WLI

Cattle futures were mixed on Monday, with Live Cattle mostly higher, but Feeder Cattle mostly lower, pressured by surging Corn futures.

Except for 45¢ and 27¢ lower in the front two contracts, Live Cattle futures closed an average of 40¢ higher.

Except for 45¢ and 30¢ higher in the back two contracts, Feeder Cattle futures closed an average of 77¢ lower (37¢ lower to $1.92 lower in spot Oct).

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

Choice boxed beef cutout value was 14¢ lower Monday afternoon at $212.44/cwt. Select was $2.75 lower at $187.11.

Corn and soybean futures rallied Monday, in the wake of a bullish USDA grain stocks report (see below), as well as positive export news for corn.

Corn futures closed 12¢ to 16¢ higher through Jul ’20 and then mostly 4¢ higher.

Soybean futures closed 13¢ to 20¢ higher through Nov ’20 and then 5¢ to 11¢ higher. 

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Major U.S. financial indices closed out the third quarter on a higher note Monday, with support from more optimism surrounding U.S.-China trade talks later this month. Nothing specific on trade talks; more of the he-said, she-said stuff.

The Dow Jones Industrial Average closed 96 points higher. The S&P 500 closed 14 points higher. The NASDAQ was up 59 points.

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USDA surprised plenty of folks with its quarterly Grain Stocks report issued Monday.

Old crop corn stocks in all positions Sept. 1 totaled 2.11 billion bu., which was 1% less than a year earlier. That was a more significant decline than the trade was expecting. Of the total stocks, 753 million bu. were stored on farms, up 22% from a year earlier. Off-farm stocks of 1.36 billion bu. were 10% less than a year ago.

Likewise, old-crop soybeans stored in all positions totaled 913 million bu. at the beginning of the month, up 108% from the previous year, but significantly less than pre-report expectations. Soybean stocks stored on farms totaled 265 million bu., up 162% percent from a year ago. Off-farm stocks, at 648 million bushels were up 92% from last September.

As well, the weekly Crop Progress report continues to underscore late crop development.

For the week ending Sept. 29, 88% of the corn crop was dented, which was 12% less than last year and 10% less than the average. 43% of corn was mature, compared to 84% a year earlier and 73% for the five-year average. 11% was harvested, which was 14% less than last year and 8% less than average. 57% was in Good (46%) or Excellent (11%) condition, the same as the previous week but 12% less than last year. 14% was in Poor (10%) or Very Poor condition (4%), which was 1% more than a week earlier and 2% more than a year earlier.

55% of soybeans were dropping leaves, which was 26% less than the previous year and 21% less than the average. 7% were harvested, which was 15% less than a year earlier and 13% less than average. 55% were rated in Good (46%) or Excellent (9%) condition, 1% more than a week earlier, but 13% less than a year ago. 13% were in Poor (10%) or Very Poor (3%) condition, which was 3% more than a year earlier.

90% of spring wheat was harvested, which was 10% less than last year and 9% less than average.

95% of sorghum was coloring, which was 2% less than the previous year but on par with the average. 54% was mature, which was 6% less than last year and 9% less than average. 30% was harvested, which was 3% less than last year and 5% less than the average. 65% was in Good (50%) or Excellent (15%) condition, which was 11% more than a year earlier. 8% was rated as Poor (6%) or Very Poor (2%), compared to 17% last year.

39% of winter wheat was planted, which was 2% less than the previous year but 1% more than the average. 11% had emerged, compared to 12% last year and 13% for average.

45% of the nation’s pasture and range was rated in Good (37%) or Excellent (8%) condition, the same as a week earlier and 2% less than a year earlier. 25% was rated as Poor (17%) or Very Poor (8%), which was 1% more than the previous week but 2% more than a year earlier.

Negotiated cash fed cattle prices made solid gains for the week, with live prices $2 higher in the Southern Plains at $103/cwt., $4-$5 higher in the Northern Plains at $106-$107 and $1-$5 higher in the western Corn Belt at $104-$105. Dressed trade was steady to $5 higher at mostly $165.

Cattle futures continued higher on Friday, supported by stronger fed cattle prices and apparent commercial interest.

Except for 10¢ lower in the back contract, Live Cattle futures closed an average of $1.09 higher, (27¢ to $2.07 higher).

Except for $2.00 lower in newly minted away Sep, Feeder Cattle futures closed an average of $1.21 higher.

