WLI

Negotiated cash fed cattle trade for last week, through Friday afternoon was mainly $127/cwt. on a live basis in the Northern Plains and the Southern Plains. That was mostly $1 less than the previous week. Dressed trade on the western Corn belt was steady at $204-$205.

Cattle futures gained with support from the continued rally in Lean Hog futures and likely near-term support from the latest round of winter. Presumably, the former is tied to the week’s export data from USDA, which indicates pork exports to China. If so, such optimism seems a stretch.

Live Cattle futures closed an average $1.19 higher (75¢ higher at the back to $1.70 higher in spot Apr).

Feeder Cattle futures closed an average of $1.21 higher (22¢ higher to $2.27 higher).

Corn futures closed 1¢ to 3¢ higher.

Soybean futures closed mostly 5¢ to 10¢ higher.

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

Choice boxed beef cutout value was 71¢ lower Friday afternoon at $226.99/cwt. Select was $1.42 lower at $217.34.

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Major U.S. financial indices closed higher Friday, buoyed by tech stocks and apparent growing optimism over a U.S.-China trade deal.

The Dow Jones Industrial Average closed 138 points higher. The S&P 500 closed 14 points higher. The NASDAQ was up 57 points.

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“Robust demand provides incentives for continued growth of the U.S. livestock sector over the next 10 years,” say analysts, in the USDA Projections to 2028, released last week. “In the beef cattle industry, the feed price ratio (cattle price/feed price) is expected to decline over the projection period, reflecting both lower cattle prices and higher feed prices, suggesting lower returns to production.”

USDA’s annual projections provide a starting point for discussion of alternative outcomes, according to report authors. They emphasize, “The scenario presented in this report is not a USDA forecast about the future. Instead, it is a conditional, long-run scenario about what would be expected to happen under a continuation of current farm legislation and other specific assumptions.”

With that said, these are some report highlights.

• “Global real economic growth is projected to average roughly 2.8% annually over the next decade. The United States is expected to have among the highest growth of the developed countries, averaging approximately 2.0% annually, while developed countries as a group are expected to experience an average of 1.6%.”

• “Rising corn prices early in the period contribute to a decreasing beef cattle feed price ratio. As cattle prices decline, the ratio also drops, reducing production (expansion) incentives for cattle producers. Despite cattle numbers, which are expected to decline over the middle part of the forecast horizon, increased slaughter weights support gains in beef production. Overall, beef production levels are expected to rise at less than 1% per year.”

• “Prices for most crops continue to remain low relative to the recent past as U.S. and global production responded to the earlier high prices. Prices are expected to rise over the first half of the projection period and thereafter decline moderately, reflecting long-term growth in global demand for agricultural products and continued biofuel feedstock demand.”

Cattle movement was stymied across a broad section of the country on Thursday, courtesy of blizzard conditions and flooding.

Negotiated cash fed cattle trade continued to trickle along at mostly $127 on a live basis in Nebraska.

Cattle futures gained, with support from the continued rally in Lean Hog futures and likely near-term support from the latest round of winter.

Live Cattle futures closed an average 84¢ higher through the front four contracts and then an average of 41¢ higher.

Except for 45¢ lower in spot Mar, Feeder Cattle futures closed an average of 60¢ higher.

Corn futures closed 1¢ to 4¢ higher through Mar ’20 and then mostly fractionally mixed.

Soybean futures closed 2¢ to 3¢ lower through Nov ’20 and then fractionally lower.

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

Choice boxed beef cutout value was 54¢ lower Thursday afternoon at $227.70/cwt. Select was 52¢ lower at $218.76.

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Major U.S. financial indices closed mixed but little changed Thursday. Pressure included weaker new home sales than expected.

Sales of new single-family houses in January 2019 were at a seasonally adjusted annual rate of 607,000, according to estimates released jointly by the U.S. Census Bureau and the Department of Housing and Urban Development. That was 6.9% below the revised December rate and 4.1% less than the January 2018 estimate.

