WLI

Cattle futures closed lower Tuesday, with little in the way of fundamental news and perhaps some technical pressure.

Live Cattle futures closed an average of 39¢ lower.

Feeder Cattle futures closed an average of 58¢ lower.

Grain markets continued to decline Tuesday, with positive crop weather news and the stronger U.S. dollar.

Corn futures closed 3¢ to 5¢ lower though Jul ’20 and then fractionally lower to 1¢ lower.

Soybean futures closed mostly 10¢ to 14¢ lower.

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

Choice boxed beef cutout value was 34¢ lower Tuesday afternoon at $212.93/cwt. Select was 5¢ lower at $189.16.

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Major U.S. financial indices edged lower Tuesday, although the nascent quarterly earnings season is mostly positive thus far.

The Dow Jones Industrial Average closed 23 points lower. The S&P 500 closed 10 points lower. The NASDAQ was down 35 points.

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“Feeder cattle prices are determined by several factors, with feed price and fed cattle price having the greatest impact,” explains Brenda Boetel, Extension agricultural economist at the University of Wisconsin-River Falls, in the latest issue of In the Cattle Markets. “Corn price has typically had an inverse relationship to both fed and feeder cattle prices. This means, as the price of corn increases, the price of feeder cattle decreases. This assumes that all other factors have remained constant, including other feeding costs, as well as fed cattle price.”

As corn price increases, the price premium declines for lighter feeder cattle weights versus heavier ones. Spun differently, the price slide narrows as corn price moves higher.

“This isn’t a new finding. What is new is that the decrease in these beef steer price differentials is at an increasing rate as weight increases, i.e., the premiums for lightweight cattle will decrease faster than has historically been found in economic studies,” Boetel says.

That was among the conclusions drawn from research conducted by Boetel last year with Lee Schultz, a peer at Iowa State University and with Kevin Dhuyvetter, cattle technical consultant with Elanco Animal Health. The study—in the Western Economics Forum—included 66,640 head of beef feeder steers and 59,005 head of dairy feeders.

“Although cattle producers can’t affect the corn price, understanding how changing corn price affects price slides can aid in management and marketing decisions,” Boetel says.

Negotiated cash fed cattle trade ended up $2-$3 higher in the Southern Plains last week at $111-$112/cwt. Live sales were steady to either side of even in Nebraska at mostly $112-$114, but $1-$3 higher in the western Corn Belt at $115. Dressed trade was $2-$5 higher at $182-$185.

Cattle futures closed narrowly mixed on Monday, although Feeder Cattle received some support from sharply lower grain futures prices.

Live Cattle futures closed narrowly mixed, from 20¢ lower to 10¢ higher.

Feeder Cattle futures closed an average of 19¢ higher.

Grain markets dove lower Monday with likely profit taking, as well as more favorable weather.

Corn futures closed 9¢ to 13¢ lower though Jul ’20 and then fractionally lower to 6¢ lower.

Soybean futures closed mostly 9¢ to 11¢ lower.

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

Choice boxed beef cutout value was 47¢ higher Monday afternoon at $213.27/cwt. Select was 39¢ lower at $189.21.

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Major U.S. financial indices edged higher Monday, on the cusp of quarterly earnings season.

The Dow Jones Industrial Average closed 27 points higher. The S&P 500 closed fractionally higher. The NASDAQ was up 14 points.

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“Uncertainty continues to plague cattle markets with broader trade and political uncertainty augmented by unknown and evolving feed market conditions,” says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly market comments. “Corn will no doubt be higher on a smaller crop this year but exactly how much higher and smaller remains an unknown.”

Undoubtedly, that uncertainty was part of the damper on a seasonal increase in feeder cattle prices, until last week. With the recent uptick, Peel says feeder markets may be set to increase seasonally over the month, on their way to a typical late-summer price peak.

Although the most recent trade data showed some improvement, Peel adds, “Domestic beef markets continue to struggle under relatively poor summer grilling weather thus far and struggling macroeconomic conditions. Ample supplies of meat are weighing more heavily on the market, as well. In particular, large pork supplies and the failure of anticipated Chinese demand for pork to materialize is pushing pork wholesale values lower, adding to beef wholesale price pressure.”

Negotiated cash fed cattle prices were yet to be fully established through Friday afternoon, based on reports from USDA’s Agricultural Marketing Service (AMS), but the trend appeared decidedly higher. The Texas Cattle Feeders Association reported its members trading at $112/cwt., which was $3 more than the previous week. Although too few to trend, early dressed sales were $2-$5 higher at $182-$185 in Nebraska and the western Corn Belt.

Live Cattle futures closed an average of 31¢ higher on Friday (7¢ to 65¢ higher), helped along by recent strength and what looked to be steady to higher cash fed prices for the week. 

Feeder Cattle futures closed an average of 83¢ lower, giving back some of the recent gains, under pressure from higher Grain futures prices. They traded and average of $3.11 higher week to week, though.

Grain markets largely shrugged off the previous day’s monthly World Agricultural Supply and Demand Estimates, given that projections were based on acres from the June 28 Acreage report, which common sense says will change. Between that and potential damage from hot and dry weather, following the interminable rains, grain futures surged on Friday.

