WLI

Negotiated cash fed cattle prices were $4-$6 higher than last week on a live basis in Nebraska through Thursday afternoon at $107/cwt., and $3-$4 higher in the western Corn Belt at $105-$106. Dressed trade was $2-$9 higher at $167, according to the Agricultural Marketing Service. Trade in the Southern Plains earlier in the week was $1 higher at $106.

Cattle futures closed mixed though, with Live Cattle edging higher and Feeder Cattle trading narrowly mixed, under continued pressure from higher grain prices.

Live Cattle futures closed an average of 46¢ higher, except for unchanged in the back contract.

Feeder Cattle futures closed mixed, from an average of 26¢ lower to an average of 43¢ higher.

Choice boxed beef cutout value was $2.36 higher Thursday afternoon at $215.55/cwt. Select was $1.92 higher at $198.97.

The average dressed steer weight of 931 lbs. for the week ending Oct. 24 was 2 lbs. heavier than the previous week and 25 lbs. heavier than the previous year, according to USDA’s Actual Slaughter Under Federal Inspection report. The average dressed heifer weight of 847 lbs. was 3 lbs. lighter than the previous week but 12 lbs. heavier year over year.

Grain futures, especially soybeans continued higher on mainly positive exports and adverse weather in South America.

Corn futures closed mostly 3¢ to 4¢ higher through Jly ‘21 and then mostly 1¢ to 2¢ higher.

Soybean futures closed 17¢ to 22¢ higher through Aug ‘21 and then mostly 10¢ to 13¢ higher. The spot month breeched the $11 mark for the first time in recent memory.

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Major U.S. financial indices extended the post-election rally Thursday. Although widely expected, support included the Fed’s decision to maintain interest rates at current levels.

“The ongoing public health crisis will continue to weigh on economic activity, employment, and inflation in the near term, and poses considerable risks to the economic outlook over the medium term,” (the Committee). “The Committee decided to keep the target range for the federal funds rate at 0 to 0.25% and expects it will be appropriate to maintain this target range until labor market conditions have reached levels consistent with the Committee’s assessments of maximum employment and inflation has risen to 2% and is on track to moderately exceed 2% for some time.”

The Dow Jones Industrial Average closed 542 points higher. The S&P 500 closed 67 points higher. The NASDAQ was up 300 points.

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U.S. Beef exports to major Asian markets were about steady with the prior year in September but trended lower overall, according to data released by USDA and compiled by the U.S. Meat Export Federation (USMEF).

September beef exports were down 6% from a year ago to 103,277 metric tons (mt), valued at $600.9 million (down 9%). Coming off record performances in August, exports to South Korea and Taiwan remained strong, while setting another new record in China. However, COVID-19 related obstacles continued to negatively impact demand for U.S. beef in several key markets, especially Mexico, Central America and the Caribbean.

“Although restaurant traffic and foodservice activity are not back to normal in most Asian markets, USMEF is very encouraged by the recovery in Asia and this was especially evident in the strong August and September exports of U.S. beef to Korea, Taiwan and China,” according to Dan Halstrom, USMEF president and CEO. “As we close out the year, U.S. beef has a great opportunity to capture greater market share in Asia due to tightening supplies from Australia. While it will require more time, we also expect U.S. beef to regain momentum in regions where beef demand depends more heavily on travel and tourism, and where e-commerce channels are not as well-developed.”

For January through September, beef exports trailed last year’s pace by 8% in volume (911,936 mt) and 9% in value ($5.55 billion).

U.S. pork exports remained on a record pace, however. They were 10% more in September year over year in volume at 222,475 mt and 6% more in value at $563.2 million.

Through the first three quarters of this year, pork exports were 16% more than last year’s record pace in both volume (2.22 million mt) and value ($5.69 billion).

“Exporting countries are watching the hog production recovery in China very closely, because we know its demand for imported pork is moderating,” Halstrom explains. “While USMEF is pleased to see U.S. pork exports to China/Hong Kong maintaining a strong pace, it is vitally important that our export destinations remain diversified. The U.S. industry continues to pursue this goal aggressively, both in the Asia Pacific region and the Western Hemisphere.”

You can find a detailed summary of U.S. beef and pork exports at the USMEF website.

Negotiated cash fed cattle prices were $1 higher on a live basis in the Southern Plains Wednesday at $107/cwt., with moderate demand, according to the Agricultural Marketing Service.

