WLI

Negotiated cash fed cattle trade was undeveloped through Wednesday afternoon, although there were some steady-money bids reported in the north.

Likewise, there were no sales in the weekly Fed Cattle Exchange auction, which had just 423 head on offer.

Prices were higher at some live fat auctions, though. Ch 2-3 steers weighing an average of 1,385 lbs. brought an average of $113.41/cwt. at Sioux Falls Regional in South Dakota. At Tama, IA, Ch 2-4 steers brought $114.90 at 1,312 lbs.

Cattle futures closed narrowly mixed, with more support in the deferred months as traders repositioned following the previous session’s sharp gains.

Live Cattle futures closed from an average of 26¢ lower across the front half of the board to an average of 7¢ higher across the back half.

Feeder Cattle futures closed from an average of 27¢ lower across the front half of the board to an average of 52¢ higher across the back half, except for unchanged in Jan. 

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

Choice boxed beef cutout value was 31¢ lower Wednesday afternoon at $214.42/cwt. Select was $1.20 lower at $190.89.

Corn futures closed mainly 1¢ to 2¢ higher.

Soybean futures closed mostly 6¢ to 8¢ higher.

Plenty of folks will be watching for Thursday’s monthly World agricultural Supply and Demand Estimates.

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Major U.S. financial indices closed higher Wednesday, buoyed by broad interpretation of Federal Reserve Chairman, Jerome Powell’s testimony to Congress meaning that a cut to interest rates is on the near horizon.

In prepared testimony to the U.S. House Committee on Financial Services, Powell explained:

“Our baseline outlook is for economic growth to remain solid, labor markets to stay strong, and inflation to move back up over time to the Committee’s 2% objective. However, uncertainties about the outlook have increased in recent months. In particular, economic momentum appears to have slowed in some major foreign economies, and that weakness could affect the U.S. economy. Moreover, a number of government policy issues have yet to be resolved, including trade developments, the federal debt ceiling, and Brexit. And there is a risk that weak inflation will be even more persistent than we currently anticipate. We are carefully monitoring these developments, and we will continue to assess their implications for the U.S economic outlook and inflation…

“In our June meeting statement, we indicated that, in light of increased uncertainties about the economic outlook and muted inflation pressures, we would closely monitor the implications of incoming information for the economic outlook and would act as appropriate to sustain the expansion. Many FOMC participants saw that the case for a somewhat more accommodative monetary policy had strengthened. Since then, based on incoming data and other developments, it appears that uncertainties around trade tensions and concerns about the strength of the global economy continue to weigh on the U.S. economic outlook. Inflation pressures remain muted…”

Crude Oil futures (WTI-CME) rallied $2.43 to $2.60 higher for the remaining 2019 contracts on a heavier domestic inventory draw than expected.

The Dow Jones Industrial Average closed 76 points higher. The S&P 500 closed 13 points higher. The NASDAQ was up 60 points.

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“Digital purchasing will accelerate in food retailing, just as it has in other retail sectors where we see much higher rates of online purchases,” says David Portalatin, food industry advisor for the NPD group (NPD) and author of Eating Patterns in America. “Still, the brick and mortar grocery store will always be a necessary means of acquiring foods, especially those where consumers place a premium on their sensory assessment to ensure quality, like meats, fruits and vegetables. This gives forward thinking retailers and their vendor partners an opportunity to truly create an omnichannel experience for the consumer and revolutionize the way we think about grocery merchandising.”

According to NPD, 20% of U.S. consumers, ages 18 and above—about 51 million consumers—shopped online for groceries, within 30 days, for the quarter ending February this year. That was 3% more than the quarter ending in November of last year. The figures include consumers ordering online for delivery or in-store pick-up.

Of those who shop online for groceries from brick and mortar or pure-play online grocers, 16% order their food and beverages for delivery. The option to order online and pick-up in store, also known as click-and-collect or BOPUS (buy online pickup in store) is favored by 11% of online grocery shoppers. Seven percent of these shoppers mix it up and do both, according to NPD’s National Eating Trends® Omnichannel Scorecard.

Unsurprisingly, negotiated cash fed cattle trade was yet to develop through Tuesday afternoon.

Cattle futures charged higher, though, fueled by limit-up gains in Lean Hog futures and technical support. Feeder Cattle were helped further by lower Corn futures.

