WLI

Cattle futures tried for gains early in Tuesday’s trading session but were mainly marginally lower toward the close.

Live Cattle futures were narrowly mixed, from an average of 15¢ lower in three contracts to an average of 16¢ higher. Feeder Cattle were an average of 28¢ lower, except for 12¢ higher in the back contract.

Negotiated cash fed cattle trade ranged from mostly inactive on very light demand to a standstill through Tuesday afternoon, with too few transactions to trend, according to the Agricultural Marketing Service.

Last week, FOB live prices were $186/cwt. in the Southern Plains, $190 in Nebraska and $188-$192 in the western Corn Belt. Dressed delivered prices were $301 in Nebraska and $300-$301 in the western Corn Belt.

Choice boxed beef cutout value was $1.28 higher Tuesday afternoon at $316.88/cwt. Select was 77¢ higher at $304.47/cwt.

Grain futures continued lower again Tuesday on crop progress. Toward the close, Corn futures were 1¢ lower. Kansas City Wheat futures 11¢ to 12¢ lower. Soybean futures 5¢ to 7¢ lower.

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Major U.S. financial indices gained Tuesday.

The Dow Jones Industrial Average closed 141 points higher. The S&P 500 closed 7 points higher. The NASDAQ was up 28 points.

Heading toward the close West Texas Intermediate Crude Oil futures on the CME were $1.13 to $1.32 lower through the front six contracts.

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U.S. agricultural producer sentiment improved in May, according to the Purdue University/CME Group Ag Economy Barometer. The overall index rose 9 points from April to 108. The Current Conditions Index rose 6 points and the Index of Future Expectations climbed 11 points to 117.

Barometer analysts say rising crop prices helped buoy sentiment, as Eastern Corn Belt cash corn prices had increased 6% to 7% by mid-May, compared to the previous Ag Economy Barometer survey. Soybean prices had risen by 2% to 3%.

“The boost in the Index of Future Expectations reflects farmers’ expectation that conditions will improve, although it’s clear 2024’s financial challenges are still a concern,” says James Mintert, the barometer’s principal investigator and director of Purdue University’s Center for Commercial Agriculture.

 This month’s Ag Economy Barometer survey was conducted from May 13-17, 2024.

Cattle futures firmed Monday with stronger wholesale beef prices after early pressure from last week’s wobbly cash fed cattle prices.

Heading into the close, Live Cattle futures were an average of 19¢ higher, except for 62¢ lower in away Aug. Feeder Cattle futures were narrowly mixed from an average of 13¢ lower in the front four contracts to an average of 39¢ higher.

Negotiated cash fed cattle trade ranged from mostly inactive on very light demand to a standstill through Monday afternoon, with too few transactions to trend, according to the Agricultural Marketing Service.

Last week, FOB live prices were $1 lower in the Southern Plains at $186/cwt., $2 lower in Nebraska at $190 and steady to $2 lower in the western Corn Belt at $188-$192. Dressed delivered prices in Nebraska were $3 lower at $301 and $2-$3 lower in the western Corn Belt at $300-$301.

The five-area weighted average direct FOB live steer price last week was $1.18 lower at $188.91. The weighted average dressed delivered steer price was $2.68 lower at $300.81.

Choice boxed beef cutout value was $2.40 higher Monday afternoon at $315.60/cwt. Select was $1.99 higher at $303.70/cwt.

Grain futures continued lower Monday as crop progress brightens.

Heading into the close, through Jly ‘25, Corn futures were mostly 3¢ to 4¢ lower. Kansas City Wheat futures 6¢ to 9¢ lower. Soybean futures were 15¢ to 20¢ lower.

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Major U.S. financial indices closed mixed Monday and well off of session lows with pressure from indications of weakness in the manufacturing sector causing concerns about domestic economic growth.

The Dow Jones Industrial Average closed 115 points lower. The S&P 500 closed 5 points higher. The NASDAQ was up 93 points.

Heading toward the close West Texas Intermediate Crude Oil futures on the CME were $2.44 to $2.88 lower through the front six contracts, pressured by news that OPEC+ plans to phase out voluntary production cuts.

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The five-area weighted average direct FOB live steer price last week was $1.18 lower at $188.91/cwt. The weighted average dressed delivered steer price was $2.68 lower at $300.81.

“It would appear the summer lull in finished cattle prices may hit the market earlier than normal and stay with the market longer than is typical,” says Andrew P. Griffith, agricultural economist with the University of Tennessee, in his weekly market comments. “If this occurs then it will pull on feeder cattle and calf prices. If the market is able to trade steady, then it would be tremendous support for the rest of the market. The one positive to support finished cattle prices is the declining number of cattle in feedlots. As this number continues tightening, competition should improve.”

As beef packers slow production in an effort to support wholesale beef values, Griffith also notes the contribution of byproducts.

