WLI

Negotiated cash fed cattle trade remained undeveloped through Thursday afternoon, with most indications for at least steady money this week.

Although there was pressure early in the session, Cattle futures closed mostly narrowly mixed in the Live pit and a touch higher for Feeder Cattle.

After 67¢ and 12¢ lower in the front two contracts, Live Cattle futures closed an average of 26¢ higher, except for 10¢ lower in away Dec.

Feeder Cattle futures closed an average of 51¢ higher.

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

Choice boxed beef cutout value was 75¢ lower Thursday afternoon at $204.04/cwt. Select was 3¢ lower at $197.24.

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Continued pressure from the latest World Agricultural Supply and Demand Estimates pushed cash bids for grains and soybeans lower Thursday, according to the Daily National Grain Market Summary.

Wheat bids were mostly 5¢ to 10¢ lower. Soybean bids were mostly 6¾¢ lower. Sorghum bids were 3½¢ lower. Corn bids were mostly 2¢ lower.

Corn futures closed 1¢ to 5¢ lower through next July and then mostly fractionally lower.

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Major U.S. financial indices closed higher Thursday. Support included tech stocks, led by Apple, as well as a slower rising Consumer Price Index (CPI) than expected. According to the Bureau of Labor Statistics, the CPI rose 0.2% in August. The index for all items less food and energy rose by 0.1%, the least since April.

The Dow Jones Industrial Average closed 147 points higher. The S&P 500 closed 15 points higher. The NASDAQ was up 59 points.

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Although current feedlot closeout projections are forecast to continue in negative triple digits this month, the most recent Historical and Projected Kansas Feedlot Net Returns suggests significant improvement on the horizon.

For example, estimated net return for steers closed out in August was -$104.20 per head. The estimate for September is -$108.96. For the next eight months after that, estimated returns range from -$63.24 in April to +$18.75 in March.

Keep in mind the projections are on a cash-to-cash basis without any price risk management assumed.

The outlook for heifers is similar. After projected losses of $105-$106 per head in August and September, estimated returns range from -$89.49 in April to +$24.04 in December.

Negotiated cash fed cattle trade remained undeveloped Wednesday, though auctions began providing some indicators, albeit mixed.

For instance, Ch 2-4 steers brought $109.74 to $110.00 on a jag of 205 head. But,

Ch 2-3 steers brought $106-$109 at Sioux Falls Regional Livestock in South Dakota.

Only 444 head were offered in the weekly Fed Cattle Exchange auction Wednesday, with no takers. There were three lots passed out at $108.00-$108.25/cwt.

Cattle futures took a strong step higher Wednesday. Lower grain prices—tied to the World Agricultural Supply and Demand Estimates—helped lift Feeder Cattle, dragging Live Cattle along.

Live Cattle futures closed an average of $1.14 higher (85¢ to $2.17 higher in spot Oct).

Feeder Cattle futures closed an average of $2.00 higher ($1.32 to $2.57 higher).

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

Choice boxed beef cutout value was $1.28 lower Wednesday afternoon at $204.79/cwt. Select was $1.04 lower at $197.27.

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Major U.S. financial indices closed narrowly mixed Wednesday. Support included reports that the U.S. is in the process of proposing new trade talks with China.

The Dow Jones Industrial Average closed 27 points higher. The S&P 500 closed 1 point higher. The NASDAQ was down 18 points.

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Projected beef production of 27.09 billion lbs. was unchanged in the latest monthly World Agricultural Supply and Demand Estimates (WASDE), with anticipated increases in slaughter during the second half of the year offset by an expected decrease in carcass weights.

Fed steer prices (5-area Direct) are projected at $108-$111/cwt. for the third quarter and at $108-$114 in the fourth quarter. Forecast prices for the first and second quarter next year are projected to be $116-$126 and $118-$128, respectively.

Beef production is forecast at 27.72 billion next year. Total red meat production is projected at 55.81 billion next year. Total red meat and poultry production next year is estimated at 105.76 billion lbs., which would be 2.7 billion lbs. more than this year’s estimate.

