WLI

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.

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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. 

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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.”

Negotiated cash fed cattle trade was a standstill in the Southern Plains through Tuesday afternoon, according to the Agricultural Marketing Service. Elsewhere, trade was very limited on very light demand. Live sales last week were at $108/cwt. in the Southern Plains, $106-$107 in Nebraska and at $104-$105 in the western Corn Belt. Dressed trade was at mostly $168.

Live Cattle futures closed narrowly mixed Tuesday, pressured by sluggish trade, as well as cash and wholesale beef weakness. Feeder Cattle edged mostly higher, perhaps helped along by brighter supply fundamentals down the road.

Live Cattle futures closed narrowly mixed, from an average of 32¢ lower to an average of 12¢ higher, except for unchanged in away-Feb.

Feeder Cattle futures closed an average of 26¢ higher, except for 5¢ lower toward the back of the board.

Choice boxed beef cutout value was 87¢ lower Tuesday afternoon at $208.82/cwt. Select was 10¢ lower at $192.20.

Corn futures closed fractionally higher to 1¢ higher except for 5¢ lower in spot Dec.

Soybean futures closed mostly 10¢ to 14¢ higher through Aug ‘21 and then mostly fractionally higher to 1¢ higher.

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Major U.S. financial indices closed higher Tuesday, with support from more optimism that Congress might be able to hash out another round of economic stimulus before the end of the year.

The Dow Jones Industrial Average closed 337 points higher. The S&P 500 closed 47 points higher. The NASDAQ was up 155 points.

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Even with surging domestic COVID cases and some states reducing restaurant capacity, customer transaction declines at major restaurant chains improved in November, according to the NPD Group (NPD).

Specifically, customer transactions improved from -9% year over year in October to -8% in November. Transactions at major quick service restaurant chains—which represent the bulk of industry transactions—were slightly more robust at -7% year over year in November, according to NPD’s CREST® Performance Alerts, which provides a rapid weekly view of chain-specific transactions and share trends for 75 quick service, fast casual, midscale, and casual dining chains representing 53% of the commercial restaurant traffic in U.S.

“Major quick service restaurant chains have learned to expand their already high capacity for off-premises volumes,” says David Portalatin, NPD food industry advisor. “We should continue to expect drive-thru and delivery to be performance drivers for the best performing restaurant operators as consumers continue to shift meal occasions to the home.”

While dine-in restaurant traffic for the total industry, chains and independents, declined by 53% in October compared to year ago, off-premises visits increased by 21%. Total restaurant carry-out, which holds the largest traffic share of off-premises services at 46%, increased by 6%; drive-thru, which represents 43% share of traffic, grew by 24%; and delivery, which represents 11% share, realized a gain of 125% in October over year ago, according to NPD’s foodservice market research, which daily tracks how U.S. consumers use restaurants and foodservice outlets.

Negotiated cash fed cattle trade was a standstill in the five-area marketing region through Monday afternoon, according to the Agricultural Marketing Service. Live sales last week were at $108/cwt. in the Southern Plains, $106-$107 in Nebraska and at $104-$105 in the western Corn Belt. Dressed trade was at mostly $168.

The five-area direct weighted average steer price last week was $106.75 on a live basis, which was $3 less than the previous week. The average steer price in the beef of $167.77 was $4.52 lower.

Cattle futures closed narrowly mixed Monday, amid sluggish activity and awaiting cash direction, especially given last week’s disappointing trade in terms of both price and volume. However, they retained the lion’s share of gains made in the previous session.

Live Cattle futures closed narrowly mixed, from an average of 17¢ lower to unchanged to an average of 17¢ higher.

Feeder Cattle futures closed narrowly mixed, from an average of 17¢ lower to an average of 19¢ higher.

Choice boxed beef cutout value was $4.19 lower Monday at $209.69/cwt. Select was $3.41 lower at $192.30.

Corn futures closed mostly unchanged to fractionally mixed, except for 5¢ lower in spot Dec.

Soybean futures closed mostly 4¢ to 9¢ higher.

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Major U.S. financial indices closed mixed Monday. Apparently, optimism about the rollout of a COVID-19 vaccine was overshadowed by concerns that increasing coronavirus infections will foster stricter pandemic restrictions in the meantime, which will weigh on economic recovery.

The Dow Jones Industrial Average closed 184 points lower. The S&P 500 closed 15 points lower, but The NASDAQ was up 62 points.

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“China has been a rapidly growing market for global beef imports in recent years and is the largest beef importing country since 2018. This reflects underlying growth in beef demand in China, accentuated by the protein shortages due to ASF (African Swine Fever). China has been a minor market for U.S. beef but is growing rapidly,” says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University. “The China share of U.S. beef exports exceeded 1% for the first time in 2019 and is the number seven beef export market at 2.9% of total beef exports thus far in 2020. Beef consumption in China is expected to continue growing and, assuming no additional political disruptions, China could be one of the top exports markets for U.S. beef in the next couple of years.”

Peel details the evolution of global animal protein markets in his latest weekly market comments. This year, he says evolution is driven by ongoing trends as well as COVID-19 impacts.

“Mexico is arguably the market most impacted by COVID-19 from a U.S., and specifically, a beef, perspective,” Peel says. “Exports of beef to Mexico are down 37.9% year over year, with declines from last year for every month in 2020. Mexico is suffering a devastating recession, the result of current federal policies aggravated by the pandemic.”

For overall perspective, Peel explains U.S. beef exports were 5.3% less year over year through October, while U.S. pork exports were 19.9% more, mostly due to Chinese demand. He adds that U.S. broiler exports were 4.2% more year over year.

Further back in the supply chain and closer to home, analysts with the Livestock Marketing Information Center (LMIC) point out North American cattle trade is generally higher year over year, despite pandemic disruptions.

