WLI

Only 596 head were offered in the weekly Fed Cattle Exchange Auction. There were no sales, but two lots of heifers (287 head) passed out at $110 and $112/cwt.

Cattle futures edged lower amid light trade and uncertainty about the week’s cash direction.

Live Cattle futures closed an average of 38¢ lower.

Feeder Cattle futures closed an average of 62¢ lower (15¢ to $1.30 lower).

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

Choice boxed beef cutout value was $1.02 lower in the afternoon at $223.90/cwt. Select was $1.09 lower at $202.30.

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Major U.S. financial indices closed lower Wednesday, under pressure from the notion that the Fed will increase interest rates two more times this year, rather than one, as previously expected. That’s after the widely anticipated hike in interest (+0.25%) Wednesday.

“Information received since the Federal Open Market Committee met in May indicates that the labor market has continued to strengthen and that economic activity has been rising at a solid rate,” according to a statement from the Fed. “Job gains have been strong, on average, in recent months, and the unemployment rate has declined. Recent data suggest that growth of household spending has picked up, while business fixed investment has continued to grow strongly. On a 12-month basis, both overall inflation and inflation for items other than food and energy have moved close to 2%. Indicators of longer-term inflation expectations are little changed, on balance.”

The Dow Jones Industrial Average closed 119 points lower. The S&P 500 closed 11 points lower. The NASDAQ was down 8 points.

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“The seasonality of heifer slaughter is likely changing as the herd size has recovered from the drought and expansion is slowing,” says David Anderson, Extension economist with Texas A&M AgriLife Extension Service.

In the most recent issue of In the Cattle Markets, Anderson explains, over the lasy several years, heifer slaughter tended to be seasonally low from about May-July, as herd expansion meant more heifer retention and fewer heading to the feedlot. Now, fewer heifers are being retained.

“Fed heifer slaughter is up about 17% over the last six weeks, using the daily slaughter data and estimating the first two weeks of June. Going back to the first of April, fed heifer slaughter is up about 16% compared to a year ago,” Anderson says. “Cattle slaughter surged over the last six weeks with weekly slaughter over 650,000 head every week since the first of May, except the Memorial Day- shortened week. Total cattle slaughter is up about 9% compared to the same period a year ago. Much of the year-over-year increase in slaughter is from heifers.” He adds that total weekly slaughter levels in May were the most for the month since May 2013.

Although there are more heifers on feed this year, Anderson says, “It is about the same as the number on feed, on average, over the 2007-2012 period before the drought and during the herd adjustments to ethanol-fueled feed costs.”

Cattle futures moved solidly lower Tuesday after early follow-through support. The surge higher in corn prices helped Live Cattle eke out a mostly positive close but kept pressure on Feeder Cattle. Keep in mind that trade was light in both pits.

Except for 12¢ lower and 25¢ lower on either end of the board, Live Cattle futures closed an average of 26¢ higher.

Except for unchanged in the back two contracts, Feeder Cattle futures closed an average of 57¢ lower (15¢ to 82¢ lower).

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

Choice boxed beef cutout value was 21¢ lower in the afternoon at $224.92/cwt. Select was 59¢ higher at $203.39.

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Major U.S. financial indices closed mostly narrowly mixed Tuesday, with the NASDAQ receiving a boost from a U.S. District Court ruling in favor of the proposed merger between Time Warner and AT&T.

The Dow Jones Industrial Average closed 1 point lower. The S&P 500 closed 4 points higher. The NASDAQ was up 43 points.

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Projected beef production for this year was lowered by 90 million lbs. in the most recent World Agricultural Supply and Demand Estimates (WASDE), on lower carcass weights more than offsetting increased steer, heifer and cow slaughter in the second quarter. Estimated beef production for this year is 27.125 billion lbs. Estimated beef production next year is 27.175 billion lbs.

