Daily Market Highlights

Negotiated cash fed cattle prices ended the week generally steady to $1 higher on a live basis and $2 higher in the beef, according to the Agricultural Marketing Service.

Live prices were at $111/cwt. in the Southern Plains, $110-$111 in Nebraska and $109-$110 in the western Corn Belt. Dressed trade was at $174.

Cattle futures mostly drifted lower on Friday, amid extremely light holiday trade.

Live Cattle futures closed an average of 47¢ lower (32¢ to 92¢ lower).

Feeder Cattle futures closed an average of 24¢ lower except for an average of 26¢ higher in two contracts.

Choice boxed beef cutout value was $2.21 lower Friday afternoon at $242.85/cwt. Select was 22¢ lower at $220.68.

Corn futures closed mostly 3¢ to 5¢ higher.

Soybean futures closed mostly 6¢ to 7¢ higher.

******************************

Major U.S. financial indices closed higher Friday, buoyed by the week’s mostly positive news surrounding apparent progress with COVID-19 vaccines.

The Dow Jones Industrial Average closed 37 points higher. The S&P 500 closed 8 points higher. The NASDAQ was up 111 points.

******************************

Total pounds of beef in freezers were up 8% from the previous month and up 7% from the previous year, as of Oct. 31, according to USDA’s latest monthly Cold Storage report.

Frozen pork supplies were down 4% from the previous month and down 27% from last year.

Total red meat supplies in freezers were up 1% from the previous month but down 12% from last year.  

Total frozen poultry supplies were 7% less than the previous month and down 4% from a year earlier.

Negotiated cash fed cattle prices were generally steady to $1 higher on a live basis and $2 higher in the beef, through Wednesday afternoon, according to the Agricultural Marketing Service.

Live prices were at $111/cwt. in the Southern Plains on moderate demand and trade. Live prices were at $110 in the western Corn Belt on slow trade and moderate demand. There were a few in Nebraska at $110. Dressed trade was at $174.

Cattle futures mostly continued gains on Wednesday, buoyed by stronger cash markets, weaker grain futures, stronger wholesale beef values and light pre-holiday trade.

Live Cattle futures closed an average of 27¢ higher.

Feeder Cattle futures closed an average of 92¢ higher (25¢ to $1.57 higher) except for 7¢ lower and 32¢ lower in the back two contracts.

Choice boxed beef cutout value was 76¢ higher Wednesday afternoon at $245.06/cwt. Select was $1.19 higher at $220.90.

Corn futures closed 5¢ lower through Jly ’21 and then mostly unchanged to 1¢ lower.

Soybean futures closed mostly 5¢ to 7¢ lower.

******************************

Major U.S. financial indices closed mixed Wednesday. Pressure included more jobless claims than traders expected.

Initial unemployment insurance claims last week were 778,000, which was 30,000 more than the previous week, according to the U.S. Department of Labor.

The Dow Jones Industrial Average closed 173 points lower. The S&P 500 closed 5 points lower. The NASDAQ was 57 points higher.

******************************

When Jan. 1 cattle inventory numbers come out toward the end of January, analysts with the Livestock Marketing Information Center (LMIC) expect to see more year- over-year contraction of the beef cow herd.

“The beef herd is expected to be down 0.5 to 1.0% based on year-to-date slaughter numbers that are above a year ago by about 2%, and heifer numbers in feedlots,” say LMIC analysts, in the latest Livestock Monitor. “It appears beef cows held for replacement are likely steady to below a year ago, given the uncertainty of 2020. Other heifers, those in the feedlot, are also expected to have pulled back. Those on feed are slightly lower than a year ago, while heifer slaughter is about 4% below last year.”

This year began with 31.31 million head, which was 1.18% less (-374,000 head) than the previous year.