Through October, total cattle imports to the U.S. from Mexico and Canada of nearly 1.73 million head were 6.4% more year over year.

“Shipments from Mexico account for the majority of the increase with a 14.6% rise year-to-date to almost 1.17 million head,” say LMIC analysts, in the latest Livestock Monitor. “Cattle shipments from Canada are down 7.4% through October totaling 561,654 head. Mexico primarily supplies feeder cattle destined for backgrounding operations or placement while Canadian cattle are typically market-ready cattle for slaughter.”

On the other end of the trade, year-over-year U.S. cattle exports to Canada and Mexico of 242,892 head were 2.7% more; 0.6% less to Canada but 21.2% more to Mexico.

“Most of the cattle exported to Mexico this year have been classified as cattle other than purebred breeding animals which means they are likely slaughter-ready cattle,” say LMIC analysts.

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

Last week, live prices were generally $2 lower in the Southern Plains at $108/cwt., and $4-$5 lower in the western Corn Belt at $104-$105. Dressed trade was $4 lower in the western Corn Belt at $168. The previous week, prices in Nebraska were at $110 on a live basis and at $172-$174 in the beef.

Through Thursday, the weighted average five-area direct fed steer price was $106.86/cwt., which was $2.91 less than the previous week and $11.95 less than the previous year. The average steer price in the beef was $167.80, which was $4.49 less than the previous week and $20.31 less than the same time last year.  

Estimated total cattle slaughter last week of 665,000 head was 2,000 head less than the previous week and 11,000 head fewer than the same week last year. Total estimated year-to-date cattle slaughter of 30.63 million head is 1.07 million less (-3.38%) than a year earlier.

Estimated beef production last week of 559 million lbs. was 800,000 less than the previous week. Estimated year-to-date beef production of 25.46 billion lbs. was 227 million lbs. less (-0.88 %) than the same time last year.

Choice was 71¢ lower at $213.88/cwt. Select was $2.76 lower at $195.71.

Cattle futures closed higher Friday, extending gains from the previous session as open interest creeps higher, perhaps emboldened by an apparent top in year-over year carcass weights and demand promise with FDA issuing emergency use authorization for the first COVID-19 vaccine (see below).

Live Cattle futures closed an average of 95¢ higher, from 42¢ to $1.40 higher.

Feeder Cattle futures closed an average of $1.01 higher, from 45¢ higher toward the back to $2.12 higher in spot Jan.

Corn futures closed mostly 1¢ to 2¢ higher.

Soybean futures closed mostly 5¢ to 7¢ higher.

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Major U.S. financial indices closed narrowly mixed again Friday, amid continued uncertainty regarding economic stimulus talks.

Positive news came with the U.S. Food and Drug Administration (FDA) issuing the first emergency use authorization for a vaccine for the prevention of coronavirus disease 2019 (COVID-19) caused by severe acute respiratory syndrome coronavirus 2 (SARS-CoV-2) in individuals 16 years of age and older. The emergency use authorization allows the Pfizer-BioNTech COVID-19 Vaccine to be distributed in the U.S.

“While not an FDA approval, today’s emergency use authorization of the Pfizer-BioNTech COVID-19 Vaccine holds the promise to alter the course of this pandemic in the United States,” says Peter Marks, M.D., Ph.D., Director of the FDA’s Center for Biologics Evaluation and Research. “With science guiding our decision-making, the available safety and effectiveness data support the authorization of the Pfizer-BioNTech COVID-19 Vaccine because the vaccine’s known and potential benefits clearly outweigh its known and potential risks. The data provided by the sponsor have met the FDA’s expectations as conveyed in our June and October guidance documents.”

The Dow Jones Industrial Average closed 47 points higher. The S&P 500 closed 4 points lower. The NASDAQ was down 27 points.

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“The virus calls the shots. The current resurgence means we’re probably in for a tough winter, with a slowdown in economic growth. If the virus is under control by the end of the summer, we’ll have brisk growth with falling unemployment by the fall,” says Larry DeBoer, an agricultural economist at Purdue University.

In his general economic outlook, part of the Purdue Ag Econ Report (PAER) Annual Outlook, DeBoer details pandemic-driven economic impacts thus far and expectations for the next 12 months. Among the highlights:

**Real GDP was $670 billion smaller in the third quarter 2020 compared to the fourth quarter 2019.

“Two-thirds of this decline was consumption spending, and all of that was due to services,” DeBoer explains. “Consumption spending is the driver of this recession.  Concern about social consumption is the driver of that drop. And the virus is the driver of that concern. The economy cannot fully recover until the virus is controlled.”

**“Investment spending is down just 2.9% since the fourth quarter. It was down 29% in the depths of the Great Recession,” DeBoer says. “Investment has held up this time. Investment in business structures has fallen by 15%, but business equipment is down only 2%. Perhaps businesses are retooling to enable social distancing. Home construction is up 5%.”

**“Even though private income fell at an annual rate of 12% from February to April, CARES Act benefits increased total personal income by 10%. This helped support consumer spending,” DeBoer explains. “Expect the inflation rate to rebound to 1.8% during the 12-months of 2021.”

**“As the vaccine rolls out and confidence rises, the accumulated savings, low interest rates, modest gas prices and added government aid should allow consumers to act. Fourth quarter consumer spending growth is likely to be high,” DeBoer says.

**“Add up consumers, business investment, government purchases and trade, and real GDP should grow about 4.3% in 2021. That would be the highest growth rate since 1999,” DeBoer explains. “Expect the unemployment rate to be around 5.6% by this time next year.”

In the meantime, DeBoer says, “The resurgence of the virus and the expiration of many CARES Act provisions at the end of the year may stall our recovery in this quarter and the next.”