WLI

As expected, negotiated cash fed cattle trade remained undeveloped through Tuesday afternoon.

Cattle futures closed mostly narrowly lower, amid light holiday trade.

Except for 2¢ to 60¢ higher in three contracts, Live Cattle futures closed an average of 26¢ lower.

Except for 2¢ higher in Sep, Feeder Cattle futures closed an average of 13¢ lower.

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

Choice boxed beef cutout value was 24¢ lower Tuesday afternoon at $209.42/cwt. Select was $3.29 lower at $202.12.

Corn futures closed fractionally lower to 1¢ lower.

Soybean futures closed 1¢ to 3¢ higher (mostly 1¢ higher).

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Major U.S. financial indices closed higher Tuesday, recovering about half of the previous session’s losses.

The Dow Jones Industrial Average closed 76 points higher. The S&P 500 closed 9 points higher. The NASDAQ was up 26 points.

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“The U.S. economy will enter 2020 decisively split, powered by a resilient and confident consumer, but hamstrung by a risk-averse business sector that has stopped investing,” say analysts with CoBank Knowledge Exchange Division (CKED), in that organization’s 2020 outlook. “And now that the stimulus effects from the 2017 tax reform and the 2018 spending bill have faded, the expansion will show its age, losing steam in the coming year.”

Depending on which data you assess, domestic economic growth, as measured by Gross National Product (GNP) will continue to grow at a slow pace in 2020.

As an example, in its forecast for the U.S. economy, the Conference Board pegs real annual GDP at 2.0% in 2020, compared to expectations of 2.3% in 2019.

However, according to the Federal Reserve Bank of St. Louis, “The consensus of professional forecasters is that real GDP growth will dip below 2% in 2020.

Real GDP growth in 2020 could rise above 2% if the economy’s headwinds—trade disputes and slowing global growth—were to diminish.”

Hopefully part of those headwinds will lose some force with the announced phase-one trade deal between the U.S. and China.

The 5-area direct weighted average price for steers last week was $122.28/cwt. on a live basis and $195.22 in the beef. Week to week, that was $1.92 higher and $3.37 higher, respectively.

Cattle futures hovered on either side of even Monday, amid light holiday trade.

Live Cattle futures closed narrowly mixed, from an average of 16¢ lower to an average of 24¢ higher (60¢ higher in nearly spent spot Dec).

Feeder Cattle futures closed narrowly mixed, from an average of 25¢ lower across the front half of the board to an average of 37¢ higher.

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

Choice boxed beef cutout value was 70¢ higher Monday afternoon at $209.66/cwt. Select was 84¢ higher at $205.41.

Corn futures closed fractionally lower to 1¢ lower through Mar ’21 and then mostly fractionally higher.

Soybean futures closed 8¢ to 11¢ higher through Sep ’20 and then mostly 3¢ to 5¢ higher. Presumably, support included more positive chatter about the Phase-one U.S.-China trade deal being signed as early as next week.

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Major U.S. financial indices closed lower Monday, with little news and likely year-end profit taking and positioning.

The Dow Jones Industrial Average closed 183 points lower. The S&P 500 closed 18 points lower. The NASDAQ was down 60 points.

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Between a likely smaller calf crop and slightly less per capita domestic beef availability, the Livestock Marketing Information Center (LMIC) projects cash fed cattle prices in 2020 to be 1-4% higher than this year, with most of the gains coming in the second half of the year.

“A smaller forecasted spring-born 2020 calf crop and a normal summer growing season sets the stage for next year’s fall-weaned calves to price near to slightly above 2017’s prices,” LMIC analysts say.

That gibes with early-release tables from USDA’s Long-Term Agricultural Projections (to-2029), which will be published in February.

USDA projects the annual average 5-area direct fed steer price in 2020 at $116.00/cwt., compared to $115.50 this year. The price in 2021 is forecast at $120.93.

Likewise, USDA projects the annual feeder steer price in 2020 (basis Oklahoma City) at $141.00, compared to $140.50 this year. The average price in 2021 is forecast at $151.11.

Negotiated cash fed cattle trade was yet to be fully developed through Friday afternoon, but early prices were higher. The Texas Cattle Feeders Association reported its members trading at $122/cwt., which was $2 higher than the previous week. Likewise, AMS reported live sales in Kansas at $122, which was $2 higher than the prior week. In Nebraska, dressed sales were mostly $3 higher at mostly $196. Although too few to trend, early dressed sales in the western Corn Belt were $3-$4 higher at $195-$196.

Stronger cash undertones helped Cattle futures maintain most of the gains from the previous session.

Except for 10¢ lower in near Feb and unchanged in Jun, Live Cattle futures closed an average of 16¢ higher.

Except for 10¢ higher in spot Jan, Feeder Cattle futures closed an average of 22¢ lower.

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

Choice boxed beef cutout value was $1.19 lower Friday afternoon at $208.96/cwt. Select was 68¢ lower at $204.57.

Corn futures closed 1¢ higher through Sep ’20 and then mostly unchanged to fractionally lower.

