WLI

Negotiated cash fed cattle trade remained undeveloped through Wednesday afternoon.

There were 358 head offered in the weekly Fed Cattle Exchange Auction: no sales  but one P.O. at $111/cwt.

Cattle futures closed lower Wednesday on apparent technical correction, profit taking and an overall lack of interest, but remained narrowly mixed week to week.

Live Cattle futures closed an average of 78¢ lower (47¢ to $1.07 lower).

Feeder Cattle futures closed an average of 94¢ lower.

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

Choice boxed beef cutout value was 47¢ lower Wednesday afternoon at $204.42/cwt. Select was $1.68 lower at $192.30.

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Major U.S. financial indices edged higher Wednesday, capped in part by increasing interest rates.

The Dow Jones Industrial Average closed 54 points higher. The S&P 500 closed 5 points higher. The NASDAQ was up 25 points.

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Although Quality Grade Choice and Prime beef continues at the sustained higher level of recent years, David Anderson, Extension livestock economist at Texas A&M University points out the recent, relative decline is adding support to Choice prices.

“Choice beef production over the last four weeks is about 3.2% below a year ago. The effect of fewer carcasses grading Choice is compounded by fewer steers and relatively more heifers in the slaughter mix,” Anderson says, in the most recent issue of In the Cattle Markets. “Fed steer weights are about the same as a year ago while heifers are reflecting heavier weights. This lack of Choice beef is showing up in prices with the Choice cutout at about $204/cwt. compared to about $192 a year ago.”

For broader perspective on beef quality trends over time, Anderson explains that of the carcasses graded in September of 1997, 2% were Prime, 51% were Choice and 37% were Select. In September this year, nearly 8% were Prime, 70% Choice and 18% Select.

“Federally inspected beef production over the last month is up 1.1% over the same period last year. During the same period fed steer slaughter is down almost 2%, while heifer and cow slaughter are 4.4% and 7% higher than a year ago, respectively,” Anderson says. “So, all the increase in beef production in recent weeks is coming from heifers and cull cows. It’s worth a reminder that cull cow beef goes to a different (but related) market than beef from fed steers and heifers.  Cull cow beef most often goes to ground beef.”

After some early pressure, Cattle futures firmed and closed a touch higher Tuesday.

Except for 12¢ lower in the back contract, Live Cattle futures closed an average of 29¢ higher.

Feeder Cattle futures closed an average of 60¢ higher.

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

Choice boxed beef cutout value was 19¢ lower Tuesday afternoon at $204.89/cwt. Select was 65¢ lower at $193.98.

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Major U.S. financial indices closed mixed Tuesday with the DJIA continuing to receive support from the announced United States-Mexico-Canada Agreement.

The Dow Jones Industrial Average closed 122 points higher. The S&P 500 closed 1 point lower. The NASDAQ was down 37 points.

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Agricultural producer sentiment dropped to its lowest level since October 2016 as producers expressed concern over worsening farm financial conditions, according to the latest Purdue University/CME Group Ag Economy Barometer. That barometer is based on a monthly survey of 400 agricultural producers from across the country.

The September barometer reading of 114 declined 15 points from the previous month. As for the sub-indices that comprise the Barometer, the Index of Future Expectations declined 10 points and the Index of Current Conditions dropped 25 points.

“The barometer readings have been unusually volatile over the past few months,” says James Mintert, the barometer’s principal investigator and director of Purdue University’s Center for Commercial Agriculture. “Concerns about the ongoing impact of trade conflicts, and especially China’s tariffs on imports of U.S. ag products, continue to reverberate throughout the U.S. agricultural sector.”

Producers indicated that financial conditions on their farms deteriorated significantly as 2018 unfolded and their expectations for the future also weakened. In September, 54% of farmers surveyed said their farm’s financial condition was worse than a year earlier, up from 38% who felt that way in June. The September survey also indicated that 33% of producers expect their farm’s financial condition to be worse a year from now, up 15 points compared to responses received to the same question in June.

News that Canada will join the U.S. and Mexico and a new North American trade agreement—the United States-Mexico-Canada Agreement (USMCA)— fueled optimism in commodity and equity markets to start the week.

