WLI

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

Live prices were generally $1-$3 lower last week at $108-$111/cwt. Dressed prices were $1-$4 lower at $172-$174.

For the week:

Texas Panhandle: $110-$111/cwt.  1-2 lower

Kansas: $109-$111  1-3 lower

Nebraska: $109-$110 on a live basis; $172 dressed. Steady to 1 lower and $4 lower

Colorado: $109 1-2 lower

Western Corn Belt: $108-$109 on a live basis; $173-$174 dressed.

Through Thursday, the average five-area direct fed steer price was $109.52/cwt. on a live basis, which was $1.96 less than the previous week and $14.48 less than the same week a year earlier. The average steer price in the beef was $173.06, which was $2.96 less than the previous week and $26.01 less than a year earlier.

Choice boxed beef cutout value was 45¢ lower Friday afternoon at $212.92/cwt. Select was $2.01 higher at $203.08. 

Total estimated cattle slaughter for the week of 651,000 head was the same as a week earlier and 18,000 head more than the same week a year earlier. Estimated beef production for the week of 544.8 million lbs. was 22.3 million lbs. more than the previous year.

The average dressed steer weight the week of Jan. 2 of 920 lbs. was 7 lbs. heavier than the previous week and 8 lbs. heavier than the same week a year earlier, according to the USDA Actual Slaughter Under Federal Inspection report. The average dressed heifer weight of 851 lbs. was 12 lbs. heavier than the previous week and 19 lbs. heavier than the prior year.

Cattle futures closed higher Friday. Bottom feeding might be one of the drivers, as was stronger wholesale beef values, rising open interest and a pause to increasing Corn futures.

Live Cattle futures closed an average of 93¢ higher, from 45¢ to $1.32 higher.

Feeder Cattle futures closed an average of $2.02 higher.

Corn futures closed 2¢ to 3¢ lower through the front three contracts, and then mostly 1¢ to 3¢ higher.

Soybean futures closed 12¢ to 13¢ lower through the front three contracts, and then mostly 1¢ to 5¢ higher.

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Major U.S. financial indices closed lower Friday. Pressure included a more negative outlook of consumer retail sales than the trade expected. Also, increasing global movement restrictions, due to escalating COVID-19 cases, weighed on the energy sector.

Advance estimates of U.S. retail and food services sales for December were 0.7% less than the previous month, but 2.9% more than the previous year, according to the U.S. Census Bureau.

The Dow Jones Industrial Average closed 177 points lower. The S&P 500 closed 27 points lower. The NASDAQ was down 114 points.

CME WTI Crude Oil futures closed $1.05 to $1.21 lower through the front six contracts.

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“Much uncertainty continues but assuming no major new global health or economic disruptions, U.S. beef trade is expected to be supportive in 2021,” says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly market comments (Jan. 11).

As reported in Cattle Current, U.S. beef exports stormed back in November, according to data released by USDA and compiled by the U.S. Meat Export Federation (USMEF).

November beef exports totaled 115,337 metric tons (mt), up 6% from a year earlier and the most since July 2019. Export value climbed 8% year-over-year to $707.5 million.

“Demand for U.S. beef in the global retail sector has been outstanding and we expect this to continue in 2021,” says USMEF President and CEO Dan Halstrom. “Unfortunately, foodservice continues to face COVID-related challenges. We expect a broader foodservice recovery this year, especially from mid-2021, but will likely still see interruptions in some markets.”

Through November, beef exports were 6% lower year-over-year in volume (1.13 million mt) and down 7% in value ($6.9 billion). January-November muscle cut exports were 3% below 2019 in volume (883,012 mt) and 6% lower in value ($6.11 billion).

“Beef exports are forecast to be modestly higher year over year, returning roughly to 2019 levels. Beef imports are currently forecast to decrease from the 2020 spike to pre-COVID levels or perhaps a bit lower,” Peel says. “Numerous factors will affect U.S. and global beef trade in 2021 including exchange rates, continuing demand for beef in China, the rebuilding of the Australian beef industry, continuing trade tensions between China and Australia/New Zealand and Mexico’s economic situation.”

