WLI

Cash fed cattle continued on Wednesday at mostly higher money. Live sales in the western Corn Belt were $2-$3 more than last week at $128-$131/cwt. Dressed trade was mostly $3 higher at $207.

Earlier in the day, the handful of cattle (113 head—2 lots from Kansas) offered in the weekly Fed Cattle Exchange Auction, sold even with the $127 price established in the Southern Plains on Tuesday.

Cash trade failed to budge futures traders much. Early on, prices rallied higher but ran out of steam in a hurry.

Except for $1.10 higher in spot Apr, Live Cattle futures closed unchanged to an average of 20¢ higher.

Except for 7¢ and 27¢ lower at the back, Feeder Cattle futures closed an average of 50¢ higher.

Choice boxed beef cutout value was 38¢ higher Wednesday afternoon at $224.11/cwt. Select was 26¢ higher at $217.01.

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Major U.S. financial indices closed lower again on Wednesday. Negative news included a sharp decline in Boeing stock on investor fears about a potential trade war with China. Fundamental pressure came from another monthly decline in U.S. retail sales, according to the U.S. Commerce Department.

The Dow Jones Industrial Average closed 248 points lower. The S&P 500 closed 15 points lower. The NASDAQ closed 14 points lower.

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“To the extent that drought conditions in the Southern Plains have diminished pasture availability, more cattle have been placed in feedlots in late 2017 and early 2018 than in the prior year. This likely diminishes the pool of cattle available for placement throughout the first-half of 2018,” say analysts with USDA’s Economic Research Service (ERS), in the latest Livestock, Dairy and Poultry Outlook. “The price forecast for feeder steers 750-800 lbs. was adjusted lower for the first quarter to $146-$149/cwt on current price movements. In the second quarter, fewer calves will likely be available for placement, which should keep prices relatively strong at $144-$152/cwt.”

Based on current cash cattle prices and expectations of wholesale beef prices continuing to show demand strength, ERS analysts adjusted the projected first-quarter fed steer price higher to $124-$127/cwt.

Negotiated cash fed cattle trade opened the week in the Southern Plains on Tuesday on moderate demand and trade, with live prices steady to $1 higher than last week at $127/cwt. in the Texas Panhandle and $126-$127 in Kansas.

Although supplies continue to be snugger in the North, according to various reports, the early trade on the part of packers speaks to their need for inventory. You couldn’t tell it by soggy Cattle futures, though.

Live Cattle futures closed little changed on Tuesday, while Feeder Cattle took another step down, though stronger early pressure softened by the end of the session.

Except for 35¢ higher in spot Apr, Live Cattle futures closed an average of 23¢ lower.

Except for unchanged at the very back, Feeder Cattle futures closed an average of 80¢ lower.

Choice boxed beef cutout value was 17¢ lower Tuesday afternoon at $223.73/cwt. Select was 74¢ lower at $216.75.

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Major U.S. financial indices closed lower on Tuesday. Among the pressure was a sharp decline in Qualcomm stock after President Trump kyboshed the proposed multi-billion dollar hostile buyout of that U.S. chip maker by Singapore-based chip maker, Broadcom, citing national security risk. The notion is that it could further strain ties with China, following the tariffs on imported steel and aluminum.

The Dow Jones Industrial Average closed 171 points lower. The S&P 500 closed 17 points lower. The NASDAQ closed 77 points lower.

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“Food and feed grains prices are expected to have bottomed out by marketing year 2017-18. Marketing year 2018-19 marks the beginning of gradual price increases that are expected to continue through the decade,” according to the recent USDA Agricultural Projections to 2027. “Despite price growth, prices are projected to remain lower than those seen over the past decade, leading to shifts in relative returns and accompanying changes in crop plantings. Shifts in acreage are expected—most notably from corn and, in the short run, wheat towards soybeans and sorghum, reflecting strong international demand for these commodities. These projections are the first in history where soybean acreage is expected to eclipse corn acreage.”

Cattle futures closed sharply lower on the front end, led by Live Cattle, as bears continue to win the day, and despite the cash premium.

Live Cattle futures closed an average of $1.14 lower through the front three contracts, (82¢ to $1.57 lower) and then an average of 31¢ lower except for an average of 20¢ higher at the back of the board.

Except for 7¢ and 30¢ higher at the back of the board, Feeder Cattle futures closed an average of 47¢ lower.

Choice boxed beef cutout value was 24¢ lower Monday afternoon at $223.90/cwt. Select was 23¢ higher at $217.49.

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Major U.S. financial indices closed mixed on Monday. Much of the pressure seemed to stem from unease about potential ramifications of the recently implemented tariff on U.S. steel and aluminum imports.

The Dow Jones Industrial Average closed 157 points lower. The S&P 500 closed 3 points lower. The NASDAQ closed 27 points higher.

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“Consumer demand for meat was stronger than average in 2017. It is rare for meat supplies to grow as they did last year without output prices suffering more severe declines,” say analysts with the Food and Agricultural Policy Research Institute (FAPRI) at the University of Missouri. “While economic projections

point to U.S. meat demand remaining solid, prices are projected to retreat for most products in 2018 due to continued supply pressure and a return to more historical levels of consumer demand.”

