WLI

Negotiated cash fed cattle trade was slow with moderate demand in the Southern Plains through Thursday afternoon. Based on USDA reports, live prices were steady with the previous day at $122/cwt., which was $2 less than last week.

Cattle futures finally firmed on Thursday after taking their lumps for the previous five sessions, and in the face of another limit and near limit-down day for Lean Hogs.

Except for 2¢ lower in near Apr, Live Cattle futures close an average of 29¢ higher (2¢ to 62¢ higher).

Except for unchanged in the back contract, Feeder Cattle futures closed an average of 25¢ higher (5¢ to 67¢ higher).

Wholesale beef values were steady to weak on light to moderate demand and offerings, according to the Agricultural Marketing Service.

Choice boxed beef cutout value was 17¢ lower Thursday afternoon at $213.35/cwt. Select was 45¢ lower at $211.48.

Corn futures closed 4¢ to 5¢ lower through Jly ’21 and then mostly 1¢ lower.

Soybean futures closed 12¢ to 16¢ lower through Jan ’21 and then 5¢ to 10¢ lower.

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Major U.S. financial indices closed higher Thursday, after being sharply lower for most of the session. Various chatter assigned the late-day turnaround to comments from the World Health Organization (WHO), which declared novel coronavirus a public health emergency of international concern (PHEIC) but made no recommendation for travel restrictions to China.

According to a statement from WHO’s Emergency Committee: “The Committee believes that it is still possible to interrupt virus spread, provided that countries put in place strong measures to detect disease early, isolate and treat cases, trace contacts, and promote social distancing measures commensurate with the risk…”

The Dow Jones Industrial Average closed 124 points higher. The S&P 500 closed 10 points higher. The NASDAQ was up 23 points.

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“Despite the perceived ‘health halo,’ synthetic meats are a long way off from being a magical mixture of vegetables. If you’re looking for a healthy snack, you can do better than these industrial food-like substances,” says Will Coggin, managing director of the nonprofit Center for Consumer Freedom (CCF).

Unbeknownst to many consumers, the folks at CCF point out plant-based meats are ultra-processed foods, which the National Institute of Health says may cause overeating and weight gain. According to the NOVA food classification system, ultra-processed foods are created by a series of industrial techniques and processes. Ingredients in synthetic meats include methylcellulose, which is commonly used in laxatives and lubricant, titanium dioxide, often used in paint, and propylene glycol, used in antifreeze.

That’s the gist of an ad CCF will air during this weekend’s Super Bowl. It features a spelling bee, where children are asked to spell some of the chemical ingredients in synthetic meats. You can see it here.

“In addition to ads CCF has run, the campaign has also been featured in articles by The New York Times, The Washington Post, and The Wall Street Journal,” Coggin says. You can see previous ads in the campaign here.

Negotiated cash fed cattle trade remained undeveloped through Wednesday afternoon, based on USDA reports.

There were 477 head offered in the weekly Fed Cattle Exchange auction and no takers.

Slaughter steers and heifers sold $1-$2 lower at Sioux Falls in South Dakota with 105 Ch 2-3 steers brought an average price of $120.43/cwt. at an average weight of 1,441 lbs. Country trade in the western Corn Belt last week was at mostly $124-$125.

After glimmers of support early on, Cattle futures continued to trek lower with the overall lack of commodity support, no cash direction and longs fleeing the market.

 Live Cattle futures closed an average of 48¢lower. Between Jan. 21 and 28, open interest declined by 30,377 contracts (down 7.6%)

 Except for 5¢higher in soon-to-expire Jan, Feeder Cattle futures closed an average of 71¢lower.

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

Choice boxed beef cutout value was 67¢ higherWednesday afternoon at $213.52/cwt. Select was 23¢ lower at $211.93.

Corn futures closed mostly 1¢ to 2¢ lower.

Soybean futures closed mostly 1¢ lower.

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Major U.S. financial indices closed narrowly mixed Wednesday, with little additional news regarding the spread of coronavirus balanced by positive quarterly earnings reports from bellwethers, such as Apple, and by the Fed’s decision to leave lending rates unchanged.

