WLI

Negotiated cash fed cattle trade was undeveloped Wednesday, as expected. There was chatter about steady to higher prices this week, though, based on current demand and an estimated holiday harvest larger than many expected.

Cash fed cattle prices last week were steady to a touch higher. Live prices were $119/cwt. in Kansas and Nebraska ($118-$120 in the western Corn Belt). Dressed prices were $190.

Cattle futures closed narrowly mixed to higher (Feeder Cattle), supported by firm fed cattle prices and boxed beef cutout values.

After 47¢ higher in spot Dec, Live Cattle futures closed narrowly mixed (17¢ lower to 7¢ higher). On Monday, except for unchanged in the spot month, they were an average of 22¢ higher.

Feeder Cattle futures closed an average of 34¢ higher. They were an average of 32¢ higher on Monday.

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

Choice boxed beef cutout value was $1.64 higher Wednesday afternoon at $215.69/cwt. Select was 10¢ higher at $207.60.

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Major U.S. financial indices blasted sharply higher Monday, regaining the steep losses from Monday’s short session, and then some. Support included retail and energy stocks. Crude oil prices (WTI-CME) closed $3.51 to $3.72 higher through the front 12 contracts. On Monday, spot Feb plunged to $42.53; it ended Wednesday at $46.22.

On the other side of the equation, plenty of worry continues over an assortment of issues, including slowing global economic growth, the trade standoff with China, rising interest rates and the domestic government shutdown.

On Wednesday, the Dow Jones Industrial Average closed 1,086 points higher. The S&P 500 closed 116 points higher. The NASDAQ was up 361 points.

By way of review, the DJIA plummeted 653 points in Monday’s holiday-shortened session. The NASDAQ closed 140 points lower Monday; 65 points lower for the S&P 500.

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Feedlot returns appear positive from now through the first quarter of the new year, based on the most recent Historical and Projected Kansas Feedlot Net Returns, from Kansas State University (KSU).

Currently, the net returns projected for closeouts in November are +$4.88 per head for steers and -$1.18 per head for heifers, according to Glynn Tonsor, KSU agricultural economist, who prepares the report. He reminds that the estimates assume no price risk management.

Projected returns for steers jump to +78.11 per head for December with an estimated feedlot cost of gain of $83.19/cwt. From there, projected returns remain in the black (+$29.46 to +$80.71) through March of 2019.

Likewise, projected returns for heifers bounce to +$62.46 per head for December with an estimated feedlot cost of gain of $90.83/cwt. Projected returns fall to -$13.17 in January, then climb to +$8.05 and +$33.54 in February and March, respectively.

Improved projections compared to the previous month are mostly due to about $5 more in forecast sales prices, according to Tonsor.

Cash fed cattle continued steady to a touch higher than the previous week, through late Friday afternoon. For the week, live sales were steady at $119/cwt. in Kansas and Nebraska. Dressed trade in Nebraska was $3 higher at $190. Live sales in the western Corn belt were $1-$2 higher at $118-$120, while dressed sales were $3 higher at $190.

Cattle futures closed narrowly mixed to end the week, with no reaction to the previous day’s monthly Cattle on Feed report and amid stronger wholesale beef prices.

Live Cattle futures closed narrowly mixed (an average of 42¢ higher through the front three contracts and then an average of 23¢ lower).

Feeder Cattle futures closed marginally mixed (17¢ lower to 7¢ higher).

Corn futures closed mostly 2¢ to 3¢ higher through Jul ’20 and then mostly fractionally lower.

Soybean futures closed 7¢ to 8¢ lower through Sep ’19 and then mostly 2¢ to 5¢ lower.

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

Choice boxed beef cutout value was $1.58 higher Friday afternoon at $214.05/cwt. Select was $2.24 higher at $207.50.

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Major U.S. financial indices closed sharply lower again on Friday, amid continuing concerns about slowing global economic growth, domestic economic recession, trade issues and the likelihood of a partial government shutdown.

The Dow Jones Industrial Average closed 414 points lower. The S&P 500 closed 50 points lower. The NASDAQ was down 195 points.

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Total pounds of beef in freezers Nov. 30 were down slightly from the previous month but up 6% percent from last year, according to the monthly USDA Cold Storage report.

Frozen pork supplies were 11% less than the previous month but 1% more than the previous year. 

Total red meat supplies in freezers were down 6% from the previous month but up 4% from last year.

Total frozen poultry supplies were 13% less than the previous month but 2% more than a year ago.

Early dressed trade picked up a couple of dollars in the North Thursday…feedlot placements in November were almost 5% fewer than a year earlier… coming up on your Cattle Current Market Update with Wes Ishmael.

Cash fed cattle trade started Thursday at $190/cwt. in Nebraska, which was $2 more than last week. Though too few to trend, there were also some early live sales in the western Corn Belt at $120 and early dressed sales at $190, both $3 more than last week.

