WLI

Negotiated cash fed cattle prices moved higher on Friday, after a softer feel the day before. Live sales in the Southern Plains were $2-$3 higher than the previous week at $124/cwt., on active trade and good demand. There were too few transactions to trend elsewhere, but demand was strong, suggesting higher prices in the Northern Plains and western Corn Belt, too.

That and significantly higher wholesale beef values week to week helped lift Cattle futures late in the session.

Live Cattle futures closed an average of $1.81 higher through the front five contracts ($1.02 to $2.65 higher) and then an average of 41¢ higher.

Except for 42¢ lower in Mar, Feeder Cattle futures closed an average of 97¢ higher (22¢ to $1.75 higher).

Choice boxed beef cutout value was $1.59 higher Friday afternoon at $221.74/cwt. Select was 16¢ lower at $204.42.

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Major U.S. financial indices tread water on Friday.

The Dow Jones Industrial Average closed 11 points lower. The S&P 500 closed 2 points higher. The NASDAQ closed 1 point higher.

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“Wholesale beef prices surged this week with strength in the loin and rib primal driving prices higher,” says Andrew P. Griffith, agricultural economist at the University of Tennessee, in his weekly market comments. “The price strength in Choice boxes is largely due to grilling season demand as this will be the first weekend of the year where most of the United States has favorable enough weather to throw beef on the grill.”

Griffith adds, “Expected increases in quantity supplied has some experts concerned, but strong consumer demand should absorb the production.”

There were no sales in the weekly Fed Cattle Exchange auction, with 3,194 head offered. Two lots—one steers and one heifers from Kansas—were passed out at $121/cwt. and $120.25, respectively.

Cattle futures were lightly traded on Wednesday, firming after a slow start.

Live Cattle futures closed an average of 42¢ higher (27¢ to 82¢ higher).

Feeder Cattle futures closed an average of 79¢ higher (35¢ to $1.20 higher).

Wholesale beef values continued higher on Wednesday. Choice boxed beef cutout value was 88¢ higher in the afternoon at $218.53/cwt. Select was $1.04 higher at $203.15.

“Demand has been bullish for beef prices while supply worries have led to bearish trade,” says Andrew P. Griffith, agricultural economist at the University of Tennessee, in his weekly market comments. “It would seem the market has consistently been more concerned with increased supply as opposed to recognizing strong consumer demand. As the calendar moves deeper into spring, and as the unofficial start of summer begins with the Memorial Day weekend, the market will have a better idea of beef demand, which should provide a more consistent price direction for beef.”

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Major U.S. financial indices rebounded a little on Wednesday. Although rising Treasury Bond yields continued to pressure the market early, positive quarterly earnings from the likes of Boeing, provided enough support for a mostly positive close.

The Dow Jones Industrial Average closed 59 points higher. The S&P 500 closed 4 points higher. The NASDAQ closed 3 points lower.

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Although calf prices in the first quarter were 3.2% higher year over year—even with to slightly higher than seasonal indexes would project—analysts with the Livestock Marketing Information Center (LMIC) say, “The 10-year seasonal index indicates more potential downside than upside moving through 2018.”

In the latest Livestock Monitor, LMIC analysts point out the U.S. cattle inventory has grown four consecutive years, making for the second longest herd expansion phase since the cycle that began in 1976.

“Larger calf crops tend to put downward pressure on prices, particularly in the fourth quarter,” LMIC analysts say. “January of 2018 showed another 0.7% increase (cattle inventory) compared to the previous year, which would indicate that 2018 fall calf prices again should be the low price point during this calendar year.”

Following early support, Cattle futures drifted to a mostly marginally lower close on Tuesday, amid light activity and bearish outside markets.

Except for 17¢ higher in near Jun, Live Cattle futures closed an average of 43¢ lower (17¢ to 80¢ lower).

Other than 7¢ higher in spot Apr and 65¢ higher in the back contract, Feeder Cattle futures closed an average of 47¢ lower.

Wholesale beef values continued higher on Tuesday. Choice boxed beef cutout value was $2.54 higher in the afternoon at $217.65/cwt. ($5.89 higher in the last two days). Select was 39¢ higher at $202.11.

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Major U.S. financial indices closed sharply lower on Tuesday. Key pressure, according to many analysts, was the yield on the 10-year Treasury bond surpassing 3% for the first time in four years. Rising treasury yields are tied to higher inflation and higher interest rates, which can challenge consumer spending and related stocks. Pressure also came from a steep decline in Caterpillar, a bellwether for current economic conditions and future growth.

The Dow Jones Industrial Average closed 400 points lower. The S&P 500 closed 35 points lower. The NASDAQ closed 121 points lower.

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Spring planting continues to lose ground, relative to last year and the average, according to the weekly Crop Progress report.

5% of the corn is planted, which is 10% less than last year and 9% less than the 5-year average.

2% of soybeans are planted, which is 3% less than last year, but on par with average.

