WLI

Negotiated cash fed cattle trade was limited on light demand in Kansas through Thursday afternoon, according to the Agricultural Marketing Service. There were a few live trades at $112/cwt., which was $2 higher than last week.

Trade was mostly inactive on light demand in Nebraska and the western Corn Belt with too few transactions to trend. It was at a standstill in the Texas Panhandle and Colorado.

The average dressed steer weight the week ending Jan. 16 was 925 lbs., which was 2 lbs. heavier than the previous week and 18 lbs. heavier than the same week last year, according to USDA’s Actual Slaughter Under Federal Inspection report. The average dressed heifer weight of 850 lbs. was 1 lb. lighter than the prior week but 16 lbs. heavier than the previous year.

Cattle futures edged lower Thursday amid light trade. 

Live Cattle futures closed an average of 38¢ lower, except for 7¢ higher in near Apr.

Feeder Cattle futures closed an average of 41¢ lower, other than 7¢ and 10¢ higher at either end of the board.

Choice boxed beef cutout value was $2.33 higher Thursday afternoon at $231.99/cwt. Select was $1.89 higher at $220.88.

Corn futures closed fractionally mixed to 1¢ higher through the front three contracts, 3¢ lower through Jly ‘22, and then mostly fractionally lower.

Soybean futures closed mostly 14¢ to 21¢ lower.

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Major U.S. financial indices rebounded Thursday, paring some of the steep losses from the previous session. Support included estimate-beating quarterly corporate earnings from the likes of American Airlines and Apple.

Although a bit less than traders expected, fourth-quarter GDP came in at 4.0%, according to the U.S. Bureau of Economic Analysis.

Also, weekly initial unemployment insurance claims came in less than expected at 847,000, according to the U.S. Department of Labor. That was 67,000 fewer than the previous week.

The Dow Jones Industrial Average closed 300 points higher. The S&P 500 closed 36 points higher. The NASDAQ was up 66 points.

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“As the U.S. foodservice sector climbs out of the hole left by 2020, the animal protein sector will not only need to realign itself with the survivors of the last year, but also remain flexible,” says Will Sawyer, lead animal protein economist with CoBank.

In the new Great Grocery Grab report from CoBank’s Knowledge Exchange Division, Sawyer explains the importance of individual foodservice channels varies significantly by animal protein species and by producer.

For instance, ground beef makes up a majority of beef volume through foodservice, but it represents only about one-third of the value due to its low price point. Conversely, the high-value steaks and roasts that are primarily sold in full-service restaurants and hotels comprise a quarter of the volume of beef sold through foodservice but nearly half of beef sales.

Some foodservice channels rebounded through the pandemic to achieve sales growth, as evidenced by the positive comparable-store sales at quick-service and fast casual restaurant concepts since the summer.

Full-service restaurants, however, continue to face double-digit declines in sales. In November, full-service restaurant sales were down 36% compared to last year while total foodservice sales were down 17%. Sawyer adds that in-restaurant dining will be vulnerable as long as consumers remain wary of dining indoors and COVID-19 cases remain elevated.

Although foodservice sales continue to improve, the report suggests sales may not return to pre-pandemic levels until the second half of 2022.

Relative to the realignment and flexibility mentioned earlier, according to the report, “In many cases that includes the large, publicly traded, franchise and multi-location limited-service restaurants. For beef, that could very well mean a long-term shift in high-value steak consumption to retail as the upscale restaurants have been especially hard hit and seen a significant number of closures.”

Negotiated cash fed cattle trade was at a standstill in Kansas and the Northern Plains through Wednesday afternoon, according to the Agricultural Marketing Service. Elsewhere, trade was mostly inactive on light demand, with too few transactions to trend. With that said, early indications point toward higher prices.

Cattle feeders offered 1,570 head (11 lots) in Central Stockyard’s weekly Fed Cattle Exchange Auction, all from the Southern Plains. Of those, 1,128 head (seven lots) sold for a weighted average price of $112.97/cwt. ($112.95 for steers and $113.00 for heifers). The marketing method included both live weight and Bid-the-Grid™. Country trade in the region last week was at $110-$111.