“Bull slaughter is well below a year ago, a reflection of lower volumes of male cattle kept for breeding purposes. This is primarily driven by the cattle cycle and the smaller needs for bulls. LMIC estimates bull inventory Jan. 1 is likely slightly less than last year,” say LMIC analysts. “Steers over 500 lbs. are expected to fall, in line with July 1 calf crop expectations, as well as cattle weighing less than 500 lbs. Both are expected to be down over half a percent.”

Even with expectations for there to be slightly more dairy cows at the beginning of 2021, LMIC expects the total of all cattle and calves to be slightly less year over year. Total inventory at the beginning of this year was 0.41% less than the prior year.

Negotiated cash fed cattle trade remained undeveloped through Tuesday afternoon, but the recent surge in Cattle futures and wholesale beef values bolstered hope for higher prices.

Cattle futures extended gains on Tuesday, supported by the previous session’s optimism and the brighter outlook for cash prices.

Live Cattle futures closed an average of 50¢ higher (10¢ to $1.17 higher) except for 55¢ lower in the back contract.

Feeder Cattle futures closed an average of 50¢ higher except for 2¢ lower in May.

Choice boxed beef cutout value was $2.70 higher Tuesday afternoon at $244.30/cwt. Select was $2.23 higher at $219.71.

Corn futures closed narrowly mixed, mostly from 1¢ lower to 1¢ higher.

Soybean futures closed mostly fractionally higher to 1¢ higher.

******************************

Major U.S. financial indices closed higher again Tuesday with follow-through support from the previous session, tied to positive news about COVID-19 vaccines and the outlook toward a bounce in economic recovery in 2021.

The Dow Jones Industrial Average closed 454 points higher. The S&P 500 closed 57 points higher. The NASDAQ was up 156 points.

******************************

U.S. beef exports for 2021 are projected to be $7.1 billion, according to the latest quarterly Outlook for U.S. Agricultural Trade, from USDA’s Economic Research Service (ERS). The projection is $200 million more than the previous report in August, based on increased volume offsetting a decline in unit values.

Overall, ERS projects U.S. agricultural exports in Fiscal Year (FY) 2021 at $152.0 billion, up $11.5 billion from the August forecast, fueled by increased soybean and corn export values.

“The projection for soybean exports is up $5.9 billion to a record $26.3 billion due to higher unit values, strong demand from China, and record volumes,” according to the report. “Corn exports are forecast up $4.2 billion to $13.2 billion as a result of reduced competition, higher unit values and record volumes…Wheat exports are projected at $6.2 billion, up $200 million, on higher unit values and slightly larger volumes.”

The forecast suggests China will become the largest market for U.S. agricultural products next year for the first time since 2017. Exports to that nation are projected at a record high $27.0 billion.

All of that is shrouded by the global economic contraction and ongoing uncertainty borne by the pandemic.

“Expectations of real gross domestic product (GDP) numbers have improved from the initial lockdown contractions, but recovery forecasts are still marked by uncertainty and prone to future setbacks,” say ERS analysts. “Overall, global real GDP growth is expected to fall by about 4.4% in 2020. This is slightly less severe than was previously feared back in June. Global trade volume, which declined 9.2% in FY 2020, is expected to increase 7.2% in FY 2021. The expected economic recovery in 2021 will be shaped by both regional and overall global success in containing the COVID-19 pandemic, in addition to boosting consumer spending.”

Negotiated cash fed cattle trade was mostly inactive on very light demand in the western Corn Belt through Monday afternoon. Elsewhere, it was at a standstill, according to data from the Agricultural Marketing Service (AMS). Last week, live prices were at $110/cwt. in the Southern Plains and Nebraska and at $109-$110 in the western Corn Belt. Dressed prices are steady at $172.

Cattle futures closed sharply higher on Monday, shaking off last week’s blues with the help of higher outside markets and an apparently bullish view of Friday’s Cattle on Feed report.

Live Cattle futures closed an average of $1.99 higher.

Feeder Cattle futures closed an average of $2.83 higher.

