WLI

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

Live prices last week were $2-$3 higher in the Southern Plains at $122/cwt. and $3-$4 higher in the North at $124. Dressed prices were $4-$5 higher at $195.

Live Cattle futures closed higher Friday, regaining some of what was lost in the previous session, supported by higher cash prices and improving fundamentals.

Live Cattle futures closed an average of $1.00 higher (37¢ to $1.92 higher).

Resurgent grain futures prices pressured Feeder Cattle futures.

Feeder Cattle futures closed an average of $1.41 lower, from an average of (85¢ lower at the back to $2.37 lower at the front.

Choice boxed beef cutout value was $2.97 lower at $323.28/cwt. Select was $3.63 lower at $283.61.

Estimated total cattle slaughter for the week ending June 19 was 663,000 head, which was 2,000 head fewer than the previous week, but 17,000 head more than a year earlier, according to USDA. Year-to-date estimated total cattle slaughter of 15.4 million head is 820,000 more (+5.62%) than the same period last year. Total estimated beef production so far this year is 12.81 billion lbs., which is 772.6 million lbs. more (+6.42%).

Grain futures bounced back Friday from the previous day’s steep selloff, looking for the trading range encompassing the stronger U.S. dollar, weather risk, uncertainty about potential changes to the Renewable Fuel Standard and all of the rest.

Corn futures closed 22¢ to 34¢ higher through Jly ‘22 , and then mostly 14¢ to 17¢ higher.

Soybean futures closed mostly 54¢ to 66¢ higher.

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

Major U.S. financial indices sagged lower Friday, beneath the weight of investor worries about the Fed raising interest rates sooner than 2023.

The Dow Jones Industrial Average closed 533 points lower. The S&P 500 closed 55 points lower. The NASDAQ down 130 points.

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

“Strong grain prices, the Federal Reserve’s record-low interest rates, and growing exports have underpinned the Rural Mainstreet Economy. Even so, current rural economic activity remains below pre-pandemic levels,” says Ernie Goss, PhD, Jack A. MacAllister Chair in Regional Economics at Creighton University’s Heider College of Business.

Goss and Bill McQuillan, former chairman of the Independent Community Banks of America, created the monthly economic survey, which underpins the Creighton University Rural Mainstreet Index (RMI), covering 10 regional states, focusing on approximately 200 rural communities with an average population of 1,300. It gives the most current real-time analysis of the rural economy. 

The June RMI remained above growth neutral for the seventh consecutive month at 70.0. The RMI was record high a month earlier at 78.8. The index ranges between 0 and 100 with a reading of 50.0 representing growth neutral.

The farmland price index was significantly above growth neutral for the ninth consecutive month; the first time since 2013. The June reading slipped to 75.9 from May’s 78.1.

The June farm equipment-sales index rose to 71.6 from 67.9, its highest level since 2012 and the seventh consecutive month of a reading above growth neutral.

Approximately, 46.7% of bank CEOs reported their local economy expanded between May and June, but several bankers raised future concerns.

For instance, according to Steve Simon, CEO of South Story Bank and Trust in Huxley, Iowa, “Continued dry conditions will start to have an effect on markets and crops soon.”

Longer term, Larry Winum, CEO of Glenwood State Bank in Glenwood, Iowa, says, “In my view, $29 trillion in total debt with no real plan to reduce that debt, or balance the annual budget is the biggest threat to our economy’s success.” He argues that neither political party, nor the Federal Reserve, has engaged in a serious discussion to solve the problem.

When asked to name the greatest threat to 2021-22 bank operations, approximately 25% cited a downturn in farm income. Another 25%  pointed to rising government regulation.

Negotiated cash fed cattle trade was at a standstill in the Texas Panhandle through Thursday afternoon, according to the Agricultural Marketing Service. Elsewhere, it was limited on light demand with too few transactions to trend. So far this week, live prices are $2-$3 higher in the Southern Plains at $122/cwt., $4 higher in Nebraska at $124 and $3-$4 higher in the western Corn Belt at $124. Dressed prices are $4-$5 higher at $195.

Live Cattle futures closed sharply lower Thursday with apparent profit taking, limit-down moves in Lean Hog futures and spillover pressures from widespread commodity selling (see below).

Live Cattle futures closed an average of $2.85 lower. 

Despite the pressure, sharply lower grain futures supported Feeder Cattle futures.

Feeder Cattle futures closed mixed, from an average of 49¢ lower to an average of 55¢ higher.

