WLI

Negotiated cash fed cattle trade was at a standstill in Colorado and the Texas Panhandle through Thursday afternoon. Elsewhere, trade was limited on light demand with too few transactions to trend.

For the week so far, trade is steady with last week on a live basis in the Southern Plains and Northern Plains at $114/cwt. Dressed trade in Nebraska is $2 lower at $180. Live sales in the western Corn Belt last week were at $114, with dressed trade at $182.

Cattle futures closed lower Thursday, pressured by the slog for higher cash prices and faltering outside markets. That was despite net U.S. export beef sales for the week ending Feb. 25 up noticeably from the previous week and up 15% from the prior four-week average at 22,600 metric tons (mt), according to the weekly U.S. Export Sales report from USDA’s Foreign Agricultural Service.

Live Cattle futures closed an average of 41¢ lower, from 2¢ lower at the back to 85¢ lower in spot Apr.

Feeder Cattle futures closed an average of $1.34 lower, from 75¢ lower at the back to $2.32 lower toward the front.

Choice boxed beef cutout value was 85¢ higher Thursday afternoon at $233.88/cwt. Select was $2.56 lower at $221.68.

The average dressed slaughter weight of 909 lbs. the week ending Feb. 20 was 10 lbs. less than the previous week, helped along by the recent winter storm. That was still 9 lbs. heavier year over year, according to the USDA Actual Slaughter Under Federal Inspection report. The average dressed heifer weight of 841 lbs. was 9 lbs. lighter than the previous week, but 10 lbs. heavier year over year. Fed cattle slaughter of 439,124 head was 49,097 head fewer (-10.05%) than the same week a year earlier.

Corn futures encountered some pressure in the front months, perhaps tied in part to the previously mentioned weekly U.S. Export Sales report.

Weekly net U.S. corn export sales of 115,900 mt for 2020-21 were a market-year low, down 74% from the previous week and down 96% from the previous four-week average. U.S. net soybean export sales of 334,000 mt were up noticeably from the previous week but 33% less than the previous four-week average.

Corn futures closed mostly 1¢ to 2¢ higher, except for 1¢ to 4¢ lower in the front three contracts.

Soybean futures closed 6¢ to 15¢ higher, except for 3¢ to 4¢ higher in the front five contracts.

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Major U.S. financial indices closed sharply lower Thursday, with traders apparently rattled by Federal Reserve Chair Jerome Powell’s dovish remarks concerning recent inflation, which helped lift Treasury yield rates and depress bond prices.

On the other hand, crude oil futures continued to surge higher, tied to the OPEC announcement that it would maintain reduced production levels. West Texas Intermediate on the CME closed $2.13 to $2.55 higher through the front six contracts.

The Dow Jones Industrial Average closed 345 points lower. The S&P 500 closed 51 points lower. The NASDAQ was down 274 points.

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Recent data continues to paint a bleak picture for U.S. restaurant recovery, the nation’s second largest private sector employer.

“While many other industries have moved into a recovery phase, the restaurant industry ended last year in a double-dip recession and with 2.5 million fewer jobs. Between March 2020 and January 2021, restaurant and foodservice sales were down $255 billion from expected levels,” according to a letter to Congress from Sean Kennedy, Executive Vice President of the National Restaurant Association (NRA). The letter supported passage of the American Rescue Plan.

Kennedy shared highlights from a February NRA survey of 3,000 restaurant operators.

Among the survey findings:

The restaurant industry lost nearly 450,000 jobs between November of last year and January 2021, representing about 10% of the total jobs recovered during the first six months after the spring shutdowns. Eighty percent of operators say their current staffing level is lower than what it would normally be in the absence of COVID-19.

Consumer spending in restaurants remained well below pre-pandemic levels in January. Overall, 77% of restaurant operators say their total dollar sales volume in January was lower than in January 2020.

32% of restaurant operators think it will be 7 to 12 months before business conditions return to normal for their restaurant, while 29% think it will be more than a year. An additional 10% of operators say business conditions will never return to normal for their restaurant.

14% of restaurant operators say they will ‘probably’ or ‘definitely’ be closed within three months if there are no additional relief packages from the federal government.