Choice boxed beef cutout value was $3.25 higher Monday afternoon at $241.60/cwt. Select was $2.50 higher at $217.48.

Corn futures closed mostly 3¢ to 5¢ higher

Soybean futures closed 10¢ to 12¢ higher through Aug ’21 and then mostly 4¢-7¢ higher.

******************************

Major U.S. financial indices closed higher Monday, buoyed by the third COVID-19 vaccine candidate that proved at least 90% effective in trials. Traders also seemed optimistic about Janet Yellen, former Federal Reserve Chair, being named Treasury secretary by president-elect Biden.

The Dow Jones Industrial Average closed 327 points higher. The S&P 500 closed 20 points higher. The NASDAQ was up 25 points.

******************************

“Feeder markets are reflecting a mix of influences including seasonal supplies of calves, wheat pasture forage conditions, higher corn prices and volatility in futures markets,” says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly market comments. “Feeder markets have been very dynamic and it means that both cow-calf and stocker producers must constantly evaluate changing market conditions.”

By way of illustration, Peel graphed (see chart below) Oklahoma calf and feeder steer prices by weight from August through Nov. 20.

After posting lows during the winter storm in late October, he explains prices for steer calves and stockers weighing less than 600 lbs. increased sharply; little change at heavier weights.

“The result is a sharper bend in the price-weight line, with an even steeper price rollback for steers up to 600 pounds,” Peel says. “Using a stocker gain of 250 lbs. from 500 to 750 lbs., the value of gain in August was $1.02/lb. In October, the value of gain was slightly higher at $1.05/lb. based on lower prices for both 500 and 750-lb. steers. In November, the higher prices for the lightweight animals resulted in a lower value of gain of $0.74/lb. Of course, a 500-lb. stocker purchased now will not reach 750 lbs. for some time. However, March Feeder futures price was $134.48 recently. That with an expected early March basis of $1.69/cwt. for 750-lb. steers in Oklahoma suggests a final price of $136.17/cwt., close to the current cash price of $136.03/cwt.”

For cow-calf producers selling calves at weaning, he explains recent prices mean the value of adding 50 lbs. to a 500-lb. steer is about 50¢/lb.

“For producers holding calves after weaning, the low value of gain must be balanced against the value of preconditioning programs and extra weaning time before sale,” Peel says. “The implications of current market conditions depend on the current weight of animals and the amount of additional weight added to animals prior to sale.”

Negotiated cash fed cattle prices ended last week steady, according to data from the Agricultural Marketing Service (AMS). Live prices were at $110/cwt. in the Southern Plains and Nebraska and at $109-$110 in the western Corn Belt. Dressed prices are steady at $172.

Estimated cattle slaughter for the week ending Nov. 21 was 665,000 head, according to USDA. That would be 12,000 head more than the prior week, but 3,000 head fewer than the same week last year. Estimated year-to-date total cattle slaughter of 28.73 million head would be 1.07 million fewer (-3.59%) than same period last year.

Estimated beef production for the week of 559.1 million lbs. would be 9.3 million lbs. more than the previous week and 5.4 million lbs. more than the same week last year. Year-to-date estimated beef production of 23.87 billion lbs. would be 245.8 million lbs. less (-1.02%) than the same period last year.

Cattle futures closed mixed on Friday with higher Lean Hog futures helping reverse some early pressure and firm following the previous session’s pullback.

Live Cattle futures closed narrowly mixed, from an average of 33¢ lower to an average of 14¢ higher.

Feeder Cattle futures closed mixed, from an average of 55¢ lower across the front half of the board to an average of 27¢ higher.

Choice boxed beef cutout value was 65¢ higher Friday afternoon at $238.35/cwt. Select was $1.09 higher at $214.98.

Corn futures closed mostly fractionally mixed.

Soybean futures closed 2¢ to 6¢ higher through Sep and then mostly 1¢ lower.

