WLI

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.

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.