WLI

Cattle futures rallied Monday, helped along by stronger cash fed cattle prices last week, as well as Friday’s bullish Cattle on Feed report.

Live Cattle futures closed an average of $1.54 higher ($1.05 to $2.62 higher).

Feeder Cattle futures closed an average of $2.03 higher ($1.77 to $2.70 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 52¢ lower Monday afternoon at $216.45 cwt. Select was 88¢ lower at $190.84.

Corn futures closed 1¢ to 2¢ higher.

Soybean futures closed 5¢ to 9¢ higher through Sep ’20 and then mostly 1¢ to 2¢ higher. 

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Major U.S. financial indices closed narrowly mixed and little changed on Monday. Pressure included weak manufacturing data out of Europe, adding to concerns about the global economy.

The Dow Jones Industrial Average closed 14 points higher. The S&P 500 closed fractionally lower. The NASDAQ was down 5 points.

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Although the cyclical peak in feedlot inventories likely remains in the future, Derrell Peel, Extension livestock marketing specialist at Oklahoma State University notes the year-over-year decline of 1.3% decline in September was the first monthly decrease since December of 2016.

“The short-term disruption of the plant fire in August and early September likely delayed some feedlot placements, but a larger 2018 calf crop and generally good forage conditions in 2019 likely means that significant numbers of yearlings are still to be marketed in the fourth quarter,” Peel explains in his weekly market comments. “The estimated 2019 calf crop is equal to 2018 levels, meaning that plenty of new-crop calves will be marketed this fall, with feeder supplies ample through 2020. It will likely be a few more months before we will see sustained year-over-year decreases in feedlot inventories.”

Peel also points out August feedlot placements estimated in the monthly Cattle on Feed report were down for the fourth consecutive month.

“Total placements the last six months, capturing the bulk of current cattle on feed, are down 0.8% percent year over year,” Peel says. “Monthly marketings for the past six months are up 1.0% year over year. Feedlots have continued to market cattle timely and maintain currentness.”

Negotiated cash fed cattle prices continued to look stronger through Friday afternoon, based on USDA reports. Although too few to trend, there were a few live trades reported at $102/cwt. in Kansas and Nebraska, which was $1-$2 higher than the previous week. Overall, live trade in in the Southern Plains was $1 higher at $101 and steady to $2 higher in the western Corn Belt at $100-$104. Dressed trade was $2-$7 higher in Nebraska at mostly $162; steady to $5 higher in the western Corn Belt at $160-$165.

Cattle futures closed a touch softer in sluggish trade on Friday with apparent positioning ahead of the monthly Cattle on Feed report (see below) and ahead of the weekend.

Live Cattle futures closed an average of 37¢ lower.

Except for an average of 32¢ higher in the front two contracts, Feeder Cattle futures closed an average of 44¢ lower.

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

Choice boxed beef cutout value was $1.20 lower Friday afternoon at $216.97 cwt. Select was 44¢ lower at $191.72.

Corn futures closed mainly 2¢ to 3¢ lower.

Soybean futures closed mostly 6¢ to 9¢ lower.

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Major U.S. financial indices closed lower on Friday. Apparently, the primary pressure was circulation of a report that Chinese officials cut short or cancelled their planned visit to a U.S. farm, which investors viewed in a bearish light.

The Dow Jones Industrial Average closed 159 points lower. The S&P 500 closed 14 points lower. The NASDAQ was down 65 points.

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As many suspected, there were fewer cattle placed on feed in August, year over year and fewer total cattle on feed Sept. 1. If anything, though, Friday’s monthly Cattle on Feed report was more bullish than anticipated.

Placements in August for feedlots with 1,000 head or more capacity was 1.88 million head, which was 186,000 head fewer, or 8.99% less than the previous year. Most analyst estimates ahead of the report were for a decline of 6-8%.

In terms of placement weight, 36.35% went on feed weighing 699 lbs. or less, 45.85% weighing 799-899 lbs. and 17.78% weighing 900 lbs. or more.

Marketings in August of 1.95 million head were 1.51% less, compared to the 1.7% to 1.9% reduction analysts expected.

