WLI

Negotiated cash fed cattle trade was $2 lower at $106/cwt. on a live basis in the Southern Plains through Monday afternoon on light demand, according to the Agricultural Marketing Service (AMS). There were a few live sales in Nebraska $3 lower at $105, but too few to trend.

Prices last week:

Southern Plains: $108 on a live basis.

Nebraska: mostly $108 live and at $169 in the beef.

Western Corn Belt: $105-$107 on a live basis and $167-$168 dressed.

Last week’s five-area direct fed steer prices was 74¢ less than the previous week at $107.52/cwt. on a live basis, according to AMS. The average price in the beef of $168.35 was $1.32 lower.

Cattle futures closed sharply lower Monday, with follow-through pressure from the last session, softer outside markets, declining open interest and what appeared to be algorithmic piling on. Recently expanded CME limits offered extra rein.

Live Cattle futures closed an average of $2.90 lower.

Feeder Cattle futures closed an average of $3.67 lower.

Choice boxed beef cutout value was 29¢ lower Monday afternoon at $209.74/cwt. Select was $1.68 lower at $191.84.

Corn futures closed mostly 1¢ to 3¢ higher.

Soybean futures closed mostly 3¢ to 4¢ higher across the front half of the board and then mostly fractionally higher to 1¢ higher.

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Major U.S. financial indices dropped Monday, beneath the weight of increasing coronavirus cases and continued uncertainty about the government’s ability to come to terms on another round of economic stimulus.

The Dow Jones Industrial Average closed 410 points lower. The S&P 500 closed 56 points lower. The NASDAQ was down 192 points.

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“Despite the rising number of cattle on feed, front-end supplies—the number of cattle on feed over 150 days—diminished for the third consecutive month,” according to analysts with USDA’s Economic Research Service, in the monthly Livestock, Dairy and Poultry Outlook. “This is the result of an improving pace of fed cattle slaughter, which was faster than a year ago for the last two months and above the five-year average. The improving pace, combined with an ample supply of fed cattle at heavier weights, has led to higher expected beef production in third-quarter 2020, relative to 2019. Nonetheless, firm demand and higher than year-ago wholesale prices are likely supporting packer margins, as the recent uptick in steer prices remains in line with year-ago prices.”

ERS increased the expected five-area direct fed steer price for the fourth quarter by $5 to $109/cwt. Projections for the first quarter next year increased by $6 to $113; by $3 to $110 in the fourth quarter.

As for feeder steers (basis Oklahoma City), ERS increased expectations for the fourth quarter by $3 to $143. The annual average price for next year increased by $2 to $139.

Negotiated cash fed cattle trade on Friday ranged from a standstill to mostly inactive on light demand, according to the Agricultural Marketing Service.

For the week, prices were $1 lower on a live basis in the Southern Plains at $108/cwt.; steady to $1 lower in Nebraska at $107-$108/cwt.; steady to $3 lower in the western Corn Belt at $105-$107. Dressed prices were $1 lower in Nebraska at $169 and $1-$3 lower in the western Corn Belt at $167-$168.

The five-area direct weighted average steer price through Thursday was $107.61/cwt., which was 2¢ more than the previous week, but $3.35 less than the same week last year. The average steer price in the beef of $168.40 was 89¢ less than the prior week and $8.86 less than the same time last year.

Cattle futures took another step lower on Friday, pressured by lower cash prices, weaker wholesale beef values and increasing demand uncertainty.

Live Cattle futures closed an average of 93¢ lower.

Feeder Cattle futures closed an average of $2.25 lower (82¢ lower at the front to $2.77 lower).

Choice boxed beef cutout value was 45¢ lower Friday afternoon at $210.03/cwt. Select was $2.98 lower at $193.52.

Corn futures closed mixed, from 1¢ lower to 1¢ higher.

Soybean futures closed 6¢ to 12¢ lower through May ’21 and then mostly 1¢ to 5¢ lower.

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Major U.S. financial indices closed mixed Friday. Pressure included resurgent COVID cases. Support included stronger retail sales than expected in September.

