WLI

Negotiated cash fed cattle trade was slow on light demand in Kansas and Nebraska through Wednesday afternoon. Live trade was steady in Kansas at $114/cwt. and steady to $1 higher in Nebraska at $114.

Elsewhere, trade ranged from limited on light demand, to mostly inactive on very light demand, with too few transactions to trend, according to the Agricultural Marketing Service.

Last week, live prices were at $114/cwt. in the Southern Plains and Colorado and $112-$113 in the western Corn Belt. Dressed prices were at $180 in Nebraska and at $178-$180 in the western Corn Belt.

Cattle feeders sold near 1,000 head in Central Stockyards’ weekly Fed Cattle Exchange auction. Those selling—all from Texas except one lot from Nebraska—traded on a live weight basis at $114.50/cwt.

Cattle futures mostly edged higher Wednesday, supported by softer Corn futures after the front two contracts, as well as resurgent Choice wholesale beef values. Perhaps there was also some early positioning against the monthly Cattle on Feed report (see below).

Live Cattle futures closed an average of 52¢ higher, from 5¢ higher at the back to $1.22 higher in spot Apr. 

Feeder Cattle futures closed an average of 39¢ higher (7¢ to $1.32 higher), except for 10¢ and 47¢ lower in the back two contracts.

Choice boxed beef cutout value was $1.54 higher Wednesday afternoon at $228.47/cwt. Select was $1.18 lower at $217.59.

Corn futures closed fractionally lower to 2¢ lower, except for 3¢ higher and fractionally higher in the front two contracts.

Soybean futures closed mostly 5¢ to 10¢ lower.

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Major U.S. financial indices closed higher Wednesday, buoyed by reiteration from the Federal Reserve that it intends to maintain the dovish, accommodative stance toward interest rates.

“The Committee seeks to achieve maximum employment and inflation at the rate of 2% over the longer run. With inflation running persistently below this longer-run goal, the Committee will aim to achieve inflation moderately above 2% for some time so that inflation averages 2% over time and longer-term inflation expectations remain well anchored at 2%,” according to an FOMC statement. “The Committee expects to maintain an accommodative stance of monetary policy until these outcomes are achieved. The Committee decided to keep the target range for the federal funds rate at 0 to 0.25% and expects it will be appropriate to maintain this target range until labor market conditions have reached levels consistent with the Committee’s assessments of maximum employment and inflation has risen to 2% and is on track to moderately exceed 2% for some time.”

The Dow Jones Industrial Average closed 189 points higher. The S&P 500 closed 11 points higher. The NASDAQ was up 53 points.

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Last month’s severe winter weather likely shifted some feedlot marketings.

“Because of the weather disruption, there is a temporal shift of expected steer and heifer marketings out of the first quarter to be marketed in the second quarter,” say analysts with USDA’s Economic Research Service (ERS), in the monthly Livestock, Dairy and Poultry Outlook.

Derrell Peel, Extension livestock marketing specialist at Oklahoma State University provides some perspective on how the widespread storm affected feedlot performance.

“Steer and heifer slaughter dropped 7.1% year over year in the middle two weeks of February before bouncing back. Steer carcass weights dropped sharply in February, declining by 20 lbs. from 919 lbs. to 899 lbs. in the last two weeks of the month,” Peel says, in is weekly market comments. “The last week of February marks the first time in 71 weeks (since October 2019) that weekly steer carcass weights were lower than the previous year. Heifer carcass weights dropped from 850 to 834 lbs. in the same period.”

That same storm closed sale barns, which may have limited feedlot placements for the month. On the other hand, current and expected wheat prices may elevate feedlot placements in March, as more producers with a dual-purpose winter wheat crop look to put it in the bin.

“…the expectation that relatively high wheat prices may discourage the grazing-out of small grains pastures and move more cattle into feedlots sooner than previously expected is anticipated to shift placements from the second quarter to the first quarter,” ERS analysts say. “As a result, some fed cattle marketings are expected to shift from the fourth quarter to the third quarter.”

USDA’s monthly Cattle on Feed report comes out Friday afternoon. Analysts surveyed by Urner Barry and reported by the Daily Livestock Report expect, on average, February feedlot placements to be 1.7% less than a year earlier, February marketings to be 2.6% less and the Mar. 1 inventory to be 1.5% more.