******************************

Major U.S. financial indices closed lower Friday, pressured by the continued rise in COVID-19 infections.

The Dow Jones Industrial Average closed 219 points lower. The S&P 500 closed 24 points lower. The NASDAQ was down 49 points.

******************************

USDA’s monthly Cattle on Feed report issued Friday—for feedlots with 1,000 head or more capacity—will likely be viewed as neutral to slightly friendly.

There were 2.19 million head placed in October which was 270,000 head fewer (-10.97%) than a year earlier. Estimates ahead of the report suggested placements to be about 1.5% more.

In terms of weights, 49% went on feed weighing less than 600 lbs.; 39% weighing 700-899 lbs.; 12% weighing 900 lbs. or more.

Marketings of 1.87 million head in October were just 2,000 fewer (-0.11%) than a year earlier, about in line with pre-report estimates.

Cattle on feed Nov. 1 were 11.97 million head, which was 157,000 head more (+1.33%) than a year earlier. That was slightly less than expectations. The number is the most for the month since the data series began in 1996.

Negotiated cash fed cattle trade was limited on moderate demand in Kansas, Nebraska and the western Corn Belt through Thursday afternoon, according to the Agricultural Marketing Service. There were a few live trades at $110/cwt. and a few in the beef at $172, but too few to trend. Established prices for the week are mainly steady with live trade at $110 in the Southern Plains and Nebraska and at $109-$110 in the western Corn Belt. Dressed prices are steady at $172.

Cattle futures closed sharply lower Thursday. Lingering pressures include persistently higher grain prices and languishing cash fed cattle prices. Chatter about fears of more pandemic-driven packing disruptions contributed to the day’s decline.

Live Cattle futures closed an average of $1.85 lower, from 92¢ lower at the back to $2.62 lower.

Feeder Cattle futures closed an average of $2.10 lower, except for 25¢ lower in expiring Nov.

Choice boxed beef cutout value was $1.86 higher Thursday afternoon at $237.70/cwt. Select was 27¢ higher at $213.89.

Net U.S. beef export sales (2020) for the week ending Nov. 12 totaled 46,400 metric tons, up noticeably from the previous week and the prior four-week average, according to the weekly U.S. Export Sales report from USDA’s Foreign Agricultural Service. Increases were primarily for South Korea, Mexico, Japan, Hong Kong and Taiwan.

Corn futures closed 1¢ to 3¢ lower.

Soybean futures closed fractionally mixed to 4¢ higher.

******************************

U.S. financial indices closed slightly higher Thursday, amid a volatile session, with pressure from the continued surge in COVID-19 cases and increasing unemployment claims.

Initial unemployment insurance claims were 742,000 for the week ending Nov. 14, according to the U.S. Department of Labor. That was 31,000 more than the previous week and more than traders expected.

The Dow Jones Industrial Average closed 44 points higher. The S&P 500 closed 14 points higher. The NASDAQ was up 103 points.

******************************

The Creighton University Rural Mainstreet Index (RMI) declined in November for the first time since April. The RMI represents a monthly survey of bank CEOs in rural areas of a 10-state region dependent on agriculture and/or energy.

The overall index was down significantly to 46.8 from the previous month’s 53.2. The index ranges between 0 and 100 with a reading of 50.0 representing growth neutral.

“Recent improvements in agriculture commodity prices, federal farm support payments, and the Federal Reserve’s record low interest rates have underpinned the Rural Mainstreet Economy. Still, only 6.5% of bankers reported economic improvements from October, while 12.9% detailed economic pullbacks for the month,” says Ernie Goss, PhD, Jack A. MacAllister Chair in Regional Economics at Creighton University’s Heider College of Business.

However, the farmland-price index advanced above growth neutral for the second consecutive month. The November reading jumped to 55.0 from October’s 50.6. This is first time since 2013 that Creighton’s survey has recorded back-to-back above growth neutral readings in farmland prices.

