WLI

Negotiated cash fed cattle trade ended the week with live prices $3 higher at $110/cwt. in Nebraska and the Southern Plains; $3-$4 higher in the western Corn Belt at $108-$110, according to USDA’s Agricultural Marketing Service (AMS). Dressed prices were at $172, which was $4 higher in Nebraska and $5-$8 higher in the western Corn Belt. Although prices were higher, some thought the market was poised to reap steeper gains.

Through Thursday, the five-area direct weighted negotiated fed steer price was $109.46/cwt. on a live basis, which was $3.11 more than the previous week but $5.69 less than the same week in 2019. The average steer price in the beef was $171.88, which was $6.58 more week to week but $10.07 less year over year.

Cattle futures closed sharply lower Friday, with much of the pressure seemingly tied to overbought conditions, week-end positioning and fears that escalating COVID-19 cases will take another whack at packer production.

Live Cattle futures closed an average of $1.61 lower, from $1.10 lower toward the back to $2.57 lower toward the front.

Feeder Cattle futures closed an average of $2.38 lower.

Choice boxed beef cutout value was 52¢ lower Friday afternoon at $225.98/cwt. Select was $1.22 higher at $209.46.

Corn futures closed mostly 1¢ to 2¢ higher.

Soybean futures closed mostly 4¢ to 9¢ higher through Nov ‘22 and then mostly unchanged. 

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U.S. financial indices closed higher Friday, as investors seemed less worried about the surge in COVID-19 cases and more comfortable that the recently announced vaccine will enable the nation to get back to business, ultimately.

The Dow Jones Industrial Average closed 399 points higher. The S&P 500 closed 48 points higher. The NASDAQ was up 119 points.

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“Agriculture will need to speak up with the new administration on its priorities, and we need to strengthen the bipartisan nature of American agriculture,” explained former assistant U.S. trade representative Sharon Bomer Lauritsen at last week’s virtual U.S. Meat Export Federation (USMEF) Strategic Planning Conference.

“There has never been a more important time to maintain a strong and unified agriculture and agribusiness voice at the state level, and in Washington, D.C., to balance the industrial voices,” Bomer Lauritsen said. “U.S. agriculture will need to defend and advance its interests, make sure they are heard over the non-ag voices, and keep the rules of trade strong and enforced to ensure that American agricultural exports continue to thrive.”

Bomer Lauritsen, who recently retired from the U.S. government after 29 years of service and is now a trade policy consultant at Ag Trade Strategies, LLC, recapped many key trade breakthroughs for U.S. red meat over the years. She noted that while the Trump administration’s approach to tariffs and trade sometimes put agricultural exports in a negative position, it also helped bring key trading partners such as Japan and China to the negotiating table on longstanding market access obstacles for U.S. beef and pork. She also offered a preview of what to expect from a new administration.

“President-elect Biden has stated his priority will be fixing domestic issues first, but that doesn’t mean that the new administration at lower levels can’t lay the groundwork to build constructive relationships and a foundation for trade negotiation,” she said. “Biden also hasn’t rejected engaging on the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), but has stated the U.S. would need to see changes. I think it’s possible to move forward with a Japan negotiation, although automotive issues will be difficult and could have ramifications for agriculture.”

Further, Pat Binger, new USMEF chair, explained that despite facing trade barriers and an uncertain economic climate in many key regions of the world, there are excellent prospects to further expansion of U.S. red meat’s global footprint.

“From a carcass utilization standpoint, we need to continue to find ways to expand our export product mix—that’s a big opportunity going forward,” Binger said. “Additionally, there are items today that our industry is not getting boxed, either due to lack of labor or a combination of labor and complexity, and that’s another opportunity that we need to manage through. But all in all, I am very optimistic about the U.S. red meat industry’s ability to take on challenges and seize the opportunities that lie ahead. I remain excited and highly encouraged about the future of our industry.”

Negotiated cash fed cattle trade got off to a strong start in the north Thursday with live prices $3 higher in Nebraska at $110/cwt. and $3-$4  higher in the western Corn Belt at $108-$110. Dressed prices were $4 higher in Nebraska at $172 and $5-$8 higher in the western Corn Belt at $172.

Cattle futures closed narrowly mixed again Thursday with Feeder Cattle receiving some support from softer grain futures.