Between the news, firmer wholesale beef values and last week’s steady negotiated cash fed cattle trade, Cattle futures moved higher.

Live Cattle futures closed an average of 34¢ higher.

Feeder Cattle futures closed an average of $1.24 higher (47¢ to $1.52 higher).

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

Choice boxed beef cutout value was $1.20 higher Monday afternoon at $205.08/cwt. Select was $1.19 higher at $194.63.

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Major U.S. financial indices mostly surged higher Monday with the late weekend news about the United States-Mexico-Canada Agreement (see below). CME Crude Oil futures (WTI) closed $2.05 to $2.19/bbl. higher through the next 12 months. Spot Nov closed $6.62 higher than two weeks ago at $75.30.

The Dow Jones Industrial Average closed 192 points higher. The S&P 500 closed 10 points higher. The NASDAQ was down 9 points.

Regarding announcement of a United States-Mexico-Canada Agreement (USMCA), U.S. Secretary of Agriculture Sonny Perdue issued the following statement:

“The new USMCA deal is important for our economy as a whole, including the agricultural sector, which counts Canada and Mexico in our top three trading partners. I have long said that I believe our country is located in the best neighborhood on Earth – North America – with valuable allies to our north and south. We have secured greater access to these vital markets and will maintain and improve the highly productive integrated agricultural relationship we have as nations. Notably, as one of the President’s top goals, this deal eliminates Canada’s unfair ‘Class 7’ milk pricing scheme, cracks open additional access to U.S. dairy into Canada, and imposes new disciplines on Canada’s supply management system. The agreement also preserves and expands critical access for U.S. poultry and egg producers and addresses Canada’s discriminatory wheat grading process to help U.S. wheat growers along the border become more competitive.”

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“Numerous factors will affect the likelihood of a seasonal stocker calf price low in the next month,” says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly market comments. “Supplies will grow as feeder volumes increase to a seasonal peak by early to mid-November. With the larger 2018 calf crop, the fall run of calves is expected to exceed last year. However, demand for wheat pasture stockers may partially or totally offset increased stocker calf supplies. 

“I really don’t expect much more increase in stocker prices, but additional increases are possible in the next couple of weeks. As we move through October into November, feeder prices are likely to stabilize or perhaps move lower, but the seasonal low may be quite muted.”

Negotiated cash fed cattle trade was mainly steady with the previous week at $110-$111/cwt. on a live basis and mostly $174 in the beef.

Cattle futures closed little changed Friday but mostly to the upside.

Live Cattle futures closed an average of 20¢ higher.

Except for 95¢ lower in newly minted away Sep, Feeder Cattle futures closed an average of 59¢ higher.

Wholesale beef values were lower 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 83¢ lower Friday afternoon at $203.88/cwt. Select was 88¢ higher at $193.44.

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Major U.S. financial indices closed little changed Friday as investors squared the books for the week, month and quarter.

The Dow Jones Industrial Average closed 18 points higher. The S&P 500 closed fractionally lower. The NASDAQ was up 4 points.

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Heading into fall, availability of winter wheat pasture looks to be well above normal, say analysts with the Livestock Marketing Information Center (LMIC), noting the planting pace is ahead of last year and the 5-year average.

“Early planting and quick germination will grant cattle earlier access to those fields and allow for longer grazing without sacrificing harvesting wheat for grain,” LMIC analysts say, in the latest Livestock Monitor.

In fact, there likely will be the most cattle grazing wheat pasture since 2007 in Kansas, Oklahoma and Texas, according to LMIC. Analysts there say the number of winter-grazing cattle in those three states averaged about 2.1 million head over the last 18 years (based on Jan. 1 numbers). There were 1.50 million head last year, the least since 2013.

“As of Jan. 1, 2019, the 3-state total could be 1.8 to 2.0 million head,” AMS analysts say. “At that midpoint (1.9 million head), it would indicate the number of head winter grazing has increased from the prior year by 400,000 head (up 27%). That number would go a long way in absorbing the growth in this year’s national calf crop, but it may also bunch-up sales of short yearling animals coming off those pastures as early as mid-February.”