Soybean futures closed 2¢ to 8¢ lower through Jan ’21 and then fractionally lower.

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Major U.S. financial indices closed narrowly mixed Friday, with limited market news.

The Dow Jones Industrial Average closed 23 points higher. The S&P 500 closed fractionally higher. The NASDAQ was down 15 points.

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Lower calf and feeder cattle prices, along with strengthening fed cattle prices appear to be improving economic returns to the feedlot, according to the most recent Historical and Projected Kansas Feedlot Net Returns. Keep in mind that projections are on a cash to cash basis, without accounting for any price risk management, carcass premiums, etc.

Projections for fed steer and heifer net returnssold in October were -$145.12 and -$82.95 per head, respectively. Losses declined in November to -$69.79 for steers and -$22.21 for heifers.

For the next nine months, though, projections are for steers to be in the black six months, from $52.39 per head in May to $149.67 in December. Negative net returns range from -26¢ in July to -$24.87 in April.

Similarly, fed heifers are projected  to return $23.43 (April) to $125.36 (December) per head for the next six months, followed by negative returns of -$2.21 (July) to -$21.37 (August).

Hopes grew Thursday for higher weekly cash fed cattle prices as Cattle futures, especially Feeder Cattle, climbed higher, apparently on the backs of non-commercial traders’ continued positioning ahead of support that could come with a U.S.-China trade deal. The next round of winter predicted to hit cattle feeding areas later this week was likely also supportive.

Live Cattle futures closed an average of 71¢ higher.

Feeder Cattle futures closed an average of $1.49 higher.

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

Choice boxed beef cutout value was $1.42 lower Thursday afternoon at $210.15/cwt. Select was 61¢ higher at $205.25.

Corn futures closed mostly fractionally higher to 1¢ higher.

Soybean futures closed mostly 1¢ higher.

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Major U.S. financial indices closed higher Thursday with mounting optimism about the phase-one trade deal between the U.S. and China, as well as reports of strong holiday retail sales.

The Dow Jones Industrial Average closed 105 points higher. The S&P 500 closed 16 points higher. The NASDAQ was up 69 points.

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Frozen beef supplies continue to trend lower year over year, according to USDA’s latest monthly Cold Storage report.

Total beef in cold storage Nov. 30 was 480.38 million lbs., which was 3% more than the previous month but 7% less than a year earlier.

Total frozen pork supplies were record large for the month of November at 574.86 million lbs., which was 6% less than the previous month but 13% more than a year earlier.

Total red meat supplies in freezers were 2% less than the previous month, but 2% more than the prior year.

Total frozen poultry supplies were 10% less than the previous month, but 1% more than last year.

Merry Christmas to All!

Cattle futures edged mostly higher amid light holiday trade Tuesday.

Except for unchanged in Jun, Live Cattle futures closed an average of 18¢ higher.

Except for 5¢ lower in Mar and Oct, Feeder Cattle futures closed an average of 12¢ higher.

Corn futures closed mostly fractionally lower to 1¢ lower.

Soybean futures closed 2¢ to 3¢ higher.

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Major U.S. financial indices closed little changed in Tuesday’s holiday-shortened session.

The Dow Jones Industrial Average closed 36 points lower. The S&P 500 closed fractionally lower. The NASDAQ was up 7 points.

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While domestic beef demand remains relatively flat over recent times, Elliott Dennis, livestock marketing economist at the University of Nebraska—Lincoln says export demand for U.S. beef increased 100% since 2010, compared to a 50% increase in export demand for other U.S. animal proteins.

 “As export demand for U.S. beef grows, this signals to expand production with a yield and quality grade product that each individual country demands. Likewise, certain countries demand/require the livestock, and cattle in particular, be raised, treated, and housed in certain ways,” Dennis explains, in the most recent issue of In the Cattle Markets. “For example, the E.U requires hormone-free beef. Other countries, such as China, require similar regulations. For cattle to be ‘export eligible’ they need to meet certain requirements, many of which arguably have little to do with the meat quality (i.e. yield and quality grade), flavor, and tenderness. Just as the industry has adjusted to meet domestic consumers demand for marbled products, so the industry could adopt similar practices to make more cattle export eligible.”

Although premiums vary by month, Dennis explains they’re around $20/cwt. for non hormone treated cattle (NHTC—never treated with hormones) and $25 for all natural (never treated with hormones or antibiotics).

“Now, whether it is profitable to chase NHTC and All Natural premiums depends on each operation’s structure, strategy, and available resources,” Dennis says. “Other protein industries faced similar issues and opportunities and have responded. The pork industry changed in a dramatic fashion this past year by removing all ractopamine (i.e. hormone) from pork production making hogs now China export eligible. Granted, China is facing African Swine Fever (ASF) and massive shortage of pork, but the premiums and market share opportunity was large enough to switch production practices. The change in the beef industry will not be as dramatic as the pork industry for a variety of reasons, but moving forward, some change in production practices is likely if the industry is going to keep up with export demand that has been sharply increasing over the last 10 years.”