The average 5-area Direct fed steer price is projected at $116-$119/cwt. for the second quarter, $106-$112 for the third quarter and $108-$116 for the fourth quarter. The annual price was reduced $1 on the upper end of the range to $114-$118; the projection for 2019 is $113-$122.

WASDE projects ending corn stocks 105 million bu. lower to 1.577 billion bu. If realized, that would be the lowest level since 2013-14. The season-average farm price for corn was raised 10¢ at the midpoint with a range of $3.40 to $4.40/bu. 

Projected ending stocks for wheat are 9 million bu. lower than the previous month to 946 million bu. The projected season-average farm price for wheat is up 10¢/bu. with the midpoint at $5.10/bu., compared to the revised 2017-18 price of $4.75.

Soybean ending stocks were projected 25 million bu. less for 2017-18 and 30 million bu. less for 2018-19, but the price forecast was unchanged. The 2018-19 season-average price for soybeans is forecast at $8.75 to $11.25/bu. Soybean meal prices are projected at $330 to $370/short ton. Soybean oil prices are projected at 29.5¢ to 33.5¢/lb. 

Negotiated cash fed cattle trade ended up sharply higher last week: $5 higher on a live basis in the Southern Plains at $115/cwt., $3-$5 higher in the western Corn Belt at $115 and $3-$4 higher in Nebraska at $114-$115. Dressed trade was $5-$7 higher at $182-$184.

Cattle futures moved higher through much of the session Monday, buoyed by follow-through support from last week’s higher cash fed cattle trade. By the end of the day, though, futures closed solidly lower, most likely on profit taking.

Except for 12¢ higher in the back contract, Live Cattle futures closed an average of $1.12 lower (75¢ to $1.25 lower).

Except for an average of $1.25 lower in the front two contracts, Feeder Cattle futures closed an average of 50¢ lower.

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

Choice boxed beef cutout value was $1.08 lower in the afternoon at $225.13/cwt. Select was 38¢ lower at $202.80.

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Major U.S. financial indices closed little changed Monday.

The Dow Jones Industrial Average closed 5 points higher. The S&P 500 closed 2 points higher. The NASDAQ was up 14 points.

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“In the U.S. wholesale meat marketplace, robust exports have been a factor cushioning beef prices against large supplies,” notes Jim Robb, director of the Livestock Marketing Information Center (LMIC), in this week’s Cow-Calf Corner. “In the World Agricultural Supply and Demand Estimates (WASDE) issued last month by USDA, their forecast was for U.S. beef exports in 2018 to be 3.03 billion lbs., 6% above 2017’s. That would be the first time for foreign sales to exceed 3 billion pounds. Year-to-date trends are on the path to reach that level.”

Of course, assorted trade issues percolating currently will have plenty to say about ultimate export reality.

“More than just insights into actual policy changes and tariff rates are required to forecast exports,” Robb explains. “For example, in the current world economic environment, exchange rates adjustments can have a significant impact on the price paid by a foreign buyer for U.S. agricultural products. Exchange rates are determined by macroeconomic forces and by sectors much bigger than the agriculture and food trade sphere. That is, exchange rates are realistically exogenous, using an economics term, to the trade of agricultural and food products. The value of the Mexican peso could drop versus the U.S. dollar, mitigating, at least partially, the short-term impacts of any new tariffs on U.S. exports to that country.”

By late Friday afternoon, cash fed cattle trade remained mostly undeveloped. Although too few transactions to trend, higher money was reported in Nebraska at $114/cwt. on a live basis, which was $2.50-$3.00 higher than the previous week. Early live sales in the western Corn Belt were at $114-$115 ($3-$4 higher); early dressed sales were $4-$6 higher at $182. Late in the day, the Texas Cattle Feeders Association reported its members trading live cattle at $115, which was $5 higher than the previous week.

Expectations for stronger cash trade helped boost Cattle futures Friday, extending the week’s gains.

