WLI

Negotiated cash fed cattle trade last week ended up steady in the Southern Plains at $114/cwt., according to the Agricultural Marketing Service. Live trades were steady to $1 higher in Nebraska at $114; dressed trade steady to $1 higher at $180-$181. In the western Corn Belt, prices were steady to $2 higher on a live basis at $114-$115 and steady to $2 higher in the beef at $180-$182.

Through Thursday, the five-area direct average steer price was $114.11/cwt. on a live basis, which was 33¢ more than the previous week but $5.66 lower than the same week last year. The average five-area dressed steer price was 64¢ higher week to week at $180.71, which was $9.39 less year over year.

Cattle futures closed higher Friday with steady cash prices, lower Corn futures, the week’s strong wholesale beef values and expectations for packers to pick up production following storm disruptions.

Live Cattle futures closed an average of 71¢ higher.

Feeder Cattle futures closed an average of 90¢ higher.

Choice boxed beef cutout value was 38¢ higher Friday afternoon at $239.23/cwt. Select was 43¢ higher at $227.90.

Estimated cattle slaughter for the week of 552,000 head was 56,000 head fewer than the previous week and 74,000 head fewer than the same week last year. Estimated year-to-date cattle slaughter of 4.50 million head is 263,000 head fewer (-5.52%) than last year. Estimated year-to-date beef production of 3.81 billion lbs. is 124.8 million lbs. less (-3.17%) than the same time last year.

Corn futures closed 6¢ to 7¢ lower through the front three contracts, mostly fractionally higher to 1¢ higher through Jly ’23 and then mostly 3¢ lower.

Soybean futures closed mostly 3¢ to 9¢ higher.

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Major U.S. financial indices closed narrowly mixed Friday. Likely profit taking and inflation jitters counterbalanced positive economic news.

Existing-home sales of 6.69 million rose 0.6% in January, marking two consecutive months of growth, according to the National Association of Realtors® (NAR). Sales were 23.7% more year over year.

“Home sales continue to ascend in the first month of the year, as buyers quickly snatched up virtually every new listing coming on the market,” says Lawrence Yun, NAR’s chief economist. “Sales easily could have been even 20% higher if there had been more inventory and more choices.”

The Dow Jones Industrial Average closed fractionally higher. The S&P 500 closed 7 points lower. The NASDAQ was up 9 points. 

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Feedlots with 1,000 head or more capacity placed 2.017 million head in January, according to Friday’s monthly Cattle on Feed report. That was about 3% more year over year and about 3% more than pre-report expectations. The report accounts for feedlots with 1,000 head or more capacity.

In terms of weight, 42.14% went on feed weighing 699 lbs. or less; 49.18% weighed 700-899 lbs.; 8.68% weighed 900 lbs. or more.

“With higher placements in January, rising feed costs are likely to become more of a focus and concern,” say analysts with the Livestock Marketing Information Center, in the latest Livestock Monitor. “The weekly Omaha corn price for January averaged $5.04/bu., which is a 15.2% ($0.67 per bushel) rise over December 2020 and 32.0% ($1.23 per bushel) higher than last year. High feed costs may incentivize cow-calf operators to add more weight to calves before placing into feedlots. This may be a challenge as much of the western U.S. remains in drought, potentially limiting available pasture and feed supplies. The harsh winter weather in mid-February likely depleted hay stocks in some areas.”

Marketings in January of 1.822 million head were 5.6% less year over year and slightly fewer than expected.

Total cattle on feed Feb. 1 of 12.106 million head were 1.5% more than a year earlier and about 0.5% more than expectations. That’s the second most for the month since the data series began in 1996.

Negotiated cash fed cattle trade was limited on light demand in all major cattle feeding regions through Thursday afternoon, according to the Agricultural Marketing Service. Live sales were steady with the prior week at $114/cwt. in the Southern Plains. There were a few live sales at $114 in Nebraska and a few in the western Corn Belt at $115, but too few to trend.

Prices last week were $113-$114 in Nebraska on a live basis and at $112-$115 in the western Corn Belt. Dressed trade was at $180.

Cattle feeders offered 1,518 head of Southern Plains steers and heifers in Central Stockyards’ special Fed Cattle Exchange auction on Thursday. Of those, 737 head sold (5 lots), via live weight and Bid-the-Grid for $114/cwt. The exception was 41 head bringing $113.75.

Cattle futures closed mixed but mostly lower Thursday, pressured again by supply chain disruptions and uncertainty about post-storm impacts. Positioning ahead of Friday’s monthly Cattle on Feed report also could have been in play.

Live Cattle futures closed an average of 70¢ lower (17¢ to $1.22 lower), except for an average of 32¢ higher in the back three contracts.