Negotiated cash fed cattle trade was mostly inactive on light demand in the western Corn Belt through Tuesday afternoon, with too few transactions to trend. Elsewhere, trade was at a standstill, according to the Agricultural Marketing Service.

Last week, live prices were at $114/cwt. in the Southern Plains and Colorado, $113-$114 in Nebraska and $112-$113 in the western Corn Belt. Dressed prices were at $178-$180.

Cattle futures closed mixed Tuesday. There was no cash direction, but Lean Hog futures continue to offer support, as does expanding open interest.

Live Cattle futures closed an average of 22¢ higher, except for an average of 62¢ lower in the front two contracts.

Feeder Cattle futures closed narrowly mixed, from an average of 39¢ lower to an average of 9¢ higher.

Choice boxed beef cutout value was $2.16 higher Tuesday afternoon at $226.93/cwt. Select was 72¢ higher at $218.77.

Corn futures closed 1¢ to 4¢ higher through the front three contracts and then mostly fractionally lower.

Soybean futures closed 3¢ higher through the front three contracts and then fractionally higher to 1¢ higher.

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Major U.S. financial indices closed mainly narrowly mixed Tuesday as investors awaited further direction from the Federal Reserve’s policy meeting statement Wednesday.

The Dow Jones Industrial Average closed 127 points lower. The S&P 500 closed 6 points lower. The NASDAQ was up 11 points.

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Beef imports to the United States in January were 8.1% less than the previous year, driven by the least volume from Australia since 2005.

“Exportable beef supplies in Australia have become limited as more heifers and cows are held back for breeding and expanding the herd,” explain analysts with USDA’s Economic Research Service (ERS), in the latest monthly Livestock, Dairy and Poultry Outlook. “Australia shipped 31 million lbs. less beef year over year…The second-largest reduction of 8.9 million lbs. came from Mexico; imports were at the lowest volume shipped to the United States in January since 2016.”

Overall, ERS reduced its forecast for U.S. beef imports for this year, by 70 million lbs. to 2.94 billion lbs., due to less expected volume from Australia and New Zealand, as well as increased beef demand competition from Asia.

On the other side of the trade ledger, ERS projects U.S. beef exports for this year to be 3.145 billion lbs., just less than the record level in 2018.

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

Last week, live prices were at $114/cwt. in the Southern Plains and Colorado, $113-$114 in Nebraska and $112-$113 in the western Corn Belt. Dressed prices were at $180 in Nebraska and at $178-$180 in the western Corn Belt.

Cattle futures closed higher Monday with Live Cattle supported by growing open interest in the previous session, as well as decent cash trade volume last week.

Live Cattle futures closed an average of 76¢ higher (12¢ to $1.35 higher).

Feeder Cattle futures closed an average of 83¢ higher (32¢ to $1.35 higher).

Choice boxed beef cutout value was $1.10 lower Monday afternoon at $224.77/cwt. Select was $2.22 lower at $218.05.

Corn futures closed 2¢ to 10¢ higher through the front three contracts and then mostly 1¢ lower.

Soybean futures closed 3¢ to 7¢ higher through the front four contracts, then mostly unchanged to fractionally lower.  

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Major U.S. financial indices closed higher Monday, buoyed by optimism about the pace of COVID-19 vaccines as it relates to fully reopening the economy.

The Dow Jones Industrial Average closed 174 points higher. The S&P 500 closed 25 points higher. The NASDAQ was up 139 points.

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“Live steer prices in the five-area marketing region are nearly flat since the first week of February, hovering around $114/cwt., despite a strong rally in the comprehensive cutout to near-record levels for the month of February,” explain analysts with USDA’s Economic Research Service (ERS), in the latest monthly Livestock, Dairy and Poultry Outlook. “An abundant supply of fed cattle on feed over 150 days Feb. 1 that is greater than the same time last year, along with the inability to process a portion of those cattle due to the winter storm system in February, likely did not support higher prices in line with typical seasonal patterns.”

Although fed cattle prices languish, Derrell Peel, Extension livestock marketing specialist at Oklahoma State University notes the premium for June Live Cattle, compared to April, suggests optimism ahead.

“After the fed cattle market works through ample cattle supplies in the first half of the year, beef production is expected to decrease year over year in the second half of the year. Live Cattle futures for the fall suggest higher fed cattle prices in the last half of the year,” Peel says, in his weekly market comments.

