WLI

Negotiated cash fed cattle trade was slow on light demand in the Southern Plains through Wednesday afternoon. Live prices were steady to $1.50 higher in the Texas Panhandle at mostly $119/cwt. There were a few live trades in Kansas at $120, but too few to trend; $119 last week.

Trade was limited on light demand in Nebraska. Dressed trade was at $191, steady with the previous day and $1 to $3 higher than last week. There were a few live trades at $120, but too few to trend; $118 last week.

Elsewhere, trade was mostly inactive on light demand.

Live prices in the western Corn Belt Tuesday were $118-$120, compared to $119 last week. Dressed prices last week were $187-$190.

Cattle feeders offered 2,469 head in Central Stockyards’ weekly Fed Cattle Exchange Auction. Of those, 1,588 head sold (1,114 heifers and 474 steers) for a weighted average price of $119.93/cwt., via live weight and bid-the-grid. The majority was from Texas.

Slaughter steers sold $1-$2 higher at Sioux Falls Regional in South Dakota and slaughter heifers traded steady to $1 higher. There were 168 Choice 3-4 steers weighing an average of 1,534 lbs., bringing an average of $119.56.

Choice steers and heifers sold $4.25 to $5.75 higher at the fat auction in Tama, IA. There were 152 Choice 2-4 steers weighing an average of 1,442 lbs., bringing an average of $125.65.

Feeder Cattle futures continued their nascent rally Wednesday, supported by more optimistic projections of the balance sheet for corn, in the monthly World Agricultural Supply and Demand Estimates. Live Cattle closed narrowly mixed with some likely profit taking and sharply lower outside markets.

Live Cattle futures closed an average of 38¢ higher, except unchanged in two contracts and down an average of 12¢ in two.

Feeder Cattle futures closed an average of $1.79 higher ($1.42 higher at the front of the board to $2.20 higher at the back).

Choice boxed beef cutout value was $2.71 higher Wednesday afternoon at $315.08/cwt. Select was 82¢ higher at $297.16.

The monthly World Agricultural Supply and Demand Estimates (see below) stoked Soybean futures Wednesday, but dampened new-crop Corn futures.

Corn futures closed mostly 13¢ to 18¢ lower through the new crop year and then mostly 2¢ to 9¢ lower.

Soybean futures closed 11¢ to 23¢ higher through Jan ‘22, then mostly 15¢ to 17¢ lower.

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Major U.S. financial indices closed sharply lower Wednesday, pressured by indicators of higher inflation than investors expected.

The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.8% in April, according to the U.S. Bureau of Labor Statistics. That followed an increase of 0.6% the previous month. The all items index is up 4.2% over the last 12 months, the steepest rise since the period ending September 2008.

The Dow Jones Industrial Average closed 681 points lower. The S&P 500 closed 89 points lower. The NASDAQ was down 357 points.

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USDA’s latest monthly World Agricultural Supply and Demand Estimates pegged beef production for this year at 27.9 billion lbs., which would be 260 million lbs. more (0.94%) than the previous month and 726 million lbs. more (2.67%) than last year. Increased fed and non-fed slaughter projections drove the adjustment.

The forecast annual average five-area direct fed steer price was projected at $116.30/cwt., which was 30¢ higher than the previous month. Projected average prices are $118 in the second quarter, $114 in the third quarter and $120 in the fourth quarter.

Hay stocks on farms May 1 of 18.0 million tons were 2.4 million tons less than the same time last year, according to the USDA Crop Production report.

Projections for total red meat and poultry production increased 161 million lbs. (0.15%) month to month. That would be 693 million lbs. more (0.65%) than last year.

Corn

The new corn crop is projected at 15.0 billion bu., up from last year on increased area and a return to trend yield of 179.5 bu./acre. With beginning stocks sharply lower year over year, total corn supplies are forecast to increase modestly to 16.3 billion bu.

The season-average corn price received by producers in 2021-22 was projected at $5.70/bu., up $1.35 from a year ago.

Soybeans

The soybean crop was projected at 4.4 billion bu., up 270 million from last year on increased harvested area and trend yields. With lower beginning stocks, soybean supplies were projected 3% less than last year.

With prices for fall delivery above $14.00/bu. in some locations, the 2021-22 U.S. season-average soybean price was projected at $13.85/bu., up $2.60 from 2020-21. Soybean meal prices were forecast at $400 per short ton, down $5.00 from the revised forecast for 2020-21. Soybean oil prices were forecast at 65.0¢/lb., up 10¢ from the revised 2020-21 forecast.

