WLI

Early dressed trade picked up a couple of dollars in the North Thursday…feedlot placements in November were almost 5% fewer than a year earlier… coming up on your Cattle Current Market Update with Wes Ishmael.

Cash fed cattle trade started Thursday at $190/cwt. in Nebraska, which was $2 more than last week. Though too few to trend, there were also some early live sales in the western Corn Belt at $120 and early dressed sales at $190, both $3 more than last week.

Cattle futures closed mostly higher ahead of the monthly Cattle on Feed report (see below), which will likely be viewed as neutral to a touch bearish.

Except for 50¢ higher in spot Dec and 17¢-27¢ lower at the back, Live Cattle futures closed 10¢ to 30¢ higher.

Other than 30¢ higher in the back two contracts, Feeder Cattle futures closed an average of $1.02 higher.

Corn futures closed mostly 5¢ to 6¢ lower through Jul ’20 and then fractionally lower to 2¢ lower.

Soybean futures closed 4¢ to 6¢ lower.

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

Choice boxed beef cutout value was 77¢ higher Thursday afternoon at $212.47/cwt. Select was 41¢ higher at $205.26.

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Major U.S. financial indices took another sharp turn south on Thursday. The growing likelihood of a partial government shutdown roiled already volatile markets. According to various reports, President Trump will veto any stopgap funding measure that doesn’t include money for a border wall. The deadline for a resolution is at midnight Friday.

The Dow Jones Industrial Average closed 464 points lower. The S&P 500 closed 39 points lower. The NASDAQ was down 108 points.

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Cattle feeders placed 4.91% fewer cattle on feed in November (1.996 million head), according to the monthly Cattle on Feed report. The report accounts for feedlots with 1,000 head or more capacity. A majority of estimates ahead of the report projected a decrease of about 6%.

As for placement weights, 52.36% went on feed weighing less than 700 lbs.; 36.62% weighing 700-899 lbs.; 11.02% weighing more than 900 lbs.

November marketings of 1,869 million head were 1.36% more than a year earlier, which was in line with most pre-report estimates. That’s the most for the month since the data series began in 1996.

Cattle on feed Dec. 1 of 11.739 million head were 1.94% more than last year, a touch more than pre-report estimates.

Cash fed cattle trade remained undeveloped through Wednesday afternoon.

There were only 250 head offered in the weekly Fed Cattle Exchange auction, and no takers.

Cattle futures closed either side of steady with no direction from the cash market, biding time for Thursday’s monthly Cattle on Feed report and little trading interest.

Live Cattle futures closed marginally mixed, (an average of 13¢ lower through the front three contracts and then an average of 12¢ higher).

Other than unchanged in spot Jan, Feeder Cattle futures closed an average of 24¢ lower.

Corn futures closed 2¢ to 3¢ lower through Jul ’20 and then mostly fractionally lower.

Soybean futures closed most 5¢ to 7¢ lower.

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

Choice boxed beef cutout value was 98¢ lower Wednesday afternoon at $211.70/cwt. Select was 12¢ higher at $204.85.

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Major U.S. financial indices closed sharply lower Wednesday in turbulent trade that turned from positive to negative following the Fed announcement it was raising interest rates another 0.25%, marking the fourth increase this year. Though anticipated, the market seemed to be hoping for a reprieve, given the recent volatility of markets and expectations for slower global economic growth.

“A statement from the FOMC explained, in part: “Information received since the Federal Open Market Committee met in November indicates that the labor market has continued to strengthen and that economic activity has been rising at a strong rate. Job gains have been strong, on average, in recent months, and the unemployment rate has remained low. Household spending has continued to grow strongly, while growth of business fixed investment has moderated from its rapid pace earlier in the year. On a 12-month basis, both overall inflation and inflation for items other than food and energy remain near 2%. Indicators of longer-term inflation expectations are little changed, on balance.”