Live Cattle futures closed an average of 30¢ lower except for 5¢ higher in Aug.

Feeder Cattle futures closed an average of 47¢ higher, except for 52¢ lower in spot Nov.

Choice boxed beef cutout value was $3.66 higher Thursday afternoon at $226.50/cwt. Select was 22¢ lower at $208.24.

Corn futures closed mostly 4¢ to 9¢ lower through Sep ‘21, and then mostly 1¢ lower.

Soybean futures closed mostly 6¢ to 8¢ lower through Aug ‘21 and then mostly fractionally mixed. 

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U.S. financial indices closed lower Thursday, amid the resurgence in COVID-19 cases and renewal of stricter safety precautions that will delay economic recovery. 

The Dow Jones Industrial Average closed 317 points lower. The S&P 500 down 35 points lower. The NASDAQ was down 76 points.

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“Globally, though some recovery has occurred, demand for beef in international destinations continues to be influenced by pandemic responses and safety measures,” says Josh Maples, Extension livestock economist at Mississippi State University. “Beef demand at seated restaurants continues to be impacted, and demand in areas reliant on tourism still faces obstacles. The pace of recovery in international destinations will be key for beef exports moving forward and for the value that beef exports add to cattle production.”

In the latest issue of In the Cattle Markets, Maples explains September U.S. beef exports were stronger year over year to South Korea, Hong Kong, Taiwan and Canada. As well, he points out beef exports to China were the most on record for September, accounting for 5.3% of total U.S. beef export, vastly more than the 1% of exports China accounted for in all of 2019.

But, U.S. beef exports were 5.6% less overall in September, Maples says; down about 6% year to date through September.

“Beef exports to Mexico continued to lag behind the 2019 pace. During September, beef exports to Mexico were about 38% lower than in September 2019 and were 40% lower for the first nine months of 2020 compared to the first 9 months of 2019,” Maples explains. “Exports to Mexico were 14% of total January-September beef exports in 2019; in 2020, that share has dropped to about 9%.”

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

If the weekly Fed Cattle Exchange Auction is any indication, prices could end up significantly higher this week. There were 1,119 head offered (six lots) and none sold. However, three lots from the Southern Plains were passed on at $110/cwt., which was $3 higher than last week’s country trade in the region.

As well, slaughter steers sold $3-$6 higher and fat heifers traded $2 higher at Sioux Falls Regional in South Dakota. There were 502 head of Choice 3-4 steers weighing an average of 1,627 lbs. that brought an average of $107.23, which was $1-$2 higher than the previous week’s country trade.

Cattle futures closed narrowly mixed Wednesday.

Live Cattle futures closed an average of 35¢ higher, from 12¢ to 80¢ higher, except for 2¢ lower toward the back.

Feeder Cattle futures closed narrowly mixed, from an average of 22¢ lower to an average of 38¢ higher.

Choice boxed beef cutout value was 59¢ higher Wednesday afternoon at $222.84/cwt. Select was 9¢ lower at $208.46.

Corn futures closed mostly 2¢ to 5¢ lower through Sept ‘21, and then fractionally lower to 1¢ lower.

Soybean futures closed mostly 6¢ to 10¢ higher.

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U.S. financial indices closed narrowly mixed Wednesday, as investors appeared to take a breather, although major tech stocks bounced back from the previous session’s selloff.

The Dow Jones Industrial Average closed 23 points lower. The S&P 500 closed 27 points higher. The NASDAQ closed 232 points higher.

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Customer transactions at major U.S. restaurant chains continue lower year over year but stabilized in October, according to The NPD Group (NPD).

Specifically, overall transactions held steady each week in October at 9% less year over year, according to NPD’s CREST^® Performance Alerts. Quick service restaurant chains, able to leverage off-premises operations during the pandemic, also stabilized at -9% throughout the month.

On the other hand, transactions fluctuated from -16% in the first week of October to  -14% in the last full week of the month at full service restaurant chains, which depend more on dine-in services.

Digital and off-premises orders underpinned gains in stability.

With dine-in operations limited and consumers in search of contactless foodservice, the NPD folks say digital restaurant orders from mobile apps, text messages, and the internet grew by 138% in the July, August, and September quarter compared to a year earlier. Off-premises orders from carry-out, delivery, and drive-thru increased by 22% year over year in the quarter, while on-premises/dine-in declined by 62% year over year. 

