WLI

Continued gains in Feeder Cattle futures on Friday helped lift Live Cattle as well.

Live Cattle futures closed an average of 57¢ higher (37¢ higher to 82¢ higher).

Feeder Cattle futures closed an average of $1.51 higher ($1.10 to $2.57 higher).

Choice boxed beef cutout value was 50¢ lower Friday afternoon at $209.35/cwt. Select was $1.84 lower at $195.42.

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Major financial indices closed higher on Friday, buoyed by a strong start to quarterly earnings reports.

The Dow Jones Industrial Average closed 84 points higher. The S&P 500 closed 11 points higher. The NASDAQ closed 38 points higher.

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Projected U.S. feed grain supplies for 2017-18 are 2% less than last year, according to the Feed Outlook issued by USDA’s Economic Research Service (ERS) on Friday. If the projected production of 443.0 million metric tons comes to pass, however, it will be the third most in history.

As for hay, ERS analysts explain, “Demand increased substantially in the last several weeks as drought has rapidly worsened in South Dakota, North Dakota, and Montana However, hay supplies are tight for two reasons. First is the time frame, as producers are cutting or just finishing early cuttings and putting up the hay, not selling it. Second, is the presumed poor yield because of the drought.”

Compounding the problem for producers facing drought in the Northern Plains, according to ERS are the lowest beginning hay stocks in the aforementioned states since 2013.

“According to data from USDA’s Agricultural Marketing Service, hay prices rose sharply since last year at this time, particularly in South Dakota,” ERS analysts say. “If rains do not resume soon, many producers will need to liquidate herds, move cattle to other regions, or buy hay (or other supplemental feeds) from distant locations at high cost.”

Negotiated cash fed cattle trade continued the week-to-week trend of $2-$3 higher with live sales at mainly $120 and dressed sales at mostly $190.

Feeder Cattle futures extended the previous session’s strong rally, helped along by another strong step down in corn prices. Live Cattle were unable to garner follow-through support.

Live Cattle futures closed from unchanged to mostly narrowly mixed to the downside (7¢ higher to 45¢ lower).

Feeder Cattle futures closed an average of $1.32 higher (85¢ to $2.05 higher). That makes for an average of about $5.50 higher in the last two trading sessions and $5-$8 higher week to week.

Choice boxed beef cutout value was $2.84 lower Thursday afternoon at $209.85/cwt. Select was $1.47 lower at $197.26.

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Major financial indices edged higher on Thursday. Positive news on the day included a statement from super-retailer Target indicating expectations of increased comparable-store sales in the second quarter. That added some lift to the retailer outlook in general.

The Dow Jones Industrial Average closed 20 points higher. The S&P 500 closed 4 points higher. The NASDAQ closed 13 points higher.

Cattle futures surged higher on Wednesday—limit up in several contracts—buoyed by cash fed cattle prices in the weekly Fed Cattle Exchange auction, followed by a step higher in country trade. Feeder Cattle received additional support from declining Corn futures prices, which were pressured by the monthly World Agricultural Supply and Demand Estimates (see below).

Unlike the last few sales, the majority of cattle—1,907 head of 2,665 head offered—traded hands in the Fed Cattle Exchange sale. Prices were unevenly steady with the bulk of last week’s country trade: $117.80 for delivery at 1-9 days; $118.45 for delivery at 1-17 days; $117.34 for delivery at 17-30 days.

Then, country trade opened up $2-$3 higher on Wednesday at mostly $120/cwt. on a live basis.

Live Cattle futures closed and average of $2.50 higher ($1.00 to limit up $3.00 in the front three contracts).

Feeder Cattle futures closed an average of $4.17 higher (from $2.22 higher to limit up $4.50 across most of the board).

Choice boxed beef cutout value was $2.55 lower Wednesday afternoon at $212.69/cwt. Select was $1.78 lower at $198.73. That’s the first time Select was below $200 since mid April.

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Major financial indices closed sharply higher on Wednesday, with many analysts attributing a solid share of the bounce to testimony from Federal Reserve Chair, Janet Yellen, which struck a more dovish tone toward hiking interest rates.