Also, slaughter steers and heifers traded $3-$4 higher in the fat auction at Sioux Falls Regional, where 128 head of Choice 3-4 steers brought an average price of $110.06. That’s at the top end of the $105-$110 paid in country trade last week.

Cattle futures closed lower Wednesday with Live Cattle pressured by the lack of cash direction and lower outside markets, while Feeder Cattle continued to adjust to the rebound in Corn futures.

Live Cattle futures closed an average of 54¢ lower.

Feeder Cattle futures closed an average of 92¢ lower, from 2¢ lower in the spot contract to $1.67 lower at the back.

Choice boxed beef cutout value was 66¢ higher Wednesday afternoon at $229.66/cwt. Select was $1.66 higher at $218.99.

Corn futures closed 1¢ to 2¢ lower, except for fractionally higher to 1¢ higher in the front three contracts.

Soybean futures closed 2¢ to 4¢ higher through Sep ‘21 and then mostly 3¢ to 5¢ lower.

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Major U.S. financial indices closed sharply lower Wednesday. Various analysts placed the most blame on disappointing corporate quarterly earnings. There were also growing concerns that the short-seller scourge in stocks like GameStop and AMC was inflicting enough damage on particular hedge funds to fuel negative ripples in other parts of the market.

The Dow Jones Industrial Average closed 633 points lower. The S&P 500 was down 98 points. The NASDAQ was down 355 points. 

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Recent data from the NPD Group (NPD) underscores how far the U.S. restaurant industry rebounded so far from the economic devastation wrought by dine-in closures and other pandemic disruptions.

Although mandated dine-in restrictions held back all restaurant segments, particularly full service, NPD researchers say consumer demand for restaurant meals, and the ability to serve the demand with a host of off-premises services enable the industry to persevere.

For instance, restaurant digital orders, were already increasing before the pandemic (+19% year over year in January 2020), but exploded through the pandemic, up 145% year over year in December, according to NPD’s daily tracking of consumers’ use of restaurants and other foodservice outlets.

Similarly, carry-out, delivery, and drive-thru were also growing before the pandemic.

Carry-out, which represents the largest share of off-premises modes, increased orders by 3% in January 2020 and by 10% in December, compared to a year earlier. Carry-out ended 2020 holding 46% of off-premises order share.

Delivery orders were 1% higher year over year in January and ended the year up 137%. Even with the triple-digit gain in orders, delivery still holds the smallest off-premises order share at 11%.

Drive-thru orders in 2020 increased from +4% year over year in January to +22% in December, ending the year with a 44% share of off-premises orders.       

“Digital orders for pick-up and all off-premises modes will be a growth engine for the U.S. restaurant industry moving forward,” says David Portalatin, NPD food industry advisor. “Consumers, both new and former users, have now experienced the convenience of digital ordering, especially for carry-out and delivery, and will continue using these services long after the pandemic is over.”  

Negotiated cash fed cattle trade was at a standstill in the Northern Plains and the Southern Plains through Tuesday afternoon, according to the Agricultural Marketing Service. Trade in the western Corn Belt was inactive on very light demand.

Heavy snow in parts of Nebraska and Kansas could help push trade to later in the week.

Live Cattle futures closed an average of 44¢ higher Tuesday, supported by rising wholesale beef values.

Choice boxed beef cutout value was $2.33 higher Tuesday afternoon at $229.06/cwt. Select was $1.12 higher at $217.33.

Feeder Cattle futures, however, closed an average of $1.80 lower, pressured by another day of sharply higher grain futures.

Corn futures closed 11¢ to 20¢ higher through Sep ‘21, 2¢ to 4¢ higher through Jly ’22 and then mostly 2¢ higher.

Soybean futures closed 17¢ to 26¢ higher through Jan ‘22 and then 11¢ to 16¢ higher.

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Major U.S. financial indices closed marginally lower Tuesday.

The Dow Jones Industrial Average closed 22 points lower. The S&P 500 closed 5 points lower. The NASDAQ was down 9 points.

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If recent data is any indication, the U.S. likely started 2021 with fewer beef cows than last year.

