WLI

Negotiated cash fed cattle trade developed Thursday at mostly decidedly lower money. Except for mostly steady in Kansas at $110/cwt., live trade was $2-$4 lower at $110 in Nebraska and the Texas Panhandle; $110-$114 in the western Corn Belt. Dressed trade was $3-$4 lower at $180-$183.

Resurgent corn prices—after a couple of days of repositioning—weighed heavy on Cattle futures Thursday.

Live Cattle futures closed an average of 69¢ lower.

Feeder Cattle futures closed an average of $1.47 lower.

Corn futures closed 7¢ to 10¢ higher through Jul ‘20 and then mostly fractionally higher to 1¢ lower.

Soybean futures closed 10¢ to 13¢ higher through Jan ‘21 and then mostly 9¢ higher.

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

Choice boxed beef cutout value was 87¢ lower Thursday afternoon at $220.72/cwt. Select was 76¢ lower at $201.48.

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Major U.S. financial indices closed sharply higher Thursday. Support included follow through optimism that the Fed will cut interest rates, as well as a bounce in energy.

Crude oil prices (WTI-CME) jumped $2.87 to $3.10 on 2019 contracts with reports that Iran shot down a U.S. surveillance drone flying over international waters. Along with recent tanker bombings in the Gulf of Oman, the move could escalate tensions between the U.S. and Iran. By some calculations, about 20% of global oil consumption must move from the Persian Gulf through the Strait of Hormuz to get to open water. Iranian territorial waters lie within the Strait.

The Dow Jones Industrial Average closed 249 points higher. The S&P 500 closed 27 points higher. The NASDAQ was up 64 points.

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Commercial red meat production of 4.57 billion lbs. in May was 1% more than the previous year and record-large, according to USDA’s monthly Livestock Slaughter report issued yesterday.

Beef production of 2.33 billion lbs. was up 1% year over year, as was total cattle slaughter of 2.94 million head.

For January through May of this year, commercial red meat production of 22.4 billion lbs. was 2% more than the same period last year.

At 847 lbs., the average dressed steer weight in May was 12 lbs. less than the previous month and 1 lb. less than the previous year. Average dressed heifer weight was 788 lbs., which was 11 lbs. less than the previous month and 2 lbs. lighter than the previous year.

Lower year-over-year carcass weights continued through the first week of June, according to USDA’s Actual Slaughter Under Federal Inspection report. Average dressed weights for both steers (846 lbs.) and heifers (782 lbs.) were 5 lbs. lighter year over year (week ending June 8).

Early indications for negotiated cash fed cattle trade this week appeared to be steady to lower on Wednesday.

Although too few transactions to trend, there were some early sales in the western Corn Belt $1-$2 lower than last week at $112-$115/cwt. Dressed sales were steady to $4 lower $180-$184.

Likewise, Choice 2-4 steers traded $2.00-$2.50 lower at the fat auction in Tama, IA: an average of $118.11/cwt. for steers weighing an average of 1,329 lbs.

On the other hand, slaughter steers sold steady to firm at Sioux Falls Regional in South Dakota: $113.98/cwt. for Ch 2-3 at an average of 1,373 lbs.

There were only three lots (315 head) offered in the weekly Fed Cattle Exchange auction, and no sales.

Perhaps cash uncertainty was one reason behind sputtering Cattle futures, despite stronger Lean Hogs and softer Corn. Along with continued fretting over demand and sluggish trade, erosion might also be linked to position squaring.

Live Cattle futures closed an average of 77¢ lower (15¢ lower at the back to $1.07 lower).

Except for 13¢ higher in three away contracts, Feeder Cattle futures closed an average of 37¢ lower, amid extremely light trade.

Corn futures closed 8¢ to 9¢ lower through Jul ‘20 and then mostly 1¢ to 3¢ lower.

Soybean futures closed 8¢ to 11¢ lower through Mar ‘20 and then 5¢ to 6¢ lower.

Incidentally, heading into Friday’s monthly Cattle on Feed report, analysts surveyed for Bloomberg expect May placements to be about 4% less year over year, May marketings to be nearly 1% more and the on-feed inventory June 1 to be a little over 1% more.

Wholesale beef values were firm to higher on moderate to firm demand, according to the Agricultural Marketing Service.

Choice boxed beef cutout value was $1.06 higher Wednesday afternoon at $221.59/cwt. Select was 44¢ higher at $202.24.

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Major U.S. financial indices edged higher Wednesday. Although the Federal Open Market Committee (FOMC) left interest rates unchanged, markets seemed buoyed by indications that the Fed was leaving the door open to rate cuts.

“The Committee continues to view sustained expansion of economic activity, strong labor market conditions, and inflation near the Committee’s symmetric 2% objective as the most likely outcomes, but uncertainties about this outlook have increased,” according to an FOMC statement. “In light of these uncertainties and muted inflation pressures, the Committee will closely monitor the implications of incoming information for the economic outlook and will act as appropriate to sustain the expansion…”

The Dow Jones Industrial Average closed 38 points higher. The S&P 500 closed 8 points higher. The NASDAQ was up 33 points.

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As many folks trying to lease or buy pasture in recent years can attest, the value continues to rise. USDA’s Agricultural Land Values-Final Estimates released yesterday provide some perspective. The average value of pasture increased every year, from $1,290 per acre in 2014 to $1,370 in 2018.