Live Cattle futures closed an average of $1.48 higher.

Feeder Cattle futures closed an average of $3.61 higher ($2.65 higher at the back to $4.37 higher toward the front). 

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

Choice boxed beef cutout value was $2.73 lower Tuesday afternoon at $214.73/cwt. Select was $2.32 lower at $192.09.

Corn futures closed mainly 5¢ to 6¢ lower through Jul ‘20, and then 1¢ lower to 1¢ higher.

Soybean futures closed mostly 7¢ to 8¢ higher.

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Tech stocks helped lead major U.S. financial indices to a narrowly mixed close on Tuesday. One way or the other, testimony from Federal Reserve Chair, Jerome Powell—to the House Financial Services Committee on Wednesday—will likely provide a spark. Traders will be looking for clues as to whether or not and when the Fed will cut interest rates.

The Dow Jones Industrial Average closed 22 points lower. The S&P 500 closed 3 points higher. The NASDAQ was up 43 points.

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“The nearby, and deferred, contracts for both livestock products (Live Cattle and Feeder Cattle futures) appear to have found a bottom. This strong upward movement appears to be supported by both fundamental and technical information,” says Elliott Dennis, an Extension livestock economist at the University of Nebraska-Lincoln. In the latest issue of In the Cattle Markets, he explains, “Bottoming prices appears to have been driven by projected grain supplies, weather-driven pasture conditions, and wholesale meat demand.”

With that said, in his recent market comments, Andrew P. Griffith, agricultural economist at the University of Tennessee notes the narrow price range between summer and fall Feeder Cattle futures contracts; about 80¢.

“The lack of a price spread means the market is offering an incentive to keep adding weight to cattle if a person can do it fairly inexpensively,” Griffith explains. “Alternatively, if weight cannot be added inexpensively, then the market is not offering much of an incentive. In reality, the feeder cattle market is very stale and can make marketing decisions more difficult than they are naturally. From a stocker operator standpoint, it may be more advantageous to cut one’s losses on the current set of cattle and start a new group…”

There certainly appears to be ample grazing opportunity, with 68% of the nation’s pasture and range rated in Good or Excellent condition as of July 7, according to the most recent USDA Crop progress report. That’s 17% more than last year. Only 8% was rated as Poor or Very Poor, compared to 21% a year earlier.

“High quality pastures should incentivize cow-calf and stockers to retain cattle longer,” Dennis says. “Likewise, with the recent USDA announcement waiving the Nov. 1 grazing requirement on prevent planting acres, the summer grazing window may extend much longer this year. Both signals will likely shift how and when feeder cattle are placed in feedlots. If feedlot placements slow then this should dampen the seasonally low fall feeder cattle prices.”

Negotiated cash fed cattle trade ended up steady in the Southern Plains last week at $109/cwt. on a live basis. Prices were $1-$2 higher in Nebraska at $113.00-$113.50 and at $112-$114 in the western Corn Belt. Dressed trade was steady to $2 higher at $180.

Likewise, the 5-area direct weekly average price for steers was $1.11 higher week to week on Monday at $111.24/cwt. on a live basis. Live heifers traded $1.25 higher at $110.82.

Cattle futures closed mainly narrowly mixed on Monday after early follow through support.

Live Cattle futures closed mixed, from an average of 66¢ lower in the front three contracts to an average of 23¢ higher.

Feeder Cattle futures closed narrowly mixed from 17¢ lower to 7¢ higher.

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

Choice boxed beef cutout value was 21¢ lower Monday afternoon at $217.46/cwt. Select was 39¢ lower at $194.41.

Corn futures closed mixed, from fractionally higher to 4¢ higher through Jul ‘20, and then mostly 1¢ to 2¢ lower.

Soybean futures closed 3¢ higher.

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Major U.S. financial indices closed lower Monday, led by tech stocks.

The Dow Jones Industrial Average closed 115 points lower. The S&P 500 closed 14 points lower. The NASDAQ was down 63 points.

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U.S. beef exports continue to reflect resilience in the face of ongoing trade barriers, according to data released by USDA and compiled by the U.S. Meat Export Federation (USMEF).

U.S. beef exports in May were steady year-over-year in volume at 117,541 metric tons (mt), but 1% more in value at $727.6 million—the second-highest on record.