“Information received since the Federal Open Market Committee (FOMC) met in December indicates that the labor market remains strong and that economic activity has been rising at a moderate rate. Job gains have been solid, on average, in recent months, and the unemployment rate has remained low,” according to the FOMC statement. “Although household spending has been rising at a moderate pace, business fixed investment and exports remain weak. On a 12‑month basis, overall inflation and inflation for items other than food and energy are running below 2%.”

The Dow Jones Industrial Average closed 11 points higher. The S&P 500 closed 2 points lower. The NASDAQ was up 5 points.

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President Trump signed the U.S.-Mexico-Canada Agreement (USMCA) Wednesday, paving the way for the three nations to begin hashing out uniform regulations for the new agreement that replaces the North American Free Trade Agreement (NAFTA). And, the Canadian Parliament must ratify the pact but is expected to do so.

“This agreement shows the rest of the world the United States is open for business,” says U.S. Secretary of Agriculture, Sonny Perdue. “USMCA is critical for America’s farmers and ranchers, who will now have even more market access to our neighbors to the north and the south.”

Canada and Mexico are the first and second largest export markets for United States food and agricultural products, totaling more than $39.7 billion food and agricultural exports in 2018.

With USMCA, all food and agricultural products that have zero tariffs under NAFTA will remain at zero tariffs. Since the original NAFTA did not eliminate all tariffs on agricultural trade between the United States and Canada, the USMCA will create new market access opportunities for United States exports to Canada of dairy, poultry, and eggs, and in exchange the United States will provide new access to Canada for some dairy, peanut, and a limited amount of sugar and sugar-containing products.

U.S. red meat exports to Mexico and Canada in 2019 totaled about 1.25 million metric tons valued at $3.8 billion, according to the U.S. Meat Export Federation.

Futures and equity markets recovered some ground on Tuesday from the previous day’s steep selloff tied to growing fears about the global spread of novel coronavirus. 

Although mainly lower, the decline in Cattle futures was soft rather than the limit and near limit-down moves in the previous session.

Live Cattle futures close an average of 38¢ lower, as open interest continued to dwindle.

Except for 15¢ and 22¢ higher in the front two contracts, Feeder Cattle futures closed an average of 29¢ lower.

Wholesale beef values were weak on Choice and higher on Select with moderate to good demand and heavy offerings, according to the Agricultural Marketing Service.

Choice boxed beef cutout value was 74¢ lower Tuesday afternoon at $212.85/cwt. Select was $1.66 higher at $212.16.

Corn futures closed mostly 2¢ to 5¢ higher through Jul ’21 and then mostly 1¢ higher.

Soybean futures closed mostly 2¢ lower.

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Investors seemed to take a more measured view of the global spread of coronavirus, pushing major U.S. financial indices higher Tuesday, led by tech and financial stocks.

The Dow Jones Industrial Average closed 187 points higher. The S&P 500 closed 32 points higher. The NASDAQ was up 130 points.

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Consumer appetite for Prime beef continues strong, based on year-over-year increases for Prime premiums, relative to the increased percentage of carcasses hitting the grade for the first few weeks of the year.

For the first four weeks of 2020, according to USDA reports, the Prime premium was $12.63 to $13.19/cwt., compared to $9.42-$9.44 a year earlier, or about 34-40% higher. At the same time, through the first three weeks, the percentage of fed cattle grading Prime was 9.39% to 9.85% compared to 9.16% to 9.31% at the same time last year.

“Heavier cattle weights could be a contributing factor, but within the last three years, there seems to be a clear push from cattle feeders to achieve the higher Prime grade,” say analysts with the Livestock Marketing Information Center (LMIC), in the latest Livestock Monitor. “Spreads between Prime and Choice have not been as low as they were in 2018 but have not been maintaining historical premiums either.”

For perspective, the premium for Prime was $20-$24 in September and October.

LMIC analysts note Prime supplies seemed to outpace the market as recently as 2018, when the Prime-Choice spread dropped as the percentage of carcasses grading Prime increased from 6.0% to 7.95% year over year. It averaged 8.60% last year.

The Prime market remains potentially fragile, though.

“Interest from retailers, such as Costco and Walmart to offer Prime cuts may be short-lived,” say LMIC analysts. “A U.S. recession and/or contraction in the cattle industry could put pressure on future demand for Prime-graded beef moving forward, if it no longer is price competitive or consumers are watching their wallets.”