U.S. retail sales were up 1.9% more than the previous month and 8.2% more year over year, according to the U.S. Census Bureau. Sales by non-store retailers were up 23.8% year over year.

The Dow Jones Industrial Average closed 112 points higher. The S&P 500 closed fractionally higher. The NASDAQ was up 42 points.

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A recent Cargill study found consumer recognition of the challenges and expectations farmers face grew amid the COVID-19 pandemic, as processing and transportation bottlenecks, especially in the protein industry, stretched the global food supply.

More specifically, the latest Feed4Thought survey conducted by Cargill found nearly one-third of consumers in the U.S., Brazil, Vietnam and Norway have a renewed appreciation for animal agriculture.

“Farmers and ranchers have faced tremendous pressures caused by COVID-19 supply chain disruptions. And those pressures came on top of the multitude of challenges farmers already faced as they worked to feed the world in a safe, responsible and sustainable way,” says David Webster, president of Cargill Animal Nutrition & Health. “When consumers experienced bare shelves at grocery stores, they were reminded of the critical role livestock and aquaculture farmers play in global food security.”

In the study, 71% of consumers express concern about the pandemic’s disruption of the food system; two in three consumers acknowledge increased pressure on animal farmers to supply safe, affordable protein since COVID-19’s onset.

These new challenges have not, however, deterred consumers’ faith in farmers: an overwhelming majority of consumers (84%) indicated they were generally confident in farmers to meet demand and feed growing populations. More than half of consumers indicate they feel positively toward/appreciative of farmers, with one-third saying that their perceptions have improved as compared to pre-pandemic. This high confidence and increased appreciation toward farmers suggest that COVID-19 may be acting as a catalyst in strengthening the relationship between consumers and farmers.

So far this week, negotiated cash fed cattle trade is steady to $1 lower on a live basis in Nebraska and the western Corn Belt at $107-$108/cwt., according to the Agricultural Marketing Service. Dressed sales are $1 lower in Nebraska at $169. Live sales in the Southern Plains are $1 lower at $108.

Cattle futures continued to weaken on Thursday, especially Feeder Cattle, as grain prices continued to strengthen.

Live Cattle futures closed an average of 58¢ lower.

Feeder Cattle futures closed an average of $1.17 lower (82¢ to $1.52 lower), except for 55¢ and 15¢ higher in the front two contracts.

Choice boxed beef cutout value was 60¢ lower Thursday afternoon at $210.54/cwt. Select was $2.38 lower at $196.89.

Corn futures closed 3¢ to 7¢ higher through the front four contracts and then mostly fractionally higher to 1¢ higher.

Soybean futures closed 3¢ to 6¢ higher through Mar ’21 and then mostly 1¢ to 2¢ lower.

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Major U.S. financial indices softened Thursday. Pressure included resurgent COVID cases in Europe prompting renewed pandemic restrictions in some countries.

Also, weekly initial unemployment insurance claims of 898,000 reported by the U.S. Department of Labor was 53,000 more than the previous week and less robust than the trade expected.

The Dow Jones Industrial Average closed 19 points lower. The S&P 500 closed 5 points lower. The NASDAQ was down 54 points.

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“The current concern surrounding Alternative Marketing Arrangements (AMA e.g. formula/grid pricing) has more to do with lower cash prices received by producers due to market reactions to major market disruptions than the role of AMA’s role in thinly traded markets,” says Elliott Dennis, Extension livestock economist at the University of Nebraska-Lincoln, in the latest issue of In the Cattle Markets.

Dennis discusses the motivation behind recent legislative proposals that would mandate minimum levels of weekly cash trade.

“While both bills would bring increased negotiated cash price discovery and transparency in the feedlot-packer market interface, neither are likely to increase the cash price received by producers since they do not fundamentally change the supply of fed cattle nor the demand for wholesale beef,” Dennis explains. “Further, it is unlikely that if these bills were implemented prior to either the Holcomb Fire or COVID-19 it would have prevented the backlog in cattle, nor affected the demand for wholesale beef. If implemented, these policies would create additional transparency but potentially create increased costs and reduce profitability for the entire beef complex. Consistent with the economic theory of derived demand, the additional costs of these policies are likely to predominately be carried by the cow-calf industry.”

