WLI

Negotiated cash fed cattle trade continued at a listless pace Thursday. Although too few transactions to trend, there were some live trades in Nebraska at $123-$126/cwt. and at $198 in the beef, compared to $125 and $198, respectively, last week. Elsewhere, trade was inactive to limited.

Feeder Cattle futures started Thursday’s session strong, retreated in the face of higher Corn futures — in the wake of the monthly World Agricultural Supply and Demand Estimates (WASDE) — and then mostly firmed by the end of the session.

Feeder Cattle futures closed mixed, from an average of 14¢ lower to an average of 38¢ higher.

Surging wholesale beef prices helped lift Live Cattle futures, but sluggish cash trade limited the potential. Choice boxed beef cutout value was $7.13  higher Thursday afternoon at $317.93/cwt. Select was $2.32 higher at $290.31/cwt.

Live Cattle futures closed an average of 64¢ higher.

The average dressed steer weight the week ending July 31 was 3 lbs. lighter than the previous week at 891 lbs., according to USDA’s Actual Slaughter Under Federal Inspection report. The average dressed heifer weight was 2 lbs. lighter at 814 lbs.

Corn futures gained on the WASDE report, amid volatile intra-day trading. They closed 9¢ to 14¢ higher through new-crop contracts and then mostly 1¢ to 3¢ higher.

Soybean futures closed mixed, mostly 3¢ lower to 2¢ higher.

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Major U.S. financial indices closed higher on Thursday, supported by the third consecutive decline in weekly initial unemployment insurance claims.

The Dow Jones Industrial Average closed 15 points higher. The S&P 500 closed 13 points higher. The NASDAQ closed 51 points higher.

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USDA’s Economic Research Service (ERS) increased the projected annual average five-area direct fed steer price this year by $2 to $121.20/cwt., based on current price strength and firm demand. The estimated annual price for next year increased by $4 to $126.

That’s in the latest World Agricultural Supply and Demand Estimates (WASDE)

More specifically, the average fed steer price was projected at $124 in the third quarter, $127 in the fourth quarter and $131 in the first quarter of next year.

Some of that bullishness is based on lower expected beef production this year and next.

Total beef production this year was projected at 27.87 billion lbs., which was 33 million lbs. less than the prior month. It would be 698 million lbs. more (+2.57%) than last year. ERS analysts say the decline is mostly due to lighter expected carcass weights due to a higher expected proportion of non-fed cattle being slaughtered through the end of the year.

Total estimated beef production next year of 26.96 billion lbs. was 360 million lbs. less (-1.31%) than the previous month and would be 907 million lbs. less (-3.25%) than this year’s estimate. That’s based on  tighter expected supplies of both fed and non-fed cattle.

Lower expected beef production pushed total anticipated red meat and poultry production lower.

Projected total red meat and poultry production this year of 106.82 billion lbs. was 315 million lbs. less (-0.29%) than the previous month. That would be 265 million lbs. more (+0.25%) than last year.

Corn

ERS reduced forecast corn production for 2021-22 by 415 million bu. to 14.8 billion bu., based on projected yield of 174.6 bu./acre, which was 4.9 bu. less than the previous month’s estimate.Ending stocks were projected 190 million bu. lower at 1.2 billion.

The season-average corn price received by producers was raised 15¢ to $5.75/bu.

Soybeans

ERS reduced estimated soybean production for 2021-22 by 66 million bu. to 4.34 billion bu., based on lower projected yield. But, beginning stock estimates increased based on decreased expectations for crush and exports.

The U.S. season-average soybean price for 2021-22 was forecast at $13.70/bu., unchanged from last month. The soybean meal price was forecast at $385 per short ton, down $10. The soybean oil price forecast was unchanged at 65.0¢/lb. 

Wheat

ERS reduced estimated wheat production for 2021-22 by 49 million bu. to 1,697 million bu., based on yield of 44.5 bu./acre, which was 1.3 bu. less than the previous forecast. Projected 2021-22 ending stocks were reduced 38 million bu. to 627 million, which would be 26% less than last year.

The projected 2021-22 season-average farm price was raised 10¢/bu. to $6.70.

Negotiated cash fed cattle trade was slow on light to moderate demand in the Southern Plains through Wednesday afternoon, according to the Agricultural Marketing Service. A few early live sales traded steady with last week at $121.

In Nebraska and the Western Corn Belt, trading was limited with light demand

Last week in Kansas, live sales traded at $121. In Nebraska live sales traded at $125 and dressed at $198. In the Western Corn Belt, live sales were at $125-$126 and dressed at $198.

Stronger Corn futures and sluggish cash prices helped pressure Cattle futures Wednesday. There might have also been some defensiveness ahead of Thursday’s monthly World Agricultural Supply and Demand Estimates.

Live Cattle futures closed mixed from an average of 34¢ lower to an average of 15¢ higher

Feeder Cattle futures closed an average of 64¢ lower (22¢ lower toward the front of the board to $1.12 lower in the back contract).

Choice boxed beef cutout value was $5.48  higher Wednesday afternoon at $310.80/cwt. Select was $3.38 higher at $287.99/cwt.

