WLI

When last week’s tally was complete, negotiated cash fed cattle trade was mostly $1-$2 higher at $112 to $114/cwt. Dressed trade was mostly steady to $4 higher at mostly $178.

Cattle futures were a touch lower Monday, presumably on profit taking and retrenching in light of recent strength, stronger cash prices and firmer wholesale beef values.

Except for unchanged in the back two contracts, Live Cattle futures closed an average of 28¢ lower.

Feeder Cattle futures closed an average of 83¢ lower (65¢ to $1.17 lower).

At $149.74, the CME Feeder Cattle Index closed at the highest level since January.

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

Choice boxed beef cutout value was 93¢ higher Monday afternoon at $205.68/cwt. Select was $1.24 higher at $198.33.      

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Major U.S. financial indices continued higher Monday, buoyed by more positive quarterly earnings reports from the likes of Berkshire Hathaway and Tyson Foods.

The Dow Jones Industrial average closed 39 points higher. The S&P 500 closed 10 points higher. The NASDAQ was up 47 points.

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“Agricultural markets are caught in a whirlwind of trade disruptions. Direct market shocks will lead to ripple effects and are likely to affect most agricultural markets worldwide in the coming months,” says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly market comments. “In some cases, global market shares may be affected in the short run and possibly long term as well.”

In order to anticipate how markets may be impacted, Peel suggests considering global supply and demand profiles. Among those he highlights, based on current USDA estimates:

Beef—the U.S. produces 20% of the global beef supply. Brazil is second largest at 15.7%, followed by the European Union at 12.5% and China at 11.6%.

Brazil accounts for 19.3% of global beef exports, followed by India (18.1%), Australia (15.4%) and the U.S. (13.1 percent).

The U.S. is the world’s largest beef importer (16.6%), followed by China (14.4%), Japan (10.0%), Hong Kong (7.0%) and South Korea (6.7%).

Pork—China is the largest pork producer, accounting for 48.2% of the global supply. The European Union is next at 21.2%, followed by the U.S. at 10.7%.

The EU accounts for 34.8% of global pork exports, followed by the U.S. (32.1%) and Canada (16.2%).

China is the largest pork importer (19.2%), followed by Japan (18.9%) and Mexico (15.1%).

Corn—The U.S. produces 35.9% of the world’s corn. China accounts for 20.9%, followed by Brazil (8.1%) and the EU (6.0%).

The U.S. exports 40.5% of total global corn exports, ahead of Brazil (17.3%), Argentina (15.9%) and the Ukraine (13.0%).

The European Union (12.3%) and Mexico (11.1%) are the two largest corn importers.

Soybeans—The U.S. and Brazil each produce 35.5% of the global soybean supply, followed by Argentina at 11.0%. China accounts for 62.9% of global soybean imports, followed by the European Union (9.1%) and Mexico (3.0%).

Weekly negotiated cash fed cattle trade was late again on Friday, but at prices reportedly $1-$2 higher than the previous week on a live basis at $113-$114/cwt. and as much as $4 high in the beef at $178.

Notions of stronger cash prices and technical buying helped Cattle futures close solidly higher.

Live Cattle futures closed an average of $1.29 higher (82¢ to $2.07 higher).

Feeder Cattle futures closed an average of $1.41 higher. 

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

Choice boxed beef cutout value was 95¢ higher Friday afternoon at $204.75/cwt. Select was 1¢ lower at $197.09.      

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Major U.S. financial indices closed higher Friday.

The Dow Jones Industrial average closed 136 points higher. The S&P 500 closed 13 points higher. The NASDAQ was up 9 points.

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“Amidst trade tariff and retaliation tariff cycles, one of the big takeaways in cold storage is how little pork inventories changed,” say analysts with the Livestock Marketing Information Center (LMIC), in the most recent Livestock Monitor.  “Total pork in cold storage remained unchanged in the month of June compared to the previous year and was below the prior month by 10%. Of the 12 categories of pork tracked, bellies and trimmings were the only two categories to show worrisome year-over-year gains, up 130% and 38%, respectively.  Although bellies are still building back from historically low levels of the prior year, both cuts also declined relative to May inventories, providing some comfort that the market is continuing to work through large pork supplies and changing trade landscapes.”

As reported previously in Cattle Current, total pounds of beef in freezers June 30 were 3% less than the previous month, but 8% more than the same time a year earlier, according to USDA’s July Cold Storage report.

