WLI

Negotiated cash fed cattle trade was slow on moderate demand in Nebraska and the western Corn Belt through Thursday afternoon, according to the Agricultural Marketing Service.

Live trade continued at $120/cwt. in Nebraska, which is steady with the previous week. Dressed trade earlier in the week was at $190-$191, which was steady to $1 lower.

Although too few to trend, there were some live trades in the western Corn Belt at $120 and some in the beef at $191. Prices last week were at mostly $120 and $188-$191, respectively.

Trade was limited on light demand in Kansas with a few live trades at $119, steady with earlier in the week but steady to $1 lower than last week.

Elsewhere, trade was mostly inactive on very light demand. Earlier in the week live trades were at $119-$120 in the Texas Panhandle, which was steady to 50¢ higher than last week.

Feeder Cattle futures closed and average of $1.54 lower Thursday, pressured by the bounce higher in Corn futures and the dour fed cattle market.

Live Cattle futures closed mixed (average of 22¢ lower to average of 43¢ higher), helped along by stellar wholesale beef prices.

Choice boxed beef cutout value was 80¢ higher Thursday afternoon at $324.18/cwt. Select was $1.92 higher at $301.61.

Net U.S. beef export sales added optimism. For the week ending May 13, they were 56,900 metric tons (mt), according to the U.S. Export Sales report from USDA. That’s a market-year high, up noticeably from the prior week and from the previous four-week average. Increases were primarily for the Netherlands, China, Japan, South Korea and Taiwan.

The average dressed steer weight the week ending May 8 was 896 lbs., which was 5 lbs. heavier than the previous week and even with the same week last year, according to USDA’s Actual Slaughter Under Federal Inspection report. The average dressed heifer weight was 826 lbs., which was 2 lbs. heavier than the prior week but 3 lbs. lighter than the previous year.

Corn futures closed mostly 12¢ to 13¢ higher through Jly ‘22 and then mostly 3¢ to 4¢ higher.

Soybean futures closed mostly fractionally lower to 3¢ lower.

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Major U.S. financial indices closed higher Thursday, lifted by a rebound from the previous session’s sharp decline in digital Bitcoin currency, as well as positive employment news. Weekly initial unemployment insurance claims were 444,000, according to the U.S. Department of Labor. That was 34,000 fewer than the previous week and a pandemic-era low.

The Dow Jones Industrial Average was up 188 points. The S&P 500 closed 43 points higher. The NASDAQ was up 236 points.

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Beef production next year is projected to be 2% less than this year at 27.3 billion lbs., according to USDA’s Economic Research Service (ERS). If so, that would be the first year-over-year decline of domestic beef production in seven years.

That’s based on expectations drought conditions will accelerate the pace of cattle slaughter in the second-half of this year, likely reducing cattle supplies for next year. “However, carcass weights are expected to increase year over year as non-fed cattle will be a smaller portion of the slaughter mix,” ERS analysts explain.

The same expectations for increased cattle slaughter in the second half of this year led ERS to increase projected 2021 beef production to 27.9 billion lbs., which was 260 million lbs. more than the previous month.

“A greater number of feeder cattle than expected were placed in first-quarter 2021, raising the expected pace of fed cattle marketed for slaughter,” say ERS analysts in the latest Livestock, Dairy and Poultry Outlook. “In second-quarter 2021, poor pasture conditions and higher feed costs will likely favor a faster pace of cattle entering feedlots, supporting higher fed cattle marketings in the second half of 2021. Further, in the face of expected tightening forage supplies, producers will likely increase culling of breeding stock—both cows and bulls—in second-half 2021.”

Negotiated cash fed cattle trade was slow on light to moderate demand in Kansas, Nebraska and the western Corn Belt through Wednesday afternoon, according to the Agricultural Marketing Service.

For the week, live sales are steady to $1 lower in Kansas at $119/cwt.. steady in Nebraska at $120, and steady to 50¢ higher in the Texas Panhandle at $119-$120. Dressed trade in Nebraska is steady to $1 lower at $190-$191.

Slaughter steers sold steady to $1 higher at the Sioux Falls Regional fat auction Wednesday. Slaughter heifers traded $1-$2 higher. There were 246 Choice 3-4 steers weighing an average of 1,536 lbs., bringing an average of $120.57/cwt.

