WLI

Negotiated cash fed cattle prices ended up last week at steady money to a little higher with moderate trade and demand on Friday. Live prices were $1 higher at $124/cwt., except for steady in the western Corn Belt at $123-$126. Dressed sales were steady to $3 higher at $197-$200.

Cattle futures closed higher Monday, led by Feeder Cattle and supported by higher cash prices and resurgent wholesale beef values.

Live Cattle futures closed an average of 67¢ higher.

Feeder Cattle futures closed an average of $1.46 higher ($1.12 to $1.82 higher).

Corn futures closed mostly unchanged to fractionally mixed.

Soybean futures closed mostly fractionally higher to 1¢ higher.

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

Choice boxed beef cutout value was $3.39 higher Monday afternoon at $217.65/cwt. Select was 26¢ higher at $213.41.

*******************************

Major U.S. financial indices closed higher Monday, supported by tech stocks and positive quarterly earnings reports.

The Dow Jones Industrial Average closed 175 points higher. The S&P 500 closed 18 points higher. The NASDAQ was up 87 points.

*******************************

“Total commercial beef production for 2018 is projected at 26.9 billion lbs., up 2.6% from one year ago and just fractionally smaller than the record U.S. beef production of 27.1 billion lbs. in 2002,” says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly market comments. “Beef production in 2019 is forecast at a record 27.4 billion lbs, up 1.8% year over year. Total beef production is likely to grow through 2020 at least.”

Along the way, Peel says total cattle slaughter last year was 2.5% more, with steer slaughter 0.7% less than in 2017 and heifer slaughter 6.5% more. Total cow slaughter was 6.5% more year over year, including 8.6% more beef cows.

Negotiated cash fed cattle trade was undeveloped through Friday afternoon, based on USDA reports, though expectations were for steady to higher prices.

Cattle futures closed narrowly mixed, following the previous session’s correction.

Except for 2¢ lower in near Apr, Live Cattle futures closed an average of 32¢ higher.

Except for $1.35 lower in the back contract and 15¢ higher in Nov, Feeder Cattle futures closed an average of 19¢ lower.

Corn futures closed mostly 1¢ to 2¢ higher.

Soybean futures closed mostly 1¢ to 2¢ higher.

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

Choice boxed beef cutout value was $1.13 lower Friday afternoon at $214.26/cwt. Select was 27¢ higher at $213.15.

*******************************

Major U.S. financial indices closed mostly higher Friday, supported by energy stocks and the positive employment outlook.

Total nonfarm payroll employment increased by 304,000 in January, according to the U.S. Bureau of Labor Statistics. The unemployment rate edged up to 4.0%.

Hourly earnings for all employees on private non-farm payrolls in January rose by 3¢ to $27.56, following a 10¢ gain in December. Over the year, average hourly earnings have increased by 85¢, or 3.2%.

The Dow Jones Industrial Average closed 64 points higher. The S&P 500 closed 2 points higher. The NASDAQ was down 17 points.

*******************************

Between 1979 and 1998, U.S. consumer beef demand declined by 50%, reminded Randy Blach, CattleFax CEO, at that organization’s annual Outlook Seminar last week.

Since then, demand increased, in part, because the industry increased product quality and consistency. For instance, Blach pointed out the percentage of Choice and Prime cattle increased 50% since 2004 to 79% last year.

“We finally started listening to the consumer and they rewarded us,” Blach says. He explains if beef demand hadn’t grown for the last two decades, fed steer prices today would be $20/cwt. less and steer calf prices would be $50 less.

“We have a changing consumer today. Are we willing to make the next changes to assure we’re providing consumer with what is important to them?” Blach asked. Among growing consumer demands, he cites things such as traceability and verification.

Negotiated cash fed cattle trade was undeveloped through Thursday afternoon.

Month-end positioning appeared to be the primary pressure on cattle futures Thursday. For the short term, there was also chatter about this week’s extreme cold dampening consumer demand across impacted areas.

Live Cattle futures closed an average of $1.36 lower.

After 27¢ lower in expiring Jan, Feeder Cattle futures closed an average of $1.38 lower.

Corn futures closed mostly 2¢ to 4¢ lower.

Soybean futures closed 3¢ to 5¢ lower through Jul ’20 and then 1¢ to 2¢ lower. 

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

Choice boxed beef cutout value was $2.66 lower Thursday afternoon at $215.39/cwt. Select was 12¢ lower at $212.88.

*******************************

Major U.S. financial indices closed mostly higher Thursday, buoyed by strong quarterly earnings reports and spillover support from the steep increases in the previous session.

The Dow Jones Industrial Average closed 15 points lower. The S&P 500 closed 23 points higher. The NASDAQ was up 98 points.

*******************************

Although increasing cattle supplies will likely pressure cattle prices across all sectors this year, Kevin Good, CattleFax analyst says robust economic demand, U.S. job growth and higher wages will remain supportive.

“The relatively strong calf market we saw in 2018 will be under pressure this year,” explained Good, at Thursday’s CattleFax Outlook Seminar in New Orleans. “However, values in the spring should have the potential to reach the mid-$180s. On the other hand, a larger calf crop and softer demand have the potential to erode prices to the $140-level next fall, so there is certainly more price risk in feeder cattle and calves than in the fed cattle markets in 2019.”

CattleFax projects 750 lb. steer prices at $130-$160/cwt., with an average at $147/cwt.

Fed cattle prices are expected to be steady this year, averaging $117/cwt., with market resistance at the $130-level and downside risk to $100/cwt. at the low end of the trading range, according to Good.

As for cull cows, Good says, “Years of expansion and poor operating margins in the dairy sector are generating more cull cows, which weighs on the markets. The additional supply and the limited packing capacity for non-fed cattle will result in a market which averages approximately $55/cwt. during 2019, with a spring high near $60/cwt. and a fall low in the lower $40s.”

Look for more insights from the CattleFax Outlook in Monday’s Cattle Current