WLI

Strong follow-through buying in Cattle futures ran out of steam by the end of the session Wednesday, though markets were able to retain the previous day’s gains and add a bit. Trade tensions and lingering uncertainties about burgeoning beef supplies continue to help limit advances.

Except for 2¢ lower in away Aug, Live Cattle futures closed an average of 32¢ higher ($1.10 higher in spot Jun).

Feeder Cattle futures closed an average of 77¢ higher (from 62¢ to $1.47 higher).

Support came from growing notions that cash fed cattle can trade higher this week.

For instance, slaughter steers sold mostly $2 higher at Sioux Falls Regional in South Dakota; $111-$115/cwt. for Ch 2-3.

There were only 568 head offered in Wednesday’s weekly Fed Cattle Exchange auction, for delivery at 1-9 days. There were no takers; two lots (155 steers and 51 heifers) were passed on at $110/cwt.

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

Choice boxed beef cutout value was 61¢ lower in the afternoon at $226.97/cwt. Select was $2.20 lower at $203.65.

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Major U.S. financial indices closed sharply higher Wednesday, driven by rallying bank stocks, tied to higher interest rates.

The Dow Jones Industrial Average closed 346 points higher. The S&P 500 closed 23 points higher. The NASDAQ was up 51 points, closing at a record high.

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“It’s clear by the growth in plant-based protein case shipments to foodservice and restaurant operators that this category has mainstreamed beyond those who choose a meatless diet,” says David Portalatin, industry advisor for The NPD Group’s (NPD) Food Sector. Case shipments from broadline foodservice distributors to independent and micro-chain restaurant operators  were 19% higher for the year ending in March.

In a recent NPD survey, 14% of U.S. consumers (more than 43 million consumers) regularly use plant-based alternatives such as almond milk, tofu, and veggie burgers, and 86% of them don’t consider themselves vegan or vegetarian. The heaviest users of plant-based foods are those who are more likely to be on a diet or to have a medical condition, and consumers who tend to think of food as fuel, are more convenience-oriented than others and less confident in their cooking skills.

Beef alternatives are driving growth in the category. Specifically, according to NPD, beef alternatives make up 44% of the plant-based categories being shipped to independent and micro-chain restaurant operators. Burgers are the largest beef alternative category but ball products, like meatless meatballs, used as ingredients have outpaced burgers and all other plant-based protein formats in terms of growth.

Cattle futures bounced higher Tuesday, perhaps helped along by continuing indications that cattle feeders remain current in marketing as supplies increase. Given light negotiated fed cattle trade the last two weeks, there was also the notion that packers likely need to be more aggressive buyers this week.

Live Cattle futures closed an average of $1.59 higher ($1.00 to $2.47 higher in spot Jun).

Feeder Cattle futures closed an average of $1.71 higher (from $1.27 higher in spot Aug to $2.00 higher).

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

Choice boxed beef cutout value was 1¢ higher in the afternoon at $227.58/cwt. Select was 40¢ lower at $205.85.

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Major U.S. financial indices closed mostly narrowly mixed on Tuesday, buoyed by tech stocks for the second consecutive day. Pressure included lingering trade worries.

The Dow Jones Industrial Average closed 13 points lower. The S&P 500 closed 1 point higher. The NASDAQ was up 31 points, closing at a record high.

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Agricultural producer sentiment rose last month to its highest level since January 2017, according to the Purdue University/CME Group Ag Economy Barometer—a sentiment index derived from a monthly survey of 400 agricultural producers across the U.S.

“Over the last month there’s been a relaxation in international trade tensions with China, and that seems to be playing a role in how producers are viewing their financial future,” says James Mintert, the barometer’s principal investigator and director of Purdue University’s Center for Commercial Agriculture.

The May barometer reading of 141 was 16 points higher than April. The Index of Current Conditions increased to 132 during May, 9 points higher than in April, while the Index of Future Expectations climbed to 145, up 19 points compared to a month earlier, making it the highest future expectations reading since February 2017.

Despite the improvement in sentiment, only 27% of respondents said now is a good time to make large farm investments.

Cattle futures moved lower again Monday, amid up-and-down, choppy trade. Declining open interest suggests current uncertainty is keeping some folks off the field.

Except for 10¢ higher in the back contract, Live Cattle futures closed an average of 55¢ lower (15¢ lower in spot Jun to $1.17 lower).

Feeder Cattle futures closed an average of 73¢ lower (from 30¢ lower at the back of the board to $1.47 lower in spot Aug).

