WLI

Week to week on Monday, the 5-area direct average steer price was $120.36/cwt. on a live basis, which was $1.19 higher than the previous week. In the beef, the average steer price was $3.85 higher at $191.85.

More placements than expected in Friday’s monthly Cattle on Feed report (see below) pressured Cattle futures to start the week; that and sluggish holiday trade.

Live Cattle futures closed narrowly mixed but mostly lower, from 35¢ lower to 17¢ higher.

Feeder Cattle futures closed an average of 52¢ lower.

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

Choice boxed beef cutout value was $1.87 higher Monday afternoon at $211.57/cwt. Select was $3.61 higher at $204.64. The Choice-Select spread was the narrowest since March at $6.93.

Corn futures closed fractionally higher to 1¢ higher.

Soybean futures closed mostly 2¢ to 4¢ higher through Jly ’21 and then mostly 1¢ lower.

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Major U.S. financial indices closed higher Monday, supported by reports that China will implement reduced temporary import tariffs on a range of U.S. goods, including frozen pork. Apparently, the announcement has to do with sagging economic growth in that country, rather than the recently announced phase-one trade agreement between the two nations.

The Dow Jones Industrial Average closed 96 points higher. The S&P 500 closed 2 points higher. The NASDAQ was up 20 points.

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“Higher placements the last three months have rebuilt feedlot inventories going into 2020,” says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly market comments. “Feedlots will be a bit front loaded in the first quarter of the new year and marketings are expected strong against the April Live Cattle futures contract. Of course, weather often impacts cattle performance and the timing of feedlot production this time of the year and may affect feedlot marketings through the winter.”

According to Friday’s monthly Cattle on Feed report, November placements in feedlots with 1,000 head or more capacity were 2.09 million head, which was 4.86% more than the prior year.

Peel notes placements weighing less than 600 lbs. were 12.7% more year over year, likely reflecting a delay in the fall calf run, combined with slow development of wheat pasture in the Southern Plains. 

“Placements were sharply higher year over year in South Dakota (160%), Colorado (132%) and Oklahoma (112%),” Peel says. Placements in Texas were 3% higher; 4% higher in Iowa.

The 12.03 million head on feed inventory Dec. 1 were 2.49% more than a year earlier. According to Peel, the annual average feedlot inventory this year was 11.62 million head, the largest 12-month moving average since the current data series began in 1996.

Negotiated cash fed cattle trade was $1 higher at $120/cwt. in Kansas through Thursday afternoon. Although too few to trend, live sales were generally $1-$2 higher at $120-$121 in Nebraska and at $121 in the western Corn Belt. Early dressed sales were $2-$4 higher at $192.

Cattle futures were mixed on Thursday but closed mostly slightly higher, supported by stronger cash prices and sluggish trade.

Live Cattle futures closed mixed, from an average of 34¢ lower across the front four contracts to an average of 27¢ higher. 

Other than 7¢ lower in Mar, Feeder Cattle futures closed an average of 40¢ higher (7¢ to 85¢ higher).

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

Choice boxed beef cutout value was 58¢ lower Thursday afternoon at $208.99/cwt. Select was also 58¢ lower at $200.99.

Corn futures closed fractionally mixed through Jul ’21 and then unchanged to 4¢ higher.

Soybean futures closed 3¢ to 4¢ lower through Aug ’20 and then mostly 1¢ lower.

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Major U.S. financial indices closed higher Thursday, as investors seemed to ignore mixed economic news and the House vote to impeach president Trump.

The Dow Jones Industrial Average closed 137 points higher. The S&P 500 closed 14 points higher. The NASDAQ was up 59 points.

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The U.S. House of Representatives approved implementing legislation for the U.S.-Mexico-Canada Agreement (USMCA), by a vote of 385-41.

“Ratification of USMCA is an important step in solidifying trade relations with Mexico and Canada, which are critical destinations for U.S. pork, beef and lamb,” says Dan Halstrom, president and CEO of the U.S. Meat Export Federation. “This agreement will bolster the United States’ position as a reliable supplier to two leading markets that currently account for about one-third of all U.S. red meat exports.”