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 93¢ lower Friday afternoon at $212.58/cwt. Select was 53¢ lower at $189.86.

Corn futures closed 1¢ lower.

Soybean futures closed fractionally mostly 3¢ to 5¢ lower. 

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Major U.S. financial indices closed lower on Friday, with reports that the White House was considering ways to limit U.S. investment in Chinese companies.

The Dow Jones Industrial Average closed 70 points lower. The S&P 500 closed 15 points lower. The NASDAQ was down 91 points.

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When the weather finally permits Australia to begin rebuilding its drought-decimated cowherd, the U.S. may have more beef export opportunity, according to the Livestock Marketing Information Center (LMIC).

“Through July, Australia is reporting 4.9 million head slaughtered, an increase of 8% over the same time period in 2018,” say LMIC analysts, in the most recent Livestock Monitor. “Since April 2018, each month (except November 2018) over 50% of Australia’s total slaughter has consisted of cows and heifers. Typically, when a majority of total slaughter is comprised of females this is an indication that the herd is contracting. Increased cow and heifer slaughter has led to a 4% growth in beef production through the first seven months of 2019. Much of the growth has been absorbed by expanding foreign demand, especially in China as they are looking to fill a meat protein supply gap left behind by a declining hog herd due to the spread of African Swine Fever (ASF).”

For perspective, the most recent peak in Australian cattle inventory was 29.3 million head in 2014, according to LMIC. The USDA Global Agricultural Information Network (GAIN) pegs the 2019 inventory at 25.73 million head and forecasts next year’s inventory at 24.48 million head, which would be 16.4% less than the recent peak and the fewest in three decades.

“As China’s demand for beef is rising, especially for grain-fed beef, Australia has been well positioned to fill demand,” LMIC analysts explain. “This is expected to change in 2020 as USDA’s GAIN report is forecasting Australia’s cattle sector to start herd rebuilding efforts if weather conditions improve. Rebuilding efforts will require more females causing lower slaughter levels and reduced available beef supplies for export in 2020.”

LMIC currently forecasts U.S. beef exports to grow 6% in 2020 with ample supplies and competitive prices spurring shipments.

Negotiated cash fed cattle trade remained undeveloped through Thursday afternoon, as Cattle futures continued to mostly grind higher.

Live Cattle futures closed an average of 17¢ higher, except for an average of 10¢ lower at either end of the board.

Except 7¢ lower for expiring Spot Sep, Feeder Cattle futures closed an average of 33¢ higher.

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

Choice boxed beef cutout value was $1.12 lower Thursday afternoon at $213.51/cwt. Select was 56¢ higher at $190.39.

Corn futures closed mostly fractionally lower.

Soybean futures closed fractionally mixed to 1¢ higher. 

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Major U.S. financial indices closed lower on Thursday, riding a similar seesaw from earlier in the week with the ebb and flow of trade talk with China.

The Dow Jones Industrial Average closed 79 points lower. The S&P 500 closed 7 points lower. The NASDAQ was down 46 points.

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Beef supplies in Cold Storage continue less year over year.

Total pounds of beef in freezers, as of Aug. 31, were 4% more than the previous month but 6% less than the same time last year, according to the most recent USDA Cold Storage report.

Frozen pork supplies were down 1% from the previous month, but were up 4% from last year.

Total red meat supplies in freezers were up 1% from the previous month but down 1% from last year.

Total frozen poultry supplies were 4% more than the previous month but 5% less than a year ago.

Negotiated cash fed cattle trade remained undeveloped through Wednesday afternoon.

There were 1,533 offered, but no sales, in the weekly Fed Cattle Exchange auction.

Although expectations remain for steady to higher prices this week, slaughter cattle sold $2-$5 lower at Sioux Falls Regional in South Dakota. Choice 2-3 steers (395 head) brought an average of $100.07/cwt. That’s on the lower end of country trade in the region last week.

Cattle futures continued to exhibit firmness on Wednesday, maintaining and extending recent gains.

Live Cattle futures closed an average of 52¢ higher (15¢ to $1.07 higher).

Feeder Cattle futures closed an average of 89¢ higher (32¢ to $1.05 higher).

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

Choice boxed beef cutout value was 76¢ lower Wednesday afternoon at $214.63/cwt. Select was 17¢ higher at $189.83.

Corn futures closed mostly fractionally higher.

Soybean futures closed 3¢ to 5¢ lower through Jul ’20 and then 1¢ to 2¢ lower.

