WLI

Cattle futures found some stability on Tuesday although Live Cattle edged lower, pressured in part by volatility in Lean Hog futures.

Live Cattle futures closed an average of 19¢ lower.

Except for $1.17 lower in spot May and 12¢ lower in Mar, Feeder Cattle futures closed an average of 18¢ higher.

Corn futures closed mostly 1¢ to 3¢ lower.

Soybean futures closed mostly 10¢ to 15¢ lower through Nov ’20 and then 3¢ to 9¢ lower. Apparently funds are taking advantage of the anemic fundamentals tied to bountiful supplies here and reports of a strong harvest in South America thus far.

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

Choice boxed beef cutout value was 37¢ lower Tuesday afternoon at $234.11/cwt. Select was $1.38 lower at $221.26.

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Major U.S. financial indices closed strongly higher on Tuesday, buoyed by better than expected quarterly earnings from a wide array of companies, including Coca-Cola, Twitter and United Technologies.

The Dow Jones Industrial Average closed 145 points higher. The S&P 500 closed 25 points higher. The NASDAQ was up 105 points.

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Total pounds of beef in freezers Mar. 31 were 5% less than the previous month and 3% less than a year earlier, according to USDA’s monthly Cold Storage report.

Similarly, frozen pork supplies were down 1% from the previous month and down slightly from last year.

Total red meat supplies in freezers were 3% less than the previous month and 2% less than a year earlier.

Total frozen poultry supplies were also lower—1% less than the previous month and 2% less than a year ago.

Feeder Cattle futures closed sharply lower Monday, in response to the higher than expected placements in last week’s Cattle on Feed report (see below). That, lower commodity markets overall and a pullback in Lean Hog futures helped drag down Live Cattle futures, despite last week’s firmer cash trade.

Except for 2¢ lower in spot Apr, Live Cattle futures closed an average of 97¢ lower.

Except for 65¢ higher in newly minted away Apr, Feeder Cattle futures closed an average of $1.23 lower.

Corn futures closed mostly 2¢ to 3¢ lower.

Soybean futures closed mostly 2¢ to 3¢ lower.

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

Choice boxed beef cutout value was 83¢ higher Monday afternoon at $234.48/cwt. Select was $2.15 higher at $222.64.

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Major U.S. financial indices mostly hovered in place Monday, with a bump in crude oil prices and energy stocks tempered by angst over the heart of quarterly earnings reporting this week.

The Dow Jones Industrial Average closed 48 points lower. The S&P 500 closed 2 points higher. The NASDAQ was up 17 points.

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Feedlot inventories are underscoring the dynamics of herd expansion, says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly market comments.

“As of Apr. 1, Peel explains that In the five years of herd expansion from 2014 to 2018, heifers in feedlots averaged 34.4% of feedlot inventories. On Jan. 1 and Apr. 1 (this year), heifers accounted for 37.7% of feedlot inventories, indicating that heifer retention slowed significantly through 2018 coming into 2019.”

The data comes from the quarterly snapshot provided in Cattle on Feed reports.

Referring to the most recent one, Peel notes, besides cattle on feed Apr. 1 being record high for the month at 11.96 million head, the 12-month moving average of feedlot inventories is just shy of the record.

“Regional differences in on-feed inventories were pronounced and likely reflect the impacts of winter weather,” Peel says. “Feedlot inventories were up year over year in Texas (+6%); Colorado (+12%), Kansas (+2%) and Oklahoma (+2%). Feedlot totals were down year over year in Nebraska (-4%), Iowa (-4%) and South Dakota (-4%).”

When all was said and done last week, negotiated cash fed cattle trade ended up $2 higher in the Southern Plains at $126/cwt. on a live basis, and steady to $4 higher in Nebraska and the western Corn Belt at mostly $130. Dressed trade was $2-$4 higher at $208.

Futures and equity markets were closed Friday in observance of Good Friday.

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

Choice boxed beef cutout value was 59¢ higher Friday afternoon at $233.65/cwt. Select was $1.03 higher at $220.49.

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Although U.S. beef exports to most countries remained higher year over in February, they declined 6% overall on a volume basis to 94,855 metric tons and 3% on a value basis to $581.6 million, according to statistics released by USDA and compiled by the U.S. Meat Export Federation (USMEF).

