WLI

Negotiated cash fed cattle trade was at a standstill in the Southern Plains through Tuesday afternoon, according to the Agricultural Marketing Service. Elsewhere, it was limited to mostly inactive on very light demand. Although too few transactions to trend, there were a few live sales in the western Corn Belt at $103.00 to $106.25/cwt. Last week, live sales were at $108/cwt. in the Southern Plains and at mostly $105 in Nebraska and the western Corn Belt. Dressed trade was at mostly $165.

Cattle futures closed lower Tuesday, likely pressured in part by some pre-holiday position squaring, technical correction and the lack of cash direction.

Live Cattle futures closed an average of 70¢ lower from 27¢ lower in spot Dec to $1.20 lower.

Feeder Cattle futures closed an average of 81¢ lower except for unchanged in the back two contracts.

Choice boxed beef cutout value was 25¢ lower at $210.67/cwt. Select was $2.33 higher at $199.59.

Corn futures closed 1¢ to 3¢ higher through Sep ‘21 and then mostly fractionally lower to 1¢ lower.

Soybean futures closed 2¢ to 4¢ higher through Aug ’21, and then mostly 1¢ to 3¢ lower.

******************************

Major U.S. financial indices closed mixed again Tuesday. Despite Congress passing a federal spending bill for next year, including another round of pandemic economic stimulus, investors seemed to focus more on escalating COVID-19 cases.

The Dow Jones Industrial Average closed 200 points lower. The S&P 500 closed 7 points lower. The NASDAQ closed 65 points higher.

******************************

Overall, total red meat and poultry supplies in freezers as of Nov. 30 were lower year over year, according to USDA’s monthly Cold Storage report.

Total red meat supplies in freezers were down 2% from the previous month and down 12% percent from last year.

Total pounds of beef in freezers were 2% more than the previous month and 7% more year over year.

Frozen pork supplies were down 7% from the previous month and down 28% from last year. Stocks of pork bellies were up 21% from the prior month but down 58% from a year earlier. Bone-in hams for the month were the least since the data series began in 1995.

Total frozen poultry supplies were down 16% from the previous month and down 10% from a year earlier.

******************************

“Placements below a year ago in October and November helped greatly reduce inventories on feed. October placements were down by more than 10%, and November settled in at 9% below 2019,” say analysts with the Livestock Marketing Information Center (LMIC), reflecting on last week’s monthly Cattle on Feed report.

At the same time, LMIC analysts explain the number of cattle on feed more than 120 days increased back above year-ago levels, driven by higher placement numbers in the third quarter and lower marketings in November.

“From a placement perspective, December auction volumes of feeder cattle receipts appear to have increased from December of last year, but border crossings of feeder cattle from Mexico continue to be below a year ago,” LMIC analysts explain, in the latest Livestock Monitor. “The five-year average indicates December placements drop about 15% from November levels. Given November’s already low placements, expect December 2020 placements to have a restrained seasonal move compared to the five-year average.”

Negotiated cash fed cattle trade was at a standstill in the five-area feeding region through Monday afternoon, according to the Agricultural Marketing Service. Live sales last week were at $108/cwt. in the Southern Plains and at mostly $105 in Nebraska and the western Corn Belt. Dressed trade was at mostly $165.

Cattle futures closed mainly higher Monday, supported by the nascent reversal in wholesale beef values and Friday’s friendly Cattle on Feed report.

Live Cattle futures closed an average of 28¢ higher except for 22¢ lower in near Feb.

Feeder Cattle futures closed an average of 73¢ higher from 17¢ higher in spot Jan to $1.02 higher at the back.

Wholesale beef prices continued to firm. Choice boxed beef cutout value was $2.29 higher at $210.92/cwt. Monday afternoon. Select was $2.99 higher at $197.26.

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

Soybean futures closed 17¢ to 23¢ higher through Aug ’21, and then mostly 7¢ to 10¢ higher.

