WLI

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

For the week, live sales in Nebraska are steady to $2 lower at $122-$123/cwt. Dressed trade is $1-$7 lower at $195.

Live sales in the western Corn Belt are $5 lower at $120. Dressed trade is $1 lower to $5 higher at $195-$202.

Live sales in the Southern Plains this week are mainly steady at $120.

Feeder Cattle closed higher Thursday, supported by lower Corn futures.

Feeder Cattle futures closed an average of $1.40 higher across the board. 

Live Cattle benefitted from higher wholesale beef prices the last couple of days, although it seems way too early to call a seasonal bottom.

Live Cattle futures closed an average of 68¢ higher across the board.

Strong weekly export sales also provided support.

U.S. net beef export sales for 2021 totaled 25,100 metric tons the week ending July 15, according to USDA’s weekly U.S. Export Sales report. That was noticeably more than the previous week and 63% more than the prior four-week average. Increases primarily were for South Korea, Japan, China, Canada, and Mexico.

Choice boxed beef cutout value was 90¢ higher Thursday afternoon at $266.14/cwt. Select was $1.00 higher at $249.77/cwt. Steer byproduct value was $14.07/cwt., the first time it reached that mark since April of 2015. It started this calendar year right at $9.00. 

The average dressed steer weight the week ending July 10 was 885 lbs., according to USDA’s Actual Slaughter Under Federal Inspection report. That was 1 lb. heavier than the previous week but 17 lbs. lighter than the same week last year. The average dressed heifer weight of 812 lbs. was 1 lb. lighter than the previous week but 17 lbs. lighter than the previous year.

Grain futures softened, with reported pressure from the aforementioned export report.

Corn futures closed 6¢ to 7¢ lower through Jul ’22; then 2¢ lower to fractionally higher.

Soybean futures closed mostly 18¢ to 28¢ lower.

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

Major financial indices closed higher Thursday, led by tech stocks. Positive earnings are damping investor anxiety over inflation and the resurgence of COVID-19 cases. Economic data was mixed, though. Sales of previously owned homes increased for the first time in five months, but jobless claims also rose.

Initial weekly unemployment insurance claims the week ending July 17 were 419,000, which was 51,000 more than the previous week and significantly more than analysts were expecting.

The Dow Jones Industrial Average closed 25 points higher. The S&P 500 closed 9 points higher. The NASDAW was up 53 points.

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

Total pounds of beef in freezers June 30 were 4% less than the previous month and 7% less than last year, according to USDA’s monthly Cold Storage report.

Frozen pork supplies were 4% less than the prior month and 4% less year over year. 

Total red meat supplies in freezers were down 4% from the previous month and down 8% from last year.

Total frozen poultry supplies were 2% more than the previous month, but 15% less than a year earlier.

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

Total federally inspected cattle slaughter in June was 2.90 million head, according to USDA’s monthly Livestock Slaughter report. That was 76,500 more (+2.71%) year over year. Total cattle slaughter from January through June of this year was 16.45 million head, which was 945,600 head more (+6.10%) than the same period last year.

Commercial beef production in June of 2.4o billion lbs. was 23.6 million lbs. more (+1.0%) than last year. Commercial beef production for January through June was 13.85 billion lbs., which was 862.4 million lbs. more (+6.64%) than last year.

Total commercial red meat production for January through June was 27.91 billion lbs., which was 1.1 billion lbs. more (+4.0%) than the same period last year.

Negotiated cash fed cattle trade and demand were moderate in the Southern Plains through Wednesday afternoon, according to the Agricultural Marketing Service. Compared to last week, live sales traded $1 lower at $119/cwt.

Although too few transactions to trend, there was limited trade and light demand in Nebraska, where a few live sales traded at $122-$123, compared to $123-$125 last week.

Cattle futures, especially Feeder Cattle, gained Wednesday. It was tough to pinpoint any particular reason. Perhaps some of the support came from early positioning ahead of the Cattle on Feed and semiannual Cattle reports due out Friday.

Feeder Cattle futures closed an average of $1.12 higher. 

Live Cattle futures closed an average of 48¢ higher.

Choice boxed beef cutout value was 36¢ higher Wednesday afternoon at $265.24/cwt. Select was 19¢ higher at $248.77/cwt.

Corn futures closed mostly fractionally higher to 2¢ higher.

Soybean futures closed mixed, down 1¢ to 4¢ in the front two contracts, then mostly 2¢ to 6¢ higher through Sep ’22 and then mostly fractionally higher to 7¢ lower.

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

Major financial indices closed higher driven by positive corporate earnings reports.

The Dow Jones Industrial Average closed 286 points higher. The S&P 500 closed 36 points higher. The NASDAQ was up 133 points.

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

Domestic beef demand continued higher year over year in May, according to the recently updated monthly Domestic Meat Demand Indices provided by Glynn Tonsor, agricultural economist at Kansas State University.

Specifically, the Choice Retail Beef Demand Index was 1.96% more than the previous year and the All-fresh Retail Beef Demand Index was 4.43% more.