January-February exports were 3% below last year’s record pace in volume (199,651 mt) but steady in value at $1.22 billion. The volume decline was mainly due to lower exports to Hong Kong and Canada, according to USMEF. Exports to Hong Kong were 40% less for volume and 35% less in terms of value. Exports to Canada were down 15% in volume and 13% in value.

Beef export value per head of fed slaughter averaged $309.39 in February, down 4% from a year earlier. The January-February average was down 3% to $296.19.

Although progress is reportedly being made in resolving a bevy of U.S.-international trade issues, USMEF President and CEO Dan Halstrom says missed opportunities for export growth are mounting.

“On the beef side there is still much to be excited about, especially with the launch of U.S.-Japan trade agreement talks,” Halstrom says. “A great deal is at stake for both U.S. beef and U.S. pork in those negotiations, as exports to Japan deliver remarkable returns for the entire U.S. supply chain and it is essential that we get back on a level playing field with our competitors.”

Beef exports to leading market Japan remained strong in February, pushing January-February exports 8% above last year’s pace in volume (47,695 mt) and 10% higher in value ($309.3 million).

U.S. pork exports continue to bear most of the losses from trade issues.

Pork export volume was down 9% in February year over year, to 186,745 metric tons (mt), while export value dropped 17% to $455.9 million — the lowest monthly value total since February 2016. For January through February, pork exports were 5% below last year’s pace in volume (388,580 mt) and 13% lower in value ($950 million).

Although demand for imported pork may be increasing in China/Hong Kong due to African Swine Fever, USMEF notes that China’s retaliatory duties make it difficult for the U.S. industry to capitalize. The duty rate on U.S. pork is 62%, compared to 12% for other suppliers. Through February, exports to China/Hong Kong were down 22% from a year ago and value was 34% less.

Negotiated cash fed cattle trade broke out in the north yesterday. Live sales were as much as $4 higher in Nebraska and the western Corn Belt at $130/cwt. Dressed trade was $2-$3 higher at $207-$208.

Lighter carcass weights continue to provide support. The average dressed steer weight for the week ending Apr. 6 was 865 lbs., which was 7 lbs. less than a year earlier, according to USDA’s Actual Slaughter Under Federal Inspection report. The average dressed heifer weight was 5 lbs. less at 804 lbs.

Except bouncing higher in the front month, Live Cattle futures closed mixed Thursday, while Feeder Cattle edged higher as traders positioned ahead of the holiday weekend and ahead of the monthly Cattle on Feed report (see below). More on that report momentarily.

Other than $1.60 higher in spot Apr, Live Cattle futures closed narrowly mixed, from 15¢ lower to 30¢ higher.

Feeder Cattle futures closed an average of 49¢ higher (22¢ to 95¢ higher).

Corn futures closed mostly fractionally mixed.

Soybean futures closed mostly 1¢ higher.

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

Choice boxed beef cutout value was 30¢ higher Thursday afternoon at $233.06/cwt. Select was 70¢ lower at $219.46. At $13.60, the Choice-Select spread was the widest since December.

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Major U.S. financial indices strengthened Thursday, buoyed by positive quarterly earnings reports and an uptick in retail sales. The U.S. Census Bureau estimated March retail sales to be 1.6% more than the previous month, significantly higher than trade expectations.

The Dow Jones Industrial Average closed 110 points higher. The S&P 500 closed 4 points higher. The NASDAQ was up 1 point.

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The monthly Cattle on Feed report will likely be viewed as neutral to a touch bearish, with slightly more March placements and total cattle on feed than most pre-report estimates. The report is for feedlots with a one-time capacity of 1,000 head or more.

There were 2.01 million head placed on feed in March, which was 4.84% more (+93,000 head) than the previous year. In terms of placement weights: 16.14% (325,000) head went on feed weighing 600 lbs. or less; 14.89% (300,000 head) weighing 600-699 lbs.; 29.54% (595,000) weighing 700-799 lbs.; 26.76% (539,000 head) weighing 800-899 lbs.; 9.19% (185,000 head) weighing 900-999 lbs.; 3.48% (70,000 head) weighing 1,000 lbs. or more.

Marketings in March of 1.78 million head were 3.42% fewer (-63,000 head) than last year.

All told, there were 11.96 million head on feed Apr. 1, which was 2.00% more (+235,000 head) than a year earlier. That’s the largest inventory since the data series began in 1996. The inventory included 4.51 million heifers and heifer calves, which was 320,000 head more (+7.62%) than the same time a year earlier.