WLI

The week’s mostly steady to stronger negotiated cash fed cattle trade helped lift Cattle futures on Thursday.

Except for 30¢ lower in the back contract, Live Cattle futures closed an average of 50¢ higher.

That was despite the latest U.S. Export Sales report from USDA’s Foreign Agricultural Service. For the week ending July 6, net U.S. beef export sales of 9,500 metric tons (mt) were 23% less than the previous week and 51% less than the previous four-week average. Increases were primarily for Japan, South Korea, China, Mexico, and Taiwan.

Feeder Cattle futures closed an average of 56¢ higher.

At $133.69, the CME Feeder Cattle Index was at the highest level since the first part of March.

Choice boxed beef cutout value was 24¢ lower Thursday afternoon at $203.59/cwt. Select was 69¢ lower at $194.83.

USDA’s latest weekly Actual Slaughter Under Federal Inspection report underscores the continued recovery in beef packing capacity. Total fed cattle slaughter for the week of June 27 was 532,820 head, which was 20,029 more than the previous week–the most since the last week of March–but 5,221 head fewer than the previous year. Total cattle slaughter of 664,812 head was 19,151 head more than the previous week, but 5,499 head fewer than the previous year.

That same report speaks to the continued backlog of fed cattle, with the average dressed steer weight for the week at 896 lbs., which was 6 lbs. heavier than the previous week and 42 lbs. more than the previous year. The average dressed heifer weight of 826 lbs. was 3 lbs. heavier than the previous week and 37 lbs. heavier than the same time a year earlier.

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Grain futures continued to firm and gain Thursday, helped along by weather and harvest, in the case of wheat. There was also likely some positioning ahead of the monthly World Agricultural Supply and Demand Estimates, due out Friday.

The aforementioned Export Sales report was also supportive.

Net corn export sales of 599,200 mt for 2019-2020 were up 66% from the prior week and up 30% from the prior four-week average. Increases were primarily for China, Colombia, Mexico, Honduras and Nicaragua.

Net soybean export sales of 952,200 mt for 2019-2020 were up noticeably from the previous week and up 60% from the prior four-week average. Increases were primarily for China, Indonesia, Pakistan, Bangladesh and Mexico.

Corn futures closed mostly 1¢ to 2¢ higher.

Soybean futures closed 1¢ to 4¢ higher.

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Major U.S. financial indices closed mixed on Thursday. While tech stocks continued to surge higher, climbing coronavirus infections in the U.S. cast a pall.

The Dow Jones Industrial Average closed 361 points lower. The S&P 500 closed 17 points lower. The NASDAQ closed 55 points higher.

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“The COVID-19 pandemic continues to have devastating impacts on public health and the economies of the U.S. and many other countries. There is much uncertainty about the future impacts of COVID-19, but even in the best of circumstances, the economic impacts are enormous,” says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his latest market comments.

He points to the sobering GDP projections made by a host of organizations.

The U.S. Federal reserves estimates U.S. GDP this year at -6.5%. The Organization for Economic Cooperation and Development projects -7.3%, but -8.5% if there’s a secondary coronavirus outbreak. The International Monetary Fund (IMF) sees GDP at -8.0%.

Further, Peel says the Federal Reserve’s most recent forecast is for the U.S. unemployment rate this year to be 9.3%.

Peel shared this observation from the IMF:

“The COVID-19 pandemic has had a more negative impact on activity in the first half of 2020 than anticipated, and the recovery is projected to be more gradual than previously forecast. In 2021 global growth is projected at 5.4%. Overall, this would leave 2021 GDP some 6.5 percentage points lower than in the pre-COVID-19 projections of January 2020.”

Negotiated cash fed cattle trade continued on Wednesday with prices mainly steady to higher, compared to last week. Live prices in the Texas Panhandle were steady to $2 higher at $95/cwt.; steady to $1 lower in Kansas at $94-$95. For the week, live sales are steady in Nebraska at $95-$96 and $3-$5 higher in the beef at $157-$160. In the western Corn Belt, live sales are $3 higher than last week at $99-$100 and $5-$7 higher in the beef at $160.

