WLI

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.

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.”