WLI

Cash fed cattle prices at yesterday’s weekly Fed Cattle Exchange Auction held mostly steady with the previous week’s country trade on current delivery. Of the 2,067 head offered, 1,257 head sold, mostly steers and mostly from the Southern Plains. The weighted average price was $132.24/cwt. for delivery at 1-9 days; the price last week was $132.54. The weighted average price this week for delivery at 1-17 days was $132.06; $128.30 for delivery at 17-30 days.

Cattle futures gained some traction as fundamentals seemed to win the race, although Live Cattle continues to maintain the steep discount to cash. The ongoing rally in front-month Lean Hog futures likely helped, too.

Live Cattle futures closed an average of $1.48 higher for a range of $1.12 to $1.85 higher.

Feeder Cattle futures closed an average of $1.89 higher for a range of $1.05 to $2.65 higher.

Wholesale beef values continued strong, with chatter about packers needing and wanting to restock following Memorial Day. Choice boxed beef cutout value was 29¢ higher Wednesday afternoon at $245.54/cwt. Select was $1.27 lower at $218.18.

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Major U.S. financial indices edged lower on Wednesday. There seemed to be no overwhelming reason. Lower oil prices were likely part of it, as well as ongoing anxiety over lethargic domestic economic growth. For instance the Beige Book released by the Federal Reserve on Wednesday chronicles the ongoing slow pace of inflation.

According to that report, from early April to Late May, “Rapidly rising costs for lumber, steel, and other commodities tended to push input costs higher for some manufacturers and the construction sector, but, some Districts noted falling prices for certain final goods, including groceries, apparel, and autos. Energy prices and farm prices were mixed across products and among Districts.”

The Dow Jones Industrial Average closed 20 points lower. The S&P 500 closed 1 point lower. The NASDAQ closed 4 points lower.

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According to David Anderson, Extension economist with Texas A&M University, “Steer weights are a full 30 lbs. below weights of a year ago—that was earlier this month.

In the latest issue of In the Cattle Markets, Anderson explains that both the ongoing incentive for cattle feeders to pull cattle forward, as well as the late winter storms, helped pressure carcass weights.

The result, Anderson says, is much tighter total beef supplies than implied by the number of cattle.

Cattle futures regained some stability on Tuesday, following run-on pressure early from the previous session’s sharp decline. Short covering appeared to be a primary driver, with Feeder Cattle leading; those contracts gained back about half of Friday’s losses.

Live Cattle futures closed an average of 78¢ higher (27¢ to $1.42 higher).

Feeder Cattle futures closed an average of $2.07 higher ($1.37 to $2.97 higher).

Corn futures closed mostly 4¢ to 6¢ lower.

Choice boxed beef cutout value was 35¢ lower Tuesday afternoon at $245.25/cwt. Select was $1.00 higher at $219.45.

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Major U.S. financial indices trended lower on Monday, amid mixed economic news. Among data investors absorbed:

Personal Income and Personal Disposable Income grew at 0.4% in April, according to the U.S. Bureau of Economic Analysis. That was in line with expectations, but continues to speak to trudging economic growth.

The Dow Jones Industrial Average closed 50 points lower. The S&P 500 closed 2 points lower. The NASDAQ closed 7 points lower.

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“Slowly growing feedlot inventories reflect the increase in feeder supplies resulting from three years of herd expansion,” says Derell Peel, Extension livestock marketing specialist at Oklahoma State University, in his latest weekly market comments. “The May 1 on-feed inventory is the highest monthly cattle on feed total since February of 2013 and the highest May total since 2012.”