Negotiated cash fed cattle trade was at a standstill in Colorado through Thursday afternoon, according to the Agricultural Marketing Service. Elsewhere, it was limited on light demand with too few transactions to trend.

For the week so far:

Texas Panhandle: $110-$111/cwt.

Kansas: $109-$110

Nebraska: $109-$110 on a live basis; $172 dressed.

Colorado: $109

Western Corn Belt: $108-$109 on a live basis; $173-$174 dressed.

Cattle futures were mixed Thursday, with Feeder Cattle losing ground beneath the weight of another surge higher in grain prices, while more positive supply fundamentals in the second quarter helped bolster deferred Live Cattle.

Live Cattle futures closed an average of 68¢ higher, except for an average of 19¢ lower in the front three.

Feeder Cattle futures closed an average of 64¢ lower except for 15¢ higher in the back contract.

Choice boxed beef cutout value was $2.37 higher Thursday afternoon at $213.37/cwt. Select was $2.01 higher at $201.07.

Strong exports continue to support corn and soybean prices, according to the latest USDA U.S. Export Sales report for the week ending Jan. 7.

Net U.S. corn export sales of 1.44 million metric tons (mt) for 2020-21 were 92% more than the previous week and 34% more than the prior four-week average.

Net U.S. soybean export sales of 908,000 mt for 2020-21 were up noticeably from the previous week and up 93% from the prior four-week average.

Corn futures closed 9¢ to 10¢ higher through the front three contracts, and then 1¢ to 5¢ higher.

Soybean futures closed 20¢ to 25¢ higher through Jan ‘22, and then mostly 10¢ to 16¢ higher.

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Major U.S. financial indices closed a touch lower Thursday, ahead of incoming President Biden’s announcement about plans for another round of federal stimulus.

Initial unemployment insurance claims for the week ending Jan. 9 were 965,000, according to the U.S. Department of Labor. That was 181,000 more than the previous week.

The Dow Jones Industrial Average closed 68 points lower. The S&P 500 closed 14 points lower. The NASDAQ was down 16 points.

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“Improving the traceability and sustainability of our supply chain is one of Wendy’s® key priorities. When it comes to beef, the first step is reaching further back into our supply chain to create visibility into the animals we source for our food, and to verify how they were raised and treated,” says Liliana Esposito, Chief Communications Officer for The Wendy’s  Company.

Wendy’s is accomplishing that in partnership with the Progressive Beef program, which increases transparency and provides third-party verification that the cattle were raised in accordance with strict animal welfare and sustainability standards. The Progressive Beef program is built around three core pillars including animal welfare, food safety and sustainability; and transparency and traceability are critical to achieving progress in these areas.

Wendy’s announced Thursday that 40% of its U.S. fresh, never frozen beef supply was sourced from Progressive Beef™-certified feedlots at the end of last year, which was 15% more than the previous year. The company’s goal is to source  more than 50% of its supply from cattle raised under the Progressive Beef program in 2021.

“Over time, we believe this transparency and record- keeping will enable us to measure and improve our impact on a variety of sustainability metrics, including medical treatment and antibiotic use, and water and land use,” Esposito says.

“Wendy’s is a longtime leader in the restaurant industry, and we were delighted to have them as our first restaurant chain partner,” says John Butler, Chief Executive Officer of Progressive Beef, LLC. “Today’s consumers want to know where their food comes from and that the cattle were ethically and sustainably raised. We are proud to offer Wendy’s a solution to meet the company’s goal of a more transparent and traceable fresh beef supply chain; a program that we believe to be the industry gold standard and way of the future.”

Negotiated cash fed cattle prices for the week, through Wednesday afternoon, were $1-$3 less than the previous week on a live basis and $2-$3 lower in the beef, according to data from the Agricultural Marketing Service.

Live prices were $1 lower than the previous day and $2 less than the previous week in the Texas Panhandle at $110/cwt. Prices in Kansas were $1-$3 lower at $109-$111. Live prices in Nebraska the previous day were at $109-$111, which was steady to $1 lower than the previous week; dressed trade was $2-$3 lower at $173-$174. Live prices were $3 lower in Colorado at $109. Live prices in the western Corn Belt on Tuesday were at $108-$109, which was $1-$2 lower than the previous week; dressed trade was $3 lower at $174-$177.

