WLI

Negotiated cash fed cattle trade ended up $1 higher in the Southern Plains last week at $106/cwt. Live prices were also $1 higher in Nebraska at $107-$108 and steady to $3.50 higher in the western Corn Belt at mostly $110. Dressed trade was $6-$10 higher in Nebraska at $175-$178, in a light test. In the western Corn Belt, dressed prices were $4-$6 higher at $174-$178.

Week to week (ending Aug. 25), the average 5-area direct steer price was 44¢ more on a live basis at $107.12, according to USDA. The average dressed steer price was $4.39 more at $175.34.

That was with 55,786 head of fed cattle slaughter, which were 10,874 more than the previous week. Estimated total cattle slaughter for the week was 654,000 head, according to USDA’s Weekly Livestock, Poultry and Grain Highlights. That was 3,000 head more than the previous week’s estimated slaughter. Total estimated cattle slaughter the week of the Tyson fire was 645,000 head.

Cattle futures made strong gains to start the week, buoyed by Friday’s friendlier than expected Cattle on Feed report, the weekend announcement of a new trade pact with Japan (see below), as well as reports that China is willing to renew trade talks with the U.S.

Live Cattle futures closed an average of $1.29 higher, recapturing most of Friday’s decline.

Feeder Cattle futures closed an average of $1.80 higher, recovering about three-quarters of what was lost in the previous session.

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

Choice boxed beef cutout value was 54¢ higher Monday afternoon at $238.06/cwt. Select was $1.05 lower at $211.66.

Corn futures closed mostly fractionally higher.

Soybean futures closed 6¢ to 10¢ higher.

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Major U.S. financial indices closed higher Monday with the aforementioned reports that China wants to return to the trade negotiation table with the U.S.

The Dow Jones Industrial Average closed 269 points higher. The S&P 500 closed 31 points higher. The NASDAQ was up 101 points.

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Positive news for U.S. beef exports came over the weekend with the announcement that the U.S. and Japan reached agreement, in principal, on a bilateral trade pact. In terms of value, Japan continues to be the leading customer for U.S. beef.

According to U.S. Trade Representative Robert Lighthizer, the agreement focuses on agriculture, industrial tariffs and digital trade.

“In the agriculture area, it will be a major benefit for beef, pork, wheat, dairy products, wine, ethanol, and a variety of other products,” Lighthizer explained during a Sunday press conference. “It will lead to substantial reductions in tariffs and non-tariff barriers across the board…this will allow us to compete more effectively with people across the board, particularly the TPP countries and Europe.”

The U.S. tariff disadvantage in Japan increased when the U.S. withdrew from the Trans Pacific Partnership (TPP), while the other 11 nations involved in TPP ultimately agreed to the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP). With it, key U.S. beef export competitors, including Australia and Canada, gained tariff advantage over the U.S. on beef exports to Japan.

“This announcement is tremendous news for U.S. farmers and ranchers, and for everyone in the red meat supply chain, because it will level the playing field for U.S. pork and beef in the world’s most competitive red meat import market,” says Dan Halstrom, president and CEO of the U.S. Meat Export Federation (USMEF). “It is also a very positive development for our customer base in Japan, which USMEF and our industry partners have spent decades building. These customers have been very loyal to U.S. pork and beef, but our exports to Japan could not reach their full potential under Japan’s current tariff structure.”

According to Lighthizer, Japan currently imports about $14 billion worth of U.S. agricultural products.

“The Meat Institute applauds the Trump Administration for negotiating better access to a critical and growing market for American beef and pork,” says Julie Anna Potts, CEO of the North American Meat Institute. “The U.S. will be better able to compete with the Comprehensive and Progressive Trans-Pacific Partnership nations and the European Union for valuable market share.”

“Removing the massive 38.5% tariff on U.S. beef will level the playing field in Japan, and we are very thankful to President Trump and his trade team for continuing to fight on behalf of America’s ranching families,” says Jennifer Houston, president of the National Cattlemen’s Beef Association. “Last year, Japanese consumers purchased over $2 billion of U.S. beef, accounting for roughly one-quarter of overall U.S. beef exports.”

Negotiated cash fed cattle trade was $1 higher in the Southern Plains on Friday at $106/cwt. Although there were too few transactions to trend, early sales were higher in Nebraska at $108 on a live basis and $175-$178 in the beef; $176 in the western Corn Belt.

Cattle futures closed sharply lower Friday beneath the weight of a variety of factors that included record-high July U.S. red meat production, the sharp month-to-month increase in frozen beef supplies and sharply lower outside markets tied to increasingly volatile trade relations between the U.S. and China.

Live Cattle futures closed an average of $1.56 lower, except for 35¢ lower in spot Aug.  

Feeder Cattle futures closed an average of $2.50 lower ($1.05 to $3.17 lower).

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

Choice boxed beef cutout value was $1.76 lower Friday afternoon at $237.52/cwt. Select was $3.20 lower at $212.71.

Corn futures closed 2¢ to 3¢ lower through Jul ’20 and then mostly 1¢ lower.

Soybean futures closed mostly 9¢ to 12¢ lower through Jul ’20 and then mostly 2¢ to 8¢ lower.

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Major U.S. financial indices plummeted lower Friday with accelerated tariffs and counter-tariffs between the U.S. and China.

The Dow Jones Industrial Average closed 626 points lower. The S&P 500 closed 75 points lower. The NASDAQ was down 239 points.

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If anything, the monthly Cattle on Feed report should likely be viewed as neutral to slightly bullish, with July placements less than expected, while July marketings and the Aug. 1 inventory were in line with pre-report estimates.