Feeder Cattle futures were mostly higher Wednesday, buoyed by pressure in grain markets. They closed an average of 85¢ higher (10¢ to $1.22 higher), except for 62¢ lower in spot May. 

Live Cattle futures closed narrowly mixed as traders balanced sluggish cash prices and cattle movement with expectations for lower boxed beef prices after Memorial Day buying ends. They closed an average of 34¢ lower, except for an average of 22¢ higher in the front three contracts.

Choice boxed beef cutout value was 4¢ higher Wednesday afternoon at $323.38/cwt. Select was 64¢ higher at $299.69

Corn futures closed mixed, from 4¢ lower to 1¢ higher with most of the pressure in nearby contracts.

Soybean futures closed mostly 21¢ to 36¢ lower through Jly ‘22 and then mostly 6¢ to 10¢ lower. 

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Major U.S. financial indices closed lower Wednesday, but well off of session lows as a sudden, sharp decline in digital Bitcoin currency rattled investors and fueled a decline in speculative stocks.

The Dow Jones Industrial Average closed 164 points lower. The S&P was down 12 points. The NASDAQ was down 3 points. 

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“With decreased forages available, feeder cattle may need to enter feedlots earlier, depressing feeder cattle prices and possibly having a seasonal low mid-summer as opposed to early fall,” says Brenda Boetel, Extension livestock economist at the University of Wisconsin-River Falls. “With continued labor shortages and high levels of cattle on feed, there is limited bullish news for fat cattle prices. Corn prices will remain volatile and will move with any weather news.”

Even so, in the latest issue of In the Cattle Markets, Boetel notes fed cattle profit potential increased slightly last week. “The potential shows up in the gross feeding margins and the idea that corn price has decreased more than the increase in feeder cattle prices,” she says.

For all of the recent price volatility and elevated costs, the outlook is more positive than one might guess, based on the monthly Focus on Feedlots Survey (FFS) conducted by Kansas State University and published in Historical and Projected Kansas Feedlot Net Returns.

Net returns projected for steer closeouts in April were -$39.01/head for steers and $2.77/head for heifers, according to the Kansas data. Estimated returns the previous month were -$69.52 for steers and -$61.18 for heifers. Keep in mind no price risk management is included in the calculations.

Looking ahead, FFS projected returns for steers range from $105.09/head in May to -$56.12 in October, with feedlot cost of gain ranging from $100.82/cwt. in May to $115.80 in October. Projected heifer returns follow a similar pattern.

“Pay attention to basis levels, especially with feed purchases,” Boetel says. “Producers may also want to consider using the futures and options markets more effectively and explore hedging strategies to protect any profit potential. Finally, reconsider your marketing plan, including your marketing strategies and price risk management strategies. Purchasing and selling decisions need to be made in a timely manner and without emotion. Volatility in the cattle/feed markets is not likely to decrease. However, given good cattle marketing and some price risk management, there are still opportunities for profitability.”

Negotiated cash fed cattle trade was slow on light demand in the Southern Plains through Tuesday afternoon at $119-$120/cwt. That was steady in Kansas and steady to 50¢ higher in the Texas Panhandle. Although too few to trend, there were a few live trades at $120 in Nebraska and the western Corn Belt, mainly steady with the prior week.

Feeder Cattle futures weakened amid higher Corn futures prices Tuesday.

Feeder Cattle futures closed an average of 66¢ lower, except for 40¢ higher in the back contract.

Live Cattle futures closed mainly higher on Tuesday, with support from a bounce higher in Lean Hog futures and the relentless climb in wholesale beef values. There were also reports that Argentina banned exporting beef for the next 30 days.

Live Cattle futures closed an average of 90¢ higher (22¢ to $1.40 higher), except for an average of 21¢ lower in two contracts.

Choice boxed beef cutout value was $3.72 higher Tuesday afternoon at $323.34/cwt. Select was $2.16 higher at $299.05

Corn futures closed mostly 6¢ to 9¢ higher.

Soybean futures closed mostly 6¢ to 8¢ higher after 1¢ to 13¢ lower in the front three contracts.