That matched the price paid for Southern Plains cattle in the weekly Fed Cattle Exchange auction. Cattle feeders offered 634 head and sold 296 head with delivery of 1-17 days.

Similarly, slaughter steers sold steady to $1 higher in the slaughter auction at Sioux Falls Regional in South Dakota: $105.34 for 281 Choice 2-3 steers weighing an average of 1,454 lbs.; $103.80 for 679 Choice 2-4 steers weighing an average of 1,556 lbs.

Cattle futures closed higher Wednesday, with support from recently stronger wholesale beef values, the brighter seasonal price outlook and the prospect for higher weekly cash trade.

Live Cattle futures closed an average of 72¢ higher, from 5¢ higher in spot Dec to $1.10 higher at the back.

Feeder Cattle futures closed average of $1.40 higher, from 82¢ higher at the back to $1.97 higher toward the front

Choice boxed beef cutout value was 75¢ higher Wednesday afternoon at $210.19/cwt. Select was $1.60 higher at $197.05.

Corn futures closed mostly 2¢ to 5¢ higher.

Soybean futures closed 17¢ to 22¢ higher through Aug ‘21 and then mostly 13¢ higher.

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Major U.S. financial indices continued to rally Wednesday, led by tech stocks and despite the undecided U.S. presidential election.

The Dow Jones Industrial Average closed 367 points higher. The S&P 500 closed 74 points higher. The NASDAQ was up 430 points.

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The International Monetary Fund (IMF) is more optimistic about global economic recovery than it was in June, although improvement is likely to continue on the sluggish side, according to the most recent quarterly World Economic Outlook (WEO).

“We are projecting a somewhat less severe, though still deep recession in 2020, relative to our June forecast,” according to IMF analysts. “The revision is driven by second quarter GDP outturns in large advanced economies, which were not as negative as we had projected; China’s return to growth, which was stronger than expected; and signs of a more rapid recovery in the third quarter. Outturns would have been much weaker if it weren’t for sizable, swift, and unprecedented fiscal, monetary, and regulatory responses that maintained disposable income for households, protected cash flow for firms, and supported credit provision. Collectively these actions have so far prevented a recurrence of the financial catastrophe of 2008-09.”

Currently, IMF projects real global GDP this year to be 4.4% less than last year, when year-to-year GDP grew by 2.8%. Projected GDP for advanced economies this year is -5.8% compared to -3.3% for emerging and developing economies. IMF forecasts U.S. GDP this year at -4.3%.

Looking ahead, IMF projects global GDP at 5.2% next year; 3.0% for advanced economies, 6.0% for emerging economies and 3.1% for the United States.

“After the rebound in 2021, global growth is expected to gradually slow to about 3.5% into the medium term,” say IMF analysts. “This implies only limited progress toward catching up to the path of economic activity for 2020–25 projected before the pandemic for both advanced and emerging market and developing economies. It is also a severe setback to the projected improvement in average living standards across all country groups. The pandemic will reverse the progress made since the 1990s in reducing global poverty and will increase inequality.”

Negotiated cash fed cattle trade was mostly inactive on light demand in the western Corn Belt through Tuesday afternoon, according to the Agricultural Marketing Service. Elsewhere, it was at a standstill.

Cattle futures closed mostly lower in light trade Tuesday, despite higher boxed beef prices and thoughts that last week’s shallower packer buy may elevate cash prices this week. Higher grain futures and election uncertainty likely provided some of the pressure.

Live Cattle futures closed an average of 26¢ lower, except for an average of 27¢ higher in the back three contracts.

Feeder Cattle futures closed an average of 57¢ lower.

Choice boxed beef cutout value was 79¢ higher Tuesday afternoon at $209.44/cwt. Select was $2.83 higher at $195.45.

Corn futures closed 3¢ to 4¢ higher through Sep ‘21 and then mostly 1¢ higher.

Soybean futures closed 8¢ to 12¢ higher through Sep ‘21 and then 4¢ to 6¢ higher.

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Major U.S. financial indices closed higher Tuesday, apparently buoyed by thoughts that economic stimulus talks will gain traction after the election, no matter who wins. 

The Dow Jones Industrial Average closed 554 points higher. The S&P 500 closed 58 points higher. The NASDAQ was up 202 points.