“On Thursday, the monthly Livestock Slaughter report revealed what many industry analysts have been watching all year,” say analysts with the Agricultural Marketing Service (AMS). “The 2020 preliminary Federally Inspected (FI) steer slaughter was near 3% below the previous year and over 4% below the three-year average. Heifer slaughter was nearly 4% below a year ago and nearly 3% larger than the three-year average.”

Further, AMS analysts explain 2020 FI beef cow slaughter was 2% more than the previous year and 9% more than the three-year average.

“The estimates for the feedlot mix Jan. 1, 2021 were 61.85% steers and 38.15% heifers. This is up slightly from these same estimates in October 2020 and very near the feedlot mix reported in January 2020,” says Josh Maples, Extension livestock economist at Mississippi State University, in the latest issue of In the Cattle Markets. “The percentage of heifers in the feedlot mix trended up from 2015-2019 as a result of the cattle cycle, but 2020 quarterly totals were slightly lower than 2019, due in part to the feedlot disruptions in the spring and summer.”

Depending on the economist, estimates are for the beef cow herd to be 0.5-1.0% less year over year.

USDA’s Cattle report, providing Jan. 1 estimates of the U.S. cattle inventory will be published Friday afternoon.

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 sales were mostly steady to $1 on either side of steady at $110-$111/cwt. in the Southern Plains, $109-$110 in the Northern Plains and at $105-$110 in the western Corn Belt. Dressed trade was steady to $3 lower at $170-$173.

The average five-area direct fed steer price last week was $109.23/cwt. on a live basis, which was 29¢ less than the prior week. The average steer price in the beef of $172.58 was 48¢ less.

Cattle futures shrugged off Friday’s monthly Cattle on Feed report and resurgent grain futures on Monday. They were pressured at the outset, but closed mostly higher by the end of the day, retaining strong gains from the previous session.

Live Cattle futures closed an average of 37¢ higher (2¢ to $1.07 higher), except for 20¢ lower in the spot contract.

Feeder Cattle futures closed an average of $1.11 higher (12¢ to $1.87 higher), except for 70¢ and 30¢ lower in the front two contracts.

Choice boxed beef value was $3.91 higher at $226.73/cwt. Select was $2.87 higher at $216.21.

Grain futures bounced back Monday from the previous session’s selloff as markets carve out a new trading range.

Corn futures closed 11¢ higher through the front three contracts and then mostly 2¢ to 4¢ higher.

Soybean futures closed 21¢ to 31¢ higher through Sep ‘22 and then mostly 14¢ to 19¢ higher.

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Major U.S. financial indices closed mixed Monday with some investors apparently wary of the barrage of corporate earnings reports due this week.

The Dow Jones Industrial Average closed 36 points lower. The S&P 500 closed 13 points higher. The NASDAQ was up 92 points. 

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Drought and dryness likely helped push December feedlot placements higher than expected, say analysts with the Livestock Marketing Information Center (LMIC).

As noted in Monday’s Cattle Current, December placements were 0.77% more than the previous year, according to the monthly Cattle on Feed report. Estimates ahead of the report expected a decrease of about 3%.

“Hay supplies are tighter and the whole feed complex has moved up significantly,” explain LMIC analysts, in the latest Livestock Monitor. “LMIC has feedlots break-evens for cattle placed in December around $109 in the Southern Plains.”

“Drought persisted across much of the west in 2020 and has extended into much of the Great Plains at the current time. Several states reveal the impact of the drought on hay production, supplies and the challenges for cattle producers in those regions,” says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly market comments.

For instance, Peel notes Dec. 1 hay stocks were 15% less in Colorado year over year and 36.4% less in New Mexico (the least since 1973). Alfalfa and other hay production for 2020 is also significantly less in those states.

“While overall U.S. hay supplies appear to be adequate, it is clear that some drought regions are experiencing severe challenges to get through the winter,” Peel says.  “The 16 Western and Plains states (not including Texas) had Dec. 1 hay stocks down 5.8% year over year.”

Although feed costs increased significantly since December, LMIC analysts point out, “In the last week, boxed beef cutout values have climbed on better demand, which has helped support cattle prices. If these prices hold, they will offset the higher feed costs, and help stabilize cattle feeding margins.”