Cattle futures closed slightly lower to mixed Tuesday, amid limited trade and a lack of cash direction.

Except for unchanged in Apr, Live Cattle futures closed an average of 43¢ lower.

Feeder Cattle futures closed narrowly mixed, 45¢ lower to 22¢ higher.

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

Choice boxed beef cutout value was 23¢ lower Tuesday afternoon at $206.07/cwt. Select was 62¢ lower at $198.31.

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Major U.S. financial indices closed higher Tuesday, with trade worries applying pressure, but higher crude oil prices and further recovery in tech stocks—led by Apple—providing support.

The Dow Jones Industrial Average closed 113 points higher. The S&P 500 closed 10 points higher. The NASDAQ was up 48 points.

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Overall, pasture and range conditions improved last week, according to the latest weekly Crop Progress report (week ending Sept. 9). Among states with 35% or more of pasture and range rated as Poor or Very Poor, week-to-week conditions improved in Arizona, Colorado, Missouri, New Mexico and Texas. Conditions eroded in Idaho, Nevada, Oregon, Utah and Washington.

Nationally, 43% of pasture and range is in Good (36%) or Excellent (7%) condition, 1% more than a week earlier, but 4% less than a year earlier. 26% is rated as Poor (17%) or Very Poor (9%), which is 2% less than a week earlier and 4% more than last year.

States with 35% or more pasture and range rated as Poor or Very Poor include: Arizona (59%), California (45%), Colorado (45%), Idaho (38%); Missouri (44%), Nevada (45%), New Mexico (45%), Oregon (74%), Texas (45%), Utah (64%) and Washington (62%). 

Crop progress continues mostly ahead of last year and the 5-year average.

86% of the corn crop is dented, which is 13% more than last year and 11% more than the average. 35% is mature, which is 15% more than last year and 14% more than average. 5% is harvested, the same as last year, but 2% more than average. 68% is in Good (47%) or Excellent (21%) condition, compared to 61% last year. 12% is in Poor (8%) or Very Poor (4%) condition, which is 1% less than last year.

31% of soybeans are dropping leaves, which is 11% more than last year and 12% ahead of the average. 68% is in Good (50%) or Excellent (18%) condition, compared to 60% last year. 10% is in Poor (7%) or Very Poor (3%) condition, compared to 12% a year earlier.

79% of sorghum is coloring, which is 7% more than last year and 5% more than average. 34% is mature, which is the same as last year but 4% less than average. 24% is harvested, which is the same as last year but 2% less than average. 53% is rated in Good (41%) or Excellent condition (11%), compared to 66% last year. 17% is in Poor (12%) or Very Poor (5%) condition, compared to 7% last year.

93% of spring wheat is harvested, which is 1% less than last year but 8% more than the average.

5% of winter wheat is planted, which is the same as last year and the average.

When the final counting was done last week, negotiated cash fed cattle prices were steady to $1 higher at mostly $107-$108/cwt. on a live basis and at $170 in the beef.

Those steady to higher prices helped Live Cattle futures firm on Monday, while Feeder Cattle closed narrowly mixed.

Except for unchanged in near Dec, Live Cattle futures closed an average of 32¢ higher.

Feeder Cattle futures closed narrowly mixed, 45¢ lower to 22¢ higher.

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

Choice boxed beef cutout value was 26¢ lower Monday afternoon at $206.30/cwt. Select was $1.84 higher at $198.93.

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Major U.S. financial indices closed mixed Monday, between some recovery in tech stocks, but lingering concerns about trade.

The Dow Jones Industrial Average closed 59 points lower. The S&P 500 closed 5 points higher. The NASDAQ was up 21 points.

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“Cattle prices decline from 2018 to 2020 as production continues to increase. Live hog prices remain below $45 cwt. for three straight years, as production continues to expand and tariffs slow growth in U.S. exports,” say analysts with the Food and Agricultural Policy Institute (FAPRI) at the University of Missouri.