Wheat

Projected 2021-22 ending stocks were projected 11% lower than last year at 774 million bu., the lowest level in seven years. That’s based on lower carry-in stocks and production increasing 3%.

The projected 2021-22 season-average farm wheat price was $6.50/bu., which would be $1.45 higher than last year’s revised price.

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

Although too few transactions to trend, there were a few dressed trades in Nebraska at $191/cwt., which was $1-$3 higher than last week; a few lives trades in the western Corn Belt at $120, which was $1-$3 higher. Elsewhere, trade was mostly inactive on light demand or at a standstill.

Cattle futures maintained gains from the previous session, supported by the outlook for higher cash prices and continued wholesale strength.

Live Cattle futures closed an average of $1.14 higher (40¢ to $1.70 higher). 

Feeder Cattle futures closed an average of 25¢ higher, except for 12¢ lower in spot May. 

Choice boxed beef cutout value was $3.26 higher Tuesday afternoon at $312.37/cwt. Select was $2.58 higher at $296.34

Grain futures recovered from sharp losses the previous day to surge ahead again in the front months, with likely profit taking and positioning ahead of Wednesday’s monthly World Agricultural Supply and Demand Estimates.

Corn futures closed 10¢ to 11¢ higher in the front two contracts, and then mostly 2¢ to 5¢ higher.

Soybean futures closed 16¢ to 27¢ higher through Jan ‘22,  then mostly 4¢ to 11¢ higher.

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Major U.S. financial indices closed lower Tuesday as ongoing supply chain disruptions and reports of labor shortages fueled inflation worries.

The Dow Jones Industrial Average closed 473 points lower. The S&P 500 closed 36 points lower. The NASDAQ was down 12 points.

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“Weekly cattle slaughter has been averaging near 650,000 head per week, except for the first week in January and the winter storm in February. This is near post-pandemic weekly slaughter highs, which signal that COVID-related changes in processing facilities are limiting slaughter levels,” say analysts with the Livestock Marketing Information Center (LMIC), in the May 7 Livestock Monitor. “The capacity-limited flow of cattle has limited upside potential for cattle prices but has led to a rise in the Choice boxed beef cutout value since the start of the year which has increased 41.1% ($85.06) to 291.79 per cwt.” Choice price was $312.37 Tuesday.

On the other side of the trade, LMIC analysts say the five-area direct weekly weighted average steer price rose from $111.28/cwt. at the start of the year to $122.03 in mid-April. Since then, prices declined.

Tyson Foods, Inc. provided another perspective in its second-quarter financial results released Monday.

“Beef sales volume decreased during the second quarter of fiscal 2021 due to a reduction in live cattle processed, partially associated with the impacts of severe winter weather and a challenging labor environment,” according to the Tyson report. “…Average sales price increased in the second quarter and first six months of fiscal 2021 as demand for our beef products remained strong. Operating income increased in the second quarter and first six months of fiscal 2021 due to strong demand as we continued to optimize revenues relative to live cattle supply, partially offset by production inefficiencies and direct incremental expenses related to COVID-19.”

Dean Banks, Tyson Foods President and CEO, noted, “We’re seeing substantial inflation across our supply chain, which will likely create margin pressure during the back half of the year.”

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

Live prices last week were at $117.50-$119.00/cwt. in the Texas Panhandle, $119 in Kansas, $118 in Nebraska and $117-$119 in the western Corn Belt. Dressed prices were $187-$190.

Rain in the Corn Belt pressured Corn futures Monday, opening the gate for Cattle futures to trade higher and begin taking a swipe at extremely oversold conditions.

Live Cattle futures closed an average of $1.03 higher, an average of $1.46 higher across the front half of the board and then an average of 61¢ higher, except unchanged in the back contract.

Feeder Cattle futures closed an average of $3.36 higher ($2.35 higher toward the back to $4.42 higher toward the front).

Choice boxed beef cutout value was $3.23 higher at $309.11/cwt. Select was $3.49 higher at $293.76.

Corn futures closed 20¢ to 27¢ lower through Jly ‘22, and then mostly 4¢ to 9¢ lower.

Soybean futures closed mostly 8¢ to 9¢ lower, but as much as 19¢ lower.

