WLI

Although Cattle futures tested stability early in yesterday’s session, they crumbled again, beneath overall market panic about novel coronavirus and its potential economic impact. Losses, however, were less than the previous day.

Live Cattle futures closed an average of $1.70 lower through the front four contracts and then an average of 56¢ lower.

Feeder Cattle futures closed an average of $2.06 lower (85¢ to $3.47 lower). That’s an average of $6.32 lower in the last two sessions.

Wholesale beef values were firm on Choice and sharply lower on Select, with light to moderate demand and offerings, according to the Agricultural Marketing Service.

Choice boxed beef cutout value was 40¢ higher Tuesday afternoon at $207.47/cwt. Select was $2.47 lower at $199.90.

Grain futures rebounded, perhaps with the help of the lower U.S. dollar.

Corn futures closed mostly fractionally higher to 2¢ higher.

Soybean futures closed mostly 4¢ to 5¢ higher.

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Major U.S. financial indices plunged lower for the second consecutive session Tuesday, again plagued by escalating fears about novel coronavirus—dubbed Coronavirus Disease 2019 (COVID-19)—and how it will impact global economic growth. The virus causing COVID-19 is named SARS-CoV-2.

A key driver in Tuesday’s decline appeared to be the latest Coronavirus Disease 2019 Situation Summary issued by the Centers for Disease Control and Prevention (CDC).

“For the general American public, who are unlikely to be exposed to this virus at this time, the immediate health risk from COVID-19 is considered low,” according to the CDC summary. “However, it’s important to note that current global circumstances suggest it is likely that this virus will cause a pandemic. In that case, the risk assessment would be different.”

CDC defines a pandemic as: “A global outbreak of a new influenza A virus. Pandemics happen when new (novel) influenza A viruses emerge which are able to infect people easily and spread from person to person in an efficient and sustained way.” There were four pandemics in the last 100 years, according to CDC.

The Dow Jones Industrial Average closed 879 points lower. The S&P 500 closed 97 points lower. The NASDAQ was down 255 points. In the last two sessions, those indices are down 1,910 points, 208 points and 610 points, respectively.

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So far, there is little visible impact, positive or negative, from the U.S.-China Phase One Economic and Trade Agreement, including before novel coronavirus began disrupting some supply chains. But, China has taken numerous actions to begin implementing its agriculture-related commitments under the agreement, on schedule, according to U.S. Secretary of Agriculture Sonny Perdue and United States Trade Representative Robert Lighthizer on Tuesday.

Among the actions Perdue and Lighthizer cite:

Lifting the ban on imports of U.S. poultry and poultry products, including pet food containing poultry products.

Lifting restrictions on imports of U.S. pet food containing ruminant material.

Updating lists of facilities approved for exporting animal protein, pet food, dairy, infant formula, and tallow for industry use to China.

Updating the lists of products that can be exported to China as feed additives.

Additionally, China began announcing tariff exclusions for imports of U.S. agricultural products subject to its retaliatory tariffs, and it announced a reduction in retaliatory tariff rates on certain U.S. agricultural goods.

“President Trump and this Administration negotiated a strong trade agreement with China that promises significant benefits for American agriculture,” explains Secretary Perdue. “We look forward to realizing these benefits this year and are encouraged by progress made last week. We fully expect compliance with all elements of the deal.”

Weekend reports of a spike in novel coronavirus cases outside of China sent major U.S. financial indices and futures markets tumbling as investors and traders try to assess the current and potential impact on global economic growth.

Cattle futures plummeted mostly limit-down in Feeder Cattle and near limit-down in Live Cattle. Friday’s announcement that USDA is restoring access to the U.S. for Brazilian beef likely added to the weight.

Live Cattle futures closed an average of $2.72 lower.

Feeder Cattle futures closed an average of $4.26 lower.

Growing pessimism prompted some early negotiated cash fed cattle trade in Nebraska and the western Corn Belt at $187/cwt. in the beef, which was $3 less than last week, but there were too few transactions to establish a trend.

Wholesale beef values were higher on Choice and firm on Select, according to the Agricultural Marketing Service.

Choice boxed beef cutout value was $1.98 higher Monday afternoon at $207.07/cwt. Select was 67¢ higher at $202.37.

Corn futures closed 3¢ to 4¢ lower through Jly ’21 and then mostly fractionally lower to 1¢ lower.

Soybean futures closed 11¢ to 16¢ lower through Jan ’21 and then 5¢ to 9¢ lower.