The Dow Jones Industrial Average closed 351 points lower. The S&P 500 closed 39 points lower. The NASDAQ was down 147 points.

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Live cattle are also contributing to the positive U.S. beef export picture.

“October cattle exports were about 29% higher than a year ago at 44,203 head,” say analysts with USDA’s Economic Research Service (ERS), in the December Livestock, Dairy and Poultry Outlook. “Despite exports to Mexico of less than half year-earlier levels, significantly higher exports to Canada resulted in the highest monthly export volume recorded since October 2001.”

Apparently Canadian cattle feeders are backfilling needed placements resulting from increasing fed cattle slaughter demand in tandem with continued flat herd growth.

“November through December is the peak placement season in Canada, which might support continued strong U.S. cattle shipments there as feedlots are sourcing cattle from the United States,” ERS analysts explain.

Besides Canada and Mexico, live cattle in October were exported to Qatar (2,184 head) and Russia (1,850 head), according to ERS. 

The cattle export forecast for 2018 was revised upward by 40,000 head to 250,000 head. The cattle export forecast for 2019 increased by 40,000 head to 255,000 head.

On the other side of the ledger, October cattle imports to the U.S.—primarily from Canada and Mexico—were 167,968 head, which was 20% more than a year earlier. For January through October, there were 1.497 million head of cattle imported to the U.S., about 82,000 head more than the previous year.

While volatility continued in outside markets Tuesday, Cattle futures managed to retrace some of the previous session’s losses …There’s a wide gap in expectations for placements in the looming Cattle on Feed report… coming up on your Cattle Current Market Update with Wes Ishmael.

As expected, negotiated cash fed cattle trade remained undeveloped through Tuesday afternoon.

Cattle futures firmed, amid continued light trade, apparently spurred along by short covering, more than anything.

Live Cattle futures closed an average of 62¢ higher.

Feeder Cattle futures closed an average of 91¢ higher.

Corn futures closed most 1¢ higher.

Soybean futures closed mostly 2¢ to 3¢ higher.

Wholesale beef values were steady 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 1¢ higher Tuesday afternoon at $212.68/cwt. Select was 97¢ higher at $204.73.

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Major U.S. financial indices eked out gains Tuesday, amid another stormy day of trading. Pressure continued to stem, in part, from worries about slowing global economic growth, tied to unresolved trade issues.

Domestically, the angst was compounded by an expected rise in interest rates Wednesday, another slide in crude oil prices

Spot CME crude oil (WTI) closed at $46.24, the lowest in more than a year. Contracts for the next 12 months were down $3.36 to $3.64.

Pressure also included an anemic outlook from the National Association of Home Builders (NAHB).

Builder confidence in the market for newly built single-family homes fell four points to 56 in December on the NAHB/Wells Fargo Housing Market Index (HMI) with persistent concerns about housing affordability. Although this is the lowest HMI reading since May 2015, builder sentiment remains in positive territory.

“We are hearing from builders that consumer demand exists, but that customers are hesitating to make a purchase because of rising home costs,” said NAHB Chairman Randy Noel, a custom home builder from LaPlace, LA “However, recent declines in mortgage interest rates should help move the market forward in early 2019.”

The Dow Jones Industrial Average closed 82 points higher. The S&P 500 closed fractionally higher. The NASDAQ was up 30 points.

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When the monthly Cattle on Feed report comes out Thursday, it will show either a few more November cattle placements or lots fewer, depending on which analysts and surveys you follow.

For instance, Allendale, Inc. sees November placements 0.9% more than last year. According to the Daily Livestock Report, though, the average estimate of the Urner Barry survey is for a decrease of 6.3%. That represents an estimated difference of 153,000 head.

As for estimated marketings in November, both sources project a year-over-year increase of about 1%.

For Allendale, that leaves an estimated 3.2% more cattle on feed Dec. 1, versus 1.7% more for the average of estimates in the Urner Barry survey.