Negotiated cash fed cattle trade and demand were light to moderate in the Southern Plains through Wednesday afternoon at $114/cwt., according to the Agricultural Marketing Service; steady with the previous week. Trade was light on moderate demand in Nebraska with dressed prices $2 lower at $180. Elsewhere, trade was limited on light demand, with too few transactions to trend.

Cattle feeders offered 1,592 head (10 lots) in Central Stockyards’ weekly Fed Cattle Exchange auction. All were from Texas, except for one lot from Nebraska. Of those offered, 757 head sold (four lots), with 167 heifers bringing an average price of $114.08/cwt. and 590 steers bringing an average of $114.00. All sales were by live weight.

Similarly, Choice steers and heifers sold steady to $1 lower at the fat auction in Tama, IA. There were 150 Choice 2-4 steers weighing an average of 1,473 lbs., bringing an average of $114.19/cwt., which was steady with the prior week’s negotiated trade.

Cattle futures closed mainly higher Wednesday, supported by lower Corn futures and oversold conditions.

Live Cattle futures closed an average of 59¢ higher, except for an average of 5¢ lower in the front two contracts.

Feeder Cattle futures closed an average of $1.28 higher, from 47¢ higher in spot Mar to $1.97 higher toward the back.

Choice boxed beef cutout value was $1.65 lower Wednesday afternoon at $233.03/cwt. Select was $1.93 lower at $224.24.

Corn futures closed 2¢ to 10¢ lower through May ‘22 and then mostly fractionally mixed.

Soybean futures closed 3¢ to 7¢ lower through Mar ‘22, and then mostly fractionally higher to 1¢ lower.

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Major U.S. financial indices closed lower Wednesday. Positive news included private sector employment increasing by 117,000 jobs from January to February according to the February ADP^® National Employment Report^TM. 

Pressure included a higher Treasury yield rate, though not spiking as it did last week.

The Dow Jones Industrial Average closed 121 points lower. The S&P 500 closed 50 points lower. The NASDAQ was down 361 points.

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Agricultural producers surveyed for the monthly Purdue University/CME Group Ag Economy Barometer believe plant-based meat alternatives will make inroads in the total protein marketplace during the next five years.

According to the February Ag Economy Barometer report, 55% of respondents said they expect alternative protein sources to capture up to 10% of the combined market for animal and plant-based protein, while approximately 15% said they expect plant-based alternatives to capture 10% or more of the total protein market.

Respondents also believe alternative proteins gaining too much market share would impact farm income negatively.

When asked what impact they would expect to see on farm income if plant-based alternatives to animal protein capture a relatively large market share (25%) of the total protein market, a majority  said they think the impact on farm income would be negative. Approximately four out of 10 producers would expect to see farm income decline by 10% or more.

“That a majority of farmers perceive negative effects of alt-meats on the agricultural economy is consistent with: 1) the fact that some respondents are likely livestock producers, and 2) a recognition that the amount of corn and soy needed to produce alt-meats is lower than the amount needed to produce an equivalent amount of beef, pork, or chicken,” says Jayson Lusk, Purdue University agricultural economist, in his March 2 blog. 

When asked if they would be interested in pursuing a contract offered to grow a crop used in the production of plant-based meat, 62% of survey respondents said no, 16% said maybe and 23% said yes.

“That strikes me as high and may include a bit of cheap talk,” Lusk explains. “It may also be that the question was worded too vaguely. What are the conditions of the contract? What are the price premiums? Farmers would want to know answers to these questions (and more) before switching to a new crop.”

February’s Ag Economy Barometer reading of 165 was little changed compared to January when the index stood at 167.

The Current Conditions Index of 200 in February was near the all-time high. The Future Expectations Index, though, declined by 3 points to 148, marking the third decline in four months.

“Ongoing strength in ag commodity prices and farm income continue to support producers’ perspective on current conditions while concerns about possible policy changes affecting agriculture and eroding confidence in future growth in ag trade continue to weigh on producers’ future expectations,” according to the report.

The Ag Economy Barometer is calculated each month from 400 U.S. agricultural producers’ responses.

Negotiated cash fed cattle trade was at a standstill in all major cattle feeding regions through Tuesday afternoon, according to the Agricultural Marketing Service. Live prices last week were at $114/cwt. and dressed trade was at $182.

Cattle futures closed mixed Tuesday, with continued pressure from Corn futures and uncertainty about the week’s cash direction.

