WLI

Negotiated cash fed cattle trade for the week was mainly steady to weak with live sales at $111/cwt. in the Northern and Southern Plains; mostly $2 lower in the western Corn Belt at $108. Dressed sales were $1 lower at $174.

Firming grain prices helped pressure Feeder Cattle futures sharply lower Friday. In turn, Live Cattle closed lower to a much lesser degree.

Live Cattle futures closed an average of 55¢ lower.

Feeder Cattle futures closed an average of $1.63 lower ($1.27 to $2.12 lower).

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

Choice boxed beef cutout value was 20¢ higher Friday afternoon at $202.71/cwt. Select was 21¢ lower at $192.28.

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Gains in Asian and European shares overnight helped plug the recent sell-off as major U.S. financial indices closed higher Friday.

The Dow Jones Industrial Average closed 287 points higher. The S&P 500 closed 38 points higher. The NASDAQ was up 167 points.

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Strong growth in both the U.S. and global economies will support increased demand in domestic and export markets through the end of the year. However, according to the latest Quarterly Rural Economic Review (QRER) from CoBank’s Knowledge Exchange Division (KED), U.S. competitiveness is currently constrained by trade uncertainties and the elevated value of the U.S. dollar, further placing pressure on the agricultural economy as output in most industries rises.

“Agricultural markets are being squeezed as prices remain weak,” says Dan Kowalski, vice president of CoBank’s Knowledge Exchange Division. “While recently negotiated trade deals show some upside for agriculture, global demand for output from the U.S. agriculture sector is being outpaced by current U.S. production.”

CoBank’s latest QRER indicates that any significant farm price improvements over last year’s prices will be limited, particularly with record U.S. yields for many of the major crop commodities adding to available supply levels. Meanwhile, the animal protein and dairy sectors continue to benefit from strong domestic demand and the promise of better access to Mexico and Canada, but will need more export market growth to absorb their current pace of output and expansion.

Negotiated cash fed cattle trade was steady in the Southern Plains Thursday at $111/cwt. It was steady to weak in the North at $108 in the western Corn Belt, $110.50-$111.50 in Nebraska and $111 in Colorado. Dressed trade was steady to $1 lower at $174.

Other than some support at the front of the board, Cattle futures continued to trend lower Thursday.

Except for 55¢ and 30¢ higher in the front two contracts, Live Cattle futures closed an average of 15¢ lower.

Except for 82¢ higher and 57¢ higher in the front two contracts, Feeder Cattle futures closed an average of 60¢ lower.

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

Choice boxed beef cutout value was 40¢ higher Thursday afternoon at $202.51/cwt. Select was 72¢ higher at $192.49.

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Worries about rising interest rates continued to fuel the plunge in major U.S. financial indices Thursday.

The Dow Jones Industrial Average closed 545 points lower. That’s a decline of 1,376 points in the last two sessions. The S&P 500 closed 57 points lower (151 points lower in the last two days). The NASDAQ was down 92 points (407 points lower in the last two sessions).

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“The forecast for 2018 total red meat and poultry production is lowered from last month,” say analysts with USDA’s Economic Research Service (ERS), in the latest monthly World Agricultural Supply and Demand Estimates (WASDE). “Beef production is reduced from the previous month, largely due to lower expected fourth-quarter fed cattle slaughter. Carcass weights are forecast lower on a higher expected proportion of cows in the slaughter mix.”

Beef projection for this year was projected 150 million lbs. less than the previous month at 26.94 billion lbs. Next year’s beef production is estimated to be 970 million lbs. more than this year at 27.91 billion lbs.

The fourth-quarter fed steer price (5-area direct) is estimated at $110-$114/cwt. Next year: $117-$125 in the first quarter; $118-$128 in the second; $109-$119 in the third.

“For 2019, the total red meat and poultry production forecast is raised from the previous month as higher expected beef production more than offsets lowered forecasts for pork and broiler production,” say ERS analysts. “Beef production is raised from last month as larger placements in late 2018 and early 2019 are marketed during 2019. However, carcass weights are lowered for the early part of the year.”

Red meat and poultry production this year was estimated 477 million lbs. less at 102.61 billion lbs. Red meat and poultry production next year was estimated to be 3.2 billion lbs. more than this year at 105.85 billion lbs.

Negotiated cash fed cattle trade remained mostly undeveloped through Wednesday afternoon.

There were a few early dressed sales in the western Corn Belt for steady to $1 lower than last week at $174/cwt. A few live sales there were at $109-$111, but too few to trend.

There were 1,246 head offered in the weekly Fed Cattle Exchange auction Wednesday, and no sales.

A steep plunge on Wall Street helped pressure Cattle futures lower Wednesday.

Live Cattle futures closed an average of 60¢ lower (32¢ to $1.27 lower in spot Oct).

Feeder Cattle futures closed an average of $1.16 lower.

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

Choice boxed beef cutout value was 74¢ lower Wednesday afternoon at $202.11/cwt. Select was 95¢ lower at $191.77

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Major U.S. financial indices closed steeply lower Wednesday amid a massive sell-off led by tech stocks and fears about rising interest rates.

