WLI

Negotiated cash fed cattle trade was limited on very light demand in Nebraska and the western Corn Belt through Tuesday afternoon, according to the Agricultural Marketing Service. Although too few to trend, there were a few live sales in Nebraska at $107-$108/cwt.

Cattle futures on Tuesday gained back a fair portion of what was lost in the previous session, although it was tough to see a concrete reason, given the 6,000-contract decline in Live Cattle open interest a day earlier. 

Live Cattle futures closed an average of 84¢ higher (40¢ to $1.50 higher).

Feeder Cattle futures closed an average of 79¢ higher (57¢ to $1.27 higher).

Choice boxed beef cutout value was $2.18 lower Tuesday afternoon at $212.44/cwt. Select was 26¢ lower at $200.08.

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Major U.S. financial indices closed lower Tuesday amid mixed economic news. Pressure included resurgent COVID cases and two major pharmaceutical companies suspending late-stage vaccine trials on health concerns.

The Dow Jones Industrial Average 157 points lower. The S&P 500 closed 22 points lower. The NASDAQ was down 12 points.

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AGR Partners LLC (AGR), along with existing co-investor StepStone Group, completed the purchase of Green Plains Inc.’s remaining 50% ownership in their joint venture in Green Plains Cattle Company LLC (GPCC), the fourth largest cattle feeder in the United States. Investment funds managed by AGR will become the majority owners of GPCC, with completion of the transaction.

GPCC has a total one-time capacity of more than 355,000 head, according to company sources. The company began in 2014 with the acquisition of Supreme Cattle Feeders in Kismet, KS. In 2017, the company added a 30,000 head operation in Hereford, TX, a 50,000 head operation in Eckley, CO, and a 105,000 head operation in Leoti, KS. A year later they acquired a combined 100,000 head operation in Tulia, TX and Sublette, KS.

AGR and StepStone Group originally completed the purchase of a 50% ownership stake of GPCC in September 2019.

“We are excited to increase our ownership in Green Plains Cattle Company,” says Daniel Masters, managing director of AGR Partners. “GPCC and the management team have a proven operational model delivering strong long-term economic, environmental and social outcomes. We look forward to continuing to build the company.”

Negotiated cash fed cattle trade was limited on very light demand in the Texas Panhandle and western Corn Belt through Monday afternoon. Although too few to trend, there were a few live sales in the Texas Panhandle at $109/cwt. and a few in the western Corn Belt at $107.

Last week’s five-area direct negotiated weighted average fed steer price was $107.12/cwt. on a live basis, which was $1.14 higher than the previous week, but 95¢ less than the same time last year. The average price in the beef of $169.67 was $1.97 more than the prior week but $2.10 less than the previous year.

Cattle futures dropped Monday, with follow through pressure from last week and perhaps some fund selling.

Live Cattle futures closed an average of $1.19 lower.

Feeder Cattle futures closed an average of 81¢ lower (35¢ to $1.00 lower), except for an average of 23¢ higher in three contracts.

Choice boxed beef cutout value was 56¢ higher Monday afternoon at $214.62/cwt. Select was 52¢ higher at $200.34.

Corn futures closed mostly 3¢ to 5¢ lower.

Soybean futures closed down 11¢ to 31¢ lower through Jan ’22 and then 1¢ to 6¢ lower.

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Major U.S. financial indices climbed higher Monday, led by big tech stocks and despite uncertainty regarding additional federal economic stimulus.

The Dow Jones Industrial Average closed 250 points higher. The S&P 500 closed 57 points higher. The NASDAQ was up 296 points.

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“The COVID impacts on the fed cattle market continue to almost have entirely run their course. Marketings have been reasonably strong. The number of long-fed cattle are down off their peaks in June and high inventories in the surrounding months of May and July,” says Stephen Koontz, agricultural economist at Colorado State University. 

