WLI

Negotiated cash fed cattle trade for the week ended up mostly $2-$3 higher on a live basis at $116-$117/cwt. ($113-$114 in the western Corn Belt), and $2-$7 higher in the beef at $180-$185.

Cattle futures continued higher on Friday, amid light holiday trade and continued support from the friendly Cattle on Feed report and stronger cash fed cattle prices.

Live Cattle futures closed an average of 37¢ higher (7¢ to 70¢ higher).  

Except for unchanged to 20¢ lower in the back three contracts, Feeder Cattle futures closed an average of 83¢ higher.

Corn futures closed mostly 1¢ to 2¢ lower.

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

Choice boxed beef cutout value was 16¢ higher Friday afternoon at $213.85/cwt. Select was 25¢ higher at $198.51.

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Major U.S. financial indices closed lower on Friday, weighed down by trade concerns and the continuing slide of oil prices. West Texas Intermediate (CME) closed $3.84 to $4.21 lower through the next 12 contracts. Week to week, they closed an average of $6.33 lower through the front six contracts.

The Dow Jones Industrial Average closed 178 points lower. The S&P 500 closed 17 points lower. The NASDAQ was down 33 points.

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Total pounds of beef in freezers Oct. 31 were up 2% from the previous month and up 2% from the previous year, according to the latest Cold Storage report from USDA.

Frozen pork supplies were 3% less than the previous month and 5% less than last year.

Total red meat supplies in freezers were down 1% from the previous month and down 1% from last year.

Total frozen poultry supplies were down 9% from the previous month, but up 4% from a year ago.

Between late Tuesday and yesterday, negotiated cash fed cattle trade kicked off at higher money. Live trade was $2.50 higher in the Texas Panhandle at $116.50/cwt. and $1-$2 higher in the western Corn Belt at $113-$114. Dressed trade in the North was $2-$4 higher at $180.

Incidentally, there were 459 head offered in the weekly Fed Cattle Exchange auction and no takers.

Cattle futures closed higher on Wednesday, buoyed by stronger cash fed cattle and a much friendlier Cattle on Feed report than many expected (see below).

Live Cattle futures closed an average of 76¢ higher. 

Feeder Cattle futures closed an average of $1.21 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 40¢ lower Wednesday afternoon at $213.69/cwt. Select was 17¢ lower at $198.26.

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Although closing even to a little higher Wednesday, Major U.S. financial indices were unable to sustain early positive momentum, amid light holiday trade.

The Dow Jones Industrial Average closed fractionally lower. The S&P 500 closed 8 points higher. The NASDAQ was up 63 points.

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Cattle Markets got a boost from Wednesday’s monthly Cattle on Feed report with fewer cattle placed in October than most expected (feedlots with 1,000 head or more capacity). There were 2.25 million head placed in October, which was 6.06% less than last year. Analyst estimates ahead of the report were for an increase of 1% more.

As for placement weights: 51.82% went on feed weighing less than 700 lbs.; 36.17% weighing 700-899 lbs.; 12.00% weighing 900 lbs. or more.

Cattle marketings in October were a touch more than expected at 1.89 million head, which was 4.78% more than last year.

Cattle on feed Nov. 1 of 11.69 million head were 3.18% more than last year, about 1% less than many expected.

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

Cattle futures closed mixed (Live Cattle) to a touch lower (Feeder Cattle) on Tuesday, pressured by sharply lower outside markets and light trade volume, as much as anything. There was also wait-and-see for Wednesday’s monthly Cattle on Feed report (see below).

Live Cattle futures closed 45¢ lower to 20¢ higher.

Feeder Cattle futures closed an average of 18¢ lower.

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

Choice boxed beef cutout value was 70¢ higher Tuesday afternoon at $214.09/cwt. Select was 14¢ lower at $198.43.

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Major U.S. financial indices fell hard on Tuesday, pressured by everything from tech stocks, to retail, to another plunge in crude oil prices. The underlying concern appears to be notions of slower global economic growth, tied to both trade issues and higher interest rates.

