WLI

Negotiated cash fed cattle trade was slow with light to moderate demand in Nebraska and the western Corn Belt through Thursday afternoon, according to the Agricultural Marketing Service.

Although there were too few to trend, early dressed sales in Nebraska were at $180/cwt., which was $2 more than last week. Live sales there last week were at $112-$113.

In the western Corn Belt, early dressed sales were steady to $2 higher than last week at $178-$180, but too few to trend. Early live sales were 50¢ to $3 higher at $113, but too few to trend.

Trade was mostly inactive on very light demand in the Southern Plains. Live prices there last week were at $113.

Cattle futures closed higher Thursday, extending gains from the previous session, with moderating grain futures prices and the outlook for higher cash fed cattle prices.

Live Cattle futures closed an average of 50¢ higher, from 12¢ higher to $1.30 higher.

Feeder Cattle futures closed an average of 63¢ higher.

Choice boxed beef cutout value was $1.03 lower Thursday afternoon at $234.25/cwt. Select was $2.95 lower at $220.44.

Corn futures closed fractionally mixed to 2¢ lower through Sep ’21 and then mostly 1¢ to 2¢ higher.

Soybean futures closed mostly 1¢ to 4¢ higher through Sep ‘21, and then mostly 7¢ to 8¢ higher.

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Major U.S. financial indices closed higher Thursday, buoyed by positive quarterly corporate earnings reports and more optimism about the labor situation.

Initial unemployment insurance claims for the week ending Jan. 30 were 779,000, which was 33,000 fewer than the previous week and less than the trade expected.

The Dow Jones Industrial Average closed 332 points higher. The S&P 500 was up 41 points.  The NASDAQ was up 167 points.

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Potentially, moisture chances could improve this spring and summer for some of the nation’s driest areas. That’s due to early indications that the current La Niña is weakening and could become neutral by summer.

That was one of the key messages from Allen Dutcher, Extension agricultural climatologist at the University of Nebraska-Lincoln, during Thursday’s Virtual BEEF Experience.

Likewise, according to the latest update from NOAA’s Climate Prediction Center, “La Niña is expected to continue through the Northern Hemisphere winter with a potential transition to ENSO-neutral conditions during the spring.

Even if more moisture returns more quickly than originally anticipated, Dutcher explained the 2020 drought left no moisture for most of the High Plains, meaning that it will take a least a year for native pastures in the region to recover.

Snowpack will drive drought risk in the High Plains, Dutcher said, adding that so far this year it’s significantly more than the same time in 2020.

Finally, with the way weather conditions are shaping up, Dutcher Expects late winter storms followed by an active severe weather season. Shorter term, he says conditions for the next 30 days are conducive to some powerful storms.

Negotiated cash fed cattle trade was at a standstill in Kansas and Nebraska through Wednesday afternoon, according to the Agricultural Marketing Service. Elsewhere, trade was mostly inactive on very light demand.

Cattle feeders offered 1,362 head (eight lots) in Central Stockyard’s weekly Fed Cattle Exchange Auction, all from the Southern Plains. Of those, 699 head sold (four lots of heifers) for a weighted average price of $113.71/cwt., via live weight and Bid-the-Grid. That was a bit higher than country trade in the region last week.

At Sioux Falls Regional fat auction, though, slaughter steers and heifers sold steady to $2 lower. There were 436 head of Choice 3-4 steers weighing an average of 1,554 lbs. bringing an average of $110.66/cwt. That was at the low end of the last week’s country price.

Cattle futures closed narrowly mixed, but mostly edged higher after the front months on Wednesday. Pressure included resurgent grain futures prices and softer wholesale beef values.

Live Cattle futures closed an average of 38¢ higher, except for an average of 28¢ lower in the front two contracts.

Feeder Cattle futures closed an average of 29¢ higher, except for an average of 36¢ lower in the front three contracts.

Choice boxed beef cutout value was $1.48 lower Wednesday afternoon at $235.28/cwt. Select was $1.65 lower at $223.39.

Corn futures closed 4¢ to 9¢ higher through May ‘22 and then mostly unchanged to fractionally lower.

Soybean futures closed 9¢ to 16¢ higher through Sep ‘21, and then mostly 1¢ to 4¢ higher.

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Major U.S. financial indices closed little changed Wednesday.

The Dow Jones Industrial Average closed 36 points higher. The S&P 500 closedp 3 points higher. The NASDAQ was up 2 points.

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Fundamentally speaking, numbers are beginning to shift back into the producer’s favor. Last year’s cattle prices should be the lowest for several years.

“The number of steers and heifers going through our packing plants over the course of the next several years is going to shrink. As it declines, so will our beef production, and prices are going to get higher. We’ll see a transition to a higher trending, more profitable cow-calf operator, feedstock operator and cattle feeder,” said Randy Blach, CattleFax CEO, at last week’s annual International Livestock Forum hosted by Colorado State University and the National Western Stock Show

Blach used fed cattle slaughter capacity utilization to illustrate how leverage should swing back toward producers. It ranged from 102% in 2016 to 110% last year as cattle numbers ran ahead of hook space. As fed cattle supplies decline, capacity utilization will drift back toward 100%, mostly after this year.