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The Purdue University/CME Group Ag Economy Barometer rose 27 points in October to 183, the highest level in the history of the barometer. The Current Conditions Index rose 36 points to a reading of 178 and the Future Expectations Index rose 23 points to a reading of 186.

The Ag Economy Barometer is based on survey responses from 400 U.S. agricultural producers and was conducted Oct. 19-23.

“The combination of good yields, a rally in crop prices and Coronavirus Food Assistance Program payments (CFAP 2) set the stage for an all-time high in the barometer and farmer sentiment,” says James Mintert, the barometer’s principal investigator and director of Purdue University’s Center for Commercial Agriculture. “Since bottoming out this summer, the ag economy has rebounded sharply, and the dramatic improvement in sentiment reflects the turnaround in the farm income picture.”

Mintert refers to a late summer/early fall rally in commodity prices combined with government program payments arising from the second round of the Coronavirus Food Assistance Program, which provided a boost to many producers’ farm income. Corn and soybean prices continued to rally, even though U.S. corn yields are expected to set a record high and USDA projects soybean yields to be the fourth highest on record.

Comparing their farm’s current financial condition to a year earlier, 25% of survey respondents said their operation was better off. That was the most positive response from producers to the question in the history of the barometer survey.

The Farm Capital Investment Index also hit an all-time high in October, up 9 points from September to a reading of 82. The percentage of producers expecting to increase their purchases of machinery in the upcoming year rose to 14% from 11% a month earlier, up from 4% in May. The percentage of respondents who plan to reduce their purchases in the next year was 33%, down from 40% in September.

Meanwhile, 4% more producers (27%) than in September expect land values to increase over the next 12 months. Similarly, 38% said they expect cash rental rates to increase in 2021, compared to 8% a month earlier.

Producer optimism about trade with China also increased, with 59% of respondents expecting China to fulfill the food and agricultural import requirements outlined in the Phase One trade agreement with the U.S.; 12% more than a month earlier.

Negotiated cash fed cattle trade was mostly inactive in the western Corn Belt through Monday afternoon, according to the Agricultural Marketing Service. Elsewhere, it was at a standstill.

Last week, live prices were at $106/cwt. in the Southern Plains, $103-$105 in Nebraska and $101-$103 in the western Corn Belt. Dressed prices, in a light test, were at $158-$163 in Nebraska and at $158-$165 in the western Corn Belt.

Cattle futures managed to close mostly higher Monday after early pressure and skittishness surrounding Tuesday’s election. 

Live Cattle futures closed an average of 26¢ higher.

Feeder Cattle futures closed narrowly mixed from an average of 25¢ lower in the front two contracts to an average of 70¢ higher.

Choice boxed beef cutout value was 55¢ higher Monday afternoon at $208.65/cwt. Select was $1.38 higher at $192.62.

Corn futures closed 1¢ lower in the front four contracts and then mostly fractionally higher

Soybean futures closed 1¢ to 5¢ lower through the front five contracts and then 1¢ to 3¢ higher.

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Major U.S. financial indices closed higher Monday, buoyed by positive economic news and despite election uneasiness.

Economic activity in the manufacturing sector grew in October, with the overall economy notching a sixth consecutive month of growth, according to the latest Manufacturing ISM® Report On Business®. The October Purchasing Managers Index was 3.9 points higher to 59.3%, the highest since September 2018.

The Dow Jones Industrial Average closed 423 points higher. The S&P 500 closed 40 points higher. The NASDAQ was up 46 points.

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“Improved stocker prospects, combined with a sharp recovery in the Feeder Cattle futures markets last week, may mean that the seasonal low in calf and stocker prices is past,” says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly market comments. “March Feeder futures, the reference for winter grazing programs, increased by roughly $8/cwt. last week, making stocker budgets look more attractive again.”

Besides the rally in futures prices, Peel points out last week’s winter storms and widespread moisture across the Southern Plains, could increase the odds for wheat pasture. Hopes for grazing wheat continued to dwindle amid expanding drought ahead of the storms.

“The wheat crop is generally poised to respond quickly to the timely precipitation. Stocker demand may pick back up somewhat in the coming weeks with improvement in the wheat crop. Seasonally large runs of feeder cattle are expected in the coming weeks and numerous value-added preconditioned calf sales are scheduled in the next five weeks (Oklahoma),” Peel says.

As well, logic suggests last week’s storms depressed feedlot performance in the region, which should also support the market.