“Today was a crucial win for all U.S. beef producers and a reassurance that U.S. beef will continue to have duty-free access to Canada and Mexico,” says Jennifer Houston, president of the National Cattlemen’s Beef Association (NCBA).

Now, it’s up to the Senate to pass the legislation and President Trump to approve.

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Red meat and pork production were record high in November at 4.74 billion lbs., which was 1% more than the previous year, according to USDA’s monthly Livestock Slaughter report. For January through November, it was 3% more at 50.3 billion lbs.

Beef production in November of 2.30 billion lbs. was 1% less than the previous year. Cattle slaughter of 2.77 million head was also 1% less. Through November, beef production was 129.3 million lbs. more (+0.50%) than the same period last year at 24.89 billion lbs.

More recently, average steer carcass weights for the week ending Dec. 7 were 5 lbs. lighter than the previous week at 906 lbs., according to USDA’s most recent weekly Actual Slaughter Under Federal Inspection report. That was 10 lbs. heavier than the prior year. The average heifer carcass weight of 840 lbs. was even with the prior week and 5 lbs. heavier than the prior year. Total cattle slaughter for the week of 682,077 head was the most in more than two years. Fed cattle slaughter of 536,210 head was the most since June. Total beef production for the week was 564.8 million lbs., the most in more than two years.

Pork production totaled 2.43 billion lbs. in November, up 3% from the previous year. Hog slaughter of 11.3 million head was 3% higher year over year. For January through November, pork production was 5% more than the same period last year.

Prospects for negotiated cash fed cattle prices got a shot in the arm from the weekly Fed Cattle Exchange auction Wednesday. One lot of Texas steers—268 head—sold out of a total offering of 878 head, for a weighted average price of $120/cwt., which was $1 higher than last week’s country trade in the region.

Similarly, Choice steers and heifers sold $1.00-$1.50 higher at the fat auction in Tama, IA. There were 305 Ch 2-4 steers weighing an average of 1,453 lbs. and bringing an average price of $120.54, which was at the upper end of the previous week’s country price.

Cattle futures wavered, amid the lack of cash direction and sluggish overall trade.

Other than 2¢ higher in spot Dec, Live Cattle futures closed an average of 25¢ lower. 

Other than 7¢ higher toward the back, Feeder Cattle futures closed an average of 52¢ lower.

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

Choice boxed beef cutout value was $3.24 lower Wednesday afternoon at $209.57/cwt. Select was $1.90 lower at $201.57.

Corn futures closed 1¢ to 3¢ lower.

Other than fractionally lower in the front four contracts, Soybean futures closed 1¢ to 4¢ higher.

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Major U.S. financial indices closed narrowly mixed Wednesday, amid mixed news and continuing optimism surrounding the presumed phase-one U.S.-China trade deal.

The Dow Jones Industrial Average closed 27 points lower. The S&P 500 closed 1 point lower. The NASDAQ was up 4 points.

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Although narrowing recently, analysts with the Livestock Marketing Information Center (LMIC) point out the Choice-Select spread was $19-$27/cwt. from June through November, well above the previous year and the five-year average. They explain the spread typically begins to narrow following peak summer beef demand around Independence Day.

According to LMIC, in the latest Livestock Monitor, 70.9% of carcasses graded Choice through November, which was 1% less than the prior year. Prime-grading carcasses were higher, though, at 8.5%.

“Interestingly, total cattle slaughter through the first week of December is 1.4% above last year at 31.1 million head. Slaughter data does not indicate that there is a lack of cattle available, but there is a lack of Choice grade cattle,” say LMIC analysts. “A factor contributing to the lower available supplies of Choice product are cattle graded for branded programs. Branded programs typically include higher quality-grade cattle, which may contain cattle that grade Choice and/or Prime.”

More specifically, quality-based brands commonly target carcasses that grade in the upper two thirds of Choice. So far this year, USDA certified 31.5% of fed cattle for that category, according to LMIC. That’s 7.4% more than last year.

“Branded boxed beef prices have been commanding an average of $5.30/cwt. above the Choice boxed beef price, indicating that there may be more Choice product going into channels for branded products,” say LMIC analysts. “The relatively higher price for branded boxed beef products over Choice products, and more cattle qualifying for branded programs, may be contributing to lower availability in the Choice category.”