WLI

Although cash fed cattle trade remained undeveloped through Thursday afternoon, and wholesale beef values were sharply lower, Cattle futures eked out slight gains. Some credited part of the support to the lack of bounce in grain prices, following the monthly World Agricultural Supply and Demand Estimates.

Except for 2¢ lower in the back contract, Live Cattle futures closed an average of 44¢ higher.

Except for unchanged in the back contract, Feeder Cattle futures closed an average of 22¢ higher.

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

Choice boxed beef cutout value was $2.15 lower Thursday afternoon at $216.07/cwt. Select was $2.66 lower at $199.11.

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Major U.S. financial indices closed narrowly mixed Thursday. Election-based optimism the previous day was tempered by indications the Federal Reserve will continue to increase interest rates, albeit gradually. They left the rate unchanged for the time being.

According to a statement from the FOMC. “The Committee expects that further gradual increases in the target range for the federal funds rate will be consistent with sustained expansion of economic activity, strong labor market conditions, and inflation near the Committee’s symmetric 2% objective over the medium term. Risks to the economic outlook appear roughly balanced.”

The Dow Jones Industrial Average closed 10 points higher. The S&P 500 closed 7 points lower. The NASDAQ was down 39 points.

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Estimated beef production for this year was lowered by 30 million lbs. to 26.91 billion lbs., according to the latest monthly World Agricultural Supply and Demand Estimates (WASDE). For next year, beef production was reduced by 100 million lbs. to 27.81 billion lbs.

The estimated fed steer price for the fourth quarter is projected to be $112-$116/cwt., with an annual average for this year of $116.79, 50¢ more than the previous month’s projection. Fed steer prices for next year are estimated at $118-$126 in the first quarter; $118-$128 in the second quarter; $109-$119 in the third.

Negotiated cash fed cattle trade remained undeveloped through Wednesday afternoon. There were just 310 head offered in the weekly Fed Cattle Exchange auction, and no takers.

Despite sharply higher outside markets, Cattle futures continued to erode on Wednesday, led by Feeder Cattle, as traders seem to be concentrating on increased beef supplies down the road, rather than relative snugness through the end of the year.

Other than 67¢ higher in spot Nov, Live Cattle futures closed an average of 40¢ lower.

Other than 5¢ lower in spot Nov, Feeder Cattle futures closed an average of 98¢ lower.

Wholesale beef values were weak to lower on light demand and offerings, according to the Agricultural Marketing Service.

Choice boxed beef cutout value was 54¢ lower Wednesday afternoon at $218.22/cwt. Select was $2.89 lower at $201.77.

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Major U.S. financial indices bolted ahead Wednesday, with investors apparently cheering the outcome of the mid-term elections.

The Dow Jones Industrial Average closed 545 points higher. The S&P 500 closed 58 points higher. The NASDAQ was up 194 points.

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Increasing producer optimism about current and future conditions drove the Purdue University-CME Group Ag Economy Barometer sharply higher last month.

Specifically, the October barometer reading of 136 was 22 points higher than September, which was the lowest reading for the survey since 2016.

“We continue to see large month-to-month variations in the barometer readings as a result of swings in major commodity prices and emerging news about trade negotiations with key ag trade partners,” says James Mintert, the barometer’s principal investigator and director of Purdue University’s Center for Commercial Agriculture.

The barometer is based on a survey of 400 agricultural producers from across the country. It’s comprised of two sub-indices: the Index of Current Conditions rose 19 points in October to 115; the Index of Expectations rose 24 points to a reading of 146.

Cattle futures stabilized Tuesday, retaining the previous session’s steep losses, but holding ground. Trade was light with many apparently remaining on the sidelines to see the election results.

Live Cattle futures closed narrowly mixed (37¢ lower to 20¢ higher).

Other than 47¢ and 17¢ higher in the front two contracts, Feeder Cattle futures closed an average of 20¢ lower.

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

Choice boxed beef cutout value was 17¢ higher Tuesday afternoon at $218.76/cwt. Select was $2.31 higher at $204.66.

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Major U.S. financial indices closed higher Tuesday with investors awaiting the outcome of mid-term elections.

The Dow Jones Industrial Average closed 173 points higher. The S&P 500 closed 17 points higher. The NASDAQ was up 47 points.

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“Yearling cattle ready for the feedlot remain in strong demand and will likely do so through the end of the year and into 2019,” says Andrew P. Griffith, agricultural economist at the University of Tennessee, in his weekly market comments.

As for calves, Griffith says it’s reasonable to assume that prices will decline another 2-3% in November.

“The slaughter cow market further exacerbates the situation,” Griffith explains. “Good-conditioned slaughter cows weighing 1,300 lbs. would have resulted in about $560 per head this week based on weekly auction averages (TN), which is about $120 per head lower than what the same cows averaged in September. These value losses are sometimes phantom losses because many producers do not consider what could have been attained during a different marketing period.”

On the other end of the scale, Griffith points to seasonally higher wholesale beef values, which should provide support to fed cattle.