The Dow Jones Industrial Average closed 7 points higher. The S&P 500 closed 2 points lower. The NASDAQ was down 12 points.

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“The number of fed cattle marketed in 2019 is anticipated to be lower than in 2018 as feedlots continue to slow the pace of marketings,” say analysts with USDA’s Economic Research Service (ERS), in the monthly Livestock, Dairy and Poultry Outlook. “Since the February Outlook report, fed cattle prices have continued their seasonal trend upward; prices typically peak in the spring. This reflects a period when fewer fed cattle are slaughtered, carcass weights are lighter, and demand picks up in anticipation of the grilling season. The current pace of slaughter combined with lower carcass weights could help support higher boxed-beef prices.” Based on current price data and expected lower marketings and lighter carcass weights this year, those analysts note the fed steer price forecast was raised to $116-$123/cwt.

Likewise, USDA bumped up their expectation for feeder steer prices to $141-$149, with a midpoint price of $145/cwt.

Although noting the 1% year-to-year increase in cattle outside feedlots Jan. 1, ERS analysts explain, “With continued large supplies of cattle in feedlots and a slower expected pace of placements in early 2019, feeder steer prices in first-half 2019 were little changed, but prices in second-half 2019 were raised as calf supplies are expected to be tighter.”

Negotiated cash fed cattle trade was light to moderate in the Southern Plains through Wednesday afternoon at $127/cwt. on a live basis, which was $1 lower than last week.

Although too few to trend, there were some live sales in Nebraska at $126-$127, which was $1.50-$2.00 lower than the previous week.

The deepest test at Tama, IA for Ch 2-4 steers was $128.56/cwt. on 132 head weighing an average of 1,420 lbs. That’s at the upper end of last week’s country trade for the region. At Sioux Falls Regional in South Dakota, though, Ch 2-4 steers brought $125.25 to $128.00.

There were 755 head offered in the weekly Fed Cattle Exchange auction, and no takers. Two lots of Oklahoma heifers were passed out at $126.50/cwt.

Cattle futures firmed Wednesday, following early-week losses suggesting the top may be in for Live Cattle.

Live Cattle futures closed an average 27¢ higher across a wide range (2¢ to 87¢ higher).

Feeder Cattle futures closed narrowly mixed (27¢ lower to 25¢ higher).

Corn futures closed fractionally higher to 1¢ lower.

Soybean futures closed 3¢ to 6¢ higher.

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

Choice boxed beef cutout value was 2¢ higher Wednesday afternoon at $228.24/cwt. Select was $1.07 lower at $219.28.

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Major U.S. financial indices closed higher Wednesday. Support included a heftier increase in durable goods orders than many expected.

New orders increased 0.4% in January, compared to December, according to the U.S. Commerce Department. Excluding defense and aircraft, new orders were up 0.8%.

The Dow Jones Industrial Average closed 148 points higher. The S&P 500 closed 19 points higher. The NASDAQ was up 52 points.

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The total number of feedlots declined by 19 to 28,160 last year, according to the Cattle on Feed report issued last Friday, while total one-time feedlot capacity declined by 100,000 head to 17.1 million head.

Year to year, there were 30 fewer feedlots with capacity of 1,000-3,999 head. Conversely, there were 10 more feedlots with capacity of 4,000-7,999 head and one more yard with capacity of 50,000 head or more; there are 74 feedlots in that category.

“Feedlots in that capacity range (+50,000 head) had 4.6 million head on feed on Jan. 1, or 32% of total inventory on feed,” says Matthew Diersen, Extension livestock economist at South Dakota State University, in the most recent issue of In the Cattle Markets. “Those feedlots also marketed 8.8 million head during 2018, or 34% of total marketings across all feedlots.”

The number of feedlots with less than 1,000 head capacity—26,000 feedlots—was the same year over year. The Jan. 1 inventory in those feedlots was 2.7 million head, or 19% of total inventory, according to Diersen. “Their marketings during 2018 were 3.3 million head, or 13% of total marketings,” he says.

