Daily Market Highlights

Negotiated cash fed cattle trade on Thursday continued steady with last week in Nebraska and the western Corn Belt at mostly $115/cwt. on a live basis. Dressed sales were steady to $1 higher at $182.

Cattle futures strengthened on Thursday, regaining some of the losses from the previous session, with continued overall strength in beef demand.

Live Cattle futures closed an average of 59¢ higher (32¢ higher to 97¢ higher in spot Dec).

Feeder Cattle futures closed an average of 84¢ higher, (42¢ to $1.22 higher).

Wholesale beef values were lower on light to moderate demand and moderate to heavy offerings, according to the Agricultural Marketing Service.

Choice boxed beef cutout value was $1.28 lower Thursday afternoon at $241.06/cwt. Select was $1.69 lower at $215.84.

Steer carcasses weighed an average of 903 lbs. for week ending Nov. 2, which was 3 lbs. lighter than the previous week, but 4 lbs. heavier than the same time a year earlier, according to the most recent USDA Actual Slaughter Under Federal Inspection report. Fed heifer carcasses weighed an average of at 835 lbs., on par with the previous week and year.

Corn futures closed mostly 1¢ higher.

Soybean futures closed mostly unchanged to 3¢ lower, but 1¢ higher in a couple of the front months.

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

Major U.S. financial indices closed little changed Thursday.

The Dow Jones Industrial Average closed 1 point lower. The S&P 500 closed 2 points higher. The NASDAQ was down 3 points.

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

So far, rather than swap alternative proteins for real meat, it appears consumers in the western world are adding alternatives to what they already eat, according to the annual global animal protein outlook from RaboResearch Food & Agribusiness (RRFA).

“Contrary to expectations, the growing interest in alternative proteins has added to total protein consumption; the substitution effect is not yet clear in the consumption data,” according to RRFA analysts. “At the same time, animal

protein consumption has been stable, or up slightly, in the E.U. and U.S. in recent years. This is despite double-digit growth in alternatives’ sales: 16% year-over-year growth for 2018 in the U.S. and a compound annual growth rate of 16% in the Netherlands since 2016.”

Rabobank expects alternative protein consumption to grow next year, along with meat and seafood consumption.

“We also expect more clarity as to whether alternatives are an addition to or a substitute for meat and seafood. Alternatives will need to improve their nutritional profile and eating quality, and address regulatory barriers such as terminology, in order to maintain current growth rates,” according to RRFA analysts.

Negotiated cash fed cattle trade developed in the Southern Plains Wednesday with prices steady to $1 higher at $115/cwt. on a live basis.

There were 1,393 head offered in the weekly Fed Cattle Exchange Auction, and no takers. Two lots from the Southern Plains were passed at bids of $115.00 and $115.50/cwt.

Choice steers and heifers sold $1.50-$2.00 higher at the fat auction in Tama, IA on Wednesday. There were 358 Choice 2-4 steers weighing an average of 1,452 lbs. and bringing an average price of $117.68. Country trade in the region last week was at $114-$115.

Cattle futures stepped lower, though, with heavy volume and about even open interest. Rather than the beginning of a correction, one could argue retrenchment ahead of what looks to be a higher trending market.

Live Cattle futures closed an average of $1.60 lower.

Feeder Cattle futures closed an average of $3.13 lower, ($2.25 to $4.30 lower). A day earlier, the CME Feeder Cattle Index reached the highest level since last December at $147.44. 

Wholesale beef values were higher on good demand and light offerings, according to the Agricultural Marketing Service.

Choice boxed beef cutout value was $1.84 higher Wednesday afternoon at $242.34/cwt. Select was $1.30 higher at $217.53.

Corn futures closed 2¢ to 3¢ lower.

Soybean futures closed mostly 2¢ lower.

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

Major U.S. financial indices closed mixed on Wednesday, with support from positive news, including a stout pop in Disney shares, capped by another see-saw chapter of U.S.-China trade talks; reports that there was yet another snag.

The Dow Jones Industrial Average closed 92 points higher. The S&P 500 closed 2 points higher. The NASDAQ was down 3 points.

