WLI

Last week’s higher fed cattle prices and firmer wholesale beef values appeared to finally offer some spark to Cattle futures on Tuesday, especially Feeder Cattle.

Live Cattle futures closed an average of 77¢ higher.

Feeder Cattle futures closed an average of $1.68 higher ($1.15 higher to $2.27 higher in spot Jan).

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

Choice boxed beef cutout value was 96¢ lower Tuesday afternoon at $214.46/cwt. Select was 45¢ higher at $201.39.

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Wild market swings continued on Wall Street Tuesday, apparently driven by continued kneejerk reactions to the headlines. By the end, major U.S. financial indices settled narrowly mixed.

The Dow Jones Industrial Average closed 53 points lower. The S&P 500 closed fractionally lower. The NASDAQ was up 11 points.

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“The 2018 forecast for total red meat and poultry production is raised from last month as higher beef and poultry production forecasts more than offset lower pork production,” according to analysts with USDA’s Economic Research Service, in the monthly World Agricultural Supply and Demand Estimates (WASDE). “The increase in beef production reflects a faster pace of steer and heifer slaughter. However, this is slightly offset by lower carcass weights.”

Fed steer prices (5-area Direct) are projected at $119-$125/cwt. in the first quarter next year, $118-$128 in the second quarter and $109-$119 in the third.

Other WASDE highlights:

Corn

Lower corn used for ethanol, reduced imports and larger ending stocks.

The season-average corn price received by producers was unchanged at a midpoint of $3.60/bu., but the range was narrowed 5¢ cents on each end to $3.25 to $3.95/bu.

Wheat

Unchanged supplies, lower exports, and higher ending stocks.

The projected season-average farm price is up 5¢/bu. at the midpoint with the range narrowed to $5.05 to $5.25.

Soybeans

Supply and use projections for 2018-19 were unchanged. Soybean ending stocks were projected at a record 955 million bu.

The U.S. season-average soybean price for 2018-19 was forecast at $7.85 to $9.35/bu., unchanged at the midpoint. Soybean meal price was unchanged at $290 to $330 per short ton. Soybean oil price was unchanged at 28.0¢ to 32.0¢/lb.

Negotiated cash fed cattle trade last week ended up $1-$3 higher at $119/cwt. ($116 in the western Corn Belt). Dressed trade was steady to $4 higher at $187.

Feeder Cattle futures gained some ground Monday, amid limited trade, while Live Cattle closed narrowly mixed, despite stronger cash prices and wholesale beef values.

Live Cattle futures closed 32¢ lower to 32¢ higher.

Feeder Cattle futures closed an average of 67¢ higher. 

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

Choice boxed beef cutout value was $1.13 higher Monday afternoon at $215.42/cwt. Select was 44¢ higher at $200.94.

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Extreme volatility continued on Wall Street Monday with steep losses early and then recovery later on, led by tech stocks.

The Dow Jones Industrial Average closed 34 points higher. The S&P 500 closed 4 points higher. The NASDAQ was up 51 points.

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“The latest meat trade data shows that meat exports are continuing to help offset record meat production in 2018,” explains Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in December market comments.  “Each of the major meats—beef, pork and poultry—are projected to reach record levels in 2018 and will combine to push total U.S meat production to a record level of 102.3 billion lbs., up 2.6% year over year. However, 2018 per capita meat consumption in the U.S. is projected at 218.7 lbs., up 1.0% year over year. The smaller increase in meat consumption compared to production is largely due to the net movement of meat offshore through meat exports. Thus far in 2018 (January-October), total meat exports of 13.3 billion lbs. consist of broiler (44.0%); pork (36.3%); and beef (19.7%).

Moreover, Peel explains U.S. meat exports are forecast to increase next year, while total meat imports are forecast to decrease. 

“Continued improvements in the net trade balance will be critical to partially offset total 2019 meat production forecast at 103.7 billion lbs., up 1.4% year over year and another record level,” Peel says. “Domestic per capita total meat consumption is forecast to hold steady in 2019.”

However, Peel also pointed out earlier this fall, “There is general agreement that trade disruptions will likely reduce U.S. and global macroeconomic growth in 2019. While the beef industry has avoided most of the direct tariff impacts thus far, indirect tariff impacts will continue to grow unless the trade situation is resolved very soon. Consumers will see growing tariff impacts that may impact consumer spending and beef demand…Tariff-driven price increases could push consumers to cheap and abundant pork and poultry at the expense of beef demand.”