Cattle feeders offered 1,390 head in the weekly Fed Cattle Exchange auction. Of those, 659 head sold, all from Kansas: 509 head for delivery at 1-9 days for a weighted average price of $95.16; 150 head for delivery at 1-17 days for a weighted average price of $95.

Live Cattle futures closed an average of 41¢ lower.

Feeder Cattle futures closed an average of 69¢ lower.

The monthly five-area direct average steer price in June was $103.82/cwt. on a live basis (FOB), which was $7.71 less than the previous month and $8.10 less than the prior year, according to USDA’s monthly report. The average live weight was 1,441 lbs., which was 21 lbs. lighter month to month, but 61 lbs. heavier year over year. The average dressed steer price (delivered) was $165.69 in June, which was $13.33 less than in May and $16.01 less than the previous year. The average dressed steer weight in June of 926 lbs. was 9 lbs. lighter than the previous month, but 43 lbs. heavier than the same time a year earlier. For January through June, total five-area direct confirmed sales of 1.91 million head were 9.75% less than the same period a year earlier.

Choice boxed beef cutout value was $1.47 lower Wednesday afternoon at $203.83/cwt. Select was $1.32 lower at $195.52.

Corn futures closed mostly 1¢ to 2¢ higher.

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

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The Wall Street seesaw continued Wednesday, to the upside this time, with tech stocks leading Major U.S. financial indices higher.

The Dow Jones Industrial Average closed 177 points higher. The S&P 500 closed 24 points higher. The NASDAQ closed 148 points higher.

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Recovery of U.S. restaurant customer transactions stalled for the second week in a row as COVID-19 cases continue to increase in a number of states, according to The NPD Group (NPD).

For the week ending June 28, total customer transactions at major U.S. restaurant chains were down 14% versus the same week a year ago.  That’s a 1% decline from the previous week, based on NPD’s CREST® Performance Alerts, which provides a rapid weekly view of chain-specific transactions and share trends for 72 quick service, fast casual, midscale, and casual dining chains.

The rise in COVID-19 case counts is causing local and state authorities to delay reopening, and in some cases, reinstating on-premise restaurant dining restrictions. In Texas, for example, restaurants may continue to offer on-premise dining, but capacity was rolled back from 75% to 50%. California announced last week the closing of its nearly 86,000 restaurants to on-premise dining. 

Nationwide, full service restaurant customer transactions were 25% less than a year earlier, for the week ending June 28. That was a 1% weekly decline overall, while transactions fell 6-9% in states where coronavirus is increasing.

Customer transactions at major quick service restaurant chains declined by 13% compared to the same week last year, down 1 point from the previous week’s decline.

“It’s apparent that the road to recovery is going to be a challenging one for the U.S. restaurant industry,” says David Portalatin, NPD food industry advisor. “Consumer demand is there, as is the want for normalcy, but there is nothing normal about this situation.”

Although too few to trend, there were a few early negotiated cash fed cattle sales in the Texas Panhandle on Tuesday at $95/cwt. on a live basis, and a few in Kansas at $94-$95. There were also a few dressed trades in Nebraska at mostly $157-$160 and a few in the western Corn Belt at $160 (a few live sales at $100).

Cattle futures paused the recent rally, giving back a minority of gains.

Except for 25¢ higher in near Oct and 2¢ higher at the back, Live Cattle futures closed an average of 37¢ lower.

Except for 5¢ higher in Apr, Feeder Cattle futures closed an average of 60¢ lower (25¢ lower at the back to $1.22 lower in spot Aug).

Choice boxed beef cutout value was 16¢ lower Tuesday afternoon at $205.30/cwt. Select was 13¢ lower at $196.84.

Corn futures closed mostly 3¢ lower through Jul ’21 and then mostly fractionally lower.

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

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Major U.S. financial indices closed lower Tuesday, with most pressure apparently tied to surging coronavirus cases in the U.S.

The Dow Jones Industrial Average closed 396 points lower. The S&P 500 closed 34 points lower. The NASDAQ closed 89 points lower.