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

“Besides the impact of ASF (African Swine Fever), many trade disputes and issues are causing uncertainty for global animal protein, with the US-China trade war the most apparent, but not the only trade uncertainty,” says Justin Sherrard, Global Strategist, Animal Protein at RaboResearch Food & Agribusiness (RRFA). “In addition, the ongoing rise of alternative proteins also adds to the uncertainty, even though Rabobank has a less bullish view of alternatives than others do.”

RRFA released its annual global animal protein outlook Wednesday.

Rabobank projects protein growth in most regions next year, but analysts say production losses, due to ASF, particularly in China, will exceed combined production growth in all other regions.

For North America, Rabobank anticipates production growth from all species, led by pork and followed by poultry and then beef.

“We expect U.S. beef production to be up slightly, by less than 1% in 2020,” according to the report. “Non-fed slaughter could also be up a little, as a result of liquidation. We expect the calf crop to come down slightly, reflecting weather conditions at calving and in the spring. We expect carcass weights to return to trend, offsetting any reduction in numbers.

“With only a fractional increase in production and solid exports, U.S. fed cattle prices are expected to change little. We expect a spring high of $128-$130/cwt. and a summer low of $100-$105.”

Cattle futures traded either side of steady on Tuesday, awaiting further direction from the cash market.

Live Cattle futures closed narrowly mixed but mostly marginally higher, from an average of 8¢ lower to an average of 11¢ higher.

Feeder Cattle futures closed narrowly mixed, from 17¢ lower to 22¢ higher.

Currently strong market fundamentals should grow more positive when Tyson reopens the Kansas plant that was shuttered by fire in August. During a Tuesday conference call to share the company’s fourth-quarter fiscal results, Noel White, Tyson CEO said the company expects to have the plant fully operational within 60 days, and potentially sooner.

Wholesale beef values were higher on Choice and sharply higher on Select with moderate to good demand and light to moderate offerings, according to the Agricultural Marketing Service.

Choice boxed beef cutout value was $1.91 higher Tuesday afternoon at $240.50/cwt.—the highest since June of 2017. Select was $2.54 higher at $216.23.

Corn futures closed 3¢ to 4¢ higher through Jly ’20 and then mostly 1¢ higher.

Soybean futures closed fractionally mixed to 1¢ lower.

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

Major U.S. financial indices mainly edged higher on Tuesday, supported once again by positive quarterly corporate earnings.

The Dow Jones Industrial Average closed unchanged. The S&P 500 closed 4 points higher. The NASDAQ was up 21 points.

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

Increased uncertainty and price pressure from the Tyson plant fire may have helped encourage some cow-calf producers to begin herd liquidation, says Elliott Dennis, livestock marketing economist at the University of Nebraska-Lincoln.

To illustrate the market uncertainty leading into the fire, Dennis uses the example of a cow-calf producer in the Northern Plains, who calves in March or April and then sells weaned calves in October. At calving time, Dennis points out Feeder Cattle futures for Oct were around $157. After higher Corn futures rose in response to late and poor planting conditions, and applied price pressure to Feeder Cattle, he explains the October Feeder Cattle contract fluctuated between $132 and $145 in June, July and August, before sinking to $127, in the wake of the Tyson plant fire. By expiration, the contract was back up $145.

“How risk averse producers were likely determined price risk management used and ultimately gross revenue received for sold calves,” Dennis says, in the latest issue of In the Cattle Markets. He adds that cow-calf producers could respond to the increased market volatility by selling cows and exiting the market or by retaining beef cows for breeding.

Although the number of beef cows bred and the number of heifers retained for breeding this year won’t be known until the Jan. 1 USDA Cattle report, Dennis says cow slaughter provides some indication of producer response.

Beef cow slaughter numbers this year tracked close to last year’s pace through much this year. However, Dennis says, USDA’s Cow Slaughter Under Federal Inspection reports suggest a large beef cow sell-off since the week of September 14. He adds that beef cow slaughter numbers are on an upward trend and show no sign of slowing down.

Besides the fire, Dennis explains cow slaughter likely increased, due to skyrocketing prices for 90% lean beef, tighter hay supplies borne by the wet spring and summer, and the slow recovery of cash prices.

“In the short term, this reduction in beef cows affects the number of calves born next year, and feeder cattle available to enter feedlots,” Dennis says. “In the long term, it could ultimately signal that the industry is beginning to enter a contraction phase of the cattle cycle.”

