WLI

Dressed beef sales trended $1 lower in Nebraska and the western Corn Belt through Thursday afternoon at $174/cwt. Live sales in those regions thus far are near steady to steady at $110.00-$110.50.

Cattle futures recovered from the worst of the early pressure Thursday, closing lower but still within the recently established higher, narrow channel.

Other than 12¢ higher at the back of the board, Live Cattle futures closed an average of 26¢ lower.

Other than 25¢ higher in expiring Sep, Feeder Cattle futures closed an average of 60¢ lower, amid extremely light trade.

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 14¢ lower Thursday afternoon at $204.71/cwt. Select was 39¢ lower at $192.56.

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Major U.S. financial indices closed higher Thursday. Support included tech stocks like Apple and Amazon, as well as Crude Oil futures continuing to edge higher.

The Dow Jones Industrial Average closed 54 points higher. The S&P 500 closed 8 points higher. The NASDAQ was up 51 points.

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“Despite more cattle on feed, the market price of finished cattle remains strong and continues to outperform year-ago prices,” says Andrew P. Griffith, agricultural economist at the University of Tennessee, in his most recent market comments. “Cattle feeders continue to fill pens and the strong feeder cattle prices demonstrate how much cattle feeders want to purchase cattle. It would appear cattle feeders are expecting finished cattle prices to remain strong in the near term and escalate moving into 2019. This thought process may not be as wild as many think it is as beef demand remains strong, which supports prices. Does this mean finished cattle prices will only escalate through the end of the year? One should probably not be so bold at this juncture, but the market does appear to be holding its own plus some at this time.”

For demand perspective, Griffith notes the retail value for Choice beef in August was the highest since July of last year at 608.2¢/lb.

There were only 242 head offered and no takers in the weekly Fed Cattle Exchange auction.

Cattle futures continued to firm Wednesday, closing higher on reportedly increased commercial interest.

Live Cattle futures closed an average of $1.39 higher through the front four contracts and then an average of 74¢ higher.

Feeder Cattle futures closed an average of $1.28 higher (42¢ to $1.82 higher).

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

Choice boxed beef cutout value was 88¢ lower Wednesday afternoon at $204.85/cwt. Select was $1.92 lower at $192.95.

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Major U.S. financial indices closed lower Wednesday. Many attributed the lion’s share of pressure to remarks made by Federal Reserve Chairman Jerome Powell, indicating the Fed didn’t foresee inflation surprising to the upside, i.e. less growth in interest rates over the long haul. That dampened bank stocks. Powell’s remarks came following the Fed’s decision to raise the federal funds rate for the third time this year to 2.00 to 2.25%.

The Dow Jones Industrial Average closed 106 points lower. The S&P 500 closed 9 points lower. The NASDAQ was down 17 points.

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A day following completion of the revised Korea-U.S. Trade agreement, the United State and Japan announced they would begin negotiating a trade pact.

“This is welcome news, since we know that export income is critical to the financial health of agriculture and is a key contributor to rural prosperity,” said Agriculture Secretary, Sonny Perdue. “Japan is an important customer for our agricultural products and we look forward to the great potential this breakthrough represents.”

Earlier this year, President Trump withdrew the U.S. from the Tran Pacific Partnership (TPP), which includes Japan.

According to a joint statement made by the two nations, President Trump and Japanese Prime Minister Shinzo Abe, affirmed the importance of a strong, stable, and mutually beneficial trade and economic relationship, recognizing that together, the two economies represent approximately 30% of global Gross Domestic Product.

Negotiated cash fed cattle trade was light on light to moderate demand in Nebraska and the western Corn Belt through Tuesday afternoon. There were a few live trades in both regions at $110.50/cwt.—steady with last week—but too few to trend.

Live Cattle futures closed an average of 14¢ higher.

Feeder Cattle futures closed an average of 24¢ higher.

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

Choice boxed beef cutout value was 43¢ lower Tuesday afternoon at $205.73/cwt. Select was 52¢ lower at $194.87.

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Except mixed for soybeans and wheat, cash bids for grains were higher Tuesday.

“Most of the Midwest is at a standstill in regards to harvest due to precipitation,” explained analysts with the Daily National Grain Market Summary. “The 10-day forecast is calling for more precipitation, which could slow harvest further.” 

Wheat bids were 7¢ lower to 1¢ higher. Soybean bids were ¼¢ lower to 16¾¢ higher. Sorghum bids were 5¾¢ higher. Corn bids were 3¢ lower to 5¼¢ higher.

Corn futures closed mostly 2¢ to 3¢ higher through March’20 and then fractionally higher to 1¢ higher.

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Major U.S. financial indices closed mostly lower on Tuesday. Pressure included more tough trade talk from the White House and higher 10-year Treasury yield.

The Dow Jones Industrial Average closed 69 points lower. The S&P 500 closed 3 points lower. The NASDAQ was up 14 points.

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 “We are entering into a new KORUS (Korea-U.S.) agreement that is a better deal for the entire United States economy, including the agricultural sector,” said Agriculture, Sonny Perdue on Tuesday. “This represents an important improvement in trade relations between our two nations, building on long-standing cooperation we have enjoyed. This agreement adds to the momentum building for President Trump’s approach to trade, which is to stand strong for America’s interests and strike better deals. I am optimistic that the dominoes will continue to fall: KORUS, then a new NAFTA, and new agreements with the European Union, Japan, and, most notably, China. As an avid sportsman, I would say ‘put this one in the bag and keep hunting for more.’”       

