WLI

Negotiated cash fed cattle trade last week was mainly steady at $110-$112/cwt. on a live basis and at $174-$175 in the beef.

Despite continued early pressure in equity markets—tied to worries about rising interest rates—Cattle futures managed to eke out gains to start the week.

Other than 2¢ lower in the back contract, Live Cattle futures closed an average of 24¢ higher.

Except for 10¢ lower in spot Oct and unchanged in the back contract, Feeder Cattle futures closed an average of 19¢ higher.

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

Choice boxed beef cutout value was 4¢ lower Monday afternoon at $203.21/cwt. Select was 7¢ lower at $191.81.

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Major U.S. financial indices closed mixed Monday after stronger pressure early in the session, tied to continued worries over rising interest rates. Bond markets were closed Monday, perhaps providing a reprieve.

The Dow Jones Industrial Average closed 39 points higher. The S&P 500 closed 1 point lower. The NASDAQ was down 52 points.

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Restaurant sales and traffic increased in August (latest data available), according to the National Restaurant Association’s (NRA) most recent Restaurant Performance Index (RPI), which is comprised of two sub-indices: Current Situation Index (CSI) and the Expectations Index (EI).

The August RPI rose 1% from the prior month to 102.0 in August, driven mostly by more optimism surrounding current conditions. The CSI was 1.6% higher month to month at 102.3, the highest level since December of last year. That index accounts for same-store sales, traffic, labor and capital expenditures. August was the seventh consecutive month the CSI was above 100. According to NRA, measures above 100 indicate expansionary industry indicators.

“Restaurant operators reported a net increase in same-store sales for the 10th consecutive month, with customer traffic also turning positive in August,” according to the NRA report.

The Expectations Index in August was 0.4% more than the previous month at 101.7. It measures restaurant operators’ six-month outlook for same-store sales, employees, capital expenditures and business conditions.

Negotiated cash fed cattle trade was mainly steady through late Friday afternoon at $110-$112/cwt. on a live basis and at $174-$175 in the beef. Trade remained undeveloped in the Southern Plains.

Steady cash and surging Lean Hog futures helped cap pressure in Cattle futures.

Other than narrowly mixed through the front four contracts, Live Cattle futures closed an average of 36¢ higher.

Except for 12¢ lower in Jan, Feeder Cattle futures closed an average of 45¢ higher.

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

Choice boxed beef cutout value was 61¢ lower Friday afternoon at $203.25/cwt. Select was 24¢ lower at $191.74.

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Major U.S. financial indices closed sharply lower again Friday, pressured by higher interest rates and fewer jobs than expected in the monthly employment report.

Total non-farm employment increased by 134,000 in September as the nation’s unemployment rate decline 0.2% to 3.7%. Average hourly earnings are 73¢ higher (+28%) over the year to $27.24/hour.

The Dow Jones Industrial Average closed 180 points lower. The S&P 500 closed 16 points lower. The NASDAQ was down 91 points.

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The United States-Mexico-Canada Agreement (USMCA) announced last week offers added market certainty, but leaves some tariffs in place.

“Canada and Mexico are the first and third largest export markets for U.S. agriculture, accounting for more than a quarter of all U.S. agriculture exports,” said Dan Kowalski, vice president of CoBank’s Knowledge Exchange Division (KED). “This agreement will advance the ball for some sectors, but for others, the deal represents a return to the status quo. Market access gains will be modest, but we expect the increased certainty to boost domestic and cross-border investment. However, Canada and Mexico still have tariffs in place that affect the U.S. dairy, pork and beef sectors. U.S. agriculture will have much more to celebrate when those barriers are removed.”

A new KED report—From NAFTA to USMCA—breaks down the impacts of the new agreement on U.S. agriculture by sector, and assesses the issues facing those sectors going forward.

“In many respects, the new North American free trade pact will look very similar to the old one,” according to the KED report. “It will lead to significant change in the auto industry, but changes to other industries will be marginal, including agriculture. While modest, the vast majority of impacts to agriculture will be positive. Access to the Canadian dairy and animal protein sectors will improve, and more importantly, the risk of NAFTA being dismantled will be eliminated.

This will clear the way for domestic investment that is dependent on cross-border demand, as well as cross-border investment by firms that are active in two or all three of the markets.

“The modest benefits that U.S. agriculture will gain from USMCA, however, will continue to be overshadowed by the remaining retaliatory tariffs imposed by Mexico and Canada. The impact of Mexico’s tariffs on cheese and pork, and Canada’s tariffs on prepared beef, far outweigh the benefits laid out in USMCA. Therefore, an agreement on steel and aluminum trade, whenever it is struck, will offer much more for U.S. agriculture to celebrate.”

Lower outside markets helped push Feeder Cattle futures lower Thursday; mixed for Live Cattle. However, futures closed off of session lows, helped along by increasing odds that negotiated cash fed cattle prices will be steady to higher this week.

Although trade remained undeveloped through late Thursday afternoon, and there were too few to trend, some early dressed sales in Nebraska traded at $175/cwt., which was $1 higher than the bulk of last week’s trade.

Live Cattle futures closed narrowly mixed (30¢ lower to 42¢ higher).

Feeder Cattle futures closed an average of 85¢ lower.