Boxed beef cutout values were steady for Choice and higher for Select Monday on moderate to fairly good demand and moderate to heavy offerings, according to the Agricultural Marketing Service.

Choice boxed beef cutout value was 4¢ higher in the afternoon at $227.57/cwt. Select was $1.45 higher at $206.25.

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Major U.S. financial indices closed higher on Monday, with follow-through buying from Friday’s rally and boosted by tech stocks, including Apple and Amazon. The tech-based NASDAQ closed up 52 points and at a record high. The Dow Jones Industrial Average closed 178 points higher. The S&P 500 closed 12 points higher.

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Notwithstanding simmering trade tensions and current trade negotiations, U.S. beef exports in 2019 are forecast at 3.15 billion pounds, a new record volume, according to last months Livestock, Dairy and Poultry Outlook. That would be 3.8% more than estimated for this year.

U.S. beef exports increased 12% from year-earlier levels in the first quarter of this year, according to USDA’s Economic Research Service (ERS).

“Global meat and poultry demand continues to fuel the growth in U.S. production (see below), driven, in part, by economic expansion in the developing world,” say ERS analysts (Jones, Haley and Melton) in a recent Amber Waves article. “While U.S. meat and poultry imports have remained fairly stable since 2000, U.S. exports of the same goods have grown at an average of 4% per year. An increase in global demand has likely contributed to favorable conditions for U.S. exports. As a result, net exports have increased by an average of 7.2% since 2000 and are expected to increase a further 5% in 2018, or more than 600 million lbs.”  

Negotiated cash fed cattle trade for the week ended up steady to either side of steady with extremely light trade.

There were some live sales at $111/cwt. in Nebraska, compared to $109.00-$110.50 the previous week. A few sold in the beef at $177, compared to $176-$180 the previous week. Scattered sales in the Southern Plains were generally steady at $110. In the western Corn Belt, dressed sales were mostly $2-$4 lower than the previous week at $178.

Cattle futures meandered lower.

Except for 2¢ higher in away Jun, Live Cattle futures closed an average of 54¢ lower (15¢ lower in spot Jun to $1.12 lower).

Feeder Cattle futures closed an average of 60¢ lower (22¢ lower at the back of the board to $1.07 lower in spot Aug).

Boxed beef cutout values were weak for Choice and firm for Select Friday on light to moderate demand and offerings, according to the Agricultural Marketing Service (AMS).

Choice boxed beef cutout value was 67¢ lower in the afternoon at $227.53/cwt. Select was 33¢ higher at $204.80.

“Beef demand seems to be hitting on all cylinders with retailers featuring beef, which is promising. With the large supply of fed cattle, demand is exceeding expectations,” say AMS analysts. “The actual federally inspected cattle slaughter for week ending May 19 totaled 667,613, the largest weekly cattle slaughter since August 2011. Steer and heifer slaughter was also running at a pretty good clip for that week as near 540,000 were harvested, the largest total for those classifications since June 2011.” 

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Major U.S. financial indices rebounded Friday from steep losses in the previous session. Support included a monthly employment report that was stronger than expected. Total non-farm payroll employment increased by 223,000 in May, according to the U.S. Bureau of Labor Statistics. The unemployment rate edged lower to 3.8%.

The Dow Jones Industrial Average closed 219 points higher. The S&P 500 closed 29 points higher. The NASDAQ closed 112 points higher.

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“Today’s consumer is a ‘pro-sumer,’ which means they are going to co-create their story and it’s about ‘Brand Me,’” explains Jeff Fromm, a partner at Barkley, a company that assists with establishing and enhancing brands and helping businesses identify emerging consumer trends. Fromm says consumers expect to have a seat at the table. If you’ve heard in the past that it’s just about being transparent, he says, our research suggests that’s going to get you a ‘C’ on your report card. In ‘Tomorrowland,’ you’re going to have to offer proof that the story you are living is real – which is a step beyond transparency.”

Fromm—the best-selling author of books that include Marketing to Millennials, Millennials with Kids and Marketing to Gen Z—spoke to an international audience at last week’s World Meat Congress in Dallas.

He explained that food has become more than just a category of products consumers buy and enjoy – it is also a means of expression.

“Today’s modern consumer expresses themselves through food,” Fromm says. “Discretionary purchases on food have increased at a dramatic rate, at a time when discretionary purchases on fashion haven’t. So they are trading ‘fashion’ for ‘food’ as a way to express themselves.”

Fromm emphasized that Farmers and ranchers, and those in meat processing and merchandising, absolutely must better connect with consumers by sharing details of the story behind their products.