WLI

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.

Negotiated cash fed cattle prices surged $2-$4 higher in the Southern Plain on Thursday at mostly $121/cwt. in the Texas Panhandle and at $122 in Kansas; moderate demand and trade.

Bears took Cattle futures down a sharp notch on Thursday, despite higher cash trade and the fundamentals that provided recent stability—including a gap in harvest-ready fed cattle supplies in the North and a looming seasonal increase in wholesale beef values.

Besides likely profit taking overall, perhaps some of the funds with remaining long positions wanted out ahead of Friday’s Cattle on Feed report. As reported in Cattle Current yesterday, most analysts anticipate a sharp drop in March placements, while expecting the Apr. 1 on-feed inventory to be 7.0-7.5% higher than last year.

Live Cattle futures closed an average of $1.58 lower ($1.20 to $2.27 lower).

Feeder Cattle futures closed an average of $2.03 lower ($1.10 to $2.35 lower).

Choice boxed beef cutout value was 30¢ lower Thursday afternoon at $211.34/cwt. Select was 9¢ lower at $198.48.

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Major U.S. financial indices closed lower on Thursday. Pressure included lower tech stocks, based on the forecast for semiconductor sales.

The Dow Jones Industrial Average closed 83 points lower. The S&P 500 closed 15 points lower. The NASDAQ closed 57 points lower.

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Fire crews continue to make progress in containing the devastating wildfires raging in western Oklahoma. Yesterday, Oklahoma Forestry Services estimated 15% containment of the Rhea Fire Complex in Dewey County.

“Hay is the number one need right now,” explained Dana Bay, Woodward County Oklahoma State University Extension educator, in a statement from the Oklahoma Cattlemen’s Association (OCA) earlier this week. “Ranchers that were able to save their cattle but lost their grass and hay are in desperate need of hay to sustain those animals.”

Last week the Oklahoma Cattlemen’s Foundation (OCF) established a relief fund for cattle producers affected by the fires.

“We will coordinate with the Extension Offices in the affected areas to organize relief efforts and to identify ranchers that are in need,” explained Tiffani Pruitt OCF Coordinator.

You can find more information about donating hay or contributing to the relief fund at the OCA website.

Yesterday’s weekly Fed Cattle Exchange auction served as one more indicator that negotiated cash fed cattle prices should be higher this week. There were 3,220 head offered. Only two lots (499 head) sold from Nebraska: steers (1-9 day delivery) for a weighted average price of $122/cwt.; heifers (1-17 day delivery) for a weighted average price of $120. The steer price was even with the top reported country price in the region last week.

Cattle futures continued to grind higher Wednesday with renewed optimism.

Live Cattle futures closed an average of 62¢ higher (37¢ to 92¢).

Other than 2¢ higher in spot Apr, Feeder Cattle futures closed an average of 81¢ higher.

Choice boxed beef cutout value was 49¢ lower Wednesday afternoon at $211.64/cwt. Select was $1.01 lower at $198.57.

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Major U.S. financial indices closed narrowly mixed on Wednesday, amid mostly positive quarterly earnings reports and despite a surge in crude oil prices.

The Dow Jones Industrial Average closed 38 points lower. The S&P 500 closed 2 points higher. The NASDAQ closed 14 points higher.

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When the monthly Cattle on Feed report comes out on Friday, most analysts expect to see placements lower year over year for the first time in 12 months. Reasoning includes earlier placements of last year’s spring calf crop thus far and declining economic incentive for feedlots.

“March Placements are expected to be 12.2% lower than last year at 1.859 million head,” say analysts with Allendale, Inc.“This would be the smallest March placement in three years…Cattle feeding margins is the main reason for the decline. Finished cattle in March were seeing a $122 breakeven, still profitable. The concern comes with April, May, and June, where breakevens increase to the $126-$129 region due to those heavy fall feeder purchases.”

Similarly, according to the Daily Livestock Report, analysts surveyed by Urner Barry expect March placements to be 9.1% less than last year.

Allendale projects March marketings at 5% less than last year. Analysts responding to the Urner Barry survey expect, on average, 4% less.