******************************

Major U.S. financial indices closed narrowly mixed Monday amid widely volatile trade that began with a steep selloff based on concerns about the new COVID-19 strain discovered in the United Kingdom. By session’s end, though, cooler heads prevailed with optimism Congress would pass the new federal spending bill—including another round of pandemic stimulus.

The Dow Jones Industrial Average closed 37 points higher. The S&P 500 closed 14 points lower. The NASDAQ was down 13 points.

******************************

Volatile feedlot flows stemming from pandemic disruptions made it more difficult than usual to assess the fed cattle market, but that should change going forward, says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University.

In his weekly market comments, Peel explains the extent of the volatility.

Monthly feedlot placements varied from 23% lower year over year in March to 11% higher in July, to 11% lower in October. “For the January to November period, total placements are down 4.4% year over year. In the last six months, which would include the majority of current feedlot inventories, placements are 0.5% above the same period last year,” Peel says.

Monthly feedlot marketings varied from 13% higher year over year in March to 27% lower in May to 6% higher in September. “For the year to date through November, total marketings are down 3.1% year over year. In the last six months, feedlot marketings are just fractionally higher than the same period last year,” according to Peel.

As of Dec. 1, there were 12.04 million head of cattle on feed (yards with 1,000 head or more capacity), according to the monthly Cattle on Feed report. That  was about even with the same time last year. Those numbers should continue a cyclical decline.

“Flows of cattle through feedlots should begin to show more consistent tightening in 2021,” Peel says. “The beef cowherd was at a peak in January 2019 and led to a 2019 calf crop that was down 0.7% from the 2018 peak calf crop. The estimated feeder cattle supply on Jan. 1, 2020 was down 0.4% from 2019 levels. The estimated 2020 calf crop in the July Cattle report is down another 0.7% from 2019. The July estimate of feeder cattle supplies was up slightly but was likely pushed higher due to the intra-year dynamics of feedlot placements. Current estimates suggest that the total calf crop in 2020 is 513,000 head less than the peak in 2018.”

So far this year, Peel explains total cattle slaughter is 2.8% less year over year. It should decline again next year.

“With herd inventories continuing to drift lower, total cattle numbers should be generally supportive of cattle prices in 2021,” Peel says.

Negotiated cash fed cattle trade was at a standstill in the Southern Plains through Friday afternoon, according to the Agricultural Marketing Service. Elsewhere, it was limited on very light demand. Although too few to trend, there were a few live sales in Nebraska at $107/cwt.

For the week, live sales were steady in the Southern Plains at $108/cwt., $1-$2 lower in Nebraska at $105 and $1 lower in the western Corn Belt at $105. Dressed trade was $3 lower at $165.

Choice boxed beef cutout value was 88¢ lower at $208.63/cwt. Select was 57¢ higher at $194.27.

Estimated total cattle slaughter last week of 659,000 head was 6,000 head fewer than the previous week and 9,000 head fewer than the same week last year.

Year-to-date estimated total cattle slaughter of 31.29 million head is 1.08 million fewer (-3.3%) than last year. Estimated year-to-date beef production of 26.02 billion lbs. is 223.6 million lbs. less (-0.85%) than the same time last year.

Net U.S. beef export sales for the week ending Dec. 10 were up noticeably from the prior week and 15% more than the previous four-week average, according to USDA’s weekly U.S. Export Sales report. Increases were primarily for Japan, South Korea, Canada, Mexico and China.

Cattle futures closed narrowly mixed Friday, as traders awaited the monthly Cattle on Feed report (see below), and in the face of rising grain futures prices.

Live Cattle futures closed an average of 36¢ higher except for unchanged to an average of 3¢ lower in three contracts.

Feeder Cattle futures closed narrowly mixed from an average of 33¢ lower to an average of 15¢ higher.

Corn futures closed 3¢ to 5¢ higher through Jly ‘22 and then unchanged to fractionally higher.

Soybean futures closed 12¢ to 18¢ higher through Aug ’21, 7¢ to 9¢ higher through Sep ’22 and then mostly fractionally lower.