“While some of the steep transaction and traffic declines experienced at the height of the mandated shelter-at-home and dine-in closures have been recovered, many uncertainties lie ahead for the industry,” says David Portalatin, NPD food industry advisor. “The continuing pandemic, governmental restrictions, and relief funding are just a few of the uncertainties. But, what we do know for certain is that consumers continue to rely on restaurants and other foodservice outlets to prepare their meals, and there is pent-up demand while we wait for a return to normalcy.”

Negotiated cash fed cattle trade was at a standstill in the five-area direct regions through Tuesday afternoon, according to the Agricultural Marketing Service (AMS). However, the recent bounce in Cattle futures and spiking wholesale beef prices have plenty of folks optimistic cash prices will rise when trade finally gets underway this week.

Cattle futures closed narrowly mixed Tuesday. Despite a massive rally in Corn and Soybean futures, surging wholesale beef values helped Live Cattle maintain ground, but pressured Feeder Cattle.

Live Cattle futures closed an average of 33¢ higher, from 2¢ to 95¢ higher, except for 10¢ lower in near Apr.

Feeder Cattle futures closed an average of 37¢ lower, except for an average of 10¢ higher in two contracts.

Choice boxed beef cutout value was $4.86 higher Tuesday afternoon at $222.25/cwt. Select was $6.18 higher at $208.55.

Corn and soybean futures spiked higher Tuesday with the crop-friendly WASDE report (see below).

Corn futures closed mostly 11¢ to 15¢ higher through Sept ‘21, and then 3¢ to 8¢ higher.

Soybean futures closed 21¢ to 33¢ higher through Sep ‘21, and then mostly from 11¢ to 17¢ higher.

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U.S. financial indices closed mixed Tuesday, with it appearing investors were trading some stay-at-home stocks for those that could benefit from further reopening of the domestic economy, given the previous day’s announcement of a vaccine candidate from Pfizer and BioNTech proving to be more than 90% effective in preventing COVID-19.

The Dow Jones Industrial Average closed 262 points higher. The S&P 500 down 5 points lower. The NASDAQ was down 159 points.

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In the latest World Agricultural Supply and Demand Estimates (WASDE), USDA’s Economic Research Service (ERS) left the forecast five-area direct fed steer price unchanged from the previous month at $109/cwt. in the fourth quarter, $113 in the first quarter next year and at $114 for the average annual price in 2021.

Compared to the previous month, projected beef production for this year increased by 85 million lbs. to 27.22 billion lbs. Estimated beef production next year of 27.36 billion lbs. would be 142 million lbs. more than this year (+0.50%).

Estimated total red meat and poultry production this year increased by 216 million lbs. from the previous month’s projection to 106.61 billion lbs. Projected total red meat and poultry production next year of 107.47 billion lbs. would be 865 million lbs. more than this year (+0.81%).

Among other WASDE highlights:

Corn Corn production was forecast at 14.51 billion bu., down 215 million with a reduction in yield to 175.8 bu./acre. Corn exports were raised by 325 million bu. to 2.65 billion, which would be record high. Projected feed and residual use was lowered by 75 million bu. based on a smaller crop and higher expected prices.

With supply falling and use increasing, corn ending stocks for 2020-21 were projected 465 million bu. less at 1.7 billion. If realized, that would be the lowest ending stocks level since 2013-14. The season-average corn price was raised by 40¢ to $4.00/bu.

Soybeans The U.S. soybean outlook for 2020-21 is for lower production and ending stocks. Soybean production is forecast at 4.17 billion bu., down 98 million on lower yields. With reduced production, soybean ending stocks were projected at 190 million bu., down 100 million from last month. If realized, soybean ending stocks would be at the lowest level in the past seven years.

The U.S. season-average soybean price for 2020-21 was forecast 60¢ higher at $10.40/bu. The soybean meal price was forecast $20 higher at $355/short ton. The soybean oil price was forecast 2¢ higher at 34.5¢/lb.

Wheat The outlook for 2020-21 U.S. wheat this month is for stable supplies, higher domestic use, unchanged exports, and reduced ending stocks.

Projected 2020-21 ending stocks were reduced 6 million bu. to 877 million, down 15% from last year. The season-average farm price was unchanged at $4.70/bu.

