WLI

Negotiated cash fed cattle trade remained undeveloped through Thursday afternoon, though hopes increased for higher money, given futures strength.

Cattle futures, especially Feeder Cattle, continued higher, once again supported by rallying Lean Hogs, as well as anticipated weather impacts.

Except for unchanged in the back contract, Live Cattle futures closed an average 86¢ higher.

Feeder Cattle futures closed an average of $1.20 higher (52¢ higher to $1.87 higher). That’s an average of about $3 higher in the last two sessions.

Corn futures closed 2¢ to 4¢ higher through Jul ’20 and then fractionally higher.

Soybean futures closed mostly 2¢ to 4¢ higher.

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

Choice boxed beef cutout value was 64¢ higher Thursday afternoon at $229.31/cwt. Select was 26¢ lower at $218.37.

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Major U.S. financial indices closed sharply higher on Thursday. Tech stocks and the previous day’s assurance from the Fed regarding interest rates underpinned gains.

The Dow Jones Industrial Average closed 216 points higher. The S&P 500 closed 30 points higher. The NASDAQ was up 109 points.

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Winter weather continues to take tonnage from the market.

Average dressed steer weights for the week ending March 9 were 10 lbs. lighter than the same week a year earlier at 871 lbs., according to USDA’s Actual Slaughter Under Federal Inspection report. Average heifer dressed weights were 9 lbs. lighter at 814 lbs. Total beef production for the week of 488.0 million lbs. was 3.4 million lbs. less than a year earlier but total cattle slaughter was 7,889 head more.

For February, federally inspected slaughter of 2.45 million head was 1.56% more year aver year, according to the monthly Livestock Slaughter report. Average dressed steer weights were 6 lbs. less than a year earlier at 879 lbs. Average dressed heifer weights were 11 lbs. less at 819 lbs. Beef production for the month of 1.99 billion lbs. was 4.2 million more (+0.21%) than the previous year.

Lean Hog futures continued their recent and aggressive rally Wednesday, providing lift to Cattle futures, especially Feeder Cattle.

Live Cattle futures closed an average 69¢ higher.

Except for unchanged and 52¢ higher in the front two contracts, Feeder Cattle futures closed an average of $1.74 higher.

Stronger futures, continued strength in wholesale beef values and the latest winter storm offer hopes of higher cash fed cattle prices this week; surely no worse than steady.

There were 596 head offered in the weekly Fed Cattle Exchange auction Wednesday; no takers.

Choice 2-4 steers sold mainly steady at the fat auction in Tama, IA: $127.28/cwt. for 150 head weighing an average of 1,406 lbs. At Sioux Falls Regional in South Dakota, Ch 2-4 steers brought $126.00-$127.75.

Corn futures closed mostly fractionally higher.

Soybean futures closed unchanged to 2¢ higher.

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 66¢ lower Wednesday afternoon at $228.67/cwt. Select was 83¢ lower at $218.63.

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Major U.S. financial indices closed mostly lower on Wednesday. Support and pressure (bank stocks) came from the Fed statement, indicating no change for interest rates and emphasizing patience going forward.

“Recent indicators point to slower growth of household spending and business fixed investment in the first quarter,” according to the FOMC statement. “On a 12-month basis, overall inflation has declined, largely as a result of lower energy prices; inflation for items other than food and energy remains near 2%. On balance, market-based measures of inflation compensation have remained low in recent months, and survey-based measures of longer-term inflation expectations are little changed.”

The Dow Jones Industrial Average closed 141 points lower. The S&P 500 closed 8 points lower. The NASDAQ was up 5 points.

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“Clearly, the cold wet winter has slowed marketings, extended days on feed, decreased feed conversion, held down slaughter weights, and increased costs of gain,” says Stephen Koontz, agricultural economist at Colorado State University, in the latest issue of In the Cattle Markets. “Information provided by Kansas State University (KSU) and other sources indicates costs of gain are 5¢-7¢/lb. higher than the same month this time last year with very similar feed input costs.”

KSU’s latest estimates—Historical and Projected Kansas Feedlot Net Returns—peg feedlot cost of gain for steers in February at $86.44/cwt.; $91.97 for heifers. For March, it’s $85.80 and $93.39, respectively.

Apparently, slower-paced fed cattle marketing is also building the supply of long-fed cattle.

“April marketings will be an important indicator of the potential strength of the cattle markets through the summer. Weak marketings will suggest a backlog of animals,” Koontz says. As of Feb. 1, he explains the calculated inventory of cattle on feed more than 120 days of 3.99 million head is 12.2% more than the same time last year and 14.1% more than the five-year average.

