WLI

Despite lower cash fed cattle prices the previous day and heavy pressure in Lean Hog futures, Live Cattle futures traded mostly sideways Thursday. Feeder Cattle inched higher, amid continued light trade.

Live Cattle futures closed narrowly mixed (20¢ lower to 35¢ higher).

Except for 15¢ lower and unchanged at either end of the board, Feeder Cattle futures closed an average of 43¢ higher.

Corn futures closed mostly fractionally higher through Mar ’21, and then 3¢ to 5¢ higher    

After 1¢ to 2¢ higher in the front four contracts, Soybean futures closed mostly fractionally lower to 1¢ lower.

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

Choice boxed beef cutout value was $1.55 lower Thursday afternoon at $227.44/cwt. Select was $1.01 lower at $219.52.

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Major U.S. financial indices bounced higher Thursday, with many crediting various reports of progress in trade talks between the U.S. and China.

The Dow Jones Industrial Average closed 91 points higher. The S&P 500 closed 10 points higher. The NASDAQ was up 25 points.

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U.S. beef exports remained robust in January, but the lack of progress in trade talks with various countries—the growing tariff disadvantage with competitors—started to show.

U.S. beef exports declined by 1% in January to 4,766 metric tons (mt), compared to the previous year, but beef export value increased 3% to $642.3 million. That’s according to statistics released by USDA and compiled by the U.S. Meat Export Federation (USMEF).

Export value per head of fed slaughter pulled back from last year’s record pace, averaging $284.86, down 3% from a year ago.

Japan and South Korea set the pace for U.S. beef exports.

Japan imported 8% more U.S. beef year-over-year (25,925 mt), valued at $167 million, which was 12% more than the same time a year earlier.

January was the first full month U.S. beef competitors received tariff relief in Japan under the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) with the import duty rate dropping from 38.5% to 27.5% on Dec. 30, 2018. This gap will widen further on April 1, when the rate for CPTPP countries drops to 26.6%.

“It’s great to see Japan’s demand for U.S. beef increase in January despite these tariff rate changes for our major competitors,” says Dan Halstrom, USMEF president and CEO. “But this disadvantage will become more and more pronounced over time, so negotiations toward a U.S.-Japan trade agreement cannot come soon enough. The playing field needs to be leveled as quickly as possible so that the U.S. industry can continue to capitalize on booming meat demand in Japan.”

South Korea imported 4% more U.S. beef in January (17,900 mt), on the heels of its record imports last year. Export value was 10% more at $134.3 million.

Although there were too few transactions for a full trend in any region, negotiated cash fed cattle trade got underway Wednesday with a decidedly bearish tone.

Live sales were $2-$3 lower in the Southern Plains at $125-$126/cwt.; $126-$127 in Nebraska. Live trade was $3 less in Colorado at $126; $1-$2 lower in the western Corn Belt at $128-$129. Dressed sales were $2-$3 lower at $206 in Nebraska and $205 in the western Corn Belt.

Early capitulation by some cattle feeders, and at those prices, surprised plenty of traders.

Live Cattle futures closed an average 87¢ lower through the front five contracts and then an average of 22¢ lower.

The notion is growing for some that last week was the seasonal top for fed cattle. If so, next comes a downward trek for prices through the summer months, with the pitch and speed depending on lots of factors; everything from marketing currentness associated with long-fed cattle and increasing cattle numbers, to beef demand, to feed prices impacted by protracted flooding to packer capacity utilization.

Feeder Cattle futures closed an average of 29¢ lower, except for an average of 8¢ higher for Aug-Oct. Trade was light.

Corn futures closed mostly 1¢ to 3¢ lower.

Soybean futures closed 10¢ to 13¢ lower through May ’20 and then 7¢ to 9¢ lower. Presumably, pressure is building with thoughts that weather will force more acres from corn to beans.

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

Choice boxed beef cutout value was 52¢ lower Wednesday afternoon at $228.99/cwt. Select was $1.54 higher at $220.53.

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Major U.S. financial indices closed lower, Wednesday, giving back gains from the previous session. Once again, pressure included a decline in the 10-year Treasury yield and lingering worries about slowing global economic growth.

The Dow Jones Industrial Average closed 32 points lower. The S&P 500 closed 13 points lower. The NASDAQ was down 48 points.

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Although devastating to individual producers and localities, cattle losses associated with the bomb cyclone are unlikely to impact overall short-term cattle markets, according to Don Close, senior protein analyst for Rabobank AgriFinance and Jim Robb, senior agricultural economist at the Livestock Marketing Information Center.

They were featured presenters at BEEF magazine’s Market Outlook webinar on Wednesday, which included perspective on markets for the remainder of this year and for 2020.

Longer term, they explained impacts could show up in this year’s calf crop, due both to direct loss and potential troubles settling cows this summer.

In the meantime, Robb noted that impact on crops, similar to 1993, could increase feed prices and pressures calf prices later in the year.

Negotiated cash fed cattle trade remained undeveloped through Tuesday afternoon.

Live Cattle futures closed an average 48¢ lower (12¢ to 77¢ lower).

Except for 57¢ and 2¢ higher in the front two contracts, Feeder Cattle futures closed an average of 89¢ lower.

Corn futures closed mostly 1¢ to 2¢ lower.

Soybean futures closed 3¢ to 5¢ lower.

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

Choice boxed beef cutout value was 51¢ higher Tuesday afternoon at $229.51/cwt. Select was 26¢ higher at $218.99.

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Major U.S. financial indices closed higher, Tuesday. Early on, the rising 10-year Treasury yield offered support.

The Dow Jones Industrial Average closed 140 points higher. The S&P 500 closed 20 points higher. The NASDAQ was up 53 points.

