WLI

Cattle futures closed mixed Tuesday, with modest pressure likely stemming from technicals, as well as near month-end and contract-end jockeying.

Live Cattle futures closed mixed, from an average of 25¢ higher across the front half of the board to an average of 27¢ lower.

Other than 2¢ higher in spot October and unchanged in Jan, Feeder Cattle futures closed an average of 30¢ lower amid sluggish trade.

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

Choice boxed beef cutout value was $2.65 higher Tuesday afternoon at $230.55/cwt. Select was $2.81 higher at $203.57.

Corn futures closed mostly fractionally higher to 1¢ higher.

Soybean futures closed fractionally lower to 2¢ lower through Jul ’20 and then fractionally higher to 2¢ higher. 

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Major U.S. financial indices edged Lower Tuesday, amid mixed economic news.

The Dow Jones Industrial Average closed 19 points lower. The S&P 500 closed 2 points lower. The NASDAQ was down 49 points.

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Fed cattle prices next quarter should be supported by the higher proportion of heifers on feed, says Matthew Diersen, a risk and business management specialist at South Dakota State University.

On the other side of the fence, he explains calf prices remain under pressure by the supply of feedlot-ready cattle, made larger as producers retain fewer replacements. But, that also means cyclically higher prices may be closer than originally anticipated.

“The slight increase in cow slaughter volume, coupled with fewer beef replacements, suggest that Jan. 1, 2020 cow inventory levels will be even with or slightly lower than year-earlier levels,” Diersen explains, in the latest issue of In the Cattle Markets. “The USDA baseline did not have a decline happening until 2022. A smaller 2020 calf crop would be supportive of prices next fall.”

The 5-area direct average fed steer price last week was $110.13/cwt. on a live basis, which was 40¢ higher than the previous week. The average dressed steer price of $174.56 was 25¢ higher.

Cattle futures mostly edged higher Monday, with firm cash trade and increasing wholesale beef values. 

Live Cattle futures closed an average of 45¢ higher.

Feeder Cattle futures closed an average of 25¢ higher except for unchanged to 30¢ lower in three contracts.

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

Choice boxed beef cutout value was $2.46 higher Monday afternoon at $227.90/cwt. Select was 92¢ higher at $200.76.

Corn futures closed mostly 2¢ lower.

Soybean futures closed 1¢ to 3¢ higher. 

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Major U.S. financial indices closed higher Monday, with follow-through buying, based on strong quarterly earnings reports and reports of progress on the first phase of a U.S.-China trade deal.

The Dow Jones Industrial Average closed 132 points higher. The S&P 500 closed 16 points higher. The NASDAQ was up 82 points.

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Cow slaughter and the mix of heifers on feed continue suggesting a cyclical plateau to the size of the nation’s cowherd.

“The number of heifers on feed (Oct. 1) was 4.4 million head, 2.3% higher year over year,” notes Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly market comments. “Over the last 20 years, heifers represented an average of 36.7% of feedlot inventories.” They represented 39.1% at the beginning of the month, he says, the highest percentage in more than 18 years. Peel notes the record low was in April 2015, when heifers represented 31.0% of the mix.

Further, Peel says beef cow slaughter so far this year is 2.4% more than last year. Total cow slaughter is up 3.0%, with dairy cow slaughter 3.5% higher.

“Total steer and heifer slaughter thus far in 2019 is up 1.0% year over year. Year-to-date steer slaughter is down 2.4% year over year, while heifer slaughter is up 7.4%…” Peel explains. “Modest increases in yearling and cow slaughter, combined with lower carcass weights, results in year-to-date beef production up 0.5% year over year. Beef production for 2019 is projected to total 27.1 billion lbs., 0.7% higher year over year. Beef production is expected to peak cyclically in 2020 with a slight year-over-year increase to 27.2 billion lbs.” 

So far this year, Peel says steer carcass weights averaged 4.6 lbs. less than last year, while heifer carcass weights averaged 5.4 lbs. less. Cow carcass weights are averaging 6.6 lbs. less. 

Considering Friday’s monthly Cattle on Feed report, Peel adds, “The 12-month moving average feedlot inventory reached 11.6 million head in August and has dropped slightly in the past two months. It is possible that feedlot inventories have peaked cyclically, although there is still a chance that average feedlot totals could push slightly higher into early 2020.”

Except for the Southern Plains, negotiated cash fed cattle trade remained undeveloped through Friday afternoon, based on USDA reports. Live sales in the Southern Plains on Thursday were at $110/cwt., which was $1 higher in Kansas and $2 higher in the Texas Panhandle.