Feeder Cattle futures mostly edged higher Wednesday, with Feeder Cattle recovering some of the previous session’s steep losses. Higher wholesale beef values also helped Live Cattle to firm after the front months.

Live Cattle futures closed mainly narrowly mixed but mostly higher, from an average of 22¢ lower in the front two contracts to an average of 35¢ higher.

Feeder Cattle futures closed an average of 61¢ higher.

Choice boxed beef cutout value was $1.86 higher Wednesday afternoon at $211.00/cwt. Select was 97¢ higher at $199.06.

Corn futures closed 7¢ to 8¢ higher through the front three contracts, and then mostly 3¢ to 4¢ lower.

Soybean futures closed 6¢ to 12¢ lower through Sep ‘21, and then mostly 1¢ to 4¢ higher.

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Major U.S. financial indices closed narrowly mixed Wednesday amid news including the rise in COVID-19 cases and the political fiasco in the nation’s capitol. 

The Dow Jones Industrial Average closed 8 points lower. The S&P 500 closed 8 points higher. The NASDAQ was up 56 points.

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Last year, the U.S. restaurant industry experienced its steepest decline since the Great Depression , according to the NPD Group (NPD). But, restaurant transactions continued to show improvement in December.

Customer transaction declines at major restaurant chains in December were down 10% compared to the same period a year ago. That was a 27-point improvement from April, the height of the shelter-at-home and restaurant dine-in closure mandates, when transactions declined by 37% from a year earlier, according to NPD’s CREST^®Performance Alerts.

Full service restaurant chains, which primarily rely on dine-in customers and had few if any off-premises services when the dine-in restrictions went into effect, bore the brunt of the transaction declines throughout the pandemic. In April, the segment’s customer transactions declined by 70% year over year; transactions improved to 30% less year over year in December.

Many full service restaurant chains quickly pivoted to offer more off-premises services by turning parking lots into drive-thru stations, offering curbside pick-up, and enhancing delivery options. For full service restaurants now, it’s about government restrictions. In more restrictive states, full service restaurant chain transactions are down 60% to 70%. In less restrictive states, there isn’t as much of a gap between quick service and full service restaurants.

Major quick service restaurant chains, which represent the bulk of restaurant industry transactions, learned to expand their already high capacity for off-premises volumes. The chains’ carry-out, drive-thru, and delivery orders soared throughout the pandemic as consumers looked for relief from preparing most of their meals at home. At their ebb in April, quick service customer transaction declines were 35% less year over year. They quickly improved as shelter-at-home orders were lifted. In December, quick service restaurant chain customer transaction declines were down  8% versus the same month a year earlier.

“The struggles of the restaurant industry are well documented and we acknowledge that some operators have not survived the pandemic,” says David Portalatin, NPD food industry advisor. “But history has shown that consumers will always value the convenience, quality, and experience of restaurant meals, and the operators that deliver against these expectations have proven it’s a winning formula in good or bad times. Our industry is resilient and consumer demand for restaurants remains strong.”

Negotiated cash fed cattle trade was limited on light demand in Nebraska and the western Corn Belt through Tuesday afternoon, according to the Agricultural Marketing Service, with too few transactions to trend. Elsewhere, trade was at a standstill.

Feeder Cattle futures closed sharply lower Tuesday, pressured by more friendly World Agricultural Supply and Demand Estimates for corn and soybeans (see below). Firmer wholesale beef values and hopes for a recovering domestic economy later in the year helped Live Cattle close mainly higher. The recent and continued increase in open interest helped, as did strength in Lean Hog futures.

Live Cattle futures closed an average of 89¢ higher, except for 55¢ lower in the front three contracts.

Feeder Cattle futures closed an average of $1.98 lower from 90¢ lower at the back to $2.92 lower toward the front.

Choice boxed beef cutout value was $1.45 higher Tuesday afternoon at $209.14/cwt. Select was $2.35 higher at $198.09.