“Signing of the revised KORUS agreement (Korea-U.S. trade agreement) is reassuring news for the U.S. beef and pork industries,” said Dan Halstrom, president and CEO of the U.S. Meat Export Federation (USMEF), following Tuesday’s announcement of the agreement. “The market access terms secured in the original KORUS not only helped increase U.S. red meat’s market share in South Korea, but also bolstered consumption by making our beef and pork products more affordable and accessible to Korean consumers.”

The U.S. is the world’s largest beef supplier to Korea and second largest supplier of pork, according to Halstrom.

“U.S. red meat exports to Korea set a record last year of $1.7 billion, up 19% year-over-year and up 69% from 2012, when KORUS entered into force,” Halstom explains. “This trend continues in 2018, with both U.S. beef and pork export value increasing more than 50% percent compared to a year ago. Korea is now the second-largest value market for U.S. beef (after Japan) and fourth largest for U.S. pork (after Japan, Mexico and China/Hong Kong).

The duty rate on U.S. beef has been reduced from 40% to 21.3% and will continue to decline each year until it is eliminated by 2026.

Negotiated cash fed cattle trade ended up being steady to $1 lower last week at $110-$111/cwt. on a live basis and mostly $175 in the beef.

Higher feedlot placements in August weighed on Cattle futures Monday.

Except for 15¢ lower in the back contract, Live Cattle futures closed an average of 79¢ lower (42¢ to $1.45 lower).

Except for 50¢ lower in the front contract, Feeder Cattle futures closed an average of $1.19 lower (75¢ to $1.87 lower).

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

Choice boxed beef cutout value was $1.36 higher Monday afternoon at $206.16/cwt. Select was 68¢ higher at $195.39.

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Major U.S. financial indices closed mostly lower on Monday. Pressure included cancellation of trade talks between the U.S. and China as counter tariffs begin this week.

The Dow Jones Industrial Average closed 181 points lower. The S&P 500 closed 10 points lower. The NASDAQ was up 6 points.

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 “Lightweight placements since May will result in lighter and later fed cattle marketings and may contribute to relatively tighter fed cattle supplies for the remainder of the year,” says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly market comments.

As noted in the last issue of Cattle Current, placements in feedlots with more than 1,000 head capacity were 7.36% more than the previous year at 2.07 million head, according to Friday’s Cattle on Feed report.

“Increased August placements largely consisted of cattle under 700 lbs., with the under-600 lb. category up 19.4% year over year and cattle placed weighing 600-700 lbs. up 17.5% compared to last year,” Peel says. “In the last four months, placements of cattle under 700 lbs. has been up 13.2% year over year, while placements weighing over 700 lbs. were down 1.0% year over year. Lightweight feedlot placements likely include lighter-weight steer placements, as well as continued high proportions of heifers in the feedlot total. Heifers are typically placed 50-100 lbs. lighter in weight compared to steers.”

Although total cattle slaughter is 3.2% more so far this year, Peel notes heifer slaughter is 8.3% higher for the year to date.

“However, heifer slaughter is expected to show much smaller year-over-year increases in the fourth quarter, thereby moderating the annual increase,” Peel explains. “Beef cow slaughter is 11.4% larger year over year so far this year. Dairy cow slaughter continues to inch higher and is up 4.5% so far this year. Steer slaughter continues below year-ago levels and is down 0.8% year over year for the year to date. Steer slaughter will likely increase some relative to last year and result in an annual total slightly larger than last year.”

Other than Nebraska, negotiated cash fed cattle trade remained mostly undeveloped through late Friday afternoon. Live trades there were $1 lower than the previous week at $110-$110.50/cwt. Dressed trade was steady at $175.

Late Friday, the Texas Cattle Feeders Association reported its members trading cattle at steady money of $111.

Cattle futures firmed on Friday with apparent positioning ahead of the monthly Cattle on Feed report (see below).

Except for 5¢ higher in the back contract, Live Cattle futures closed an average of 51¢ higher.

Feeder Cattle futures closed an average of 87¢ higher across the front half of the board, and then an average of 10¢ higher.

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

Choice boxed beef cutout value was 28¢ higher Friday afternoon at $204.80/cwt. Select was 20¢ lower at $194.71.

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Major U.S. financial indices closed mixed on Friday, with investors squaring the books amid little market-moving news.

The Dow Jones Industrial Average closed 85 points higher. The S&P 500 closed 1 point lower. The NASDAQ was down 41 points.

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Friday’s monthly Cattle on Feed report will likely be viewed as bearish, with more August placements than average estimates ahead of the report.

Placements in feedlots with more than 1,000 head capacity were 7.36% more than the previous year at 2.07 million head. That’s 2-4% more than expected.

Most cattle went on feed weighing less than 800 lbs. Specifically, 20.8% weighed less than 600 lbs.; 16.2% weighed 600-699 lbs.; 22.2% at 700-799 lbs.; 22.9% weighing 800-899 lbs.; 11.6% weighing 900-999 lbs.; 6.3% at weights of 1,000 lbs. or more.

Marketings in August of 1.98 million head were just about even with the previous year, but 4,000 head more.

All told, 11.125 million head were on feed Sept. 1, which was 5.9% more (+621,000 head) than the same time last year. That’s the largest inventory for the month since the data series began in 1996.