WLI

Wholesale beef values bounced higher Tuesday on good demand and light to moderate offerings, according to the Agricultural Marketing Service.

Choice boxed beef cutout value was $2.21 higher in the afternoon at $212.76/cwt. Select was $2.07 higher at $210.30.

That and stronger Lean Hog futures helped Live Cattle futures close an average of 22¢ higher.

Other than unchanged and 10¢ higher in the back two contracts, Feeder Cattle futures closed an average of 12¢ lower.

Corn futures closed fractionally lower to 1¢ lower.

Soybean futures closed fractionally lower to 1¢ lower.

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Major U.S. financial indices closed mixed and little changed Tuesday, with better than expected quarterly earnings from the likes of J.P Morgan Chase, but skittishness over Wednesday’s scheduled signing of the phase-one trade deal between the U.S. and China.

The Dow Jones Industrial Average closed 32 points higher. The S&P 500 closed 4 points lower. The NASDAQ was down 22 points.

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“Beef exports are generally expected to be strong in 2020,” says Josh Maples, Extension livestock economist at Mississippi State University. “The latest World Agricultural Supply and Demand Estimates (WASDE) projection for 2020 beef exports is 3.3 billion lbs., which would be a new record and about 9% above 2019 levels.”

Although U.S. beef exports in 2019 look to be less year over year—4.6% less for January through November—in the latest issue of In the Cattle Markets, Maples emphasizes it was not a weak year.

“The 3.02 billion lbs. of 2019 beef exports projected by WASDE would trail only the 3.16 billion lbs. exported in 2018,” Maples says.

Heading into 2020, Maples notes the bevy of trade deals, either recently signed or in progress and ultimately signed, will add support.

As well, both African Swine Fever and the horrendous fires in Australia promise to impact the global flow of animal proteins. 

With respect to the latter, in his weekly market comments, Derrell Peel, Extension livestock marketing specialist at Oklahoma State University says, “Wildfires (in Australia) have burned over 15 million acres, an area the size of West Virginia, and are not yet under control as of Jan. 10. Roughly 9% of the Australian cattle herd is in areas significantly impacted by the fires; another 11% are in regions partially impacted by the fires.”

Drought-forced herd liquidation pushed last year’s Australian beef production and exports higher than previously projected, with female slaughter reaching record proportions of total cattle slaughter, according to Peel. This year, he says Australian beef production is forecast to decrease nearly 15% year over year to the lowest level since 2010. Australian exports are projected to decline by more than 19%, compared to 2019.

“It is mid-summer in Australia and the drought continues unabated with severe rainfall deficits and above average temperatures,” Peel explains. “Additional herd liquidation is likely if conditions do not improve. In any event, Australian cattle and beef production will be reduced for the foreseeable future and rebuilding, whenever it can begin, will take several years.”

Negotiated cash fed cattle prices ended last week mainly steady on a live basis at mostly $124/cwt. and mostly $1-$2 higher in the beef at mainly $200.

Cattle futures basically gave back gains from the previous session on Monday, likely pressured by nearby Lean Hogs, as well as the mostly steady, rather than higher cash fed cattle prices.

Live Cattle futures closed an average of 30¢ lower (2¢ lower to 87¢ lower in spot Feb).

Feeder Cattle futures closed an average of 99¢ lower (45¢ lower at the back to $1.60 lower toward the front).

Wholesale beef values were firm to higher on moderate to good demand and moderate offerings, according to the Agricultural Marketing Service.

Choice boxed beef cutout value was 51¢ higher Monday afternoon at $210.55/cwt. Select was $1.68 higher at $208.23.

Corn futures closed 2¢ to 3¢ higher through Mar ’21 and then mostly 1¢ higher.

Soybean futures closed mostly 3¢ to 6¢ lower

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Major U.S. financial indices closed higher Monday, helped along by news that the U.S. will remove China from its list of currency-manipulating countries, buoying optimism for the phase-one trade deal between the two nations, which is scheduled to be signed Wednesday.

The Dow Jones Industrial Average closed 83 points higher. The S&P 500 closed 22 points higher. The NASDAQ was up 95 points.

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More crossbreeding by dairy farms—dairy cows bred to beef bulls—may shift fewer calves going into veal production and more back toward beef, according to the Livestock Marketing Information Center (LMIC).

“So far, the crossbreeding trend has been rather short-term and modest; on an annualized basis removing 35,000 to 40,000 head from calf slaughter and adding those animals to feedlots,” say LMIC analysts, in the latest Livestock Monitor. “But it may gain momentum. Currently, the LMIC forecasts record small annual calf slaughter levels by 2022.”