Grain futures surged higher Tuesday, fueled by the friendly World Agricultural Supply and Demand Estimates (see below).

Corn futures closed 23¢ to 25¢ higher through the front four contracts, 12¢ to 16¢ higher through the next four and then mostly 5¢ higher.

Soybean futures closed 41¢ to 47¢ higher through the front four contracts, 19¢ to 33¢ higher through the next four and then mostly 10¢ to 16¢ lower.

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Major U.S. financial indices edged higher Tuesday, with trader expectations for additional economic stimulus apparently trumping escalating COVID-19 cases.

The Dow Jones Industrial Average closed 60 points higher. The S&P 500 closed 1 point higher. The NASDAQ was up 36 points.

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USDA lowered its forecast for total red meat and poultry production for 2021, compared to the previous month’s estimate, according to the latest World Agricultural Supply and Demand Estimates (WASDE). That’s based on expectations of lower beef, broiler, and turkey production more than offsetting higher pork production.

However, total estimated red meat and poultry production for 2021 is forecast 634 million lbs. more than in 2020 (+0.60%) at 107.10 billion lbs.

Beef production for 2021 is forecast at 27.19 billion lbs., which would be 32 million lbs. more (+0.11%) than in 2020, with higher non-fed cattle slaughter more than offsetting lighter expected cattle carcass weights.

WASDE estimated the average five-area direct fed steer price for last year at $108.51/cwt. Fed steer prices for 2021 are projected to be $113 in the first and second quarters, $115 in the third quarter and $120 in the fourth quarter for an annual average of $115.50, which was 50¢ more than the previous month’s forecast.

Among other WASDE highlights:

Corn: Outlook for the 2020-21 U.S. corn crop is for lower production, reduced corn used for ethanol, smaller feed and residual use and exports, and decreased ending stocks. Corn production is estimated at 14.182 billion bu., down 324 million on a lower yield and slight reduction in harvested area. With supply falling more than use, corn stocks were lowered 150 million bu. to 1.552 billion. The season-average corn price received by producers was raised 20¢ to $4.20/bu.

Soybeans: Soybean production was estimated at 4.135 billion bu., down 35 million bu., led by reductions for Minnesota, Iowa, and Kansas. Harvested area was estimated at 82.3 million acres, up slightly from the previous report. Yield was estimated at 50.2 bu./acre, down 0.5 bu. With higher imports and slightly higher beginning stocks, soybean supplies were down 14 million bu. from last month. The soybean crush forecast was raised 5 million bu. to 2.2 billion, reflecting improved prospects for soybean meal exports with a lower export forecast for Argentina. The soybean export forecast was raised 30 million to a record 2.23 billion bu. With lower supplies and increased use, ending stocks were projected at 140 million bu., down 35 million from the previous forecast.

The U.S. season-average soybean price for 2020-21 was projected 60¢ higher at $11.15/bu. The soybean meal price was projected $20 higher at $390/short ton. The soybean oil price was forecast 2.5¢ higher at 38.5¢/lb. 

Wheat: Outlook for 2020-21 U.S. wheat is for slightly smaller supplies, unchanged domestic use, higher exports, and lower ending stocks. Supplies were reduced on lower imports, which were decreased 5 million bu. to 120 million on a slower than expected pace. Exports were raised 10 million bu. to 985 million as higher white wheat exports were partially offset by lower Hard Red Winter (HRW) exports. Projected 2020-21 ending stocks were reduced 15 million bu. to 862 million, down 16% from last year. The season-average farm price for wheat was unchanged at $4.70/bu.   

Winter wheat: Planted area for harvest in 2021 was estimated at 32.0 million acres, up 5% from 2020 and up 2% from 2019, according to the Winter Wheat and Canola Seedings report. This represents the fourth lowest United States acreage on record. Seeding of the 2021 acreage was underway in early-September and was ahead of the five-year average pace. Throughout the season, planting and emergence progress remained ahead of the five-year average pace. Seeding was mostly complete by Nov. 15.

