WLI

Negotiated cash fed cattle trade was mostly inactive on light demand in the Southern Plains through Thursday afternoon, according to the Agricultural Marketing Service. In Nebraska and the Western Corn Belt, trading was limited on light demand. A few live sales in Nebraska traded at $125-$126. 

Last week, live prices were at $122/cwt. in the Southern Plains and $124 in the North. Dressed prices were at $195.

Cattle futures faded early pressure Thursday to close mostly higher, perhaps with positioning ahead of this afternoon’s Cattle on Feed report. Heading into mid-day Friday, Feeder Cattle futures continued to edge higher, while Live Cattle were mostly a touch softer.

Live Cattle futures closed an average of 47¢ higher, except for 25¢ lower in near Aug. 

Feeder Cattle futures closed an average of 84¢ higher, from 52¢ higher to $1.45 higher at the front.

Choice boxed beef cutout value was $4.63 lower Thursday afternoon at $312.05/cwt. Select was 73¢ higher at $276.14.

Corn and Soybean futures continued mostly lower Thursday with weather pressure.

Corn futures closed mostly 1¢ to 2¢ lower.

Soybean futures closed 7¢ to 13¢ lower through Aug ’22, and then mostly 1¢ to 2¢ lower.

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Major U.S. financial indices rose to all-time highs on Thursday as agreement was announced on a $579 billion infrastructure plan.

The Dow Jones Industrial Average closed 323 points higher. The S&P 500 closed 25 points higher. The NASDAQ was up 97 points. 

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As noted in Cattle Current Thursday, Dustin Aherin, RaboResearch animal protein analyst, shared insight about planned beef packing capacity expansion in his testimony to the U.S. Agriculture Committee. He also cited the estimated cost of $100-$200 million per 1,000 head of daily capacity.

Today, the National Cattlemen’s Beef Association (NCBA) announced it secured introduction of the Butcher Block Act in the U.S. House, a bipartisan bill that would provide critical funding to expand capacity for small, regional, and independent processing facilities.

“When there’s not enough capacity to process the current supply of live cattle, our producers lose leverage in the market. Expanding capacity is an essential component of the multifaceted effort to increase the opportunities for profitability for cattle producers, and we’ve been hearing for months that the two biggest obstacles standing in the way of that are lack of capital and lack of labor,” says NCBA President Jerry Bohn. “The Butcher Block Act addresses both of those hurdles, and would go a long way to alleviating the bottleneck that is depressing live cattle prices for our farmers and ranchers.”

Introduced by Rep. Dusty Johnson (R-SD) and Rep. Abigail Spanberger (D-VA), the legislation would establish a stand-alone loan program through the U.S. Department of Agriculture (USDA) to help processors expand capacity, improve marketing options for cattle producers, and encourage competitive markets and pricing for live cattle.

The legislation would also authorize the Secretary of Agriculture to establish a grant program that would support a range of research and training efforts aimed at strengthening the workforce to meet labor needs, and helping processors become federally inspected.

A recent study by Rabobank found that under the current dynamics of supply and demand, the industry could economically accommodate an additional 5,700 hooks per day of processing capacity, or processing roughly 1.5 million additional head per year. However, access to capital is a major barrier. The average start-up cost for a beef processing facility is roughly $100,000 per hook, which means that someone trying to open a modest 25-hear-per-day facility has to secure $2.5 million in financing just to turn on the lights.

Negotiated cash fed cattle trade was mostly inactive on light demand in the Southern Plains through Wednesday afternoon, according to the Agricultural Marketing Service. In Nebraska and the Western Corn Belt, trading was limited on light to moderate demand. A few live sales in Nebraska traded at $126 and a few dressed at $197.

Choice boxed beef cutout value was $3.70 lower Wednesday afternoon at $312.05/cwt. Select was $4.34 lower at $275.41.

Cattle futures softened Wednesday, pressured by crumbling Lean Hog futures, the lack of cash direction and perhaps some early positioning ahead of Friday’s monthly Cattle on Feed report.

Live Cattle futures closed an average of 89¢ lower, from 30¢ to $1.40 lower.

Feeder Cattle futures closed an average of $2.11 lower, from $1.85 to $2.65 lower.

Corn futures closed mostly 1¢ to 3¢ lower through new-crop contracts, and then mostly fractionally higher to 2¢ higher.

Soybean futures closed 1¢ to 9¢ lower through the front five contracts and then mostly 6¢ to 10¢ higher.

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Major U.S. financial indices traded narrowly on Wednesday as investors continue to evaluate the strength of the economy.

The Dow Jones Industrial Average closed 71 points lower. The S&P 500 closed 5 points lower. The NASDAQ was up 18 points.

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Arguably, the root cause of much of the current debate surrounding the lack of producer leverage in recent and current markets — compounded by several black swan events — revolves around available packing capacity, relative to cattle supplies.

That was one of the issues discussed in Wednesday’s U.S. Agriculture Committee hearing: Examining Markets, Transparency, and Prices from Cattle Producer to Consumer. Dustin Aherin, RaboResearch animal protein analyst was one of five expert witnesses invited to testify. As part of his testimony, Aherin explained plans for new and expanded packing facilities announced in recent months could add about 8,000 head per day daily fed cattle capacity and 2,000 head of non-fed daily capacity over the next five years.

“Even before the extremes of 2020, recent margins suggest that there is opportunity to add packing capacity. However, that opportunity does not come without significant risk,” Aherin explained. “First, the upfront cost of a new or expanded plant is extremely expensive. Industry sources estimate that a new plant costs $100 to $120 million (USD) for every 1,000 head of daily capacity. Increasing construction costs over the past year likely put current costs near or even above the high end of that estimate. Then, a new endeavor must meet regulatory requirements, build a labor force, and keep enough cash on hand to absorb losses. It’s not just about building facilities, it’s about building a business model.”