Corn futures closed 2¢ to 7¢ higher through the front six contracts, then fractionally higher to 1¢ higher.

Soybean futures closed mostly fractionally higher to 2¢ higher, except for 42¢ lower in waning Spot Aug. 

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Major U.S. financial indices closed mixed on Wednesday with both the S&P 500 and the Dow Jones hitting record highs. Support included the moderating Consumer Price Index in July.

The Dow Jones Industrial Average closed 220 points higher. The S&P 500 closed 11 points higher. TheNASDAQ closed 23 points lower.

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Declining cattle numbers, finally working through backlogged cattle supplies, as well as strong beef demand are setting the stage for significantly higher cattle prices next year and beyond, according to the 2021-22 CattleFax Industry Outlook yesterday at the 2021 Cattle Industry Convention and NCBA Trade Show in Nashville.

CattleFax projects the average fed steer price next year to be $135/cwt., up $14 from this year. That’s with the forecast average carcass composite price at $265/cwt., up $5 from this year.

In turn, projected feeder steer prices (850 lbs.) are forecast $20 higher next year at an average of $165/cwt. Steer calf (550 lbs.) prices are projected to average $200/cwt., which would be $30 more than this year.

Bred cows are projected to average $1,750/head, which would be $125 more than this year.

Rounding out prices, CattleFax sees Utility cows averaging $70/cwt., up $6.

Declining Cow Numbers

CattleFax expects the beef cowherd to decline 400,000 head by Jan. 1 of next year, reaching 30.7 million head. Part of that has to do with lingering drought.

Art Douglas, professor emeritus at Creighton University expects La Niña conditions to return this fall, intensifying drought in the West and Plains into early 2022.

According to Kevin Good, CattleFax vice president of industry relations and analysis, total cattle inventory peaked at 94.8 million head. He explains those numbers remain in the system due to the COVID-19 induced slowdown in harvest over the past year. So, fed cattle slaughter will remain elevated through 2021 as carryover from pandemic disruptions works through the processing sector, which remains hindered by labor issues.

Ultimately, during the current contraction phase, CattleFax expects feeder cattle and calf supplies to decline roughly 1 million head from the cyclical peak.

“While fed cattle slaughter nearly equals 2019 highs at 26.5 million head this year, we expect a 500,000-head decline in 2022,” Good says. “This, combined with plans for new packing plants and expansions, possibly adding near 25,000 head per week of slaughter capacity over the next few years, should restore leverage back to the producer.”

Beef Demand Remains Strong

Aftershocks from the pandemic continue to keep domestic demand at elevated levels not seen since 1988, say CattleFax analysts.

“Customer traffic remained strong at restaurants and retail – even as those segments pushed on the higher costs, proving consumers are willing to pay more for beef,” Good explains. He notes the boxed beef cutout price peaked at $336/cwt. in June, while retail beef prices pushed to an annual high at $7.11/lb. Retail beef prices are expected to average $6.80/lb. in 2021 and increase to $6.85/lb. in 2022, he says.

At the same time, global U.S. beef export demand is on a record pace this year.

“Tightening global protein supplies will support stronger U.S. red meat exports in 2022,” according to Good. “U.S. beef exports are expected to grow 15% in 2021 and another 5% in 2022.”

Negotiated cash fed cattle trade was again at a standstill in the Southern Plains and Nebraska through Tuesday afternoon, according to the Agricultural Marketing Service. In the Western Corn Belt, trading was still mostly inactive on light demand.

Last week in the Texas Panhandle, live sales traded from $121 to $122. In Kansas, live sales traded at $121. In Nebraska live sales traded at $125 and dressed at $198. In the Western Corn Belt, live sales were at $125-$126 and dressed at $198.

Cattle futures firmed after early pressure to close higher Tuesday, helped along by the extraordinary run in wholesale beef prices.

Live Cattle futures closed an average of 40¢ higher (3¢ to 65¢).

Feeder Cattle futures closed an average of 34¢ higher, except for 15¢ lower in Sept.

Corn futures closed fractionally lower to 4¢ lower through the front six contracts.

Soybean futures closed 6¢ to 7¢ higher in the front six contracts, except for 14¢ higher in Spot Aug.

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Major U.S. financial indices closed mixed on Tuesday, with support including Senate passage of the trillion-dollar infrastructure bill.

The Dow Jones Industrial Average closed 163 points higher. The S&P 500 closed 4 points higher. The NASDAQ was up 72 points.

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The massive $1 trillion infrastructure bill took a long step toward fruition Tuesday with Senate passage.

According to a statement from Agriculture Secretary Tom Vilsack, “Rural America stands to benefit from this historic long-term investment in our infrastructure and economic competitiveness. From tackling some of the greatest challenges we face today, to making long-term investments in the rural areas that are the heart of our nation, the Bipartisan Infrastructure Investment and Jobs Act will ensure we build back better, stronger, and more resilient and equitable than ever before.”

If passed, Secretary Vilsack says the legislation will deliver broadband to rural homes, communities and businesses across the country, as well as increasing access to jobs, education, health care, banking, and markets for farmers and rural small businesses.