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Major U.S. financial indices closed lower Tuesday, despite positive earnings reports from the likes of Home Depot and Walmart. Negative economic news included less robust housing news than traders expected. Housing starts in April of 1.57 million were 9.5% less than the previous month, according to the U.S. Census Bureau.

The Dow Jones Industrial Average closed 267 points lower. The S&P 500 closed 35 points lower. The NASDAQ was down 75 points.

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“Packers appear unable to increase weekday slaughter levels to process the market-ready supply in a timely manner as the sector enters a period of typically higher fed cattle slaughter,” say analysts with USDA’s Economic Research Service (ERS), in the latest monthly Livestock, Dairy and Poultry Outlook. “This appears to be in part due to labor disruptions that packers have dealt with since the beginning of the pandemic, but also interruptions in slaughter due to extreme weather in February and scheduled plant maintenance events.”

Compared to 2019, due to pandemic disruptions last year, ERS analysts say packers are processing about 10,000-15,000 head fewer per week, for the first six weeks of the second-quarter this year. That’s with Saturday kills about 5,000 head more per week than in 2019. As of April 1 they estimated there were 11% more cattle on feed for more than 150 days than last year; about 1% more than in 2019.

At the same time, ERS expects drought, poor pasture and higher feed costs will increase feedlot placements this year more than previously expected.

“Feedlots are constrained in their ability to market cattle in a timely manner. As producers face poor pasture conditions and rising feed costs, they will compete for space in feedlots in an environment with higher expected feed prices and little optimism for fed cattle prices,” ERS analysts explain. “Accordingly, the second-quarter 2021 feeder steer price forecast was lowered $1 on current prices and the third-quarter 2021 price was dropped $2, for a 2021 annual forecast of $139.30/cwt.,” say ERS analysts.

Projected average feeder steer prices (basis Oklahoma City) are $139 for the second quarter, $141 for the third quarter and $143 for the fourth quarter.

Negotiated cash fed cattle trade was mostly inactive on very light demand in Kansas and the western Corn Belt through Monday afternoon, according to the Agricultural Marketing Service. Elsewhere, trade was at a standstill. Depending on the region last week, live prices were generally $1-$2 higher at $119-$121/cwt. on a live basis and at $188-$191 in the beef.

Feeder Cattle futures gained to start the week as Corn futures maintained their lower pace, in relative terms.

Feeder Cattle futures closed an average of $1.14 higher (37¢ to $1.60 higher).

Live Cattle futures were mixed on Monday, though as the slower pace of slaughter cork potential.

Live Cattle futures closed mixed, from an average of 29¢ lower to an average of 20¢ higher.

Choice boxed beef cutout value was $2.68 higher Monday afternoon at $319.62/cwt. Select was $3.70 higher at $296.89.

Corn futures closed mostly 1¢ to 3¢ higher, except for 8.6¢ higher in new spot Jly and 3¢ to 5¢ lower in most new crop contracts.

Soybean futures closed mostly 1¢ to 4¢ lower.

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Major U.S. financial indices softened Monday, with most of the pressure presumably coming from inflation worries.

The Dow Jones Industrial Average closed 54 points lower. The S&P 500 closed 10 points lower. The NASDAQ was 50 points.

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“Beef cow slaughter increased sharply in the latest data to levels not seen since fall cow culling last November and December,” says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly market comments. “Weekly beef cow slaughter increased 13-14% in the latest two weeks of data over the previous six-week average. It appears herd liquidation is already happening and more can be expected. Poor pasture conditions now, reduced hay stocks and limited potential for pasture and hay production all suggest that additional beef cow herd liquidation is imminent.”

Although marginally more positive week to week, 25% of the nation’s pasture and range was rated as Good or Excellent for the week ending May 16, compared to 47% a year earlier, according to the latest USDA Crop Progress report. Conversely, 43% was rated as Poor or Very Poor, compared to 16% a year earlier.

The previous week, based on regional aggregation compiled by the Livestock Marketing Information Center, Peel explains 51% of pastures were rated Poor or Very Poor in the eight states of the western region, 43% in the seven states of the Great Plains Region and 29% in the Southern Plains states of Oklahoma and Texas.