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

Last week, live prices were at $122/cwt. in the Southern Plains and $124 in the North. Dressed prices were at $195.

Softer Corn futures helped Feeder Cattle futures gain Tuesday, while apparently oversold conditions and reports of higher cash prices in the North spurred Live Cattle.

Live Cattle futures closed an average of $1.65 higher, from $2.12 higher at the front to 65¢ higher at the back.

Feeder Cattle futures closed an average of $2.70 higher, from $3.25 higher at the front to $2.275 higher toward the back.

Choice boxed beef cutout values was $5.45 lower Tuesday afternoon at $315.75/cwt. Select was $1.71 lower at $279.75.

Grain futures were pressured Tuesday by timely rains forecast across the Midwest.

Corn futures closed mostly 11¢ to 18¢ lower through Dec ’22, except for fractionally higher in spot July.

Soybean futures closed mostly 16¢ to 18¢ lower through Nov ’22.

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Major U.S. financial indices closed higher on Tuesday, buoyed by Fed Chief Jerome Powell downplaying recent inflation as transitory.

The Dow Jones Industrial Average 69 points higher. The S&P 500 closed 22 points higher. The NASDAQ up 112 points.

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Total pounds of beef in freezers as of May 31 were 8% less than the previous month and 1% less than the same time last year, according to USDA’s most recent Cold Storage report.

Frozen pork supplies were up 1% from the previous month but down 1% from last year.

Total red meat supplies in freezers were 4% less than the previous month and 3% less than a year earlier.

Total frozen poultry supplies were up 3% from the previous month, but down 12% percent from a year ago.

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

Last week, live prices were at $122/cwt. in the Southern Plains and $124 in the North. Dressed prices were at $195.

Cattle futures closed narrowly mixed Monday, supported by improving fundamentals but balanced by declining wholesale beef values and weaker Lean Hog futures.

Live Cattle futures closed an average of 23¢ lower.

Feeder Cattle futures closed an average of 47¢ higher, from 7¢ higher at the front to $1.12 higher toward the back.

So far this morning, both are higher.

Choice boxed beef cutout value was $2.08 lower Monday afternoon at $321.20/cwt. Select was $2.15 lower at $281.46.

Although new-Crop Corn futures eased Monday, overall Corn and Soybean futures were supported by weaker crop conditions (Good and Excellent) week over week and year over year.

Corn futures closed mostly 6¢ to 9¢ lower through new-crop contracts, and generally 3¢ to 5¢ higher in other contracts.

Soybean futures closed mostly 6¢ to 9¢ higher in new-crop contracts and mostly 13¢ to 22¢ higher in the others.

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Major U.S. financial indices rallied back Monday, supported by higher crude oil prices. CME WTI Crude Oil futures closed $1.21 to $2.02 higher through the front six contracts.

The Dow Jones Industrial Average closed 586 points higher. The S&P 500 closed 58 points higher. The NASDAQ was up 111 points.

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USDA and lawmakers continue to focus more money and proposed legislation on addressing the nation’s meat packing industry.

USDA announced Monday $55.2 million in competitive grant funding available through the new Meat and Poultry Inspection Readiness Grant (MPIRG) program.

“We are building capacity and increasing economic opportunity for small and midsized meat and poultry processors and producers across the country,” said Agriculture Secretary, Tom Vilsack. “Through MPIRG, meat and poultry slaughter and processing facilities can cover the costs for necessary improvements to achieve a Federal Grant of Inspection under the Federal Meat Inspection Act or the Poultry Products Inspection Act, or to operate under a state’s Cooperative Interstate Shipment program.”

MPIRG’s Planning for a Federal Grant of Inspection (PFGI) project is for processing facilities currently in operation and are working toward Federal inspection.

Earlier this month (June 11), as mentioned in Cattle Current, USDA announced it was beginning work on three proposed rules to support enforcement of the Packers and Stockyards (P&S) Act.

First, USDA intends to propose a new rule that will provide greater clarity to strengthen enforcement of unfair and deceptive practices, undue preferences, and unjust prejudices. Second, USDA will propose a new poultry grower tournament system rule, with the current inactive proposal to be withdrawn. Third, USDA will re-propose a rule to clarify that parties do not need to demonstrate harm to competition in order to bring an action under section 202 (a) and 202 (b) of the P&S Act.

Earlier that week, USDA announced $4 billion in assistance as part of the Build Back Better initiative, an effort designed to strengthen and transform critical parts of the U.S. food system. Investments made through Build Back Better will include a mix of grants, loans and innovative financing to address the shortage of small meat processing facilities across the country as well as the necessary local and regional food system infrastructure needed to support them.

Also on June 11, Senator Chuck Grassley (R-Iowa), along with Senators Jon Tester (D-Mont.) and Mike Rounds (R-S.D.) announced new bipartisan legislation they said was meant to address anticompetitive practices in the meat and poultry industries.

“Increased consolidation is driving concerns about competitive market access for Iowa livestock producers,” Grassley said. “The recent cyberattack (JBS) added to existing vulnerabilities in our food supply chain, underscoring the importance of protecting the livelihoods of our family farmers. Food security is national security. This bill provides USDA with the necessary tools to beef up enforcement of the Packers and Stockyards Act, increase coordination with DOJ, FTC, and DHS and to foster a fair and functional marketplace for farmers and consumers alike.”

The Senators’ bill, the Meat Packing Special Investigator Act, would create the “Office of the Special Investigator for Competition Matters” within the U.S. Department of Agriculture’s (USDA) Packers and Stockyards Division.

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.

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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.

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“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.