WLI

Negotiated cash fed cattle trade was at a standstill in the Southern Plains through Friday afternoon. Elsewhere, it was limited on light demand with too few transactions to trend, according to the Agricultural Marketing Service (AMS).

For the week, live prices were $1-$2 higher at $115/cwt. in the Southern Plains and $116 in the Northern Plains. Dressed trade was $2-$3 higher in Nebraska at $185. Trade was yet to be established in the western Corn Belt, according to AMS, but various reports suggested trade in the region at as much as $3 higher than the previous week.

Cattle futures continued to edge higher Friday, buoyed by the week’s stronger cash prices and wholesale beef values.

Live Cattle futures closed an average of 36¢ higher, except for 20¢ lower in the back contract.

Feeder Cattle futures closed an average of 39¢ higher, from 15¢ higher toward the back to 90¢ higher in spot Apr. 

Choice boxed beef value was $1.21 higher Friday afternoon at $237.66/cwt. Select was $1.52 higher at $227.77.

Estimated total cattle slaughter the week ending Mar. 26 was 646,000 head, according to USDA. That was 19,000 head more than the previous week, but 39,000 head fewer (-5.69%) than the same week a year earlier. Estimated total year-to-date cattle slaughter of 7.75 million head was 278,000 head fewer (-3.46%) than the same time last year. Estimated year-to-date beef production of 6.50 billion lbs. was 143.1 million lbs. less (-2.15%).

Corn futures closed mostly 1¢ higher, except for 3¢ and 6¢ higher at either end of the board.

Soybean futures closed 6¢ to 13¢ lower through the front six contracts, and then mostly 2¢ higher.

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Major U.S. financial indices closed sharply higher Friday with a late-session surge tied to the Federal Reserve announcement that banks meeting stress criteria can return to normal levels of dividend disbursement and share repurchases at the end of June. That ability was limited since the beginning of the pandemic.

Investors were likely also encouraged by the latest data from the U.S. Bureau of Economic Analysis, suggesting tame inflation. It showed the personal consumption expenditure price index, excluding food and energy prices, increased just 0.1% month to month in February and just 1.4% year over year.

The Dow Jones Industrial Average closed 453 points higher. The S&P 500 closed 65 points higher. The NASDAQ was up 161 points.

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“There was a time in the beef industry when $200/cwt. was the primary resistance point for the weekly Choice boxed beef cutout value. However, the $200 level appears to be the primary support point in that the weekly Choice boxed beef price has not been below this level since the week ending Oct. 20, 2017,” says Andrew P. Griffith, agricultural economist at the University of Tennessee, in his weekly market comments.

Griffith says Choice boxed beef cutout values exceeded $200 for the first time in May 2013 (looking back as far as 2004). Between May 2013 and October 2017, he explains the Choice prices swung to levels on either side of $200 but exceeded the level since then.

“Choice beef prices have been strong the first quarter of 2021 and they are only expected to get stronger in the second quarter as grilling season hits full stride,” Griffith says. “Many consumers have ample disposable income because they have not been traveling. Thus, they can spend some of that money on their eating experience. There is no reason to attempt to predict how high boxed beef prices will go this spring, but they are likely to test the $250 mark.”

Negotiated cash fed cattle trade continued through Thursday afternoon, with limited to slow trade on light to moderate demand. For the week, live prices are $1-$2 higher on a live basis at $115/cwt. in the Southern Plains, $115-$116 in Nebraska and $116 in Colorado. Dressed trade in Nebraska is $3-$5 higher at $185. Trade was yet to be established in the western Corn Belt.

Cattle futures continued mostly higher Thursday, supported by stronger cash prices and wholesale beef values.

Net U.S. beef export sales of 18,900 metric tons for the week ending Mar. 18 were 27% less than the previous week but 3% more than the prior four-week average, according to the weekly U.S. Export Sales report. Increases were primarily for Japan, South Korea, China, Taiwan and Chile.

Live Cattle futures closed an average of 45¢ higher through the front five contracts, and then unchanged to an average of 18¢ lower.

Feeder Cattle futures closed an average of 98¢ higher, from 37¢ to $1.80 higher. 

