WLI

Cattle futures closed narrowly mixed on Friday. Support in the front months appeared to be a product of short covering and month-end position squaring, as much as anything. Pressure included uncertainty regarding the cash market, as well as the continued slide in Lean Hog futures, tied to trade disputes with China and Mexico.

Live Cattle futures closed an average of 58¢ higher in the front four contracts (5¢ higher to $1.10 higher), and then an average of 21¢ lower.

Except for 87¢ higher and 35¢ higher in the front two contracts, Feeder Cattle futures closed an average of 31¢ lower.

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

Choice boxed beef cutout value was 23¢ higher Friday afternoon at $205.14/cwt. Select was unchanged at $198.27. 

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Major U.S. financial indices closed lower Friday, led by tech stocks, including Intel and Twitter. That was despite robust second-quarter GDP of 4.1% reported by the U.S. Bureau of Economic Analysis. GDP was up 2.2% in the first quarter.

The Dow Jones Industrial average closed 76 points lower. The S&P 500 closed 18 points lower. The NASDAQ was down 114 points.

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“Boxed-beef values are sitting at the crossroads, as it appears they have put in a summer low,” say analysts with USDA’s Agricultural Marketing Service. 

If so, it ends nine consecutive weeks of declining Choice boxed beef cutout values.

During that time, Choice boxed beef cutout values declined more than $27/cwt., according to Andrew P. Griffith, agricultural economist at the University of Tennessee, in his weekly market comments.

“Current prices are still slightly below prices from the same week one year ago, but they have shown considerable strength compared to last year,” Griffith says. “Looking at prices from 2017, the Choice cutout peaked at nearly $251 in the middle of June and collapsed to $191 in the middle of September, which is a loss of $60. Thus, the decline in 2018 has only been 45% of the summer decline in 2017. Historical price data would imply there is still potential for downside price risk in the wholesale beef market. However, if packers can hold current prices or push them higher next week, then the risk may be very small.”

After support early, Cattle futures dropped hard Thursday before paring some of the loss. Technical selling, pushed into overdrive by algo trading could have been part of the slide. Some pointed to pressure on commodities, in general, stemming from fewer month-to-month exports of all U.S. goods in June and the widening trade deficit. The U.S. Commerce Department said yesterday that the nation’s international trade deficit was $3.6 billion more in June than May at $68.3 billion.

Live Cattle futures closed an average of $1.16 lower (97¢ higher to $1.40 lower).

Feeder Cattle futures closed an average of $1.42 lower ($1.17 to $1.60 lower).

Boxed beef cutout values were firm on moderate to fairly good demand and light offerings, according to the Agricultural Marketing Service.

Choice boxed beef cutout value was 27¢ higher Thursday afternoon at $204.91/cwt. Select was 69¢ higher at $198.27.           

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Major U.S. financial indices closed mixed Thursday. Pressure included a steep slide in Facebook on poor quarterly earnings.

The Dow Jones Industrial average closed 112 points higher. The S&P 500 closed 8 points lower. The NASDAQ was down 80 points.

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David Anderson, Extension livestock economist with Texas A&M, offers some insights to last week’s Cattle on Feed and Cattle inventory reports in the latest issue of In the Cattle Markets.

Noting the 2.01 million head marketed in June by feedlots with 1,000 head or more capacity, Anderson explains, “…the marketings rate is holding up well given the large supplies of cattle. That we are moving these large supplies of cattle is a tribute to good demand from retail and export markets and demand for fed cattle from packers. Continued good movement will be critical to cattle prices over the next six weeks approaching Labor Day.”

The number of cattle marketed last month was 0.85% more than last year. However, according to the Livestock Marketing Information Center, daily average marketing in June (adjusting for one less slaughter day than a year earlier) was 5.7% higher year over year (see graph).

Anderson points out the number of heifers on feed July 1 (4.454 million head) was nearly 8% more than a year earlier. He adds the mid-year Cattle report indicates 2.1% fewer beef replacement heifers, year over year.

“When combined with beef cow and heifer slaughter, the data continues to indicate a drastically slowing rate of herd growth,” Anderson says.

There were 1,249 head offered in the weekly Fed Cattle Exchange Auction Wednesday. None were sold, but one lot of steers from Kansas was passed out at $111/cwt., which was $2 less than last week’s price in the Southern Plains. Likewise, there was too little country trade to establish a market.

Cattle futures traded on both sides of even Wednesday, amid light trade and little direction. Other than spot Live Cattle, most contracts in both pits meandered to marginal gains or losses.

