WLI

Negotiated cash fed cattle trade and demand were moderate in Kansas through Wednesday afternoon with live prices $1-$2 less than the previous week at $124/cwt.

There were 513 head offered in the weekly Fed Cattle Exchange auction and no takers.

Up north, Choice 2-4 steers brought $128.90/cwt. at the fat auction in Tama, IA. They were $125.50-$127.25 at Sioux Falls.

Growing odds for lower cash prices this week, softer wholesale beef values and the lack or packer urgency to increase harvest levels helped pressure Cattle futures Wednesday.

Except for an average of 20¢ higher in two contracts toward the back, Live Cattle futures closed an average of 36¢ lower.

Feeder Cattle futures closed an average of 54¢ lower (10¢ to 90¢ lower).

Corn futures closed mostly 1¢ to 3¢ higher.

Soybean futures closed mixed, fractionally higher to 1¢ lower.

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

Choice boxed beef cutout value was 41¢ higher Wednesday afternoon at $226.14/cwt. Select was 48¢ higher at $218.97.

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Major U.S. financial indices edged higher Wednesday. Support from news about China and the U.S. nearing a trade deal was tempered by indications of slowing domestic economic growth.

Private sector employment increased by 129,000 from February through March, according to the most recent ADP Employment report. That was less than the trade expected.

Month to month, the Non-Manufacturing Index (NMI®) from the Institute for Supply Management® (ISM®) declined 3.6% in March to 56.1%.

“The non-manufacturing sector’s growth cooled off in March after strong growth in February. Respondents remain mostly optimistic about overall business conditions and the economy. They still have underlying concerns about employment resources and capacity constraints,” according to Anthony Nieves, Chair of the ISM Non-Manufacturing Business Survey Committee

The Dow Jones Industrial Average closed 39 points higher. The S&P 500 closed 6 points higher. The NASDAQ was up 46 points.

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Southern Plains cull cow prices increased 32% from the end of January through the end of March, increasing from about $40/cwt. to $53, according to David Anderson, Extension livestock economist at Texas A&M University. Along the way, he says 90%-lean beef prices increased 10% to $218/cwt., while the cow-beef cutout climbed by 7.7%.

“The rally in cow prices has come in the face of historically large slaughter,” Anderson explains, in the latest issue of In the Cattle Markets. “Dairy cow slaughter has exceeded 70,000 per week for that last 5 weeks. The 72,700 head sent to market the first week of March was the largest weekly dairy cow slaughter since 1986. Some readers might remember the Dairy Herd Buyout program that contributed to large dairy cow slaughter in 1986. Beef cow slaughter dropped below last year’s levels by mid-March; 53,000 head compared to 56,000 head this time last year. Total beef and dairy cow slaughter is the most since drought-forced movement in 2012-2013.”

Anderson points out new cow packing capacity in the Northwest is helping boost cull cow prices higher further north than in the Southern Plains, where packing capacity eroded amid the 2010-2012 drought.

“Presumably, dairy cow marketings will decline later in the year as increased culling has an effect on milk production and prices,” Anderson says. “Some milk market recovery should lead to higher milk prices and slower culling rates. The slowing rate of growth of the beef cow herd should slow beef cow marketings. The combination of slowing culling, limiting the growth in supplies, should provide some price support.”

Negotiated cash fed cattle trade was undeveloped through Tuesday afternoon, but there were a few live sales reported in Kansas at $124/cwt., but too few to trend. Country trade there last week was at $126.

That might be one reason for softer Cattle futures, especially Feeder Cattle, although Live Cattle got some early support from another run up in Lean Hog futures.

Other than an average of 9¢ higher in four contracts, Live Cattle futures closed an average of 60¢ lower.

Feeder Cattle futures closed an average of $1.20 lower (60¢ to $1.45 lower).

After fractionally mixed in the front four contracts, Corn futures closed mostly 1¢ to 3¢ higher.

Soybean futures closed mostly 4¢ to 6¢ higher.

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

Choice boxed beef cutout value was $1.11 lower Tuesday afternoon at $225.73/cwt. Select was 84¢ lower at $218.49.

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Major U.S. financial indices closed narrowly mixed Tuesday, with investors apparently content to take a breather from the recent rally.

The Dow Jones Industrial Average closed 79 points lower. The S&P 500 closed unchanged. The NASDAQ was up 19 points.

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Producer sentiment weakened slightly in late winter, according to the March Purdue University/CME Group Ag Economy Barometer, which is based on a survey of 400 U.S. agricultural producers. Month to month, the barometer declined 3 points in March to 133.

“This month’s drop is largely due to producers’ weaker outlook regarding future economic conditions in agriculture and, in some cases, stress regarding their farm’s future financial performance,” says James Mintert, the barometer’s principal investigator and director of Purdue University’s Center for Commercial Agriculture.

The Index of Future Expectations dropped 6 points to 139, while the Index of Current Conditions remained relatively unchanged at 120.

To learn more about financial conditions on U.S. farms, Purdue researchers asked producers about their operating debt, both in the January and March surveys this year. Using the need to carry over unpaid operating debt as an indicator of financial stress, results suggest that 5% to as much as 7% of U.S. farms are suffering from some financial stress. However, of the 22% of farms (March survey) that expect to have a larger operating loan in 2019, slightly more than one in five said it was the result of carrying over a previous year’s unpaid operating debt.