Cattle futures closed mostly higher ahead of the monthly Cattle on Feed report (see below), which will likely be viewed as neutral to a touch bearish.

Except for 50¢ higher in spot Dec and 17¢-27¢ lower at the back, Live Cattle futures closed 10¢ to 30¢ higher.

Other than 30¢ higher in the back two contracts, Feeder Cattle futures closed an average of $1.02 higher.

Corn futures closed mostly 5¢ to 6¢ lower through Jul ’20 and then fractionally lower to 2¢ lower.

Soybean futures closed 4¢ to 6¢ lower.

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

Choice boxed beef cutout value was 77¢ higher Thursday afternoon at $212.47/cwt. Select was 41¢ higher at $205.26.

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Major U.S. financial indices took another sharp turn south on Thursday. The growing likelihood of a partial government shutdown roiled already volatile markets. According to various reports, President Trump will veto any stopgap funding measure that doesn’t include money for a border wall. The deadline for a resolution is at midnight Friday.

The Dow Jones Industrial Average closed 464 points lower. The S&P 500 closed 39 points lower. The NASDAQ was down 108 points.

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Cattle feeders placed 4.91% fewer cattle on feed in November (1.996 million head), according to the monthly Cattle on Feed report. The report accounts for feedlots with 1,000 head or more capacity. A majority of estimates ahead of the report projected a decrease of about 6%.

As for placement weights, 52.36% went on feed weighing less than 700 lbs.; 36.62% weighing 700-899 lbs.; 11.02% weighing more than 900 lbs.

November marketings of 1,869 million head were 1.36% more than a year earlier, which was in line with most pre-report estimates. That’s the most for the month since the data series began in 1996.

Cattle on feed Dec. 1 of 11.739 million head were 1.94% more than last year, a touch more than pre-report estimates.

Cash fed cattle trade remained undeveloped through Wednesday afternoon.

There were only 250 head offered in the weekly Fed Cattle Exchange auction, and no takers.

Cattle futures closed either side of steady with no direction from the cash market, biding time for Thursday’s monthly Cattle on Feed report and little trading interest.

Live Cattle futures closed marginally mixed, (an average of 13¢ lower through the front three contracts and then an average of 12¢ higher).

Other than unchanged in spot Jan, Feeder Cattle futures closed an average of 24¢ lower.

Corn futures closed 2¢ to 3¢ lower through Jul ’20 and then mostly fractionally lower.

Soybean futures closed most 5¢ to 7¢ lower.

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

Choice boxed beef cutout value was 98¢ lower Wednesday afternoon at $211.70/cwt. Select was 12¢ higher at $204.85.

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Major U.S. financial indices closed sharply lower Wednesday in turbulent trade that turned from positive to negative following the Fed announcement it was raising interest rates another 0.25%, marking the fourth increase this year. Though anticipated, the market seemed to be hoping for a reprieve, given the recent volatility of markets and expectations for slower global economic growth.

“A statement from the FOMC explained, in part: “Information received since the Federal Open Market Committee met in November indicates that the labor market has continued to strengthen and that economic activity has been rising at a strong rate. Job gains have been strong, on average, in recent months, and the unemployment rate has remained low. Household spending has continued to grow strongly, while growth of business fixed investment has moderated from its rapid pace earlier in the year. On a 12-month basis, both overall inflation and inflation for items other than food and energy remain near 2%. Indicators of longer-term inflation expectations are little changed, on balance.”

The Dow Jones Industrial Average closed 351 points lower. The S&P 500 closed 39 points lower. The NASDAQ was down 147 points.

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Live cattle are also contributing to the positive U.S. beef export picture.

“October cattle exports were about 29% higher than a year ago at 44,203 head,” say analysts with USDA’s Economic Research Service (ERS), in the December Livestock, Dairy and Poultry Outlook. “Despite exports to Mexico of less than half year-earlier levels, significantly higher exports to Canada resulted in the highest monthly export volume recorded since October 2001.”

Apparently Canadian cattle feeders are backfilling needed placements resulting from increasing fed cattle slaughter demand in tandem with continued flat herd growth.

“November through December is the peak placement season in Canada, which might support continued strong U.S. cattle shipments there as feedlots are sourcing cattle from the United States,” ERS analysts explain.

Besides Canada and Mexico, live cattle in October were exported to Qatar (2,184 head) and Russia (1,850 head), according to ERS. 

The cattle export forecast for 2018 was revised upward by 40,000 head to 250,000 head. The cattle export forecast for 2019 increased by 40,000 head to 255,000 head.

On the other side of the ledger, October cattle imports to the U.S.—primarily from Canada and Mexico—were 167,968 head, which was 20% more than a year earlier. For January through October, there were 1.497 million head of cattle imported to the U.S., about 82,000 head more than the previous year.