Choice boxed beef cutout value was $2.92 lower Thursday afternoon at $326.25/cwt. Select was $2.72 lower at $287.24.

The average dressed steer weight the week ending June 5 was 891 lbs., according to USDA’s Actual Slaughter Under Federal Inspection report. That was 1 lb. less than the previous year. The average dressed heifer weight of 812 lbs. was 12 lbs. lighter.

Grain futures tanked Thursday with promising weather in the Corn Belt. Growing uncertainty about whether President Biden will bolster or relax the current Renewable Fuel Standard added pressure, as did the sharply higher U.S. Dollar.

Moreover, there was broad-based commodity selling, tied to reports of China directing state-owned firms to reduce exposure to foreign commodity markets, in an effort to curb inflation.

Corn futures closed limit down 40¢ through the front six contracts, and then mostly 26¢ to 30¢ lower.

Soybean futures closed 82¢ to $1.18 lower through Jly ‘22. And then mostly 55¢ to 69¢ lower.

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

Major U.S. financial indices closed mixed Thursday. Along with continued pressure from the Fed’s expectation of raising interest rates a year earlier than previously intended, initial weekly unemployment insurance claims were more than expected. Those claims tallied 412,000 for the week ending June 12, up 37,000 from the previous week.

The Dow Jones Industrial Average closed 210 points lower. The S&P 500 closed 1 point lower. The NASDAQ was down 121 points.

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

Delays and congestion at U.S. ports continue to hamstring U.S. agriculture exports, including meat and poultry products.

“Perhaps the most egregious action perpetrated by ocean carriers is their growing proclivity to decline to carry U.S. agricultural commodity exports, including meat and poultry exports, instead choosing to hasten empty containers to Asian markets to fill them with more lucrative consumer goods to export to the U.S.,” explained Julie Anna Potts, Meat Institute president and CEO. “In some instances, common carriers are collecting freight rates as high as $12,000 per container to carry cargo from Asia to the U.S., while containers carrying U.S. agriculture exports earn only $1,800.” That was part of the testimony she delivered earlier this week to the House Committee on Transportation and Infrastructure Subcommittee On Coast Guard and Maritime Transportation.

Further, Potts explained ocean carriers and marine terminal operators are charging excessive and unreasonable detention and demurrage fees.

“Failure to hold these carriers accountable could have long-lasting, detrimental effects for the trade-dependent U.S. meat and poultry industry and agriculture sector which has caused $1.5 billion in lost revenue,” said Potts. “If current ocean carrier practices persist, and are not subject to oversight, then the U.S. meat and poultry industry, its workers and the communities it supports will struggle to access these vital markets that have been cultivated over decades.”

The U.S. Department of Agriculture estimates that the $141.6 billion in U.S. agricultural export value in 2019 generated an additional $160 billion in economic activity for a total of $301.6 billion in economic output.

The Meat Institute is urging U.S. Secretary of Agriculture Tom Vilsack and the Congress to confront the crisis as part of efforts to improve and strengthen the food supply chain.

Negotiated cash fed cattle prices continued higher in Kansas and Nebraska on slow trade and light demand through Wednesday afternoon, according to the Agricultural Marketing Service. So far this week, live prices are $2-$3 higher in the Southern Plains at $122/cwt. and $4 higher in Nebraska at $124. Dressed prices in Nebraska are $4-$5 higher at $195.

Last week, prices in the western Corn Belt were $120-$121 on a live basis and $190-$191 in the beef.

Cattle feeders offered 6,049 head in Central Stockyards’ weekly Fed Cattle Exchange auction. Of those, 1,006 sold — all from the Southern Plains and all on a live weight basis. Steers brought a weighted average price of $121.65/cwt. and heifers brought an average of $121.22.

Cattle futures mostly gained again Wednesday, supported by the recent break in grain futures, as well as higher cash prices. That came in the face of limit-down moves in front-month Lean Hog futures.

Feeder Cattle futures closed an average of 87¢ higher (17¢ to $2.30 higher), except for an average of 25¢ lower in the back two contracts.

Live Cattle futures closed an average of 72¢ higher (12¢ to $1.35 higher). 

Choice boxed beef cutout value was $5.26 lower Wednesday afternoon at $329.17/cwt. Select was $8.32 lower at $289.96. The Choice/Select spread was $39.21/cwt.

Positive weather kept pressure on Corn futures Wednesday.