Placements in July of 1.70 million head were 2.12% less than the previous year.In terms of placement weight, 36.36% went on feed weighing 699 lbs. or less; 46.62% weighing 700-899 lbs.; 17.00% weighing 900 lbs. or more.

Marketings in July of 2.00 million head were 6.89% more than the prior year.

Cattle on feed Aug. 1 of 11.11 million head were 0.17% more than the same time last year. “This makes the fourth month in a row that the on-feed number is the largest since the data series started in 1996,” according to the Agricultural Marketing Service. 

Negotiated cash fed cattle trade remained largely undeveloped through Thursday afternoon, based on USDA reports. However, although too few to trend, there were some early dressed sales in Nebraska at $170-$178/cwt., which was $2 lower to $6 higher than last week. There were also a few dressed trades in the western Corn Belt at $178, which was $6-$8 higher than the previous week.

Despite more pressure in Lean Hogs, Cattle futures on Thursday took another measured step closer to where they were before the Tyson fire.

Live Cattle futures closed an average of 84¢ higher (40¢ higher at the back to $2.30 higher in spot Aug at $104.975). 

Feeder Cattle futures closed an average of 82¢ higher.

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

Choice boxed beef cutout value was $2.46 lower Thursday afternoon at $239.28/cwt. Select was 21¢ higher at $215.91.

Corn futures closed fractionally higher.

Soybean futures closed mostly 3¢ to 4¢ lower.

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Major U.S. financial indices closed narrowly mixed Thursday, with investors apparently content to wait for the much-anticipated speech from Fed Chairman Jerome Powell on Friday.

The Dow Jones Industrial Average closed 49 points higher. The S&P 500 closed 1 point lower. The NASDAQ was down 28 points.

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Commercial red meat production in July was record high for the month at 4.59 billion lbs., which was 8% more than the same time last year, according to USDA’s monthly Livestock Slaughter report released yesterday. Keep in mind there was an extra weekday in July this year.

The total included beef production for the month of 2.36 billion lbs., which was 6% more than last year. Average steer carcass weight for July was 866 lbs., which was 4 lbs. less than the same time a year earlier. The average carcass weight for heifers was 796 lbs., which was 7 lbs. less than the previous year.

Total cattle slaughter in July was 2.90 million head, which was 120,600 head more than the same month last year.

For January through July, commercial red meat production of 31.4 billion lbs. was 3% more than the same period last year. Accumulated beef production was 1% higher; pork production was up 5%.

Total pounds of beef in freezers as of July 31 were 12% more than the previous month, but 6% less than the previous year, according to the monthly USDA Cold Storage report.

Frozen pork supplies were down 3% from the previous month but were 9% more than last year.

Total red meat supplies in freezers were up 3% from the previous month and up 1% from last year.

Total frozen poultry supplies were 2% more than the previous month but 4% less than a year earlier.

Negotiated cash fed cattle trade remained undeveloped through Wednesday afternoon, based on USDA reports.

Choice steers brought $1.75-$2.00/cwt. higher at the fat auction in Tama, Iowa. Ch 2-4 steers (152 head) at an average of 1,344 lbs. brought an average of $109.27/cwt. Choice heifers were $2.25-$2.50 higher.

Similarly, slaughter steers sold $3-$4 higher at Sioux Falls Regional in South Dakota; $5-$6 higher for slaughter heifers. Ch 2-3 steers (182 head) weighing an average of 1,440 lbs. brought an average of $108.89.

Incrementally, Cattle futures continued to recover some of last week’s steep losses, helped along by wholesale beef strength, as well as notions that Friday’s Cattle on Feed report should be neutral to slightly bullish (see below).

Live Cattle futures closed an average of 53¢ higher (17¢ higher at the back to 95¢ higher).

Feeder Cattle futures closed an average of $1.09 higher (77¢ to $1.57 higher).

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

Choice boxed beef cutout value was 4¢ higher Wednesday afternoon at $241.74/cwt. Select was $1.43 higher at $215.70.

Corn futures closed mostly 1¢ to 2¢ higher.

Soybean futures closed mostly 3¢ to 4¢ higher.

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Major U.S. financial indices closed higher Wednesday, recovering losses from the previous session. Support included loftier quarterly earnings than expected from consumer giants Lowes and Target.

The Dow Jones Industrial Average closed 240 points higher. The S&P 500 closed 23 points higher. The NASDAQ was up 71 points.

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Positive forage conditions for longer grazing, as well as the bump higher in grain prices earlier this summer are among reasons market analysts seem to be expecting lower year-over-year July feedlot placements when the monthly Cattle on Feed report comes out Friday.

For instance, analysts at Allendale, Inc. estimate July placements to be 1.6% less than last year. Analysts surveyed by Urner Barry expect, on average, placements to be 0.5% less, according to the Daily Livestock Report.

If either are correct, Allendale analysts point out it would be the third consecutive month of placements below year-earlier levels.

“Concerns over feedlot profitability, and more restrained supplies of replacement feeders are two important reasons,” say Allendale analysts. “July placements supply a portion of the January through April finished cattle supply. Kansas State University estimates fed cattle finishing in that period may run losses averaging $106 per head.”

Helped along by an extra marketing day in July this year, both estimate marketings to be 6.6-6.8% more than a year earlier.

Allendale’s estimate puts marketing in July at 1.997 million head. That would be the most for the month in 11 years, according to analysts there.

Likewise, between both sources, cattle on feed Aug. 1 is estimated to be up 0.5-0.6%, compared to the same time last year.