue to face significant obstacles when shipping product overseas. Due to the ongoing, fluid impact of COVID-19, foodservice restrictions also continue to affect several key markets where dine-in service is either suspended or subject to capacity limits and shorter hours, and tourism has not yet returned in many countries.

“USMEF remains optimistic that international demand will remain strong in the second half of 2021, but the road ahead is not an easy one,” Halstrom explains. “The U.S. industry must continue to be innovative and aggressive in defending existing market share, while also expanding our customer base by responding to COVID-driven changes in the marketplace and shifts in consumer trends and preferences.”