“Stronger beef prices generally result in packers being willing to pay higher money for finished cattle but they continue to fight with cattle feeders to maintain those strong margins,” Griffith says. “The price increase in wholesale beef was to be expected as holiday buying is underway, but beef demand continues to impress and further support prices.”

Negotiated cash fed cattle trade last week ended up steady to higher in late trade.

Live sales were $1-$2 higher in the Southern Plains at $116/cwt. They were steady to $1 higher in the Northern Plains at $114-$116. Live trade was steady in the Western Corn belt at $113-$114. Dressed trade was fully steady at $180.

Despite that, seasonally higher wholesale beef values and apparently snugger packer inventories, Cattle futures headed hard south on Monday. There were no easy explanations, at least not from a fundamental standpoint. Part of it could have been defensive positioning ahead of Tuesday’s election.

Live Cattle futures closed an average of $1.47 lower, from an average of (62¢ to $1.75 lower).

Feeder Cattle futures closed an average of $2.65 lower ($2.20 to $3.32 lower).

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

Choice boxed beef cutout value was 9¢ higher Monday afternoon at $218.59/cwt. Select was 88¢ higher at $202.35.

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Major U.S. financial indices closed mixed Monday. Financial institutions and some energy companies provided support, while tech stocks, including Apple, applied pressure.

The Dow Jones Industrial Average closed 190 points higher. The S&P 500 closed 15 points higher. The NASDAQ was down 28 points.

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U.S. beef exports continued at a stronger year-over-year pace in September, according to data released by USDA and compiled by the U.S. Meat Export Federation (USMEF).

September beef exports of 110,160 metric tons (mt), were 6% more than a year earlier. Export value was 11% more at $687.1 million.

For January through September, beef exports were just over 1 million mt, up 9% from a year ago, while value surged 18% to $6.2 billion.

“With a full quarter still to be reported, beef export value records are already being surpassed in some markets and global value is on track for $8 billion by year’s end,” says USMEF President and CEO Dan Halstrom.

Beef export value equated to $334.63 per head of fed slaughter in September and $320.85 for January through September, each 16% more than a year ago.

For the first three quarters of 2018, exports accounted for 13.5% of total production (up from 12.8%) and 11.1% for muscle cuts, up one full percentage point from last year.

Among the highlights:

Exports to Korea were up 22% from a year ago in volume (19,116 mt) and were 29% percent higher in value ($143.1 million). January-September exports reached 180,495 mt, up 37% from a year ago, while export value soared 51% to $1.29 billion, already breaking last year’s full-year value record.

September beef exports to leading market Japan were up 4% from a year ago in both volume (28,086 mt) and value ($172.3 million). For the first three quarters of 2018, exports to Japan were up 7% from a year ago in volume (252,871 mt), while value increased 10% to $1.59 billion.

Exports to Mexico were up 1% from a year ago in volume (177,906 mt) and 8% higher in value ($783.1 million). With a strong fourth quarter, exports to Mexico should top $1 billion for the first time since 2015.

Negotiated cash fed cattle trade remained mostly undeveloped through late Friday afternoon, although there continued to be chatter that inventory needs would push packers to the trough before the end of the day. The lack of cash direction helped to hold Cattle futures in check, with Feeder Cattle getting extra pressure from rising corn prices.

Live Cattle futures closed narrowly mixed, from an average of 9¢ lower to an average of 37¢ higher.

Feeder Cattle futures closed an average of 46¢ lower in flea-thin trade.

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

Choice boxed beef cutout value was 5¢ lower Friday afternoon at $218.50/cwt. Select was $2.78 lower at $201.47.

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Major U.S. financial indices closed lower Friday, in volatile trade. Pressure included uncertainty surrounding trade issues. Support included a monthly employment report that beat expectations. Non-farm payroll employment increased by 250,000 in October, according to the U.S. Bureau of Labor Statistics. That left the nation’s unemployment rate at 3.7% for the second consecutive month, the lowest rate since 1969.

“…we have a total of 4.5 million new jobs since November 2016. Jobs were added across all industries. Employment hit a record high of 156,562,000,” says U.S. Secretary of Labor Alexander Acosta.

The Dow Jones Industrial Average closed 109 points lower. The S&P 500 closed 17 points lower. The NASDAQ was down 77 points.

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Early tables from USDA for the Agricultural Projections to 2028 that will be published in February suggest the nation’s beef cowherd will peak in 2021 at 32.00 million head, which would be 111,000 head more than the projected inventory on Jan. 1 of next year of 31.89 million head.

Those same projections estimate feeder steer prices (OKC) next year to average $146.50/cwt., compared to this year’s estimate of $148.20. The 5-area Direct fed steer price for next year is estimated at $117.75, compared to this year’s estimate of $116.29.

For this year, analysts with the Livestock Marketing Information Center (LMIC) noted earlier this week, higher costs—including winter feed, fuel, utilities and interest—along with lower cull cow prices are pressuring cow-calf returns.

“Last year had a positive return over cash costs, due to calf prices that strengthened during the second half of the year,” say LMIC analysts, in the latest Livestock Monitor. They estimate cash returns per cow this year at slightly less than breakeven.