Combined, Allendale estimates Apr. 1 cattle on feed to be 7.1% more than last year. Analysts in the Urner Barry survey expect 7.6% more.

Market optimism grew on Tuesday with more chatter about short front-end fed cattle supplies in the north and the increasing likelihood that cash prices can move higher again this week. There was no negotiated trade reported.

Other than an average of 5¢ lower in Feb, Live Cattle futures closed an average of 34¢ higher (12¢ to 90¢ higher in spot Apr).

Other than 12¢ to 50¢ lower in three contracts, Feeder Cattle futures closed an average of 34¢ higher.

Choice boxed beef cutout value was 34¢ higher Tuesday afternoon at $212.13/cwt. Select was 40¢ lower at $199.58.

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Major U.S. financial indices closed sharply higher again on Tuesday, supported by strong quarterly earnings from some of the big players, including Netflix and UnitedHealth.

The Dow Jones Industrial Average closed 213 points higher. The S&P 500 closed 28 points higher. The NASDAQ closed 124 points higher.

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“Current projections indicate losses (cattle feeding) spanning the rest of 2018, consistent with lower expected sales prices, which have decline by $8-$12/cwt. (depending on closeout month) since early March,” according to the latest Historical and Projected Kansas Feedlot Net Returns (KFNR) from Kansas State University.

Keep in mind that KNFR estimated returns are on a cash to cash basis with no risk management assumed.

March net returns for steers were estimated at $41.54 per head. Projections are for negative net returns of -$253.77 (April) to -$256.67 (June) per head. Estimated losses for the rest of the year range from -$70.95 (December) to -$191.13 (July).

Similarly, March net returns for heifers were projected at $59.56 per head. Projections are for negative net returns of -$238.69 (April) to -$48.27 (December) per head), but mostly well above $100.

Cash fed cattle trade perked up at the end of the week, according to reports for late-Friday trade. Live prices for the week were generally steady to $3 higher at $118-$120/cwt. in Kansas, $122 in Nebraska and $119-$123 in the western Corn Belt. Dressed trade was steady to sharply higher at $190.

Stronger cash prices helped Cattle futures barrel out of the blocks, building on the previous week’s momentum. Futures closed mixed, though, with uncertainty about the impact of the weekend’s brutal winter weather, and interest in Live Cattle likely capped by the gaping discount between spot Apr and June. 

Other than an average of 56¢ higher in the front two contracts, Live Cattle futures closed an average of 11¢ lower.

Except unchanged in May and $1.37 higher in Mar, Feeder Cattle futures closed narrowly mixed, 32¢ lower to 25¢ higher.

Choice boxed beef cutout value was 82¢ lower Monday afternoon at $211.79/cwt. Select was 7¢ higher at $199.98.

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Major U.S. financial indices closed sharply higher on Monday, supported by strong quarterly earnings, as well as less tension after the missile strike against Syria by the U.S. and its allies.

The Dow Jones Industrial Average closed 212 points higher. The S&P 500 closed 21 points higher. The NASDAQ closed 49 points higher.

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Retail beef prices continue to suggest strong consumer demand, says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly market comments. 

“The All-Fresh beef retail price for March was $5.598/lb., up from $5.53/lb. in February and up 0.9% from one year ago,” Peel says. “Choice boxed beef cutout has declined from a February high of $224.46/cwt. to $213.34/cwt. in mid-April but remains 1.6% higher year over year for the latest weekly data.”

Moreover, Peel notes that retail beef prices continue to hold up well relative to pork and poultry prices.

“March retail pork price was $1.502/lb., up from $1.478/lb. in February and down 0.7% from one year ago,” Peel explains. “Composite broiler retail price in March was $1.867/lb., up slightly from the February level of $1.861/lb. and down 0.6% from last year. The ratio of retail beef price to both pork and broiler continues to hold strong despite growing supplies of beef, pork and poultry.  Production of beef, pork and broilers are all expected to be record large in 2018 leading to record large total meat supplies of nearly 103 billion lbs., up 3.3% year over year.” 

So far this year, beef production is up about 1.5% compared to last year, Peel says, adding that projections call for about a 5% increases by the end of the year.