In the latest issue of In the Cattle Markets, Koontz says fall feeder cattle prices could be among the highest of the year. While less than the recent peak of $150/cwt. in August, he points out current price levels of near $145 are significantly higher than the $120 seen in April.

“However, cash prices for 4-5-weight animals remain comparable to this spring. Prices are in the high $160s and that is similar to the mid-$160s of April and May,” Koontz says. “Basis for these lightweight animals is soft and the market is rather clearly communicating, for producers who can feed calves for another month or two, that delaying marketing should be considered.”

Although beef cow slaughter has yet to increase much, Koontz expects to see acceleration.

“Beef cow slaughter is up 2.7% for the year to date as of late September,” says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly market comments. “At the end of the first quarter, cumulative beef cow slaughter was nearly 11% higher year over year. By the end of the second quarter, cumulative beef cow slaughter had decreased to roughly 3.5% higher than the previous year…Beef cow slaughter is projected to be roughly 2% above year ago levels in the fourth quarter, leading to an annual total beef cow slaughter roughly 2.5% higher year over year.”

Through Friday afternoon, negotiated cash fed cattle prices for the week were generally $2 higher in the Southern Plains at $109/cwt. on a live basis; $1-$2 higher in Nebraska and at $108-$109 and steady to $3 higher in the western Corn Belt at $107-$110. Dressed trade was $2-$3 higher at $170.

Through Thursday, the five-area direct negotiated weighted average fed steer price was $107.59/cwt. on a live basis, which was 48¢ higher than the previous week, but $1.49 less than the same time last year. The average price in the beef of $169.29 was $1.61 more than the prior week but 79¢ less than the previous year.

Live Cattle futures closed an average of 55¢ lower except for 17¢ higher in spot Oct.

Feeder Cattle futures closed an average of 90¢ lower (5¢ to $1.22 lower), except for 20¢ higher in spot Oct.

Choice boxed beef cutout value was $1.94 lower Friday afternoon at $214.06/cwt. Select was $3.28 lower at $199.82.

Total estimated cattle slaughter for the week ending Oct. 10 was 637,000 head, which was 28,000 head fewer (-4.2%) than the previous week and 1.7% less than the same time last year. That’s according to USDA’s Estimated Weekly Meat Production Under Federal Inspection report. Year to date total cattle slaughter 24.81 million head is 1.05 million head fewer (-4.1%) than the same time last year.

Estimated beef production was 535.3 million lbs., which was 4.1% less than the previous week, but a tick higher than the same week last year. Year-to-date beef production of 20.57 billion lbs. is 1.4% less than last year.

Corn and soybean futures found another gear Friday, fueled by the monthly World Agricultural Supply and Demand Estimates (see below).

Corn  futures closed mostly 6¢ to 8¢ higher through Jly ’21 and then mostly 3¢ to 4¢ higher.

Soybean futures closed mostly 15¢ and 26¢ higher.

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Major U.S. financial indices posted another day of gains Friday, with continued optimism regarding additional federal economic stimulus.

The Dow Jones Industrial Average closed 161 points higher. The S&P 500 closed 30 points higher. The NASDAQ was up 158 points.

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USDA’s Economic Research Service (ERS) increased projected fed cattle prices for this year and next, in the latest monthly World Agricultural Supply and Demand Estimates (WASDE). Specifically, ERS increased the 2020 annual average price (five-area direct) by $1.41 to $108.71/cwt., compared to the previous month, with a fourth-quarter price projection of $109. That’s based on current price strength and robust beef demand.

The forecast annual average fed steer price for 2021 increased by $2 to $114. Prices are projected to be $113 in the first quarter, $110 in the second quarter and $114 in the third quarter.

That’s with a projected increase in beef production both this year and next.

ERS projects beef production for this year at 27.14 billion lbs., which was 90 million lbs. more than the previous month’s estimate. That’s based on expectations for increased slaughter in the second half of the year. The total would be 17 million lbs. less than last year. Projections for beef production in 2021 increased 10 million lbs. to 27.37 billion lbs., which would be 227 million lbs. more than this year.

