WLI

Compared to the previous month, USDA increased projected 2021 beef production by 5 million lbs. to 27.905 billion lbs., in the latest World Agricultural Supply and Demand Estimates (WASDE). Analysts with the Economic Research Service (ERS) note higher expected cow slaughter is largely offset by lower steer and heifer slaughter.

USDA forecast the five-area direct fed steer price 70¢ higher for this year to $117/cwt., reflecting current price strength. Projected average prices are $120 in the second quarter, $115 in the third quarter and $120 in the fourth quarter.

Negotiated cash fed cattle trade in the Southern Plains was at a standstill through Thursday afternoon, according to the Agricultural Marketing Service. For the week so far, live sales are at $119-$120/cwt.

Elsewhere, trade ranged from slow to inactive on light demand.

Live sales in Nebraska and the western Corn Belt earlier in the week were at $120 on a live basis and at $190-$191 in the beef.

Cattle futures traded mostly higher on Thursday, amid light trade, especially for Live Cattle.

Feeder Cattle futures closed an average of 36¢ higher.

Live Cattle futures closed an average of 19¢ higher, except for down an average of 10¢ in the back two contracts.

Choice boxed beef cutout value was 40¢ lower Thursday afternoon at $338.25/cwt. Select was $2.53 higher at $310.40

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Despite USDA lowering projecting beginning and ending corn stocks by 150 million bu. in the latest World Agricultural Supply and Demand Estimates, Corn Futures trended mostly 3¢ to 6¢ higher with support from the weather outlook. The WASDE left the projected season-average corn price unchanged at $5.70/bu.

USDA forecast beginning soybean stocks (2021-22) 15 million bu. more month to month. Ending stocks were projected 15 million bu. higher at 155 million bu. The season-average soybean price remained unchanged at $13.85/bu.

Soybean futures closed mixed, with the front three contracts down fractionally to 18¢, then up between 4¢ to 11¢ through Sep ’22.

Soybean futures closed 13¢ and 18¢ lower in the front two contracts, then mainly 8¢ to 11¢ higher through new-year contracts, followed by mostly 5¢ to 7¢ lower the rest of the way.

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Major U.S. financial indices closed higher on Thursday, despite the Consumer Price Index coming in a little stronger than expected. A wide array of analysts viewed increased consumer prices as expected in the categories bolstered by the reopening of the economy rather than a long-term rise in inflation.

The Dow Jones Industrial Average closed 19 points higher. The S&P 500 closed 20 points higher. The NASDAW was up 109 points.

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JBS USA (JBS) announced yesterday it’s investing $130 million to increase production capacities at two of its major beef processing facilities in Nebraska. The company is on schedule to complete, in late summer, a significant expansion of its Grand Island beef production facility, including the construction of a new harvest floor and enhanced animal welfare facilities. JBS is also expanding cooler capacity and upgrading the fabrication floor at its Omaha beef production facility. The expanded facilities and upgrades will increase processing capacity by nearly 300,000 head of cattle per year, according to the company.

“At JBS USA, we recognize the importance and cultural significance of beef – from the men and women who raise cattle, to the frontline essential workers who process beef, to the families who enjoy a tender steak or hamburger as part of the family meal,” says Tim Schellpeper, President of the JBS USA Fed Beef business unit. “Our longstanding commitment to the U.S. beef industry and continued reinvestment in its success will help ensure that beef remains at the center of plates around the world for years to come.”

To ensure consistent access to a skilled workforce, JBS also increased annualized wages by $150 million over the last 12 months. This permanent yearly investment is in addition to more than $71 million in short-term incentives and non-permanent bonus payments JBS provided to its U.S. beef workforce during the pandemic.

The JBS USA Grand Island facility is a two-shift, beef-processing plant in central Nebraska employing more than 3,600 people. Grand Island has the capacity to process more than 1.4 million cattle per year and currently exports to 20 different countries. The Omaha facility is a single-shift, beef processing plant employing more than 650 people. The plant offers a range of high-end specialty beef products.

Negotiated cash fed cattle trade in the Southern Plains, Nebraska and Western Corn Belt was limited on moderate demand through Wednesday afternoon, according to the Agricultural Marketing Service. In the Texas Panhandle live sales were steady to 50¢ lower than last week at $119.50 to $120.00/cwt. In Kansas, live sales traded mostly steady at $120.00. In Nebraska, a few live sales traded from $120 to $121.

