WLI

Negotiated cash fed cattle trade remained mostly undeveloped through Wednesday afternoon, with too few transactions to trend in any region.

There were 1,068 head offered in the weekly Fed Cattle Exchange auction, but no takers.

Midwestern fat auction prices were less than encouraging: $1-$2/cwt. lower at Sioux Falls, a touch lower at Tama. Yet, logic suggests packers need to be somewhat aggressive given the upcoming mid-week holidays.

Despite the lack of cash direction, Cattle futures closed higher Wednesday.

Live Cattle futures closed an average of 60¢ higher.

Feeder Cattle futures closed an average of 78¢ higher (47¢ higher at the back to $1.15 higher toward the front).

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

Choice boxed beef cutout value was $2.84 lower Wednesday afternoon at $218.65/cwt. Select was $1.63 lower at $203.72.

Corn futures closed 4¢ to 5¢ lower through Jul ’20 and then mostly 1¢ to 2¢ lower.

Soybean futures closed 5¢ to 7¢ lower through Nov. ’20 and then 3¢ to 4¢ lower.

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Major U.S. financial indices edged higher on Wednesday. Support included the Federal Reserve’s decision to leave interest rates unchanged. Further, economic projections of Federal Reserve Board members and Federal Reserve Bank presidents suggest little to no change next year.

“Information received since the Federal Open Market Committee (FOMC) met in October 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 strong 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%. Market-based measures of inflation compensation remain low; survey-based measures of longer-term inflation expectations are little changed.”

The Dow Jones Industrial Average closed 29 points higher. The S&P 500 closed 9 points higher. The NASDAQ was up 37 points.

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U.S. Senator Deb Fischer (R-Neb.), a member of the Senate Agriculture Committee, introduced the Real MEAT Act on Tuesday to end deceptive labeling practices for alternative protein products. The bill would clarify the definition of beef for labeling purposes, eliminate consumer confusion resulting from misbranding, and ensure that the federal government is able to enforce the law. 

“Beef is derived from cattle—period. Under USDA, beef undergoes a rigorous inspection and labeling process, but plant-based protein products that mimic beef and are sometimes labeled as beef are overseen by the FDA instead. These products are not held to the same food safety and labeling standards as beef. Americans deserve to know what’s on their dinner plate. The Real MEAT Act will protect consumers from deceptive marketing practices and bring transparency to the grocery store,” Fischer explains.

Senator Fischer cited a study by the National Cattlemen’s Beef Association (NCBA) that found 55% of consumers did not understand that “plant-based beef” wasn’t beef at all. This bill would help to clear the confusion by codifying a definition of beef for labeling purposes and allowing the USDA to take action against misbranded products, she explains.

“It’s clear that fake-meat companies are continuing to mislead consumers about the nutritional merits and actual ingredient composition of their products,” says NCBA president Jennifer Houston. “We commend the efforts of Senator Fischer on introducing this legislation, which would end deceptive labeling of fake meat products and allow cattle producers to compete on a level playing field.”

The Senate bill is a companion to H.R. 4881, which was introduced by U.S. Representatives Roger Marshall (R – 1st Dist., Kansas) and Anthony Brindisi (D – 22nd Dist., N.Y.) in October.

Cattle futures closed narrowly mixed for the second consecutive session on Tuesday, amid seasonally declining wholesale beef prices and awaiting cash direction.

Live Cattle futures closed from an average of 22¢ lower across the front half of the board to an average of 11¢ higher.

Other than unchanged and 5¢ lower in Sep and Oct, Feeder Cattle futures closed an average of 26¢ higher.

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

Choice boxed beef cutout value was $2.15 lower Tuesday afternoon at $221.49/cwt. Select was $1.14 lower at $205.35.

Corn futures closed mostly 1¢ to 2¢ higher.

Soybean futures closed mostly 1¢ to 3¢ higher.

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Major U.S. financial indices edged lower on Tuesday. Pressure was broadly attributed to positioning ahead of the U.S. tariff increase on Chinese imports scheduled to begin this weekend.

The Dow Jones Industrial Average closed 27 points lower. The S&P 500 closed 3 points lower. The NASDAQ was down 5 points.

