WLI

Cattle feeders offered 683 head in the weekly Fed Cattle Exchange Auction, all from the Southern Plains. They sold 219 head (two lots) for an average of $104.16/cwt., for delivery at 1-17 days. That was higher than last week’s country trade of $103.00-$103.50.

Similarly, Choice steers and heifers sold 75¢ to $1 higher at the fat auction in Tama, IA. Choice 2-4 steers (217 head) weighing an average of 1,450 lbs. sold for an average price of $105.55/cwt., at the top of last week’s price range for country trade.

On the other hand, slaughter steers sold $2-$3 lower at Sioux Falls Regional in South Dakota, where 332 Choice 2-3 steers weighing an average of 1,490 lbs. brought an average price of $102.92.

The notion of firm to higher cash prices helped support Cattle futures Wednesday, although trade was sluggish.

Live Cattle futures closed an average of 51¢ higher (10¢ to $1.02 higher).

Feeder Cattle futures closed an average of 55¢ higher.

Choice boxed beef cutout value was 43¢ higher Wednesday afternoon at $215.87/cwt. Select was $1.30 higher at $207.60.

Corn futures closed fractionally lower to 1¢ lower.

Soybean futures closed 3¢ to 5¢ lower through Nov ’21 and then mostly fractionally higher.

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Major U.S. financial indices closed lower Wednesday, hamstrung by big tech stocks and wariness over the pace of economic recovery.

The Dow Jones Industrial Average closed 525 points lower. The S&P 500 closed 78 points lower. The NASDAQ closed 330 points lower.

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As the COVID-19 pandemic continues to unfold, some researchers are getting their arms wrapped around the resulting economic damage so far, and into the future.

For instance, a recent Texas A&M AgriLife coordinated study suggests the pandemic will reduce U.S. gross domestic product (GDP), by $2.5 trillion and employment by 19 million full-time equivalent jobs over the next year.

The study includes researchers from Texas A&M’s Department of Homeland Security (DHS) Center of Excellence Cross-Border Threat Screening and Supply Chain Defense (CBTS), Arizona State University’s DHS Center of Excellence, the Center for Accelerating Operational Efficiency, and researchers at the Victoria University in Australia.

Researchers utilized a model of the U.S. economy with a special emphasis on major food and agriculture sectors.

Compared to most other sectors–tourism, air transport, education, restaurants and lodging–the report concludes U.S. food and agricultural sectors will experience smaller economic impacts because they were not subject to shutdowns and reductions in aggregate consumer spending brought on by job losses.

Researchers also suggests livestock operations will suffer economically more than crop operations. They explain USDA’s latest figures show that animal product receipts in 2020 are down just over 8.1%, while cash receipts for crops are expected to increase 6.9%.

“This analysis gives us a critical and realistic evaluation of how the pandemic has and will continue to impact our nation’s and the world’s food supply,” says Patrick J. Stover, vice chancellor of Texas A&M AgriLife, dean of the College of Agriculture and Life Sciences and director of Texas A&M AgriLife Research. “It will be critical that we work together to elevate food system concerns and develop solutions that address the economic consequences to serve as a foundation for lasting recovery.”

Here you can read the full article by Kay Ledbetter, associate editor/communication specialist for Texas A&M AgriLife Research.

Cattle futures closed lower Tuesday, especially Feeder Cattle, with the lack of cash direction, demand wonderments and perhaps queasiness over the next Cattle on Feed report due out Friday.

Live Cattle futures closed an average of 64¢ lower (20¢ to $1.02 lower).

Except for 62¢ higher in spot Sep, Feeder Cattle futures closed an average of $1.33 lower (47¢ to $1.67 lower).

Choice boxed beef cutout value was 78¢ lower Tuesday afternoon at $215.44/cwt. Select was 48¢ higher at $206.30.

Corn futures closed unchanged to fractionally mixed.

Soybean futures closed 1¢ to 3¢ lower through Sep ’21 and then 5¢ to 8¢ lower.

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Major U.S. financial indices closed higher Tuesday, with technical buying the apparent driver.

The Dow Jones Industrial Average closed 140 points higher. The S&P 500 closed 34 points higher. The NASDAQ closed 184 points higher.

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Total pounds of beef in freezers as of Aug. 31 were 5% more than the previous month but 2% less than last year, according to the latest Cold Storage report from USDA.

Frozen pork supplies were up 2% from the previous month but down 23% from last year.

Total red meat supplies in freezers were 3% more than the previous month but 13% less than last year.

Total frozen poultry supplies were up 1% from the previous month but down 2% from a year earlier.

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Projected cattle feeding returns improve significantly in September, compared to recent months, according to the latest monthly Historical and Projected Kansas Feedlot Net Returns from Kansas State University.

Net returns for closeouts in August were estimated at -$162.33/head for steers and -$101.76 for heifers. Keep in mind, estimates are on a cash basis and do not include price risk management.

Starting in September, though, net returns for steers are projected to be positive for the next seven months (September through March), ranging from $20.56/head in September to $101.52 in October, with feedlot cost of gain ranging from $80.01/cwt. in September to $84.71 in February.

Projected net returns are positive for heifers during the same period of time, ranging from $8.41/head in January to $66.18 in October, with feedlot cost of gain of $87.67/cwt. in September to $91.42 in March.

The five-area direct average fed steer price last week was $103.54/cwt. on a live basis, which was $2.33 more than the previous week. The average steer price in the beef was $163.25, which was $2.59 higher.

However, sharply lower outside markets and likely profit taking pressured Cattle futures Monday.

Live Cattle futures closed an average of 89¢ lower (65¢ to $1.25 lower).

Except for 20¢ higher in spot Sep and Nov, Feeder Cattle futures closed an average of 58¢ lower.