Cattle futures softened to start the week, especially Feeder Cattle. Pressure likely included the anticipated packer slowdown during the next two holiday-shortened weeks, as well as technical correction.

Live Cattle futures closed an average of 77¢ lower.

Feeder Cattle futures closed an average of $1.70 lower ($1.20 to $2.45 lower).

Corn futures closed fractionally lower through Dec ’10 and then mixed.

Soybean futures closed 2¢ to 4¢ higher.

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

Choice boxed beef cutout value was $1.71 higher Monday afternoon at $212.67/cwt. Select was 62¢ higher at $203.76.

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Major U.S. financial indices closed sharply lower again Monday, down about the same amount they were in the previous session. Concerns continued about slowing global economic growth and unresolved trade issues, in tandem with expectations the Fed will raise interest rates again Wednesday.

The Dow Jones Industrial Average closed 507 points lower. The S&P 500 closed 54 points lower. The NASDAQ was down 156 points.

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“Packer demand has increased seasonally, and strong margins this year have likely encouraged packers to be strong buyers of cattle,” say analysts with USDA’s Economic Research Service (ERS), in the December Livestock, Dairy and Poultry Outlook. “For the week ending December 8, the weekly slaughter estimate was 667,000 head. This would be the highest weekly slaughter total since the week ending May 19. This demand is also reflected in prices offered for fed steers in the 5-area marketing region. In November, monthly prices finally broke out of the 5-month narrow price window of $109.90 to 112.20/cwt. to reach over $115. Further, for the week ending December 9, fed steer prices climbed to $118.11, though still below year-earlier levels. From last month, the forecast for fourth-quarter 2018 price for fed steers in the 5-area marketing region was raised to $113-$116/cwt. However, the annual forecast for 2019 fed steer prices was left unchanged $114-$122/cwt.

The aggressive slaughter pace pushed estimated beef production for this year 25 million lbs. higher to 26.9 billion lbs. ERS analysts note lighter carcass weights and less projected cow slaughter in the fourth quarter partially offset increased steer and heifer slaughter. Likewise, beef production for 2019 was reduced slightly based on the expectation of lighter carcass weights. Estimated beef production for next year was reduced by 25 million lbs. to 27.8 billion lbs.

Negotiated cash fed cattle prices in the Southern Plains on Friday were mainly steady with the previous week at $119/cwt. on a live basis. Early dressed sales in Nebraska were $1 higher at $188. Though too few to trend, early live sales in the western Corn Belt were $1 higher at $117, while early dressed sales of $187 were at the upper end of the prior week’s trading range in the region.

Cattle futures meandered to a marginally softer close.

Other than 12¢ higher in spot Dec, Live Cattle futures closed an average of 29¢ lower.

Feeder Cattle futures closed an average of 22¢ lower.

Corn futures closed mostly unchanged to fractionally mixed.

Soybean futures closed 4¢ to 6¢ lower.

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

Choice boxed beef cutout value was $1.51 lower Friday afternoon at $210.96/cwt. Select was $2.14 higher at $203.14.

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Major U.S. financial indices closed sharply lower Friday, pressured by weak European and Chinese economic data pointing toward slowing global economic growth.

The Dow Jones Industrial Average closed 496 points lower. The S&P 500 closed 50 points lower. The NASDAQ was down 159 points.

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Despite some notions to the contrary, the nation’s beef cow herd likely continued to expand a mite this year, according to the Livestock Marketing Information Center (LMIC), in the most recent Livestock Monitor. Specifically, LMIC analysts expect to see 0.2-0.4% growth as of January 1.

Yes, growth is anticipated despite federally inspected heifer slaughter through October running 7.3% more than the previous year; 10.7% more for federally inspected beef cow slaughter.

“The number of beef cows that calved has grown over the last four years, adding 2.6 million head since 2014,” says LMIC analysts. “This incredible growth pattern led to larger calf crops, and the economics has supported retaining a large number of heifers in recent years to continue adding to that beef cow number.”