Choice boxed beef cutout value was $1.61 higher Thursday afternoon at $236.45/cwt. Select was $2.18 higher at $226.25.

The average dressed steer weight of 904 lbs. was 4 lbs. heavier than the prior week and 3 lbs. heavier than the previous year, according to USDA’s Actual Slaughter Under Federal Inspection report for the week ending Mar. 13. The average dressed heifer weight of 832 lbs. was 1 lb. lighter than the previous week and 3 lbs. lighter than the previous year.

Corn futures closed mostly 2¢ to 4¢ lower.

Soybean futures closed 10¢ to 18¢ lower.

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Major U.S. financial indices closed higher Thursday, in a late-session surge, supported by more positive labor data than the trade expected. Weekly initial unemployment insurance claims the week ending Mar, 20 were 684,000, according to the U.S. Department of Labor. That was 97,000 fewer than the previous week.

The Dow Jones Industrial Average closed 199 points higher. The S&P 500 closed 20 points higher. The NASDAQ was up 15 points.

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Persistently and bullishly strong Lean Hog futures continue offering support to beef, tied in part to speculation whether China’s hog herd rebuilding from African Swine Fever is going as well as that government’s reports claim.

“While China’s governmental inventory data as of December 2020 show sow and hog inventory were 92.1% and 93.1% of their respective 2017 levels (MARAC 2021), recent record-high piglet, sow, hog, and pork prices suggest a large persistent supply shortage,” say analysts with the Center for Agricultural Research and Development (CARD) at Iowa State University.

“China’s record pork and live swine imports in 2020 suggest that China’s hog rebuilding might be fast but of low genetic quality. Specifically, it seems likely that the retention of low-quality commercial generation gilts helped rebuild the herd but set back the national breeding system by abandoning purebred grandparents and parent generation propagation (Dim Sums 2021).”

In CARD’s winter Agricultural Policy Review—Is China’s Hog Rebuilding Complete? Reconciling Inventory and Price Data—analysts explain China’s recently launched Live Hog futures also suggest traders expect prices to remain elevated into 2022.

Negotiated cash fed cattle trade was light on light to moderate demand in the Southern Plains through Wednesday afternoon, with live price $1 higher than last week at $115/cwt.

Elsewhere, trade was limited on light demand, according the Agricultural Marketing Service. There were a few live trades in Nebraska at $115-$116, but too few to trend. Prices last week were at $114 in the Northern Plains and at $114-$115 in the western Corn Belt. Dressed prices were at $180-$182.

Cattle feeders offered 2,633 head in Central Stockyards’ weekly Fed Cattle Exchange auction. Of those, 1,550 head sold for an average price of $115.89/cwt., all via live weight. Texas prices were at $115/cwt. and Nebraska prices were at $116, which was $2 higher than last week’s country trade.

Choice steers and heifers sold $1.50-$2.50 higher at the fat auction in Tama Iowa. There were 67 Choice 2-4 steers weighing an average of 1,487 lbs., brining an average price of $117.15/cwt. That was $2-$3 higher than country trade in the region last week.

At Sioux Falls Regional in South Dakota, though, slaughter steers sold steady to $2 lower and slaughter heifers traded steady to $1 lower. There were 152 Choice 2-3 steers weighing an average of 1,468 lbs., bringing an average of $112.72.

Cattle futures closed higher Wednesday, supported by stronger cash prices and softer Corn futures prices.

Live Cattle futures closed an average of 59¢ higher, except for unchanged in spot Apr.

Feeder Cattle futures closed an average of $1.32 higher, from 32¢ higher in waning spot Mar to $2.70 higher.

Choice boxed beef cutout value was 85¢ higher Wednesday afternoon at $234.84/cwt. Select was $1.16 lower at $224.07.

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

Soybean futures closed mostly 6¢ to 9¢ higher.

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Major U.S. financial indices extended losses Wednesday, pressured by a selloff in big tech stocks and despite strong gains earlier in the session.

The Dow Jones Industrial Average closed 3 points lower. The S&P 500 closed 21 points lower. The NASDAQ was down 265 points.