“It also upgrades our power infrastructure, improves drinking water, and connects rural communities through upgraded roads and bridges,” he says.

The bill now goes to the House for consideration.

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

Last week in the Texas Panhandle, live sales traded from $121 to $122. In Kansas, live sales traded at $121. In Nebraska live sales traded at $125 and dressed at $198. In the Western Corn Belt, live sales were at $125-$126 and dressed at $198.

Steep declines in Lean Hog futures pressured Cattle futures Monday despite last week’s stronger cash trade and surging wholesale beef prices. By the end of the session, though, they were back to about even.

Live Cattle futures closed an average of 27¢ lower (15¢ to 45¢), except for unchanged in spot Aug.

Feeder Cattle futures closed mixed, down an average of 19¢, except for 28¢ higher in Apr.

Choice boxed beef cutout value was $3.54 higher Monday afternoon at $299.80/cwt. Select was $3.72 higher at $280.81/cwt.

Crop progress and an improved weather outlook pressured Corn futures Monday.

Corn futures closed mostly 2¢ to 3¢ lower.

Soybean futures closed mostly 4¢ to 7¢ lower, except for 11¢ higher in Spot Aug.

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Major U.S. financial indices closed mixed Monday. The spread of the Delta variant of Covid, as well as anticipation of year-end stimulus tapering, weighed on the market.

The Dow Jones Industrial Average closed 107 points lower. The S&P 500 closed 4 points lower.The NASDAQ closed 24 points higher. 

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“Triple-digit gains in Choice cutout values last week created optimism, however traders are still questioning where beef prices will land once Labor Day buying is complete,” says Brenda Boetel, Extension livestock economist at the University of Wisconsin-River Falls, in the latest issue of In the Cattle Markets. “Feeders are expected to focus on further advancement of cash values following the moderate $1 to $2/cwt. gains last week. This could create a wider gap between asking prices and bids once each side becomes more active.”

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

Last week were generally $1-$2 higher on a live basis in the Texas Panhandle at $121-$122/cwt.; $1 higher in Kansas at $121; $3 higher in Nebraska at $125; $1-$2 higher in the western Corn Belt at $125-$126. Dressed trade was $2 higher in Nebraska at $198; $3 higher to $3 lower at $198 in the western Corn Belt.

Surging wholesale beef values, position squaring and stronger cash fed cattle prices, albeit with anemic trade, helped buoy Cattle futures Friday.

Live Cattle futures closed an average of 78¢ higher (30¢ to $1.225)

Feeder Cattle futures closed an average of $1.62 higher (80¢ to $2.20)

Corn futures closed 3¢ to 6¢ higher through the front six contracts, except for up fractionally in spot Sept, and then mostly 8¢ to 9¢ higher.

Soybean futures closed 6¢ to 8¢ higher, except for 20¢ higher in Spot Aug.

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After a better-than-expected employment report for July, major U.S. financial indices once again closed at record highs although the NASDAQ was down. The report from the labor department showed 943,000 new jobs last month, which brought the unemployment rate down to 5.4%.

The Dow Jones Industrial Average closed 144 points higher. The S&P 500 closed 7 points higher. The NASDAQ was down 59 points.

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U.S. red meat exports closed the first half of the year at record levels, according to data released by USDA and compiled by the U.S. Meat Export Federation (USMEF). Although volume and value eased from the enormous totals posted in April and May, export value was still the highest on record for the month of June and first-half shipments established a record pace for both beef and pork exports.

June beef exports totaled 112,249 metric tons (mt), up 42% from a year ago when exports were still hampered by a COVID-related slowdown in production. Export value was $804.4 million, up 68% from a year ago and the third highest on record after April and May of this year. First-half exports reached 700,087 mt, up 18% from a year ago, valued at $4.64 billion (up 28%). Compared to 2018, the record year for U.S. beef exports, first-half results were up 6% in volume and 15% in value.

“USMEF had expected a continued strong performance in June for both beef and pork exports, despite significant headwinds,” said USMEF President and CEO Dan Halstrom. “2021 has presented many formidable challenges for the U.S. industry, including a very tight labor situation, logistical obstacles that slowed product movement and foodservice restrictions in many key markets. So the fact that first-half exports reached record levels speaks to the loyalty of our international customer base, strong consumer demand for high-quality, nutritious U.S. red meat and the U.S. industry’s ability to adapt to a challenging and rapidly changing business climate. We have also seen a welcome rebound in beef and pork variety meat volumes, which had been down last year.”

Beef export value equated to $351.18 per head of fed slaughter in June, up 60% from last June’s COVID-impacted average. The first-half per-head average was $359.49, up 20% from a year ago. June exports accounted for 13.6% of total beef production and 11.5% of muscle cuts, both dramatically higher than a year ago. In the first half, exports accounted for 14.7% of total beef production and 12.5% for muscle cuts, each up about 1.5 percentage points from a year ago.

Pork exports reached 238,935 mt in June, up 15% from a year ago, while export value climbed 35% to $696.8 million. First-half pork exports topped last year’s record pace by 1% at 1.58 million mt, valued at $4.33 billion (up 7%).