Feeder Cattle futures closed an average of 48¢ lower, except from unchanged to an average of 8¢ higher in three contracts.

Choice boxed beef cutout value was $1.34 higher Thursday afternoon at $238.85/cwt. Select was $1.83 higher at $227.47.

The average dressed steer weight the week ending Feb. 6 was 919 lbs., which was 1 lb. lighter than the previous week but 16 lbs. heavier than the same time a year earlier, according to USDA’s Actual Slaughter Under Federal Inspection report. The average dressed heifer weight of 848 lbs. was 5 lbs. lighter week to week but 14 lbs. heavier year over year. Total fed cattle slaughter for the week of 509,053 head was 16,884 head more than the same week last year.

Corn futures closed mixed, mostly from 1¢ lower to 1¢ higher.

Soybean futures closed 6¢ to 8¢ lower through the front four contracts, then 2¢ lower to mostly 2¢ to 4¢ higher.

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Major U.S. financial indices closed lower Thursday, pressured in part by discouraging jobs data.

Initial weekly unemployment insurance claims for the week ending Feb. 13 increased by 13,000 to 861,000, according to the U.S. Department of Labor. That was more than the trade expected.

The Dow Jones Industrial Average closed 119 points lower. The S&P 500 closed 17 point lower. The NASDAQ was down 100 points.

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U.S. beef and veal exports for fiscal year (FY) 2021 are projected to be $7.4 billion, according to the latest quarterly Outlook for U.S. Trade report from USDA’s Economic Research Service (ERS) and Foreign Agricultural Service (FAS). The forecast is $300 million more than the November estimate, mostly on increased unit values. The total would be $756 million more than FY 2020.

Total FY 2021 U.S. livestock, dairy, and poultry exports are forecast $300 million more than the November projection at $32.6 billion.

Total FY 2021 U.S. agricultural exports are forecast $5 billion more than the November projection at $157.0 billion, driven by higher oilseed and grain export forecasts.

“The global COVID-19 pandemic remains the defining variable impacting economic growth for countries around the globe,” say ERS-FAS analysts. “The success of both economic relief programs and vaccination deployments is expected to shape the growth rates and extent of recovery in FY 2021. Several new variants of the virus pose concerns for prolonged economic setbacks, but widespread distribution of vaccines has the potential to provide a buffer against further economic disruption. Global gross domestic product (GDP) is projected to grow 5.5% in FY 2021. Containing the pandemic, restoring consumer confidence, and boosting consumption levels are essential to advancing growth.”

For perspective, those analysts note global GDP last year declined by about 3.5%.

“The impact of wide-ranging adaptations in monetary policy and shifts in international trade flows due to the pandemic have had notable impacts on foreign exchange rates over the last 14 months,” says ERS-FAS analysts. “The initial outbreak of COVID-19 caused a flight of currency toward the U.S. dollar, leading to its dramatic appreciation in early 2020. As the outbreak steadied, and interest rates on U.S. Treasuries remained low relative to government debt from other currency safe havens, particularly the European Union’s Euro, the dollar has depreciated steadily since April…The recent currency trend of a weakening U.S. dollar relative to the Japanese yen, Euro, and Chinese renminbi yuan is expected to continue into 2021 but moderate as the year progresses.”

U.S. agricultural imports in FY 2021 are forecast at $137.5 billion, up $500 million from the November forecast, led by increases in livestock, dairy, and poultry imports.

Negotiated cash fed cattle trade was at a standstill in all major cattle feeding regions through Wednesday afternoon, according to the Agricultural Marketing Service. There was some trade in the Texas Panhandle on Tuesday at $114/cwt., which was steady with last week.

Impacts from the severe weather, including reports of reduced slaughter at some packing plants in the Southern Plains, due to rolling power outages, might help explain what appears to be a tough road to maintaining steady fed cattle prices this week. Reduced production also helps account for the atypical rise in wholesale beef values.

Cattle feeders offered 1,444 head (9 lots) in Central Stockyards’ (CS) weekly Fed Cattle Exchange auction, all from Kansas and Texas. None sold. The reserve price for most was $114.50/cwt. CS will host another sale Thursday.

Choice steers and heifers sold 75¢ to $1.00/cwt. higher amid a light offering at the fat auction in Tama, IA. The deepest test was 198 head of Choice 2-4 heifers weighing an average of 1,362 lbs., bringing an average of $114.92. That was at the upper end of last week’s country trade in the region.

At Sioux Falls Regional, though, slaughter steers sold steady, while heifers traded $2-$3 lower. There were 171 Choice 2-3 steers weighing an average of 1,457 lbs. and bringing an average of $113.37.