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

Choice boxed beef cutout value was 56¢ lower Thursday afternoon at $203.86/cwt. Select was 32¢ lower at $191.98.

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Major U.S. financial indices closed sharply lower Thursday, pressured by investors fretting over higher interest rates.

The Dow Jones Industrial Average closed 200 points lower. The S&P 500 closed 23 points lower. The NASDAQ was down 145 points.

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“As history has taught us, open markets and science-based trade are the key ingredients for export success in the U.S. beef industry,” says Kevin Kester, a fifth-generation rancher from Parkfield, CA, who serves as president of the National Cattlemen’s Beef Association (NCBA). “Once passed, the new U.S.-Mexico-Canada Agreement will build on over two decades of unrestricted, science-based, duty free trade for U.S. beef in North America. The results have been outstanding: Today the U.S. exports around $2 billion worth of beef to Canada and Mexico each year.”

In a recent op-ed, Kester goes on to explain, “Similarly, KORUS reduced tariffs on U.S. beef exports and removed many trade restrictions. Our sales have skyrocketed under KORUS. Global retail giant Costco, who previously sourced Australian beef for their stores in South Korea, is now importing every single ounce of their chilled beef from the United States. Some aspects of previous trade agreements were in serious need of modernization, but the established framework for beef trade works remarkably well.”

Negotiated cash fed cattle trade remained undeveloped through Wednesday afternoon.

There were 358 head offered in the weekly Fed Cattle Exchange Auction: no sales  but one P.O. at $111/cwt.

Cattle futures closed lower Wednesday on apparent technical correction, profit taking and an overall lack of interest, but remained narrowly mixed week to week.

Live Cattle futures closed an average of 78¢ lower (47¢ to $1.07 lower).

Feeder Cattle futures closed an average of 94¢ lower.

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

Choice boxed beef cutout value was 47¢ lower Wednesday afternoon at $204.42/cwt. Select was $1.68 lower at $192.30.

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Major U.S. financial indices edged higher Wednesday, capped in part by increasing interest rates.

The Dow Jones Industrial Average closed 54 points higher. The S&P 500 closed 5 points higher. The NASDAQ was up 25 points.

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Although Quality Grade Choice and Prime beef continues at the sustained higher level of recent years, David Anderson, Extension livestock economist at Texas A&M University points out the recent, relative decline is adding support to Choice prices.

“Choice beef production over the last four weeks is about 3.2% below a year ago. The effect of fewer carcasses grading Choice is compounded by fewer steers and relatively more heifers in the slaughter mix,” Anderson says, in the most recent issue of In the Cattle Markets. “Fed steer weights are about the same as a year ago while heifers are reflecting heavier weights. This lack of Choice beef is showing up in prices with the Choice cutout at about $204/cwt. compared to about $192 a year ago.”

For broader perspective on beef quality trends over time, Anderson explains that of the carcasses graded in September of 1997, 2% were Prime, 51% were Choice and 37% were Select. In September this year, nearly 8% were Prime, 70% Choice and 18% Select.

“Federally inspected beef production over the last month is up 1.1% over the same period last year. During the same period fed steer slaughter is down almost 2%, while heifer and cow slaughter are 4.4% and 7% higher than a year ago, respectively,” Anderson says. “So, all the increase in beef production in recent weeks is coming from heifers and cull cows. It’s worth a reminder that cull cow beef goes to a different (but related) market than beef from fed steers and heifers.  Cull cow beef most often goes to ground beef.”

After some early pressure, Cattle futures firmed and closed a touch higher Tuesday.

Except for 12¢ lower in the back contract, Live Cattle futures closed an average of 29¢ higher.

Feeder Cattle futures closed an average of 60¢ higher.

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

Choice boxed beef cutout value was 19¢ lower Tuesday afternoon at $204.89/cwt. Select was 65¢ lower at $193.98.

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Major U.S. financial indices closed mixed Tuesday with the DJIA continuing to receive support from the announced United States-Mexico-Canada Agreement.

The Dow Jones Industrial Average closed 122 points higher. The S&P 500 closed 1 point lower. The NASDAQ was down 37 points.

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Agricultural producer sentiment dropped to its lowest level since October 2016 as producers expressed concern over worsening farm financial conditions, according to the latest Purdue University/CME Group Ag Economy Barometer. That barometer is based on a monthly survey of 400 agricultural producers from across the country.

The September barometer reading of 114 declined 15 points from the previous month. As for the sub-indices that comprise the Barometer, the Index of Future Expectations declined 10 points and the Index of Current Conditions dropped 25 points.

“The barometer readings have been unusually volatile over the past few months,” says James Mintert, the barometer’s principal investigator and director of Purdue University’s Center for Commercial Agriculture. “Concerns about the ongoing impact of trade conflicts, and especially China’s tariffs on imports of U.S. ag products, continue to reverberate throughout the U.S. agricultural sector.”

Producers indicated that financial conditions on their farms deteriorated significantly as 2018 unfolded and their expectations for the future also weakened. In September, 54% of farmers surveyed said their farm’s financial condition was worse than a year earlier, up from 38% who felt that way in June. The September survey also indicated that 33% of producers expect their farm’s financial condition to be worse a year from now, up 15 points compared to responses received to the same question in June.