WLI

Negotiated cash fed cattle trade appeared steady to either side of even in two regions through Friday afternoon.

Live sales in the western Corn Belt, was mainly steady at $114-$115/cwt., while dressed sales were steady to $2 higher at $184-$186.

The Texas Cattle Feeders Association reported its members trading at $112, which was $1 less than the previous week.

Cattle futures continued to soften Friday with continued pressure from rising grain prices.

Live Cattle futures closed an average of 56¢ lower.

Feeder Cattle futures closed an average of 88¢ lower amid extremely light trade.

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

Choice boxed beef cutout value was 13¢ higher Friday afternoon at $222.23/cwt. Select was $1.95 lower at $202.76.

Corn futures closed 4¢ to 11¢ higher through Jul ‘20 and then mostly fractionally lower to 3¢ lower.

Soybean futures closed 5¢ to 8¢ higher through May ‘20 (mostly 8¢) and then mostly 1¢ to 3¢ higher.

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Major U.S. financial indices closed lower Friday. Pressure included a decline in chipmakers, tied to U.S. sanctions against China’s Huawei.

The Dow Jones Industrial Average closed 17 points lower. The S&P 500 closed 4 points lower. The NASDAQ was down 40 points.

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With the weather and flooding continuing to wreak havoc across the Northern Plains and Midwest, the Livestock Marketing Information Center (LMIC) reduced  its outlook for hay yield and increased the expected price.

Keep in mind, hay prices were already sharply higher year over year, in the latest USDA Agricultural Prices published at the end of last month. At $199/ton in April, alfalfa was $16 more than the previous year and $15 more than the previous month. At $151/ton, other hay was $27 more than last year and $4 more than in March of this year.

In the latest Livestock Monitor, LMIC notes new seedings of alfalfa in those aforementioned areas—about half of all new seedings—are likely struggling.

“Winterkill was also potentially an issue in these areas, as this winter was not the kindest either,” say LMIC analysts. “It is unknown how many of those fields face irrecoverable situations, but for now, we assume that, should the fields dry out, those acres will still be harvested, but may lose a cutting.”

Although too few transactions to trend, negotiated cash fed cattle trade for the week wobbled from the blocks at steady to lower prices. There were some early sales in the Texas Panhandle at $112/cwt., a few in Kansas at $110, as well as some early dressed sales at $185 in Nebraska and the western Corn Belt.

Feeder Cattle futures closed sharply lower Thursday but off of session lows, under continued pressure from rising grain prices. Live Cattle closed lower, to a lesser degree.

Live Cattle futures closed an average of 67¢ lower (22¢ to $1.10 lower).

Feeder Cattle futures closed an average of $1.68 lower.

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

Choice boxed beef cutout value was 5¢ lower Thursday afternoon at $222.10/cwt. Select was $2.02 lower at $204.71.

Corn futures closed 7¢ to 12¢ higher in the front three contracts and then mostly 1¢ to 4¢ higher.

Soybean futures closed mostly 5¢ to 10¢ higher through Sep ‘20 and then mostly 2¢ to 4¢ higher.

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Major U.S. financial indices closed higher Thursday, buoyed in part by a bounce to recently struggling oil prices.

The Dow Jones Industrial Average closed 101 points higher. The S&P 500 closed 11 points higher. The NASDAQ was up 44 points.

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Carcass weights continue to suggest currentness of feedlot marketing.

Average dressed steer weighing of 842 lbs. (week ending June 1) was even with the previous week and 9 lbs. less than the previous year, according to the most recent Actual Slaughter Under Federal Inspection report from USDA. Average dressed heifer weight was 6 lbs. lighter than the previous week at 779 lbs. and 7 lbs. lighter than the previous year. With 3,413 head more total cattle slaughter for the week than the previous year (1,810 head more fed slaughter), beef production for the week was 900,000 lbs. less at 463.8 million lbs.

Although 0.89% more carcasses graded Prime for the week ending May 31, carcasses grading Choice and Prime were 0.12% less with 0.80% fewer grading in the upper two-thirds of Choice.

Choice steers and heifers sold $2.00-$2.25 higher at the fat auction in Tama, IA: $120.52/cwt. for steers at 1,396 lbs.

There were 663 head offered in the weekly Fed Cattle Exchange auction, with 340 head (two Kansas lots) selling for a weighted average price of $113/cwt.; delivery at 1-9 days.

Live Cattle futures closed an average of $1.26 lower (75¢ lower at the back to $1.65 lower).