Live Cattle futures closed an average of 33¢ higher, except for 25¢ lower in the back contract.

Feeder Cattle futures closed mixed, from an average of 42¢ lower to an average of 18¢ higher.

Choice boxed beef cutout value was $4.35 lower Tuesday afternoon at $234.68/cwt. Select was $1.47 lower at $226.17.

Corn futures closed mostly 4¢ to 7¢ higher; 13¢ higher in spot Mar.

Soybean futures closed 10¢ to 11¢ higher through Jan ‘22, and then mostly 3¢ higher.

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Major U.S. financial indices closed lower Tuesday, with likely profit taking from the previous day’s sharp rebound.

The Dow Jones Industrial Average closed 143 points lower. The S&P 500 closed 31 points lower. The NASDAQ was down 230 points.

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Bipartisan U.S. Senators—Deb Fischer (R-Neb.) and Ron Wyden (D-Ore.)— introduced a bill on Tuesday aimed at increasing transparency and price discovery in cash fed cattle markets.

The Cattle Market Transparency Act of 2021, according to the Senators, will:

Establish regional mandatory minimum thresholds of negotiated cash and negotiated grid trades to enable price discovery in cattle marketing regions. It will require the Secretary of Agriculture, in consultation with the Chief Economist, to establish regionally sufficient levels of negotiated cash and negotiated grid trade, seek public comment on those levels, then implement.

Require USDA to create and maintain a publicly available library of marketing contracts between packers and producers in a manner that ensures confidentiality.

Prohibit the USDA from using confidentiality as a justification for not reporting and make clear that USDA must report all Livestock Mandatory Reporting (LMR) information, and they must do so in a manner that ensures confidentiality.

Senator Fischer, a member of the Senate Agriculture Committee first introduced the bill last September.

“I am pleased to reintroduce this bill with bipartisan support,” says Senator Fischer. “It will help facilitate price discovery and provide cattle producers with the information they need to make informed marketing decisions. I am committed to working across the aisle to advance the bill forward this Congress.”

The need for increased market transparency and cash price discovery is recognized widely. Choosing a voluntary or mandatory approach is where opinions diverge just as widely.

“Cattle producers continue to face serious obstacles when it comes to increasing profitability and gaining leverage in the marketplace,” explains Ethan Lane, Vice President of Government Affairs for the National Cattlemen’s Beef Association (NCBA). “Leveling the playing field and putting more of the beef dollar in producer pockets remains the top priority of this association. NCBA shares Senator Fischer’s objectives, as do its affiliates and indeed the entire industry. The best way to achieve those objectives, however, continues to be hotly debated by the very cattle producers this legislation would directly impact. We have worked and will continue to work alongside our affiliates, Congress, and USDA toward regionally robust negotiated trade, the establishment of a cattle contract library, and commonsense in USDA’s rules of confidentiality by taking direction from our membership through the grassroots policy process.”

NCBA is two months into the implementation phase of a voluntary approach, which established a series of triggers to evaluate negotiated trade volumes in each region and benchmarks for improvement.

Negotiated cash fed cattle trade was at a standstill in all major cattle feeding regions through Monday afternoon, according to the Agricultural Marketing Service. Live prices last week were at $114/cwt. and dressed trade was at $182.

The weekly five-area direct average fed steer price last week was $114.07/cwt., which was even with the previous week but 78¢ less than the previous year. The average five-area dressed steer price was $181.63, which was $1.06 more than the previous week but $3.15 less than the previous year.

Cattle futures extended losses Monday, with pressure including last week’s steady cash prices, the outlook for steady money this week and expectations for declining wholesale beef values.

Live Cattle futures closed an average of 47¢ lower, except for unchanged to an average of 8¢ higher in three contracts.

Feeder Cattle futures closed an average of 70¢ lower (10¢ lower toward the back to $1.47 lower in spot Mar), except for 50¢ higher in the back contract.

Boxed beef cutout value: Choice boxed beef cutout value was $1.50 lower Monday afternoon at $239.03/cwt. Select was $2.09 lower at $227.64.

Grain Futures softened Monday, pressured by the stronger U.S. Dollar and recently weaker export sales.

Corn futures closed 8¢ to 9¢ lower through the front three contracts, 1¢ to 5¢ lower through the next five and then 1¢ higher.