LMIC points to the number of calves being harvested for veal production, compared to that in prior years, given that virtually all veal in the U.S. comes from dairy calves.

For the first 14 weeks of 2019, LMIC analysts explain Federally Inspected (FI) calf slaughter was above the same weeks a year earlier. Year-over-year calf slaughter levels fluctuated over the next 28-weeks and then declined the last 10 weeks.

“Some of that 10-week period of declines was due to fewer dairy cows in the U.S….it would represent only a 2,000 to 3,000 head drop in calf slaughter,” LMIC analysts say.

Although it’s unlikely there will be a wholesale shift by dairy producers to churn out Beef X Dairy crossbred steers, LMIC analysts say, “Some regions of the U.S. could see stronger preferences for this strategy than others. Overall, the amount of interest by dairy producers is mounting, because it pencils out nicely for those with the reproductive management skills to capitalize on higher crossbred calf prices.”

Negotiated cash fed cattle trade was light to moderate on moderate demand in Nebraska and the western Corn Belt through Friday afternoon, but there were too few transactions to trend. Early dressed sales in both regions were at $200/cwt. Early live sales in the western Corn Belt were at $124-$126.

Hints of steady to higher cash pries and strong fundamentals helped lift Cattle futures Friday.

Live Cattle futures closed an average of 32¢ higher.

Feeder Cattle futures closed an average of 96¢ higher.

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

Choice boxed beef cutout value was 8¢ higher Friday afternoon at $210.04/cwt. Select was 13¢ lower at $206.55.

Corn futures closed mostly 2¢ higher.

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

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Major U.S. financial indices closed lower Friday, amid less robust job and wage growth than the trade expected.

Total nonfarm payroll employment rose by 145,000 in December, according to the U.S. Bureau of Labor Statistics. That left the unemployment rate unchanged at 3.5%.

Average hourly earnings for all employees on private nonfarm payrolls in December rose by 3¢ to $28.32. Over the last 12 months, average hourly earnings increased by 2.9%.

The Dow Jones Industrial Average closed 133 points lower. The S&P 500 closed 9 points lower. The NASDAQ was down 24 points.

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The latest World Agricultural Supply and Demand Estimates (WASDE) reduced forecast 2020 beef production on lighter expected carcass weights. However, quarterly beef production was increased in the first half of the year and reduced in the second half of the year due to higher-than-expected cattle placements in late 2019 and a reduced placement forecast for early 2020.

WASDE estimates 2020 beef production at 27.44 billion lbs., which is 75 million lbs. less (-0.27%) than the December forecast. That would be 289 million lbs. more (+1.06%) than in 2019.

Anticipated first-quarter cattle prices were raised, reflecting current early-year price strength. Anticipated average cash fed steer prices (five-area direct) for 2020 are forecast at $125/cwt. in the first quarter, $118 in the second, $112 in the third and $114 in the fourth. The annual average price for 2020 is projected at $117.50, which is 50¢ more than the previous month’s estimate and 72¢ more than the estimated average in 2019.

Total red meat and poultry production for 2020 was estimated at 108.15 billion lbs., which would be 2.94 billion lbs. more (+2.79%) than in 2019.

Cattle futures closed narrowly mixed on Thursday, capped by pressure from Lean Hogs and the lack of cash direction. Perhaps there was also some hesitation over what Friday’s monthly World Agricultural Supply and Demand Estimates could say about feed prices.

Live Cattle futures closed an average of 26¢ higher.

Feeder Cattle futures closed narrowly mixed, from an average of 9¢ higher across the front half of the board to an average of 19¢ lower.

Wholesale beef values were steady to firm on moderate to fairly good demand and heavy offerings, according to the Agricultural Marketing Service.

Choice boxed beef cutout value was 46¢ higher Thursday afternoon at $209.96/cwt. Select was 15¢ higher at $206.68.

Corn futures closed mostly fractionally mixed to 1¢ lower.

Soybean futures closed mostly 4¢ lower.

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Major U.S. financial indices posted another day of strong gains Thursday, led by tech stocks.

The Dow Jones Industrial Average closed 211 points higher. The S&P 500 closed 21 points higher. The NASDAQ was up 74 points.

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Agricultural producer sentiment declined in December, driven by the outlook for current economic conditions, according to the Purdue University/CME Group Ag Economy Barometer.

Specifically, the overall index declined 3 points from November to a reading of 150, while the Index of Current Conditions—one of the sub-indexes—declined 12 points to a reading of 141. Conversely, the index of Future Expectations increased 2 points to a reading of 155.

“These results are indicative of the variability in economic conditions on U.S. farm operations, with some farms performing better than expected and others worse than expected,” says James Mintert, the barometer’s principal investigator and director of Purdue University’s Center for Commercial Agriculture.

