WLI

Negotiated cash fed cattle prices continued the early-week’s lower tone through Tuesday afternoon, according to the Direct Slaughter Cattle Dashboard from USDA’s Agricultural Marketing Service. Live steers averaged $102.81/cwt. and live heifers averaged $101.62. In the beef, steers averaged $164.62 and heifers averaged $163.41.

Cattle futures rallied higher on Tuesday, amid relatively light trade, helped along by strength in outside markets, normalizing supply chains and possibly some early positioning ahead of the monthly Cattle on Feed report due out Friday.

Live Cattle futures closed an average of 99¢ higher (25¢ higher in spot Jun to $1.22 higher).

Feeder Cattle futures closed an average $2.03 higher ($1.70 higher in spot Aug to $2.30 higher at the back).

Choice boxed beef cutout value was 72¢ lower Tuesday afternoon at $227.89/cwt. Select was $1.18 lower at $213.17.

Corn futures closed mostly fractionally higher to 1¢ higher.

Soybean futures closed mostly 2¢ lower through Sep ’21 and then mostly unchanged.

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Major U.S. financial indices closed strongly higher Tuesday, buoyed by news of an effective COVID-19 treatment, as well as a record high bounce in domestic retail sales.

Although 6.1% less than a year earlier, retail sales in May of $485.5 billion were a staggering 17.7% more than in April, according to the U.S. Census Bureau.

The Dow Jones Industrial Average closed 526 points higher. The S&P 500 closed 58 points higher. The NASDAQ closed 169 points higher.

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Although consumers moved on from the panic grocery shopping they did in the early stage of COVID-19, they’re keeping up their at-home inventories of foods and beverages. At the end of last month, compared to early April, the estimated number of food and beverage packages on hand in homes declined by only 3%, according to the NPD Group (NPD).

Some consumers are finding it easier to maintain at-home inventories than others.

For the week ending May 28, 68% of U.S. grocery shoppers reported to NPD that they hadn’t encountered any out-of-stock foods and beverages they shopped for during the week. The other 32% of shoppers reported experiencing out-of-stock items that same week, according to NPD’s NET® COVID-19 Pantry & Food Strategy Tracker.

More specifically, 51% of the consumers who reported encountering out of stocks said they weren’t able to purchase the meat or poultry item they were looking for, which was 10% fewer than the previous week.

For perspective, 33% of consumers reported out of stocks of water, coffee, tea, and juice in the week ending May 28 compared to 25% the previous week.

Categories with increased week-to-week out of stocks reported by consumers included fruits, vegetables and potatoes, as well as dairy products.

Still, David Portalatin, NPD food industry advisor says, “Considering the unprecedented situations COVID-19 presented over the last few months, the U.S. food supply chain held up remarkably well.”

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Net cattle feeding returns will be significantly negative through the summer, before improving, according to the latest Historical and Projected Kansas Feedlot Net Returns from Kansas State University.

Keep in mind, the net return projections reflect cash to cash, without any price risk management.

Currently, the net returns projected for steers closed out in May are -$107.72/head with a Feedlot Cost of Gain (FCOG) of $85.38/cwt. Net returns for heifers are projected at -$83.67/head with a FCOG of $91.82.

From there, projected net returns for steers range from -$194.58 per head (Aug.) to -$276.79 (June) with FCOG of $78.30 to $84.16/cwt. For September through February of next year, projected net returns range from -$73.90 (Sept.) to -$13.23 (Feb.) with FCOG ranging from $77.50 (Sept.) to $80.23 (Feb.).

Forecast summer net returns for heifers are similar: -$141.64 (Aug.) to -$240.81 (June) with FCOG of $85.87 (Aug) to $90.54 (June). For September through February of next year, projected net returns range from -$84.71 (Sept.) to -$19.48 (Feb.) with FCOG ranging from $83.54 (Nov.) to $86.29 (Jan.).

Although too few to trend, negotiated cash fed cattle sales started the week on a mostly lower note, with live trades at $100/cwt. in the Texas Panhandle, $98-$100 in Kansas and at $100-$105 in Nebraska. Early dressed trades in Nebraska were at $159-$167; mostly $167 in the western Corn Belt, according to the Agricultural Marketing Service (AMS).

The weighted five-area direct average price for steers last week, on a live basis, was $104.47/cwt., which was $7.92 less than the previous week. The average dressed steer price was $12.64 less at $166.40. Prices for the same week last year were $113.62 and $184.48, respectively.

Cattle futures followed equity markets on Monday, down early before recovering into the close.

Live Cattle futures closed an average of 61¢ higher, except for unchanged in spot Jun.