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Major U.S. financial indices plunged lower Monday, with surging coronavirus cases reported outside China over the weekend and some analysts shaving a full 1% from expected first-quarter GDP growth.

The Dow Jones Industrial Average closed 1,031 points lower. The S&P 500 closed 111 points lower. The NASDAQ was down 355 points.

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With trade negotiations set to begin between the United States and the United Kingdom, the North American Meat Institute (Meat Institute) and the British Meat Processors Association (BMPA) signed a memorandum of understanding (MOU) to benefit members of each organization and to support and promote mutually beneficial regulations, standards and policies to enhance bilateral trade in meat and poultry products.

“Members of the Meat Institute and the British Meat Processors Association share many common goals, especially regarding food safety, sustainability, nutrition and worker safety,” says Bill Westman, Meat Institute Senior Vice President for International Affairs. “As our governments begin trade talks, it is important to members in both organizations to formalize an already beneficial relationship. We look forward to working with the Administration and our British counterparts to improve access to significant trade opportunities between our nations.”

Both organizations will share with the other, and disseminate to their members, information that is not subject to a confidentiality and non-disclosure agreement with their respective governments concerning regulatory, scientific, legislative and international developments that affect the other organization’s members. Each organization also will discuss periodically, and as needed, other mechanisms that would mutually benefit each organization’s members.

Negotiated cash fed cattle trade ended the week steady to $1 higher on a live basis at $120/cwt. in the Southern Plains and $119-$120 in the north. Dressed trade was steady at $190.

Weaker outside markets and ample supplies continued to pressure Cattle futures Friday, although they closed off of session lows.

Live Cattle futures closed an average of 40¢ lower, amid active trade.

Feeder Cattle futures closed an average of $1.03 lower (42¢ to $1.37 lower).

Wholesale beef values were firm on Choice and steady on Select with light to moderate demand and offerings, according to the Agricultural Marketing Service.

Choice boxed beef cutout value was 59¢ higher Friday afternoon at $205.09/cwt. Select was 10¢ higher at $201.70.

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USDA projections shared at last week’s 2020 Agricultural Outlook Forum are plumb bullish for corn production this year with expectations for 94.0 million corn acres, which would be about 5 million more than last year.

“The U.S. corn outlook for 2020-21 is for record production and domestic use, increased exports, and higher ending stocks,” according to USDA’s Grains and Oilseeds Outlook. “The corn crop is projected at 15.5 billion bu., 13% above a year ago with an increase in area from last year’s weather-reduced plantings and a return to trend yields. The yield projection of 178.5 bu./acre is based on a weather-adjusted trend assuming normal planting progress and summer growing season weather. Despite beginning stocks forecast down from a year ago,

total corn supplies at 17.4 billion bu. are forecast to be record high.”

“One of the major concerns heading into planting season is if the soil, and infrastructure can handle this year’s snow melt,” say analysts with the Livestock marketing Information Center (LMIC), in the latest Livestock Monitor. “From the Mississippi Delta through the upper Midwest and Missouri river basin, hydrological conditions are currently showing heavy saturation levels. Additionally, un-harvested acres in North Dakota and South Dakota could become problematic for spring planting.”

Moreover, LMIC analysts say there appears to be a mismatch between futures prices and the level of plantings USDA is suggesting. 

“Even though greater numbers of swine and poultry are expected in 2020, corn export demand has been dismal so far in the 2019-20 marketing year,” LMIC analysts say. “The risk of recession and spread of coronavirus all point to potentially shaky demand moving forward this year. Already, the 2019-20 crop is approaching a 2 billion bu. carryout because of the lack of export demand. That could weigh on corn prices and will likely allow soybeans to bid acres away from corn.”

Corn futures closed fractionally lower to 2¢ lower.

Soybean futures closed mostly 2¢ to 3¢ lower.

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Major U.S. financial indices closed strongly lower Friday as fears about novel coronavirus picked up steam again with reports from China suggesting a deep economic toll in that country.

The Dow Jones Industrial Average closed 222 points lower. The S&P 500 closed 35 points lower. The NASDAQ was down 174 points.

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Feedlots placed fewer cattle year over year in January, according to the monthly USDA Cattle on Feed report released Friday. The report is for feedlots with 1,000 head or more capacity.

Cattle feeders placed 1.96 million head in January, which was 0.61% less (-12,000 head) than the previous year. Ahead of the report, estimates were for placements to be up about 2%.

