WLI

Negotiated cash fed cattle trade was $3-$5 lower last week on a live basis at $115-$117/cwt. in the Southern Plains, $117 in Nebraska and $116-$118 in the western Corn Belt. Dressed prices were $2-$5 lower in the western Corn Belt at $185-$190 and $3-$10 lower in Nebraska at $185-$186.

Oversold conditions and follow-through technical support helped Cattle futures close higher Friday, especially Feeder Cattle.

Live Cattle futures close an average of $1.31 higher (80¢ to $1.80 higher).

Except for 30¢ higher in spot May, Feeder Cattle futures close an average of $2.35 higher.

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

Choice boxed beef cutout value was 75¢ higher Friday afternoon at $220.31/cwt. Select was 40¢ higher at $208.28.

Corn futures closed 1¢ to 4¢ higher through May ’20, and then mostly fractionally lower to 1¢ lower.

Soybean futures closed 14¢ to 18¢ lower, mostly 16¢-17¢ lower.

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Major U.S. financial indices closed lower Friday in a late-session sell-off attributed to reports that trade talks between the U.S. and China are at a standstill.

The Dow Jones Industrial Average closed 98 points lower. The S&P 500 closed 16 points lower. The NASDAQ was down 81 points.

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Cattle producers received positive trade news at the end of the week.

U.S. Agriculture Secretary Sonny Perdue announced on Friday that Japan agreed to eliminate longstanding restrictions on U.S. beef exports, including the 30-month cattle age limit.

The U.S. Meat Export Federation (USMEF) estimates removal of the cattle age restriction will increase exports to Japan 7% to 10%, or by $150 million to $200 million per year.

“The ability to use beef from over-30-month cattle will also lower costs for companies exporting processed beef products to Japan,” says Dan Halstrom, USMEF president and CEO. “But for the U.S. industry to fully capitalize on this growth opportunity, U.S. beef needs to be on a level playing field in Japan. So, USMEF is also anxious to see progress in the U.S.-Japan trade negotiations.”

Also on Friday, according to the Office of the United States Trade Representative,

“The United States announced an agreement with Canada and Mexico to remove the Section 232 tariffs for steel and aluminum imports from those countries and for the removal of all retaliatory tariffs imposed on American goods by those countries.”

Those tariffs were a sticking point in completing the U.S.-Mexico-Canada (USMCA) trade agreement.

“Today’s announcement is a big win for American agriculture and the economy as a whole,” says Secretary Perdue. “Canada and Mexico are two of our top three trading partners, and it is my expectation that they will immediately pull back their retaliatory tariffs against our agricultural products. Congress should move swiftly to ratify the USMCA so American farmers can begin to benefit from the agreement.”

Cash fed cattle trade continued Thursday with live sales in Nebraska $3-$4 lower than last week at $117/cwt. A day earlier, live trade in the Southern Plains was $3-$5 lower than last week at $115-$117.

Even so, oversold conditions helped Live Cattle futures close an average of $1.17 higher, except for 7¢ higher in the back contract

Despite early pressure and higher grain prices, firming Live Cattle helped Feeder Cattle futures close an average of $1.03 higher (7¢ to 60¢ higher), except for $1.70 lower in spot May.

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

Choice boxed beef cutout value was 1¢ lower Thursday afternoon at $219.56/cwt. Select was 16¢ lower at $207.88.

Corn futures closed 3¢ to 9¢ higher through Jul ’20, and then mostly 1¢ higher. That’s an average of 25¢ higher week to week through the front three contracts; an average of 21¢ higher through the front six.

Soybean futures closed 4¢ higher through May ’20 and then mostly 1¢ to 3¢ higher. That’s an average of 36¢ higher through the front six contracts since Monday.

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Major U.S. financial indices closed higher again Thursday, buoyed by banks and quarterly earnings from Walmart that beat expectations.

The Dow Jones Industrial Average closed 214 points higher. The S&P 500 closed 25 points higher. The NASDAQ was up 75 points.

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“Based on recent price data and the number of fed cattle that will likely be available for marketing this year, the forecasts for second and third-quarter 2019 fed steers were lowered $3 and $2 to $121/cwt. and $113, respectively,” say analysts with USDA’s Economic Research Service (ERS), in the monthly Livestock, Dairy and Poultry Outlook released Thursday.

Both cattle numbers and carcass weights are increasing.

Average steer dressed weight was 3 lbs. heavier than a year earlier at 852 lbs. for the week ending May 4, according to USDA’s Actual Slaughter Under Federal Inspection report. Average dressed heifer weight was 9 lbs. heavier at 795 lbs. Fed steer and heifer slaughter of 541,532 head was 17,743 head more than the same week a year earlier. Total cattle slaughter of 672,540 head was 20,203 head more. Beef production of 535.9 million lbs. was 16.3 million lbs. more.

“Based on recent price data and expectations of feedlots being less likely to bid up the price, the second-quarter 2019 feeder steer price was lowered by $2 to $145/cwt.,” say ERS analysts. “The fourth-quarter 2019 price was raised $1 to $147 based on expected fall demand. As a result, this month’s annual price forecast for 2019 was $145.50, close to last month’s forecast.”

For year-to-year perspective, 2018 feeder steers pries were $143.05 in the second quarter, $150.46 in the third and $147.90 in the fourth.

USDA’s initial projections for 2020 estimate an annual average feeder steer price of $150/cwt.