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U.S. ratification of the United States-Mexico-Canada Trade Agreement (USMCA) took a major step forward Tuesday with agreement between the U.S. Trade Representative and House democrats, who had refused to schedule a vote unless there were revisions.

“USMCA is a big win for American workers and the economy, especially for our farmers and ranchers,” says U.S. Secretary of Agriculture Sonny Perdue. “The agreement improves virtually every component of the old NAFTA, and the agriculture industry stands to gain significantly. President Trump and Ambassador Lighthizer are laying the foundation for a stronger farm economy through USMCA and I thank them for all their hard work and perseverance to get the agreement across the finish line. While I am very encouraged by today’s breakthrough, we must not lose sight—the House and Senate need to work diligently to pass USMCA by Christmas.”

Canada and Mexico are the first and second largest export markets for United States food and agricultural products, totaling more than $39.7 billion worth of food and agricultural exports in 2018. These exports support more than 325,000 American jobs.

Under the new agreement, all food and agricultural products that have zero tariffs under the North American Free Trade Agreement will remain at zero tariffs.

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USDA’s Economic Research Service (ERS) reduced expectations of U.S. beef production next year, in the monthly World Agricultural Supply and Demand Estimates released Tuesday. That’s based on the anticipated slower pace of fed and non-fed cattle slaughter in the first half of the year.

For 2020, total beef production is forecast to be 27.51 billion lbs., which would be 379 million lbs. more (+1.40%) than this year’s 27.14 billion lbs.

USDA increased the projected average fed steer price in the fourth quarter by $3 to $115/cwt., compared to the previous month. The estimated annual average price for 2019 increased $1 to $117.

For next year, the average fed steer price is projected $2 higher at $122 in the first-quarter; $1 higher in the second quarter at $118; $1 lower in the third quarter at $112. Next year’s annual average price was estimated $1 higher at $117.

Total U.S. red meat and poultry production next year is projected to increase 2.70% to a staggering 108.14 billion lbs., with higher broiler production more than offsetting lower expected beef production.

Cattle futures closed narrowly mixed Monday, unable to get much lift from stronger cash prices or last week’s massive total cattle slaughter of an estimated 679,000 head under federal inspection.

Live Cattle futures closed narrowly mixed, from an average of 11¢ lower to an average of 18¢ higher.

Feeder Cattle futures closed narrowly mixed, from an average of 19¢ lower to an average of 32¢ higher.

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

Choice boxed beef cutout value was 92¢ lower Monday afternoon at $223.64/cwt. Select was 81¢ lower at $206.49.

Corn futures closed fractionally lower to 1¢ lower.

Soybean futures closed mostly 5¢ to 7¢ higher.

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Major U.S. financial indices closed lower on Monday, with no definitive source. Profit taking and rally fatigue could have been part of it, as well as ongoing skittishness regarding U.S-China trade talks.

The Dow Jones Industrial Average closed 105 points lower. The S&P 500 closed 9 points lower. The NASDAQ was down 34 points.

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Agricultural producer sentiment rose 17 points month to month in November, to the second highest level of the year, according to the most recent Purdue University/CME Group Ag Economy Barometer.

“Except in the northern Corn Belt, farmers were wrapping up their fall harvest in November and yields were better than expected earlier this year, which helped boost sentiment along with news that the trade dispute might be settled soon,” says James Mintert, the barometer’s principal investigator and director of Purdue University’s Center for Commercial Agriculture. “Since early fall, cattle prices also rallied substantially, helping make both cattle ranchers and feeders feel better about their operations’ finances.”

The Index of Current Conditions—one sub-index of the Barometer—soared 38 points to 153 in November. The Index of Future Expectations edged 7 points higher. The barometer is based on a mid-month survey of 400 U.S. crop and livestock producers.

Confidence in a quick resolution to the U.S.-China trade dispute increased to its highest point since the question was first posed in March of this year. In November, 57% of respondents say they expect a resolution soon; only 29% did in August.

Moreover, 80% of respondents expect the trade dispute to be resolved in a way that favors U.S. agriculture, up 5% from the previous month.

Negotiated cash fed cattle prices were mainly $1 higher last week, with live prices in the Southern Plains at $119/cwt. and at $118-119 in the western Corn Belt. Dressed prices were $1 higher at $188.