Although there are regional differences and periods when bid-the-grid selling increased, Dennis says there has been little overall average change in the percentage of negotiated cash sales since the beginning of the year.

Negotiated cash fed cattle trade was slow on light to moderate demand in the Southern Plains and Nebraska through Wednesday afternoon, according to the Agricultural Marketing Service.

Live trade in the Southern Plains was $1 lower at $108/cwt. Dressed trades were $1 lower in Nebraska at $169. Elsewhere, trade was limited on light demand.

Cattle feeders offered 774 head in the weekly Fed Cattle Exchange auction. Of those, 671 head (four lots) from the Southern Plains sold: 304 head for a weighted average price of $108/cwt. for delivery at 1-9 days; 367 head at $108.25 for delivery at 1-17 days. That was $1 lower than country trade in the region last week.

Similarly, Choice steers and heifers sold 50¢ to $1.00 lower at the fat auction in Tama, IA. There were 171 head of Choice 2-4 steers weighing an average of 1,423 lbs. selling for an average price of $107.40. That was a touch softer than the top of last week’s negotiated range.

Slaughter steers and heifers sold mainly $2-$3 lower at Sioux Falls Regional in South Dakota. There were 330 head of Choice 2-3 steers weighing an average of 1,472 lbs. bringing an average price of $104.71/cwt.

Cattle futures tottered back lower on Wednesday with pressure including the softer cash price outlook and stagnant wholesale beef values.

Live Cattle futures closed an average of 47¢ lower.

Feeder Cattle futures closed an average of 43¢ lower (2¢ to 90¢ lower), except for 25¢ higher in spot Oct.

Choice boxed beef cutout value was $1.30 lower Wednesday afternoon at $211.14/cwt. Select was 81¢ lower at $199.27.

Exports to China continue adding heft to grain markets. Yesterday, for instance, USDA’s Foreign Agricultural Service reported sales of another 420,000 metric tons of corn and 264,000 metric tons of soybeans to China for delivery in the 2020-21 marketing year that began Sept. 1.

Corn futures closed 2¢ to 5¢ higher through the front three contracts and then mostly 1¢ lower.

Soybean futures closed mostly 3¢ to 12¢ higher through Aug ’21 and then mostly fractionally lower to 1¢ lower.

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Major U.S. financial indices closed lower again Wednesday, pressured by the lack of a deal for another round of COVID economic stimulus and despite positive corporate quarterly earnings reports.

The Dow Jones Industrial Average closed 165 points lower. The S&P 500 closed 23 points lower. The NASDAQ was down 95 points.

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Nationwide, other hay prices increased more than those for alfalfa in July and August, climbing $9 to $137 per ton, compared to $128 in June. Other hay price is 6% above a year ago, while the national alfalfa hay price in August was 4% less than a year earlier at $172 per ton, according to the Livestock Marketing Information Center (LMIC).

“Typically, alfalfa prices are higher than other hay prices, however, the reverse of that trend has been evident in certain states,” say LMIC analysts, in the latest Livestock Monitor. “Colorado other hay prices are over $200 per ton this year and in the last two months went for $5 per ton more than alfalfa in the state. Arizona other hay prices outpaced alfalfa by $15 per ton in July and in August. Montana and Nevada each reported $10 premiums for other hay, and Washington $20. Washington is one of the few states that regularly has other hay commanding a higher value than alfalfa.”

Besides demand from the horse industry, the folks at LMIC explain high quality grasses produced in the Northwest, such as timothy and orchard grass, are in demand internationally.

“As large exporters of grasses to the rest of the world, the export market can have incredible influence on those values,” say LMIC analysts. “According to USDA FAS, other hay exports year to date are up 2%, with China nearly doubling its purchases from last year. Japan, the largest destination for U.S. other hay is up 7%.”