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Major U.S. financial indices closed lower Monday, pressured by a selloff in big tech stocks.

The Dow Jones Industrial Average closed 34 points lower. The S&P 500 was down 34 points. The NASDAQ was down 350 points. 

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“It now appears that it will take the remainder of the second quarter and likely much of the third quarter of the year to move the fed cattle industry into tighter numbers and relieve the capacity constraints that are limiting the fed cattle market,” says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University.

In his weekly market comments, Peel provides insight to U.S. beef packing capacity over time. In the 1980’s, when much of the current capacity was constructed, he explains cattle inventories averaged 15% more than in the last decade and there was surplus capacity. That fueled closing some plants like the Tyson plant at Emporia, KS in 2008 and the Cargill plant at Plainview, TX in 2013. Before that,  ConAgra never replaced its facility that burned at Garden City, KS in 2000.

“The cyclical expansion in cattle numbers from 2014 to 2019 has now pushed cattle slaughter beyond packing industry capacity,” Peel says. “It is estimated that annual average slaughter has exceeded capacity since 2016. Although cattle numbers peaked cyclically in 2019, feedlot production is just now at a peak in early 2021, partly as a result of pandemic delays in 2020.”

Saturday harvests are used to bridge some of the gap. For instance, Saturday slaughter accounted for 2.7% of weekly slaughter in 2012 and 7.3% in 2007, according to Peel. Saturdays accounted for more than 9% of weekly slaughter in 2019 and 2020; 10% so far this year.

“Slaughter needs will be seasonally larger in the coming weeks and it will be difficult for feedlots to get more current. It will be challenging to maintain, let alone push Saturday slaughter in the coming weeks,” Peel says.

Negotiated cash fed cattle trade was mostly inactive on very light demand in Kansas through Friday afternoon. Elsewhere, trade was at a standstill, according to the Agricultural Marketing Service.

Live prices for the week were steady to 50¢ lower in the Texas Panhandle at $117.50-$119/cwt., steady in Kansas at $119, $1-$2 lower in Nebraska at $118 and steady to $1 lower in the western Corn Belt at$118-$119. Dressed trade was $1-$2 lower in Nebraska at $188-$190 and steady to $4 lower in the western Corn Belt at $187-$190.

Feeder Cattle futures closed mostly higher Friday, but off of session highs, in the face of increasing front-month Corn futures. Live Cattle futures tagged along.

Live Cattle futures closed an average of 32¢ higher in five contracts and then unchanged to 5¢ lower

Feeder Cattle futures closed an average of 65¢ higher through the front five contracts (27¢ to $1.25 higher) and then unchanged to 27¢ lower.

Choice boxed beef cutout value was 49¢ lower at $305.88/cwt. Select was 91¢ higher at $290.27

Total estimated cattle slaughter for the week ending May 7 was 638,000 head, which was 11,000 head fewer than the previous week. Total estimated beef production of 527.3 million lbs. was 10 million lbs. less week to week.

Corn futures closed mostly 11¢ to 13¢ higher through Jly ‘22, and then mostly 2¢ to 3¢ lower.

Soybean futures closed 15¢ to 25¢ higher through May ‘22, and then mostly 9¢ to 13¢ higher.

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Major U.S. financial indices closed higher Friday, amid one of those frequent non-intuitive paradoxes. Presumably, much of the support stemmed from investors betting the Federal Reserve will maintain dovish monetary policy longer, due to April employment numbers falling far short of expectations.

Total non-farm payroll employment increased 266,000 in April, according to the U.S. Bureau of Labor Statistics. Various reports pegged pre-report estimates at closer to 1 million.

Average hourly earnings for all employees on private non-farm payrolls were $30.17 in April, up 21¢ from the previous month.

The Dow Jones Industrial Average closed 229 points higher. The S&P 500 was up closed 30 points higher. The NASDAQ was up 119 points.

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“Timely rains remain critical to being able to stock cattle through the summer,” say analysts with the Livestock Marketing Information Center (LMIC). “ Drought continues to intensify across the U.S. and is looking dismal in key areas.  The Western half of the U.S. is in the worst stages of drought (65%-D0-D4, 47% D3-D4), a situation that has persisted since last year and is escalating.”

As noted in Cattle Current last week, USDA’s first seasonal assessment ranked just 22% of the nation’s pasture and range as Good or Excellent, versus 46% at the same time last year. Conversely, 47% was rated as Poor or Very Poor, compared to 16% a year earlier.