Feeder Cattle futures closed an average 56¢ higher (7¢ higher in spot Aug to 77¢ higher at the back).

Choice boxed beef cutout value was $2.03 lower Monday afternoon at $228.61/cwt. Select was $4.92 lower at $214.35.

Corn futures closed mostly 1¢ lower.

Soybean futures closed 2¢ to 3¢ lower through Jan ’21 and then mostly 1¢ lower.

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Major U.S. financial indices closed higher Monday, amid a volatile day of trade. Pressure early, tied to resurgent COVID-19 cases in some states, drove indexes sharply lower. The Fed’s announcement that it would buy individual corporate bonds, expanding its support of credit markets, pulled indexes higher, led by tech stocks.

The Dow Jones Industrial Average closed 157 points higher. The S&P 500 closed 25 points higher. The NASDAQ closed 137 points higher.

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“Feeder cattle prices are expected to hold firm through the summer, while feed costs are expected to decline with larger feedstuffs production,” say analysts with the Livestock Market Information Center (LMIC), in the latest Livestock Monitor. “Drought continues to be an aspect to watch. But, with the improvement of fed cattle prices later this year and lower corn costs, cattle feeding margins could become supportive of feeder cattle prices.”

LMIC analysts point out calf and feeder cattle auction volumes were the least for March since 2002 and the least for April since 2012, mirroring significant year-over-year declines in feedlot placements. Through May, however, they say calf and feeder cattle volume marketed via auction, direct and Internet/video was 9.5% more than the same time last year.

Through Thursday, the average five-area direct fed steer price (AMS) was $104.84 on a live basis, compared to $112.68 the previous week. The dressed steer price was $166.65, versus $179.17 the prior week.

Regionally, live prices were $3-$4 lower in the Southern Plains at $104/cwt. in the Texas Panhandle and at $103-$107 in Kansas. Live trade was $5-$10 lower in Nebraska at $105-$108; $5-$9 less in the western Corn Belt at $103-$105. Dressed trade was $10-$20 lower in Nebraska at $165; $13-$15 lower in the western Corn Belt at $160-$172.

Cattle futures drifted lower on Friday amid light trade and lower cash prices.

Live Cattle futures closed an average of 72¢ lower.

Feeder Cattle futures closed an average 88¢ lower.

Wholesale beef values closed lower, minus the steep pitch of recent weeks. Choice boxed beef cutout value was $4.92 lower Friday afternoon at $230.64/cwt. Select was 61¢ lower at $219.27.

Corn futures closed mostly fractionally lower to 1¢ lower.

Soybean futures closed mostly 2¢ to 5¢ higher through Jan ’21 and then mostly fractionally lower.

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Major U.S. financial indices closed higher Friday, gaining back a portion of the previous day’s steep selloff, tied to queasiness over escalating COVID-19 cases in some states.

The Dow Jones Industrial Average closed 477 points higher. The S&P 500 closed 39 points higher. The NASDAQ closed 96 points higher.

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“Considerable uncertainty remains in the U.S. and global markets going forward,” says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his latest weekly market comments. “While domestic protein markets continue to sort out the COVID-19 and recessionary impacts, meat trade is generally offering a much needed bright spot across all protein industries.” 

Based on the latest trade data, Peel explains U.S. beef exports in April were 3.4% less year over year, but are 6.9% more for January through April. He adds that beef imports are 3.3% more year to date, compared to 2019. Also, U.S. pork exports are 35.2% more than in 2019 for January through April and U.S. broiler exports are up 7.8%.

“China continues to struggle with the impacts of African Swine Fever (ASF) and the resulting protein shortages. This is supporting U.S. protein exports,” Peel explains. He points out U.S. pork exports to China, year to date, were 458.2% more than last year. Although sparse, U.S. beef exports to China also continue to grow, up 38.7% so far this year.

USDA’s Foreign Agricultural Service (FAS) left its forecast for 2020 U.S. exports of livestock poultry and dairy unchanged at $32.4 billion, in the latest quarterly Outlook for U.S. Agricultural Trade.

“Strengthened demand for pork and dairy products offsets a decline for beef and poultry products,” say FAS analysts. “Strong demand from China continues to drive growth in U.S. pork exports. The beef forecast is lowered nearly $300 million to $7.2 billion as lower volumes are only partially offset by the higher prices associated with tighter domestic supplies.” Beef export last year were about $7.3 billion.

Negotiated cash fed cattle trade continued lower on Thursday, with live trade in the Texas Panhandle $4 lower at $104/cwt. and $1-$5 lower in Kansas at $103-$107, according to the Agricultural Marketing Service (AMS).

