WLI

Though too few to trend, early live sales in the western Corn Belt so far this week are at $106.00-$108.50/cwt. with early dressed sales at $170. Prices in that region last week were at $108-$109 and $172-$174, respectively.

Although indications pointed toward lower cash fed cattle prices, Cattle futures firmed on Thursday as traders prepare for the end of the week and month.

Live Cattle futures closed an average of 64¢ higher.

Except for 15¢ lower in expiring spot Aug, Feeder Cattle futures closed an average of 79¢ higher.

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

Choice boxed beef cutout value was 95¢ lower Thursday afternoon at $211.73/cwt. Select was $1.34 lower at $202.21.

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Major U.S. financial indices closed lower Thursday, reportedly pressured by concerns about looming U.S. tariffs on additional Chinese imports, as well as angst about whether Canada will join the recently announced trade pact between the U.S. and Mexico.

The Dow Jones Industrial Average closed 137 points lower. The S&P 500 closed 12 points lower. The NASDAQ was down 21 points.

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Although the latest monthly USDA Cold Storage report noted a 12% increase in year-over-year frozen beef supplies, David Anderson, Extension livestock economist at Texas A&M University points out most of the increase (89%) was boneless beef, versus beef cuts.

“It seems likely that the increase in boneless beef stored supplies is related to increases in cull cow slaughter and beef imports. The small growth in cuts would suggest that beef demand is keeping up with large beef supplies,” Anderson explains, in the latest issue of In the Cattle Markets.

If fat cattle auctions are any indication, negotiated cash fed cattle prices are shaping up to be lower this week.

For instance, fed steers and heifers traded $2-$3 lower at Sioux Falls Regional in South Dakota where Ch 2-4 steers brought $105.60-$107.25/cwt.

Likewise, Choice steers were $2.00-$2.25 lower at Tama, IA, bringing $107.25-$108.36

There were 751 head offered in the weekly Fed Cattle Exchange auction Wednesday, but no takers.

Cattle futures were lightly traded again Wednesday, closing mostly narrowly mixed, with no apparent impact from the USDA announcement about a confirmed case of atypical BSE. It was found in a 6-year-old mixed-breed beef cow in Florida. The animal never entered slaughter channels and never presented a risk to the food supply, or to human health in the United States. Atypical BSE generally occurs in older cattle, usually 8 years of age or older. It seems to arise rarely and spontaneously in all cattle populations.

Except for $1.37 higher in nearly spent spot Aug, Live Cattle futures closed an average of 19¢ higher across the front half of the board and then an average of 26¢ lower.

Feeder Cattle futures closed an average of 17¢ lower across the front half of the board, and then an average of 84¢ lower.

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

Choice boxed beef cutout value was 28¢ higher Wednesday afternoon at $212.68/cwt. Select was 73¢ lower at $203.55.

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Major U.S. financial indices closed higher again Wednesday, led by rallying tech stocks, including Amazon and Apple. Reports that Canada is rejoining the NAFTA talks also provided support.

The Dow Jones Industrial Average closed 60 points higher. The S&P 500 closed 16 points higher. The NASDAQ was up 79 points.

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One downside to the nation’s strong economy and purportedly higher average wages is that it’s making it tougher to hire agricultural workers, which was already a vexing challenge.

According to a new study from CoBank’s Knowledge Exchange Division, manual laborers are chasing higher wages offered in industries like transportation, construction, hospitality and mining, forcing agriculture employers to increase wages at a faster rate to compete.

“Wages have historically been higher in these other industries compared to most farm labor,” says Ben Laine, a senior economist with CoBank. “The difference now is that these jobs are much more widely available and are more in line with the background of workers coming from Mexico.”

The shrinking number of migrant workers from Mexico also exacerbates the scarcity of farm labor. In addition to immigration controls like tightening borders and increased immigration enforcement, birthrates in Mexico are falling and populations are moving toward urban areas, leaving fewer people with agricultural backgrounds who would be interested in U.S. farm work.

The CoBank study, Help Wanted, is broken into two sections: Wage Inflation and Worker Scarcity; U.S. Agribusiness Experience Hiring Headaches.

“Labor accounts for a significant share of overall operational costs for many types of farms, particularly specialty crops and dairies,” Laine says. “In 2016, labor costs on all farms made up about 10% of gross income while in the specialty crop sector, that share was closer to 27%.” 

Cattle futures broke hard from the outset Tuesday, following the previous session’s strong rally. Apparent short covering by the end lifted futures well off of session lows. Overall, it was the same continued light trade and lack of open interest mired in a months-old range.

Live Cattle futures closed an average of 70¢ lower (40¢ to $1.05 lower).

Feeder Cattle futures closed an average of 88¢ lower.

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

Choice boxed beef cutout value was $1.10 lower Tuesday afternoon at $212.53/cwt. Select was 44¢ lower at $204.41.

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Major U.S. financial indices edged higher Tuesday, following the previous session’s steep gains. Continued support seemed mostly due to optimism from Monday’s announced trade deal between the U.S. and Mexico.

