WLI

Negotiated cash fed cattle trade was limited on light demand in the Texas Panhandle through Tuesday afternoon. Although too few to trend, there were some early live sales at $116/cwt. Elsewhere, trade was at a standstill, according to the Agricultural Marketing Service (AMS).

Last week, live prices were at $115/cwt. in the Sothern Plains, mostly $116 in the Northern Plains and at $115-$117 in the western Corn Belt. Dressed trade was at mostly $185.

Feeder Cattle futures edged higher Tuesday, helped along by softer Corn futures. Live Cattle were mixed, taking a breather ahead of cash direction.

Live Cattle futures closed narrowly mixed, from 42¢ lower to 15¢ higher.

Feeder Cattle futures closed an average of 48¢ higher, except for 25¢ lower and unchanged in the front two contracts. 

Choice boxed beef cutout value was $5.30 higher Tuesday afternoon at $244.83/cwt. Select was $3.42 higher at $235.90.

Corn futures, and especially Soybean futures, closed lower Tuesday with likely profit taking and positioning ahead of USDA’s Prospective Plantings report due out Wednesday.

Corn futures closed mostly 4¢ to 8¢ lower.

Soybean futures closed 22¢ to 27¢ lower through the front four contracts, and then mostly 11¢ to 18¢ lower.

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Major U.S. financial indices closed lower Tuesday, pressured by rising Treasury yield rates and worries about increasing interest rates.

The Dow Jones Industrial Average closed 104 points lower. The S&P 500 closed 12 points lower. The NASDAQ was down 14 points.

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 “Americans feel better than ever about choosing meat as part of healthy, balanced diets. With COVID-19 deepening demand for convenient, affordable food that tastes good and matches Americans’ values, meat fits the bill,” says Julie Anna Potts, president and CEO of the North American Meat Institute (the Meat Institute).

Potts is referring to the recently released annual Power of Meat report conducted by 210 Analytics on behalf of FMI and the Meat Institute’s Foundation for Meat and Poultry Research and Education.

The national analysis shows that three out of every four Americans agree meat belongs in healthy, balanced diets, up by nearly 20% since 2020; 94% say they buy meat because it provides high-quality protein.

Nearly all American households (98.4%) purchased meat in 2020 (IRI data) and 43% of Americans now buy more meat than before the pandemic, primarily because they are preparing more meals at home.

The proportion of meals prepared at home peaked at 89% in April 2020 and remained at 84% in December (IRI), considerably above pre-pandemic levels and particularly impacting Millennials who were previously most likely to eat out.

“Shoppers are cooking more at home due to the COVID-19 pandemic, and their confidence in cooking and preparing meat has increased,” says Rick Stein, FMI vice president of fresh foods. “Further analysis also shows convenient meal solutions are key and that food retailers have opportunities to provide more choices, along with more information and education on consumer priorities like nutrition and meal preparation, building up what we call consumers’ Meat IQ.”

The number of meat shoppers who purchased groceries online grew 40% in 2020, and 59% of online purchasers expect to continue purchasing about the same amount online in this year, suggesting food shopping habits may have changed permanently.

Negotiated cash fed cattle trade was at a standstill in the Southern Plains and Northern Plains through Monday afternoon. Elsewhere, it was mostly inactive on very light demand with too few transactions to trend, according to the Agricultural Marketing Service (AMS).

Last week, live prices were $1 higher in the Southern Plains at $115/cwt., $2 higher in the Northern Plains at mostly $116 and $1-$2 higher in the western Corn Belt at $115-$117. Dressed trade was $3-$5 higher at $185.

The five-area direct average steer price last week was $115.38/cwt. on a live basis, which was $1.14 higher than the previous week. The five-area direct average steer price in the beef was $184.66,which was $2.98 higher.

Cattle futures bounced higher Monday, amid active trade, extending last week’s gains, with ongoing support from higher wholesale beef values, last week’s  stronger cash prices and softer Corn futures.

Live Cattle futures closed an average of 61¢ higher, except for unchanged and 5¢ lower in the back two contracts.

Feeder Cattle futures closed an average of $1.28 higher, from 15¢ higher toward the back to $2.32 higher toward the front. 

The CME Feeder Cattle Index was $2.10 higher at $138.85.

Choice boxed beef cutout value was $1.87 higher Monday afternoon at $239.53/cwt. Select was $4.73 higher at $232.50.

Corn futures closed 2¢ to 5¢ lower.

Soybean futures closed 1¢ to 2¢ lower, except for 5¢ to 7¢ lower in the front three contracts.