That’s one of the conclusions from the recently released Baseline Update for U.S. Agricultural Markets. The update is to the annual U.S. Baseline Outlook published each spring, which provides 10-year projections. The Update looks through 2023.

FAPRI estimated the average price of a 600-650 lb. feeder steer (basis Oklahoma City) at $158.51/cwt. this year, declining as low as $141.06 in 2020; rising each year after that to $162.14 in 2023.

Prices for fed steers (5-area Direct) are projected at $116.59 this year, declining as low as $110.19 in 2020, then ultimately increasing to $119.99 in 2023.

For context, FAPRI forecasts peak beef cow numbers in 2019 at 31.8 million head, just 100,000 head more than the start of this year. Then numbers continue to decline through 2023 at 30.8 million head.

Likewise, total cattle and calves are projected to plateau next year at 94.6 million head—200,000 more than this year—before declining to 91.4 million head in 2023.

Incidentally, peak beef production is estimated to plateau at 28.32 billion lbs. in 2021, then decline to 28.01 billion in 2023. That would still be more than next year’s estimated production of 27.92 billion lbs.

Negotiated cash fed cattle trade ended last week generally steady with the previous week, with live sales at mostly $107/cwt. and dressed sales at $170.

Cattle futures closed higher, led by Feeder Cattle. There was some chatter about part of the support coming from traders expecting African Swine Fever in China to support the hog market and beef by extension (see below).

Live Cattle futures closed an average of 53¢ higher (15¢ to $1.05 higher in spot Oct).

Other than unchanged and 17¢ higher at the back of the board, Feeder Cattle futures closed an average of $1.06 higher.

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

Choice boxed beef cutout value was $2.19 lower Friday afternoon at $206.56/cwt. Select was 74¢ lower at $197.09.

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Major U.S. financial indices closed lower Friday. Pressure included reports the White House could levy tariffs on another $267 billion worth of Chinese imports. Reportedly, investors were also concerned about tighter monetary policy ahead, given last month’s wage growth.

According to the monthly employment report from the U.S. Bureau of Labor Statistics, non-farm payroll employment increased by 201,000 in August, leaving the nation’s unemployment rate unchanged at 3.9%. Through the year, average hourly wage earnings are 2.9% higher at $27.16.

The Dow Jones Industrial Average closed 79 points lower. The S&P 500 closed 6 points lower. The NASDAQ was down 20 points.

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“Beef trade has been supportive of beef prices. The bigger trade concern for cattle is the indirect effects from decreased trade opportunities for pork,” says Brenda Boetel, Extension livestock economist at the University of Wisconsin-River Falls, in the latest issue of In the Cattle Markets.

Although U.S. beef exports remain at a heady pace this year, analysts with USDA’s Economic Research Service (ERS), lowered the expected value next year based on lower values as volume increases. According to USDA’s quarterly Outlook for U.S. Agricultural Trade, next year’s estimate of $7.1 billion worth of beef and veal exports is $100 million less than this year’s projection.

Based on expectations for weaker demand and retaliatory tariffs pressuring prices lower, the estimated value from pork exports next year was reduced by $300 million to $5.1 billion.

Boetel notes export markets so far this year absorbed large amounts of increased beef and pork production.

“Increasing or decreasing market export opportunities is similar to increasing or decreasing the size of the cattle herd,” Boetel explains. “It takes a long time to increase the number, but we can lose our markets very quickly.”

Consequently, there is urgency for the U.S. to resolve outstanding trade issues preventing or reducing export trade.

“The short-term excitement over the U.S.—Mexico agreement has worn off as people realize the agreement isn’t finalized or ratified,” Boetel explains. “Getting NAFTA finalized would free up trade negotiators for more discussions with China. Beginning those negotiations with China now may possibly have fortuitous timing as China will start needing U.S. soybeans in the next few months, as well as U.S. pork. The Chinese demand for U.S. soybeans and pork will depend on trade as well as impacts felt from the African Swine Fever.”