*******************************

Major U.S. financial indices closed lower Friday as Congress tried to reach agreement for additional federal stimulus, tied to next year’s government spending bill. A spending bill stopgap was set to expire Saturday, risking government shutdown. Lawmakers wrangled a two-day extension set to expire first thing Monday morning.

The Dow Jones Industrial Average closed 124 points lower. The S&P 500 closed 13 points lower. The NASDAQ was down 9 points.

******************************

Markets will likely view Friday’s monthly Cattle on Feed report as at least neutral, with slightly fewer November placements and slightly more marketings than expected.

Placements in November of 1.91 million head were 187,000 head fewer (-8.9%) than the prior year, compared to average expectations of 8.2% less, according to the Urner Barry Survey shared by the Daily Livestock Report.

In terms of weight, 51.41% went on feed weighing less than 600 lbs., 37.04% weighing 700-899 lbs. and 11.54% weighing 900 lbs. or more.

Marketings in November of 1.78 million head were 31,000 head fewer (-1.7%); pre-report expectations were for a decline of 2.1%.

Total cattle on feed in yards with 1,000 or more capacity, as of Dec. 1, were 12.04 million head, just 5,000 head more (+0.04%) than the previous year. Expectations ahead of the report were for no change.

Negotiated cash fed cattle prices were steady in the Southern Plains through Thursday afternoon at $108/cwt., according to the Agricultural Marketing Service, but there were too few transactions for a market trend.

There were also some live trades in Nebraska at $105, steady with the previous day but $1-$2 lower than the previous week. Dressed trades there on Wednesday were $3 lower at $165.

So far this week live trades are steady to $1 lower in the western Corn Belt at $105 on a lived basis and $3 lower in the beef at $165.

Cattle futures closed higher Thursday, supported by early signs that wholesale beef prices may be at or near the seasonal ebb. Firmness could also stem from expectations that Friday’s monthly Cattle on Feed report will be market friendly, with significantly lower year-over-year placements in November.

Live Cattle futures closed an average of 50¢ higher.

Feeder Cattle futures closed an average of 82¢ higher from 12¢ higher in spot Jan to $1.22 higher.

Corn futures closed 3¢ to 5¢ higher through Sep ‘21 and then mostly 1¢ higher.

Soybean futures closed 14¢ to 17¢ higher through Aug ’21 and then mostly 7¢ to 9¢ higher.

******************************

Major U.S. financial indices closed higher Thursday, buoyed by increasing optimism for more federal economic stimulus, as well as a second COVID-19 vaccine receiving a key nod off approval from FDA.

The Dow Jones Industrial Average closed 148 points higher. The S&P 500 closed 21 points higher. The NASDAQ was up 106 points.

******************************

This week, the U.S. Food and Drug Administration (FDA) approved the first intentional genomic alteration (IGA) in an animal for both human food consumption and as a source for potential therapeutic uses. It’s for a line of domestic pigs referred to as GalSafe pigs. The IGA is intended to eliminate alpha-gal sugar on the surface of the pigs’ cells. People with Alpha-gal syndrome (AGS) may have mild to severe allergic reactions to alpha-gal sugar found in red meat (e.g., beef, pork, and lamb).

“Today’s first ever approval of an animal biotechnology product for both food and as a potential source for biomedical use represents a tremendous milestone for scientific innovation,” says FDA Commissioner Stephen M. Hahn, M.D. “As part of our public health mission, the FDA strongly supports advancing innovative animal biotechnology products that are safe for animals, safe for people, and achieve their intended results. Today’s action underscores the success of the FDA in modernizing our scientific processes to optimize a risk-based approach that advances cutting-edge innovations in which consumers can have confidence.”

As part of its review, the FDA evaluated the safety of the IGA for the animals and people eating meat from them, as well as the product developer’s intention to market the IGA for its ability to eliminate alpha-gal sugar on pigs’ cells. The FDA  determined that food from GalSafe pigs is safe for the general population to eat. The FDA’s review also focused on ensuring the effectiveness of the IGA through the evaluation of data demonstrating that there is no detectable level of alpha-gal sugar across multiple generations of GalSafe pigs.