Of course, carcass weights continue to be lighter year over year, too.

The average dressed steer weight for the week ending Mar. 2 was 9 lbs. less than a year earlier at 874 lbs., according to USDA’s Actual Slaughter Under Federal Inspection report. Dressed heifer weights were 15 lbs. lighter at 813 lbs.

Cattle futures, especially Feeder Cattle continued to gain on Tuesday. Some of the support likely stems from positioning ahead of the potential market impact of last week’s storm, which wrought massive flooding in Nebraska and adjoining states.

Live Cattle futures closed an average 59¢ higher.

Feeder Cattle futures closed an average of $1.43 higher.

Corn futures closed fractionally mixed to 1¢ lower.

Soybean futures closed mostly fractionally mixed to 1¢ lower.

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

Choice boxed beef cutout value was $1.00 higher Tuesday afternoon at $229.33/cwt. Select was $1.25 higher at $219.46.

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Major U.S. financial indices closed little changed and narrowly mixed on Tuesday. Pressure included conflicting news regarding progress in U.S.-China trade talks.

The Dow Jones Industrial Average closed 26 points lower. The S&P 500 closed fractionally lower. The NASDAQ was up 9 points.

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China’s total swine inventory will be down 13% to 374 million head by the end of this year—due to African Swine Fever (ASF)—according to a recent assessment by USDA’s Foreign Agricultural Service (FAS).

“Pork production will decrease by 5% to 51.4 million metric tons (mt), with the reduced supply only slightly offset by weakened demand,” according to FAS analysts, in the People’s Republic of China Livestock and Products Semi-annual. “To cover the domestic supply gap, China will increase pork imports by 33% to 2 million mt. While U.S. pork products still face retaliatory Chinese tariffs of up to 62% and process verification requirements, if these are removed, U.S. producers could significantly increase exports to China.”

As long as the U.S. remains ASF-free.

Last week, thanks in part to USDA-trained detector dogs, roughly 1 million lbs. of pork allegedly smuggled from China was seized at the Newark Point of Entry.

“While China’s Ministry of Agriculture and Rural Affairs (MARA) has reported 115 outbreaks to the World Organization for Animal Health (OIE), with roughly 1 million swine culled (as of Mar. 11), it is likely that this vastly underestimates the total number of outbreaks and animals culled across China,” say FAS analysts. “In a country where half of the world’s pigs reside and half of the world’s pork is consumed, ASF has brought significant changes and will continue to affect swine and pork production for the foreseeable future.”

Last week’s 5-Area direct price for steers and heifers ended up right at $1/cwt. lower on a live basis, according to USDA data. Steers averaged $1.01 lower at $127.14. Heifers were $1.06 lower at $126.95. In the beef, steers were 82¢ lower at $204.25; heifers were 69¢ lower at $204.09.

Cattle futures meandered mostly higher Monday with continuing support from Lean Hog futures and a major question mark regarding the impact of last week’s bomb cyclone that hit a wide swath of the Plains.

Other than 77¢ lower in spot Apr and 35¢ lower in away Jun, Live Cattle futures closed an average 30¢ higher.

Except for 62¢ and 12¢ lower in Apr and May, respectively, Feeder Cattle futures closed an average of 32¢ higher.

Corn futures closed mostly 1¢ lower through Sep ’20 and then fractionally higher.

Soybean futures closed mostly 2¢ to 3¢ lower.

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

Choice boxed beef cutout value was $1.34 higher Monday afternoon at $228.33/cwt. Select was 87¢ higher at $218.21.

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Major U.S. financial indices extended the previous session’s gains on Monday. There was nothing fundamental pointing strongly in either direction.

The Dow Jones Industrial Average closed 65 points higher. The S&P 500 closed 10 points higher. The NASDAQ was up 25 points.

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“For the near term, several factors support expectations that feedlot placements in 2019 will be above 2018 levels,” say analysts with USDA’s Economic Research Service (ERS), in the latest Livestock, Dairy and Poultry Outlook. “The number of cattle outside feedlots Jan. 1 is up nearly 1% from a year ago. Included in the cattle outside feedlots are the cattle on small grains pastures. The Cattle report also indicated 1.9 million head were on small grains pastures in the Southern Plains (Kansas, Oklahoma, and Texas). This is 27% more cattle than the same time last year. Although the increase seems large, the number of cattle on small grains pastures last year was low as producers reduced winter wheat planted area in 2017-18.”

Although last year’s calf crop was estimated a touch lower than the mid-year estimate, ERS analysts say the pool of cattle that might be expected to be placed in feedlots this year still represented 1.8% more calves than the previous year (36.4 million head), according to the most recent Cattle report.