Cattle futures closed lower Wednesday, pressured by supply chain disruptions, as well as uncertainty about post-storm impacts.

Live Cattle futures closed an average of 58¢ lower, from 2¢ lower toward the back to $1.65 lower toward the front.

Feeder Cattle futures closed an average of $1.26 lower, from 85¢ lower to $2.35 lower in spot Mar.

Choice boxed beef cutout value was $2.74 higher Wednesday afternoon at $237.51/cwt. Select was $3.61 higher at $225.64.

Corn futures closed mostly 1¢ to 3¢ higher through Sep ‘22, and then mostly unchanged to fractionally higher.

Soybean futures closed mostly 1¢ to 3¢ lower, except for 3¢ higher in near Nov and Jan.

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Major U.S. financial indices closed narrowly mixed amid volatile trade Wednesday, despite domestic retail sales last month shattering expectations to the upside.

U.S. retail and food services sales in January were 5.3% more than the previous month at $586.2 billion, according to the U.S. Census Bureau.

Apparently, the sharp increase fueled investor concerns about inflation, as did the monthly Producer Price Index (PPI) from the U.S. Bureau of Labor Statistics. It increased 1.3% in January, the steepest rise since the index began in 2009.

The Dow Jones Industrial Average closed 90 points higher. The S&P 500 was down 1 point to 3,931. The NASDAQ was down 82 points.

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Creighton University’s Rural Mainstreet Index (RMI) increased to 52.0 in January, from 51.6 in December. According to the monthly survey of bank CEOs in rural areas of a 10-state region dependent on agriculture and/or energy, the index increased to its second highest level since January 2020. The index ranges between 0 and 100 with a reading of 50.0 representing growth neutral.

“Recent sharp improvements in agriculture commodity prices, federal farm support payments, and the Federal Reserve’s record-low short-term interest rates have underpinned the Rural Mainstreet Economy in a solid and positive growth range. However, the rural economy remains well below pre-pandemic levels,” says Ernie Goss, Jack A. MacAllister Chair in Regional Economics at Creighton University’s Heider College of Business.

The confidence index, which reflects bank CEO expectations for the economy six months out, declined slightly to a still healthy 60.0 from December’s 62.9.

“Federal farm support payments, improving grain prices, and advancing exports have supported confidence, offsetting negatives from pandemic ravaged retail and leisure and hospitality companies in rural areas,” Goss explains.

For a fourth straight month, the farmland price index advanced above growth neutral. The January level of 56.3 was the highest level since July 2013, and up from 55.0 in December. This is first time since 2013 that Creighton’s survey has recorded four straight months of above growth-neutral farmland prices.

Similarly, the farm equipment-sales index the past two months rose above growth neutral for the first time in 86 months. It was 50.2 in December and then rose to 54.5 in January, the highest level since April 2013.

According to Goss, bankers reported that their primary economic concerns for this year are excessive inflation and higher long-term interest rates.

“I feel the economy is moving in a positive direction that can be rattled by a combination of higher taxes, higher inflation, and a return of stricter regulation,” explained Jim Levick, president of Nebraska State Bank in Oshkosh, NE.

Negotiated cash fed cattle trade was at a standstill in all major cattle feeding regions through Tuesday afternoon, according to the Agricultural Marketing Service.

Trade last week was steady in the Southern Plains at $114/cwt. on a live basis, $1-$2 higher in Nebraska at $113-$114 and steady to $1 higher in the western Corn Belt at $112-$115. Dressed trade was steady to $2 higher at $180.

Futures markets closed mixed but mainly higher Tuesday, with Feeder Cattle fading pressure from surging grain futures and Live Cattle helped by higher wholesale beef values and recently increasing open interest.

Live Cattle futures closed mixed, from an average of 41¢ lower in four contracts (5¢ lower at the back to $1.05 lower in spot Feb) to an average of 31¢ higher.  

Feeder Cattle futures closed an average of 78¢ higher, except for an average of 10¢ lower in the front three contracts.

Choice boxed beef cutout value was $2.33 higher Tuesday afternoon at $234.77/cwt. Select was 62¢ higher at $222.03.

Grain futures surged, led by wheat and concerns about winter kill from the severe weather.

Corn futures closed 11¢ to 13¢ higher through Sep ‘21, 7¢ to 9¢ higher through the next four contracts and then mostly 3¢ to 4¢ higher. 

Soybean futures closed 11¢ to 17¢ higher. 

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Major U.S. financial indices closed narrowly mixed Tuesday. Pressure included investors fretting over escalating Treasury yield rates pointing toward higher interest rates and the potential impact on the speed of economic recovery.

