WLI

Negotiated cash fed cattle trade was mainly slow on light demand through Thursday afternoon, according to the Agricultural Marketing Service. So far this week, live prices in the North are generally $1-$2 higher at $125-$127/cwt. Price are steady to $1 higher in the Southern Plains at $121-$122.

Choice boxed beef cutout value was $1.55 higher Thursday afternoon at $341.63/cwt. Select was $6.61 higher at $316.41/cwt.

Net U.S. beef export sales for the week ending Aug. 12 were 11,100 metric tons for 2021, according to USDA’s weekly U.S. Export Sales report. That was 18% less than the previous week and 42% less than the prior four-week average. Increases were primarily for Japan, South Korea, China, Taiwan, and Mexico.

Cattle futures softened Thursday. More than anything, pressure seemed mostly tied to weakness in outside markets and in commodities overall as fund managers assess the impact of surging COVID cases on economic growth.

Live Cattle futures closed an average of 53¢ lower (20¢ to 90¢)

Feeder Cattle futures closed an average of 38¢ lower (23¢ to 58¢ lower)

Corn futures closed an average of 13¢ lower through the front six contracts, then fractionally to 7¢ lower.

Soybean futures closed an average of 30¢ lower through the front six contracts, then mostly 8¢ to 25¢ lower.

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Major U.S. financial indices closed mixed Thursday amid volatile trade. As mentioned, pressure included surging delta COVID-19 infections, as well as fretting over when the Fed will begin tapering stimulus.

The Dow Jones Industrial Average closed 67 points lower. The S&P 500 6 points higher. The NASDAQ was up 15 points higher at 14,542

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Most analysts expect the monthly Cattle on Feed report, due out Friday to be neutral to friendly.

For instance, David Anderson, Extension livestock economist at Texas A&M University looks for July placements to be 6-7% less year over year.

“Over the last five years, on average, placements have tended to decline slightly from June to July with last year being the exception,” Anderson says, in the latest issue of In the Cattle Markets. “One area of interest in the report will be any evidence of drought-forced earlier placements out of the West and Northern Plains.”

Anderson expects July marketings to be 3% less and the inventory of cattle on feed Aug. 1 to be 1.5% less. He adds that on-feed inventory tends to decline seasonally from June to a low in September.

“The Cattle on Feed report will likely provide more evidence of tightening fed cattle numbers and beef production to begin in 2022,” Anderson says. “Beef production has been below a year ago for five out of the last six weeks. Average federally inspected steer and heifer dressed weights continue to run below a year ago, fueling the decline in beef production. It’s also worth noting that the amount of beef grading Choice as a percent of all beef graded has been below last year for about seven weeks…Tighter supplies of Choice beef is likely keeping the Choice-Select spread wider than at this time last year and wider than the five-year average.

Negotiated cash fed cattle trade was slow on moderate demand in the North Tuesday at steady to higher money.

Live sales in Nebraska were $2 higher at $125 to $128/cwt. Dressed sales were generally $2 higher at $200, but some up to $205.

In the western Corn Belt, live sales were $1-$2 higher at $127. Although too few to trend, there were some dressed sales at $200, compared to $198-$204 last week.

Trade in the Texas Panhandle was slow on light demand. There were some live trades at $121 to $122 — steady to $1 higher than last week — but too few to trend.

In Kansas, trade was mostly inactive.

Cattle futures retraced recent softness, led by Feeder Cattle Wednesday. Support included the outlook for steady to higher cash fed cattle prices, as well as optimism about the monthly Cattle on Feed report due out Friday.

Feeder Cattle futures closed an average of $1.74 higher ($1.35 to $2.42 higher).

Live Cattle futures closed an average of 52¢ higher (2¢ to 92¢ higher), except for 17¢ lower in the back contract.

Choice boxed beef cutout value was $2.02 higher Wednesday afternoon at $340.08/cwt. Select was $3.03 higher at $309.80.

Corn futures closed mostly 1¢ to 3¢ higher.

Soybean futures closed 4¢ to 10¢ lower through Jly ’22 and then mostly fractionally lower to 1¢ lower.

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Major U.S. financial indices stepped lower Wednesday, pressured by the Federal Reserve making plans to begin tapering its bond buying program, possible by the end of the year, according to FOMC minutes released yesterday.