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Major U.S. financial indices closed narrowly mixed to lower Monday, following strong pressure early in the session from bank stocks. According to various reports, the pressure stemmed from the forced liquidation of more than $20 billion by a hedge fund that got caught upside down in bad bets and margin calls; ripple effects ensued.

The Dow Jones Industrial Average closed 98 points higher. The S&P 500 closed 3 points lower. The NASDAQ was down 79 points.

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“As April arrives, the current drought situation looms larger and potential impacts on cattle markets are increasing with each passing week,” says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly market comments. “The latest Drought Monitor shows that 43.55% of the continental U.S. is in some degree of drought (D1-D4), including 18.06% in Extreme and Exceptional drought (D3-D4). Additionally, another 20.66% of the country is abnormally dry (D0), which means that only 35.79% of the U.S. is free of drought conditions. At the beginning of March one year ago, over 76% of the U.S. was drought free.”

The current drought, which began to advance a year ago, has progressed more rapidly than any drought in more than 20 years, Peel says. He adds an aggregate annual index of drought conditions is currently at the highest level (worst drought) since 2014. 

So far, Peel notes the most significant drought impacts appear to be in Colorado, where the beef cow inventory declined by 112,000 head (-14.5%) year over year Jan. 1 and replacement heifers declined by 16.1%.

“Drought conditions plagued much of the desert southwest in 2020 but cow herd liquidation in Nevada, New Mexico and Utah totaled just 34,000 head. As bad as they were, these cowherd losses were not enough to cause significant general cattle market impacts. Significantly higher hay prices were noted in 2020 in the western drought region,” Peel says. “If a drought is severe enough, over a big enough region, and lasts long enough, broader market values may be affected resulting in lower prices for cattle and higher prices for feeds and other inputs. This can result in additional challenges for drought impacted producers, as well as impacts on producers outside the drought region.” 

Moreover, odds favor La Niña conditions into the summer, according to Art Douglas, professor emeritus at Creighton University and long-time CattleFax meteorologist. He forecasts the Southwest U.S. will be warmer than normal, and the western half of the country will be relatively dry. Dry conditions in the Rockies will eventually extend into the central Corn Belt, he says, causing concerns for corn and soybean growers.

“Arguably the most concerning areas now are North and South Dakota and Texas. Persistence or expansion of drought in these areas (which have large beef cattle numbers), in conjunction with ongoing drought in Rocky Mountain and desert southwest regions could result in levels of herd liquidation/movement that broadly impact cattle markets,” Peel says. “If the drought preempts spring forage growth in these regions, market impacts could develop rapidly in the next three to five months. Conditions in the coming weeks may have significant cattle market impacts on producers in drought regions, producers in regions where drought is or could develop, as well as producers outside of drought areas.”

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

For the week, live prices were $1-$2 higher at $115/cwt. in the Southern Plains and $116 in the Northern Plains. Dressed trade was $2-$3 higher in Nebraska at $185. Trade was yet to be established in the western Corn Belt, according to AMS, but various reports suggested trade in the region at as much as $3 higher than the previous week.

Cattle futures continued to edge higher Friday, buoyed by the week’s stronger cash prices and wholesale beef values.

Live Cattle futures closed an average of 36¢ higher, except for 20¢ lower in the back contract.

Feeder Cattle futures closed an average of 39¢ higher, from 15¢ higher toward the back to 90¢ higher in spot Apr. 

Choice boxed beef value was $1.21 higher Friday afternoon at $237.66/cwt. Select was $1.52 higher at $227.77.

Estimated total cattle slaughter the week ending Mar. 26 was 646,000 head, according to USDA. That was 19,000 head more than the previous week, but 39,000 head fewer (-5.69%) than the same week a year earlier. Estimated total year-to-date cattle slaughter of 7.75 million head was 278,000 head fewer (-3.46%) than the same time last year. Estimated year-to-date beef production of 6.50 billion lbs. was 143.1 million lbs. less (-2.15%).

Corn futures closed mostly 1¢ higher, except for 3¢ and 6¢ higher at either end of the board.

Soybean futures closed 6¢ to 13¢ lower through the front six contracts, and then mostly 2¢ higher.

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Major U.S. financial indices closed sharply higher Friday with a late-session surge tied to the Federal Reserve announcement that banks meeting stress criteria can return to normal levels of dividend disbursement and share repurchases at the end of June. That ability was limited since the beginning of the pandemic.