Except for unchanged in Feb, Live Cattle futures closed an average of 38¢ higher (15¢ higher to 97¢ higher in spot Aug).

Except for 7¢ higher in spot Aug and 2¢ higher in Jan, Feeder Cattle futures closed an average of 10¢ lower.

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

Choice boxed beef cutout value was 1¢ lower Wednesday afternoon at $204.64/cwt. Select was 37¢ lower at $197.58.     

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Major U.S. financial indices closed higher Wednesday, with extra support coming late in the session on reports that President Trump garnered trade concessions from the EU, including that bloc agreeing to import more U.S. soybeans.

The Dow Jones Industrial average closed 172 points higher. The S&P 500 closed 25 points higher. The NASDAQ was up 91 points.

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U.S. consumers are increasingly eating and preparing their meals at home, contrary to recent news reports that they are eating at restaurants more based on an uptick in foodservice spending, according to The NPD Group (NPD), a leading global information company.

Through its daily research of U.S. consumers’ eating behaviors, NPD shows that four out of five meals are prepared at home, and although the relationship of in-home prepared meals versus those sourced away from home has been stable for a few years, Americans still prepare more meals at home than they did a decade ago. Last year over 80% of meals were prepared and eaten in home.

Although foodservice spending has been increasing—up 2% in the year ending May 2018—foodservice visits were flat in the period compared to year ago. Foodservice spending is up primarily because the cost of a restaurant meal is increasing faster than the cost of a home-prepared meal, according to NPD. Additionally, a restaurant meal has historically cost more than an in-home meal, typically as much as three times more. So, NPD analysts say restaurant visits, whether onsite, drive-thru, or ordered for delivery, are more indicative of foodservice growth than spending, reports NPD.

While U.S. consumers might not be dining out more, they do turn to foodservice for a shortcut in their in-home meal preparation. Close to half of dinners purchased from a restaurant are consumed at home and a growing number of in-home meals are a blend of dishes prepared and items purchased ready-to-eat from a foodservice establishment. NPD’s recently published Future of Dinner study forecasts that blended meals, which include a restaurant or prepared food, will grow over the next five years.

Cattle futures edged lower Tuesday, apparently pressured more by technical selling and rally fatigue than anything else.

Live Cattle futures closed an average of 33¢ lower.

Feeder Cattle futures closed an average of 49¢ lower.

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

Choice boxed beef cutout value was 17¢ lower Tuesday afternoon at $204.65/cwt. Select was 8¢ lower at $197.95.           

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Major U.S. financial indices closed mostly higher Tuesday, with quarterly earnings beating estimates across a variety of sectors, from Alphabet-Google, to  John Deere, to Eli Lilly.

The Dow Jones Industrial average closed 197 points higher. The S&P 500 closed 13 points higher. The NASDAQ was up 1 point.

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U.S. Secretary of Agriculture Sonny Perdue announced yesterday that the U.S. Department of Agriculture (USDA) will take several actions to assist farmers in response to trade damage from unjustified tariff retaliation.

Specifically, USDA will authorize up to $12 billion in programs, which is in line with the estimated $11 billion impact of the unjustified retaliatory tariffs on U.S. agricultural goods.

“This is a short-term solution to allow President Trump time to work on long-term trade deals to benefit agriculture and the entire U.S. economy,” Secretary Perdue said. “The President promised to have the back of every American farmer and rancher, and he knows the importance of keeping our rural economy strong. Unfortunately, America’s hard-working agricultural producers have been treated unfairly by China’s illegal trading practices and have taken a disproportionate hit when it comes to illegal retaliatory tariffs. USDA will not stand by while our hard-working agricultural producers bear the brunt of unfriendly tariffs enacted by foreign nations. The programs we are announcing today help ensure our nation’s agriculture continues to feed the world and innovate to meet the demand.”

USDA will use the following programs to assist farmers:

The Market Facilitation Program, authorized under The Commodity Credit Corporation (CCC) Charter Act and administered by Farm Service Agency, will provide payments incrementally to producers of soybeans, sorghum, corn, wheat, cotton, dairy, and hogs. This support is aimed at helping farmers manage disrupted markets, deal with surplus commodities, and expand and develop new markets at home and abroad.

USDA will use the CCC Charter Act and other authorities to implement a Food Purchase and Distribution Program through the Agricultural Marketing Service to purchase unexpected surplus of affected commodities such as fruits, nuts, rice, legumes, beef, pork and milk for distribution to food banks and other nutrition programs.

Finally, the CCC will use its Charter Act authority for a Trade Promotion Program administered by the Foreign Agriculture Service in conjunction with the private sector to assist in developing new export markets for our farm products.