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Plenty of folks are eager to see the Prospective Plantings report from USDA on Friday, but it will likely spawn more questions than answers, as surveys for the report occurred before the bomb cyclone and subsequent flooding, which is projected to continue for the next couple of months.

“Taking a brief look at intended national plantings, versus actual acreage seeded in the past two primary flood years—2011 and 1993—1993 was significantly worse with spring flooding, plus devastating growing season flooding,” say analysts with the Livestock Marketing Information Center (LMIC), in the most recent Livestock Monitor. “However, note that the balance of this year Midwest crops could be different than those years due to relative crop prices, etc. In 2011, the corn area planted was about 240,000 acres below the prospective indication (down 0.3%), while soybean acreage was down 1.6 million acres (dropped 2.0%). In 1993, the difference (actual plantings minus prospective survey) was a corn drop of about 3.25 million acres (-4.3%), and a soybean increase of 785,000 acres (up 1.3%).”

Markets will focus on three areas in order to assess corn and soybean prices, according to LMIC.

First is plantings. Next is the portion of planted acres harvested for grain; LMC analysts note Midwest flooding could increase planting area abandoned as the growing season unfolds. Finally, is the yield per acre.

Negotiated cash fed cattle trade ended up mostly $1-$2 higher on a live basis last week at $128/cwt. in the South and $129 in the North (up to $131 in the western Corn Belt). Dressed trade was mainly $4 higher at mostly $208.

The 5-area weighted average for fed steers last week was $1.82 higher at $128.96/cwt. Heifers were $1.66 higher on a live basis at $128.61. In the beef, steers were $3.39 higher at $207.64. Heifers were $3.50 higher at $207.59.

Cattle futures closed sharply lower, though, pressured by more feedlot placements than expected in Friday’s Cattle on Feed report. Placements in February were 2.20% more than the previous year. The average of estimates ahead of the report projected a decline of about 4%.

“The February placement total is the largest for the month since 2000,” says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly market comments. “Over the last 12 months, the average feedlot inventory was 11.529 million head, the largest 12-month moving average since January 2000.” See more comments from Peel below.

Live Cattle futures closed an average $1.25 lower (40¢ lower at the back to $2.37 lower in near Jun).

Feeder Cattle futures closed an average of $1.56 lower (40¢ to $3.35 lower).

Corn futures closed mostly 1¢ higher.

Soybean futures closed 1¢ to 2¢ higher.

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

Choice boxed beef cutout value was 9¢ lower Monday afternoon at $229.00/cwt. Select was 9¢ higher at $218.73.

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Major U.S. financial indices basically hovered in place Monday. Support included the weekend announcement that investigators found no collusion between Russia and President Trump’s 2016 presidential campaign. Pressure included ongoing worries about slowing global economic growth.

The Dow Jones Industrial Average closed 14 points higher. The S&P 500 closed 2 points lower. The NASDAQ was down 5 points.

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The long, cold, wet winter, and now flooding, will likely reverberate throughout crop and livestock markets for months to come, says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly market comments.

“On the crop side, losses of stored grain, hay and other products will have immediate impacts on the producers affected and perhaps on broader markets,” Peel explains. “Disruptions to transportation may be the biggest impact with truck, rail and river transportation all impacted by the floods and associated damage, and likely to be affected for weeks ahead.”

As for cattle, in addition to weather-depressed carcass weights and less beef production than originally anticipated, Peel says the recent floods most assuredly increased cattle morbidity and mortality.

“The timing of the floods are particularly insidious given that it is calving season for many cow-calf operations. This is likely to result in cattle losses even greater than would be expected during floods,” Peel says. “It will take many weeks to fully assess the cattle losses due to winter weather and the floods…Calf losses this spring will not really become apparent until fall and may possibly be big enough to affect the overall 2019 calf crop.”

Negotiated cash fed cattle trade was yet to be fully developed by late Friday afternoon. Live sales in the Southern Plains were reported $1 higher at $128/cwt., on light to moderate demand and trade. Though too few to trend, there were some early dressed sales reported in the Western Corn Belt at $208, which was $2-$5 more than the previous week.

Traders got skittish in front-month Lean Hog futures. Volatility there weighed on Cattle futures, though they closed mostly higher for another session.

Except for 17¢ and 40¢ lower in the front two contracts, Live Cattle futures closed an average 21¢ higher.

Except for 12¢ lower in Apr, Feeder Cattle futures closed an average of 84¢ higher (5¢ to $1.42 higher).

Corn futures closed fractionally higher to 2¢ higher.

Soybean futures closed mostly 7¢ to 9¢ lower.

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

Choice boxed beef cutout value was 22¢ lower Friday afternoon at $229.09/cwt. Select was 27¢ higher at $218.64.

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Major U.S. financial indices closed sharply lower on Friday. Investor angst included inversion of what’s known as the yield curve, considered by some to be a signal of looming recession. The curve turns negative when short-term rates (3-month Treasury bill) move higher than long-term rates (10-year Treasury bill).

The Dow Jones Industrial Average closed 460 points lower. The S&P 500 closed 54 points lower. The NASDAQ was down 196 points.

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USDA’s monthly Cattle on Feed report will likely be viewed as at least a touch bearish.

Placements in feedlots with 1,000 head or more capacity were 1.86 million head in February, which was 2.20% more than a year earlier. Most estimates ahead of the report projected a decline.

Marketings in February of 1.68 million head were 0.48% more than a year earlier, slightly less than pre-report expectations.

Cattle on feed March 1 of 11.80 million head were 0.69% more than the previous year. Average estimates ahead of the report suggested a slight decline.