Cattle on feed Sept. 1 of 10.98 million head were 143,000 head fewer, or 1.29% less than a year earlier. Ahead of the report analysts anticipated a decline of about 0.50% to 1.0%.

Negotiated cash fed cattle trade remained undeveloped through Thursday afternoon, according to USDA reports. Although too few to trend, there were a few live trades reported at $100-$101/cwt. in Kansas, which was $1 higher than last week.

Cattle futures closed mostly narrowly higher as traders anticipated cash trade and Friday’s monthly Cattle on Feed report.

Except for an average of 45¢ lower in the front two contracts, Live Cattle futures closed an average of 35¢ higher.

Except for an average of 20¢ lower in May, Feeder Cattle futures closed an average of 49¢ higher, from 7¢ higher to $1.00 higher.

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

Choice boxed beef cutout value was 7¢ lower Thursday afternoon at $218.17 cwt. Select was 19¢ higher at $192.16.

Corn futures closed fractionally higher to 1¢ higher.

Soybean futures closed 1¢ to 4¢ higher through Aug ’20 and then mostly 3¢- 6¢ lower.

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Major U.S. financial indices closed little changed on Thursday.

The Dow Jones Industrial Average closed 52 points lower. The S&P 500 closed unchanged. The NASDAQ was up 5 points.

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Depending on which analysts you consult, many expect Friday’s monthly Cattle on Feed report to show August placements approximately 6-8% less year over year, fueled in part by available forage and the tougher prices. August marketings are expected to be about 1.5% less. Most believe cattle on feed Sept. 1 will be less year to year—up to 1% less—for the first time in several years.

In the meantime, fed cattle slaughter continues to suggest current feedlot marketing, despite the logistical challenges from the hole in capacity, due to the Tyson fire.

The average fed steer dressed weight the week ending Sept. 7 was 893 lbs. according to USDA’s Actual Slaughter Under Federal Inspection report. That was 9 lbs. heavier week to week but 3 lbs. less year to year. Likewise the average dressed heifer weight was 4 lbs. heavier week to week, but 4 lbs. lighter year over year at 815 lbs.

Negotiated cash fed cattle prices took on a firmer feel Wednesday.

There were 1,229 head offered in the weekly Fed Cattle Exchange auction. Of those, 281 head—two lots in the Southern Plains—sold for a weighted average price of $101.13/cwt., for delivery at 1-9 days. That’s $1-$2 more than negotiated trade in the region last week.

Slaughter steers and heifers sold $3-$5 higher at Sioux Falls Regional in South Dakota. Choice 2-3 steers (319 head) averaged $103.40. Country trade in the region last week was at $101-$102.

Likewise, steers and heifers sold $4-$5 higher at the fat auction in Tama, IA. Choice 2-4 steers (197 head) averaged $107.54.

That helped Cattle futures close higher, despite continued erosion in wholesale beef values.

Except for an average of 10¢ lower in the back two contracts, Live Cattle futures closed an average of 59¢ higher.

Feeder Cattle futures closed an average of 76¢ higher.

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

Choice boxed beef cutout value was $1.53 lower Wednesday afternoon at $218.24/cwt. Select was $1.94 lower at $191.97.

Corn futures closed 2¢ to 3¢ higher through the front three contracts and then mostly fractionally higher.

Soybean futures closed mostly 4¢ lower.

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Major U.S. financial indices closed little changed on Wednesday. There was pressure earlier in the session, tied to the Fed meeting. Investors got the widely anticipated rate cut (down 25 basis points) but no confirmation that the central bank plans any more cuts this year.

“In light of the implications of global developments for the economic outlook as well as muted inflation pressures, the Committee decided to lower the target range for the federal funds rate to 1.75- 2.00%,” according to a statement from the FOMC. “This action supports the Committee’s view that sustained expansion of economic activity, strong labor market conditions, and inflation near the Committee’s symmetric 2% objective are the most likely outcomes, but uncertainties about this outlook remain.”

The Dow Jones Industrial Average closed 36 points higher. The S&P 500 closed 1 point higher. The NASDAQ was down 8 points.

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USDA expects lingering effects from the Tyson fire to keep pressure on feeder cattle prices, at least through the first part of next year.