Cattle futures traded mixed Wednesday. Higher Corn futures pressured Feeder Cattle once again, while steady cash helped Live Cattle tread water.

Feeder Cattle futures closed an average of $1.11 lower (52 to $1.47 lower), except for unchanged and up $1.02 in the back two contracts.

Live Cattle futures closed narrowly mixed, from an average of 36¢ lower to an average of 35¢ higher.

Choice boxed beef cutout value was 4¢ higher Wednesday afternoon at $338.65/cwt. Select was $1.69 higher at $307.87

Grain markets were mixed on Wednesday, with corn futures getting help from ethanol demand and soybeans down across most of the board. The monthly World Agricultural Supply and Demand Estimates due out Thursday will likely have plenty to say about direction for the rest of the week.

Corn futures closed mostly 2¢ to 4¢ higher.

Soybean futures closed 13¢ to 17¢ lower through the front three contracts and then mostly 3¢ to 7¢ lower.

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Major U.S. financial indices closed lower on Wednesday with investors apparently jittery about Thursday’s inflation reading.

The Dow Jones Industrial Average closed 153 points lower. The S&P 500 closed 8 points lower. The NASDAQ was down 13 points.

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U.S. beef exports set another new value record in April at $808.3 million, up 35% from a year ago, according to data released by USDA and compiled by the U.S. Meat Export Federation (USMEF). Export volume was 23% more year-over-year and the fifth largest on record at 121,050 metric tons (mt).

“Looking back at April 2020, it was a difficult month for red meat exports as we began to see COVID-related supply chain interruptions, and foodservice demand took a major hit in many key markets,” says Dan Halstrom, USMEF President and CEO. “While it is no surprise that exports performed much better in April 2021, we are pleased to see that global demand continued to build on the broad-based growth achieved in March.”

Beef export value per head of fed slaughter reached a new monthly high in April at $367.45.

As for customers, April beef exports to South Korea increased 21% from a year ago and just missed setting a new value record at $182.7 million. Beef exports to China continued to soar in April, reaching a record 17,233 mt (up from just 1,367 mt a year ago). Export value to China was $130.6 million – up from $11.5 million.

U.S. pork exports built on the previous month’s record pace as well. Pork exports were the sixth largest on record in April at 269,918 mt, up 2% from a year ago. Export value was $749.2 million, up 10% and the fourth highest on record.

Halstrom cautioned that the COVID-19 pandemic is still a major concern for the U.S. meat industry, adding uncertainty to the business climate in many export destinations. Logistical challenges, including container shortages and ongoing vessel congestion at many U.S. ports, also present significant obstacles for red meat exports.

“While conditions are improving in many key markets, the COVID impact is the most intense it has ever been in Taiwan and heightened countermeasures are also in place in Japan and other Asian countries,” Halstrom explains. “But foodservice activity is climbing back in our Latin American markets and retail demand – both in traditional settings and in e-commerce – has been outstanding and USMEF continues to find innovative ways for the U.S. industry to capitalize on these opportunities. We are also working with ag industry partners and regulatory agencies to find ways to improve the flow of outbound cargo, which is essential to maintaining export growth.”

Negotiated cash fed cattle trade was at a standstill in the Texas Panhandle through Tuesday afternoon, according to the Agricultural Marketing Service. Last week in the Southern Plains, live sales traded at $120. In Nebraska and the Western Corn Belt, trade was slow on moderate demand. Live sales in Nebraska traded steady at $120, dressed at $190-$191. In the Western Corn Belt, a few lives sales traded from $120-$121 and dressed from $190-$193. In Kansas, trading was limited on light demand with a few live sales at $119.

Cattle futures traded mixed Tuesday with Feeder Cattle mainly pressured by higher Corn futures, while Live Cattle edged higher, helped along by early cash direction.

Feeder Cattle futures closed an average of 59¢ lower through the front half of the board and then an average of 30¢ higher, except for $1.15 lower in the back contract.

Live Cattle futures closed an average of 36¢ higher, except for 30¢ lower in the back contract.