“With the slaughter pace inching closer to normal and beef cutout values dropping, the focus may soon be turning to the surplus of market ready cattle that history says will have to be whittled away at by getting to a price low enough to stimulate surplus demand,” noted the AMS reporter on hand for the weekly sale at South Central Regional Stockyards in Vienna, MO.

Cattle futures closed narrowly mixed to narrowly lower, fading more intense pressure early in the session. Declining cash prices and sharply lower outside markets added drag, while export sales provided some lift. Net beef export sales were up 66% (week ending June 4) from the previous week and up noticeably from the prior four-week average, according to the weekly Export Sales report from USDA’s Foreign Agricultural Service. Increases were primarily for South Korea, Japan, Mexico and Canada.

Live Cattle futures closed narrowly mixed, from 35¢ lower to 22¢ higher.

Feeder Cattle futures closed an average 54¢ lower.

The average five-area direct live steer price (FOB) in May was $111.53/cwt., which was $9.51 more than the previous month, according to USDA. The average dressed steer price in the beef was $179.02 (delivered), which was $19.75 more than the previous month.

Wholesale beef values closed lower, minus the steep pitch of recent weeks. Choice boxed beef cutout value was 50¢ lower Thursday afternoon at $235.56/cwt. Select was $2.96 lower at $219.88.

The average dressed steer weight for the week ending May 30 was 891 lbs., which was 3 lbs. lighter than the previous week, but 49 lbs. heavier than the previous year, according to USDA’s Actual Slaughter Under Federal Inspection report. The average dressed heifer weight of 826 lbs. was even with the prior week and 47 lbs. heavier than the previous year.

Corn futures closed mostly 1¢ to 2¢ higher.

Other than fractionally higher in the front three contracts, Soybean futures closed mostly 2¢ to 3¢ lower. 

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Major U.S. financial indices closed sharply lower Thursday, pressured by the recent increase in COVID-19 cases and investor worry that reopening the nation’s economy could stall.

The Dow Jones Industrial Average closed 1,861 points lower. The S&P 500 closed 188 points lower. The NASDAQ closed 527 points lower.

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USDA’s Economic Research Service (ERS) estimates this year’s beef production at 26.67 billion lbs., which is 910 million lbs. more (+3.53%) than the previous month’s estimate. That would be 481 million lbs. less (-1.77%) than in 2019. In the latest monthly World and Agricultural Supply and Demand Estimates, ERS analysts say the increase reflects slaughter levels recovering quicker than anticipated a month earlier.

“Cattle price forecasts are raised, reflecting current price strength and increased packer demand,” say ERS analysts. “For 2021, cattle prices are also raised on expected continued strength of packer demand in the first part of the year.”

The annual fed steer price for this year is projected at $108.60/cwt., which is $4.50 more than the previous month’s expectation. By quarter, USDA pegs the average fed steer price at $118.32 in the first quarter, $106 in the second quarter, $104 in the third quarter and $106 in the fourth quarter. The projected price for the first quarter next year is $104.

ERS estimates total red meat and poultry production 1.43 billion lbs. more (+1.38%) than the previous month at 105.00 billion lbs. That would be 261 million lbs. less (-0.25%) than in 2019.

Among other WASDE highlights:

Corn

The 2020-21 U.S. corn outlook was little changed, with fractional increases to beginning and ending stocks. Ending stocks were projected 5 million bu. higher at 3.3 billion bu. The season-average farm price was unchanged at $3.20/bu.

Soybeans

U.S. soybean supply and use projections for 2020-21 include higher beginning stocks, higher crush, and slightly lower ending stocks. With higher soybean crush more than offsetting higher beginning stocks, 2020-21 ending stocks are projected at 395 million bushels. The 2020-21 season-average soybean and product price forecasts were unchanged: $8.20 per bushel, down 30¢ from 2019-20. Soybean meal prices are forecast at $290 per short ton, down $10 from 2019-20. Soybean oil prices are forecast at 29.0¢/lb., up 0.5¢ from 2019-20.

Wheat

Total 2020-21 wheat production was forecast at 1,877 million bu., and total supplies were raised 16 million to 3,000 million. Domestic use and exports for the new marketing year were unchanged, while ending stocks were raised 16 million bushels to 925 million, which would be a 6-year low. Last month, ERS projected 2020-21 ending stocks 69 million bu. lower than the previous year at 909 million. The projected season-average farm price last month was projected at $4.60/bu., unchanged from the previous year, with expectations for U.S. corn prices to restrain U.S. wheat prices.