Estimated total red meat and poultry production this year of 106.39 billion lbs. would be 1.13 billion lbs. more than last year. ERS projects total red meat and poultry production next year at 107.46 billion lbs.

Apparently, feed prices will be less supportive to cattle markets than previously thought, according to from USDA’s Economic Research Service (ERS).

Corn

Corn production is forecast 178 million bu. less than the previous month at 14.72 billion bu., based on reduced harvested area and a slight decline in yield to 178.4 bu./acre. Corn supplies are forecast down sharply from last month, on a smaller crop and lower beginning stocks. Corn ending stocks for 2020-21 were lowered 336 million bu. The season average corn price received by producers was increased 10¢ to $3.60/bu.

Soybeans

Soybean production is projected at 4.3 billion bu., down 45 million on lower harvested area. Soybean yield is projected at 51.9 bu./acre, unchanged from the September forecast. Soybean supplies for 2020-21 are forecast 96 million bu. less at 4.8 billion bu. on lower production and beginning stocks. Despite reduced supplies, soybean exports were raised 75 million bu. on record early-season sales. With smaller supplies and increased exports, ending stocks are projected at 290 million bu., down 170 million from last month.

The U.S. season-average soybean price for 2020-21 is forecast at $9.80/bu., up 55¢. The soybean meal price is forecast at $335.00/short ton, up $20.00. The soybean oil price forecast is raised 0.5¢ to 32.5¢/lb. 

Wheat

The 2020-21 U.S. wheat supply and demand outlook was unchanged. The projected season-average farm price for wheat was unchanged at $4.50/bu.

Negotiated cash fed cattle prices in Kansas on Thursday were steady to $2 higher at $107-$108/cwt., according to the Agricultural Marketing Service. Although there were too few transactions to trend, there was some live trade in Nebraska at $108, which was mainly $1 higher than last week. A day earlier, dressed trade started the week $1-$2 higher at $169, but too few to trend.

Cattle futures, especially Feeder Cattle softened Thursday, perhaps with some defensiveness ahead of Friday’s monthly World Agricultural Supply and Demand Estimates.

Live Cattle futures closed an average of 74¢ lower (37¢ to $1.00 lower).

Feeder Cattle futures closed an average of $1.40 lower, from 45¢ lower in spot Oct to $1.75 lower at the back.

Choice boxed beef cutout value was 88¢ lower Thursday afternoon at $216.00/cwt. Select was $2.48 lower at $203.10.

Corn  futures closed mostly 2¢ lower.

Soybean futures closed mostly 3¢ and 6¢ lower.

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Major U.S. financial indices extended gains Thursday, buoyed by continued optimism about another round of economic stimulus sooner than later.

The Dow Jones Industrial Average closed 122 points higher. The S&P 500 closed 27 points higher. The NASDAQ was up 56 points.

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The Livestock Marketing Information Center (LMIC) projects cattle prices to rebound next year and in 2022, based in part on expectations that beef production will peak this year.

Glynn Tonsor, agricultural economist at Kansas State University (KSU) offered LMIC price projections as part of his Market Outlook at the recent KSU Beef Stocker Field Day. Prices that follow are basis the Southern Plains.

500-600 pound steer calves: $156-$158/cwt. (fourth quarter); $163-$168 (first-quarter 2021); $169-$175 (second quarter); $167-$171 for the year. For 2022, the annual estimate is $175-$185.

700-800 pound feeder steer: $141-$144/cwt. (fourth quarter); $141-$145 (first-quarter 2021); $142-$148 (second quarter); $148-$152 for the year. For 2022, the annual estimate is $152-$162.

Five-area fed steer: $108-$110/cwt. (fourth quarter); $113-$118 (first-quarter 2021); $116-$122 (second quarter); $117-$120 for the year. For 2022, the annual estimate is $119-$129.

