Daily Market Highlights

Negotiated cash fed cattle prices finally moved beyond steady money Wednesday.

Live prices were $2 higher in the Southern Plains at $126/cwt., $2 higher in the western Corn Belt at $126-$127 and $2-$3 higher in Nebraska at $127. Dressed trade was $4 higher at $200.

Trade was slow on light demand in the Southern Plains and western Corn Belt, according to the Agricultural Marketing Service. It was slow to moderate on good demand in Nebraska.

Despite stronger cash prices, Live Cattle futures closed narrowly mixed, from an average of 28¢ higher through the front five contracts to an average of 18¢ lower.

Although turning the seasonal corner higher, wholesale beef prices were lower Wednesday afternoon. Choice was down $1.13 to $283.63/cwt. Select was 85¢ lower at $261.69.

Feeder Cattle futures softened, though, in the wake of a strong surge in Corn futures.

Feeder Cattle closed and average of $1.34 lower, except for 52¢ higher in nearly spent Oct.

Corn futures closed mostly 10¢ to 13¢ higher with support from ethanol production and lower corn production in Brazil.

Soybean futures closed mostly 2¢ to 3¢ higher.

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Major U.S. financial indices closed mixed Wednesday amid what appeared to be rally fatigue, likely profit taking and skittishness about economic growth. Crude Oil futures were also down sharply on higher weekly inventories than expected.

The Dow Jones Industrial Average closed 266 points lower. The S&P 500 closed 23 points lower. The NASDAQ was up fractionally.

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“Solid grain prices, the Federal Reserve’s record-low interest rates and growing exports have underpinned the Rural Mainstreet Economy,” says Ernie Goss, Jack A. MacAllister Chair in Regional Economics at Creighton University’s Heider College of Business. “USDA data show that 2021 year-to-date agriculture exports are more than 25.4% above that for the same period in 2020. This has been an important factor supporting the Rural Mainstreet economy.”

Creighton University’s Rural Mainstreet Index (RMI) remained above growth neutral in October for the eleventh consecutive month. It rose to 66.1 from 62.5 in September. The index is based on a monthly survey of bank CEOs in rural areas of a 10-state region dependent on agriculture and/or energy.

The majority of bankers (82.1%) indicate farmers in their area are in solid cash position with little need for borrowing.

The region’s farmland price index slid to a very strong 81.5 from September’s record high 85.2. October’s reading represented the 14th straight month that the index was above growth neutral.

Cattle futures stepped higher Tuesday, helped along by follow-through support from the friendly Cattle on Feed report, as well as early indications of cash prices pushing past steady this week and wholesale beef prices turn seasonally higher.

Feeder Cattle futures closed an average of $1.33 higher (35¢ to $2.05 higher).

Those gains came despite Corn futures closing mostly 3¢ to 5¢ higher.

Soybean futures closed mostly fractionally higher to 2¢ higher.

Live Cattle futures closed an average of $1.48 higher.

Negotiated cash fed cattle trade was slow on light demand in the Texas Panhandle through Tuesday afternoon, according to the Agricultural Marketing Service. Prices were mainly steady with last week at $124/cwt., but a few traded $1 higher at $125.

Elsewhere, trade ranged from mostly inactive on light demand to a standstill with too few transactions to trend.

Last week, live prices were $124 in Kansas and $124-$125 in Nebraska and the western Corn Belt. Dressed prices were $196.

Choice boxed beef cutout value was $1.72 higher at $284.76/cwt. Select was 65¢ lower at $262.54.

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Major U.S. financial indices edged higher Tuesday, fueled once again by strong corporate quarterly earnings reports. Consumer confidence added luster.

The Conference Board Consumer Confidence Index® increased to 113.8 in October from 109.8 in September.

“Consumer confidence improved in October, reversing a three-month downward trend as concerns about the spread of the Delta variant eased,” says Lynn Franco, Senior Director of Economic Indicators at The Conference Board. “While short-term inflation concerns rose to a 13-year high, the impact on confidence was muted. The proportion of consumers planning to purchase homes, automobiles, and major appliances all increased in October—a sign that consumer spending will continue to support economic growth through the final months of 2021. Likewise, nearly half of respondents (47.6%) said they intend to take a vacation within the next six months—the highest level since February 2020, a reflection of the ongoing resurgence in consumers’ willingness to travel and spend on in-person services.”

The Dow Jones Industrial Average closed 15 points higher. The S&P 500 closed 8 points higher. The NASDAQ was up 9 points.