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Agricultural producer sentiment improved in June for the second month in a row, according to the Purdue University/CME Group Ag Economy Barometer. The index was up 14 points from May to a reading of 117.

The Index of Current Conditions rose 19% from May to a reading of 99, and the Index of Future Expectations climbed 12% from May to a reading of 126.

The Ag Economy Barometer is based on responses from 400 U.S. agricultural producers. The most recent survey was conducted June 22-26.

“This month’s survey was conducted after the USDA announced details regarding the Coronavirus Food Assistance Program (CFAP),” says James Mintert, the barometer’s principal investigator and director of Purdue University’s Center for Commercial Agriculture. “A more favorable spring planting season combined with assistance from CFAP helps explain this month’s improvement in farmer sentiment, yet a majority of producers believe additional economic assistance will be needed in 2020.”

The majority of producers (60%) indicated that CFAP somewhat (53%) or completely (7%) relieved their concerns about the impact of the virus on their 2020 farm income. However, 64% of respondents indicated that they think it will be necessary for Congress to pass another bill to provide more economic assistance to U.S. farmers.

Early dressed sales in the western Corn Belt on Monday were $5-$7 higher than last week at $160/cwt., according to USDA’s Agricultural Marketing Service. Although too few to trend, there were some live sales in Kansas at $93-$95 (steady to $2 lower) and some dressed sales in Nebraska at $155-$160 ($5-$6 higher).

Cattle futures built on the previous session’s gains, supported by surging outside markets and likely helped along by technicals.

Live Cattle futures closed an average of 96¢ higher (40¢ higher to $1.25 higher).

Feeder Cattle futures closed an average of $1.09 higher (55¢ to $1.37 higher).

Choice boxed beef cutout value was 2¢ higher Monday afternoon at $205.46/cwt. Select was $1.79 lower at $196.97.

Corn futures closed 2¢ to 4¢ higher through Jul ’21 and then fractionally higher to 1¢ higher.

Soybean futures closed mostly 7¢ to 9¢ higher.

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Major U.S. financial indices closed solidly higher Monday, led by tech stocks and despite the continuing escalation in COVID-19 infections.

The Dow Jones Industrial Average closed 459 points higher. The S&P 500 closed 49 points higher. The NASDAQ closed 226 points higher.

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Recent export demand underscores the negative global impact of COVID-19.

U.S. beef exports in May were 33% less in may than a year earlier at 79,280 metric tons (mt)—the lowest monthly total in 10 years—according to data released by USDA and compiled by the U.S. Meat Export Federation (USMEF). Value was 34% less than the same time last year at $480.1 million.

For January through May, beef exports fell 3% below last year’s pace in volume (512,596 mt) and were 5% lower in value ($3.14 billion).

“As protective measures related to COVID-19 were being implemented, plant disruptions peaked in early May with a corresponding temporary slowdown in exports,” explains USMEF President and CEO Dan Halstrom. “Unfortunately, the impact was quite severe, especially on the beef side. Exports also faced some significant economic headwinds, especially in our Western Hemisphere markets, as stay-at-home orders were implemented in key destinations and several trading partners dealt with slumping currencies.”

Halstrom notes that the recent rebound in beef and pork production will help exports regain momentum in the second half of 2020. The global economic outlook is challenging, but he looks for export volumes to recover quickly in most markets as U.S. red meat remains an important staple, not only in the United States but for many international consumers as well.

“In what has been a remarkably turbulent year, consumer demand for U.S. red meat has proven very resilient,” Halstrom says. “Now that production has substantially recovered, the U.S. industry is better able to meet the needs of both domestic and international customers. While the foodservice and hospitality sectors face enormous challenges, they are on the path to recovery in some markets while retail demand remains strong. Retail sales have also been bolstered by a surge in e-commerce and innovations in home meal replacement, as convenience remains paramount.”

May U.S. pork exports of 243,823 mt were 12% more than a year earlier but down 13% from the monthly average for the first quarter of 2020. Export value was $620.9 million, up 9% year-over-year but 16% below the first quarter monthly average.