The Dow Jones Industrial Average closed 831 points lower. The S&P 500 closed 94 points lower. The NASDAQ was down 315 points.

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Overall, pasture and range conditions improved again, according to the latest weekly Crop Progress report (week ending Oct. 9). Among states with 35% or more of pasture and range rated as Poor or Very Poor the previous week, conditions improved or stayed the same everywhere, except in Colorado and Idaho.

Nationally, 48% of pasture and range is in Good (40%) or Excellent (8%) condition, 1% more than a week earlier and 7% more than a year earlier. 22% is rated as Poor (14%) or Very Poor (8%), which is 1% less than a week earlier and 3% less than last year.

States with 35% or more pasture and range rated as Poor or Very Poor in the recent report include: Arizona (68%), California (60%), Colorado (62%), Idaho (43%), New Mexico (45%), Oregon (73%), Utah (63%) and Washington (56%). 

Crop progress and harvest continues at a positive pace.

93% of the corn crop is mature, which is 13% more than last year and 10% more than the average. 34% is harvested, which is 13% more than last year and 8% more than average.

91% of soybeans are dropping leaves, which is 3% more than last year and 6% ahead of the average. 32% are harvested, which is 2% less than last year and 4% less than the average.

73% of sorghum is mature, which is 5% more than last and 1% more than average. 39% is harvested, which is 4% more than last year but 3% less than the average.

57% of winter wheat is planted, which is 11% more than last year and 3% more than the average. 30% has emerged, which is 7% more than last year and 2% more than the average.

Cattle futures softened Tuesday as wholesale beef values continue to languish ahead of the expected seasonal uptick.

Live Cattle futures closed an average of 69¢ lower.

Feeder Cattle futures closed an average of $1.02 lower.

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

Choice boxed beef cutout value was 36¢ lower Tuesday afternoon at $202.85/cwt. Select was 91¢ higher at $192.72.

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Major U.S. financial indices closed mostly lower Tuesday as benchmark Treasury Note yields climbed to the highest level in several years, continuing recent investor angst about rising interest rates.

The Dow Jones Industrial Average closed 56 points lower. The S&P 500 closed 4 points lower. The NASDAQ was up 2 points.

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U.S. beef exports topped $750 million in August for the first time, according to data released by USDA and compiled by the U.S. Meat Export Federation (USMEF).

Specifically, August beef export value was $751.7 million, which was 11% more than the previous year, easily exceeding the previous record of $722.1 million reached in May 2018. In terms of volume, August beef exports were 7% more than the previous year at 119,850 metric tons (mt).

For January through August, beef exports totaled 899,300 mt, up 9% from a year ago, while value climbed 18% to $5.51 billion.

“U.S. beef exports continue to achieve tremendous growth, not only in our mainstay Asian markets but in the Western Hemisphere as well,” says Dan Halstrom, USMEF President and CEO. “USMEF is excited about the recent market access developments achieved by the Office of the U.S. Trade Representative (USTR) and USDA, with favorable terms being preserved in Mexico, Canada and South Korea and trade talks getting underway with Japan. A trade agreement with Japan would bring opportunities for even greater expansion as U.S. beef becomes more affordable for Japanese consumers and is back on a level playing field with Australian beef.”

Beef export value averaged $320.92 per head of fed slaughter in August, up 11% from a year ago. The January-August average was $318.66 per head, up 16%. Through August, beef exports accounted for 13.5% of total U.S. beef production, which was 0.7% more than the previous year.

Conversely, U.S. pork exports were pressured by retaliatory tariffs in China and Mexico. August pork export volume was down 1% from last year at 182,372 mt, while export value fell 3% to $494.1 million.

China’s duty rate on pork muscle cuts and variety meat increased from 12% to 37% in April and from 37% to 62% in July. Mexico’s duty rate on pork muscle cuts increased from 0% to 10% in June and then jumped to 20% in July (pork variety meats continue to enter Mexico duty-free). Beginning in June, Mexico also imposed a 15% duty on sausages and a 20% duty on some prepared or preserved hams and shoulders.

“Pork exports have posted an impressive performance in 2018, but the retaliatory duties are a clearly a significant obstacle,” Halstrom explains. “The fact that U.S. trade officials were able to secure duty-free access for U.S. red meat in the new U.S.-Mexico-Canada Agreement is critically important, and we are hopeful that duty-free access for U.S. pork entering Mexico will be restored soon. Tariff relief in China may not come as quickly, but USMEF continues to work with industry partners to keep as much product as possible moving to China while also working aggressively to expand exports in other key markets, including Korea, Central and South America, the ASEAN region and Australia.”

Keep in mind that U.S. beef still faces retaliatory duties in China and Canada. China’s duty rate increased from 12% to 37% in July, with the higher rate applying to all eligible products. Canada’s 10% duty, which also took effect in July, applies to cooked/prepared beef products. All other U.S. beef still enters Canada duty-free.