“Almost 60% of respondents anticipated the first reduction in the pace of net asset purchases to come in January, though, on average, respondents placed somewhat more weight than in the June surveys on the possibility of tapering beginning somewhat earlier,” according to the minutes.

The Dow Jones Industrial Average closed 382 points lower. The S&P 500 closed 47 points lower. The NASDAQ was down 120 points.

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USDA increased the projected average feeder steer price (750-800 lbs., basis Oklahoma City) for the remainder of this year and the first half of next year, based on recent price strength and declining cattle numbers.

In the latest Livestock, Dairy and Poultry Outlook, analysts with USDA’s Economic Research Service (ERS) project the average feeder steer price this year at $145.13/cwt., which is $3 more than last month. Average prices are projected at $153 in the second and third quarter. Compared to the previous month, that’s $7 higher in the third quarter and $5 higher in the fourth quarter.

ERS forecasts next year’s annual average feeder steer price $5 higher at $151.50. Prices are projected to average $149 in the first quarter next year and $147.00 in the second.

“The July five-area price for fed steers was $122.03/cwt., up more than $25 year over year and about $9 higher than the July 2019 average price,” according to ERS analysts. “The average five-area steer price for the week ending August 8 was $123.83, over $22 above a year ago.”

ERS increased the forecast fed steer price $4 to $124/cwt. in the third quarter and to $127 in the fourth quarter. The projected 2021 annual price increased  $2.00 to $121.20, compared to the previous month. ERS raised the expected average fed steer price next year by $4 to $126.

Although too few to trend, there were some early live sales in the western Corn belt at $127/cwt. and a few in the beef at $204, the top end of last week’s price range in the region.

Elsewhere, trade ranged from a standstill to mostly inactive with very light demand.

Weaker outside markets and the lack of cash direction weighed on Cattle futures Tuesday.

Feeder Cattle futures closed an average of 75¢ lower (32¢ to $1.30 lower).

Live Cattle futures closed an average of 56¢ lower (22¢ to $1.00 lower) except for 5¢ higher in the back contract.

That was despite another day of strong gains for wholesale beef prices. Choice boxed beef cutout value was $8.26 higher Tuesday afternoon at $338.06/cwt. Select was $3.22 higher at $306.77/cwt.

Corn futures close mostly 4¢ to 5¢ lower.

Soybean futures closed 3¢ to 7¢ lower through Jly ’22 and then mostly fractionally lower to 1¢ lower.

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Major U.S. financial indices closed lower Tuesday, amid various reports pointing to a slowing domestic and international economy.

U.S. retail and food service sales were 1.1% less month to month in July, according to advanced estimates from the U.S. Census Bureau. That was a steeper decline than expected.

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USDA’s Agricultural Marketing Service (AMS) began publishing two new reports this month, based on Livestock Mandatory Reporting, aimed at bolstering market transparency.

The National Weekly Direct Slaughter Cattle-Formulated Base and Forward Contract Base Purchases report provides more detail about foundational prices used in cattle market formulas, grids and contracts.

More specifically, according to USDA, it enables stakeholders to see the correlation between the negotiated trade and reported formula base prices, as well as the aggregated values being paid as premiums and discounts. Ultimately, it sounds like there will be daily reports, as well.

“Daily formula base price reports will be national in scope and released in morning, summary and afternoon versions,” according to the announcement. “The weekly and monthly formula base reports will be both national and regional in scope and include forward contract base purchase information.”

The other new report, the National Weekly Cattle Net Price Distribution report details at what price and volume levels trade occurred across the weekly weighted average price for each purchase type – negotiated, negotiated grid, formula and forward contract.

“Currently, the market speculates whether large or small volumes of cattle trade on both sides of the price spread. And in fact, with premiums and discounts applied to the prices, the spreads shown on reports can be wide. Publishing a price distribution for all cattle net prices will offer more transparency to each of the purchase type categories,” according to the USDA announcement. “This report is a window into what producers are paid for cattle (net) and retains confidentiality by segregating volumes purchased in $2.00 increments (plus or minus) the daily weighted average price depending upon premiums and discounts.”

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.”