Feeder Cattle futures closed an average of 96¢ lower (32¢ lower in spot Aug to $1.30 lower).

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

Choice boxed beef cutout value was 24¢ lower Wednesday afternoon at $222.15/cwt. Select was $1.52 lower at $206.73.

Corn futures closed mostly 1¢ to 2¢ higher.

Soybean futures closed 18¢ higher in the front four contracts and then mostly 10¢ to 17¢ higher.

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Major U.S. financial indices edged lower Wednesday, amid lingering worries about trade issues. Crude oil prices (WTI-CME) were also about $2 lower for 2019 contracts with wonderments about demand, tied to wonderments about global economic growth.

The Dow Jones Industrial Average closed 43 points lower. The S&P 500 closed 5 points lower. The NASDAQ closed 29 points lower.

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“Steer and heifer calf prices are now expected to fall by about 3% in 2019 relative to last year, equivalent to taking between $4-$7/cwt. out of 500-600 lb. calf prices in the Southern Plains,” say analysts with the Livestock Marketing Information Center (LMIC), in the latest Livestock Monitor.

LMIC adjusted expected calf and feeder prices lower based on the dramatic run up in corn prices.

As mentioned in yesterday’s Cattle Current, USDA increased the expected season-average corn price 50¢ higher to $3.80/bu. in the latest World Agricultural Supply and Demand Estimates. LMIC is more bearish.

“LMIC is expecting total corn plantings this spring will be 87.4 million acres, the lowest area since 2009,” according to analysts there. “The lateness in planting also has negative implications for crop yield potential, since the crop will have less time to develop before harvest. Therefore the average yield per acre for the coming harvest is expected to fall to 162.5 bu.  Total corn harvest this fall is pegged at 13.0 billion bu., down from 14.4 billion bu. harvested last year. Corn prices will have to go up to ration the smaller supply and LMIC is calling for a crop year average price of $4.50 at the farm for the 2019-2020 corn crop.”

By way of comparison, WASDE projects corn planted area of 89.8 million acres with a yield of 166 bu./acre for total production of 13.7 billion bu.

Between the dramatic increase in expected corn prices and the adjustment lower in calf prices LMIC lowered projected cow-calf returns for this year from +$27 per head to -$14, similar to 2018. Anticipated returns for 2020 remain positive.

Moreover, LMIC anticipates higher cull  cow prices.

“Cull cow prices are still expected to move higher in 2019 by about 8.6%, averaging under $60/cwt. in the southern plains,” say LMIC analysts. “LMIC is expecting a substantial rebound in the cull cow price as both beef and dairy cow slaughter is expected to pull back by 2020.”

Live Cattle futures and Feeder Cattle ran in opposite directions Tuesday as Corn futures strengthened on the monthly World Agricultural Supply and Demand Estimates (see below).

Live Cattle futures closed an average of 67¢ higher (40¢ to $1.02 higher).

Feeder Cattle futures closed an average of 68¢ lower (10¢ lower at the back to $1.70 lower in spot Aug).

Wholesale beef values were firm 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 73¢ higher Tuesday afternoon at $222.39/cwt. Select was 54¢ lower at $208.25.

Corn futures closed 10¢ to 12¢ higher through May ‘20 and then mostly 4¢ to 6¢ higher.

Soybean futures closed 1¢ to 3¢ higher.

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Major U.S. financial indices edged lower Tuesday.

The Dow Jones Industrial Average closed 14 points lower. The S&P 500 closed 1 point lower. The NASDAQ closed fractionally lower.

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Analysts with USDA’s Economic Research Service (ERS) reduced estimated beef production for this year by 65 million lbs. to 27.20 billion lbs., in the latest World Agricultural Supply and Demand Estimates (WASDE).

“The decline in beef production largely reflects lower steer and heifer slaughter in the second half of the year…as incentives to add weight on pasture slows the pace of feedlot placements,” say ERS analysts.

If realized, estimated total production would still be 332 million lbs. more than last year.

Estimated fed steer price for the year (5-area Direct) was lowered $1.50 from the previous month to $117/cwt. Prices are forecast to average $118 in the second quarter, $110 in the third quarter and $114 in the fourth.

Corn

Despite an increase to projected beginning corn stocks, based on reduced exports, WASDE estimates ending stocks 810 million bu. lower to 1.7 billion bu.—the lowest since 2013-14—with lower production.