Negotiated cash fed cattle trade remained mostly undeveloped through Friday afternoon, according to USDA reports. There was some light to moderate trade in the western Corn Belt at $115-$117/cwt., which was $1 higher than the previous week. Early dressed sales were steady at $183-$185. By late in the day, AMS reported some dressed trade in Nebraska at $187, which was $2-$4 more than the previous week.

Cattle futures closed narrowly mixed in choppy trade.

Live Cattle futures closed an average of 22¢ higher, except for 5¢ to 27¢ lower at either end of the board.

Other than 17¢ higher in spot Jan, Feeder Cattle futures closed unchanged to an average of 22¢ lower. 

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

Choice boxed beef cutout value was $1.62 higher Friday afternoon at $214.29/cwt. Select was $2.28 higher at $200.50.

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Major U.S. financial indices plunged again to end the week.

Pressure included ongoing worries about global economic growth and trade, as well as fewer jobs than expected in the monthly national employment report.

Total nonfarm payroll employment increased by 155,000 in November, according to the U.S. Bureau of Labor Statistics. The unemployment rate remained unchanged at 3.7%. 

Average November hourly earnings for all employees on private nonfarm payrolls rose by 6¢ to $27.35. Over the year, average hourly earnings have increased by 81¢ cents, or 3.1%.

The Dow Jones Industrial Average closed 558 points lower. The S&P 500 closed 62 points lower. The NASDAQ was down 129 points.

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U.S. beef exports continue at a torrid pace, according to data released by USDA and compiled by the U.S. Meat Export Federation (USMEF).

October beef exports totaled 117,838 metric tons (mt), up 6% from a year ago, valued at $727.4 million, which was 10% more year over year and the second-highest monthly total on record.

For January through October, beef exports totaled 1.13 million mt, 9% more than last year, while value was 17% more at $6.92 billion. For beef muscle cuts only, exports increased 12% percent in volume (867,714 mt) and 19% in value ($6.19 billion).

 “Demand for U.S. beef continues to climb in nearly every region of the world, with annual records already falling in some markets,” says Dan Halstrom, USMEF president and CEO. “Per-head export value will also easily set a new record in 2018, which illustrates the strong returns exports are delivering for cattle producers and for the entire supply chain.”

Beef export value equated to $317.53 per head of fed slaughter in October, up 5% from a year ago. For January through October, the per-head average was up 15% to $320.50.

Negotiated cash fed cattle trade was undeveloped through Thursday afternoon.

Cattle futures softened but closed well off of session lows that came early, driven in part by the plummeting stock market (see below).

Live Cattle futures closed an average of 48¢ lower. 

Except for an average of 35¢ lower in the back two contracts, Feeder Cattle futures closed an average of $1.22 lower. 

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

Choice boxed beef cutout value was 59¢ lower Thursday afternoon at $212.67/cwt. Select was $1.36 higher at $198.22.

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Maybe it still pays to leave that cash in the coffee can. Wall Street took a wild ride Thursday, with the Dow plunging nearly 800 points early on—driven in part by the overnight free fall in stock index futures —before ultimately recovering most of the loss. That followed the previous session’s steep losses.

Recent pressure includes the yield curve inversion, as a possible barometer of looming domestic economic recession, as well as fears of a global economic slowdown, tied to lingering trade issues. Support for the day included reports that the Fed may be less aggressive in raising interest rates after the December meeting.

The Dow Jones Industrial Average closed 79 points lower. The S&P 500 closed 4 points lower. The NASDAQ was up 29 points.

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“On average, bankers estimated that farmland prices declined by 4.0% over the past 12 months and expect farmland prices to fall by another 3.2% over the next 12 months,” according to the most recent Rural Mainstreet Economy Report from Creighton University.

“More than ever, farmland values are extremely dependent upon quality, and location, location, location,” says Fritz Kuhlmeier, CEO of Citizens State Bank at Lena, IL.

The monthly report is built from surveys of rural community bank CEOs in a 10-state region dependent on agriculture and/or energy. It includes the Rural Mainstreet Index (RMI), a real-time measure of rural economic health. The overall index expanded to 54.3 in October from 51.5 in September. The index ranges between 0 and 100 with 50.0 representing growth neutral. That’s the ninth consecutive month the index climbed above growth neutral. 

“Our surveys over the last several months indicate that the Rural Mainstreet economy is expanding outside of agriculture. However, the negative impacts of tariffs and low agriculture commodity prices continue to weaken the farm sector,” says Ernie Goss, PhD, Jack A. MacAllister Chair in Regional Economics at Creighton University’s Heider College of Business.