Growing fears about the global spread of novel coronavirus hammered equity and futures markets Monday.

Live Cattle futures close an average of $2.29 lower, from $1.35 lower at the back to limit-down $3.00 toward the front.

Other than 5¢ higher in waning spot Jan, Feeder Cattle futures closed an average of $3.84 lower, from $3.17 lower toward the back to limit-down $4.50 toward the front.

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

Choice boxed beef cutout value was 90¢ lower Monday afternoon at $213.59/cwt. Select was 20¢ lower at $210.50.

Corn futures closed mostly 2¢ to 6¢ lower.

Soybean futures closed 4¢ to 5¢ lower through Jan ‘21 and then mostly 1¢ higher. 

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As alluded to earlier, equity markets sank Monday beneath the weight of increasing fears about the global spread of coronavirus and its potential economic impact, especially given that the epicenter is in China, a driver of the world’s economic growth.

The Dow Jones Industrial Average closed 453 points lower. The S&P 500 closed 51 points lower. The NASDAQ was down 175 points.

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“With total cattle inventories at or just past a cyclical peak, feedlot inventories will likely peak in the next few months,” says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly market comments. “However, average feedlot inventories are currently record large. After peaking last August then declining for two months, the 12-month moving average of feedlot inventories moved higher the last three months and is currently at 11.639 million head, record large for the current data series back to 1996.” He explains the 12-month moving average removes seasonality, allowing month-to-month comparisons of annual average feedlot inventories.

In reviewing Friday’s monthly Cattle on Feed report, Peel points out the 11.96 million head of cattle on Feed Jan. 1 (feedlots with 1,000 head or more capacity) were the most for the month since 2008. December placements of 1.83 million head were the most for the month since 2011 and December marketings of 1.83 million head represented the highest total for the month since 2010.

“Cattle slaughter is expected to decrease in 2020, including a slight year-over-year decline in steer and heifer slaughter and lower cow slaughter,” Peel says.  “However, large current feedlot inventories confirm that slaughter will be higher early in the year before decreasing in the second half of 2020. Total annual beef production is expected to be slightly higher year over year as heavier carcass weights offset lower slaughter. Beef production in the first half of the year will be higher on increased slaughter and larger carcass weights before lower slaughter pulls beef production down late in the year.”

Negotiated cash fed cattle trade ended up generally steady to firm last week, with live prices in the Southern Plains and Nebraska at $124/cwt. and at $124-$126 in the western Corn Belt. Dressed prices were at $199 in Nebraska and mostly $198-$199 in the western Corn Belt.

Cattle futures continued lower, to a lesser degree than the previous session, helped along by weaker outside markets.

Other than an average of 13¢ higher in three contracts, Live Cattle futures close an average of 24¢ lower.

Feeder Cattle futures closed an average of 69¢ lower. 

Wholesale beef values were weak to lower on light to moderate demand and moderate offerings, according to the Agricultural Marketing Service.

Choice boxed beef cutout value was 83¢ lower Friday afternoon at $214.49/cwt. Select was 50¢ lower at $210.70.

Corn futures closed mostly 3¢ to 5¢ lower.

Soybean futures closed mostly 5¢ to 8¢ lower through Nov ‘21 and then mostly 1¢ higher. 

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Growing fears about coronavirus and its potential impact on the fragile global economy pressured equity markets Friday.

The Dow Jones Industrial Average closed 170 points lower. The S&P 500 closed 30 points lower. The NASDAQ was down 87 points.

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Traders will likely view Friday’s monthly USDA Cattle on Feed report as neutral, given the fact that estimates basically mirrored pre-report expectations.

December placements in feedlots with 1,000 head or more capacity were 1.83 million head, which was 3.45% (+61,000 head) more year over year. That was 0.15% more than average estimates ahead of the report.

Marketings in December of 1.83 million head were 5.34% (+93,000 head) more than a year earlier. In terms of placement weights, 50.32% went on feed weighing 699 lbs. or less, 38.73% weighed 700-899 lbs. and 10.94% weighed more than 900 lbs.

Cattle on feed Jan. 1 of 11.96 million head were 2.29% (+268,000 head) more than the same date a year earlier. That was 0.19% more than average estimates ahead of the report.