Futures prices for West Texas Intermediate Crude (CME) declined $3.72 to $3.85 over the next 12 months. Spot Jan closed at $53.43, which was $10 lower than where it started the month.

The Dow Jones Industrial Average closed 551 points lower. The S&P 500 closed 48 points lower. The NASDAQ was down 119 points.

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Judging by various estimates and surveys, most analysts expect the monthly Cattle on Feed report on Wednesday (12 p.m. EST) to show higher October placements and marketings, as well as more cattle on feed Nov. 1 than a year ago.

For instance, analysts at Allendale, Inc. expect placements to be 4.3% higher at 2.496 million head, the most for the month in eight years. They estimate marketings 3.4% more at 1.862 million head, the most for the month in 11 years. Finally, they project cattle on feed Nov. 1 to be 11.961 million head, which would be 5.6% more than last year, the most for the month in 12 years, and the second largest since the data series began in 1996.

You can also find other pre-report estimates that are a few points less bearish on placements.

Negotiated cash fed cattle sales were mainly steady last week on a live basis at $114/cwt. ($112 in the western Corn Belt). Dressed trade was $1-$2 lower at $176-$178.

Except for the back half of Live Cattle, futures prices on Monday eked out minimal gains following pressure early in the session.

Live Cattle futures closed an average of 40¢ higher through the front five contracts, and then unchanged to 35¢ lower.

Feeder Cattle futures closed an average of 38¢ higher, amid extremely thin trade. 

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

Choice boxed beef cutout value was 48¢ higher Monday afternoon at $213.39/cwt. Select was $1 higher at $198.57.

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Major U.S. financial indices closed sharply lower Monday with tech stocks leading the sell-off.

Pressure also came from declining builder confidence, as measured by the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI). The index was 8 points lower month to month in November, pressured by concerns about affordability—home prices and interest rates.

The Dow Jones Industrial Average closed 395 points lower. The S&P 500 closed 45 points lower. The NASDAQ was down 219 points.

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“Beef markets have largely been a case of ‘so far, so good’ in 2018. I’m cautiously optimistic that this will continue in 2019 but the risks to beef demand will be higher in the coming year,” says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly market comments. 

Although slowing, Peel explains beef production next year is forecast to be 1.5-2.0% higher at a record 27.5 billion lbs., following the estimated 3.3% increase this year to 27.0 billion lbs.

“Through 2018, total beef production has increased 14.2% (3.4 billion lbs.) since the recent 2015 low,” Peel says. “Strong beef demand has supported prices and margins at all levels of the beef and cattle industry as beef production expanded. Continued strong beef demand will be critical in 2019 as beef production pushes to new record levels.”

Among the challenges to beef demand, Peel cites:

Record poultry and pork production

“Thus far, beef has maintained good demand relative to pork and poultry, as indicated by the fact that beef retail prices are at near record ratios compared to retail pork and poultry prices,” Peel says.

Likewise, Peel explains beef imports are about steady with last year, while U.S. beef exports are 13.3% higher.

Domestic and global economic conditions

“The U.S. economy has supported beef demand thus far, but recent stock market volatility highlights fragile macroeconomic conditions going forward,” Peel says.  “Rising interest rates and growing budget deficits will add to inflationary pressures and contribute to a stronger dollar. A rising dollar could add to export headwinds in the coming months.”

Trade issues

“The uncertain global trade situation continues to hang over beef and other agricultural markets,” Peel explains. “There is general agreement that trade disruptions will likely reduce U.S. and global macroeconomic growth in 2019.  While the beef industry has avoided most of the direct tariff impacts thus far, indirect tariff impacts will continue to grow unless the trade situation is resolved very soon. Consumers will see growing tariff impacts that may impact consumer spending and beef demand…Tariff-driven price increases could push consumers to cheap and abundant pork and poultry at the expense of beef demand.”