“The hide and offal value has been between $11 and $12/cwt. This value essentially adds these same dollars to the live animal,” Griffith explains. “In other words, if there was no value in the hide and offal, packers would have to pay $11 to $12/cwt. less for a finished animal.”

Griffith adds weekly average hide and offal values have been $1.57/cwt. less year over year for the first five months of 2024.

Negotiated cash fed cattle trade ranged from moderate on moderate demand up north to a standstill through Friday afternoon, according to the Agricultural Marketing Service.

For the week, FOB live prices were $1 lower in the Southern Plains at $186/cwt., $2 lower in Nebraska at $190 and steady in the western Corn Belt at $190-$192. Dressed delivered prices in Nebraska were $3 lower at $301. Prices in the western Corn Belt the previous week were $302-$304.

Choice boxed beef cutout value was 84¢ lower Friday afternoon at $313.20/cwt. Select was 81¢ lower at $301.71/cwt. Choice was $2.75 higher week to week on Friday. Select was 1¢ lower.

Estimated total cattle slaughter for the holiday-shortened week of 540,000 head was 67,000 head fewer than the previous week and 28,000 head fewer than the same week a year earlier. Year-to-date estimated total cattle slaughter of 13.1 million head was 624,000 fewer (-4.5%) than the same time last year. Estimated year-to-date beef production of 11.1 billion pounds was 218.4 million pounds less (-1.9%).

Cattle futures continued lower Friday with pressure including steady to lower cash fed cattle prices.

Live Cattle futures closed an average of $1.16 lower. They were an average of $2.70 lower week to week on Friday.

Feeder Cattle futures closed an average of $2.04 lower, from 87¢ lower at the back to $2.67 lower at the front. Week to week, they were an average of $2.57 lower, from $1.15 lower toward the back to $3.82 lower at the front.

Grain futures continued to erode on Friday.

Corn futures closed 3¢ to 4¢ lower. Through the front six contracts, they were an average of 20¢ lower week to week.

KC HRW Wheat futures closed mostly fractionally mixed.

Soybean futures closed 3¢ to 5¢ lower.

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Major U.S. financial indices closed mixed Friday. Much of the support seemed tied to the latest Personal Consumption Expenditures Price Index —a closely watched inflation gauge — coming in near expectations.

The Dow Jones Industrial Average closed 574 points higher. The S&P 500 closed 42 points higher. The NASDAQ was down 2 points.

West Texas Intermediate Crude Oil futures on the CME were 54¢ to 92¢ lower through the front six contracts.

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Assuming no price risk management, cattle feeding returns are projected to be negative from June to the end of this year, according to the most recent Historical and Projected Kansas Feedlot Net Returns (KFNR) from Kansas State University.

For June through December, projected net returns for steers range from -$47.99 per head in July to -$259.78 in September with feedlot cost of gain ranging between $109.91/cwt (June) to $116.34 (Dec.).

Similarly, projected net returns for fed heifers during the same period range from -$2.74 per head in July to -$176.38 in Sept. with feedlot cost of gain ranging from $119.20/cwt. (June) to $127.79 (Dec.).

Based on the KFNR, analysts with the Livestock Marketing Information Center (LMIC) say, “The number of days on feed for a steer was reported at 206 days in April, which is up 25 days from 181 days in January. A year ago in April, the number of days on feed for a steer was 190. The number of days on feed for heifers increased from 178 days in January to 191 days in May, compared to 170 to 186 days during the same period last year.”

LMIC analysts add the increased number of days on feed and a decrease in average daily gain since the start of the year have resulted in more pounds of feed per pound of gain.

“Year-to-date through April, the pounds of feed per pound of gain for steers has averaged 6.8 compared to 6.4 last year while heifers have averaged 7.2 versus 6.8 last year, LMIC analysts explain,” in the latest Livestock Monitor. “Although pounds of feed per pound of gain have increased this year, feed costs have averaged $125 and $133/cwt. respectively, for steers and heifers, a decline of 15% and 16% compared to last year.”

For ADG perspective, LMIC analysts say it is less year over year and less than the five-year average through the first four months of this year. For steers, they explain steer ADG declined to 3.14 lbs. in April from 3.41 lbs. in January. For heifers, ADG declined from 3.03 lbs. in January to 2.89 pounds in April.

Cattle futures continued lower Thursday with follow-through pressure including negative outside markets, oversold conditions and perhaps some month-end profit taking.

Heading into the close and before settlement, Live Cattle futures were an average of 75¢ lower. Feeder Cattle were an average of 78¢ lower.

Negotiated cash fed cattle trade ranged from light on light demand to mostly inactive on light demand through Thursday afternoon, according to the Agricultural Marketing Service. Although too few to trend, there some early FOB live trades in the Southern Plains at $186/cwt.

Last week, FOB live prices were $187 in the Southern Plains, $192 in Nebraska and $190-$192 in the western Corn Belt.

Dressed delivered prices were $304 in Nebraska and $302-$304 in the western Corn Belt.