Keep in mind, that’s amid continued strength in retail prices.

“The June all fresh beef price was $7.11/lb., down 1.2% from last year but the third highest level only behind record prices of June ($7.56) and May ($7.59) set last year during the pandemic,” say analysts with the Livestock Marketing Information Center (LMIC). “The Choice sirloin steak, beef for stew, and all uncooked beef steaks each set all-time high prices in June. Choice sirloin steak was $10.78/lb. rising 3.4% over last year, which was the prior record price at $10.42. Beef for stew and all uncooked beef steaks were $6.80 and $9.75/lb., respectively, beating the prior record prices set exactly one year ago.”

On the other end of the scale, ground beef prices decline 8.0% year over year in June to $4.36/lb., according to LMIC. Chuck roast and round roast both fell 7.4% and 5.1%, to $6.64 and $6.21/lb., respectively.

“Many of the retail beef price data for June last year were record prices, which led to some of the reported prices posting year-over-year declines,” LMIC analysts explain, in the latest Livestock Monitor.

Negotiated cash fed cattle trade ranged from a standstill to limited with very light demand through Tuesday afternoon, according to the Agricultural Marketing Service.

Cattle futures closed lower amid light trade Tuesday, led by Feeder Cattle, which was pressured by Corn futures once again.

Feeder Cattle futures closed an average of $1.25 lower through the front five contracts, then down 18¢ to 30¢ at the back. 

Live Cattle futures closed an average of 47¢ lower, except for 73¢ higher in the back contract.

Choice boxed beef cutout value was $1.61 lower Tuesday afternoon at $264.88/cwt. Select was 91¢ lower at $248.58/cwt. Also of note, steer byproduct value spiked 80¢ to $13.93/cwt.

Grain futures bounced higher Tuesday with hotter, drier weather forecast in the Corn Belt and wheat challenges in the West.

Corn futures closed 12¢ to 16¢ higher through Jly ‘22, and then mostly 2¢ to 6¢ higher.

Soybean futures closed 10¢ to 15¢ higher through Sep ‘22, and then 8¢ to 9¢ higher.

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

Major U.S. financial indices recovered a majority portion of what was lost in the previous day’s steep selloff as investors seemed content to bet on the dip.

The Dow Jones Industrial Average closed 550 points higher. The S&P 500 closed 65 points higher. The NASDAQ was up 224 points.

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

“Across day-parts, the motivations for visiting restaurants are evolving, necessitating a refocus on how restaurant operators target consumers,” says David Portalatin, food industry advisor for the NPD Group (NPD). “Quality, value, and innovation will always be relevant to the consumer, but we also need to recognize that in many ways the world has fundamentally changed.”

Depending on new consumer rhythms of home, school, and work-life, recovery of each day-part — morning meal, lunch, dinner, and P.M. Snack — will be key to the restaurant industry’s recovery.

For instance, online or physical visits for the morning meal (breakfast and morning snack periods) were 5% less in May than the same time last year and 11% less than two years earlier. Since morning meal visits are habitual, recovery for this day-part will depend on consumers returning to workplaces and schools, according to NPD.

Lunch traffic was 4% less year over year in May and 10% less than two years ago, so recovery relies on more employees returning to workplaces, as well as more midday activities such as shopping.

Visits during the dinner day-part were 5% less than a year earlier and 12% less than two years ago. According to NPD, restaurant’s ability, particularly full service restaurants, to operate at total capacity will aid in recovery of this day-part, as will consumer comfort with dining in, and more business and recreational travel.

On the other hand, P.M. Snack visits in May were 8% more than last year and 3% more than two years ago as more flexible work schedules blur day-parts. Operators need to innovate their food and beverage offerings to grow traffic in this day-part, say the NPD folks.

Overall, total restaurant visits were 23% percent more year over year in May but were 6% less than two years earlier.

Negotiated cash fed cattle trade was mostly inactive on very light demand in the western Corn Belt through Monday afternoon. Elsewhere, it was at a standstill, according to the Agricultural Marketing Service.

Last week, live trade was generally steady: $120/cwt. in the Southern Plains; $123-$125 in Nebraska; $125 in the western Corn Belt. Dressed trade was steady in Nebraska at $196-$202 and steady to $5 lower in the western Corn Belt at $196-$197.

Cattle futures faded early pressure from outside markets to close mostly higher.

Feeder Cattle futures closed an average of 52¢ higher, except for 5¢ lower in Apr. 

Live Cattle futures closed narrowly mixed, from and average of 46¢ lower to an average of 16¢ higher.

Choice boxed beef cutout value was $1.45 lower Monday afternoon at $266.49/cwt. Select was $2.30 lower at $249.49/cwt.

Grain futures closed mixed Monday with traders eyeing sharply lower outside markets and weather.

Corn futures closed narrowly mixed, mostly 1¢ lower to fractionally higher.

Soybean futures closed 14¢ to 26¢ lower through Sep. ’22 and then mostly 9¢ lower.

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

Equity markets tumbled Monday with investors fretting the potential economic slowdown from resurgent COVID-19 cases among the unvaccinated.