Similarly, Peel points to the premium for fall Feeder Cattle futures, compared to nearby contracts, explaining that summer stocker prospects are promising at this point in time.

“Feeder steer prices for February 2021 averaged $131.82/cwt. for steers weighing 750-800 lbs., sold at Oklahoma National Stockyards, just over $6 above a year ago,” say ERS analysts. “However, prices for the first two weeks of March are almost $8 above the same month last year.”

ERS increased the expected first-quarter average for feeder steers by $1 to $133/cwt. Price projections were unchanged for the remainder of the year: $134 in the second quarter; $139 in the third quarter; $140 in the fourth quarter; $136.50 for the 2021 average.

Negotiated cash fed cattle trade was limited on light demand in all major cattle feeding regions through Friday afternoon, according to the Agricultural Marketing Service.

For the week, live prices were steady at $114/cwt. in the Southern Plains, steady to $1 higher at $114 in Colorado, steady in Nebraska at $113-$114 and steady to $1 lower in the western Corn Belt at $112-$113. Dressed trade was steady in Nebraska at $180 and steady to $2 lower in the western Corn Belt at $178-$180.

Lower grain futures helped lift Cattle futures on Friday. Perhaps some traders also are returning to the Live Cattle Market, positioning ahead of what appears to be a solid trend higher after first-quarter supplies are whittled and as the U.S. economy expands.

Live Cattle futures closed an average of 83¢ higher.

Feeder Cattle futures closed an average of $1.52 higher.

Choice boxed beef cutout value was 80¢ lower Friday afternoon at $225.87/cwt. Select was 20¢ higher at $220.27.

Total estimated cattle slaughter for the week ending Mar. 13 was 647,000 head, which was 18,000 head fewer than the prior week. Year-to-date estimated total cattle slaughter of 6.47 million head is 209,000 head fewer (-3.12%). Estimated beef production so far this year is 5.46 billion lbs., which is 74.8 million lbs. less (-1.35%) than the same time last year.

Corn futures closed mostly 4¢ lower.

Soybean futures closed 1¢ to 5¢ higher, after mostly fractionally mixed through Jan ’22. 

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Major U.S. financial indices closed mixed but mostly higher Friday. Primary pressure was rising bond yield rates on big tech stocks.

The Dow Jones Industrial Average closed 293 points higher. The S&P 500 closed 4 points higher. The NASDAQ was down 78 points.

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Gradual deployment of effective COVID-19 vaccines is boosting prospects for sustained global economic recovery, according to the Organization for Economic Cooperation and Development (OECD).

OECD increased its expectations for global GDP this year by more than 1%—compared to December projections—to 5.6%, in that organization’s Interim Economic Outlook.

World output is expected to reach pre-pandemic levels by the middle of this year but the pace and duration of the recovery will depend on the race between vaccines and emerging variants of the virus, according to OECD analysts.

“Widespread vaccination of the adult population is the best economic policy available today to get our economies and employment growing again,” says OECD Chief Economist Laurence Boone. “…If we don’t get enough people vaccinated quickly enough to allow restrictions to be lifted, the recovery will be slower and we will undermine the benefits of fiscal stimulus.”

In the OECD’s central scenario, U.S. GDP is projected to be 6.5% this year, which is more than 3% higher than the December projection, partly reflecting the large-scale fiscal stimulus with a sustained pace of vaccination.

Vaccine deployment remains uneven globally, OECD analysts say, noting the pandemic is widening gaps in economic performance between countries and between sectors, increasing social inequalities, particularly affecting vulnerable groups, and risking long-term damage to job prospects and living standards for many people.

Among other highlights from the OECD report summary:

Cost pressures have begun to emerge in commodity markets due to the resurgence of demand and temporary supply disruptions, but underlying inflation remains mild, held back by spare capacity around the world.

The current very accommodative monetary policy stance should be maintained, and allow temporary overshooting of headline inflation provided underlying price pressures remain well contained, with macro-prudential policies deployed where necessary to ensure financial stability.

Continued income support for households and companies is warranted until vaccination allows a significant easing of restraints on face-to-face activities, but should be refocused to support people and help companies with grants and equity rather than debt.

Negotiated cash fed cattle trade was limited on light demand in Nebraska and the western Corn Belt through Thursday afternoon, with too few transactions to trend. Elsewhere, trade was at a standstill, according to the Agricultural Marketing Service.