Choice boxed beef cutout value was 42¢ higher Thursday afternoon at $314.04/cwt. Select was 4¢ lower at $302.52/cwt.

Grain futures closed lower again Thursday as traders pondered the improved planting and weather outlook.

Heading into the close Tuesday, through Jly ‘25, Kansas City Wheat futures were 6¢ to 10¢ lower.  Corn futures were 6¢ to 8¢ lower. Soybean futures mostly 5¢ to 7¢ lower.

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Major U.S. financial indices continued to chop lower Thursday with continued concerns about sticky inflation.

The Dow Jones Industrial Average closed 330 points lower. The S&P 500 closed 31 points lower. The NASDAQ was down 183 points.

Heading toward the close West Texas Intermediate Crude Oil futures on the CME were $1.10 to $1.33 lower through the front six contracts.

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U.S. beef exports for this year were forecast at $9.1 billion in USDA’s latest quarterly Outlook for U.S. Agricultural Trade. That was $200 million more than the previous quarter’s estimate. The increase was based on slightly more volume and firm demand.

Overall U.S. agricultural exports in fiscal year (FY) 2024 were projected at $170.5 billion, unchanged from the February forecast with higher exports of livestock, dairy and ethanol mostly offsetting reductions in grains and feeds, oilseeds, and horticultural products.

For broader perspective, global Gross Domestic Product (GDP) is projected to rise by 3.2% in calendar year (CY) 2024, which was slightly higher than the previous forecast.

“Global economic growth continues to increase but at a slow rate, in part, due to a stagnation of global trade growth in 2023 and early 2024,” say USDA analysts. “Despite the slow progress, this steady growth marks a continued sign of resilience following the economic turmoil from 2020 through 2022. Nevertheless, several potential barriers to sustained economic growth persist including the war in Ukraine, intensifying conflicts in the Middle East, China’s economic uncertainty, and shifting weather patterns.”

U.S. GDP was forecast 0.6% higher than the previous estimate at 2.7%.

“This growth is buoyed by robust consumer spending notwithstanding factors leading to more subdued growth, such as declines in business inventories, Federal Government purchases, business investment, and investment in residential property,” say USDA analysts.

Cattle futures closed lower Wednesday with pressure including negative outside markets, oversold conditions and perhaps some month-end profit taking.

Heading into the close and before settlement, Live Cattle futures were an average of $1.65 lower. Feeder Cattle were an average of $3.15 lower.

Negotiated cash fed cattle trade ranged from limited on light demand to a standstill through Wednesday afternoon, according to the Agricultural Marketing Service. Although too few to trend, there some early FOB live trades in Nebraska at $190/cwt.

Last week, FOB live prices were $187 in the Southern Plains, $192 in Nebraska and $190-$192 in the western Corn Belt.

Dressed delivered prices were $304 in Nebraska and $302-$304 in the western Corn Belt.

Choice boxed beef cutout value was $1.50 higher Wednesday afternoon at $313.62/cwt. Select was 95¢ lower at $302.48/cwt.

Grain futures closed lower Wednesday as it appeared traders took back some weather premium.

Heading into the close Tuesday, through Jly ‘25, Kansas City Wheat futures were 6¢ to 10¢ lower.  Corn futures were 5¢ to 7¢ lower. Soybean futures were 5¢ to 18¢ lower.

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Major U.S. financial indices closed lower Wednesday. Pressure included concerns about a second day of increase in the benchmark 10-year Treasury yield.

The Dow Jones Industrial Average closed 411 points lower. The S&P 500 closed 39 points lower. The NASDAQ was down 99 points.

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Rural communities continue struggling for economic growth, according to Creighton University’s latest Rural Mainstreet Index (RMI). It sagged below growth neutral in May for the ninth consecutive month, declining 1.6 points from April to 44.2.

Higher interest rates, weaker agriculture commodity prices and higher grain storage costs contributed to the decline, according Ernie Goss, Jack A. MacAllister Chair in Regional Economics at Creighton University’s Heider College of Business.

The RMI is based on a survey of bank CEOs in rural areas of a 10-state region dependent on agriculture and/or energy. The index ranges between 0 and 100, with a reading of 50.0 representing growth neutral.

Among other measures, the region’s farmland price index slumped to 47.9 from April’s 56.5.

“For the first time in more than four years, Creighton’s survey is detecting weakening farmland price growth,” Goss says. “Only 4.2% of bankers reported that farmland prices expanded from previous levels.”

Similarly, the farm equipment sales index for May dropped to 34.0 from 47.7 in April. 

“This is the 11th time in the past 12 months that the index has fallen below growth neutral,” Goss says. “Higher borrowing costs, tighter credit conditions and weaker grain prices are having a negative impact on the purchases of farm equipment.”

The latest survey also asked about banks’ interest rates on farm operating loans and farmland loans. On average, bankers reported an average interest rate of 8.6% on farm operating loans and 7.4% on farmland loans.