Also, the November farm equipment-sales index increased to 42.9, its highest level since December 2013, and up from 37.9 in October. But, the reading has been below growth neutral for 86 consecutive months.

Negotiated cash fed cattle trade and demand were moderate in the Southern Plains through Wednesday afternoon. Live prices were steady with last week at $110/cwt., according to the Agricultural Marketing Service. There were also a few live trades at $110 in Nebraska and a few at $106 in the western Corn Belt but too few to trend in either region. Last week, live prices were at $110 in Nebraska and at $108-$110 in the western Corn Belt. Dressed prices were at $172.

Cattle feeders offered 930 head in the weekly Fed Cattle Exchange Auction—all from Texas. They sold 543 head for a weighted average price of $110.25 for delivery at both 1-9 days and 1-17 days. That price was steady with country trade in the region last week and so far this week.

Cattle futures closed lower Wednesday, pressured by higher grain prices and the steady rather than higher cash prices so far this week. Perhaps there was also some positioning ahead of Friday’s monthly Cattle on Feed report.

Live Cattle futures closed an average of 80¢ lower, from 42¢ to $1.15 lower.

Feeder Cattle futures closed an average of $1.60 lower, from 35¢ lower in spot Nov to $2.42 lower.

Choice boxed beef cutout value was $2.12 higher Wednesday afternoon at $235.84/cwt. Select was 34¢ lower at $213.62.

Corn futures closed 3¢ to 5¢ higher through Sep ’21 and then mostly 1¢ higher.

Soybean futures closed mostly 5¢ to 7¢ higher through Sep ‘22 and then mostly 3¢ higher.

******************************

U.S. financial indices closed lower Wednesday, pressured by the growing renewal of pandemic restrictions as COVID-19 cases continue to surge.

The Dow Jones Industrial Average closed 344 points lower. The S&P 500 closed 41 points lower. The NASDAQ was down 97 points.

******************************

“With the higher grain prices and forage prices, we will see persistent pressure on feeder cattle and calf prices into 2021,” says Stephen Koontz, agricultural economist at Colorado State University, in the latest issue of In the Cattle Markets. “One dollar higher corn costs translate into about $6-$7/cwt. lower feeder cattle prices. This cattle price impact is being exacerbated by dry conditions in the western U.S. and hay prices that are creeping higher. The impact on calf prices will be greater.”

Koontz points out Corn futures (2020-21 crop) are about $1 higher than in August and Soybean futures are about $2 higher, including deferred contracts. He adds that prices for both appear to be at a premium to what underlying fundamentals suggest.

“Stock-to-use ratios imply more reasonably mid-to-high-$3 corn and mid-to-high-$9 soybeans. That is unless the long-term demand picture is also changing. And there is some evidence that is the case,” Koontz says. “Corn export demand has been strong but that for soybeans is considerably more so. Consumption of corn is also picking up from ethanol production. The crop market fundamentals are looking more like they did in the years prior to the trade war. Soybean demand may pull considerable acres to that crop and buoy both soybean and corn prices.”

Along with export strength and iffy production in other parts of the world, some folks suggest speculation about a domestic drought next growing season is adding support.

Negotiated cash fed cattle trade was steady in the Texas Panhandle through Tuesday afternoon with live prices at $110/cwt. That was on limited trade and light demand, according to the Agricultural Marketing Service. Trade in other regions ranged from a standstill to mostly inactive on light demand with too few transactions to trend. Last week, live prices were at $110/cwt. in the Southern Plains and Nebraska and at $108-$110 in the western Corn Belt. Dressed prices were at $172.

Cattle futures closed higher Tuesday, apparently fueled by the surge in wholesale beef values, tied in part to chatter about consumers stockpiling again, due to resurgent COVID-19 cases. The lower U.S. dollar is also offering added support to commodities.