Negotiated cash fed cattle trade ended the holiday-shortened week steady to $2 lower on a live basis in the Southern Plains at $93-$95/cwt.; steady to $1 higher in Nebraska at $95-$96 and unevenly steady in the western Corn Belt at $96-$97. Dressed trade was $1 lower in Nebraska at $154-$155 and steady to $4 lower in the western Corn Belt at $152-$155.

Cattle futures extended gains, though, for no apparent reason.

Live Cattle futures closed an average of $1.08 higher (32¢ higher to $2.10 higher in spot Aug).

Feeder Cattle futures closed an average of $1.78 higher ($1.47 to $2.55 higher).

Choice boxed beef cutout value was 6¢ higher Thursday afternoon at $205.44/cwt. Select was 33¢ higher at $198.76.

The average dressed steer weight for the week ending June 20 was 890 lbs., which was 6 lbs. lighter than the previous week, but 36 lbs. heavier than the previous year, according to USDA’s Actual Slaughter Under Federal Inspection report. The average dressed heifer weight of 823 lbs. was 1 lb. lighter than the previous week, but 33 lbs. heavier than the same week a year earlier.

Grain futures softened Thursday, following strong gains earlier in the week. Pressure likely included week-end positioning and profit taking, as well as the bearish weekly Export Sales report (week ending June 25) from USDA’s Foreign Agricultural Service.

Net export corn sales of 361,100 metric tons (mt) for 2019-2020 were down 22% from the previous week and 32% from the prior four-week average.

Net soybean export sales of 241,700 mt for 2019-2020 were a marketing-year low, down 60% from the previous week and 63% from the prior four-week average.

Corn futures closed mostly 3¢ to 7¢ lower.

Soybean futures closed fractionally lower to 2¢ lower.

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Major U.S. financial indices climbed higher Thursday on the back of a national employment report that shattered expectations to the upside.

Total nonfarm payroll employment rose by 4.8 million in June, according to the Employment Situation Summary from the U.S. Bureau of Labor Statistics. The unemployment rate declined to 11.1%.

“These improvements in the labor market reflected the continued resumption of economic activity that had been curtailed in March and April due to the coronavirus (COVID-19) pandemic and efforts to contain it,” according to the report. “In June, employment in leisure and hospitality rose sharply. Notable job gains also occurred in retail trade, education and health services, other

services, manufacturing, and professional and business services.”

Average hourly earnings for all employees on private nonfarm payrolls in June fell by 35¢ to $29.37.

The Dow Jones Industrial Average closed 92 points higher. The S&P 500 closed 14 points higher. The NASDAQ closed 53 points higher.

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“To further aid in a gentle transition back toward economic normality, federal economic policy will have to shift from sending families money to maintain social distancing to helping businesses maintain employment,” says Jeffrey Dorfman, professor of agricultural and applied economics at the University of Georgia. That’s part of a recent publication from the Council for Agricultural Science and Technology (CAST): Macroeconomic Impacts and Policies in the Face of COVID-19.

Although the government extended forgivable loans to small businesses through the Paycheck Protection Program, Dorfman explains the current unemployment bonus of $600 per week could make it harder for some businesses to reopen.

“Workers are currently making more from unemployment than from working, particularly in the retail, hospitality, and personal services sectors that are home to so many small businesses,” Dorfman says. “With the unemployment bonus, not working can pay the equivalent of about $50,000 per year. Few small businesses can compete with that when roughly half of all workers made less than that just a few months ago.”

Worker challenges aside Dorfman says, economic recovery requires customers feeling safe about returning to restaurants, local shops, movie theaters and all of the rest.

“Until a vaccine and/or effective treatments are widely available, the best confidence restorer will be clearly posted and followed safety protocols that minimize the risk of frequenting public businesses and maximize the amount of economic activity that can safely take place,” Dorfman says. “But a full recovery requires either a vaccine or treatment that convinces people contracting the virus is more a nuisance than a mortal risk.”