WLI

Negotiated cash fed cattle trade ranged from slow to limited trade on light demand up north, to mostly inactive in the Southern Plains, through Friday afternoon, according to the Agricultural Marketing Service.

For the week:

Live prices in the Southern Plains were steady at $114/cwt.

Live prices in Nebraska were $1-$2 higher at $113-$114. Dressed trade was steady to $2 higher at $180.

Live prices in the western Corn Belt were steady to $3 higher at $114-$115. Dressed trade was steady to $2 higher at $180.

The five-area direct average steer price through Thursday was $113.78/cwt. on a live basis, which was 50¢ lower than the previous week and $5.10 less than the prior year. The average steer price in the beef of $180.07 was 75¢ less than the prior week and $10.19 less than the previous year.

Estimated total cattle slaughter last week was 611,000 head, which was 42,000 head fewer than the previous week. Estimated year-to-date cattle slaughter of 3.95 million head is 185,000 head fewer (-4.47%) than the same period last year. Estimated year-to-date beef production of 3.35 billion lbs. is 68.2 million lbs. less (-2.0%) than a year earlier.

Cattle futures closed higher Friday with support from consolidating grain futures prices, as well as the outlook for higher cash prices next week, given the frigid weather and what appeared to be sluggish fed cattle trade for the week.

Live Cattle futures closed an average of 98¢ higher, from 22¢ lower toward the back to $2.05 higher toward the front.

Feeder Cattle futures closed an average of 98¢ higher (60¢ to $1.70 higher).

Choice boxed beef cutout value was 59¢ lower Friday afternoon at $232.37/cwt. Select was 64¢ higher at $220.93.

Corn futures closed 2¢ to 4¢ lower through Jly ‘22, and then mostly fractionally lower to 1¢ lower. 

Soybean futures closed 4¢ to 5¢ higher through Aug ‘21, and then mostly fractionally higher to 2¢ higher. 

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Major U.S. financial indices edged higher Friday, supported by higher oil prices and prospects for additional federal economic stimulus.

The Dow Jones Industrial Average closed 27 points higher. The S&P 500 closed 18 points higher. The NASDAQ was up 69 points.

Crude Oil futures (WTI-CME) closed an average of $2.57 higher through the front six contracts, week to week on Friday. That’s an average of $6.98 higher over the last two weeks.

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As might be suspected, the novelty of the pandemic overwhelmed conventional logic and expectations in many areas.

For instance, as COVID-19 began upending economies and supply chains last April, the Food and Agricultural Policy Institute (FAPRI) at the University of Missouri provided projected impacts. At the time, analysts there expected the pandemic would lead to lower prices for livestock producers. That happened, but not to the degree or for the reasons anticipated.

“In hindsight they note that they incorrectly assumed that supply chain concerns would play only a minor part in the story, and that the main cause of lower producer prices would be weaker consumer demand. They expected a contracting U.S. economy to reduce disposable income, and that consumers with less money in their pockets would choose to buy less meat and other high-value food products,” according to a recent FAPRI draft document—Expected and Unexpected Impacts of COVID-19 on U.S. Markets for Animal Products. That’s part of an investigation into the impacts of the COVID-19 pandemic on agriculture, food, and related supply chains, conducted by FAPRI and Texas A&M University’s Cross-Border Threat Screening and Supply Chain Defense (CBTS) DHS Center of Excellence.

Instead, real disposable income in the U.S. increased significantly, even as real GDP plunged, due to government stimulus programs. Domestic meat consumption increased slightly year over year, in the face of higher prices.

For context, FAPRI researchers note the average price paid to livestock producers declined 20% in April. At the same time, consumer prices began to increase sharply for meat, poultry, fish and eggs. By June, consumer prices were 10% more than in March. Both matched expectations as costs increased for meat processing and delivery.

“As packing plants were able to return to more normal levels of capacity utilization and as other supply chain problems were resolved or at least mitigated, these trends reversed,” say FAPRI researchers. “Consumer prices for meat and other animal products declined by more than 5% between June and November, while farm-level prices for animal products increased by 20% between April and November. It would be a mistake to say things are back to normal in the sector, but the situation has improved dramatically since the depths of the crisis last spring.”

Negotiated cash fed cattle trade was slow on light demand in all major cattle feeding regions through Thursday afternoon, according to the Agricultural Marketing Service. There were a few live trades in Nebraska, but too few to trend.

For the week so far, live trade in the Southern Plains is steady at $114/cwt. Dressed trade is steady to $2 higher at $180 in Nebraska and the western Corn Belt. Live trade in the latter two regions last week was at $112-$114.

