WLI

Cattle futures settled mostly little changed on Monday, after an early surge. That speaks to current fundamental strength in the wake of Friday’s Cattle on Feed report, as does last week’s sharply higher cash fed cattle trade.

Negotiated cash fed cattle trade last week ended up being $3-$4 higher at $125-$127/cwt., mostly $127. Dressed trade was $5 higher at $200.

After $1.10 higher in spot Feb, Live Cattle futures closed an average of 16¢ higher on Monday, except for 87¢ higher in the back contract.

Feeder Cattle futures closed an average of 20¢ higher, except for 15¢ and 12¢ lower in May and Jan, respectively.

Choice boxed beef cutout value was $2.28 higher on Monday afternoon at $209.11/cwt. Select was $2.30 higher at $204.13.

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On wall Street Monday, major U.S. financial indices closed sharply lower. Depending on whom you listened to, concerns about rising inflation and interest rates were part of the pressure, though nothing much changed since Friday when equities surged sharply higher. Instead, perhaps it was a breather and profit taking as investors consider news slated for this week that includes the monthly employment report and State of the Union address.

The Dow Jones Industrial Average closed 177 points lower. The S&P 500 closed 19 points lower. The NASDAQ closed 39 points lower.

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“The heifer feedlot inventory swelled sharply in the last half of 2017 and indicates slowing heifer retention,” says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly market comments. “However, it should be noted that the ratio of steer to heifer slaughter in 2017 was still well above long-term average levels, meaning that growing heifer feedlot inventories relative to steers is really just getting back to more typical levels of heifer feeding after sharp reductions due to drought and herd expansion since 2012.”

Peel points out that the 7.34 million head of steers on feed Jan. 1, according to Friday’s Cattle on Feed report, is 4.5% more than a year earlier and the most since 2008. The 4.15 million heifers on feed are 15.9% more than last year and the most since 2012.

“In the last five months of 2017, feedlot placements exceeded marketings by 506,000 head,” Peel says. “These additional cattle will be marketed in the first 4-6 months of 2018.”

Through Friday afternoon, cash fed cattle was shaping up to be another final-hour affair. The surprising break in futures prices the previous day likely had both packers and feeders trying to assess leverage. Depending on how you slid the beads and who was working the abacus, odds still favored cattle feeders.

According to the Texas Cattle Feeders Association late in the day, members traded steers and heifers for $127/cwt., which was $4 more than the previous week’s country trade.

Cattle futures roared back on Friday, regaining the majority of losses from the previous session. That was ahead of the monthly Cattle on Feed report, which came in with more placements than many analysts expected but far from the double-digit hikes in recent months (see below).

Live Cattle futures closed an average of $1.74 higher ($1.15 to $2.12 higher in spot Feb).

Feeder Cattle futures closed an average of $2.50 higher, except for 60¢ lower in newly minted away Jan.

Choice boxed beef cutout value was 6¢ higher on Friday afternoon at $206.83/cwt. Select was 51¢ higher at $201.83.

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Major U.S. financial indices closed sharply higher on Friday as major companies continued to report earnings that beat estimates.

The Dow Jones Industrial Average closed 223 points higher. The S&P 500 closed 33 points higher. The NASDAQ closed 94 points higher.

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Although year-to-year placements in December were significantly less than in recent months, they were more than the trade was expecting, according to the monthly Cattle on Feed report issued Friday.

Placements in December of 1.79 million head were 0.8% more (14,000 head) than the previous year. Estimates ahead of the report called for about 3% less. In terms of weight, 48.9% went on feed weighing less than 700 lbs.; 10.8% weighing 900 lbs. or more.

Marketings in December of 1.75 million head were 1.4% less (25,000 head) than the previous year, about in line with pre-report estimates.

Cattle on feed in feedlots with one-time capacity of 1,000 head or more was 11.48 million head Jan. 1, which was 8.3% more than the previous year. That was about 0.6% more than estimates ahead of the report. There were 16% more heifers and heifer calves on feed than the previous year.

Cattle futures closed sharply lower Thursday after early follow-through support, and all indications for higher cash fed cattle trade this week. There was no clear or even fuzzy reason for such a reversal.

Live Cattle futures closed an average of $2.48 lower through the front four contracts and then an average of $1.35 lower (92¢ to $1.70 lower).

Feeder Cattle futures closed an average of $2.12 lower ($1.65 to $2.55 lower), except for 30¢ lower in expiring Jan.

Choice boxed beef cutout value was $1.22 lower on Thursday afternoon at $206.77/cwt. Select 47¢ higher at $201.32.

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Cash bids for grains and soybeans were mixed on Thursday, according to the Daily National Grain Market Summary.

Wheat bids were mostly 1¢ to 3¢ higher. Sorghum bids were 2¢ lower. Soybean bids were mostly steady. Corn bids were 1¢ to 2¢ lower.

Corn futures closed fractionally lower to 1¢ lower.

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Major U.S. financial indices closed mixed on Thursday. Positive quarterly earnings reports provided support, including reports from Caterpillar and 3M.

The Dow Jones Industrial Average closed 140 points higher. The S&P 500 closed 1 point higher. The NASDAQ closed 3 points lower.