Cattle futures firmed and gained on Monday, supported by currently positive fundamentals, including seasonal strength for wholesale beef values and cash fed cattle prices.

Live Cattle futures closed an average of 56¢ higher.

Feeder Cattle futures closed an average of 92¢ higher (57¢ to $1.25 higher).

Wholesale beef values were weak on Choice and firm on Select with light to moderate demand and light offerings, according to the Agricultural Marketing Service.

Choice boxed beef cutout value was 53¢ lower Monday afternoon at $238.59/cwt. Select was 43¢ higher at $213.69.

Corn futures closed 4¢ lower through Jly ’20 and then mostly 2¢ lower.

Soybean futures closed 10¢ to 14¢ lower through Nov ’20 and then 5¢ to 9¢ lower.

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

Major U.S. financial indices closed marginally mixed on Monday, amid mixed news.

The Dow Jones Industrial Average closed 10 points higher. The S&P 500 closed 6 points lower. The NASDAQ was down 11 points.

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

“Prices for most weight classes of feeder cattle increased last week, suggesting that the last week of October may have been the seasonal low,” says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University. “However, cold weather this week may dampen demand and could pressure prices a bit more as large fall run numbers will likely continue for another couple of weeks.”

In his weekly market comments, Peel explains price patterns are typical for the time of year in Oklahoma, with prices per hundredweight decreasing sharply from 400 to 600 lbs. and prices largely unchanged at weights from 600 to 800 lbs.

“The current price patterns suggest marketing considerations for both cow-calf sellers and stocker buyers. For example, the value of additional weight for retained weaned calves depends on the weaning weight of the animals and the amount of additional weight planned,” Peel explains. “At 450 lbs., the value of 50 lbs. of weight gain is only $34/head but the value of 50 additional lbs. for a steer weighing 550 lbs. at weaning is $46/head. However, under the current price pattern, the value per pound of additional weight is higher as more weight is added. Of course, prices at this point in time do not account for price changes over the time it takes to add additional weight. However, current price patterns provide information about potential value relative to additional costs to add weight.”

Cash fed cattle trade ended the week at $114-$115/cwt. in the Southern Plains, which was mainly $2 higher in Kansas and $2-$3 higher in the Texas Panhandle. In Nebraska, live trade was unevenly steady at $114-$116. Prices in the western Corn Belt were $1-$2 higher at $114-$115. Dressed trade was $1-$2 higher at $181-$182.

Cattle futures closed narrowly mixed to marginally higher with positive Live Cattle fundamentals tempered by the more price-positive outlook for corn prices (see World Agricultural Supply and Demand Estimates below).

Except for 20¢ lower in the back contract, Live Cattle futures closed an average of 19¢ higher.

Feeder Cattle futures closed narrowly mixed (27¢ lower to 22¢ higher).

Wholesale beef values were higher on Choice and steady on Select with moderate demand and offerings, according to the Agricultural Marketing Service.

Choice boxed beef cutout value was 83¢ higher Friday afternoon at $239.12/cwt. Select was 24¢ higher at $213.26.

Corn futures closed 2¢ higher through Jly ’20 and then mostly 1¢ higher.

Soybean futures closed mostly 3¢ to 5¢ Lower. 

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

Major U.S. financial indices edged higher on Friday, with continued optimism regarding progress in U.S.-China trade talks.

The Dow Jones Industrial Average closed 6 points higher. The S&P 500 closed 7 points higher. The NASDAQ was up 40 points.

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

Forecast total red meat and poultry production for this year increased by 257 million lbs. to 105.02 billion lbs. (+0.25%) in the monthly World Agricultural Supply and Demand Estimates (WASDE) issued Friday.

Projected beef production increased 88 million lbs. to 27.04 billion lbs. (+0.32%) on higher expected slaughter of fed cattle and non-fed cattle.

The expected average fed steer price (5-area direct) for this year increased 50¢ from the previous month to $116/cwt., based on recent price strength. Fourth-quarter price is projected at $112.

Forecast total red meat and poultry production for next year increased by 45 million lbs. to 107.46 billion lbs., with increased broiler and turkey production offsetting lower anticipated beef production. That would be 2.44 billion lbs. (+2.32%) more than this year.