Cattle futures closed narrowly mixed on Thursday.

Live Cattle futures closed an average of 52¢ higher, except for 80¢ lower in spot Feb. 

Feeder Cattle futures closed an average of 20¢ lower, except for unchanged to an average of 9¢ higher in three contracts.

Choice boxed beef cutout value was 6¢ lower through Thursday afternoon at $232.96/cwt. Select was 67¢ lower at $220.29.

The average dressed steer weight the week ending Jan. 30 was 920 lbs., which was 6 lbs. lighter than the previous week but 23 lbs. heavier than the same week a year earlier, according to USDA’s Actual Slaughter Under Federal Inspection report. The average dressed heifer weight of 853 lbs. was 2 lbs. heavier than the prior week and 20 lbs. heavier than the previous year.

Grain futures recovered some gains from the previous session’s steep decline as markets continue carving out a trading range.

Corn futures closed 6¢ to 7¢ higher through the front three contracts, and then 1¢ to 4¢ higher. 

Soybean futures closed 10¢ to 15¢ higher through Nov ‘21, and then mostly 3¢ to 5¢ higher. 

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Major U.S. financial indices closed narrowly mixed Thursday. Pressure included softer energy prices and more jobless claims than the trade expected.

Initial unemployment insurance claims for the week ending Feb. 6 were 793,000, which was 19,000 fewer than the previous week, according to the U.S. Department of Labor.

The Dow Jones Industrial Average closed 7 points lower. The S&P 500 was up 6 points. The NASDAQ was up 53 points.

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USDA’s latest Feed Outlook provides perspective on the global demand fueling higher grain prices.

For instance, the latest estimate for 2020-21 U.S. corn exports of 2,600 million bu. would be the most ever and 162 million bu. more than the previous record set in 2017-18.

“Export prospects improved due to increased shipments to China this year, culminating in 38.8 million bu. in December to that country, as reported by the Census Bureau,” according to analysts with USDA’s Economic Research Service (ERS). “September through December shipments to China reached 124 million bu., compared with less than a million during the same period in 2019-20. Total U.S. exports through December are 628 million bu., compared with 371 million during the same period in 2019-20. USDA Agriculture Marketing Service Export Inspections through Feb. 4 indicate a strong pace of exports since the New Year.”

ERS projects China will import 40.3 million tons of corn, barley, oats, and sorghum in 2020-21, more than double what that nation imported in 2019-20. Analysts cite high domestic prices and strong demand from that nation’s livestock sector as drivers to the increase.

“This change—coupled with lower coarse grain production and exports in the Black Sea region of Europe, due to hot and dry growing conditions in several key production regions—has substantially impacted 2020-21 feed grain trade,” say ERS analysts. “Price levels across the world are substantially higher than they were a year ago. China has increased its market share of trade for nearly every feed-grain commodity in 2020-21. Other significant import markets have seen their import outlooks reduced due to higher prices and increased competition.”

Negotiated cash fed cattle trade was slow on light demand in Kansas through Wednesday afternoon at $114/cwt. on a live basis, which was steady with last week.

Trade was also slow on light demand in the western Corn Belt with early dressed sales steady to $2 higher at $180. Live prices there last week were at $112-$114.

Elsewhere, trade was limited on light demand, with too few transactions to trend, according to the Agricultural Marketing Service.

Last week: live prices in the Texas Panhandle and Nebraska were at mostly $114; dressed trade in Nebraska was at $178-$180.

Cattle feeders offered 1,251 head (10 lots) in Central Stockyards’ weekly Fed Cattle Exchange auction. Of those, 518 head (four lots) from the Southern Plains sold for a weighted average price of $114/cwt., via live weight and Bid-the-Grid. That was steady with the previous week’s country trade in the region.

Slaughter steers and heifers sold $3-$5 higher at Sioux Falls Regional in South Dakota. There were 147 head of Choice 3-4 steers weighing an average of 1,548 lbs., bringing an average of $113.79. That was at the upper end of last week’s country price for the region.

Cattle futures closed mixed on Wednesday. Sharply lower Corn futures helped boost Feeder Cattle, while softer Choice wholesale beef values and demand uncertainty pressured Live Cattle.

Live Cattle futures closed an average of 87¢ lower, from 55¢ lower to $1.32 lower.

Feeder Cattle futures closed an average of 39¢ higher, from 10¢ to 85¢ higher

Choice boxed beef cutout value was $1.27 lower Wednesday afternoon at $233.02/cwt. Select was 23¢ higher at $220.96.