Live Cattle futures closed an average of 98¢ higher, from 37¢ to $1.55 higher.

Feeder Cattle futures closed an average of $1.36 higher, from 10¢ higher in

Choice boxed beef cutout value was $6.77 higher Tuesday afternoon at $233.72/cwt., the highest level since June. Select was $1.61 higher at $213.96.

Corn futures closed mostly 1¢ to 4¢ higher through Jly ’21 and then mostly fractionally mixed.

Soybean futures closed 8¢ to 16¢ higher through Sep ‘21 and then fractionally higher to 2¢ higher.

******************************

U.S. financial indices closed lower Tuesday on likely profit taking and mixed economic news.

On one hand, U.S. retail and food services sales for October were 0.3% higher month to month, according to the U.S. Commerce Department. That’s less than the trade expected.

On the other hand, builder confidence in the market for newly-built single-family homes increased five points to 90 in November, shattering the previous all-time high of 85 recorded in October, according to the latest National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index. Builder confidence levels hit successive all-time highs over the past three months.

“Historically low mortgage rates, favorable demographics and an ongoing suburban shift for home buyer preferences have spurred demand and increased new home sales by nearly 17% in 2020 on a year-to-date basis,” says NAHB Chairman Chuck Fowke, a custom home builder from Tampa, FL. “Though builders continue to sign sales contracts at a solid pace, lot and material availability is holding back some building activity. Looking ahead to next year, regulatory policy risk will be a key concern given these supply-side constraints.”

The Dow Jones Industrial Average closed 167 points lower. The S&P 500 closed 17 points lower. The NASDAQ was down 24 points.

******************************

USDA’s Economic Research Service (ERS) lowered the expected fourth-quarter feeder steer price by $6 from the previous month to $137/cwt., in the latest Livestock, Dairy and Poultry Outlook. That’s basis Oklahoma City for Medium #1. The lower revision is based on seasonal price weakness and cash prices in October down more than $9 year over year at $137.55. ERS reduced expected feeder steer prices for next year by $1, based on higher projected feed prices.

Specifically, ERS forecasts feeder steer prices next year at $133 in the first quarter, $136 in the second, $141 in the third; annual average price of $138.

ERS left the expected five-area direct fed steer price unchanged for the fourth quarter ($109) and for next year: $113 in the first quarter, $110 in the second quarter, $114 in the third quarter; annual average price of $114.

“Despite the rising number of cattle on feed, front-end supplies—the number of cattle on feed over 150 days—decreased for the third consecutive month as a percentage and in volume,” say ERS analysts. “This is the result of an improving pace of fed cattle slaughter, which was faster than a year ago for the last three months and above the five-year average. The quickening slaughter pace, combined with an ample supply of fed cattle at heavier weights, led to higher expected beef production in fourth-quarter 2020 relative to 2019. Nevertheless, tighter front-end supplies will likely support continued seasonal movement in fed steer prices.”

ERS increased annual forecast 2020 beef production by 90 million lbs. to 27.2 billion lbs. Forecast beef production increased slightly for 2021, as well (27.4 billion lbs.), on higher expected fed cattle marketings.

“Despite the challenges facing the industry at the beginning of the third quarter, the beef industry processed more fed cattle in third-quarter 2020 than last year. As a result, the industry appears to have worked through the backlog of cattle that resulted from the plant disruptions in the second quarter,” ERS analysts explain. “The combination of delayed cattle marketings and good feeding conditions this year raised average cattle carcass weights nearly 3% for the third quarter, also increasing third-quarter 2020 production nearly 3% year over year. As a result, beef production set a record for the quarter at 7.1 billion lbs.”

Negotiated cash fed cattle trade ranged from a standstill to mostly inactive on very light demand with too few transactions to trend, according to the Agricultural Marketing Service. Last week, live prices were at $110/cwt. in the Southern Plains and Nebraska and at $108-$110 in the western Corn Belt. Dressed prices were at $172.