Negotiated cash fed cattle trade was undeveloped through Tuesday afternoon, but futures prices and a few trades in the western Corn Belt hint at steady to softer prices.

Although too few to trend, there were a few live sales in the western Corn Belt at $126-$128/cwt., and a few in the beef at $204-$205.

Live Cattle futures closed an average of $1.14 lower (47¢ lower in the back contract to $2.35 lower in spot Apr). Trade volume was the heaviest since the first part of January.

Feeder Cattle futures closed an average of $1.19 lower.

Bears, no doubt, will likely make the case that the decline in Cattle futures signals the seasonal top is in the books.

Corn futures closed 3¢ to 5¢ higher.

Soybean futures closed 6¢ to 7¢ higher.

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

Choice boxed beef cutout value was 86¢ higher Tuesday afternoon at $228.22/cwt. Select was 72¢ higher at $220.35.

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Major U.S. financial indices closed mixed Tuesday.

Primary pressure came from Boeing stocks, beaten lower following the Ethiopian Airlines crash involving one of that company’s popular models; the EU and Indonesia grounded the plane from use by their airlines.

Support included continued inflation sloth, revealed by the monthly Consumer Price Index (CPI). It increased by 0.2% in February, after no change the prior month, according to the Bureau of Labor Statistics. Before seasonal adjustment the CPI for the last year increased 1.5%. Leave out food and energy expenditures and the February CPI increased by 0.1%.

The Dow Jones Industrial Average closed 96 points lower. The S&P 500 closed 8 points higher. The NASDAQ was up 32 points.

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Total pounds of beef in freezers Jan. 31 totaled 502.15 million lbs., according to the latest USDA Cold Storage report. That was 8.32 million lbs. (+1.66%) than a year earlier. Month to month, frozen beef supplies increased 14.44 million lbs. (+2.91%).

Frozen pork supplies were up 11% from the previous month, but down 3% from last year.

Total red meat supplies in freezers of 1.12 billion lbs. were 9.4 million lbs. fewer (-0.80%) than a year earlier.

Total frozen poultry supplies were up 4% from the previous month, but down 2% from a year earlier.

Short covering and profit taking seemed to be the order of the day in Cattle futures to start the week as follow-through buying to the previous session’s gains failed to materialize.

Live Cattle futures closed an average of 46¢ lower, except for unchanged to 17¢ higher in the back three contracts.

Feeder Cattle futures closed an average of $1.49 lower through the front three contracts and then an average of 28¢ lower.

Grain futures turned lower Monday, presumably on continued response to last weeks World Agricultural Supply and Demand Estimates indicating increased ending stocks for wheat and corn.

Corn futures closed mostly 1¢ to 2¢ lower.

Soybean futures closed 3¢ to 6¢ lower, with chatter that delayed planting conditions this year could force more acres into soybeans.

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

Choice boxed beef cutout value was $1.23 higher Monday afternoon at $227.36/cwt. Select was 85¢ higher at $219.63.

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Major U.S. financial indices closed higher Monday, boosted by tech stocks, including Apple.

The Dow Jones Industrial Average closed 200 points higher. The S&P 500 closed 40 points higher. The NASDAQ was up 149 points.

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National Beef Packing Company, LLC (National Beef), announced on Monday that it has approved a transaction that will result in 100% ownership interest in Iowa Premium, LLC, (IP) at Tama, IA.

IP began operations in November 2016. It employs more than 800 people and processes approximately 1,100 head of Black Angus fed cattle per day.

“I am excited to expand our beef operations with a processing facility in Iowa and we look forward to strengthening IP’s relationships with the family farmers who produce the highest quality Black Angus cattle in the U.S.,” says Tim Klein, National Beef president and CEO. “Iowa Premium fits perfectly with our value-based marketing strategy as we continue to provide our customers with the very best beef products and programs.”

The transaction is subject to customary conditions, including the expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act, and is expected to close in the second quarter of 2019.