Choice boxed beef cutout value was 1¢ higher Tuesday afternoon at $338.61/cwt. Select was $2.99 lower at $306.18

A continued hot and dry forecast in the Midwest and Northern Plains helped push  grain markets higher on Tuesday.

Corn futures closed mostly 6¢ to 9¢ higher.

Soybean futures closed mostly 6¢ to 17¢ higher, except for 15¢ to 17¢ lower in most ‘23 contracts.

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Major U.S. financial indices were little changed Tuesday with some investors likely waiting for Thursday’s inflation reading that comes with the consumer price index. The Dow Jones Industrial Average closed 31 lower. The S&P 500 closed 1 point higher. The NASDAQ up 43 points.

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Good, bad or otherwise, the state of cattle markets is drawing more Congressional attention.

Yesterday, Representative Vicky Hartzler (R-MO) introduced the Optimizing the Cattle Market Act of 2021 in the U.S. House. The legislation builds on a growing consensus among cattle producers, industry leaders, and Members of Congress that current market dynamics are unsustainable for the beef supply chain.

If enacted, the bill would direct the U.S. Department of Agriculture (USDA) to create a cattle formula contracts library, and increase the reporting window for “cattle committed” from seven to 14 days. These measures would increase transparency in the industry and improve the opportunity for robust price discovery.

Rep. Hartzler’s legislation also reiterates the need for expedited reauthorization of USDA’s Livestock Mandatory Reporting (LMR) program. That jibes with one of the recommendations from the coalition of national cattlemen’s organizations that met last month.

The bill would also require USDA, in consultation with the Chief Economist, to establish mandated minimums for regional negotiated cash and negotiated grid live cattle trade. Minimums would be set within two years of passage of the bill, and would invite stakeholder input through a public comment period and the consideration of key, peer-reviewed research from land grant universities.

Mandatory requirements versus voluntary ones remain a difference of opinion between producers and producer groups. In the case of the National Cattlemen’s Beef Association (NCBA), for instance, grassroots policy supports voluntary regional minimums, but also provides for pursuing a legislative or regulatory solution determined by membership. 

“The growing momentum we’re seeing in the House and Senate behind addressing these critical concerns in the cattle markets is reflective of the urgency producers are feeling across the country,” says Ethan Lane,  NCBA Vice President of Government Affairs. “Extreme market volatility, unpredictable input costs, a shifting regulatory landscape and natural crises like drought leave cattle farmers and ranchers with a growing list of threats to their continued financial viability. Something needs to give.”

Also on Tuesday, Representative Mike Guest (R-MS) and Representative Darren Soto (D-FL) led a bipartisan group of 52 lawmakers in pushing the U.S. Department of Justice (DOJ) to complete its investigation into the meatpacking sector, and whether or not anticompetitive practices have contributed to a persistent imbalance in the cattle markets.

Negotiated cash fed cattle trade was at a standstill in the Southern Plains and Western Corn Belt through Monday afternoon, according to the Agricultural Marketing Service. In Nebraska, trading was mostly inactive with very light demand. Last week, live prices were at $120. Dressed prices in Nebraska and the Western Corn Belt were at $190-$191.

Cattle futures tread water to the downside Monday with pressure from new-crop grain prices and the appearance of an imminent top for wholesale beef values.

Feeder Cattle futures closed an average of 18¢ lower, except for 28¢ and 55¢ higher at either end of the board.

Live Cattle futures closed an average of 33¢ lower through the front four contracts and then an average of 68¢ higher (37¢ higher to $1.60 higher in the back contract).

Choice boxed beef cutout value was 38¢ lower Monday afternoon at $338.60/cwt. Select was $2.56 lower at $309.17.

Except for nearby contracts, grain futures continued to extend gains Monday.

Corn futures closed 10¢ to 14¢ higher in new-crop contracts, and then mostly 4¢ to 7¢ higher. Spot Jly was down 3¢.

Soybean futures closed mostly 7¢ to 14¢ higher, except for 4¢ to 23¢ lower in the front three contracts.

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Major U.S. financial indices fell on Monday, due mostly to concern over inflation risks and speculation about the Fed’s looming decision on interest rates. However, the NASDAQ gained on biotech stocks.