Among the regional highlights Peel gleaned from Friday’s monthly Cattle on Feed report:

• While Texas remains the largest cattle feeding state, Peel says feedlot inventories there haven’t grown very fast in recent months. The May 1 inventory was unchanged from last month and was 1.2% lower than last year. According to Peel, current Texas feedlot numbers are 20.1% lower than the all-time monthly inventory peak of 3.08 million head that occurred in February/March of 2001.
• Like Texas, Peel says the inventory has also grown at a slow pace in Nebraska, which is the second largest cattle feeding state. Although, he adds that Nebraska continues to close the gap with Texas in terms of monthly on-feed inventory.
• On the other end of regional growth, Peel says, feedlot inventories in Kansas (the No. 3 cattle feeding state) have grown aggressively in recent months. He explains, “The current Kansas feedlot inventory of 2.28 million head is 6% more than last year and is the highest monthly total for the state since December of 2011.”
• “Colorado (the No.4 cattle feeding state) has also grown rapidly in the past few months,” Peel says. “The May 1 inventory there is 6.7% higher than last year and is the largest monthly total for the state since April, 2013.”
• Then there is Iowa, the No. 5 cattle feeding state in terms of on-feed inventory. Peel notes that feedlot inventories there have grown rapidly in the past six months with monthly placements averaging nearly 20% higher year over year. Peel explains, “This is the fastest growth in placements among the top five feedlot states and has pushed the current Iowa cattle-on-feed inventory to a record high for the data series going back to 1992.”

Lower cash fed cattle prices and the bearish Cattle on Feed report (see below) helped pressure Cattle futures to sharp losses on Friday.

Live Cattle futures closed an average of $2.17 lower ($1.22 to $2.85 lower).

Feeder Cattle futures closed an average of $4.02 lower ($3.52 to $4.30 lower).

Corn futures closed 3¢ to 5¢ higher.

Choice boxed beef cutout value was 51¢ lower Friday afternoon. Select was 53¢ lower. The Choice-Select spread was $27.15/cwt.

Even so, analysts with the Agricultural Marketing Service explained on Friday, “The feeder market continues to thrive despite slaughter cattle losing ground on Wednesday in direct feedlot trade. The momentum from the previous week’s positive advances continued to lend support and add confidence in the minds of feeder buyers.”  

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Wall Street investors seemed content to drift into the holiday weekend, with major U.S. financial indices treading water on Friday.

The Dow Jones Industrial Average closed 2 points lower. The S&P 500 closed fractionally higher. The NASDAQ closed 4 points higher.

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Friday’s monthly Cattle on Feed report will likely add pressure to calf prices, at least as the week begins.

Plenty of analysts were correct in thinking April feedlot placements would be higher, but most were too conservative in how broadly feedlots would respond to the spring rally in fed cattle prices.

April feedlot placements of 1.85 million head were 11% higher than the previous year. That’s about 4% more than pre-release estimates, according to Griffith.

In terms of weights, 53.2% (985,000 head) weighed 700-899 lbs. On the lighter end, 18.8% of the placements (348,000 head) went on feed weighing 600 lbs. or less.

Marketings of 1.70 million head were 3% more than last year, compared to estimates ahead of the report of 1.7%.

The net result is an on-feed inventory May 1 that was 2% more than a year earlier at 11.o million head. Most estimates ahead of the report forecast an inventory even with last year.

Apparently wholesale beef values remained high enough, and the gaping maw stayed wide enough between spot Live Cattle and cash to stymie another round of futures losses on Thursday. Or, it could have been position squaring and the general lack of trade.

Live Cattle futures closed an average of $1.27 higher with a range of $1.00 to $1.80 higher.

Except for 47¢ lower in expiring May, Feeder Cattle futures closed an average of $1.75 higher with a range of 72¢ to $2.45 higher.

Corn futures closed 1¢ to 2¢ lower.

Choice boxed beef cutout value was 3¢ higher Thursday afternoon at $246.11/cwt. Select was 62¢ lower at $218.98. The Choice-Select spread continued historically high at $27.13/cwt.

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Tech stocks helped lead major U.S. financial indices higher on Thursday. That was despite a step-down in oil prices with CME Crude Oil futures settling $2.33-$2.46 lower for the remainder of the year.

The Dow Jones Industrial Average closed 70 points higher. The S&P 500 closed 10 points higher. The NASDAQ closed 42 points higher.

