WLI

So far this week, negotiated cash fed cattle prices are mainly $2-$3 lower on a live basis at $101/cwt. in the Southern Plains and Nebraska and at $100-$101 in the western Corn Belt, according to the Agricultural Marketing Service. Dressed trade is $2-3 lower at $160-$161.

Cattle futures reversed course again on Thursday, regaining most of what was lost in the previous session and despite the surge in Corn futures. At least part of the support came from limit-up moves in nearby Lean Hog futures, after news that a wild boar carcass in Germany tested positive for African Swine Fever. In turn, South Korea banned pork imports from Germany, which was the second largest European pork exporter last year.

Except for 17¢ lower in away Feb, Live Cattle futures closed an average of 72¢ higher (27¢ to $1.00 higher).

Feeder Cattle futures closed an average of $1.59 higher (77¢ higher in spot Sep to $1.95 higher).

Choice boxed beef cutout value was $2.12 lower Thursday afternoon at $220.83/cwt. Select was 19¢ lower at $207.32.

Actual total fed cattle slaughter for the week ending Aug. 29 was 527,439 head, according to USDA’s Actual Slaughter Under Federal Inspection report. That was 4,100 more than the previous week and 6,872 head more than the prior year. The average dressed steer weight of 916 lbs. was 6 lbs. heavier than the previous week and 32 lbs. heavier than a year earlier. The average dressed heifer weight of 834 lbs. was 1 lb. heavier than a week earlier and 23 lbs. heavier than the same week last year.

After 7¢ higher in spot Sep, Corn futures closed 3¢ to 4¢ higher through Sep ’21 and then fractionally mixed to 2¢ higher. Support included reports of successive typhoons impacting China’s main corn-growing region.

After 5¢ higher in spot Sep, Soybean futures closed mostly 1¢ to 3¢ lower

USDA’s monthly World Agricultural Supply and Demand Estimates are due out Friday morning.

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Major U.S. financial indices closed strongly lower Thursday, amid a resumed selloff in big Tech stocks.

Also negative, initial weekly unemployment insurance claims last week were 884,000, more than traders expected. The number was on par with the previous week’s revised figure, according to the U.S. Department of Labor.

The Dow Jones Industrial Average closed 405 points lower. The S&P 500 closed 59 points lower. The NASDAQ closed 221 points lower.

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“With the large cow slaughter levels of recent years, there has been a lack of harvest capacity, especially in some regions of the U.S. That will become a less critical factor depressing prices if culling rates begin to subside as expected,” say analysts with the Livestock Marketing Information Center (LMIC), in the latest Livestock Monitor. Plus, LMIC forecasts some strength in fed cattle prices, which tends to be supportive of cull cow prices.

As it is, AMS pegged the national live cull cow price (packer direct) at $57.65/cwt. the last week of August, according to LMIC. That was about $2 more than a year earlier, but more than $15 less than the five-year average (2014-18). 

“Generally, year-over-year increases in cull cow prices are expected for the balance of this year and throughout next year,” say LMIC analysts. That runs counter to typical seasonal expectations, when cull cow prices usually begin dropping in late September through November.

However, the LMIC folks say it’s essential to also consider non-typical changes within seasonal cull cow slaughter patterns. For instance, they point to beef imports. Most non-fed, lean beef imported to the U.S. comes from South America and Australia. Long-term, widespread Australian drought increased cow slaughter and non-fed beef exports in recent years. Easing drought in that country suggests a reduction in U.S. imports.

Negotiated cash fed cattle prices were $1-$2 lower than last week in Nebraska on a live basis Wednesday at $101/cwt., according to the Agricultural Marketing Service. Dressed sales were $2-$3 lower at $160-$161. Although too few to trend, there were a few live sales in Kansas at $101 and a few dressed sales in the western Corn Belt at $160-$161.

At Sioux Falls Regional in South Dakota, though, slaughter steers and heifers sold steady to $1 higher. There were 200 head of Choice 2-3 steers weighing an average of 1,468 lbs. that brought an average of $102.02/cwt.

The weekly Fed Cattle Exchange auction was postponed Wednesday, due to technical difficulties.

With packer inventory apparently abundant and wholesale beef values continuing to erode, lower cash prices pressured Cattle futures Wednesday, amid active trade.

Live Cattle futures closed an average of 63¢ lower (35¢ lower to $1.07 lower in spot Oct).