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“While the incentives to retain cattle and put on additional weight appear to be present this year in some locations, producers must calculate their operations’ value and cost of gain to determine if it is a correct decision,” says Elliott Dennis, Extension livestock economist at the University of Nebraska-Lincoln. “Using some form of risk management could be appropriate given the assumptions about volatility and price certainty.”

In the latest issue of In the Cattle Markets from the Livestock Marketing Information Center, Dennis explains feed costs and beef demand are two factors that could take the shine of what currently appear to be price trends conducive for cow-calf producers to retain cattle for longer this fall.

Although projected corn production is more than expected just a couple of months ago, the forecast season-average price of $5.45/bu. is significantly higher than last year, as are other feeds. Drought raised the price floor beneath forage and hay prices. Odds favor La Nina conditions through the winter, which point to similar temperature and moisture conditions as last year.

“If this weather forecast materializes, then the price for grass and hay will continue to rise, pasture rental rates adjust higher and likely continue the cow herd liquidation this has persisted over the last three years,” Dennis says. “…Some feeding regions are coming off two years of drought conditions and many producers have already sold off both feeder cattle and parts of the cow herd.”

 As for beef demand, Dennis says there are early indications that higher beef prices are creating consumer reluctance to continue buying at the same pace.

“Beef exports have started to slow from their record-setting pace and as of yet, there are few advanced purchases for beef into 2022. This is one indication that the export markets have started to potentially move away from higher-priced U.S. beef,” Dennis explains. “In the domestic market, advanced purchases of wholesale beef from retail stores have also started to slow, indicating that perhaps domestic retailers are more willing to live in the cash market and then adjust featured products in the short run. This is perhaps one of the first signs that the price of beef is just too high for retailers to take any longer.”

Cattle futures found traction Monday from the friendly Cattle on Feed report.

Feeder Cattle futures closed an average of $1.25 higher, except for 20¢ higher in waning spot Oct.

Live Cattle futures closed an average of 92¢ higher.

Corn futures closed mostly marginally higher.

Soybean futures closed 9¢ to 16¢ higher.

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

Last week, trade was at $124.00/cwt. on a live basis in the Southern Plains and mainly $124-$125  in Nebraska and the western Corn Belt. Dressed trade was at $196.

Choice boxed beef cutout value was $1.22 higher Monday afternoon at $283.04/cwt. Select was 8¢ higher at $263.19.

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Major U.S. financial indices closed higher Monday, propelled by strong quarterly corporate earnings reports from tech heavyweights. The S&P 500 reached an all-time high, buoyed by consumer discretionary, energy and materials sectors. Crude oil reached $85/barrel for the first time since 2014.

The Dow Jones Industrial Average closed 64 points higher. The S&P 500 closed 22 points higher. The NASDAQ was up 137 points. 

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“Following the ripple effects of last year’s pandemic volatility, it appears that feedlot production has moved past the cyclically peak numbers and will decrease consistently going forward,” says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly market comments. He was talking about the most recent Cattle on Feed report published Friday.

“These numbers indicate that feedlots are front-loaded with heavy cattle and will remain so for a few more weeks, likely into December. This explains much of the inability of the fed cattle market to move into the tighter numbers needed to break out of current levels. However, the September placements show a very different picture ahead,” Peel explains.

Although cattle on feed Oct. 1 of 11.55 million head was 1.4% less than the previous year at 11.55 million head, the number was the second largest for the date since the data series began in 1996.

On the other hand, September placements were 2.9% less year over year and about 4% less than expected.

“Placements under 600 lbs. were down 1.2% year over year and placements over 800 lbs. were down 5.3%, including a 7.4% year-over-year decrease in placements over 900 lbs. The implication is that, while it is taking longer than expected to turn the corner on tighter feedlot numbers, the change may be relatively sudden and dramatic when it does arrive,” Peel explains. “Feedlots have responded to higher costs of gain by focusing more on heavy placements as long as possible. However, the overall decline in cattle numbers and the seasonal dynamics of fall placement weights should result in a rapidly changing feedlot situation by December and into 2022.”

Cash cattle price were generally mixed to steady last week as more calves make their way to town and as fed cattle keep slugging for extra traction.

“Seasonal weakness in the calf market is evident as producers have been setting wheels under calves the past several weeks at a rapid pace,” says Andrew P. Griffith, agricultural economist at the University of Tennessee, in his weekly market comments. “…As more calves make their way to the market, stocker producers become more selective in the cattle they will pay a premium for. Freshly-weaned calves tend to have an increased incidence of sickness this time of year as weaning stress is compounded by large temperature swings. From the stocker perspective, there is an opportunity to profit on calves being purchased and sold in truckload lots. The value of gain for an October purchase of a 525-pound steer and the sale of an 825-pound steer in March is $1.42 per pound with a 5% death loss. That is favorable math.”