Total projected beef production for next year was lowered by 120 million lbs. (-0.43%) on a slower expected pace of gains in carcass weights. That would be 514 million lbs. (+1.90%) more than this year.

The annual fed steer price for next year is projected at $116, with the first-quarter price at $120 and the second-quarter price at $117.

Corn

WASDE increased the season-average corn price by 5¢ to $3.85/bu., based on current prices.

This month’s 2019-20 U.S. corn outlook is for lower production, reduced use, and smaller ending stocks.

Corn production is forecast at 13.66 billion bu., down 118 million from last month with reduced yield of 1.4 bu. to 167.0 bu./acre. Corn ending stocks are lowered 18 million bu. 

Soybeans

The U.S. soybean outlook is for slightly lower production of 3.55 billion bu., down less than 1 million bu. from the previous month, on fractionally lower yields and unchanged harvested area. But, ending stocks were projected higher on reduced crush.

The U.S. season-average soybean price for 2019-20 is forecast at $9/bu., unchanged from last month. The soybean meal price forecast is also unchanged at $325/short ton. The soybean oil price is forecast at 31¢/lb., up 1¢ from last month, on sharply higher reported prices through October.

Wheat

The outlook for 2019-20 U.S. wheat is for smaller supplies, reduced domestic use, and lower stocks. Projected wheat supplies were lowered by 42 million bu., based on updated production estimates for the states resurveyed following the NASS Small Grains Summary, issued September 30.

The season-average farm price was reduced 10¢/bu. to $4.60, based on NASS prices reported to date and expectations for cash and futures prices the remainder of the 2019-20 marketing year.

Negotiated cash fed cattle trade remained largely undeveloped through Thursday afternoon, based on USDA reports. There was some early dressed trade in Nebraska at $181-$182/cwt., which was $1-$2 higher than last week. Although too few to trend, there were also some dressed sales in the western Corn Belt at $181-$182 and some live at $114.

Continued higher wholesale beef values, the positive outlook for cash prices and higher outside markets helped lift Cattle futures Thursday.

Except for unchanged in spot Dec, Live Cattle futures closed an average of 42¢ higher.

Except for 2¢ lower in spot Nov, Feeder Cattle futures closed an average of 96¢ higher (40¢ to $1.52 higher).

Wholesale beef values were higher on moderate to fairly good demand and moderate offerings, according to the Agricultural Marketing Service.

Choice boxed beef cutout value was $1.15 higher Thursday afternoon at $238.29/cwt. Select was $1.49 higher at $213.02.

Grain futures were mixed as traders positioned themselves ahead of Friday’s monthly World Agricultural Supply and Demand Estimates.

Corn futures closed 2¢ to 4¢ lower through Sep ’20 and then mostly 1¢ lower.

Soybean futures closed 7¢ to 10¢ higher through Aug ’20 and then mostly 2¢ to 5¢ higher.

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

Major U.S. financial indices climbed on Thursday, with reports that the U.S. and China are making progress on a trade deal, including agreement to roll back some existing tariffs if and when a deal is struck.

The Dow Jones Industrial Average closed 182 points higher. The S&P 500 closed 8 points higher. The NASDAQ was up 23 points.

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

“Fed cattle, feeder cattle, and calf cash prices have all been stronger than expected through this fall. Live Cattle and Feeder Cattle futures contract prices have also shaken off the pessimism of abundant supplies, compounded by the unexpected closure of the Tyson beef plant in southwest Kansas,” says Stephen Koontz, agricultural economist at Colorado State University, in the latest issue of In the Cattle Markets.

He explains part of the support comes from the supply side, including the lighter year-over-year carcass weights for much of the year, as well as packers running substantial Saturday kills for a long while.

“What is being discussed less is the strong retailer and, by definition, consumer effects,” Koontz says. “Packers margins have been very strong in August and September, and likely October, approaching $500 per head. These are the live-to-wholesale beef price spreads. This value is much higher than other months and much higher than prior year highs. This is, of course, due in part to the plant closure. But it is interesting that the live-to-retail price spread has moved little in these same two months. The live-to-retail spread is up less than 2-3%. The retailer margin or the wholesale-to-retail spread has declined sharply. Again, the live-to-wholesale spread is up, the live-to-retail spread is even, so it is the retailer that has taken a chunk out of their margin.”