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U.S. beef exports—and U.S. agricultural exports in general—are forecast to continue growing this year, even as domestic and international economic growth continues to totter forward. That’s according to the latest Outlook for U.S. Agricultural Trade from USDA’s Economic Research Service (ERS).

“World per capita GDP growth is expected to reach 1.6% in 2017 compared with 1.2% in 2016,” ERS analysts say. They explain the increase reflects a broad-based upswing in the world economy across both developed and developing countries.

In terms of U.S. export opportunity, the report anticipates little strengthening, if any, in the value of the U.S. dollar.

So, ERS analysts say, “Expectations for Livestock, poultry, and dairy exports are raised $600 million to $28.7 billion, almost entirely due to higher anticipated shipments of red meat and products. Beef exports are raised $200 million to $6.0 billion and pork exports are raised $400 million to $5.4 billion due to growth in export volumes to several countries in Asia and Mexico.”

Cash fed cattle trade opened on Wednesday with the weekly Fed Cattle Exchange auction sale.

About half of the 2,648 head offered ended up trading hands. Most of those were at a weighted average price of $132.54/cwt. for delivery at 1-9 days. That’s 2.62 less than last week. Cattle selling for delivery at 1-17 days and 10-17 days brought a weighted average of $132.50.

Country trade was limited on light demand through the afternoon.

Even though it was expected, the softer cash trade helped apply strong pressure to Cattle futures, although they pulled back from the severe downturn seen earlier in the session.

Live Cattle futures closed an average of 90¢ lower with a range of 35¢ to $1.40 lower.

Except for 25¢ lower in spot May, Feeder Cattle futures closed an average of $2.13 lower with a range of $1.32 to $2.85 lower.

Corn futures closed fractionally higher to 2¢ higher.

Choice boxed beef cutout value was 34¢ higher Wednesday afternoon at $246.08. Select was $1.57 lower at $219.60.

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Major U.S. financial indices closed higher on Wednesday. According to some, one of the drivers was release of the minutes from the Federal Reserve earlier this month, which provides some insight on how they plan to go about unwinding the massive balance sheet built through the quantitative easing program. Presumably, investors view the plan as market friendly overall.

The Dow Jones Industrial Average closed 74 points higher. The S&P 500 closed 5 points higher. The NASDAQ closed 24 points higher.

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Analysts with Allendale, Inc. expect Friday’s monthly Cattle on Feed report to show April placements 4.6% higher year over year. According to those analysts, that would be the largest April placement in six years. They add that their estimate is based on their belief that Cattle feeders responded to the rally in fed cattle prices from the end of March to the end of April by placing more cattle. They also point out that April placements supply the October through January slaughter period.

Cattle futures settled lower on Tuesday amid a session with little conviction one way or the other. Part of it could be traders waiting for information yet to come this week, including development of cash fed cattle trade, along with positioning ahead of Friday’s monthly Cattle on Feed report, as well as the looming Holiday weekend.

Live Cattle futures closed an average of 36¢ lower for a range of 7¢ to 85¢ lower, except for unchanged at the back.

Except for unchanged in spot May and $1.15 higher at the back of the Board, Feeder Cattle futures closed an average of 79¢ lower with a range of 32¢ to $1.27 lower.

Corn futures closed 2¢-5¢ lower.

Cash fed cattle trade was at a standstill in all major cattle feeding regions. Choice boxed beef cutout value was $2.14 lower Tuesday afternoon at $245.74. Select was $1.66 lower at $221.17.

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Major U.S. financial indices closed a touch higher on Tuesday, as investors await minutes from the Federal Reserve meeting this week. The Dow Jones Industrial Average closed 43 points higher. The S&P 500 closed 4 points higher. The NASDAQ closed 5 points higher.

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Depending on expectations, the monthly USDA Cold Storage report this week was neutral to either side of a non-factor.

Total pounds of beef in freezers on Apr. 30 were down 1% from the previous month and down 2% from last year. Frozen pork supplies were up 9% from the previous month but down 6% from last year. Combined, total red meat supplies in freezers were up 4% from the previous month but down 4% from last year.