At the same time, Blach expects consumer beef demand to continue near last year’s extraordinary pace. It was the most in 30 years, according to Blach, based on the Annual U.S. Consumer Beef Demand Index, which was near 180 in 2020, compared to just over 160 the previous year. That was with record beef, pork and poultry production.

“That speaks to the quality of the product that we’re producing in this country,” Blach says. He explained Prime and Choice beef production increased from approximately 11 to 12 billion lbs. in the early 2000s to around 18 billion lbs. last year.

Along the way, the Choice-Select spread maintained its strong pace, while the spread between Choice and the upper two-thirds of Choice grew. The Prime-Choice spread sagged this year due to the dearth of restaurant business.

“We produce more high-quality beef and consumers continue to say they want more,” Blach said. Since 2000, he noted that beef gained 7% share of total meat spending, away from pork and poultry.

Note: the above is from an upcoming article that will be published in F&R Livestock Resource.

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

Last week, cash fed cattle prices ended up $2-$3 higher in the Southern Plains at $113/cwt., $3 higher in the Northern Plains at $113 and $2.50-$5.00 higher in the western Corn Belt at $110.00-$112.50. Dressed trade was $5-$8 higher at $178.

Cattle futures gained again on Tuesday, supported by softer Corn futures, last week’s stronger cash prices and higher Lean Hog futures.

Live Cattle futures closed an average of 64¢ higher (40¢ higher at the back to $1.10 higher in spot Feb).

Feeder Cattle futures closed an average of $1.21 higher.

Choice boxed beef cutout value was $1.08 higher Tuesday afternoon at $236.76/cwt. Select was 55¢ lower at $225.04.

Corn futures closed 5¢ to 6¢ lower through the front three contracts and then mostly fractionally higher.

Soybean futures closed 10¢ to 11¢ lower through the front four contracts, and then mostly 2¢ lower to fractionally higher.

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Major U.S. financial indices closed sharply higher again Tuesday. Reportedly, much of the optimism had to do with growing investor confidence the recent barrage against short sellers of stocks like GameStop is in check.

Another day higher in energy markets added support—the front six contracts of West Texas Intermediate crude oil futures on the CME were up an average of $2.41 in the last two sessions.

The Dow Jones Industrial Average closed 475 points higher. The S&P 500 closed 52 points higher. The NASDAQ was up 209 points.

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Agricultural producer sentiment declined in January, driven by weaker expectations about the future, according to the Purdue University/CME Group Ag Economy Barometer.

The Index of Current Conditions declined 3 points to 199, while the Index of Future Expectations dropped 10 points to 151. The overall Ag Economy Barometer was 7 points less month to month in January, at 167. From October to January, the Index of Future Expectations dropped 19%. The Index of Current Conditions increased 12% over the same period.

“The ongoing strength in the Current Conditions Index appears to be driven by the ongoing rally in crop prices, while the deterioration in the Future Expectations Index seems to be motivated by longer-run concerns about policies that could impact U.S. agriculture in the future,” says James Mintert, the barometer’s principal investigator and director of Purdue University’s Center for Commercial Agriculture.

The Ag Economy Barometer includes a survey of 400 U.S. agricultural producers. The latest was conducted Jan. 18-22.

Weakening agricultural producer expectations for the future appear to be motivated by concerns about several policy issues. For instance, confidence that the ongoing trade dispute with China will ultimately be resolved in a way that favors U.S. agriculture declined 12 points in January to 38%.

Producers are also significantly more concerned about potentially restrictive environmental policies: 83% of respondents in January expect to see more restrictive regulations from the new presidential administration, up 42 points from October. Significantly more also expect higher estate taxes and income taxes over the next five years.

Shorter term, nearly one-third of survey respondents expect improved financial performance this year than in 2020. When asked about the size of their operating loan, 17% of respondents expect their loan to increase this year. Of those, 20% said the increased loan is due to carrying over unpaid operating debt from the previous year. This implies that 3 to 4% of those surveyed are suffering financial stress. However, that’s down from 5-6% of farms identified as suffering financial stress a year earlier.

Farmers also remained bullish about short-term farmland values and cash rental rates. In January, 43% of respondents said they expect farmland values to rise over the next year (up 8 points from December) and 27% said they expect cash rental rates to rise in 2021 (up 9 points from the previous month).

Also of note, more respondents expressed interest in following specified production practices in order to capture carbon and market the sequestration.

Overall, 30% of respondents to the January survey said they are aware of opportunities to receive a payment for capturing carbon. Among that group, 22% said they have actively engaged in discussions about receiving a carbon capture payment. This implies that 6 to 7% of the producers in the January survey have given consideration to contractually sequestering carbon.

Finally, interest in receiving the COVID-19 vaccine quickly is trending higher. Respondents were asked if they planned to get vaccinated. Response choices were: Yes, as soon as possible; Yes, but not right away; No.