Negotiated cash fed cattle prices last week were $1 higher than the previous week in the Southern Plains at $107/cwt. on a live basis, $4-$6 higher in Nebraska at $107/cwt., and $3-$4 higher in the western Corn Belt at $105-$106. Dressed trade was $2-$9 higher at mostly $167, according to the Agricultural Marketing Service.

Last week’s five-area weighted average fed steer price was $106.33/cwt. on a live basis, which was $1.26 higher than the previous week, but $8.27 less than the same time a year earlier. The average steer price in the beef was $165.35, which was $1.40 more than the prior week, but $15.69 less than the previous year.

Cattle futures roared higher Monday, buoyed by significant gains in wholesale beef prices and last week’s stronger cash fed cattle prices. There was also likely plenty of help from surging outside markets, tied to the reported efficacy of a coronavirus vaccine (more below).

Live Cattle futures closed an average of $2.19 higher, from $1.20 higher toward the back to $3.17 higher in spot Dec.

Feeder Cattle futures closed an average of $3.71 higher, from $1.90 higher at the back to $4.80 higher.

Choice boxed beef cutout value was $3.07 higher Monday afternoon at $217.39/cwt. Select was $3.88 higher at $202.37. Week to week, Choice was $8.74 higher and Select was up $9.75. 

Corn futures closed mostly 1¢ to 3¢ higher.

Soybean futures closed 6¢ to 9¢ higher through Aug ‘21, and then mostly from 1¢ lower to 1¢ higher.

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Except for tech stocks, major U.S. financial indices rallied Monday on news that a vaccine candidate from Pfizer and BioNTech proved to be more than 90% effective in preventing COVID-19.

Specifically, according to those companies, the vaccine candidate,  “…was found to be more than 90% effective in preventing COVID-19 in participants without evidence of prior SARS-CoV-2 infection in the first interim efficacy analysis.”

The companies continue accumulating safety data and currently estimate that a median of two months of safety data following the second (and final) dose of the vaccine candidate—the amount of safety data specified by the FDA in its guidance for potential Emergency Use Authorization—will be available by the third week of November. Based on current projections those companies expect to produce globally up to 50 million vaccine doses this year and up to 1.3 billion doses in 2021.

The Dow Jones Industrial closed 834 points higher. The S&P 500 closed 41 points higher. The NASDAQ down 181 points.

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Calf and feeder markets appear to be moving higher in the Southern Plains with wheat pasture prospects improved by recent moisture.

For instance, in Oklahoma, Derrell Peel, Extension livestock marketing specialist at Oklahoma State University says prices last week for steers weighing 450-600 lbs. were the highest since late August and early September. As an example, he notes the combined state auction price for Medium and Large #1 steers at 450-500 lbs. last week was $166.89/cwt. compared to $147.34 a week earlier, when storm severity helped damper markets.

Peel provided a price chart (below) in his weekly market comments published Monday.

“For animals below 600 lbs., the price drops sharply with additional weight (i.e. a bigger price rollback). Above 600 lbs., the price changes little with additional weight. A bigger price rollback reduces the value of gain. For example, the value of gain for 200 lbs. of gain from 450 to 650 lbs. is $0.62/lb. but for 650 to 850 lbs., the value of gain is $1.36/lb.,” Peel explains. 

Consequently, Peel says stocker producers should consider several factors, including beginning weight, how long the animals will be owned and how much gain will be added to the animals.

“With a possibly shortened winter grazing period, a heavier beginning weight currently offers a higher value of gain and may make sense,” Peel says. “The next few weeks may result in additional demand for stockers but will likely also see larger supplies of feeder cattle in Oklahoma auctions. Combined Oklahoma auction volume the past six weeks was down nearly 33%, in part due to the impacts of the winter storm. It appears there are significant numbers of calves and feeders yet to be marketed this fall. Stocker and feeder prices could move either higher or lower in the next month depending on the balance of increased demand and increased supply in auctions.”

Peel adds that the recent surge in Feeder Cattle futures is adding support to calf and feeder cattle prices.

“Winter grazing typically keys off the March Feeder futures contract,” he says. “March contract prices increased to over $135/cwt. at the end of last week, up from lows below $126/cwt. less than two weeks ago. Feeder markets are also closely watching feed grain markets as strong export demand has pushed grain prices higher.”