Feeder Cattle futures closed an average of $1.39 lower (55¢ lower in spot Sep to $2.00 lower).

Choice boxed beef cutout value was $1.87 lower Wednesday afternoon at $222.95/cwt. Select was 95¢ lower at $207.51.

Corn futures closed fractionally lower to 1¢ lower.

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

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Major U.S. financial indices rebounded Wednesday, led by the big tech stocks that applied pressure in the previous session.

West Texas Intermediate Crude Oil futures on the CME pared losses from the previous session, up $1.07 to $1.29 through the front six contracts.

The Dow Jones Industrial Average closed 439 points higher. The S&P 500 closed 67 points higher. The NASDAQ closed 293 points higher.

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“Bunched-up yearlings that have been on summer grazing programs and forced off grass due to drought, especially in the Western regions of the U.S., have dampened feeder cattle prices (e.g., 700-to 800-pound steers). That may spill back into the calf market (e.g., 500-to 600-pound steers),” say analysts with the Livestock Marketing Information Center (LMIC), in the most recent Livestock Monitor.

From January through August, steer calf prices (500-600 lbs., Southern Plains) averaged $159.41/cwt., according to LMIC. Prices reached their highest level since before the pandemic in August at an average $161.78. 

“Weather conditions may continue to play a significant role in how calves are priced in the coming months,” say LMIC analysts. “For example, in the Southern Plains, small grain (e.g., wheat) pasture prospects used for grazing recently received some beneficial rain, and there is some optimism about grazing availability. However, it is still early in the planting season for those crops/pastures. That forage will not be available for cattle to graze until October, and in some situations until even later in the year. Steer calf prices in the Southern Plains may falter slightly in September and finish the quarter between $157-158.”

LMIC expects steer calf prices in the fourth quarter to remain a little below $160. The average price in the fourth quarter last year was $158.18, when markets were still dealing with the fallout from the Tyson plant fire.

Further ahead, the LMIC folks say smaller calf crops the last couple of years should provide price support. Plus, they point out lower year-over-year corn prices that helped underpin calf prices through most of the summer should remain lower well into next year.

The five-area direct weighted average steer price was $103.12/cwt. on a live basis last week, which was $1.97 less than the prior week. The weighted average dressed price of $163.07 was $3.46 lower.

Cattle futures extended gains, though, with apparent correction from recently oversold conditions.

Live Cattle futures closed an average of $1.14 higher (75¢ to $1.65 higher).

Feeder Cattle futures closed an average of 96¢ higher (60¢ to $1.35 higher).

Choice boxed beef cutout value was $1.03 lower Tuesday afternoon at $224.82/cwt. Select was 84¢ lower at $208.46.

Corn futures closed 3¢ higher through Jly ’21 and then mostly fractionally higher to 1¢ higher.

Soybean futures closed 3¢ to 5¢ higher through Mar ’21 and then 1¢ to 2¢ higher.

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Major U.S. financial indices closed sharply lower Tuesday, with continued correction and readjustment in big tech stocks.

West Texas Intermediate Crude Oil futures on the CME were $2.72 to $3.01 lower through the front six contracts, with the front month closing at the lowest level since the first part of June.

The Dow Jones Industrial Average closed 632 points lower. The S&P 500 closed 95 points lower. The NASDAQ closed 465 points lower.

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According to the weekly U.S. Drought Monitor (Sept. 1) 57.46% of the continental United States was classified as abnormally dry to extreme drought. That was 27.9% more than the same time last year, but 0.2% less than the prior week, with help from Hurricane Laura. 

Those rains also helped pasture and range conditions hold their ground week to week, according to the latest USDA Crop Progress report for the week ending Sept. 6.

22% of pasture and range was rated in Good (20%) or Excellent (2%) condition, which was 29% less than last year. 46% was rated in Poor (27%) or Very Poor (19%) condition, compared to 20% at the same time last year.

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In his weekly market comments, Derrell Peel, Extension livestock marketing specialist at Oklahoma State University points out drought is primarily in the western half of the nation.

“There is no doubt that lack of pasture is creating management challenges in the worst drought areas and likely leading to some regional destocking and relocation of cows,” Peel says. “However, it is not clear that drought has resulted in significant net herd liquidation thus far. Beef cow slaughter for the year to date is up 3.3% but is down fractionally for the past four weeks.”