“One of the newer developments in the Drought Monitor has been the spread of dryness across the Corn Belt,” say LMIC analysts, in the latest Livestock Monitor.  The Drought Monitor indicates that 44% of this region is in some level of drought. Dryness is less of a concern when planting, and typically means faster acres planted…The problem is more about soil moisture and growing phases which can affect crop yields.”

Based on USDA’s Crop Progress report last week, LMIC analysts point out top soil moisture conditions are rated as Short or Very short across 37% of cropland in the continental U.S. About 55% of cropland is reporting adequate moisture compared to 65% in 2020

“These figures are worrisome but with most of the growing season ahead of us, it’s early to be calling for yield declines just yet,” say LMIC analysts.

Negotiated cash fed cattle trade was slow on light demand in Kansas through Thursday afternoon. Live prices were steady with the previous day at $119/cwt., according to the Agricultural Marketing Service.

Elsewhere, trade was limited on light demand with too few transactions to trend.

Earlier in the week, live prices were at $117.50 to $119.00 in the Texas Panhandle, at $118 in Nebraska and at $118 to $119 in the western Corn Belt. Dressed prices were at $187 to $190. Live prices in Colorado last week were at $119-$120.

Feeder Cattle futures gave back everything gained in the previous session as corn prices surged higher yet again on Thursday. Live Cattle futures extended modest gains, supported by blooming wholesale beef values and a sizable gain in open interest the previous day.

Live Cattle futures closed an average of 66¢ higher.

Feeder Cattle futures closed an average of $2.02 lower.

Choice boxed beef cutout value was $1.59 higher Thursday afternoon  at $306.37/cwt. Select was $3.18 higher at $289.36

The average dressed steer weighing for the week ending Apr. 24 was 896 lbs., according to USDA’s Actual Slaughter Under Federal Inspection report. That was 2 lbs. lighter than the previous week. The average dressed heifer weight of 825 lbs. was 12 lbs. lighter. Beef production was 16.9 million lbs. at 547.4 million lbs.

Corn futures closed 10¢ to 20¢ higher from Jly ‘21 to Jly ‘22, mostly 6¢ to 8¢ higher in other contracts.

Soybean futures closed 20¢ to 28¢ higher through Mar ‘22, and then mostly 11¢ to 13¢ higher.

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Major U.S. financial indices closed higher Thursday, apparently buoyed by the previous day’s bullish ADP^®National Employment Report^TM, and betting on similar results in the government’s employment situation summary due out Friday.

The Dow Jones Industrial Average closed 318 points higher. The S&P 500 closed 34 points higher. The NASDAQ was up 50 points.

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U.S. beef exports surged in March, with volume up 8% year over year, the second most in the post-BSE era, according to data released by USDA and compiled by the U.S. Meat Export Federation (USMEF).

Beef exports totaled 124,808 metric tons (mt) in March. Export value for the month exceeded $800 million for the first time at $801.9 million, up 14% year-over-year. Beef muscle cut exports set new monthly records for both volume (98,986 mt, up 13% from a year ago) and value ($718.3 million, up 17%). For the first quarter, beef exports pulled even with last year’s pace at 333,348 mt, valued at $2.12 billion. For beef muscle cuts, first quarter exports increased 4% to 262,914 mt, valued at $1.9 billion (up 5%).

March highlights for U.S. beef included record exports to China, Honduras and the Philippines.

March pork exports were record-large at 294,724 mt, up 1% from last year’s strong total, setting a new value record at $794.9 million (up 4%).

“It’s very gratifying to see such an outstanding breakout month for U.S. beef and pork exports,” says Dan Halstrom, USMEF President and CEO. “Exports were off to a respectable start in 2021, considering the logistical and labor challenges the industry is facing and ongoing restrictions on the foodservice sector in many key markets. While these obstacles are not totally behind us, the March results show the situation is improving and the export totals better reflect the strong level of global demand for U.S. red meat.”

Muscle cuts drove March export growth, but Halstrom is also encouraged by a rebound in shipments of beef and pork variety meat.

“The tight labor situation at the plant level has been especially hard on variety meat volumes,” Halstrom explains. “But March variety meat exports matched last year’s performance for pork and were the largest of 2021 on the beef side. It’s important that the capture rate for variety meat continues to improve, as this is a critical component of the export product mix.”