The Dow Jones Industrial Average closed 725 points lower. The S&P 500 closed 68 points lower. The NASDAQ was down 152 points.

CME WTI Crude Oil futures closed $4.77 to $5.39 lower through the front six contracts.

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

“High feed prices mostly impact how cattle are produced. In an environment of high feed prices, the industry incentives are to make cattle bigger before feedlot placement and to slow down the rate of cattle production somewhat. For cow-calf and stocker producers, this means more opportunities for retained stockers and stocker production to heavier weights in response to those market signals,” says Derrell Peel, Extension livestock marketing specialist, in his weekly market comments.

More specifically, Peel explains feeder cattle markets respond to increased feed costs by reducing the price premium of lightweight feeders.

“This represents a reduction in the price rollback or price slide for feeder cattle as weight increases,” Peel says. “The result is to increase the value of gain for stocker production and thereby encourage cattle to achieve more weight prior to placement in the feedlot. More emphasis on stocker production also slows down the movement of cattle into the feedlot and reduces feed demand by spreading out feeder cattle over more time.”

Another way of looking at it, Peel says is that the price of lightweight feeder cattle would be significantly higher relative to heavy feeders with lower feed costs and the market line would be steeper and would be close to the green line.

Negotiated cash fed cattle trade was at a standstill in the Southern Plains through Friday afternoon, according to the Agricultural Marketing Service. Elsewhere, it was limited on light to moderate demand with too few transactions to trend.

For the week, live trade was generally steady in the Southern Plains at $120/cwt. and at $123 in Nebraska. It was unevenly steady in the western Corn Belt at $125.00-$125.50. There was no established dressed trade.

Choice boxed beef cutout value was $1.93 lower Friday afternoon at $267.94/cwt. Select was 69¢ lower at $251.79/cwt.

Total estimated cattle slaughter last week was 653,000 head, which was 78,000 head more than the previous holiday-shortened week.

Year-to-date estimated total cattle slaughter of 17.94 million head is 802,000 head more (+4.68%) than the same period last year.

Year-to-date estimated total beef production of 14.85 billion lbs. is 706.5 million lbs. more (+4.99%) than last year.

Cattle futures lost some ground Friday amid generally steady cash prices, lower outside markets and stronger Wheat futures.

That was despite front-month Lean Hog futures surging higher in response to news that African Swine Fever (ASF) was confirmed in Germany’s domestic swine population for the first time, by the National Reference Laboratory for African Swine Fever at the nation’s Friedrich-Loeffler Institute (FLI). The disease was confirmed in one sow at an organic farm and two pigs at a smallholdings farm, in districts near the border between Germany and Poland. The disease was confirmed in a wild boar in the same region last September.

Feeder Cattle futures closed an average of $1.14 lower (72¢ to $1.75 lower).

Live Cattle futures closed an average of 68¢ lower (12¢ to 95¢ lower).

Grain futures closed mixed Friday.

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

Soybean futures closed 7¢ to 11¢ higher through Aug. ’22 and then mostly 2¢ to 3¢ higher.

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

Even though U.S. retail and food service sales increased 0.6% month to month in June — more than analysts expected — according to the U.S. Census Bureau, major U.S. financial indices faltered Friday, amid inflation worries and some likely profit taking.

The Dow Jones Industrial Average closed 299 points lower. The S&P 500 closed 32 points lower. The NASDAQ was down 115 points. 

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

USDA boosted expected average feeder steer prices by $5/cwt. for upcoming quarter, based on current price strength.

Specifically, in the latest Livestock, Dairy and Poultry Outlook, USDA projects the average price of feeder steers (750-800 lbs., Oklahoma City) at $146/cwt. in the third quarter and $148 in the fourth quarter for an annual average of $142.13. Next year, prices are forecast to be $144 in the first quarter and $142 in the second quarter with an annual average price of $146.50 in 2022.

Earlier in the week, analysts with USDA’s Economic Research Service (ERS) raised expectations for fed steer prices, too. In the July World Agricultural Supply and Demand Estimates, ERS forecast the average five-area fed steer price at $120/cwt. in the third quarter, $123 in the fourth quarter and $127 in the first quarter of next year.

“Based on Agricultural Marketing Service data — actual and estimated daily cattle slaughter — the percentage of heifer slaughter compared to that of steers for June 2021 was estimated 2.5% higher than a year ago. The estimated percentage of federally inspected cow slaughter to total slaughter for June 2021 was 0.5% higher than June 2020,” say ERS analysts.

Based on the U.S. Drought Monitor, ERS estimates approximately 34% of the nation’s cattle are in regions experiencing some level of drought.

“Pasture and range in much of the western and northern United States continue to be in very poor to poor conditions, which is likely affecting cow slaughter in regions where forage availability has become critical,” say ERS analysts. “However, to the extent that the increase in aggregate slaughter numbers is driven by higher expected cow numbers and that heifers have recently been a higher proportion of steer and heifer slaughter, average carcass weights are expected to be lower.”