Cattle futures closed higher Friday, supported by stronger cash trade and higher outside markets.

Other than 17¢ lower in the back contract, Live Cattle futures closed an average of 28¢ higher.

Feeder Cattle futures closed an average of 65¢ higher.

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

Choice boxed beef cutout value was $1.04 lower Friday afternoon at $224.56/cwt. Select was 82¢ lower at $207.30.

Corn futures closed mostly unchanged to fractionally lower.

Soybean futures closed 2¢ to 5¢ higher through Sep ’21 and then fractionally higher.

Over the weekend, various reports suggested China will reduce or waive import tariffs on some agricultural products imported from the U.S., including some shipments of pork and soybeans. If that’s true, then both markets could see some bounce to start the week. On the other hand, with additional U.S. tariffs scheduled to be imposed on Chinese imports Dec. 15, the move may create more uncertainty.

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Major U.S. financial indices closed strongly higher on Friday, buoyed by positive jobs data.

Total non-farm payroll employment increased by 266,000 in November, according to the U.S. Bureau of Labor Statistics. That was stronger than the trade expected. The unemployment rate was little changed at 3.5%.

Average hourly earnings for all employees on private non-farm payrolls rose 7¢ in November to $28.29. Average hourly earnings are 3.1% higher over the last 12 months.

The Dow Jones Industrial Average closed 337 points higher. The S&P 500 closed 28 points higher. The NASDAQ was up 85 points.

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Although still strong, U.S. beef exports softened in October in terms of both value and tonnage, according to data released by USDA and compiled by the U.S. Meat Export Federation (USMEF).

Beef exports in October of 108,017 metric tons were 8% less than a year earlier; value was 11% less at $649.1 million. Through the first 10 months of the year, export volume was 2.5% less and value was 2.5% less than last year’s record pace.

Beef export value per head of fed slaughter averaged $284.56 in October, down 10% from a year ago. The January-October average was down 4% to $308.04.

The Japanese Parliament’s recent ratification of the trade agreement with the U.S. should help bolster beef exports to that value-leading customer.

According to USMEF, the rate for U.S. beef muscle cuts is 38.5% but will drop by nearly one-third when the agreement enters into force, mirroring the 26.6% rate imposed on Australian, Canadian, Mexican and New Zealand beef. Another rate reduction will come April 1, when the Japanese fiscal year begins.

Negotiated cash fed cattle trade developed in Kansas Thursday, with live prices mostly $1 higher than last week at $119/cwt.; light to moderate trade and moderate demand.

Cattle futures closed marginally mixed.

Live Cattle futures closed an average of 24¢ higher.

Feeder Cattle futures closed an average of 26¢ lower.

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

Choice boxed beef cutout value was $1.35 lower Thursday afternoon at $225.60/cwt. Select was $2.19 lower at $208.12.

Corn futures closed mostly fractionally lower to 2¢ lower.

Soybean futures closed 3¢ to 6¢ higher.

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Major U.S. financial indices closed marginally higher on mixed news Thursday.

The Dow Jones Industrial Average closed 28 points higher. The S&P 500 closed 4 points higher. The NASDAQ was up 4 points.

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Although analysts with Rabo AgriFinance expect fed cattle prices next year to mirror those of the last couple of years, they say there are two possibilities that could give them a boost.

One is a resolution in U.S.-China trade talks, which they say would allow for increased pork exports to China and elevate all protein prices. The other has to do with disruption in global animal protein trade, due to African Swine Fever.

“As a larger share of beef from Australia and New Zealand go to China, it is forcing a reduction in the quantity of manufacturing beef coming to the U.S.,” explain Rabo AgriFinance analysts, in that organization’s RaboResearch Q4 Beef Quarterly. “As a result prices of Australian and New Zealand 90% lean trimmings delivered to the U.S. currently hold a $54/cwt. (USD) premium to domestic lean trimmings. This is forcing U.S. quick service burger restaurants to look for domestic alternatives for supplies, supporting U.S. cattle and beef prices. This situation is not expected to be quickly resolved and will be an interesting market development to watch during the coming year.”