Hay Stocks: Stocks on farms Dec. 1 were 84.02 million tons, according to the latest USDA Crop Production report. That was 468,000 tons less (-0.55%) than the previous year.

Negotiated cash fed cattle trade was at a standstill through Monday afternoon, except for the western Corn Belt, where trade was mostly inactive on very light demand, according to the Agricultural Marketing Service.

Live prices last week were at $112/cwt. in the Southern Plains and Colorado, $110-$111 in Nebraska and $110 in the western Corn Belt. Dressed trade was at $176 in Nebraska and at $174-$177 in the western Corn Belt.

The average five-area direct fed steer price last week was $111.27/cwt. on a live basis, which was 24¢ less than the previous week. The average steer price in the beef was $175.79, which was 12¢ more than the previous week.

Cattle futures closed mostly lower Monday, with most of the declines in Live Cattle. Pressure included the inability to spark cash prices higher last week, as well as uneasiness ahead of the monthly World Agricultural Supply and Demand Estimates scheduled to be published Tuesday (see below). There was also likely pressure in the nearby contracts from the monthly Goldman roll, as that firm rolls forward underlying futures contracts in its excess return index portfolio, contracts set to expire in the next month.

Live Cattle futures closed an average of 49¢ lower, except for 7¢ higher in three contracts.

Feeder Cattle futures closed an average of 15¢ lower except for an average of 12¢ higher in the front two contracts.

Choice boxed beef cutout value was 89¢ higher Monday afternoon at $207.69/cwt. Select was 95¢ lower at $195.74.

Corn futures closed 3¢ to 4¢ lower through the front three contracts and then mostly 1¢ to 2¢ higher.

Soybean futures closed 1¢ to 2¢ lower through Aug ‘21 and then mostly 12¢ to 14¢ lower.

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Major U.S. financial indices closed lower Monday, with little momentum one direction or the other.

The Dow Jones Industrial Average closed 89 points lower. The S&P 500 closed 25 points lower. The NASDAQ was down 165 points. t

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“The corn futures rally is following soybeans higher, and cash has struggled to keep pace, widening the basis for this time of year. Although exports have been strong, the fundamentals are not currently holding ending stocks tight enough to justify $5 corn,” say analysts with the Livestock Marketing Information Center (LMIC). “Still, there seems little to move the futures lower ahead of U.S. plantings and harvest in South America.”

In the latest Livestock Monitor, LMIC analysts explain the last time nearby Corn futures prices were closing in on $5/bu. was in May of 2014.

“Corn prices at the farm, as reported by USDA-NASS during the 2013-14 crop year ending on Aug. 31, 2014 averaged $4.46/bu. Nearby corn futures finished August 2014 at $3.59, a $1.50 decline in about three months. A record large corn crop of 14.2 billion bu. was about to be harvested, followed by 1.9 billion bu. of the crop being marketed in export markets and 6.6 billion bu. being used domestically for food, industrial and seed purposes. These figures compare to the current situation where production is pegged at 14.5 billion bu. by USDA-NASS,” say LMIC analysts. 

Soybean futures are providing plenty of fuel, with nearby contracts surging by about $1/bu. in the last 10 days to the highest level since June of 2014, according to LMIC.

“The impetus for surging prices (soybeans) has come from adverse crop development conditions in Argentina, the third largest soybean producing country and the leading exporter of soybean meal in the world,” LMIC analysts explain. “Reduced availability of soybeans and soybean products from Argentina is forcing the world to focus on U.S. soybean supplies. Projected exports of U.S. soybeans is expected to be a record at 2.2 billion bu. and soybean meal exports should be close to the record set last year at 14 million tons. As a result, inventories of soybeans at the end of this crop year (Aug. 31, 2021) will be close to 200-220 million bu., down from 909 million bu. two years earlier. 

“Tightening supplies support a rising price trend in order to bid more plantings of the crop in the U.S. this spring versus corn and cotton. The average price for soybeans this crop year is currently expected to be $11.50 but the risks to this forecast are all to the high side, depending on weather and the global economy in coming months. The potential for record high soybean prices in the $15-$20 area exists based on possible market conditions.”