Investors were likely also encouraged by the latest data from the U.S. Bureau of Economic Analysis, suggesting tame inflation. It showed the personal consumption expenditure price index, excluding food and energy prices, increased just 0.1% month to month in February and just 1.4% year over year.

The Dow Jones Industrial Average closed 453 points higher. The S&P 500 closed 65 points higher. The NASDAQ was up 161 points.

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“There was a time in the beef industry when $200/cwt. was the primary resistance point for the weekly Choice boxed beef cutout value. However, the $200 level appears to be the primary support point in that the weekly Choice boxed beef price has not been below this level since the week ending Oct. 20, 2017,” says Andrew P. Griffith, agricultural economist at the University of Tennessee, in his weekly market comments.

Griffith says Choice boxed beef cutout values exceeded $200 for the first time in May 2013 (looking back as far as 2004). Between May 2013 and October 2017, he explains the Choice prices swung to levels on either side of $200 but exceeded the level since then.

“Choice beef prices have been strong the first quarter of 2021 and they are only expected to get stronger in the second quarter as grilling season hits full stride,” Griffith says. “Many consumers have ample disposable income because they have not been traveling. Thus, they can spend some of that money on their eating experience. There is no reason to attempt to predict how high boxed beef prices will go this spring, but they are likely to test the $250 mark.”

Negotiated cash fed cattle trade continued through Thursday afternoon, with limited to slow trade on light to moderate demand. For the week, live prices are $1-$2 higher on a live basis at $115/cwt. in the Southern Plains, $115-$116 in Nebraska and $116 in Colorado. Dressed trade in Nebraska is $3-$5 higher at $185. Trade was yet to be established in the western Corn Belt.

Cattle futures continued mostly higher Thursday, supported by stronger cash prices and wholesale beef values.

Net U.S. beef export sales of 18,900 metric tons for the week ending Mar. 18 were 27% less than the previous week but 3% more than the prior four-week average, according to the weekly U.S. Export Sales report. Increases were primarily for Japan, South Korea, China, Taiwan and Chile.

Live Cattle futures closed an average of 45¢ higher through the front five contracts, and then unchanged to an average of 18¢ lower.

Feeder Cattle futures closed an average of 98¢ higher, from 37¢ to $1.80 higher. 

Choice boxed beef cutout value was $1.61 higher Thursday afternoon at $236.45/cwt. Select was $2.18 higher at $226.25.

The average dressed steer weight of 904 lbs. was 4 lbs. heavier than the prior week and 3 lbs. heavier than the previous year, according to USDA’s Actual Slaughter Under Federal Inspection report for the week ending Mar. 13. The average dressed heifer weight of 832 lbs. was 1 lb. lighter than the previous week and 3 lbs. lighter than the previous year.

Corn futures closed mostly 2¢ to 4¢ lower.

Soybean futures closed 10¢ to 18¢ lower.

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Major U.S. financial indices closed higher Thursday, in a late-session surge, supported by more positive labor data than the trade expected. Weekly initial unemployment insurance claims the week ending Mar, 20 were 684,000, according to the U.S. Department of Labor. That was 97,000 fewer than the previous week.

The Dow Jones Industrial Average closed 199 points higher. The S&P 500 closed 20 points higher. The NASDAQ was up 15 points.

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Persistently and bullishly strong Lean Hog futures continue offering support to beef, tied in part to speculation whether China’s hog herd rebuilding from African Swine Fever is going as well as that government’s reports claim.

“While China’s governmental inventory data as of December 2020 show sow and hog inventory were 92.1% and 93.1% of their respective 2017 levels (MARAC 2021), recent record-high piglet, sow, hog, and pork prices suggest a large persistent supply shortage,” say analysts with the Center for Agricultural Research and Development (CARD) at Iowa State University.

“China’s record pork and live swine imports in 2020 suggest that China’s hog rebuilding might be fast but of low genetic quality. Specifically, it seems likely that the retention of low-quality commercial generation gilts helped rebuild the herd but set back the national breeding system by abandoning purebred grandparents and parent generation propagation (Dim Sums 2021).”

In CARD’s winter Agricultural Policy Review—Is China’s Hog Rebuilding Complete? Reconciling Inventory and Price Data—analysts explain China’s recently launched Live Hog futures also suggest traders expect prices to remain elevated into 2022.

Negotiated cash fed cattle trade was light on light to moderate demand in the Southern Plains through Wednesday afternoon, with live price $1 higher than last week at $115/cwt.