But, Peel says poor pasture conditions magnify the importance of hay supplies heading into the fall and winter. USDA estimated alfalfa hay production 5.9% less year over year, in the August Crop Production report, and other hay production 0.5% less.

“The reduction in alfalfa hay production is generally more important in the northern half of the country and affects both beef and dairy cows,” Peel explains.

“In the western region, both alfalfa and other hay production are down year over year, and combined with the poor pasture conditions, suggest the biggest regional challenges in the coming months.”

Compared to the west, Peel explains pasture conditions are significantly more positive in the Corn Belt, which represents about 15% of U.S. cowherd, and where crop aftermath likely comprises a more significant component of total forage supplies.

“USDA reported July alfalfa hay prices of $174/ton, down from $179/ton in June and from $183/ton one year ago,” Peel says. “Only six states reported year-over- year higher prices in July. Other hay prices in July were $137/ton, up from $128/ton in June and higher than $134/ton last year.”

Negotiated cash fed cattle prices ended the week $2-$3 lower in the Southern Plains and Nebraska on a live basis at $102-$103/cwt. Live trade was steady to $3 lower in the western Corn Belt at $103-$104. Dressed sales were $3-$5 lower at $162-$164.

Through Thursday, the five-area direct weighted average fed steer price was $103.18/cwt. on a live basis, which was $1.94 less than the previous week. The average dressed steer price of $163.11 was $3.41 less than the previous week.

Cattle futures firmed by the end of Friday’s session after pressure earlier.

Live Cattle futures closed an average of 62¢ higher.

Except for 10¢ lower at the back, Feeder Cattle futures closed an average of 31¢ higher.

Choice boxed beef cutout value was $1.39 lower Friday afternoon at $225.85/cwt. Select was $3.20 lower at $209.30.

Corn futures closed mostly 2¢ to 3¢ higher.

Soybean futures closed mostly 1¢ higher.

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Major U.S. financial indices extended losses on Friday, despite a more positive national employment report than traders expected.

Total non-farm payroll employment increased by 1.4 million in August and the U.S. unemployment rate declined to 8.4%, according to the Employment Situation Summary from the Bureau of Labor Statistics. Average hourly earnings for all employees on private nonfarm payrolls rose by 11¢ to $29.47.

The Dow Jones Industrial Average closed 159 points lower. The S&P 500 closed 28 points lower. The NASDAQ closed 144 points lower.

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July exports of U.S. beef rebounded from recent lows but remained below 2019 levels, according to data released by USDA and compiled by the U.S. Meat Export Federation (USMEF).

July beef exports totaled 107,298 metric tons (mt), up 36% from June but still 9% below last year. Export value was $647.8 million, the highest since March but down 10% from a year ago. For January through July, beef exports were also 9% below last year’s pace in volume (698,907 mt) and 10% lower in value ($4.28 billion).

Beef export value per head of fed slaughter averaged $280.40 in July, down 9% from a year ago. The January-July average was $297.21 per head, down 5%.

July beef exports to China increased sharply year-over-year and shipments trended higher to Taiwan, Canada and Hong Kong. July exports were lower than a year ago to Japan and South Korea and declined significantly to Mexico.

“With production returning to near-normal levels, we definitely saw an improvement in beef exports, though the recovery was not quite as strong as expected,” said USMEF President and CEO Dan Halstrom. “It is also important to remember that the monthly export data is in the rearview mirror and that weekly export sales data, along with observations from our USMEF-China team, suggest that China’s demand for both U.S. pork and beef will be strong through the balance of the year, including purchases for Chinese New Year. When combined with the rebound in other main markets, growth in emerging markets and the return of the U.S. supply advantage, USMEF remains optimistic about a strong finish for U.S. red meat exports in 2020, despite many challenges related to COVID-19.”

July pork exports totaled 222,035 mt, down 5% from a year ago, while export value fell 12% to $548.3 million. For January through July, pork exports remained 20% ahead of last year’s record pace in volume (1.78 million mt) and 22% higher in value ($4.6 billion).

“China’s pork demand has moderated and we are also entering a time when year-over-year gains are not nearly as dramatic, as exports to China began gaining momentum in mid-2019,” Halstrom says. “But, pork exports to Mexico showed encouraging signs of recovery in July and we also saw promising growth in several emerging markets, including Vietnam and the Philippines.”