“Corn production for 2019-20 is forecast to decline 1.4 billion bu. to 13.7 billion, which if realized would be the lowest since 2015-16,” say ERS analysts. “Unprecedented planting delays observed through early June are expected to prevent some plantings and reduce yield prospects. USDA will release its Acreage report June 28, which will provide survey-based indications of planted and harvested area.” USDA slashed expected yield per acre by 10 bu. to 166 bu./acre, compared to the prior month’s estimate. That would be 6.4 bu. less than the projection for 2018-19. USDA reduced projections for planted corn acreage by 3 million acres to 89.8 million acres.

The season-average farm price for corn was raised 50¢ to $3.80/bu. 

Soybeans

WASDE increased beginning soybean stocks on reduced exports.

“Although adverse weather has significantly slowed soybean planting progress this year, area and production forecasts are unchanged with several weeks remaining in the planting season,” explain ERS analysts.

The 2019-20 season-average price for soybeans is forecast at $8.25/bu., up 15¢ reflecting the impact of higher corn prices. Soybean meal prices are forecast at $295 per short ton, up $5. The soybean oil price forecast is unchanged at 29.5¢/lb. 

Wheat

WASDE projects U.S. 2019-20 wheat supplies lower, with reduced beginning stocks partly offset by slightly higher production.

U.S. beginning wheat stocks were estimated to be 25 million bu. less based on increased 2018-19 exports. Ending stocks were lowered 69 million bu. to 1,072 million.

“Winter wheat production is forecast up 6 million bu. to 1,274 million with an increase to Hard Red Winter more than offsetting decreases for Soft Red Winter and White Winter,” say ERS analysts. “Total wheat production is forecast at 1,903 million bu., up 5.8 million bu. from the May forecast.”

The season-average farm price for wheat was raised 40¢/bu. to $5.10, reflecting  sharply higher Wheat futures prices and reduced 2019-20 corn supplies.

Cattle futures surged higher Monday, recovering most of the losses from the previous session, even more for Live Cattle. Some attributed the reversal to the after-hours announcement on Friday that threatened U.S. tariffs on Mexican imports were suspended indefinitely.

Live Cattle futures closed an average of $2.15 higher ($1.57 to $3.00 higher).

Feeder Cattle futures closed an average of $2.31 higher.

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

Choice boxed beef cutout value was 65¢ lower Monday afternoon at $221.66/cwt. Select was $1.87 higher at $208.79.

Corn futures closed mostly 2¢ higher, except for unchanged to fractionally lower in the front three contracts. 

Soybean futures closed 2¢ to 4¢ higher, except for 7¢ higher in the back three contracts.

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Major U.S. financial indices closed higher Monday with apparent support from the aforementioned agreement between the U.S. and Mexico regarding illegal immigration that staved off U.S. tariffs.

The Dow Jones Industrial Average closed 95 points higher. The S&P 500 closed 13 points higher. The NASDAQ was up 82 points.

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“While good moisture conditions bodes well for forage growth in general, ongoing flooding and excessively wet conditions is limiting grazing and hay production in some regions,” says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly market comments. “Sloppy feedlot conditions continue to hamper feedlot production in some areas. Additionally, the record late planting of corn and soybeans this year is adding uncertainty about corn acreage and yield and is beginning to push corn prices higher. There is little doubt that the corn crop will be smaller than anticipated just a few weeks ago but carryover levels are still expected to be adequate. While significantly higher feed prices are not anticipated at this time, the uncertainty remains.”

Peel outlined the variety of quandaries adding pressure to cattle markets, including ongoing trade issues. So far this year, he says weaker year-to-year exports of beef, pork and poultry suggest the meat complex is struggling internationally.

“Weaker beef demand may be the biggest threat to cattle and beef markets for the remainder of the year,” Peel says. “Strong beef demand supported cattle and beef markets in 2017 and 2018, but there are signs that some weakness may be developing in beef demand in both domestic and international markets. While unemployment remains very low, other indications of weakness in the macro-economy are concerning and have led to reduced forecasts for U.S. economic growth in 2019; largely due to ongoing impacts of tariffs and trade disruptions. Relatively slow domestic income growth and higher prices for major consumer items, such as gasoline, combined with record large supplies of beef, pork and poultry may be limiting domestic beef demand going forward in 2019. Relatively wet and cold weather thus far has likely stifled summer beef demand somewhat and probably contributed to an early seasonal peak in boxed beef prices and recent weakness in wholesale beef values.”