Soybean futures closed 9¢ to 13¢ lower through Aug’21, and then mostly 1¢ to 4¢ higher

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Major U.S. financial indices roared back Monday, helped along by a lower Treasury yield rate and U.S. approval of a third COVID-19 vaccine—this one a single-shot version from Johnson & Johnson.

The Dow Jones Industrial Average closed 603 points higher. The S&P 500 closed 90 points higher. The NASDAQ was up 396 points.

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Although the La Niña weather pattern leveled off recently, it will return with warm and dry conditions over most of the United States into the summer, according to Dr. Art Douglas, professor emeritus at Creighton University.

“The Pacific jet stream is positioned far north from normal preventing moisture from reaching the continent,” Douglas explained at last week’s CattleFax Outlook, held during the virtual 2021 Cattle Industry Convention Winter Reboot. “The only significant moisture will be in the Ohio Valley and along the Canadian border from northeast North Dakota into Minnesota.”

Douglas 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 said, causing concerns for corn and soybean growers.

With crops and feed costs in mind, Mike Murphy, CattleFax vice president of research and risk management services, estimated that there will be 181 million planted acres of corn and soybeans in 2021, the most ever combined acres for those two commodities.

“That number is likely to be even higher, and in some regards it needs to be larger to balance the demand and build back supply,” said Murphy. He explained corn should be able to balance supply and demand, but soybean supplies will be snugger globally, with a smaller crop expected from South America.

On the demand side of the ledger, Murphy explained China is looking for higher quality feed ingredients, such as corn and soybeans, as that nation rebuilds its pork industry in the wake of African Swine Fever. That includes the estimated 700 million bu. of corn China purchased from the U.S. this year.

“As soybean prices drive higher, soybeans will have a greater influence on the value of corn, bringing corn prices with it,” said Murphy.

Spot soybean prices are expected to be $13.50-$16.50/bu. for the remainder of 2021, according to Murphy.

Negotiated cash fed cattle trade continued sluggish on Friday. Live trade last week was steady in Nebraska and the Southern Plains at $114/cwt.; steady to $1 lower at $114 in the western Corn Belt. Dressed trade was steady to $2 higher at $182.

Sluggish cattle trade, near-term heavy fed cattle supplies and month-end position squaring all helped pressure Cattle futures Friday.

Live Cattle futures closed an average of $1.50 lower, from 95¢ lower toward the back to $3.90 lower in expiring Feb.

Feeder Cattle futures closed an average of $2.27 lower.

Choice boxed beef cutout value was 14¢ higher Friday afternoon at $240.53/cwt. Select was 94¢ higher at $229.73.

Estimated total cattle slaughter last week of 666,000 head was 114,000 head more than the previous week and 38,000 more than the prior year. Year-to-date estimated cattle slaughter of 5.17 million head is 227,000 head fewer than the same time last year. Beef production of 4.37 billion lbs. is 87.9 million lbs. less (-1.97%) year over year.

Corn futures closed mostly 3¢ to 4¢ lower.

Soybean futures closed mostly 7¢ to 9¢ lower.

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Major U.S. financial indices closed mixed Friday, from the sharply lower Dow to higher tech stocks. Primary pressure continued to be investor fears about rapidly rising inflation and interest rates.

The Dow Jones Industrial Average closed 469 points lower. The S&P 500 closed 18 points lower. The NASDAQ was up 72 points.

CME WTI Crude Oil futures closed $1.93 to $2.03 lower through the front six contracts.

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“Beef in cold storage followed a fairly typical seasonal pattern in 2020 despite the coronavirus pandemic,” says Andrew P. Griffith, agricultural economist at the University of Tennessee, in his weekly market comments. “However, beef in cold storage accelerated more than normal the last quarter of 2020. This resulted in beef in cold storage at the end of January 2021 totaling 519 million lbs., which is the largest quantity of beef in cold storage at the end of January since 2017. This is not an unmanageable quantity of beef, but it could indicate that beef is slowly backing up in the supply chain.” He adds that recently higher wholesale beef values may suggest supplies will be easily cleared.

Total pounds of beef in freezers Jan. 31 were down 3% from the previous month, but up 6% from last year, according to the latest USDA Cold Storage report.