“In the event the macroeconomic environment improves beyond what’s built into these forecasts, I could build an argument for better prices yet,” Tonsor says. “I think there are reasons for optimism that global demand will rebound, but that will hinge on global economic conditions and geopolitical relations.”

You can watch Tonsor’s presentation Here.

Although there were too few transactions to trend, there were some early dressed trades in Nebraska and the western Corn Belt on Wednesday at $169/cwt, according to the Agricultural Marketing Service (AMS). That’s was $1-$2 higher than last week.

Cattle feeders offered 470 head (three lots) in the weekly Fed Cattle Exchange auction. Of those, 367 head (two lots from Texas) sold for delivery at 1-17 days for a weighted average price of $108.50, which was mostly $1.50 higher than last week’s country trade in the region.

Slaughter steers and heifers sold $2-$3 higher at Sioux Falls Regional in South Dakota. There were 406 head of Choice 3-4 steers weighing an average of 1,562 lbs. and bringing an average price of $106.35.

At the fat auction in Tama, IA, Choice steers and heifers sold $2 higher, with 194 head of Choice 2-4 steers weighing an average of 1,421 lbs. and bringing an average price of $108.07.

Cattle futures firmed with the outlook for steady to higher cash fed cattle prices this week.

Live Cattle futures closed mostly higher across a wide range. Except for unchanged and 7¢ lower in the back two contracts, they closed an average of 48¢ higher (12¢ to $1.15 higher).

Feeder Cattle futures closed mostly narrowly higher. Except for 15¢ and 40¢ lower in two contracts, they were an average of 18¢ higher.

Choice boxed beef cutout value was 68¢ higher Wednesday afternoon at $216.88/cwt. Select was $1.26 lower at $205.58.

Corn  futures closed 2¢ to 3¢ higher through Jly ’21 and then mostly fractionally mixed.

Soybean futures closed 7¢ and 6¢ higher in the front two contracts and then mostly 3¢ to 5¢ lower.

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Major U.S. financial indices closed higher Wednesday, supported by indications the White House will entertain renewed economic stimulus talks ahead of the election.

The Dow Jones Industrial closed 530 points higher. The S&P 500 closed 58 points higher. The NASDAQ was up 209 points,

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U.S. exports of beef muscle cuts turned the COVID corner in August, according to data compiled by the U.S. Meat Export Federation (USMEF). Exports of beef variety meats continued lower year over year, though, due in part to the lack of available labor required to harvest and export some items.

Led by record-large demand in South Korea and Taiwan, beef muscle cut exports were the largest in more than a year at 89,148 metric tons (mt), up 3.5% year-over-year, while export value increased slightly from a year ago to $611 million. August muscle cut exports also set new records in China and Indonesia and beef exports to Canada continued to gain momentum. Combined beef/beef variety meat exports were 109,752 mt in August, down 4.5% from a year ago. Export value was $673.8 million, down 2% from a year ago but the highest since March.

For January through August, beef muscle cut exports were 6% below last year’s pace in volume (627,248 mt) and 9% lower in value ($4.38 billion). Beef/beef variety meat exports were down 8% to 808,659 mt, valued at $4.95 billion (down 9%).

“Record beef shipments to Korea, Taiwan and China show the kind of rebound U.S. beef can achieve as the foodservice sector gradually recovers and adapts, and we are excited to see demand strengthen further entering the fourth quarter,” says Dan Halstrom, USMEF President and CEO.

U.S. pork exports remain on a record pace in 2020, with January-August muscle cut exports up 22% from a year ago to 1.68 million mt, valued at $4.45 billion (up 20%). Pork/pork variety meat exports were up 17% in volume at just under 2 million mt, with value up 18% to $5.13 billion.

“The upward trend in muscle cut exports is very encouraging and especially critical as beef and pork production continue to rebound from the interruptions earlier in the year,” Halstrom says. “Maintaining variety meat volumes has been especially challenging this year but we continue to expand and develop destinations for these items, which are essential to maximizing carcass value.”