The Ag Economy Barometer is based on a mid-month survey of 400 U.S. crop and livestock producers.

Producers were asked whether their farm’s 2019 financial performance was better than expected, as expected, or worse than their initial budget projections. Just over half (52% percent) said their initial projections matched their farm’s financial performance; 30% said it was worse; and 19% said it was better than expected.

To better assess the level of financial stress among U.S. farms, November and December surveys asked producers whether they expected their farm’s 2020 operating loan to be larger, about the same, or smaller than in 2019.

Approximately one out of five respondents in the two surveys expected to have a larger operating loan in 2020 compared to 2019. Of those, three out of 10 indicated the reason was unpaid operating debt from 2019. Carrying over unpaid operating debt from year to year is an indicator of financial stress, and these results suggest that about 6% of farms surveyed for the Ag Barometer in late 2019 were experiencing financial stress.

Producers remained relatively optimistic about the ongoing trade dispute between the U.S. and China being resolved soon and to the benefit of U.S. agriculture.

In December, 54% of respondents stated they expect a resolution soon, which was 3% less than the previous month, but the second most positive response since last March.

The percentage of producers who expect a favorable outcome to U.S. agriculture declined 8 points to 72%. Since the question was first posed in March 2019, more than 70% of respondents have, on average, indicated they expect a favorable outcome to the trade dispute for U.S. agriculture.

Negotiated cash fed cattle trade remained undeveloped through Wednesday afternoon, based on USDA reports. Early indications are for steady to higher prices again this week, with the expectation of a bit snugger harvest-ready supplies.

There were 525 head offered in the year’s first weekly Fed Cattle Exchange auction, and no takers. Two lots of steers from Texas and Kansas were passed on at $123.00/cwt. and $124.25, respectively.

Cattle futures mostly rebounded from the previous session’s softer tones, led by Feeder Cattle.

Except for 17¢ and 32¢ lower in the front two contracts, Live Cattle futures closed an average of 32¢ higher.

Feeder Cattle futures closed an average of 91¢ higher (40¢ to $1.40 higher).

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

Choice boxed beef cutout value was 6¢ lower Wednesday afternoon at $209.50/cwt. Select was 29¢ lower at $206.53.

Corn futures closed mostly unchanged to fractionally higher.

Soybean futures closed 1¢ to 3¢ higher through Mar ’21 and then mostly fractionally higher.

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Major U.S. financial indices closed higher Wednesday, amid increasing confidence that the tensions between the U.S. and Iran are easing. For instance, West Texas Intermediate crude oil futures (CME) closed $2.71 to $3.09 lower through the front six contracts.

The Dow Jones Industrial Average closed 161 points higher. The S&P 500 closed 15 points higher. The NASDAQ was up 60 points.

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Although trailing the previous year’s record pace, U.S. beef export value through November was the second highest on record, according to data released by USDA and compiled by the U.S. Meat Export Federation (USMEF).

For January through November, beef exports were 3% less in both volume of 1.21 million metric tons (mt) and value of $7.4 billion. Year over year, November beef exports were 4% less in volume (108,662 mt) and 7% less in value ($658.1 million).

Among highlights, U.S. beef exports to Korea were on a record pace, up 6% in volume through November and up 6% in value at $1.69 billion. U.S. share of Korea’s chilled beef imports reached 62%, up from 58% in 2018. U.S. beef accounted for 51% of Korea’s total beef and beef variety meat imports and more than one-third of Korea’s total beef consumption.

Beef exports to Taiwan were also on a record pace, for the fourth consecutive year. Through November, U.S. exports to that nation were 8% more than the previous year for volume and value was 4% higher at $513.3 million.

However, reduced exports to Japan—the largest destination for U.S. beef exports—offset gains made in Korea and Taiwan.

Through November, exports to Japan were 6% less year over year in volume and 7% less in value at $1.8 billion. Tariff relief, beginning Jan. 1 provides more optimism for 2020.

“The Japanese market performed extremely well for U.S. beef in 2018, even though we were already facing a tariff rate disadvantage versus Australia,” says Dan Halstrom, USMEF president and CEO. “More competitors saw tariff rate cuts in 2019 under the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), which further tilted the playing field against U.S. beef. For example, Canada’s beef exports to Japan increased 57% last year. So the rate cuts Japan recently implemented for U.S. beef are long overdue, and USMEF is working aggressively with U.S. exporters and the Japanese trade to capitalize.”

Beef export value per head of fed slaughter was $307.55 in November, down 15% from a year earlier. Through November, per-head U.S. export value averaged $308.74, down 4%.