Corn futures closed 1¢ to 7¢ lower, except for 5¢ higher in spot Jly.

Soybean futures closed mostly 18¢ to 30¢ lower.

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

Major U.S. financial indices closed lower Wednesday, pressured by information from the Federal Reserve, indicating inflation was running higher than previously expected and interest rates may increase sooner than expected. In this case, sooner means 2023 versus 2024.

In the meantime, according to the FOMC statement, the committee expects to maintain its current accommodative monetary policy until inflation averages 2% over time and longer‑term inflation expectations remain “well anchored” at 2%.

In prepared remarks, Federal Reserve Chair Jerome Powell said, “Inflation has increased notably in recent months. The 12-month change in Personal Consumption Expenditure (PCE) prices was 3.6% in April and will likely remain elevated in coming months before moderating.” The committee increased PCE expectations for this year by 1% from its previous estimate to 3.4%. 

The Dow Jones Industrial Average closed 265 points lower. The S&P 500 closed 22 points lower. The NASDAQ was down 33 points.

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

Although total cattle slaughter in May was more than last year’s pandemic-ravaged pace, it was 1% less than in 2019, according to USDA’s Economic Research Service (ERS). Cow slaughter, though, was 6% more than last year and 7% more than in 2019.

“While there have been improvements in drought conditions in some regions since last month, pasture and range conditions in areas like the Northwest and North Dakota remain very poor compared to last year,” say ERS analysts, in the latest Livestock, Dairy and Poultry Outlook.

ERS increased expected cow slaughter for the second and third quarters this year, but analysts say projected total cattle slaughter remained static based on less fed cattle slaughter in the second quarter, and reduced expectation for fourth-quarter cow slaughter. Expected annual beef production this year is 5 million lbs. more than the previous month at 27.905 billion lbs.

In the monthly World Agricultural Supply and Demand Estimates, ERS forecast the annual average five-area direct fed steer price at $117/cwt. Average prices are projected at $120 in the second quarter, $115 in the third quarter and $120 in the fourth quarter. Next year’s forecast annual average price is $121.50.

ERS projects the annual average feeder steer price (basis Oklahoma City) this year at $139.33/cwt. Average prices are forecast at $139 in the second quarter, $141 in the third quarter and $143 in the fourth quarter. ERS pegs the average annual price for next year at $144.25.

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 (AMS). Although too few to trend, there were a few dressed trades at $195/cwt., compared to $190-$191 last week. Elsewhere, trade ranged from mostly inactive on very light demand to a standstill.

Live prices last week were at mostly $119-$120 in the Southern Plains, $120 in Nebraska and $120-$121 in the western Corn Belt.

The recent decline in Corn futures moderated Tuesday but continued to bolster Cattle futures, which were also supported by the outlook for steady to higher cash prices this week.

Feeder Cattle futures closed an average of $1.34 higher (62¢ to $2.22 higher).

Live Cattle futures closed an average of $1.91 higher through the front four contracts ($1.32 to $1.62 higher) and then an average of 26¢ higher, except for 12¢ lower in the back two contracts.

Choice boxed beef cutout value was $1.04 lower at $334.43/cwt. Select was $5.13 lower at $298.28. At $36.15, the Choice/Select spread was the highest since June 2017, when it peaked at $30.92.

Grain futures continued mainly lower Tuesday with the progress-friendly weather forecast in the Corn Belt.

Corn futures closed mostly 3¢ to 7¢ lower, except for 8¢ higher in spot Jly.

Soybean futures closed mostly 17¢ to 21¢ lower.

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

Major U.S. financial indices softened Tuesday, with weaker economic data.

Advance estimates of U.S. retail and food services sales for May 2021 were less than expected at $620.2 billion, a decrease of 1.3% month to month, according to the U.S. Census Bureau.

The Producer Price Index (PPI) for final demand increased 0.8% in May, according to the U.S. Bureau of Labor Statistics. On an unadjusted basis, the final demand index advanced 6.6% for the 12 months ended in May, the largest increase since 12-month data were first calculated in November 2010.

The Dow Jones Industrial Average closed 94 points lower. The S&P 500 closed 8 points lower. The NASDAQ was down 101 points.

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

U.S. beef exports this year are forecast to exceed the level of the last two years and perhaps that of the record year in 2018, according to Derrell Peel, Extension livestock marketing specialist at Oklahoma State University.