Potentially, GalSafe pigs may provide a source of porcine-based materials to produce human medical products that are free of detectable alpha-gal sugar, according to FDA. For example, GalSafe pigs could potentially be used as a source of medical products, such as the blood-thinning drug heparin, free of detectable alpha-gal sugar. Tissues and organs from GalSafe pigs could potentially address the issue of immune rejection in patients receiving xenotransplants, as alpha-gal sugar is believed to be a cause of rejection in patients.

Negotiated cash fed cattle trade was slow to moderate on moderate demand in Nebraska through Wednesday afternoon, according to the Agricultural Marketing Service (AMS). Live prices were $1-$2 lower than last week at $105/cwt. Dressed prices were $3 lower at $165.

There were a few early sales in the western Corn Belt at $105 live and at $165 in the beef, but too few to trend. Prices last week were at $104-$105 and $168, respectively.

Trade was at a standstill in the Southern Plains. Prices there last week were at $108.

However, slaughter steers at the Sioux Falls Regional auction in South Dakota sold $3-$5 higher; $2-$4 higher for fat heifers. There were 185 Choice 2-3 steers weighing an average of 1,469 lbs. bringing an average of $107.13.

Cattle futures closed higher Wednesday, perhaps helped along by positioning ahead of Friday’s monthly Cattle on Feed report.

Live Cattle futures closed an average of 61¢ higher, from 17¢ higher in spot Dec to 90¢ higher.

Feeder Cattle futures closed an average of 84¢ higher.

Choice Boxed beef cutout value was $1.60 lower Wednesday afternoon at $207.22/cwt. Select was 11¢ lower at $192.09.

Corn futures closed mostly 1¢ higher. ,

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

******************************

Major U.S. financial indices closed mixed Wednesday. Support included apparent progress toward another round of federal economic stimulus. On the negative side, U.S. retail and food services sales in November were 1.1% less than the previous month, according to the U.S. Commerce Department. That was a steeper decline than the trade expected.

The Dow Jones Industrial Average closed 44 points lower. The S&P 500 closed 6 points higher. The NASDAQ was up 63 points. 

******************************

Although feeder steer prices (750-800 lbs.) improved month to month in November, analysts with USDA’s Economic Research Service point out they were $8 less year over year at $138.22/cwt.

“The first prices reported in December were almost $13 below the same week last year at $136.67,” ERS analysts say, in the latest Livestock, Dairy and Poultry Outlook. “The feeder steer price forecast for fourth-quarter 2020 was unchanged at $137/cwt.”

ERS also left forecast feeder prices (basis Oklahoma City) unchanged for next year at $133 in the first quarter, $136 in the second quarter, $141 in the third quarter and $138 for the annual average.

On the other side of the equation, the average five-area direct fed steer price the first week of December was 8% less than the same week a year earlier at $109.75/cwt. on a live basis, according to ERS—the lowest December starting price since 2010.

Consequently, ERS projected the average fourth-quarter price $1 lower at $108. However, they forecast next year’s average price $1 higher at $115. ERS forecast the second-quarter price $3 higher based on expectations of fewer cattle available for slaughter.

Specifically, fed steer prices are forecast to be $113 in the first and second quarters and $114 in the third quarter.

ERS also notes higher anticipated feed costs in 2021.

“The corn price estimate for the 2019-20 marketing year is $3.56/bu.; the 2020-21 forecast is $4.00, unchanged from last month’s forecast,” ERS analysts explain. “The soybean meal price estimate for the 2019-20 marketing year is $299.50/short ton. The 2020-21 forecast for soybean meal has been raised to $370/short ton, $15 higher than the last forecast. The alfalfa hay price in October was $171/ short ton, unchanged from September but $6 lower than October 2019. The five-state weighted average price for premium alfalfa hay in October was $194/ short ton, $2 higher than September but $11 lower than October 2019.”