Wholesale beef prices found some traction, though.

Choice boxed beef cutout value was 58¢ higher Monday afternoon at $216.22/cwt. Select was $1.88 higher at $205.82.

Lower outside markets and harvest pressure pushed grain futures lower Monday.

Corn futures closed 8¢ lower through May ’21 and then mostly 4¢ to 5¢ lower.

Soybean futures closed 17¢ to 21¢ lower through Mar ’21 and then mostly 10¢ to 12¢ lower.

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Major U.S. financial indices closed sharply lower on Monday, but well off of session lows. Pressure included worries about another surge of COVID-19 leading to renewed shutdowns in different parts of the world, as well as the inability of Congress to come to terms on more economic stimulus for businesses and individuals.

The Dow Jones Industrial Average closed 509 points lower. The S&P 500 closed 38 points lower. The NASDAQ closed 14 points lower.

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Analysts with the Livestock Marketing Information Center (LMIC) expect fourth-quarter beef production to be more than in 2019, but note cattle flows will also contend with smaller placements in March and April.

“The supply situation for beef is still unfolding,” say LMIC analysts, in the latest Livestock Monitor. “Dressed weights have not followed the normal seasonal pattern through the summer but look to be closing the gap between last year and 2020. In the latest week of data, steer dressed weights are only 25 lbs. heavier than a year ago. This is a significant decrease compared to summer increases of 40 lbs. or more in June. Slaughter levels in August were below a year ago, but the last two weeks of actual slaughter data has picked up.”

USDA estimated total cattle slaughter last week at 645,000 head, which was 71,000 head more than the previous week, but 16,000 head fewer than the same week last year. Estimated total cattle slaughter year to date of 22.85 million head is still 1.07 million fewer (-4.49%) than the same time last year.

On the other side of the trade, LMIC points to the odds of a weaker economy pressuring beef demand.

“Corporate holiday parties and other holiday gatherings had been a boost to beef demand in recent years; the frequency of those events will likely decrease significantly in 2020,” LMIC analysts explain. “Retail featuring high-end meat cuts is expected this holiday season as the Restaurant Expectation and Performance Index remains in contraction territory and those cuts have struggled to move quantities. But, it seems unlikely the retail all fresh beef demand index will take out the record set in 2019. First and second quarter indexes have been above a year ago in 2020, but none were record highs. Third quarter data is still pending.”

USDA estimated beef production last week of 540.1 million lbs., which was 60.4 million lbs. more than the previous week and just 3.8 million lbs. less than the same week last year.

Negotiated cash fed cattle trade continued higher on Friday with dressed trade in Nebraska at $165/cwt., which was $2 higher than earlier in the week and $4-$5 higher than the prior week. Dressed trade was $2-$3 higher in the western Corn Belt at $163.

Live sales for the week ended up $1.50-$2.00 higher in the Southern Plains at $103.00-$103.50, $2.50 higher in Nebraska at $103.50 and $2-$4 higher in the western Corn Belt at $104-$105.

Stronger cash prices to end the week helped lift Cattle futures on Friday.

Live Cattle futures closed an average of 37¢ higher.

Except for 25¢ lower in the back contract, Feeder Cattle futures closed an average of 64¢ higher.

Choice boxed beef cutout value was 59¢ higher Friday afternoon at $215.64/cwt. Select was 55¢ higher at $203.94.

Corn futures closed 2¢ to 3¢ higher.

Soybean futures closed 9¢ to 15¢ higher through Aug ’21 and then mostly 1¢ to 4¢ higher.

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Major U.S. financial indices closed lower on Friday, pressured once again by big tech stocks, uncertainty over federal pandemic stimulus and political sabre rattling between the U.S. and China.

The Dow Jones Industrial Average closed 244 points lower. The S&P 500 closed 37 points lower. The NASDAQ closed 117 points lower.

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“As consumers continue to eat at home, and the longer sit-down restaurants are closed or at limited capacity, the longer lean beef imports will remain strong,” says Andrew P. Griffith, agricultural economist at the University of Tennessee, in his weekly market comments.

Griffith explains most beef imported to the U.S. is lean beef meant for grinding to produce ground beef, hot dogs, taco meat and the like. He notes that U.S. beef imports in July of 376.8 million lbs. represented the largest monthly total in 15 years.

The July total was 41.1% more than a year earlier, pushing imports for the first seven months of the year 8.5% higher year over year, according to Derrell Peel, Extension livestock marketing specialist at Oklahoma State University.

“Beef imports were up from each of the four largest beef import sources,” Peel explains, in his weekly market comments. “Canada, the largest source of beef imports, was up 12.7% in July but was down 5.8% for the year to date. Mexico was up 34.3% in July compared to last year and was up 25.5% so far this year.  Mexico now exceeds Australia as the number two source of U.S. beef imports.  Australia was up 17.1% year over year in July but was down 2.7% for the year to date. New Zealand was up 94.2% in July and was 13.3% higher for the year to date. So far in 2020, Canada and Mexico account for 44.3% of total beef imports. Combined with Australia and New Zealand, the top four source represent 82.4% of total beef imports.”

On the other side of the trade ledger, Griffith points out U.S. beef exports began to recover in July, compared to year-over-year weakness the previous three months.

“Currency exchange rates are important factors affecting international beef trade,” Peel explains. “Since the COVID-19 impacts began in mid-March, the U.S. dollar has been significantly stronger compared to the Argentinian, Brazilian and Mexican currencies and somewhat stronger against the Canadian, Australian and New Zealand dollars. A strong U.S. dollar is a headwind for beef exports and favors beef imports. The U.S. dollar has weakened slightly against the Japanese Yen, and the Hong Kong dollar, which does help support beef exports to those two major markets.”