Elsewhere, trade was limited on light demand, according the Agricultural Marketing Service. There were a few live trades in Nebraska at $115-$116, but too few to trend. Prices last week were at $114 in the Northern Plains and at $114-$115 in the western Corn Belt. Dressed prices were at $180-$182.

Cattle feeders offered 2,633 head in Central Stockyards’ weekly Fed Cattle Exchange auction. Of those, 1,550 head sold for an average price of $115.89/cwt., all via live weight. Texas prices were at $115/cwt. and Nebraska prices were at $116, which was $2 higher than last week’s country trade.

Choice steers and heifers sold $1.50-$2.50 higher at the fat auction in Tama Iowa. There were 67 Choice 2-4 steers weighing an average of 1,487 lbs., brining an average price of $117.15/cwt. That was $2-$3 higher than country trade in the region last week.

At Sioux Falls Regional in South Dakota, though, slaughter steers sold steady to $2 lower and slaughter heifers traded steady to $1 lower. There were 152 Choice 2-3 steers weighing an average of 1,468 lbs., bringing an average of $112.72.

Cattle futures closed higher Wednesday, supported by stronger cash prices and softer Corn futures prices.

Live Cattle futures closed an average of 59¢ higher, except for unchanged in spot Apr.

Feeder Cattle futures closed an average of $1.32 higher, from 32¢ higher in waning spot Mar to $2.70 higher.

Choice boxed beef cutout value was 85¢ higher Wednesday afternoon at $234.84/cwt. Select was $1.16 lower at $224.07.

Corn futures closed mostly fractionally lower to 2¢ lower, except for 2¢ and 3¢ higher in the front two contracts.

Soybean futures closed mostly 6¢ to 9¢ higher.

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Major U.S. financial indices extended losses Wednesday, pressured by a selloff in big tech stocks and despite strong gains earlier in the session.

The Dow Jones Industrial Average closed 3 points lower. The S&P 500 closed 21 points lower. The NASDAQ was down 265 points.

West Texas Intermediate Crude Oil futures (CME) closed $2.97 to $3.42 higher through the front six contracts, mostly gaining back the previous session’s decline, and presumably related to reports that a cargo ship ran aground in the Suez Canal, blocking traffic.

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“U.S. agricultural exports are largely expected to continue a faster pace in 2021 with help from weakness in the U.S. dollar,” says Tanner Ehmke, manager of CoBank’s Knowledge Exchange (CBKE).

The U.S. dollar weakened substantially since March 2020 and is expected to experience modest deflation in 2021. CoBank analysts explain a weaker dollar generally makes U.S. agricultural products more competitive on the global export market. However, commodities are affected differently, given the diversity in global export competition and foreign exchange rates. 

CBKE published a recent report—Dollar Divergence: U.S. Dollar Index Does Not Reflect True Dollar Impact on U.S. Ag Exports—examining the impact of currency dynamics on agricultural exports, in addition to fundamental factors such as tariffs and weather conditions.

CBKE utilized the foreign exchange (FX) rates of key agricultural exporting countries that the U.S. competes with, rather than the dollar index (DXY), which those analysts say is heavily weighted toward the euro. The research reveals a more nuanced effect of FX rates on U.S. grain, livestock, dairy, tree nuts, and cotton exports.

“In the final months of 2020, U.S. protein exports started to benefit from the strengthening of the Australian dollar and the euro against the U.S. dollar, helping animal protein exports to end the year on a high note,” according to the report. “The

outlook for a strong Australian dollar and euro in 2021 should make U.S. beef and pork exports the largest beneficiaries of a weaker dollar in the coming year.”

At the same time, CBKE analysts explain the U.S. trade weighted grain and oilseed index strengthened by 14% in 2020 and is expected to gain another 4%-5% this year. The U.S. dollar’s strength, relative to the currencies of major exporters like Brazil, Argentina and Ukraine, is driving the stronger index.

“A casual observer could argue that corn and soybean exports will face headwinds in 2021 since the index strength implies that U.S. exports become less price competitive,” says Kenneth Scott Zuckerberg, lead grain and farm supply economist with CoBank. “But this was not the case in 2020 nor is it expected to be in 2021 due to Chinese demand.”

China has been aggressively buying U.S. grain for feed as it rebuilds its hog herd, leveraging its strong currency relative to the U.S. dollar despite the dollar’s strength in relation to other currencies.

“In addition to currency, a more normal year for U.S. meat processing capacity, the rebound in global foodservice demand, and the trend in China’s meat and poultry imports will be the primary drivers of a good year for U.S. protein exports in 2021,” according to the report.