For January through May, beef exports were 3% below last year’s record pace in volume (530,088 mt) but only slightly lower in value at $3.3 billion.

Beef export value per head of fed slaughter averaged $312.85 in May, down slightly from a year ago. For January through May, beef export value averaged $309.33 per head, down 3%.

Korea and Taiwan Set the Pace

Beef exports to South Korea remained on a record pace in May, climbing 11% to 23,004 mt and 13% in value to $165 million. January-May exports to Korea were 11% above last year in volume (101,761 mt) and 15% higher in value ($743.5 million).

Beef exports to Taiwan also strengthened for the second straight month at 5,873 mt in May (up 27% from a year ago), valued at $52.6 million (up 28%). Through May, exports to Taiwan were 11% above last year’s record pace in volume (24,478 mt) and 4% higher in value ($218.2 million).

May export volume to leading market Japan also bounced back, despite the U.S. disadvantage borne by the lack of a trade agreement with that nation.

According to USMEF, all of U.S. pork and beef’s major competitors gained tariff relief in Japan this year through the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the economic partnership agreement between Japan and the European Union.

“The explosive growth U.S. beef has achieved in Korea and Taiwan is a testament to the quality of the product and the outstanding customer base the U.S. industry has established over the years,” explains Dan Halstrom, USMEF President and CEO. “That same dynamic is present in Japan, on an even larger scale. But for Japan to remain in the ‘strong growth’ column, it is essential that we have market access comparable to our key competitors.”

Pork Exports Show Signs of Renewed Strength

U.S. pork exports in May were also steady with the previous year at 217,999 mt. Value was 1% higher at 567.8 million—the highest monthly value total since April 2018. For January through May, however, pork exports were 4% below last year in volume (1.035 million mt) and 10% less in value at $2.57 billion.

Although pork exports to Mexico remained slow—the 20% retaliatory duty on most U.S. pork entering that nation wasn’t removed until May 20—exports to China/Hong Kong rebounded, despite the ongoing 50% retaliatory duty on U.S. pork going to China. U.S. pork exports to the region were 33% more year over year for volume (45,422 mt) and 5% more in value at $84 million. Through the first five months of 2019, though, exports to the region trailed last year by 7% in volume (173,642 mt) and 25% in value ($326 million).

“May export results for U.S. pork were very encouraging, especially the renewed momentum in Japan and China/Hong Kong,” Halstrom says. “When exports to Mexico get back on track and trade talks with Japan and China show progress, this will be a very welcome lift for the U.S. pork industry.”

Negotiated cash fed cattle traded ended up steady in the Southern Plains at $109/cwt. on a live basis. It was $1-$2 higher at $113.00-$113.50 in Nebraska and at $112-$114 in the western Corn Belt. Dressed trade was steady to $2 higher at $180.

Through Thursday, the weighted average 5-Area Direct price for steers was 59¢ higher than the prior week at $111.17/cwt. on a live basis. The dressed price was 74¢ higher at $180.10.

Cattle futures closed sharply higher Friday, helped along by sluggish trade and higher cash fed cattle prices in the North.

Live Cattle futures closed an average of $1.18 higher (67¢ to $1.77 higher).

Feeder Cattle futures closed an average of $1.41 higher ($1.10 to $2.25 higher in spot Aug).

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

Choice boxed beef cutout value was $1.58 lower Friday afternoon at $217.67/cwt. Select was 56¢ lower at $194.80.

Corn futures closed fractionally higher to 2¢ higher through Jul ‘20, and then mostly unchanged to 2¢ lower.

Soybean futures closed mostly 10¢ to 14¢ lower.

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Major U.S. financial indices closed lower Friday. Popular thinking ascribed the pressure to a positive monthly employment report, which might make the Fed more reticent to cut interest rates.

Total non-farm payroll employment increased by 224,000 in June, according to the U.S. Bureau of Labor Statistics Employment Situation Summary. The unemployment rate was little changed at 3.7%.

Average hourly earnings in June of $27.90 was 6¢ more than the previous month. Average hourly earnings increased 3.1% over the past 12 months.

Earlier in the week, ADP National Employment report showed private sector, non-farm employment increasing by 102,000 in June, significantly less than the trade expected.