Total red meat supplies in freezers were down 7% from the previous, month but up 5% from last year.

Total frozen poultry supplies were 3% more than the previous month and 6% more than the previous year.

“As much as trade is weighing in the current market, the most recent cold storage and trade data does not reflect the full weight of what has happened or will happen in the export markets,” LMIC analysts say. “Poultry products did make the list of retaliatory actions by China. The U.S. exports very little poultry meat to China, but about 25% of total poultry meat exports go to Mexico. Larger production is the majority of what is driving the current levels in cold storage, but that could change in the coming months for poultry and pork.”

After follow-through support early in the session, continued erosion in Lean Hog futures, along with light trade and declining open interest, helped pressure Cattle futures Thursday, especially Feeder Cattle. Cattle futures did close well off of session lows.

Except for 2¢ higher in away Aug, Live Cattle futures closed an average of 16¢ lower.

Feeder Cattle futures closed an average of 56¢ lower across the front half of the board and then and average of 17¢ lower.

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

Choice boxed beef cutout value was 5¢ higher Thursday afternoon at $203.80/cwt. Select was 48¢ lower at $197.10.      

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Major U.S. financial indices closed mixed Thursday, amid lingering trade worries on one hand, and continued positive quarterly earnings on the other.

The Dow Jones Industrial average closed 7 points lower. The S&P 500 closed 13 points higher. The NASDAQ was up 95 points.

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Pastureland values increased 3% year over year—up $40 per acre—for an average of $1,390 per acre, according to the 2018 Land Values Summary released by the National Agricultural Statistics Service (NASS) yesterday. Increases were steepest in the Southern Plains region—up 5.6%.

At $4,130 per acre, cropland value also increased an averaged of $40 per acre from the previous year. It was up 4.7% in the Southern Plains region.

U.S. farm real estate value, a measurement of the value of all land and buildings on farms, averaged $3,140 per acre for 2018, up $60 per acre (1.9%) from 2017 values.

“Regional changes in the average value of farm real estate ranged from an 8.3% increase in the Southern Plains region to a 1.4% decrease in the Northern Plains region,” say NASS analysts. “The highest farm real estate values were in the Corn Belt region at $6,430 per acre. The Mountain region had the lowest farm real estate value at $1,140 per acre.”

Feeder Cattle futures took another step lower Tuesday, presumably pressured mostly by surging grain prices (see below) and month-end positioning. Live Cattle followed along, to a lesser degree.

Except for 7¢ higher in away Aug, and unchanged in Feb and June, Live Cattle futures closed an average of 38¢ lower (5¢ to 75¢ lower).

Feeder Cattle futures closed an average of $1.76 lower through the front half of the board and then an average of 46¢ lower.

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

Choice boxed beef cutout value was 45¢ lower Tuesday afternoon at $204.27/cwt. Select was 40¢ higher at $198.38.   

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Major U.S. financial indices closed higher Tuesday, about gaining back what was given in the previous session. Support included chatter about global economic powers wanting to figure out how to avoid a trade war. Crude oil futures (WTI-CME) were $1.17 to $1.37 lower through the rest of the year.

The Dow Jones Industrial average closed 108 points higher. The S&P 500 closed 13 points higher. The NASDAQ was up 41 points.

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“This calendar year, calf and yearling prices are projected to be similar to 2016’s and 2017’s. In the fourth quarter of this year, calf prices may average slightly below 2017’s, but substantially above 2016’s,” say analysts with the Livestock Marketing Information Center (LMIC), in the latest Livestock Monitor. “If the general trends of the first half of 2018 persist, as of January 1, 2019, the U.S. cowherd likely will be up well less than 1.0% year over year. That suggests cyclically stronger calf prices are ahead (e.g., calf prices in the fall of 2020). Pre-planning may position a cattle operation to take advantage of this market transition.”

Bottom line, those analysts explain the clearest signal in the current market resides on the supply side of the equation, with the national beef cowherd a good ways down the expansion phase of the current cattle cycle.

The recent mid-year Cattle report from USDA underscored the point with just less than 1% more beef cows year to year, along with 2.1% fewer beef replacement heifers.

“The NASS survey largely confirmed that the national herd is still growing, but importantly, at a moderating pace compared to that of recent years,” LMIC analysts say. “Looking ahead, smaller herd growth rates will translate into the rather modest year-over-year increase in beef production in 2019. If recent cowherd trends persist, 2020 could mark the end of the current U.S. cattle inventory build-up.”