The Dow Jones Industrial Average closed 14 points higher. The S&P 500 closed fractionally higher. The NASDAQ was up 12 points.

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It might be time to order new earflaps, if the 2019 Farmers’ Almanac (FA) winter forecast is close to reality.

“Contrary to some stories floating around on the internet, our time-tested, long-range formula is pointing towards a very long, cold, and snow-filled winter,” says FA editor, Peter Geiger. FA long-range forecasts are based on a mathematical and astronomical formula developed in 1818.

The Farmers’ Almanac forecasts the coldest weather of this winter season to pour south from Canada and blow into the Northeast, New England, Great Lakes, Ohio Valley, and Southeast during mid-February. Above-normal snowfall is predicted for the Great Lakes states, Midwest, and central and northern New England. The Pacific Northwest and Mid-Atlantic regions of the country are also forecast to have an abundance of snow and wet/icy conditions this winter.

Logic suggested follow-through selling in Cattle futures to start the week, given Friday’s Cattle on Feed report showing about 2% more feedlot placement in July than expected. Instead, they roared higher, helped along by news that the U.S. and Mexico reach a new trade agreement (see below).

Besides which, Derrell Peel, Extension livestock marketing specialist at Oklahoma State University points out in his weekly market comments, feedlots remain current in marketing, despite the increased cattle numbers.

Live Cattle futures closed an average of $2.04 higher (95¢ to $2.60 higher).

Feeder Cattle futures closed an average of $2.58 higher ($1.02 to $3.60 higher).

The weighted average fed steer price (5-area Direct) was $1.22 lower last week on a live basis at $108.77/cwt. It was 32¢ lower in the beef at $172.94.

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

Choice boxed beef cutout value was 31¢ higher Monday afternoon at $213.63/cwt. Select was $1.03 higher at $204.85.

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The U.S. and Mexico reached a free trade agreement Monday, which should bolster the price outlook for some commodities and could smooth the way for trade talks with Canada.

“After a year of tough negotiations, the United States and Mexico reached a trade agreement that is fair and reciprocal and will strengthen both nations’ economies,” according to a statement from U.S. Vice President Mike Pence. “The U.S.–Mexico Trade Agreement is a win for American ranchers, manufacturers, and auto workers. Our nations have agreed to new rules that will maintain duty free access for agricultural goods on both sides of the border. In addition, we have agreed to eliminate non-tariff barriers and take other steps to encourage more agriculture trade between our two countries. Unlike any previous bilateral trade deal, this agreement includes the strongest labor standards, and these requirements are fully enforceable. The President and our entire Administration are grateful to President Peña Nieto and his negotiating team for their good faith efforts to get this deal done. Today is a win for the American people and we look forward to working with members of Congress in both parties to swiftly approve this new trade agreement.”

“This is nothing short of a great victory for farmers and ranchers, because locking in our access to Mexican markets is critical to supporting farm income and strengthening rural communities. Mexico has historically been a great customer and partner and we are happy to have this resolved for our agricultural producers,” said U.S. Agriculture Secretary Sonny Perdue. “We now hope that Canada will see the need to settle all of the outstanding issues between our two nations as well, and restore us to a true North American Free Trade Agreement.”

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Major U.S. financial indices jumped higher Monday, with news of the trade deal between the U.S. and Mexico.

The Dow Jones Industrial average closed 259 points higher. The S&P 500 closed 22 points higher. The NASDAQ was up 71 points.

Negotiated cash fed cattle trade was $1-$2 lower last week at $108/cwt. (western Corn Belt) to $109.50. Dressed trade was steady to $2 lower at $171-$174.

Softer cash fed cattle prices, the lack of open interest and anxiety about Friday’s monthly Cattle on Feed report (see below) pressured Cattle futures sharply lower to end the week.

Except for 57¢ and 7¢ lower in the back two contracts, Live Cattle futures closed an average of $1.51 lower.

Except for 17¢ higher in soon-spent spot Aug and 95¢ lower in the back contract, Feeder Cattle futures closed an average of $1.71 lower.

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

Choice boxed beef cutout value was $1.05 lower Thursday afternoon at $213.32/cwt. Select was 17¢ lower at $203.82.

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Major U.S. financial indices closed higher Friday, amid broad economic optimism.

The Dow Jones Industrial average closed 133 points higher. The S&P 500 closed 17 points higher. The NASDAQ was up 67 points.

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USDA’s monthly Cattle on Feed report will likely be viewed as bearish by the trade with more placements than many expected and the most cattle on feed Aug. 1 since the data series began in 1996.

Placements in July—in feedlots with 1,000 head or more capacity—were 1.74 million head, which was 7.86% more (+127,000 head) than the previous year. That’s about 2% more than popular expectations. In terms of weight distribution, 40.19% went on feed weighing 699 lbs. or less; 44.89% weighing 700-899 lbs.; 14.93% weighing more than 900 lbs.

Marketings in July of 1.87 million head were 4.99% more (+89,000 head) than last year.

Cattle on feed Aug. 1 of 11.09 million head were 4.61% more (+489,000 head) than last year.