The Dow Jones Industrial Average closed 43 points lower. The S&P 500 closed 5 points lower. The NASDAQ was down 8 points.

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The Creighton University Rural Mainstreet Index  (RMI) rose 4.7 points in June to 53.2. That’s the sixth month out of seven the index was above growth neutral. The index ranges between 0 and 100 with 50.0 representing growth neutral, and an RMI below the growth neutral threshold. 50.0, indicating negative growth for the month.

The RMI is based on a monthly survey of bank CEOs in rural areas of a 10-state region dependent on agriculture and/or energy: Colorado, Illinois, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, South Dakota and Wyoming.

“Higher agriculture commodity prices and rebuilding from recent floods boosted the Rural Mainstreet Index (RMI) for the month. Furthermore, despite the negatives from the trade war, 69.4% of bankers support either raising, or continuing current tariffs,” said Ernie Goss, PhD, Jack A. MacAllister Chair in Regional Economics at Creighton University’s Heider College of Business. 

At the same time, more than one in four bank CEOs reported rising loan defaults due to farmer financial woes. Almost half of bankers reported that due to crisis-level farm income, farmers in their area have responded by selling the farm, or otherwise leaving the farm.

One of the notable quotes came from Jeff Bonnett, president of Havana National Bank in Havana, IL, who said there are estimates that 15-20 million corn acres were not planted nationwide.

“Based upon this information, corn prices should be in the range of $5.75 to $6.00/bu., or more. What are we missing? Will the true corn acres planted be revealed after the required certification through FSA due by July 15th?”

Negotiated cash fed cattle trade developed Wednesday on moderate trade and demand. Live prices were steady in the Southern Plains at $109/cwt., steady to $1.50 higher in Nebraska at $111-$113 and $1 higher in the western Corn Belt at $112-$113. Although too few to trend, early dressed sales were steady to higher at $178-$180.

Likewise, 53 Kansas heifers sold for a weighted average price of $109 (1-17 day delivery) in the weekly Fed Cattle Exchange auction. That was out of an offering of 392 head.

Live Cattle futures closed an average of 62¢ higher, from 40¢ higher at the back to $1.35 higher in spot Aug.

Feeder Cattle futures closed sharply lower, though, beaten down by light trade and the surge in grain futures.

Feeder Cattle futures closed an average of $1.52 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 $1.22 lower Wednesday afternoon at $219.25/cwt. Select was 63¢ lower at $195.36.

Corn futures closed mostly 12¢ to 19¢ higher through Jul ‘20, and then mostly 1¢ to 3¢ higher.

Soybean futures closed 9¢ to 10¢ higher though Aug ’20 and then mostly 6¢ higher.

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Major U.S. financial indices closed sharply higher Wednesday—record high for the DJIA and NASDAQ—as investors seemed to think weaker labor data will hasten the Fed’s decision to cut rates.

Private sector, non-farm employment increased by 102,000 in June, according to the closely watched ADP National Employment report. That was about 24% less than the trade expected.

The Dow Jones Industrial Average closed 179 points higher. The S&P 500 closed 22 points higher. The NASDAQ was up 61 points.

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“Financial stress for many in agriculture continues to build amid unprecedented uncertainty from trade disputes and weather disasters,” say analysts with CoBank’s Knowledge Exchange Division (KED), in that organization’s Quarterly U.S. Economic Rural Review. “Nearly all sectors of agriculture were affected last quarter by the inundation of spring rains that kept farmers out of fields throughout the U.S. The amount of acreage lost to prevented planting will remain the major unknown in the months ahead for ag commodities markets.”

In fact, the KED folks say elevated corn prices could alter the modest beef cow herd growth previously expected.

On the other side of the ledger, U.S. beef exports and other meat exports could benefit from African Swine Fever in Southeast Asia.

“An expected decline in Chinese pork production will spur a surge of beef, pork, and chicken imports into China as it tries to fill a shortfall in animal protein supply that no single pork-producing country will be able to fill,” say KED analysts.

Among other highlights from the KED Quarterly Review:

Global economic development continues to slide as tariffs drag on global trade and manufacturing.

Despite domestic GDP growth of 3.1% in the first quarter, the pace of investment spending, manufacturing, and demand for capital goods have eased in recent months, and the slowdown trend is widely expected to persist through the remainder of the year.