In January, 58% said they plan to get vaccinated as soon as possible, up from 39% in December, 36% in November, and 24% in October.

The average five-area direct fed steer price was $3.21 higher on a live basis last week at $112.44/cwt. The average steer price in the beef was $4.98 higher at $177.56.

Monday’s negotiated cash fed cattle trade summary was unavailable from AMS at press time.

Through Friday afternoon, prices were $3-$4 higher on a live basis in the Northern Plains at mostly $113/cwt. Dressed sales in Nebraska were $5 higher at $178.

On Friday, the Texas Cattle Feeders Association reported its members trading cattle at just over $2 more week to week: $112.80 for steers and $112.91 for heifers.

Softer Corn futures early on Monday, along with last week’s stronger cash prices, helped Cattle futures mostly gain.

Live Cattle futures closed an average of 76¢ higher, except for an average of 16¢ lower in the front two contracts.

Feeder Cattle futures closed an average of $1.08 higher (20¢ higher in spot Mar to $2.55 higher toward the back).

Corn futures closed mostly 1¢ to 3¢ higher.

Soybean futures closed mostly 9¢ to 12¢ higher through Sep ‘22, except for 3¢ to 4¢ lower in the front three contracts.

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Major U.S. financial indices closed sharply higher Monday, likely helped along by new-month positioning, and ahead of more corporate earnings reports this week.

The Dow Jones Industrial Average closed 229 points higher. The S&P 500 closed 59 points higher. The NASDAQ was up 332 points.

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“Both the inventory of beef replacement heifers, at 18.7% of the beef cow herd, and the number of heifers calving are at a level that does not indicate either herd liquidation or expansion, though the levels could support limited herd expansion in the coming year,” says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, reflecting on Friday’s semi-annual USDA Cattle report.

Likewise, in the latest issue of In the Cattle Markets, Matthew Diersen, a risk and business management specialist at South Dakota State University says, “The main takeaways were the stabilization of inventories, the smaller calf crop and fewer cattle outside of feedlots. The inventory levels have increased or consolidated in the Plains states, stretching from North Dakota to Texas, with levels generally lower elsewhere.”

Peel points to the drought-induced 14.5% year-over-year decline in Colorado beef cows and the 16.1% decrease in Colorado beef replacement heifers as perhaps the most notable headline from the Jan. 1 inventory numbers.

For those keeping score, Peel also notes the number of cattle grazing small grains pasture in Kansas, Oklahoma and Texas were 7.5% more year over year at 1.73 million head. He adds that the total estimated feeder supply of 7.245 million head in those same states was 1% more.

“In general, U.S. cattle inventories show little direction and are more stable than anything,” Peel says. “Market conditions, and perhaps drought in the coming months will determine the direction of cattle numbers in 2021 and beyond.”   

Negotiated cash fed cattle prices were $3-$4 higher on a live basis in the Northern Plains on Friday at mostly $113/cwt., according to the Agricultural Marketing Service. That was with slow trade and light demand. Dressed sales in Nebraska were $5 higher at $178.

There were a few live sales in the Southern Plains at $113 and a few dressed trades in the western Corn Belt at $178, but too few to trend.

On Thursday, live sales in the western Corn Belt were $2-$7 higher at $112. Dressed trade the previous week was at $170-$173.

The prior week, live sales were at $110-$111 in the Texas Panhandle and at $110 in Kansas. On Friday, the Texas Cattle Feeders Association reported its members trading cattle at just over $2 more week to week: $112.80 for steers and $112.91 for heifers.

Despite higher cash cattle prices and increasing wholesale beef values, Cattle futures closed lower Friday, as grain futures continued to climb. Month-end position squaring likely played a role, too.

Live Cattle futures closed an average of $1.23 lower.

Feeder Cattle futures closed an average of $1.96 lower.

Corn futures closed mostly 3¢ to 6¢ higher mixed, except for 9¢ to 12¢ higher in the front three contracts.

Soybean futures closed 10¢ to 16¢ higher through Sep ‘22, and then 7¢ to 9¢ higher.

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Major U.S. financial indices closed sharply lower Friday, pressured by more investor worries about the potential impact from short sellers being challenged by buyers in stocks like GameStop.

The Dow Jones Industrial Average closed 620 points lower. The S&P 500 closed 73 points lower. The NASDAQ was down 266 points.

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The nation’s beef cow herd began this year with 31.16 million head, according to the semi-annul Cattle report from USDA on Friday. That’s 181,000 head fewer or 0.58% less than the previous year.

The number of beef heifers retained for replacement of 5.81 million head was 3,200 head more than the previous year, just 0.06% more.

As of Jan. 1, the calculated number of calves outside feedlots was 25.66 million head, which were 62,000 head fewer (-0.24%) than a year earlier. That’s 3.35% less than 2 years earlier.

Milk cows Jan. 1 of 9.44 million head were 97,400 (+1.04%) more than the previous year.

The inventory of all cattle and calves was estimated at 93.59 million head, down 198,000 (-0.21%) from a year earlier.