In terms of placement weights, 43.22% went on feed weighing 699 lbs. or less, 47.82% weighed 700-899 lbs. and 8.95% weighed 900 lbs. or more.

Marketings in January of 1.93 million head were 1.10% more (+21,000 head) than a year earlier.

Cattle on feed Feb. 1 of 11.93 million head were 2.16% (+252,000 head) more than a year earlier.

Both marketings and the on-feed inventory were close to pre-report estimates.

Cattle and calves on feed for slaughter in the United States, for feedlots with capacity of 1,000 or more head, represented 81.5% of all cattle and calves on feed in the United States Jan. 1, 2020, according to USDA’s National agricultural Statistics Service (NASS). That’s comparable to 81.3% a year earlier.

Further, NASS analysts say feedlots with capacity of 1,000 or more head during 2019 represented 87.0% of total cattle marketed from all feedlots in the United States, down slightly from 87.1% during 2018.

Negotiated cash fed cattle trade on Thursday continued $1 higher than last week in the Southern Plains at $120/cwt. Live prices were steady to $1 higher in Nebraska at $119-$120 and steady in the beef at $190.

Near term, increased slaughter numbers and heavier carcass weights year over year, magnified by the mostly open winter so far are keeping a firmer seasonal lid on wholesale beef prices. The average steer carcass weight the week ending Feb. 8 was 903 lbs., according to USDA’s Actual Slaughter Under Federal Inspection report. That was 6 lbs. more than the previous week and 18 lbs. more than the same week a year earlier. The average dressed heifer weight of 834 lbs. was 1 lbs. more than the previous week and 12 lbs. more than the same week last year.

Weaker outside markets amid the daily up and down tied to novel coronavirus also helped pressure Cattle futures Thursday.

Live Cattle futures closed an average of $1.03 lower (70¢ to $1.65 lower), but still higher week to week.

Except for 2¢ higher in spot Mar, Feeder Cattle futures closed an average of 78¢ lower. 

Analysts surveyed by Urner Barry and reported by the Daily Livestock Report expect to see January feedlot placements 1.9% more than the previous year, in Friday’s monthly Cattle on Feed report. They anticipate January marketings to be 1% more and the Feb. 1 on-feed inventory to be 2.4%  more.

Wholesale beef values were lower on Choice and steady on Select with light to moderate demand and heavy offerings, according to the Agricultural Marketing Service.

Choice boxed beef cutout value was $1.07 lower Thursday afternoon at $204.50/cwt. Select was 16¢ lower at $201.60.

Corn futures closed mostly 1¢ to 2¢ lower.

Soybean futures closed 4¢ to 7¢ lower.

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Major U.S. financial indices closed lower Thursday, presumably on profit taking and vacillating concerns about novel coronavirus..

The Dow Jones Industrial Average closed 128 points lower. The S&P 500 closed 12 points lower. The NASDAQ was down 66 points.

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USDA projects U.S. beef and veal export value for the current fiscal year (FY) 2020 at $7.5 billion, in the quarterly Outlook for U.S. Agricultural Trade—released Thursday—from the Economic Research Service (ERS) and the Foreign Agricultural Service (FAS). That’s $100 million less than the November estimate but would be $200 million more than FY 2019. Analysts explain the reduced quarter-to-quarter estimate is based on slightly higher expected prices unable to offset what’s expected to be a slight reduction in volume.

“Livestock, poultry, and dairy exports are forecast up $500 million from the November projection to $32.4 billion as stronger demand for poultry and products, dairy, and variety meats more than offsets declines for beef,” say ERS-FAS analysts.

Overall, U.S. agricultural exports are projected $500 million more for FY 2020, compared to the November forecast, with increased soybean, wheat, and poultry export forecasts more than offsetting reductions in corn and soybean meal. The estimated $139.5 billion this fiscal year would be $4 billion more than last year, when trade wars and issues disrupted export flows.

“Exports for China are raised $3.0 billion from the November forecast to $14.0 billion, largely based on higher projected volumes for soybeans,” say ERS-FAS analysts. “The current outlook for exports to China is tempered by significant uncertainties surrounding the Covid-19 outbreak (novel coronavirus), which may affect the timing of China’s purchases under the Phase One Agreement during the calendar year.”

Despite novel coronavirus, ERS and FAS left expectations for world per capita gross domestic product (GDP) growth little changed. However, those analysts explain, a slowdown across the Eurozone, declining growth rates in China and the damaging global impact of novel coronavirus is expected to dampen growth prospects worldwide.