When asked about their financial performance expectations for 2019 compared to last year, 59% of producers expect their farm’s performance to be “about the same,” and 21% expect “better,” financial performance; 20% expect their farm’s performance to be “worse than” last year.

Cattle futures bounced back on Monday as traders retrenched for the new quarter. There was chatter that optimism about spring consumer beef demand provided the lift. Could be, but nothing changed on that fundamental front since Friday. For Feeder Cattle, the bearish crops reports on Friday likely provided some support.

Live Cattle futures closed an average of 46¢ higher. Since setting a new record Mar. 22, open interest declined 15,515 contracts to 439,234 on Friday.

Feeder Cattle futures closed an average of $1.27 higher across the back half of the board; an average of 33¢ higher through the front.

Corn futures closed 4¢ to 5¢ higher through Sep ’20, and then mostly 1¢ to 2¢ higher, rebounding from the hard dive Friday.

Soybean futures closed 8¢ to 11¢ higher, helped by late-week reports of a buy from China

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

Choice boxed beef cutout value was 80¢ higher Monday afternoon at $226.84/cwt. Select was 44¢ higher at $219.33.

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Major U.S. financial indices closed sharply higher Monday, with popular analysis attributing the gains to positive manufacturing data from both the U.S. and China, damping concerns about economic growth in those countries, at least for the day.

The closely watched Institute for Supply Management® (ISM) Purchasing Managers Index (PMI®) was 55.3% for March, increasing 1.1% month to month.

“Comments from the panel reflect continued expanding business strength, supported by gains in new orders and employment,” says Timothy R. Fiore, CPSM, C.P.M., Chair of the ISM Manufacturing Business Survey Committee.

The Dow Jones Industrial Average closed 329 points higher. The S&P 500 closed 32 points higher. The NASDAQ was up 99 points.

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“Total 2019 meat production in the U.S. is currently projected to reach another record level of 103.3 billion lbs., up 1.3% year over year. However, per capita meat consumption may decrease slightly to 217.3 lbs. from the 2018 level of 218.6 lbs.,” says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly market comments. “The decrease in per capita meat consumption reflects improved meat trade, with projected decreases in meat imports and increased meat exports, along with normal population growth.”

Peel points out 2004 was the record year for per capita meat consumption at 221.9 lbs. He explains lower population, higher meat imports, and meat exports that were less than half of current levels increased per capita consumption, despite lower total meat production of 85.1 billion lbs., which was 17.6% less than today.

Beef production this year is projected at 27.2 billion lbs., about 1.1% more than last year. 

“Weather impacts are holding carcass weights well below year-ago levels so far this year and annual average carcass weights are projected to only increase slightly year over year,” Peel says. “Cattle slaughter is projected to increase about 1% year over year. With beef imports projected to decrease and beef exports expected to increase again in 2019, per capita beef consumption is expected to decrease to 56.8 lbs. (retail basis), down from 57.1 lbs. one year ago.”

These projections reflect estimates and analysis by Peel and the Livestock Marketing Information Center.

Through late Friday afternoon, negotiated cash fed cattle prices for the week were mostly $2-$3 less on a live basis at $125-$126/cwt. in the Southern Plains, mostly $126 in Nebraska and mostly $128 in the western Corn Belt. Dressed trade was also $2-$3 lower at $206 in Nebraska and at $205 in the western Corn Belt.

Cattle futures softened Friday with pressure from Lean Hog futures, lower cash prices and positioning for the end of the month and quarter.

Except for 62¢ higher in the back contract, Live Cattle futures closed an average of 57¢ lower.

Except for 85¢ and $1.70 higher in the back two contracts, Feeder Cattle futures closed an average of 47¢ lower.

Corn futures closed 8¢ to 17¢ lower through Jul ’20, and then 3¢ to 5¢ lower. Planting intentions and grain stocks (see below) applied heavy pressure to the front contracts.    

Soybean futures closed 3¢ to 5¢ lower.

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 $1.40 lower Friday afternoon at $226.04/cwt. Select was 63¢ lower at $218.89.

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Major U.S. financial indices closed higher Friday, with support including optimism regarding trade talks between the U.S. and China.

The Dow Jones Industrial Average closed 211 points higher. The S&P 500 closed 18 points higher. The NASDAQ was up 60 points.

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Corn stocks Mar. 1 were 3% less year over year at 8.60 billion bu., according to USDA’s Grain Stocks report issued Friday. That was significantly more than the trade expected. Likewise, the 92.8 million acres farmers intend to plant, in the Prospective Plantings report, is 4% more than last year (+3.66 million acres) and more than expected.

Keep in mind, the Prospective Plantings report is based on surveys conducted before or mostly before the bomb cyclone and subsequent flooding. No doubt, intentions and possibilities changed since then. Still, Corn futures dropped hard Friday in response to the reports.

Soybeans stored in all positions on Mar. 1 totaled 2.72 billion bu., up 29% from the previous year, reflecting the relative dearth of exports so far this year.

Soybean planted area for this year is estimated at 84.6 million acres, down 5% from last year.

All wheat stored in all positions on Mar. 1 totaled 1.59 billion bu., which was 6% more than a year earlier.

All wheat planted area for 2019 is estimated at 45.8 million acres, down 4% from last year and the least since records began in 1919. The 2019 winter wheat planted area of 31.5 million acres is 3% less than last year but 1% more than the previous estimate.