Among highlights in FAPRI’s annual U.S. Baseline Outlook released last week, which includes 10-year projections:

• Strong demand supported cattle, hog, chicken and milk prices in 2017, in the face of large increases in meat and milk production. Further production increases could weigh on livestock and dairy prices in 2018 unless demand growth is exceptionally strong.
• Projected prices for corn, soybeans and wheat all increase slightly in 2018-19 and 2019-20, but large global stocks limit the increase. Corn prices average $3.57/bu. for the 2018-19 crop, while soybean prices average $9.38 and wheat prices average $4.89.
• Projected net farm income increases slightly in 2019. In later years, real net farm income is fairly flat, remaining below the 2015 level through 2027.
• Annual food price inflation was below 1% for the second straight year in 2017. Projected food price inflation is about 2% in 2018, similar to the overall rate of inflation in the U.S. economy.

Cattle futures closed higher in the nearby contracts and then on either side of steady. Along with apparent short covering, ongoing strength in wholesale beef values provided some support, as did higher outside markets.

After an average of $1.19 higher in the front two contracts, Live Cattle futures closed an average of 16¢ higher, except for 2¢ lower in away Apr.

After 77¢ higher in spot Mar, Feeder Cattle futures closed narrowly mixed, 22¢ lower to 20¢ higher.

Choice boxed beef cutout value was 26¢ higher Friday afternoon at $224.14/cwt. Select was 48¢ higher at $217.26.

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Major U.S. financial indices spiked sharply higher on Friday, fueled by a monthly jobs report that bulldozed expectations to the upside. Total non-farm payroll employment increased by 313,000 in February, according to the U.S. Bureau of Labor Statistics. The unemployment rate remained at 4.1%. At the same time, softer wage growth (+2.6%) diluted some of the chatter about inflation.

The Dow Jones Industrial Average closed 440 points higher. The S&P 500 closed 47 points higher. The NASDAQ closed 132 points higher.

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U.S. beef exports continued at a strong pace in January, accounting for $293.06 per head of fed slaughter—14% more than the previous January—according to data released by USDA and compiled by the U.S. Meat Export Federation (USMEF).

U.S. beef exports totaled 105,486 metric tons (mt) in January, up 9% year over year, while export value surged 21% to $624.4 million.

“January export results were solid overall and were especially strong for muscle cuts,” says USMEF President and CEO Dan Halstrom. “Despite the decline in variety meat volume, export value continued to increase. This underscores the important contribution variety meats deliver for producers and for everyone in the U.S. supply chain.”

Among the January highlights:

U.S. beef exports to Japan were 7% more for volume (23,968 mt) and 19% more in value ($148.6 million).

Exports to South Korea were 13% more for volume (17,133 mt) and 34% more for value ($122.3 million). Incidentally, U.S. beef exports to South Korea last year were record high for value at $1.2 billion.

U.S. beef exports to China reached a new monthly high of 819 mt in January valued at $7.5 million.

Cash fed cattle trade on Thursday was mainly steady with the previous week on moderate demand and trade. Live prices were at mostly $126-$127/cwt. with dressed trade at mostly $204.

Despite positive fundamentals and the oversold nature of the market, bears continued to drive Cattle futures lower on Thursday, helped along by technical selling.

Live Cattle futures closed an average of $1.04 lower (65¢ to $1.55 lower).

Feeder Cattle futures closed an average of $2.21 lower ($2.02 lower to $2.42 lower).

Choice boxed beef cutout value was 31¢ higher in the afternoon at $223.88/cwt. Select was $1.58 higher at $216.78.

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Major U.S. financial indices closed higher on Thursday. Presumably, the boost was tied to President Trump implementing the 25% tariff on imported steel and 10% tariff on imported aluminum, but excluding key trade partners Canada and Mexico.

The Dow Jones Industrial Average closed 93 points higher. The S&P 500 closed 12 points higher. The NASDAQ closed 31 points higher.

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Analysts with USDA’s Economic Research Service (ERS) project total red meat and poultry production this year fractionally lower than last month, in the latest World Agricultural Supply and Demand Estimates (WASDE).

Beef production was estimated to be 27.69 billion lbs., which is 40 million lbs. less than the previous month’s projection. That’s based on lower first-quarter slaughter and lower weights. However, ERS analysts say the decline is offset somewhat by higher second-quarter fed beef production and higher non-fed beef production during the first half of the year.

With that in mind, projected fed steer prices for the first-quarter are projected slightly higher at $124-$127/cwt. Projected quarterly prices for the remainder of the year: second quarter at $118-$124; third quarter at $110-$120; fourth quarter at $112-$122.

Other WASDE Estimates

ERS reduced expected ending corn stocks by 225 million bu. on expectations for increased exports and usage for ethanol. The projected range for the season-average corn price received by producers was narrowed 10¢ on the low end to $3.15 to $3.55/bu., with the midpoint up 5¢ to $3.35.

U.S. soybean supply and use changes for 2017-18 included higher crush, lower exports, and increased ending stocks. The season-average soybean price range forecast of $9.00 to $9.60/bu. was unchanged at the midpoint. Soybean oil prices are forecast at 30¢ to 33¢/lb., down 1¢ at the midpoint. Soybean meal prices are projected at $325 to $355/short ton, up $20 at the midpoint. Higher soybean meal prices reflect the impact of sharply lower soybean production in Argentina, ERS analysts say.

Despite a projected reduction in exports of 25 million bu., the season-average farm price for wheat increased 5¢ at the midpoint of the range to $4.65 per bushel based on expectations of higher prices for the remainder of the year.