Live Cattle futures closed an average of $1.44 higher through the front three contracts and then an average of 28¢ higher (7¢ to 62¢ higher).

Feeder Cattle futures closed an average of 69¢ higher (27¢ higher to $1.20 higher in spot Aug). 

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

Choice boxed beef cutout value was 20¢ lower in the afternoon at $226.21/cwt. Select was 23¢ lower at $203.18.

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Major U.S. financial indices closed higher Friday, amid generally positive economic news.

The Dow Jones Industrial Average closed 75 points higher. The S&P 500 closed 8 points higher. The NASDAQ was up 10 points.

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Brazilian interests now own a substantial chunk of the U.S. beef packing business.

That comes with last week’s announcement that Marfrig Global Foods received final authorization for its acquisition of a 51% interest in National Beef Packing Company, LCC. The pending sale was announced in April, with the Brazilian company paying $969 million (U.S.) for the controlling interest.

According to a statement from National Beef at the time, “The operations and management of National Beef will remain unchanged with Tim Klein continuing as National Beef President and Chief Executive Officer upon completion of the transaction. The current owners of National Beef will continue as owners under the new structure.” At the time, Leucadia National Corp. was the majority owner, having acquired a majority interest in National Beef at the end of 2011.

With the sale, Brazilian interests now own a substantial chunk of the U.S. beef packing business.

Brazilian-owned JBS USA is the nation’s second largest beef packer in terms of sales, according to data compiled by CattleFax and presented in Directions statistics from the National Cattlemen’s Beef Association. National is fourth largest in terms of beef sales. Based on net sales (all meats), according to the National Provisioner, JBS was second largest in the U.S. last year, and National Beef was seventh largest (Tyson was largest and Cargill was third largest).

Early follow-through support faded in Cattle futures yesterday, leading to a marginally lower close. The week’s negotiated cash fed cattle trade remained undeveloped through late afternoon.

Except for 7¢ higher in spot Jun and 2¢ higher in Apr, Live Cattle futures closed an average of 14¢ lower.

Other than 50¢ and 10¢ higher at the back of the board, Feeder Cattle futures closed an average of 39¢ lower. 

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

Choice boxed beef cutout value was 56¢ lower in the afternoon at $226.41/cwt. Select was 24¢ lower at $203.41.

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Major U.S. financial indices closed mixed Thursday.

The Dow Jones Industrial Average closed 95 points higher. The S&P 500 closed 1 point lower. The NASDAQ was down 54 points.

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U.S. beef exports continue at a steamy pace, according to data released by USDA and compiled by the U.S. Meat Export Federation (USMEF).

Beef export volume in April (111,213 mt) was 11% more than a year earlier. Export value was 23% higher at $676.7 million, the fourth-highest on record. Through the first four months of 2018, exports were up 10% in volume (429,286 mt). Export value was 20% more than last year’s record pace at $2.59 billion.

Beef export value averaged $328.46 per head of fed slaughter in April, up 16% from a year ago. Through April, per-head export value averaged $318.91, up 17%.

Even with growth in red meat production, both pork and beef exports accounted for a larger share and contributed more dollars per head, indicating strong international demand, according to USMEF.

U.S. pork exports set a new volume record in April (230,049 mt), which was 13% more than a year ago. Export value was also 13% more ($584.1 million).

While Japan maintained its position as the leading volume and value market for U.S. beef, momentum continued to build in South Korea, where April exports were up 62% from a year ago in volume (19,185 mt) and 72% in value ($134.8 million).

“The enthusiasm for U.S. beef in these markets may be at the highest level I’ve ever seen,” says Dan Halstrom USMEF President and CEO. “In nearly every segment of the retail and restaurant sectors, U.S. beef is attracting new customers with a wider range of cuts and menu items. It’s an exciting trend that’s not just limited to Japan and Korea, with U.S. beef’s popularity also strengthening in other Asian markets and in the Western Hemisphere.”