The five-area direct average fed steer price last week was $109.62/cwt. on a live basis, which was $3.29 more than the previous week, but $5.57 less than the previous year. The average steer price in the beef was $171.87, which was $6.52 more than the previous week, but $9.85 less than the same week last year.

Cattle futures firmed Monday, after early pressure on Feeder Cattle, closing mostly higher amid relatively light trade after the previous session’s selloff. Presumably, technical support and higher outside markets helped pave the way.

Live Cattle futures closed an average of 29¢ higher, except for 20¢ lower in near Feb.

Feeder Cattle futures closed an average of 47¢ higher, except for 20¢ lower in spot Nov and unchanged in Sep.

Choice boxed beef cutout value was 97¢ higher Monday afternoon at $226.95/cwt. Select was $2.89 higher at $212.35.

Corn futures closed mostly 2¢ to 4¢ higher.

Soybean futures closed mostly 4¢ to 6¢ higher. 

******************************

U.S. financial indices closed higher Monday, on news that another Covid vaccine candidate, this one from Moderna, proved more than 94% effective in a preliminary, late-stage trial.

The Dow Jones Industrial Average closed 470 points higher. The S&P 500 closed 41 points higher. The NASDAQ was up 94 points.

******************************

By most measures, domestic consumer beef demand remained resilient in the face of multifold challenges posed by the pandemic. Heading into winter, though, Derrell Peel, Extension livestock marketing specialist at Oklahoma State University expects challenges to increase.

“Loss of outdoor dining in cold weather will further aggravate restaurant challenges.  Food service demand is likely to be additionally affected with worsening public health challenges. Macroeconomic concerns will grow as consumers go forward with less unemployment support,” Peel explains, in his weekly market comments.  “Ample supplies of beef, pork and poultry increase market price pressure, though disruptions in supply are a threat as well.”  

By way of review, Peel points out unparalleled beef supply and demand disruptions characterized the first half of 2020. By the end of June, cattle slaughter—packing capacity—was mostly recovered.

“Beef demand, however, continues to be challenged with restricted food service.  Restaurants have recovered somewhat from the initial lockdown with more emphasis on takeout and delivery. Retail grocery demand remains robust and numerous adjustments have helped to shift some food service supply chains to support retail grocery supply chains,” Peel explains. “There are indications that retail grocery demand is being boosted again by consumers stocking up in the face of increased uncertainty. The shift from summer beef demand to winter raises additional concerns. Food service is typically more emphasized in winter months, which may be an additional challenge. The pandemic is resurging and additional restrictions on food service are a growing risk.”

Currently, domestic beef demand is difficult to assess, according to Peel. Although Choice boxed beef cutout values increased sharply the past two weeks, they remain 9.2% less than the same time last year.

“Ribeyes are a key market this time of year with strong demand for Christmas and New Year’s holiday. So far, Ribeyes are following close to a typical seasonal increase with current Ribeye prices close to year-ago levels and up over 9% the last two weeks,” Peel says. “Other food service-dependent beef products are less encouraging. Beef tenderloins are currently averaging 25.6% below year-ago levels and were down 1.5% in the last two weeks. Sirloin Top Butt is up 6.0% the last two weeks but down 18.4% year over year. Other beef products heavily dependent on food service demand include brisket, down 13.9% from one year ago and the Petite Tender, down 20.7% year over year. Strip Loin, more frequently used in retail grocery, is up 7.8% year over year.”

As well, Peel says prices for most chuck and round products are down 5% to 10% compared to last year. Exceptions include Chucks (2-piece), which are up 7.0% the past two weeks and up 13.7% year over year, which may indicate more demand for grinding for retail grocery ground beef.

“In contrast, 50% trimmings are down 55.7% and 90% trimming are down 15.8% year over year, although both are up the past two weeks. 50s and 90s are more commonly used for food service ground beef,” Peel explains.