31% of oats are planted, compared to 55% last year and 55% for average. 26% have emerged, compared to 36% last year and 35% for average.

13% of winter wheat is headed, which is 17% less than last year and 6% less than average. 31% is rated in Good (25%) or Excellent condition (6%), compared to 54% last year. 37% is in Poor (22%) or Very Poor (15%) condition, compared to 13% last year.

When all was said and done last week, negotiated cash fed cattle sales were generally $2-$4 higher on a live basis at $121-$122/cwt. in the Southern Plains; $119-$124 in the Northern Plains; $122-$125 in the western Corn Belt. Dressed trade was $5 higher at $195 in Nebraska and the western Corn Belt.

The weekly 5-Area Direct average had steers $2.22 higher at $121.71 on a live basis and $1.87 higher in the beef at $191.84. Similar trends and prices for heifers.

Cash strength and the lack of negative surprise in Friday’s Cattle on Feed report, helped traders continue pushing Cattle futures higher on Monday.

After $2.37 higher in spot Apr, Live Cattle futures closed an average of 99¢ higher.

Feeder Cattle futures closed an average of $1.82 higher ($1.27 to $2.62 higher). 

Wholesale beef values finally found some spark on Monday. Choice boxed beef cutout value was $3.35 higher in the afternoon at $215.11/cwt. Select was $1.59 higher at $201.72.

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Major U.S. financial indices closed narrowly mixed on Monday, with continued pressure from tech stocks and worries about inflation.

The Dow Jones Industrial Average closed 14 points lower. The S&P 500 closed fractionally higher. The NASDAQ closed 17 points lower.

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March feedlot placements were significantly lower year over year—9.26% less—, but Derrell Peel, Extension livestock marketing specialist at Oklahoma State University reminds that the overall supply of cattle remains unchanged.

“Decreased March placements are not an indication of fewer total cattle supplies but rather are a confirmation of the change in feedlot timing in recent months,” Peel explains in his weekly market comments. “Larger, drought-enhanced placements in recent months built feedlot inventories and set the stage for larger than normal seasonal peak marketings in May and June.” 

Although heifers represent an increasing percentage of the on-feed mix, Peel points out that heifer slaughter continues at non-liquidation rates.

“In the past 12 months, heifers represented an average of 34.3% of total steer and heifer slaughter. Over the course of a cattle cycle, heifers account for about 37% of total yearling slaughter, a level that generally represents a stable herd size.  This percentage varies from roughly 31% during rapid herd expansion to about 40% during herd liquidation. The current level of heifer slaughter is up from a recent low of 31.4% in mid-2016 but is still less than the long-term average and certainly below levels that would suggest herd liquidation. Heifer slaughter is increasing but is still at a level that suggests limited but slightly positive herd growth.”

Negotiated cash fed cattle trade continued on Friday, with too few transactions to trend in Nebraska and the western Corn Belt, but there was a sense that prices could maintain or build on earlier-week strength. Prices in the Southern Plains were $2-$4 higher on Thursday at mostly $121/cwt. in the Texas Panhandle and at $122 in Kansas.

That, and a bounce in support late in the day, helped Cattle futures regain some of the ground lost in the previous session.

Except for $1.55 higher in spot Apr and 22¢ higher in the back contract, Live Cattle futures closed an average of 61¢ higher.

Other than 65¢ lower in the back contract, Feeder Cattle futures closed an average of 65¢ higher except for 7¢ higher in spot Apr.

Choice boxed beef cutout value was 64¢ higher Friday afternoon at $211.98/cwt. Select was $1.65 higher at $200.13.

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Major U.S. financial indices closed lower on Friday, pressured by Apple (a bearish forecast for quarterly iPhone) sales and the rising 10-year Treasury Yield.

The Dow Jones Industrial Average closed 201 points lower. The S&P 500 closed 22 points lower. The NASDAQ closed 91 points lower.

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At worst, logic suggests Friday’s Cattle on Feed report should be viewed as neutral by the trade. Keep in mind the data accounts for feedlots with a one-time capacity of 10,000 head or more.

Placements in March of 1.92 million head were 9.26% less (196,000 head fewer) than last year. Estimates ahead of the report expected a decline in placements of 9-12% less. In terms of weight composition, 31.24% were placed on feeds at weights less than 699 lbs.; 55.2% weighed 700-899 lbs.; 13.53% weighed more than 900 lbs.

Marketings in March of 1.84 million head were 3.87% less (74,000 head fewer) than last year. Ahead of the report, analysts expected a decline of 4-5%.

Total cattle on feed of 11.73 million head, were 7.42% more (810,000 head more) than last year. The average expectation of analysts ahead of the report was for an increase of 7.1-7.6%. It’s the second-highest total for Apr. 1 since the series began in 1996.

The on-feed mix Apr. 1 was 64.24% steers and 35.76% heifers, with heifers representing 2.07% more of the total than last year.