West Texas Intermediate Crude Oil futures (CME) closed $2.97 to $3.42 higher through the front six contracts, mostly gaining back the previous session’s decline, and presumably related to reports that a cargo ship ran aground in the Suez Canal, blocking traffic.

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“U.S. agricultural exports are largely expected to continue a faster pace in 2021 with help from weakness in the U.S. dollar,” says Tanner Ehmke, manager of CoBank’s Knowledge Exchange (CBKE).

The U.S. dollar weakened substantially since March 2020 and is expected to experience modest deflation in 2021. CoBank analysts explain a weaker dollar generally makes U.S. agricultural products more competitive on the global export market. However, commodities are affected differently, given the diversity in global export competition and foreign exchange rates. 

CBKE published a recent report—Dollar Divergence: U.S. Dollar Index Does Not Reflect True Dollar Impact on U.S. Ag Exports—examining the impact of currency dynamics on agricultural exports, in addition to fundamental factors such as tariffs and weather conditions.

CBKE utilized the foreign exchange (FX) rates of key agricultural exporting countries that the U.S. competes with, rather than the dollar index (DXY), which those analysts say is heavily weighted toward the euro. The research reveals a more nuanced effect of FX rates on U.S. grain, livestock, dairy, tree nuts, and cotton exports.

“In the final months of 2020, U.S. protein exports started to benefit from the strengthening of the Australian dollar and the euro against the U.S. dollar, helping animal protein exports to end the year on a high note,” according to the report. “The

outlook for a strong Australian dollar and euro in 2021 should make U.S. beef and pork exports the largest beneficiaries of a weaker dollar in the coming year.”

At the same time, CBKE analysts explain the U.S. trade weighted grain and oilseed index strengthened by 14% in 2020 and is expected to gain another 4%-5% this year. The U.S. dollar’s strength, relative to the currencies of major exporters like Brazil, Argentina and Ukraine, is driving the stronger index.

“A casual observer could argue that corn and soybean exports will face headwinds in 2021 since the index strength implies that U.S. exports become less price competitive,” says Kenneth Scott Zuckerberg, lead grain and farm supply economist with CoBank. “But this was not the case in 2020 nor is it expected to be in 2021 due to Chinese demand.”

China has been aggressively buying U.S. grain for feed as it rebuilds its hog herd, leveraging its strong currency relative to the U.S. dollar despite the dollar’s strength in relation to other currencies.

“In addition to currency, a more normal year for U.S. meat processing capacity, the rebound in global foodservice demand, and the trend in China’s meat and poultry imports will be the primary drivers of a good year for U.S. protein exports in 2021,” according to the report.

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

Last week, prices were at $114/cwt. on a live basis in the Southern Plains and Northern Plains, and at $114-$115 in the western Corn Belt. Dressed trade was at $180-$182.

Cattle futures continued higher Tuesday, supported by rising wholesale beef prices and strength in Lean Hog futures, amid light trade.

Live Cattle futures closed an average of 66¢ higher, from 10¢ higher at the back to $1.12 higher toward the front.

Feeder Cattle futures closed an average of 39¢ higher.

Choice boxed beef cutout value was $3.04 higher Tuesday afternoon at $233.99/cwt. Select was $2.18 higher at $225.23.

Corn futures closed mostly fractionally higher to 2¢ higher.

Soybean futures closed 5¢ to 8¢ higher.

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Major U.S. financial indices closed lower Tuesday, pressured by increasing domestic and international COVID-19 infections, and the potential for that to create further supply chain disruptions, while further slowing economic recovery.

The Dow Jones Industrial Average closed 308 points lower. The S&P 500 closed 30 points lower. The NASDAQ down 149 points.

West Texas Intermediate Crude Oil futures (CME) closed $3.12 to $3.80 lower through the front six contracts.

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The Creighton University Rural Mainstreet Index (RMI) soared to 71.9 in March—the highest level since the data series began in January of 2006—up from 53.8 the previous month. The index was above growth neutral (50.0) for the fifth time in six months.