Commercial red meat production for the United States totaled 4.40 billion lbs. in December, up slightly from the previous December, according to the monthly Livestock Slaughter report released by the National Agricultural Statistics Service yesterday. Keep in mind that there was an extra workday during the months last year.

Beef production of 2.15 billion lbs. was 1% less than the the previous year. Cattle slaughter of 2.58 million head was also 1% less. The average live weight was 2 lbs. less than the previous year at 1,379 lbs.

Pork production was record high for the month at 2.23 billion lbs., up 1% from the previous year, although hog slaughter was slightly less at 10.5 million head. The average live weight was up 3 lbs. at 286 lbs.

Slaughter steers and heifers sold mostly $2-$4 higher at Sioux Falls Regional in South Dakota on Wednesday, with instances of $6 higher. Choice 2-3 steers brought $124-$126/cwt., which was $1-$3 more than last week’s country trade.

There were just 494 head offered in the weekly Fed Cattle Exchange Auction—no takers. One lot of heifers for current delivery was a P.O. at $123.75.

That helped Live Cattle futures close a touch higher on Wednesday, while profit taking and positioning ahead of Friday’s monthly Cattle on Feed report pressured Feeder Cattle.

Live Cattle futures closed an average of 26¢ higher (unchanged to 70¢ higher in spot Feb).

Feeder Cattle futures closed an average of 57¢ lower (42¢ to $1.07 lower).

Wholesale beef values were firm to higher on moderate to good demand and light to moderate offerings. Choice boxed beef cutout value was $1.14 higher on Wednesday afternoon at $207.99/cwt. Select 69¢ higher at $200.85.

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Major U.S. financial indices closed mixed on Wednesday. Mostly positive quarterly earnings reports continued to provide support. Some of the drag may have come from investors wondering to what degree current valuations are real or oversold.

The Dow Jones Industrial Average closed 41 points higher. The S&P 500 closed 1 point lower. The NASDAQ closed 45 points lower.

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Total pounds of beef in freezers Dec. 31 were up 1% from the previous month but 14% less than a year earlier, according to USDA’s monthly Cold Storage report issued yesterday.

Frozen pork supplies were down 2% from the previous month but up 3% from last year.

So, total red meat supplies in freezers were down 1% from the previous month and down 6% from last year.

Total frozen poultry supplies were up 1% from the previous month and up 10% from a year ago.

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Heading into Friday’s monthly Cattle on Feed report, most popular estimates are for December placements to be 3-4% less than last year. Part of that expectation stems from dry conditions pushing more cattle to feedlots earlier the past couple of months.

For instance, Allendale, Inc. expects to see a decline in placements of 3.9%. If so, analysts there say it would be noteworthy, given the increases of 10.2% to 13.9% the past three months.

Allendale pegs December marketings at 1.5% less than last year, which would still make it the second largest total for the month in six years.

Put it all together and Allendale suggests the on-feed total Jan. 1 will be 7.6% more than a year earlier at 11.415 million head.

Follow through buying, a bump in wholesale beef values and notions of snugger short-term supply due to weather helped Cattle futures continue to gain on Tuesday.

Live Cattle futures closed an average of 71¢ higher (52¢ to $1.17 higher in spot Feb).

Feeder Cattle futures closed an average of $1.40 higher (72¢ to $1.90 higher).

Boxed beef cutout values were firm to higher on moderate to good demand and light to moderate offerings. Choice boxed beef cutout value was $1.78 higher on Tuesday afternoon at $206.85/cwt. Select 64¢ higher at $200.16.

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Major U.S. financial indices closed mostly higher on Tuesday, supported once again by better than expected quarterly earning reports.

The Dow Jones Industrial Average closed 3 points lower. The S&P 500 closed 6 points higher. The NASDAQ closed 52 points higher.

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Expect an expanding global economy, strong U.S. consumer confidence and persistent economic recovery in many rural areas, according to the 2018 outlook report from CoBank’s Knowledge Exchange Division.

“The rural economy is uniquely impacted by what happens in Washington, the broader U.S. economy and around the world,” says Dan Kowalski, vice president of CoBank’s Knowledge Exchange Division. “In the coming year, rural America will rise with the broader economic tide, but it will also contend with persistent barriers to prosperity.”

The report highlights 10 key factors that will shape rural communities and the market sectors that support them. Among them, according to the report:

Global economy—“2018 will offer a prime opportunity for governments to address structural impediments that have been ignored during the decade-long recovery.”

U.S. economy—“Consumer confidence and the unemployment rate are at their best levels since 2000 and inflation-adjusted wages have been growing faster than the historical average since 2014…Business investment will rise in 2018 to keep up with strengthening demand.”

Agricultural economy—“The surplus of agricultural commodities will continue to depress prices and shrink farmer working capital. Farm debt loads will continue to climb as prices fall short of persistently high production costs. Market conditions have also resulted in a sharp, unsustainable divergence between farm income and farm asset values.”

Agricultural trade—“NAFTA will be the primary focus for agriculture in the first half of 2018. All three countries involved will be incentivized to come to an agreement before the Mexican presidential election in July. But more trade deals are in flux that could also greatly affect U.S. agriculture exporters. The rebooted TPP (CPTPP) is being negotiated between all of the original member-countries except the U.S. And the U.S. trade agreement with Korea is also being re-evaluated.”