Grain futures fell hard on Wednesday, with likely profit taking following the WASDE report leaving South American production unchanged, whereas the trade expected a reduction.

Corn futures closed 11¢ to 21¢ lower through the front four contracts, 5¢ to 8¢ lower through the next five contracts and then mostly 1¢ to 2¢ lower.

Soybean futures closed 24¢ to 47¢ lower through Jan ‘22, 12¢ to 18¢ lower through the next five contracts and then mostly 8¢ lower.

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Major U.S. financial indices closed narrowly mixed Wednesday, as positive quarterly corporate earnings competed with a gloomy labor outlook.

In a speech to the Economic Club of New York on Wednesday, Federal Reserve Chair, Jerome Powell, painted a dour picture of the current labor market, in the pandemic’s wake, illustrating the daunting challenge to achieving maximum employment.

“After rising to 14.8% in April of last year, the published unemployment rate has fallen relatively swiftly, reaching 6.3% in January. But published unemployment rates during COVID have dramatically understated the deterioration in the labor market. Most importantly, the pandemic has led to the largest 12-month decline in labor force participation since at least 1948,” Powell explained. “… In addition, the Bureau of Labor Statistics reports that many unemployed individuals have been misclassified as employed. Correcting this misclassification and counting those who have left the labor force since last February as unemployed would boost the unemployment rate to close to 10% in January.”

The Dow Jones Industrial Average closed 69 points higher. The S&P 500 was down 1 point. The NASDQ was down 35 points. 

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“On-feed numbers are currently high but will moderate through the remainder of the year with smaller placements and smaller calf numbers. Further, the currently very large carcass weights will shrink into the spring as winter weather has its impact,” says Stephen Koontz, agricultural economist at Colorado State University, in the latest issue of In the Cattle Markets.

USDA’s recent Cattle report estimates the 2020 calf crop 1% less year over year at 35.1 million head. Analysts with the Livestock Marketing Information Center (LMIC) also point out estimates of the previous year’s calf crop were revised lower by about 500,000 head.

“The inventory report was decidedly bullish for cattle prices over the next three years. Tighter supplies of cattle will move through the system, lowering beef production,” say LMIC analysts, in the latest Livestock Monitor.

While declining cattle numbers will support cattle prices overall, Koontz sees more potential for fed cattle prices than those for calves and feeder cattle, due to the run up in feed prices.

“Even with the substantial increases in corn and soybean futures prices for nearby contracts, the current corn basis across the Central and Southern Plains remains strong – cash activity and price levels have followed the futures rally,” Koontz explains. “In this setting, these increases are not temporary but rather permanent. And permanent for cattle feeding cost-of-gains.”

LMIC analysts say drought and feed costs could impact cow-calf returns significantly. However, they believe higher year-over-year calf prices will support positive returns.

“I believe cow-calf producers should look hard at Livestock Revenue Protection (LRP) insurance,” Koontz says. “My outlook communications discussed the potential for returning to normal seasonal patterns and opportunities this year. For cow-calf producers that involves diversifying and making some sales in the spring and early summer, with fed cattle and beef price rallies. I am concerned that this year may play out more like last year. In 2020, selling opportunities evaporated through March. If the current changes to feed costs persists then we may be in for a repeat.”

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

Pressure in Corn futures helped boost Cattle futures Tuesday, especially Feeder Cattle.

Live Cattle futures closed an average of 32¢ higher (15¢ to 87¢ higher) except for an average of 25¢ lower in two contracts.

Feeder Cattle futures closed an average of $1.32 higher.

Choice boxed beef cutout value was $1.91 lower Tuesday afternoon at $234.29/cwt. Select was 12¢ higher at $220.73.

Corn futures closed 7¢ to 8¢ lower through the front three contracts and then mostly 1¢ to 2¢ lower. Estimated U.S. and world ending stocks were more than the average of expectations.

Soybean futures closed mostly 10¢ to 14¢ higher through Jan ‘22 and then mostly 8¢ to 9¢ higher.

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Major U.S. financial indices closed narrowly mixed Tuesday.

The Dow Jones Industrial Average closed 9 points lower. The S&P 500 closed 4 points lower. The NASDAQ was up 20 points.

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USDA’s Economic Research Service (ERS) increased projected beef production for 2021 and lowered expected fed steer prices slightly, in the latest monthly World Agricultural Supply and Demand Estimates (WASDE).