Koontz also points to the current Choice-Select spread of more than $25/cwt. compared to what’s typically about $10 this time of year.

“It is clear the retailer has helped the cattle market turn the corner on any pessimism from summer supplies and slaughter disruption. And, there does not appear to be any pushback from the consumer,” Koontz says.

Negotiated cash fed cattle trade remained undeveloped through Wednesday afternoon, but early indications were positive.

Choice steers and heifers sold $1.75-$2.00 higher at the fat auction in Tama, IA. There were 192 head of Ch 2-4 steers weighing an average of 1,455 lbs. that brought an average price of $116.28/cwt. That was $2-$3 higher than last week’s country trade in the region.

Likewise, slaughter steers and heifers traded $1-$2 higher at Sioux Falls Regional in South Dakota. There were 348 head of Ch 2-3 steers weighing an average of 1,468 lbs. and bringing an average price of $113.03.

Only 547 head were offered in Wednesday’s weekly Fed Cattle Exchange auction, and no takers. There were two heifer lots from the Southern Plains passed on with bids of $114/cwt. and $113.

Cattle futures softened, though, likely with some defensiveness ahead of the Goldman Roll, when the Goldman Sachs Commodity Index rolls its futures holdings forward from the expiring month.

Live Cattle futures closed an average of 57¢ lower, except for 2¢ higher in near Feb.

Feeder Cattle futures closed an average of $1.03 lower (67¢ to $1.35 lower).

Wholesale beef values were firm on moderate to good demand and offerings, according to the Agricultural Marketing Service.

Choice boxed beef cutout value was $1.09 higher Wednesday afternoon at $237.14/cwt. Select was $1.71 higher at $211.53.

Corn futures closed 2¢ to 4¢ lower through Sep ’20 and then mostly unchanged to fractionally lower.

Soybean futures closed 3¢ to 6¢ lower across most of the board.

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

Major U.S. financial indices basically hovered in place on Wednesday, with continued strong quarterly corporate earnings tempered by lingering uncertainty about a U.S.-China trade deal.

The Dow Jones Industrial Average closed fractionally lower. The S&P 500 closed 2 points higher. The NASDAQ was down 24 points.

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

U.S. beef exports in September were steady with last year in volume at 109,799 metric tons (mt), but value was 4% less at $661.3 million, according to data released by USDA and compiled by the U.S. Meat Export Federation (USMEF).

Through the first three quarters of the year, beef exports were 2% below last year’s record pace in both volume (991,325 mt) and value ($6.1 billion).

“While red meat exports face obstacles in some key markets, global demand dynamics are strong and we see opportunities for significant growth in the fourth quarter and into 2020,” says USMEF President and CEO Dan Halstrom. “Progress is being made on market access improvements and this makes for a very positive outlook going forward.”

With that said, lingering trade issues continue to constrain potential. For instance the recently signed U.S.-Japan trade agreement awaits approval, and tariff relief, from the Japanese Parliament. In the meantime, September beef exports to that leading market were 14% below last year in both volume (24,041 mt) and value ($148.3 million).

“Japan is still delivering excellent value for U.S. beef producers, but tariff relief cannot come soon enough,” Halstrom says. “With a level playing field, the U.S. beef industry will move a wider range of products to our loyal customers in Japan and will definitely capitalize on emerging growth opportunities.”

Beef export value per head of fed slaughter averaged $318.54 in September, up significantly from the previous month but 5% below last year. The January-September average was down 3% at $310.77.

U.S. Pork Exports Churn Higher

U.S. pork exports in September increased 13% from a year ago in both volume (202,248 mt) and value ($532.2 million). For January-September, pork export volume was 5% ahead of last year’s pace at 1.9 million mt, while value increased 2% to $4.89 billion.

“Although the U.S. industry has made rebuilding pork demand in Mexico a top priority, there is definitely a lingering effect from the retaliatory duties, which were in place for nearly a full year,” Halstrom explains. “While it is a great relief to once again move pork to Mexico duty-free, ratification of the U.S.-Mexico-Canada Agreement would certainly help the psychology of the market and bolster our major customers’ confidence in the U.S. supply chain.”