As noted in Cattle Current last week, U.S. beef exports set another new value record in April at $808.3 million, up 35% from a year ago, according to data released by USDA and compiled by the U.S. Meat Export Federation. Export volume was 23% more year over year and the fifth largest on record at 121,050 metric tons (mt).

“Beef exports represent a component of total beef demand in terms of quantity and value,” Peel says, in his weekly market comments. “Moreover, beef exports represent a wide range of product types and qualities exported to various markets and augment domestic beef demand by providing markets for products less desired in the U.S.” He explains exporting products that have more value to international consumers than domestic ones enables maximizing domestic beef value.

U.S. beef export value per head of fed slaughter reached a new monthly high in April at $367.45.

More broadly, total global food and agricultural exports grew by almost $52 billion last year (+3.2% annualized), according to the Food and Agriculture Organization of the United Nations (FAO). Developing countries accounting for about 40% of the increase.

This year, FAO forecasts global agricultural exports to increase 8%, or $137 billion. Much of that growth reflects demand from East Asia.

FAO analysts expect meat production this year to increase 2% to 346 million tons, reflecting an anticipated rebound in meat production in China, especially for pork.

“The average worldwide consumer price of protein in May 2021 was 23% above its May 2020 level,” according to FAO’s semiannual Food Outlook. “Calories, in prices, meanwhile, were up 34% year-on-year and hit their highest level since February 2013. The difference reflects stronger price rises for wheat, coarse grains and vegetable oils compared to meats, dairy products and fish.”

Negotiated cash fed cattle trade was limited on very light demand in Nebraska through Monday afternoon, according to the Agricultural Marketing Service. There were a few live sales at $124/cwt., but too few to trend. Elsewhere, trade was at a standstill.

Live prices last week were at mostly $119-$120 in the Southern Plains, $120 in Nebraska and $120-$121 in the western Corn Belt. Dressed trade was at $190-$191.

Feeder Cattle futures roared higher Monday, buoyed by a sharp break in Corn futures. Live Cattle futures edged higher, with interest apparently constrained by what appears to be post-top wholesale prices for a while.

Feeder Cattle futures closed an average of $2.78 higher ($2.00 higher at the back to $3.42 higher at the front). That’s right at an average of $5 higher in the last two sessions.

Live Cattle futures closed an average of 48¢ higher.

Choice boxed beef cutout value was $2.09 lower through Monday afternoon at $335.47/cwt. Select was $1.80 lower at $303.41.

Grain futures prices fell Monday, swamped by more weekend rain than expected in the Corn Belt, as well as increased chances for rain and cooler temperatures in that region for the next couple of weeks.

Corn futures closed 25¢ to 31¢ lower through Jly ‘22, and mostly 13¢ and 16¢ lower. 

Soybean futures closed mostly 31¢ to 41¢ lower.

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

Major U.S. financial indices closed mixed Monday, with the strongest performance in tech stocks.

The Dow Jones Industrial Average closed 85 points lower. The S&P 500 closed 7 points higher. The NASDAQ closed 104 points higher.

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

Nationally, pasture and range conditions held about steady, according to the latest USDA Crop Progress report, for the week ending June 13.

35% of pasture and range was rated as Good (28%) or Excellent (7%), the same as a week earlier, but 10% less than a year earlier. Conversely, 36% was rated as Poor (20%) or Very Poor (16%), compared to 37% a week earlier and 22% a year earlier.

According to the U.S. Drought Monitor (week beginning June 10), 61.2% of the continental U.S. ranged from abnormally dry to Exceptional Drought. That was 2.1% more than the previous week, but 5.2% less than at the beginning of the year.

Crop progress continues strong for row crops.

96% of corn was emerged, which was 2% more than last year and 5% more than the five-year average. 68% was in Good (56%) or Excellent (12%) condition, which was 4% less than the previous week and 3% less than the five-year average.

94% of soybeans were in the ground, which was 2% more than last year and 6% more than the average. 86% were emerged, which was 7% more than the prior year and 12% more than the five-year average. 62% were in Good (53%) or Excellent (9%) condition, which was 5% less than the previous week and 10% less than the same week last year.

92% of winter wheat was headed, compared to 90% the previous year and 92% for the five-year average. 4% was harvested, which was 10% less than a year earlier and 11% less than average. 48% was rated in Good (40%) or Excellent (8%) condition, compared to 50% the prior week and a year earlier. 20% was rated Poor (14%) or Very Poor (6%) compared to 18% a week earlier and 19% at the same time last year.