For the week, live prices are steady at $114/cwt. in the Southern Plains, steady to $1 higher at $114 in Colorado, steady in Nebraska at $113-$114 and steady to $1 lower in the western Corn Belt at $112-$113. Dressed trade is steady in Nebraska at $180 and steady to $2 lower in the western Corn Belt at $178-$180.

Net U.S. beef export sales for the week ending Mar. 4 were 20,900 metric tons, according to USDA’s weekly U.S. Export Sales report. That was 8% less than the previous week but 17% more than the previous four-week average. Increases were primarily for South Korea, Japan, Mexico, China and Taiwan.

Cattle futures closed mixed Thursday. Live Cattle closed mostly higher, supported by a strong rally in front-month Lean Hog futures. Feeder Cattle futures edged mostly lower with higher Corn futures and the sluggish recovery in cash prices.

Live Cattle futures closed an average of 48¢ higher, except for 5¢ to 30¢ lower in three contracts.

Feeder Cattle futures closed an average of 43¢ lower, except for unchanged to 7¢ higher in three contracts.

Choice boxed beef cutout value was 62¢ lower at $226.67/cwt. Thursday afternoon. Select was 25¢ higher at $220.07.

The average dressed steer weight the week ending Feb. 27 was 899 lbs., which was 10 lbs. lighter than the previous week and 2 lbs. heavier year over year, according to USDA’s Actual Slaughter Under Federal Inspection report. The average dressed heifer weight of 834 lbs. was 7 lbs. lighter than the previous week and 1 lb. heavier year over year.

Corn futures closed mostly 2¢ to 4¢ higher.

Soybean futures closed mostly 5¢ to 9¢ higher though May ‘22, and then mostly 11¢ to 16¢ higher.

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Major U.S. financial indices closed higher Thursday, supported by President Biden singing the COVID-19 relief bill and a more positive labor outlook than the trade expected.

Initial unemployment insurance claims for the week ending Mar. 6 were 712,000, according to the U.S. Department of Labor. That was 42,000 fewer than the previous week.

The Dow Jones Industrial Average closed 188 points higher. The S&P 500 closed 40 points higher. The NASDAQ was up 329 points.

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“U.S. corn market prices continue to rise, largely driven by strong export demand and tight global supplies,” say analysts with USDA’s Economic Research Service (ERS), in the latest USDA Feed Outlook. “The average cash-spot corn-market prices for Central Illinois and the Gulf for February 2021 were $5.56/bu. and $6.24/bu., respectively. By comparison, the same prices in February 2020 were $3.75 and $4.29.”

Through the first five months of the 2020-21 marketing year, U.S. corn exports totaled 857 million bu., significantly higher than the same time a year earlier. For the year, corn exports are projected at 2,600 million bu., according to ERS.

“The Foreign Agricultural Service’s (FAS) Export Sales Report system shows record amounts of total commitments and outstanding sales for U.S. corn—mostly driven by large purchases for China’s market,” ERS analysts explain. “In order to meet these outstanding sales, the U. S. export program would have to operate at a very high pace, consistently, for the remainder of the marketing year. Inspections data indicate a high export level for February—potentially a February export record—with strong demand to China, Mexico, and Japan. While the strong pace may be logistically feasible, the United States is also likely to face increased competition from Southern Hemisphere corn exporters in the second half of the marketing year.”

Ethanol is another key wild card for corn prices going forward.

With demand for ethanol this year—and the derived demand for corn—primarily driven by trends in gasoline consumption, ERS analysts say how and when U.S. consumers return to the roads will be the most important factor relative to that aspect of the corn market.

“Overall, gasoline prices through the end of 2020 remained lower than pre-COVID-19 levels, indicating that demand was still relatively weak. The RBOB spot price averaged $1.43/gal. in December 2020, which was up 204% from the April 2020 average of $0.47/gal., but was still lower than $1.66/gal. in December 2019,” say ERS analysts. “Through early 2021, however, prices have been steadily climbing back to pre-COVID-19 market levels, indicating that supply is continuing to adjust to current levels of demand, as well as higher crude oil prices. The USDA’s 2020-21 corn used for ethanol forecast is currently 4,950 million bu., which assumes higher corn use for ethanol from March to August relative to 2019-20.