Beef production was estimated at 27.54 billion lbs., which was 350 million lbs. more (+1.29%) than the previous month. That would be 388 million lbs. more (+1.43%) than last year. Estimated beef production increased mostly on higher cattle slaughter and heavier than expected early-year cattle weights.

The average five-area direct fed steer price was projected 50¢ lower for the annual average at $115/cwt. Average prices are forecast at $113 in the first and second quarters, $114 in the third quarter and $119 in the fourth quarter.

Total red meat and poultry production for this year was projected at 107.60 billion lbs., which was 500 million lbs. more (+0.47%) than the previous month. That would be 1.08 billion lbs. more (+1.01%) than last year.

Among other WASDE highlights:

Corn—The outlook is for higher exports and lower ending stocks, which were projected 50 million bu. less than the previous month. The expected 2020-21 season-average corn price received by producers was raised 10¢ to $4.30/bu. 

Soybeans—The outlook is for increased exports and lower ending stocks. The U.S. season-average soybean price for 2020-21 is forecast at $11.15/bu., unchanged from the previous month. Soybean meal price is forecast $10 more per short ton at $400. The soybean oil price forecast was raised 1.5¢ to 40.0¢/lb. 

Wheat—The supply and demand outlook for 2020-21 U.S. was largely unchanged. The season-average farm price was raised 15¢/bu. to $5.00, based on NASS prices reported to date and expectations for futures and cash prices for the remainder of the marketing year.

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

Regionally, prices last week were mainly $1-$2 higher on a live basis at $114/cwt. in the Southern Plains, mostly $114 in Nebraska and at $112-$114 in the western Corn Belt. Dressed trade was steady to $2 higher at $178-$180.

The five-area direct steer price was $113.64/cwt. last week on a live basis, which was $1.00 more than the previous week. The average steer price in the beef of $179.26 was $1.70 higher.

Live Cattle futures mostly edged higher Monday, helped along by the higher cash prices and prospects of higher money this week as the coldest temperatures of the year erode cattle performance.

Live Cattle futures closed an average of 18¢ higher, except for 15¢ lower and 10¢ lower at either end of the board.

Feeder Cattle futures closed lower beneath the weight of grain futures, which likely got a boost from positioning ahead of Tuesday’s World Agricultural Supply and Demand Estimates.

Feeder Cattle futures closed an average of $1.29 lower, from 72¢ lower toward the front to $2.15 lower at the back.

Choice boxed beef cutout value was $1.62 higher Monday afternoon at $236.20/cwt. Select was 18¢ lower at $220.61.

Corn futures closed 11¢ to 15¢ higher through the front three contracts and then mostly 1¢ to 6¢ higher.

Soybean futures closed mostly 14¢ to 21¢ higher.

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Major U.S. financial indices closed higher Monday, with support from resurgent energy prices and optimism about the vaccination rollout getting the economy reopened sooner than later.

West Texas Intermediate Crude Oil futures on the CME were $1.08 to $1.15 higher through the front six contracts on Monday. That’s a little more than $5 higher week to week.

The Dow Jones Industrial Average closed 237 points higher. The S&P 500 closed 28 points higher. The NASDAQ was up 131 points.

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Although U.S. beef exports were 5% lower last year, in volume (1.25 million metric tons—mt) and value ($7.65 billion), they finished 2020 with a near record December, according to data released by USDA and compiled by the U.S. Meat Export Federation (USMEF).

December beef exports totaled 119,892 mt, up 8% from December 2019 and the largest in nearly 10 years. Export value in December was $744 million, up 9% from a year ago and the second highest total on record. Fourth-quarter volume was 4.5% more year over year. Beef exports to China were record-large in 2020. A new volume record was also achieved in Taiwan.

Foodservice restrictions in many major markets impacted beef exports significantly, but they trended higher late in the year, bolstered by very strong retail and holiday demand.

“Consumers across the world responded to the COVID-19 pandemic by seeking high-quality products they could enjoy at home, and U.S. beef and pork definitely met this need,” Says Dan Halstrom, USMEF president and CEO. “We expect these retail and home-delivery demand trends to continue even as sit-down restaurant dining recovers, creating robust opportunities for U.S. red meat export growth.”

Beef export value per head of fed slaughter was $349.19 in December, up 9% year over year and the highest level since April. For the year, beef export value per head of fed slaughter was down 2% at $302.31.

U.S. pork exports reached nearly 3 million mt in 2020, topping the 2019 record by 11%. Pork export value climbed 11% to a record $7.71 billion. Exports set new annual records in China/Hong Kong, Central America, Vietnam and Chile, and achieved strong fourth quarter growth in Japan and Mexico.