The Dow Jones Industrial Average closed 64 points higher. The S&P 500 closed 2 points lower. The NASDAQ closed 47 points lower.

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“Heavier anticipated carcass weights and greater fed cattle marketings are expected to lift 2021 beef production to record levels at 27.540 billion lbs.,” say analysts with USDA’s Economic Research Service (ERS), in the latest monthly Livestock, Dairy and Poultry Outlook (LDPO).

Based on January’s Actual Slaughter Under Federal Inspection report, ERS analysts say average carcass weights were more than 18 lbs. heavier than the same time a year earlier at 844.1 lbs. They add that the same data suggests cattle slaughter is 3.7% more than last year.

“Although the number of cattle outside feedlots Jan. 1 was less than a year ago, a larger proportion of cattle on small grains pastures, and dry conditions in parts of the Plains States, raised prospects for higher anticipated placements in first-half 2021. As a result, marketings in second-half 2021 were increased, which also contributed to a raised production forecast,” say ERS analysts.

Those projections helped lead to the lower month-to-month forecast for an average five-area direct fed steer price of $115/cwt.

ERS also lowered expectations for feeder steer prices.

“Feeder steer prices for January 2021 averaged $133.94/cwt. for steers weighing 750-800 lbs. sold at Oklahoma City National Stockyards, about 7% below the average for January 2020. With prices for the first two weeks of February almost $7 below the same month last year, the first-quarter 2021 forecast was lowered $2 to $132/cwt.,” say ERS analysts. “Revisions to the 2020 calf crop tightened anticipated feeder cattle supplies in second-half 2021. However, higher expected feed costs offset expectations for stronger prices the rest of the year; as a result, the second-half 2021 feeder steer price forecasts are unchanged from last month.”

ERS forecasts the feeder steer price at $134/cwt. in the second quarter, $139 in the third and $140 in the fourth quarter for an annual average of $136.25. That would be only 80¢ more than the 2020 average.

Negotiated cash fed cattle trade was at a standstill in all major cattle feeding regions through Monday afternoon, according to the Agricultural Marketing Service.

Trade last week was steady in the Southern Plains at $114/cwt. on a live basis, $1-$2 higher in Nebraska at $113-$114 and steady to $1 higher in the western Corn Belt at $112-$115. Dressed trade was steady to $2 higher at $180.

The five-area direct average steer price last week was about even with the prior week at $113.83/cwt. on a live basis and at $180.10 in the beef. Confirmed trade volume was 19,328 head fewer at 62,079.

Futures markets were closed Monday in observance of President’s Day. Week to week on Friday, Live Cattle futures closed an average of 79¢ higher (45¢ to $1.40 higher). Feeder Cattle futures closed an average of $1.29 higher, from 17¢ higher at the back to $2.57 higher at the front.

Choice boxed beef cutout value was 7¢ higher Monday afternoon at $232.44/cwt. Select was 48¢ higher at $221.41.

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Equity markets were closed Monday in observance of President’s Day. Week to week on Friday, the DJIA closed 310 points higher, the NADASQ closed 239 points higher and the S&P 500 was up 48 points.

Crude Oil futures (WTI-CME) closed an average of $2.57 higher last week, through the front six contracts. The severe weather will likely boost energy markets this week.

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Frigid, prolonged temperatures in the Southern Plains, along with ice and snow are being described as once in a generation or downright history making.

“An unprecedented and expansive area of hazardous winter weather continues into President’s Day as disruptive snow and ice accumulations transpire across the South Central U.S.,” according to the National Weather Service on Monday. “This impressive onslaught of wicked wintry weather across much of the Lower 48 is due to the combination of strong Arctic high pressure supplying sub-freezing temperatures and an active storm track escorting waves of precipitation from coast to coast.”

Sub-zero temperatures and wind chills were expected to last several more days, as the storm system tracked from the Southern Plains toward the northeast. It was preceded by last week’s Arctic blast across the Northern and Central Plains.

“Wheat pasture cattle and other stockers are no doubt experiencing reduced gains or even weight loss in these conditions. Many cattle grazing dual-purpose wheat will need to be removed and marketed in the next two to three weeks, very likely a bit lighter in weight than expected,” says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly market comments.

Peel notes feeder cattle prices in the state were 3-10% lower last week as decreased demand overwhelmed the significant decline in auction volume. Some markets in the region closed last week and will this week.

“Feedlot cattle are no doubt impacted as well and the market effects will be apparent over time,” Peel says. “Reduced performance will show up as lower carcass weights in the coming weeks. The residual impacts of this historic weather event will likely effect cattle markets for several weeks.”