Cattle futures strengthened Friday, supported by steady to higher cash trade, increasing wholesale beef values and higher Lean Hog futures.

Live Cattle futures closed an average of 94¢ higher.

Feeder Cattle futures closed an average of 86¢ higher.

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

Choice boxed beef cutout value was 18¢ lower Friday afternoon at $225.44/cwt. Select was 75¢ higher at $199.84.

Corn futures closed unchanged to fractionally lower.

Soybean futures closed 9¢ to 13¢ lower through Aug. 20 and then mostly 4¢ to 6¢ lower.

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Major U.S. financial indices closed higher Friday, amid strong quarterly earnings reports and chatter about progress being made on the first phase of a U.S.-China trade deal.

The Dow Jones Industrial Average closed 152 points higher. The S&P 500 closed 12 points higher. The NASDAQ was up 57 points.

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Markets will likely view Friday’s monthly Cattle on Feed report as neutral. Except for about 0.5% more placements than pre-report estimates, numbers reflected most expectations.

Placements in September for feedlots with 1,000 head or more capacity were 2.09 million head. That was 2.04% more (+42,000 head) than last year. As for placement weights: 37.02% weighed less than 700 lbs., 44.67% weighed 700-899 lbs. and 18.30% weighed 900 lbs. or more.

Marketings in September of 1.74 million head were 1.11% more (+19,000 head) than a year earlier.

Cattle on feed Oct. 1 of 11.28 million head were 1.07% less (-122,000 head) than the same time last year. There were 2.32% more (+100,000 head) heifers and heifer calves on feed.

Negotiated cash fed cattle trade developed in the Southern Plains on Thursday, with live sales at $110/cwt. That was $1 higher in Kansas and $2 higher in the Texas Panhandle. Although too few to trend, there were also some early dressed sales in the North at $174-$175, which was $1 higher than the low end of last week’s range.

Cattle futures softened a touch. Part of the pressure might have been defense ahead of Friday’s USDA monthly Cattle on Feed report. 

Except for 22¢ higher in spot Oct, Live Cattle futures closed an average of 33¢ lower.

Except for 20¢ higher in spot Oct, Feeder Cattle futures closed an average of 64¢ lower.

Wholesale beef values were sharply higher on Choice again and steady on Select, with fairly good demand and moderate offerings, according to the Agricultural Marketing Service.

Choice boxed beef cutout value was $2.34 higher Thursday afternoon at $225.62/cwt. Select was 15¢ higher at $199.09.

Although increasing seasonally, dressed fed cattle carcass weights continue to be lighter year over year, according to USDA’s weekly Actual Slaughter Under Federal Inspection report. The average dressed steer weight of 901 lbs. for the week ending Oct. 12 was 2 lbs. heavier than the previous week but 2 lbs. lighter than the same week last year. The average dressed heifer weight of 828 lbs. was 4 lbs. heavier than the prior week but 3 lbs. lighter than a year earlier.

Corn futures closed mostly 1¢ lower.

Soybean futures closed fractionally lower to 1¢ lower in the front three contracts and then fractionally higher to 5¢ higher.

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Major U.S. financial indices closed narrowly mixed Thursday. Although corporate quarterly earnings reports continue mostly positive, investors remain uncertain about economic growth.

The Dow Jones Industrial Average closed 28 points lower. The S&P 500 closed 5 points higher. The NASDAQ was up 66 points.

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The closely watched Rural Mainstreet Index (RMI) from Creighton University rose above growth neutral this month, but rural bankers’ economic expectations fell to the lowest level in two years.

Specifically, the RMI increased to 51.4 in October from 50.1 in September. Although still weak, it was the highest level since June and marked the third time in the past four months that the overall index rose above growth neutral.

“Federal agriculture crop support payments and somewhat higher grain prices boosted the Rural Mainstreet Index slightly,” says Ernie Goss, PhD, Jack A. MacAllister Chair in Regional Economics at Creighton University’s Heider College of Business. Even so, he adds that 73% of bank CEOs reported continuing negative impacts from the trade war.

Bank CEO expectations for the economy six months out, slumped to 36.5 from September’s 42.9, and continues to indicate a very negative economic outlook among bankers, according to the associated confidence index.

“This is the lowest economic confidence we have recorded in two years,” says Goss. “The trade war with China and the lack of passage of the USMCA (NAFTA’s replacement) are driving confidence and growth lower for most areas of the region.”

The RMI is a unique index covering 10 regional states, focusing on approximately 200 rural communities with an average population of 1,300. It represents an early snapshot of the economy of rural agriculturally and energy-dependent portions of the nation.