Negotiated cash fed cattle trade got underway in the Southern Plains Wednesday, with early live sales $3-$5 lower than last week at $115-$117/cwt.

Similarly, slaughter steers and heifers sold $2-$4 lower at Sioux Falls Regional in South Dakota: $117.95/cwt. for Ch 2-3 steers.

Of the 376 head offered in the weekly Fed Cattle exchange Auction, 280 head sold for a weighted average price of $117/cwt. for delivery at 1-9 days.

Stronger Lean Hog futures helped lift Live Cattle futures Wednesday, while Feeder Cattle futures continued to be pressured by higher grain prices.

Except for 2¢ lower in the back contract, Live Cattle futures closed an average of 19¢ higher.

Feeder Cattle futures closed an average of 44¢ lower (7¢ to 60¢ lower).

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

Choice boxed beef cutout value was 55¢ lower Wednesday afternoon at $219.57/cwt. Select was 93¢ lower at $208.04.

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

Soybean futures closed 2¢ to 4¢ higher through Mar ’20 and then mostly fractionally mixed.

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Major U.S. financial indices closed higher Wednesday, on reports that President Trump will delay imposing higher tariffs on Chinese auto imports. Until that chatter began, markets were pressured by weaker economic data, which included a 0.2% decline in April U.S. retail sales, according to the U.S. Commerce Department.

The Dow Jones Industrial Average closed 115 points higher. The S&P 500 closed 16 points higher. The NASDAQ was up 87 points.

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“High prices rationed hay disappearance between Dec. 1 to May 1 to the lowest level since 2013-14 at 64 million tons. However, that still was not enough to prevent a year-over-year drop in the year-ending hay inventory,” say analysts with the Livestock Marketing Information Center (LMIC), in the most recent Livestock Monitor.

There were 14.91 million tons of hay on farms May 1, according to the most recent USDA Crop Production report. That was 442,000 fewer (-2.88%) than a year earlier, the second lowest inventory on record, according to LMIC.

There were 79.06 million tons of hay on farms Dec. 1 last winter, which was 5.37 million fewer tons (-6.36%)  than the year before.

“Several states are experiencing the cumulative effects of two consecutive years of tighter inventories, with a handful reaching the lowest levels in the past decade,” LMIC analysts say. “Using the 10-year yield average of 2.4 tons per acre, the total U.S. supply this marketing year (May 2019 – April 2020) is expected to increase 3% to 4%. All hay prices, even with that increase, are still expected to be above a year ago.”

All told, year-to-year hay stocks May 1 declined by more than 25% in 17 states.

“Texas and Oklahoma inventories are down more than 50% from two years ago,” explain LMIC analysts. “Surrounding states such as Louisiana, Arkansas, Kansas, and Missouri are also in tight inventory situations. Hay stocks are down more than 50% from 2017 in those states as well.”

LMIC is currently forecasting other hay national prices to be 5% higher this marketing year.

Stronger outside markets and a sharp reversal higher in Lean Hog futures provided support to Cattle futures early Tuesday, but surging grain prices took away gains by the close.

Live Cattle futures closed an average of 46¢ lower.

Other than 95¢ higher in spot May, Feeder Cattle futures closed an average of 93¢ lower.

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

Choice boxed beef cutout value was $1.46 lower Tuesday afternoon at $220.12/cwt. Select was 8¢ higher at $208.97.

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Grain futures bounced higher on Tuesday, getting a boost from the most recent USDA Crop Progress report confirming the degree of late planting.

For instance, just 30% of corn was planted, which was 36% less than the 5-year average. Only 9% of soybeans are in the ground, compared to 29% for the average.

Corn futures closed 11¢ to 13¢ higher through Dec ’20, 6¢ to 9¢ higher in the next three contracts and then mostly 2¢ to 3¢ higher.

Soybean futures closed mostly 23¢ to 29¢ higher.

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Major U.S. financial indices rebounded Tuesday, gaining back about a third of the sizable losses from the previous session, which was tied to China’s retaliation to additional tariffs levied by the U.S. late last week. Nothing changed on that front.

The Dow Jones Industrial Average closed 207 points higher. The S&P 500 closed 22 points higher. The NASDAQ was up 87 points.

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“Calf and stocker prices have dropped significantly after peaking in April. While good moisture conditions imply good forage prospects this summer, cooler than normal weather has delayed pasture growth,” says Derrell Peel, extension livestock marketing specialist at Oklahoma State University, in his weekly market comments. “Calf prices generally decline from first-quarter peaks to seasonal lows in the fall. Heavy feeder cattle prices, which seasonally grind higher from now until late summer, have also dropped recently. I suspect this is largely due to delayed feedlot marketings resulting from earlier winter weather combined with continuing wet, sloppy feedlot conditions. Heavy feeder prices will likely get back on seasonal track as feedlots catch up from earlier delays and feedlot pen conditions improve in the next few weeks.”

Likewise, Peel suggests fed cattle prices are likely past the seasonal peak of $128/cwt. in March and April. He notes last week’s price of about $120 is the lowest since last December, with delayed support from summer grilling demand, due to the protracted cold, damp weather.

“Boxed beef cutout values will likely strengthen again with July 4 buying commencing in middle to late May. Warmer summer weather should also boost beef demand seasonally in the coming weeks,” Peel says. “While end meat prices are typically weaker in the summer, current weakness, especially for chuck products may additionally reflect weaker export demand so far in 2019.”