“The shift in demand for fed cattle has put considerable pressure on feeder steer prices. Weakness in fed cattle prices will likely affect feedlots’ pricing of feeder cattle,” say analysts with USDA’s Economic Research Service (ERS), in the monthly Livestock, Dairy and Poultry Outlook released yesterday. “On Sept. 9 at the Oklahoma National Stockyards, sales of feeder steers weighing 750-800 lbs. were reported at $134.80/cwt., down about $6 from the week before the fire. Based on recent price data, the third-quarter 2019 feeder steer price was lowered by $4 to $138/cwt. Because of the expected continuation of weaker fed cattle prices and a slower pace of marketing, the 2019 fourth-quarter feeder steer price forecast was lowered $5 from the prior month to $133. The impact of lower fed cattle prices is likely to carry into 2020. The price forecasts for feeder steer prices in the first and second quarter of 2020 were reduced by $5 to $135 and $140, respectively. As a result, the 2020 annual price forecast for feeder steers was $140.50 per cwt.”

As for the weaker fed cattle prices driving the pressure, ERS analysts point out the average 5-area direct fed steer price last week of $110.07/cwt. was almost 11% less than the week of the fire. Expected fed steer price for the third quarter was reduced by $3 to $107/cwt.

“With the expected return of the Holcomb plant in first-quarter 2020, the additional capacity would suggest some price support for fed cattle in early 2020. However, to the extent feedlots may have held cattle over from fourth-quarter 2019 into early 2020, increased availability of cattle may mitigate some of the upward pressure on prices from increased packer demand,” ERS analysts explain. “Accordingly, the first and second-quarter price forecasts for 2020 were reduced by $5 to $119 and $117, respectively. As a result, the 2020 annual price forecast for fed steers was lower by $4 to $115 per cwt.”

Cattle futures rallied higher Tuesday. Some of it could be traders sensing a bottom in the cash market, as well as potential optimism about the monthly Cattle on Feed report due out Friday.

Live Cattle futures closed an average of $1.32 higher through the front three contracts and then an average of 48¢ higher.

Feeder Cattle futures closed an average of $2.34 higher ($1.77 to $3.10 higher).

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

Choice boxed beef cutout value was 85¢ lower Tuesday afternoon at $219.77/cwt. Select was $2.66 lower at $193.91.

Corn futures closed mostly 6¢ lower.

Soybean futures closed 5¢ to 6¢ lower through Aug ’20 and then mostly 1¢ to 2¢ lower.

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Major U.S. financial indices edged higher Tuesday, helped by lower oil prices, as investors await the latest interest rate decision from the Fed’s meeting, which concludes Wednesday.

Oil prices declined after the previous day’s spike, with reports that Saudi Arabian production will recover quickly from the weekend attacks on its oil fields.

Through the front six contracts, crude oil futures (WTI-CME) were down an average of 3.24.

The Dow Jones Industrial Average closed 33 points higher. The S&P 500 closed 7 points higher. The NASDAQ was up 32 points.

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“If we want to knock down barriers we need to make all players feel valued,” says Marcelo Gonzalez, Paraguayan Vice Minister of Livestock. “Think ahead and have a plan that thinks beyond 10 or 20 years to be sustainable. Sometimes farmers are already doing what we want them to do, but consumers don’t know and government doesn’t know.”

Gonzalez spoke at last week’s 9th annual meeting of the Global Agenda on Sustainable Livestock (GASL), at Kansas State University.

Besides being the first time the GASL meeting took place in the United States, it was also the first time trade issues were part of the formal agenda.

“Sustainability should go hand in hand with negotiation,” Gonzalez explained, adding that transparency and consumer education is also important. “Some car companies have said they won’t use leather because they don’t want to support an industry that’s not sustainable. They don’t realize they’re hurting farmers who are trying to produce in more sustainable ways.”

Trade is essential to sustainable outcomes, according to Jason Hafemeister, U.S. Department of Agriculture Foreign Agricultural Service.

“We have to produce more with less,” Hafemeister said, but warned that if productivity is driven by something other than consumer preferences, it can be captured by special interests.