Conversely, average Cropland value in 2018 was $4,050 per acre, $20 less than a year earlier and $40 less than in 2014.

Some examples of average pasture value for the states with the most beef cows: Texas ($1,570); Oklahoma ($1,380); Missouri ($1,920); Nebraska ($975); South Dakota ($1,040); Kansas ($1,320); Montana ($667); Kentucky ($3,000).  

Cattle futures mostly maintained and extended gains from the previous session on Tuesday, buoyed by a breather in the Corn rally and higher outside markets.

Except for unchanged and 7¢ lower in the front two contracts, Live Cattle futures closed an average of 71¢ higher.

Feeder Cattle futures closed an average of 75¢ higher (32¢ up front to $1.27 higher at the back).

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 $1.29 lower Tuesday afternoon at $220.53/cwt. Select was 71¢ lower at $201.80.

Corn futures closed mostly 4¢ to 6¢ lower through Sep ‘20 and then mostly fractionally mixed.

Soybean futures closed fractionally higher to 1¢ higher through Mar ‘20 and then fractionally lower to 1¢ lower.

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Major U.S. financial indices closed sharply higher Tuesday, apparently based on speculation, more than anything. First, speculating that a China trade deal is within grasp as reports indicate President Trump is scheduled to meet with China’s leader ahead of the G20 Summit scheduled June 28-29. Next, speculation that the Fed will conclude its meeting Wednesday with either a rate cut or language signaling that they will ease rates sooner rather than later. Markets were also buoyed by reports that the European Central Bank stood ready to provide more economic stimulus in an effort to stimulate economic growth.

West Texas Intermediate Crude Oil futures on the CME also bounced higher on hopes of increased demand. Contracts for the remainder of this year closed $1.64-$1.97 higher.

The Dow Jones Industrial Average closed 353 points higher. The S&P 500 closed 28 points higher. The NASDAQ was up 108 points.

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“It is a rare year in that corn prices are significantly higher while pasture conditions are in better shape than is usually expected this time of year,” says Josh Maples, Extension agricultural economist at Mississippi State University, in the latest issue of In the Cattle Markets. “This is likely to lead to shifts in how gain is added to feeders this year. Producers may glance at the lower prices offered and decide to push them a little longer on pasture. This could potentially lead to slower feedlot placements and temper 2019 beef production slightly.”

After year-to-year strength in April, Maples points out cash feeder cattle prices followed Feeder Cattle futures lower, due to a number of factors

“The usual peak in March or April is generally followed by a decline into the summer. Add in a bearish April Cattle on Feed report, weaker export totals, and the corn market rally, and there was not much good news for cattle markets in late April and May,” Maples explains. “Large supplies are still a major piece of the market puzzle, also. U.S. cattle slaughter for the first quarter of 2019 was about 1% above a year ago. However, lower cattle dressed weights have helped to moderate beef supplies.”

Cattle futures faded early follow through pressure Monday morning to rally back for a positive close.

Except for 20¢ lower in the back contract, Live Cattle futures closed an average of 71¢ higher (27¢ to $1.35 higher).

Feeder Cattle futures closed an average of $1.19 higher after four consecutive sessions of lower money (75¢ to $1.45 higher).

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 41¢ lower Monday afternoon at $221.82/cwt. Select was 25¢ lower at $202.51.

Corn futures closed mostly 4¢ to 5¢ higher through Sep ‘20 and then mostly fractionally higher to 1¢ higher.

Soybean futures closed 10¢ to 16¢ higher through Jul ‘20 (16¢ higher in the front four contracts) and then 6¢ to 9¢ higher.

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Major U.S. financial indices edged higher Monday, basically erasing minimal losses from the previous session. Traders are likely content to wait for further direction from the Fed meeting scheduled to take place Tuesday and Wednesday.

The Dow Jones Industrial Average closed 22 points higher. The S&P 500 closed 2 points higher. The NASDAQ was up 48 points.

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“Softening fed cattle prices in 2019 and the prospect of higher feed input costs could delay steers and heifers from entering feedlots,” say analysts with USDA’s Economic Research Service, in the monthly Livestock, Dairy and Poultry Outlook (LDPO) released Monday. “This could incentivize keeping lightweight cattle on pasture longer to add weight, which may lead to a more gradual pace of heavier cattle placed on feed so that feedlots will spend less time feeding them to the appropriate finishing weights. The slower pace of placement will likely be reflected in fewer fed cattle to be marketed for slaughter in early 2020.”

Higher anticipated feed costs and the anticipated slower pace of fed cattle marketings in the fourth quarter are behind the reduction in projected beef production for this year to 27.2 billion lbs., which would still be 332 million lbs. more than last year.

“Lower fed cattle prices have turned feedlot margins negative, and higher forecast feed input prices could make feedlots less willing to bid up prices for feeder cattle for the rest of 2019,” say ERS analysts. “Based on recent price data, the second-quarter 2019 feeder steer price was lowered by $3 to $142/cwt. Faced with continued poor operating margins, the 2019 third and fourth-quarter price forecasts were each lowered $5 from the prior month to $145 and $142/cwt., respectively. As a result, this month’s annual price forecast for 2019 was $4 lower at $142. The 2020 annual price forecast was reduced $5 from last month’s forecast to $145/cwt. as higher forecast feed costs and a lower forecast for fed cattle prices weigh on feedlot margins.”