The Dow Jones Industrial Average closed 126 points lower. The S&P 500 closed 3 points lower. The NASDAQ was down 67 points.

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“Calmer times may be coming but we are not quite there yet,” says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly market comments. “It will take a few more weeks to work through current fed cattle supplies and get the packing industry below capacity constraints. That will allow fed cattle markets to once again fully reflect market conditions.”

Peel points out domestic and international beef markets are very strong as economies continue to open.

“Feed prices are expected to remain elevated and feeder cattle markets will continue to adjust to both feed market and fed cattle market conditions,” Peel says. “Drought impacts remain uncertain and the short-term and long-term impacts on cattle markets are unknown. If enough herd liquidation is forced by the drought, short-term cattle slaughter and beef production will be higher than expected and beef production prospects beyond 2021 will be reduced.”

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

Regionally, negotiated prices last week were mostly steady to $1 either side of steady. Live prices were at $120/cwt. and dressed prices were at $189-$191.

Estimated total cattle slaughter for the week ending June 5 was 538,000 head, according to USDA. That was 91,000 head fewer than the previous week and 90,000 head fewer than the same week a year earlier. Estimated beef production for the week was 443.0 million lbs., which was 75 million lbs. less than the previous week.

Surging Corn futures prices hammered Feeder Cattle futures on Friday. It’s likely week-end profit taking also played a role.

Feeder Cattle futures closed an average of $2.09 lower ($1.32 lower at the back to $3.02 lower in spot Aug).

Although mainly lower Friday, Live Cattle futures continued to consolidate, supported by wholesale beef values and slaughter data suggesting a return to post-pandemic normal following disruptions at JBS earlier in the week.

Live Cattle futures closed an average of 47¢ lower, except for 5¢ and $1 higher at either end of the board and unchanged in away Aug.

Net U.S. beef export sales of 12,600 metric tons for 2021 were 55% less than the previous week and 38% less than the prior four-week average, according to USDA’s Export Sales report for the week ending May 27. Increases were primarily for Japan, South Korea, Taiwan, Mexico and Chile.

Choice boxed beef cutout value was $1.57 lower Friday afternoon at $338.98/cwt. Select was $1.43 lower at $311.73.

Grain markets were sharply higher on Friday as extreme heat gripped the Western Corn Belt and Northern Plains.

Corn futures closed up through Jul ’22 an average of 24¢ higher.

Soybean futures closed up an average of 33¢ through Jan ’22.

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Major U.S. financial indices rallied on Friday despite a somewhat disappointing jobs report and downward pressure on the dollar. The S&P 500 almost hit an all-time high as investor anxiety seemed to lessen about the Federal Reserve changing rates and tapering support. NASDAQ posted its best day in three weeks.

The Dow Jones Industrial Average closed 179 points higher. The S&P 500 closed 37 points higher. The NASDAQ was up 200 points.

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Drought continues to elevate beef cow slaughter.

“The start of pasture and range conditions (this year) was the worst since the 2012 and 2013 growing seasons. These early weeks are showing a large portion of the U.S. was already requiring supplemental feed to maintain herds,” say analysts with the Livestock Marketing Information Center (LMIC), in the latest Livestock Monitor. “For the west, this is a second year of continued hardship and will result in a second year of beef cow culling. As of this week (June 4) about 25% of the beef cowherd was in areas where pasture and range conditions were assessed as poor and very poor. This is an improvement from a few weeks ago, when 40% of the cowherd was assessed to be in those conditions. Still, pasture and range is not improving evenly.”

More specifically, utilizing regional USDA cow slaughter reports, LMIC analysts point out beef cow slaughter is 29% higher year over year in Region 5 (IL, IN, MI, MN, OH, WI), 12% higher in Region 6 (AR, LA, NM, OK, TX) and 18% higher in Region 9 (AZ, CA, HI, NV).

“Total U.S. beef cow slaughter in federally inspected plants is up 10.1% year to date,” explain LMIC analysts. “In the last couple of weeks, beef cow slaughter accelerated, hitting above 70,000 head per week. The percent change is being amplified by below average slaughter levels of last year during April and May…In addition to the West, drought has been creeping into the Southeast, and the Northern Plains continue to struggle with limited moisture.”