Cattle futures faded early pressure to close mainly narrowly mixed on Tuesday, supported by the continued surge in beef cutout values and the outlook for steady to higher cash fed cattle prices this week.

Except for 62¢ lower in spot Dec and 52¢ higher at the back of the board, Live Cattle futures closed marginally mixed (10¢ lower to 25¢ higher).

Other than $1.22 lower in spot Nov and 10¢ higher at the back of the board, Feeder Cattle futures closed an average of 11¢ lower.

Wholesale beef values were higher on Choice and weak on Select with light to moderate demand and offerings, according to the Agricultural Marketing Service.

Choice boxed beef cutout value was $1.24 higher Tuesday afternoon at $236.05/cwt. Select was 56¢ lower at $209.82.

Corn futures closed mostly 1¢ lower.

Soybean futures closed 3¢ to 4¢ lower through Jan. ’21 and then mostly 1¢ lower.

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

Major U.S. financial indices closed narrowly mixed Tuesday, amid continued strong quarterly corporate earnings reports.

The Dow Jones Industrial Average closed 30 points higher. The S&P 500 closed 3 points lower. The NASDAQ was up 1 point.

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

Agricultural producer sentiment rose in October, according to the Purdue University/CME Group Ag Economy Barometer. It increased 15 points from September to a reading of 136. Sub-indices also increased, with an increase of 15 points in both the Index of Current Conditions (155) and the Index of Future Expectations (146).

The barometer is based on a mid-month survey of 400 U.S. crop and livestock producers.

“Almost across the board, farmers were more optimistic about the agricultural economy in October,” says James Mintert, the barometer’s principal investigator and director of Purdue University’s Center for Commercial Agriculture. “While the level of optimism among farmers is higher than earlier this year, the survey uncovered additional uncertainty related to trade agreements that are still being negotiated.”

For instance, 96% of producers indicated the U.S.-Mexico-Canada Trade Agreement—waiting for approval by Congress—was either important or very important. However, only 55% expect it to be approved by Congress soon. At the same time, 97% of producers felt the recently announced trade deal with Japan was also important or very important to U.S. agriculture.

As for the ongoing trade war between the U.S. and China, 51% of respondents believed an imminent resolution was unlikely. But, that was 8% fewer than in September and 20% less than when the same question was posed in August. At the same time, 75% in the October survey said they expect the final outcome will ultimately prove beneficial to U.S. agriculture. October was the fourth consecutive month that more than 70% expected a beneficial outcome to the trade dispute.

When all was said and done last week, negotiated cash fed cattle sales ended up $2 higher on a live basis in the Southern Plains at $112/cwt., mostly $5 higher in Nebraska at mostly $115 and $3-$4 higher in the western Corn Belt at $113-$114. Dressed sales were mostly $5 higher at mostly $180.

Cattle futures edged mostly higher to start the week, maintaining gains from Friday’s rally, borne by higher cash fed cattle prices and increasing wholesale beef values.

Live Cattle futures closed an average of 39¢ higher.

Other than 5¢ lower and unchanged in the front two contracts, Feeder Cattle futures closed an average of 63¢ higher (17¢ to $1.07 higher).

Wholesale beef values were higher to sharply higher on good demand and moderate offerings, according to the Agricultural Marketing Service.

Choice boxed beef cutout value was $1.61 higher Monday afternoon at $234.81/cwt. Select was $2.87 higher at $210.38.

Corn futures closed 3¢ to 6¢ lower in the front four contracts and then mostly 1¢ to 2¢ lower.

Soybean futures closed mostly 2¢ higher through Jan. ’21 and then mostly fractionally lower.

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

Major U.S. financial indices closed higher Monday, with follow-through buying from Friday’s rally, sparked by a strong monthly employment report and continued strong quarterly corporate earnings.

The Dow Jones Industrial Average closed 114 points higher. The S&P 500 closed 11 points higher. The NASDAQ was up 46 points.

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

Cyclical price support could be nearer than previously supposed, based on recent estimates from the Livestock Marketing Information Center (LMIC).

First, LMIC projects the Jan. 1 cattle inventory will be slightly less year over year.