Negotiated cash fed cattle trade ended the week with live prices $3 higher at $110/cwt. in Nebraska and the Southern Plains; $3-$4 higher in the western Corn Belt at $108-$110, according to USDA’s Agricultural Marketing Service (AMS). Dressed prices were at $172, which was $4 higher in Nebraska and $5-$8 higher in the western Corn Belt. Although prices were higher, some thought the market was poised to reap steeper gains.

Through Thursday, the five-area direct weighted negotiated fed steer price was $109.46/cwt. on a live basis, which was $3.11 more than the previous week but $5.69 less than the same week in 2019. The average steer price in the beef was $171.88, which was $6.58 more week to week but $10.07 less year over year.

Cattle futures closed sharply lower Friday, with much of the pressure seemingly tied to overbought conditions, week-end positioning and fears that escalating COVID-19 cases will take another whack at packer production.

Live Cattle futures closed an average of $1.61 lower, from $1.10 lower toward the back to $2.57 lower toward the front.

Feeder Cattle futures closed an average of $2.38 lower.

Choice boxed beef cutout value was 52¢ lower Friday afternoon at $225.98/cwt. Select was $1.22 higher at $209.46.

Corn futures closed mostly 1¢ to 2¢ higher.

Soybean futures closed mostly 4¢ to 9¢ higher through Nov ‘22 and then mostly unchanged. 

******************************

U.S. financial indices closed higher Friday, as investors seemed less worried about the surge in COVID-19 cases and more comfortable that the recently announced vaccine will enable the nation to get back to business, ultimately.

The Dow Jones Industrial Average closed 399 points higher. The S&P 500 closed 48 points higher. The NASDAQ was up 119 points.

******************************

“Agriculture will need to speak up with the new administration on its priorities, and we need to strengthen the bipartisan nature of American agriculture,” explained former assistant U.S. trade representative Sharon Bomer Lauritsen at last week’s virtual U.S. Meat Export Federation (USMEF) Strategic Planning Conference.

“There has never been a more important time to maintain a strong and unified agriculture and agribusiness voice at the state level, and in Washington, D.C., to balance the industrial voices,” Bomer Lauritsen said. “U.S. agriculture will need to defend and advance its interests, make sure they are heard over the non-ag voices, and keep the rules of trade strong and enforced to ensure that American agricultural exports continue to thrive.”

Bomer Lauritsen, who recently retired from the U.S. government after 29 years of service and is now a trade policy consultant at Ag Trade Strategies, LLC, recapped many key trade breakthroughs for U.S. red meat over the years. She noted that while the Trump administration’s approach to tariffs and trade sometimes put agricultural exports in a negative position, it also helped bring key trading partners such as Japan and China to the negotiating table on longstanding market access obstacles for U.S. beef and pork. She also offered a preview of what to expect from a new administration.

“President-elect Biden has stated his priority will be fixing domestic issues first, but that doesn’t mean that the new administration at lower levels can’t lay the groundwork to build constructive relationships and a foundation for trade negotiation,” she said. “Biden also hasn’t rejected engaging on the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), but has stated the U.S. would need to see changes. I think it’s possible to move forward with a Japan negotiation, although automotive issues will be difficult and could have ramifications for agriculture.”

Further, Pat Binger, new USMEF chair, explained that despite facing trade barriers and an uncertain economic climate in many key regions of the world, there are excellent prospects to further expansion of U.S. red meat’s global footprint.

“From a carcass utilization standpoint, we need to continue to find ways to expand our export product mix—that’s a big opportunity going forward,” Binger said. “Additionally, there are items today that our industry is not getting boxed, either due to lack of labor or a combination of labor and complexity, and that’s another opportunity that we need to manage through. But all in all, I am very optimistic about the U.S. red meat industry’s ability to take on challenges and seize the opportunities that lie ahead. I remain excited and highly encouraged about the future of our industry.”