After 1¢ higher in expiring spot Jul, Corn futures closed 9¢ to 11¢ higher though Jul ’20 and then mostly 1¢ to 2¢ higher.

Soybean futures closed mostly 10¢ to 14¢ higher.

Wholesale beef values continued to lose seasonal steam. Trade on Friday was  lower on light to moderate demand and moderate offerings, according to the Agricultural Marketing Service.

Choice boxed beef cutout value was 97¢ lower Friday afternoon at $212.80/cwt. Select was $1.19 lower at $189.60.

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Major U.S. financial indices closed sharply higher Friday, apparently with lighter trade and follow-through rally support from expectations for a cut in interest rates.

The Dow Jones Industrial Average closed 243 points higher. The S&P 500 closed 13 points higher. The NASDAQ was up 48 points.

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Lighter year-over-year carcass weights continue to underscore currentness, while also adding price support. For the week ending June 29, the average dressed steer weight was 854 lbs., which was the same as a week earlier but 11 lbs. lighter than the same week a year earlier, according to USDA’s Actual Slaughter Under Federal Inspection report. The average dressed heifer weight was 1 lb. lighter than the previous week and 3 lbs. lighter than the previous year at 789 lbs.

“One might assume the higher prices (fed cattle) this week means the market has reached its summer low and that may be the case. However, the finished cattle market will continue to be pressured the next several weeks moving through July and August” says Andrew P. Griffith, agricultural economist at the University of Tennessee, in his weekly market comments. “Thus, there is a good chance finished cattle prices yo-yo the next several weeks as packers and feedlots jockey for position.”

Negotiated cash fed cattle trade was undeveloped through Thursday afternoon, but early sales in Nebraska and the western Corn Belt point to stronger trade this week. Although there were too few transactions to trend, early dressed sales in those regions were $2-$5 higher than last week at $182-$185. Early live sales in the western Corn Belt were $1-$2 higher at $114-$115.

Cattle futures drifted higher, awaiting more concrete cash direction.

Live Cattle futures closed from an average of 15¢ higher.

Other than 2¢ lower in the back two contracts, Feeder Cattle futures closed an average of 42¢ higher.

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

Choice boxed beef cutout value was 65¢ lower Thursday afternoon at $213.77/cwt. Select was 10¢ lower at $190.79.

Corn futures closed 6¢ to 13¢ higher though Jul ’20 and then 1¢ to 2¢ higher. That was despite what most would deem bearish news in the monthly World Agricultural Supply and Demand Estimates (see below).

Soybean futures closed mostly 3¢ to 4¢ higher.

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Major U.S. financial indices closed higher Thursday, led by health care stocks and overall optimism surrounding the previous day’s dovish comments by Federal Reserve Chair, Jerome Powell, regarding interest rates.

The Dow Jones Industrial Average closed 227 points higher. The S&P 500 closed 6 points higher. The NASDAQ was down 6 points.

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Beef production for this year was forecast 75 million lbs. less to 27.13 billion lbs., in the latest monthly World Agricultural Supply and Demand Estimates (WASDE). That’s based on lighter carcass weights and reduced third-quarter slaughter. Total beef production would still be 257 million lbs. more than last year.

USDA’s Economic Research Service (ERS) also reduced projected fed cattle prices. The projected annual 5-area Direct fed steer price for this year was lowered by $1.50 to $115.50/cwt. The third-quarter average is forecast at $107. Projections are $110 in the fourth quarter and $124 in first quarter of 2020

Compared to the previous month, total projected red meat and poultry production for this year increased by 350 million lbs. to 104.52 billion lbs., with higher forecast pork and broiler production. That would be 2.172 billion lbs. more than last year.

Corn

Corn production for 2019-20 was projected 195 million bu. higher at 13.9 billion bu., based on increased planted and harvested areas from the June 28 Acreage report. That’s with yield unchanged at 166.0 bu./acre.

The season-average corn price received by producers was lowered 10¢ to $3.70/bu.

In July, USDA’s National Agricultural Statistics Service will collect updated information on 2019 acres planted, and if the newly collected data justify any changes, NASS will publish updated acreage estimates in the August Crop Production report.

Soybeans

Soybean production for 2019-20 was projected at 3.85 billion bu., down 305 million bu., based on lower planted and harvested area in the June 28 Acreage report and on lower projected yields of 48.5 bu./acre. Beginning and ending stocks were lowered, as well.

The 2019-20 season-average price for soybeans was forecast at $8.40/bu., up 15¢ from the previous month. Soybean meal prices were forecast $5 higher at $300 per short ton. The soybean oil price forecast was unchanged at 29.5¢/lb.

Wheat

Forecast 2019-20 U.S. wheat production was raised 18 million bu. to 1,921 million. The all wheat yield was forecast 1.3 bu./acre higher at 50.0 bu. However, anticipated domestic use increased on higher feed and residual use. Ending stocks were projected 72 million bu. lower.

The projected season-average farm price for wheat is $5.20/bu., up 10¢ from the previous month.