“Regional cow slaughter suggests beef cows are being slaughtered at a much higher rate in most of the regions except the Southern Plains,” say LMIC analysts, in the latest Livestock Monitor. “Total beef cow slaughter through 42 weeks of the year is up 2.9%. Heifer slaughter continues to post large gains compared to a year ago. Weekly heifer slaughter year to date is up 7.3%.”

Further, LMIC analysts explain heifer slaughter is on pace for about 500,000 head more than was in the Jan. 1 ‘other heifer’ category.

“That would indicate more heifers that were considered for replacement were pulled from the herd,” they say. “The latest Cattle on Feed report showed 39% of the on-feed mix were heifers. This suggests that the number of heifers held for replacement for beef-type animals will also likely be below a year ago. LMIC is penciling in beef heifer replacements down more than 2%.”

As for dairy, LMIC analysts say the cow inventory edged lower since last year, with the latest milk production report indicating 30,000 fewer cows than when the year began.

Finally, LMIC analysts point out steer slaughter for the first 42 weeks of this year is more than 2% less than the same period last year.

“Reconciling the steer slaughter deficit against 2018’s large 1.8% increase in the calf-crop year from the previous year has been difficult,” they say. “The calf crop and the number reported for steers 500 lbs. and heavier both appear to be too high in last year’s report (Cattle).”

Negotiated cash fed cattle trade remained undeveloped in the North through Friday afternoon, based on USDA reports. Although there were too few transactions to trend, a few live sales in the western Corn Belt were at $112-$114/cwt. and a few dressed sales in Nebraska were at $180. Compared to the previous week, that was $2-$4 higher on a live basis and $5 higher in the beef.

Furthermore, USDA’s Direct Slaughter Cattle Reporting Dashboard tallied 12,560 head of steers and heifers Friday (live and dressed), with the average steer price at $113.70 on a live basis and $177.04 in the beef.

For the week, live sales in the Southern Plains were $2 higher at $112/cwt.

Stronger cash prices and the recent surge in wholesale beef values helped Cattle futures rally on Friday.

Not counting 40¢ lower in newly minted away April, Live Cattle futures closed an average of $1.55 higher ($1.07 higher to $2.30 higher in spot Dec).

Feeder Cattle futures closed an average of $1.94 higher ($1.32 to $2.72 higher).

Wholesale beef values were higher on moderate to good demand and offerings, according to the Agricultural Marketing Service.

Choice boxed beef cutout value was $1.02 higher Friday afternoon at $233.20/cwt. Select was also $1.02 higher at $207.51.

Corn futures closed mostly fractionally lower.

Soybean futures closed 3¢ to 7¢ higher through Aug. ’20 and then mostly 1¢ lower.

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

Major U.S. financial indices closed higher Friday, buoyed by a strong monthly employment report.

Total non-farm payroll employment increased by 128,000 in October, according to the U.S. Bureau of Labor Statistics. That was significantly more than expectations. The unemployment rate was little changed at 3.6%. The average hourly earnings of all employees on non-farm payrolls increased 6¢ to $28.12. Average hourly earnings are 3.0% higher over the last 12 months.

Crude oil rallied with West Texas Intermediate (CME) up $1.80 to $2.02 higher through the front 12 contracts.

The Dow Jones Industrial Average closed 301 points higher. The S&P 500 closed 29 points higher. The NASDAQ was up 94 points.

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

Choice boxed beef cutout value was $233.20/cwt. Friday, the highest since August—about a week after the Tyson fire. That was $14.65 more (+6.7%) than a year earlier. At $207.52 on Friday, Select was $3.27 more (+1.6%) more. The Choice-Select spread was 79.6% higher (+$11.39) at $25.69.

“Most of the strength in cutout prices right now is coming from the rib and brisket primal, with slight support from the chuck and round,” says Andrew P. Griffith, agricultural economist at the University of Tennessee, in his weekly market comments. “The chuck and round will bear more of the burden of supporting the cutout value moving through the winter months.”

Griffith also notes 90%-lean beef prices remain strong, despite seasonal fourth-quarter pressure.

“Current prices are about 16% above where they were this time one year ago, but they are slightly lower than the five-year average price for the beginning of November,” Griffith says.