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Major U.S. financial indices closed higher on Wednesday, mostly retracing lost ground from the previous session. Some attributed support to a comment by President Trump suggesting optimism over a trade deal with China.

The Dow Jones Industrial Average closed 162 points higher. The S&P 500 closed 18 points higher. The NASDAQ was up 87 points.

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U.S. beef and red meat exports got a shot in the arm yesterday with completion of the previously announced U.S.-Japan Trade Agreement (USJTA).

“This agreement between the United States and Japan is a better deal for the entire U.S. economy, but is a particularly big win for our farmers and ranchers,” says U.S. Secretary of agriculture, Sonny Perdue. “When I visited Japan in May for the G20, I made it clear that the U.S. is Japan’s best customer and we felt that relationship was not reciprocal. This agreement helps level the playing field.”

When implemented, Secretary Perdue says the agreement will enable American producers to compete more effectively with countries that currently have preferential tariffs in the Japanese market.

“With Japan being the largest value destination for U.S. pork and beef exports (combined export value in 2018 was $3.7 billion), there is no market more critical to the profitability and prosperity of the U.S. red meat industry,” explains Dan Halstrom, president and CEO of the U.S. Meat Export Federation. “It is therefore imperative that we achieve a level playing field for U.S. pork and beef in Japan, so that the U.S. industry can further expand its customer base in this increasingly competitive market. Today’s announcement is not only excellent news for U.S. farmers and ranchers, but also for Japanese consumers who will have greater access to U.S. pork and beef products.”

Under the USJTA, Japan committed to provide substantial market access to American food and agricultural products by eliminating tariffs, enacting meaningful tariff reductions, or allowing a specific quantity of imports at a low duty (generally zero), according to Secretary Perdue. Tariff treatment for the products covered in the agreement will match the preferential tariffs Japan provides to countries in the Comprehensive and Progressive Agreement for Trans-Pacific Partnership. 

After early follow-through support Tuesday, Cattle futures traders seemed content to hold their positions and wait for direction from the cash market.

Live Cattle futures closed narrowly mixed but mostly higher (35¢ lower to 30¢ higher).

Other than 35¢ lower at the front and 5¢ lower at the back, Feeder Cattle futures closed an average of 57¢ higher.

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

Choice boxed beef cutout value was $1.06 lower Tuesday afternoon at $215.39/cwt. Select was $1.18 lower at $189.66.

Corn futures closed mostly unchanged to fractionally mixed.

Soybean futures closed mostly 1¢ lower to 1¢ higher.

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Major U.S. financial indices closed lower on Tuesday amid chatter about the Democrats calling for an impeachment inquiry into President Trump, as well as weaker consumer confidence.

The Conference Board Consumer Confidence Index® decreased to 125.1 (1985=100) in September from 134.2 in August.

“Consumers were less positive in their assessment of current conditions and their expectations regarding the short-term outlook also weakened,” says Lynn Franco, Senior Director of Economic Indicators at The Conference Board. “The escalation in trade and tariff tensions in late August appears to have rattled consumers. However, this pattern of uncertainty and volatility has persisted for much of the year and it appears confidence is plateauing. While confidence could continue hovering around current levels for months to come, at some point this continued uncertainty will begin to diminish consumers’ confidence in the expansion.” 

The Dow Jones Industrial Average closed 142 points lower. The S&P 500 closed 25 points lower. The NASDAQ was down 118 points.

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If current high levels of beef cow and heifer slaughter continue, then analysts with the Livestock Marketing Information Center (LMIC) say the beef cow inventory at the beginning of next year could be lower than the previous year.

For January through August, LMIC pegs federally inspected heifer slaughter 7.0% higher than the same period a year earlier, with beef cow slaughter up 1.9%.

“The last week of August, heifer slaughter surged to over 200,000 head, the highest weekly figure since June 2011,” say LMIC analysts, in the most recent Livestock Monitor. “The last several weeks of actual heifer slaughter has been above a year ago by over 5% and jumped in the final week of August to 11%…The climb in heifer slaughter offers a few signposts. The first is that these are likely heifers that didn’t get bred. July’s cattle on feed report indicated that animals 900 lbs. and heavier jumped 11.5% higher than a year ago. The U.S. does not break down each weight group by heifers and steers, but the large volume in the slaughter mix, coupled with higher heavier placement weights, could imply that some of those heavier cattle were female replacements that remain open.”