“These three regions account for 60.6% of the total beef cow inventory,” Peel says. “Currently 40.1% of all beef cows in the country (12.67 million head) are in states with 40% or more poor to very poor pasture and range conditions.”

At the same time, Peel says May 1 hay stocks were 24.9% less year over year in the West; 34.1% less than the five-year average. Hay stocks in the Great Plains region were down 20.1% year over year and down 6.4% from the five-year average. Southern Plains hay stocks were 28.8% less than the same time a year earlier; 29.3% less than the five-year average. 

Negotiated cash fed cattle trade was at a standstill in the Southern Plains through Friday afternoon, according to the Agricultural Marketing Service. Elsewhere, trade was mostly inactive on light demand.

Live prices last week were 50¢ to $1.50 higher in the Texas Panhandle at $119.00-$119.50/cwt., steady to $1 higher in Kansas at $119-$120, $2 higher in Nebraska at $120, and $1 higher in the western Corn Belt at $118-$120. Live prices in Colorado two weeks ago were at $119-$120.

Dressed prices were $1-$4 higher in Nebraska last week at $191. Prices were at $187-$190 in the western Corn Belt the prior week.

Through Thursday, the five-area direct average steer price was $1.35 higher than the previous week at $119.70/cwt., on a live basis. The average five-area direct dressed steer price was $2.01 higher at $190.48.

Feeder Cattle futures mostly gained back on Friday what was lost in the previous session, helped by continued pressure on grain markets.

Feeder Cattle futures closed an average of 52¢ higher, except for an average of 30¢ lower in the back two contracts.

Live Cattle futures mostly extended losses, amid stagnant cash trade and softer Lean Hog futures.

Live Cattle futures closed an average of 44¢ lower, except for an average of 12¢ higher in the back three contracts.

Choice boxed beef cutout value was 16¢ higher Friday afternoon at $316.94/cwt. Select was $2.72 lower at $293.19.

Estimated total cattle slaughter for the week was 2,000 head more than the prior week at 640,000 head. Year-to-date estimated total cattle slaughter of 12.2 million head is 658,000 more than the pandemic-ravaged harvest the same week last year. Estimated beef production for the week of 527.6 million lbs. was 300,000 lbs. more than the previous week. Year-to-date estimated beef production of 10.2 billion lbs. is 660.8 million lbs. more than the same time last year.

Forecast rain in Brazil and the U.S. Corn Belt, reopening barge traffic on the Mississippi River and chatter about private analysts projecting significantly more corn acres all added pressure to Corn futures Friday.

Corn futures closed mostly 13¢ to 15¢ lower, after 20¢ to 34¢ lower in the front three contracts.

Soybean futures closed mostly 2¢ to 6¢ higher, except for 8¢ lower in spot May.

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Major U.S. financial indices continued higher Friday, following the steep selloff earlier in the week. That was despite ongoing inflation worries and flat national retail sales.

Advance estimates of U.S. retail and food services sales for April were $619.9 billion, virtually unchanged from the previous month, according to the U.S. Census Bureau.

The Dow Jones Industrial Average closed 369 points higher. The S&P 500 closed 61 points higher. The NASDAQ was up 304 points.

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Tight corn supplies, coupled with strong international demand, pushed corn prices to their highest level in more than a decade. In turn, higher corn prices are altering the price prospects of other products.

“The key for folks to understand is that corn prices roll through everything else,” said David Anderson, Extension livestock economist at Texas A&M University (TAMU). “High grain prices mean meat will eventually cost more because input costs are up. And corn overlaps with other important crops like wheat and soybeans because prices influence what is planted on the available crop acres.” He explained the ripple effect in a consumer-focused interview last week.

In the same interview, Mark Welch, TAMU Extension grain economist, said the corn market is highly speculative currently, due to current supply and demand, coupled with uncertainty about domestic and foreign production this growing season.

Besides higher corn prices currently trying to buy more acres, Welch pointed out U.S. corn planting started early than usual this season, which typically means planted acres will be more than projected in USDA’s March Prospective Plantings report.

“If we see more acres planted, the weather improves in South America and domestic corn-producing states, then we could see things settle down. If corn stocks get lower, there are problems with corn crops and things get tighter, then we could see all-time high record corn prices,” Welch said.