WLI

Negotiated cash fed cattle trade remained undeveloped through Friday afternoon. Though too few to trend, there were a few live sales reported in the western Corn Belt on Thursday at $119.00-$121.50/cwt., which was about $1 higher than the previous week.

Front-month Live Cattle set the tone for firm to higher futures prices, supported by expectations of steady to higher cash fed cattle prices.

Except for $1.15 higher in spot Dec and 22¢ lower in the back contract, Live Cattle futures closed an average of 27¢ higher.

Feeder Cattle futures closed narrowly mixed (10¢ lower to 22¢ higher).

Corn futures closed 1¢ higher.

Soybean futures closed 10¢ to 13¢ higher through March ’20 and then 8¢ to 9¢ higher.

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

Choice boxed beef cutout value was 89¢ lower Friday afternoon at $214.41/cwt. Select was 30¢ higher at $207.52.

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Major U.S. financial indices closed mainly lower Friday, amid another day of volatile trade.

The Dow Jones Industrial Average closed 76 points lower. The S&P 500 closed 3 points lower. The NASDAQ was up 5 points.

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Most auctions were closed for the holiday last week, so there were no price trends for calves and feeder cattle. When sales start in the new year, they should receive support from recently stronger cash fed cattle and futures prices. Snugger front-end supplies and harsh winter weather in some cattle-feeding areas suggest that support should continue for a while.

Near-term wildcards continue to include volatile equity markets, tied to worries about rising interest rates and slowing global economic growth, as well as the government shutdown.

Depending on your abacus, cattle prices this past year were unsurprising and mostly on par with the previous year. As long as weather and demand hold up, it’s hard to argue that prices will be much different in 2019.

The Livestock Marketing Information Center (LMIC) projected calf prices for the first quarter of 2019 at $168-$172/cwt., according to Glynn Tonsor, agricultural economist at Kansas State University, in December. Yearling prices were projected at $147-$150 and fed prices at $118-$121.

Negotiated cash fed cattle trade remained undeveloped through Thursday afternoon, but Live Cattle futures bounced higher, pulling Feeder Cattle along. Apparently, traders expect solid consumer demand heading into the new year. That’s hard to argue against, given snugger front-month fed cattle supplies and wholesale beef values holding their ground.

After an average of $1.39 higher in the front two contracts, Live Cattle futures closed an average of 45¢ higher (an average of 69¢ higher overall).

Feeder Cattle futures closed an average of 52¢ higher (12¢ higher at the back of the board to 90¢ higher in spot Jan).

Corn futures closed 1¢ lower to 1¢ higher.

Soybean futures closed fractionally mixed to 1¢ higher.

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

Choice boxed beef cutout value was 39¢ lower Thursday afternoon at $215.30/cwt. Select was 38¢ lower at $207.22. Both remained higher week to week.

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Major U.S. financial indices closed higher Thursday after a sharp drop early, following the previous session’s steep gains. Given fundamentals, apparently raw emotion and the vagaries of electronic trading are firmly in charge.

The Dow Jones Industrial Average closed 260 points higher. The S&P 500 closed 21 points higher. The NASDAQ was up 25 points.

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Since 2015, one in every five bushels of added feed demand for corn is due to beef and pork exports, according to a recently updated study—The Intersection of U.S. Meat Exports and Domestic Corn Use—conducted by World Perspectives, Inc. (WPI), on behalf of the U.S. Meat Export Federation.

The original study concluded that in 2015 exports of U.S. red meat accounted for 11.7 million tons of combined corn and Dried Distillers Grains with Solubles (DDGS) use. In the update, WPI analysts say that 2018 beef and pork exports will use a combined total of 14.9 million tons of corn and DDGS, which equates to an additional 459.7 million bu. of corn produced, an increase of 29% over the 2015 projections.

“While the original study utilized 2015 export numbers, combined U.S. beef and pork exports this year should be about 26% above the 2015 totals,” explains Dave Juday, WPI senior analyst. “If you look forward, we’re projecting that the baseline over the next 10 years will grow about 10% more than USDA had projected back in 2016.”

Beef and pork exports also have a direct impact on the utilization and value of DDGS, according to the updated study. Overall, the value of DDGS sold for feed to livestock represents about 23% percent of the value of ethanol per bushel of corn.

“Over the baseline period of 2018-2027, the combined value of beef and pork exports to corn and DDGS is projected to reach $22.2 billion—$19 billion for corn and $3.2 billion for DDGS. This cumulative 10-year total is almost 19% more than the $18.7 billion projected in 2016 using USDA’s 2016-2025 long term baseline meat export forecast,” Juday says.

Among other study highlights:

• About 11% of the price of corn this year will be derived from red meat exports.
• Red meat exports’ impact on corn price is 39¢/bu. (based on annual average price of $3.53/bu.).
• There would be a loss of $5.7 billion in corn value without red meat exports.

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.