The Dow Jones Industrial Average closed 123 points higher. The S&P 500 closed 17 points higher. The NASDAQ closed 67 points higher.

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Monthly World Agricultural Supply and Demand Estimates (WASDE) released yesterday increased red meat and poultry production for 2017 with higher forecast beef and broiler production more than offsetting declines in pork and turkey production. The beef production forecast increased on both higher cattle slaughter and heavier carcass weights.

For 2018, however, red meat and poultry production forecasts declined with projected beef production lower on expected steer and heifer slaughter in the first part of the year.

Cattle price forecasts for 2017 were lowered slightly from last month on weakened prices and ample fed cattle supplies.

The average fed steer price (5-area Direct) was $132.76/cwt. in the second quarter. The range is projected at $117-$121 in the third quarter and at $113-$121 in the fourth quarter, for an annual price range of $121-$125, which is $1 less than the June projection.

The annual projected price for next year is $113-$123.

Bullish traders won the light-traded standoff in Cattle futures on Tuesday, as wholesale beef values continued to drift lower. Cash fed cattle trade was at a standstill.

Live Cattle futures closed $1.14 higher through the front five contracts and then 15¢-62¢ higher.

Except for 47¢ and 55¢ higher in the back two contracts, Feeder Cattle futures closed an average of $1.99 higher ($1.47 to $2.57 higher).

Choice boxed beef cutout value was $2.30 lower Tuesday afternoon at $215.24/cwt. Select was $2.16 lower at $200.51.

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Major financial indices treaded water again on Tuesday, with investors apparently content to wait for more economic news later in the week, which will include the start of quarterly earnings reports.

The Dow Jones Industrial Average closed fractionally higher. The S&P 500 closed 1 point lower. The NASDAQ closed 16 points higher.

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“Regional feeder steer prices are showing some effects of the declining forage conditions,” say analysts with the Livestock Marketing Information Center, in the latest Livestock Monitor. “South Dakota feeder steer prices reported by USDA’s Agriculture Marketing Service were much weaker for lighter weight cattle than in Nebraska markets. Steers weighing 600 lbs. in South Dakota in mid-June were priced $9/cwt. lower than a month earlier. Over the same time span in Nebraska, the price comparison for similar steers was up $10, Oklahoma City prices were $3 higher and Montana’s were down $4.”

According to the most recent USDA Crop Progress report, 54% of pasture and range is rated as Good (45%) or Excellent (9%) compared to 57% at the same time a year ago. 17% is rated as Poor (11%) or Very Poor (6%), which is 4% more than last year.

North Dakota and South Dakota are struggling the most with 69% and 59%, respectively, of the pasture and range in those states reported in Poor or Very Poor condition. Conditions continue to deteriorate in Montana with 51% in Poor or Very Poor condition.

The AMS reporter at Ft. Pierre Livestock Auction in South Dakota last week noted, “Short pasture conditions have pushed some producers into marketing cattle earlier than normal. A large offering of cow-calf pairs and fall-bred cows followed the feeder cattle sale.”

Other Crop Conditions

19% of the corn crop is silking, which is 11% less than last year and 8% behind the 5-year average. 65% is rated in Good (52%) or Excellent condition (13%), compared to 76% last year. 10% is rated as Poor (7%) or Very Poor (3%) compared to 5% a year ago.

34% of soybeans are blooming, which is 3% less than last year but 2% more than average. 7% are setting pods, which is 1% more than last year and 2% more than average. 62% of the crop is rated as Good (52%) or Excellent (10%) compared to 71% last year. 11% is rated as Poor (8%) or Very Poor (3%) compared to 6% last year.

67% of winter wheat is harvested, which is 2% more than last year and the 5-year average.

79% of spring wheat is headed, which is 10% less than last year, but 5% more than average. Only 35% is rated in Good (29%) or Excellent (6%) condition, compared to 70% last year. 39% is rated Poor (20%) or Very Poor (19%), compared to 7% the previous year.