“Sharp gains in grain prices, federal farm support, and the Federal Reserve’s record-low interest rates have underpinned the Rural Mainstreet Economy,” says Ernie Goss, PhD, Jack A. MacAllister Chair in Regional Economics at Creighton University’s Heider College of Business.

“Only 3.1% of bank CEOs indicated economic conditions worsened from the previous month. Even so, current rural economic activity remains below pre-pandemic levels,” according to Goss.

The RMI is borne by a monthly survey of community bank presidents and CEOs in non-urban agricultural and energy-dependent portions of a 10-state area. Bankers from Colorado, Illinois, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, South Dakota and Wyoming are included.

Approximately, 68.8% of bank CEOs reported that their local economy was expanding; the remaining 31.2% indicated little or no growth.

Highlights from the March survey include:

The farmland price index climbed to 71.9 in March, up from 60.0 the previous month and the highest level since November 2012. March was the sixth consecutive month the index was above growth neutral. Bankers reported that approximately 12.3% of farmland sales were cash sales, which is down from 17.3% recorded in February 2020.

The March farm equipment sales index rose to 63.5, its highest reading since February 2013, and up from 62.7 in February. After 86 straight months of readings below growth neutral, farm equipment bounced into growth territory for the last four months.

For the first time since September of last year, bankers reported an expansion in loan volumes. The March loan volume index increased to 60.9 from February’s 46.1.

The confidence index, which reflects bank CEO expectations for the economy six months out, rose to 76.7 and up from 64.0.

“Looming 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 the rural economy,” Goss says.

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

Last week, prices were at $114/cwt. on a live basis in the Southern Plains and Northern Plains, and at $114-$115 in the western Corn Belt. Dressed trade was at $180-$182.

The average five-area direct fed steer price last week was $114.23/cwt. on a live basis, which was 61¢ more than the prior week. The average steer price in the beef was $181.33, which was $2.01 higher.

Cattle futures found some traction Monday amid relatively light trade, following the late-week decline. Support included lower Corn futures, higher outside markets, stronger wholesale beef prices and the neutral Cattle on Feed report.

Live Cattle futures closed an average of 40¢ higher.

Feeder Cattle futures closed an average of 28¢ higher, expect for unchanged in Apr.

Choice boxed beef cutout value was 96¢ higher Monday afternoon at $230.95/cwt. Select was $3.10 higher at $223.05.

Corn futures closed 5¢ to 8¢ lower in the front three contracts, and then mostly 2¢ to 3¢ lower.

Soybean futures closed mostly 5¢ lower, after 1¢ higher in the front two contracts.

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Major U.S. financial indices closed higher Monday, buoyed by declining Treasury yield rates and increased demand for big tech stocks.

The Dow Jones Industrial Average closed 103 points higher. The S&P 500 closed 27 points higher. The NASDAQ was up 162 points.

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“There is considerable optimism for fed cattle markets going forward, beginning in the second quarter and especially in the second half of the year,” says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly market comments. “…Feedlots have been somewhat front-loaded thus far in 2021 which has contributed to the sluggish fed cattle markets in the first quarter of the year. Feedlot supplies should tighten in the second half of the year after working through current inventories.”

For context, Peel says fed steer and heifer slaughter is 0.8% more year over year for the first nine weeks of 2021; steer and heifer carcass weights are 13-14 lbs. heavier year over year. He explains that reality, along with last month’s weather-based packer disruptions, overwhelmed the opportunity for a seasonal rally in cash fed cattle prices.

Market-ready fed cattle supplies will begin to tighten, though, with total feedlot placements for the last six months 2.3% less year over year, according to Peel. Placements in February were 1.86% less than a year earlier, according to the latest USDA Cattle on Feed report.

“Currently Live Cattle futures for April and June are trading at roughly the same level with June; at times, premium to April. This is unusual because June is usually at a significant discount to April Live Cattle futures. In fact, the previous five-year average discount of June to April Live Cattle futures in March is -$8.47/cwt.,” Peel says. “The fact that April and June are at equal levels this year is due to weak April prices relative to June expectations. Live Cattle futures prices for October and December reflect additional optimism for fed cattle markets in late 2021 and heading into 2022.”