Feeder Cattle futures closed an average of $1.99 lower on Friday (83¢ to $2.68 lower). Week to week, they were an average of $2.54 lower, amid profit taking from recent gains, slack interest, stagnant cash prices and skittishness about the monthly Cattle on Feed report. They received added pressure from resurgent Corn futures, which closed an average of 11¢ higher through the front six contracts week to week on Friday, with strong export demand.

However, Feeder Cattle perked up on Monday in response to the Cattle on Feed report. More on those numbers momentarily.

As mentioned in Cattle Current last week, in the monthly Livestock, Dairy and Poultry Outlook, ERS increased the projected annual average feeder steer price for next year by 50¢ to $155.50, based on expectations of tighter feeder cattle supplies in the second half of the year. Prices are forecast to average $153.00 in the first quarter, $151 in the second and $156.00 in the third quarter.

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Although there was some uptick on live prices in the North, negotiated cash fed cattle prices last week were mainly steady.

Regionally, trade last week, trade was at $124.00/cwt. on a live basis in the Southern Plains, $124.00-$126.50 in Nebraska and $124-$125 in the western Corn Belt. Dressed trade was at $196.

The five-area average direct fed steer price was 55¢ higher at $124.39/cwt. The average five-area price in the beef was 29¢ higher at $195.99.

“Cattle feeders and the industry have to be expecting prices to break one way or the other,” Griffith explains. “They will certainly do it, but the timing of such a price movement is becoming more difficult to decipher with week-after-week of steady prices.”

Live Cattle futures closed an average of $1.41 lower week to week on Friday, except for 5¢ higher in the back contract.

ERS projected the annual average fed steer price for next year at $128.75, compared to this year’s expected average of $121.06. Average prices are forecast at $130.00 in the first quarter, $128 in the second and $126.00 in the third quarter.

In the meantime, wholesale beef prices continue to show signs of turning the seasonal corner. Choice boxed beef cutout value was $1.58 higher week to week on Friday at $281.82/cwt. Select was $2.49 higher at $263.11.

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Major U.S. financial indices closed mixed on Friday. Tech stocks were pressured by Snap Inc. issuing a warning on ad spending, which took more than $100 billion in market value from various social media companies.

Also pressuring stocks was Fed a warning from Federal Reserve Chair Powell  that U.S. inflation is likely to last into next year and that it was, “time to taper.”  Overt the weekend, Treasury Secretary Janet Yellen echoed Powell, saying she expected inflation to remain through mid-year 2022.

The Dow Jones Industrial Average closed 74 points higher. The S&P 500 closed 5 points lower. The NASDAQ was down 126 points.

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For feedlots with 1,000 head or more capacity, according to the latest Cattle on Feed report, there were 2.16 million head placed in September, which was 64,000 fewer year over year (-2.9%). That was 4.1% fewer than the average of analyst estimates ahead of the report.

Marketing’s in September of 1.79 million head were 3.1% less than a year earlier, which was 0.4% less than average estimates.

Cattle on feed Oct. 1 of 11.55 million head was 167,000 head fewer than the previous year. That was 1.43% less. Average estimates ahead of the report saw a decline of 0.5%. The total was the second largest for the date since the data series began in 1996.

Negotiated cash fed cattle trade ranged from inactive on light demand to mostly inactive on light demand through Thursday afternoon, according to the Agricultural Marketing Service.

So far this week, live prices are steady in the Southern Plains at $124/cwt., steady to $2.50 higher in Nebraska at $124.00-$126.50 and steady to $1 higher in the western Corn Belt at $124-$125. Dressed prices are steady at $196.

Cattle futures closed mixed Thursday.

Live cattle were down an average of 63¢ lower on likely profit taking, pressure from Lean Hogs and positioning ahead of Friday’s Cattle on Feed report. Feeder Cattle managed to close narrowly mixed.

Feeder Cattle futures closed narrowly mixed, from an average of 36¢ lower to an average of 19¢ higher.

Choice boxed beef cutout value was 63¢ higher at $280.66/cwt. Select was 8¢ lower at $262.72/cwt.

As for grains, Corn and soybean futures closed lower Thursday beneath the weight of profit taking and lower crude oil prices.

Corn futures closed mostly 4¢ to 7¢ lower.

Soybean futures closed mostly 18¢ to 21¢ lower.

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Major U.S. financial indices closed mainly higher Thursday. Support included fewer weekly jobless claims than the trade expected. Initial weekly unemployment claims for the week ending Oct. 16 was 290,000, according to the U.S. Department of Labor. That was 6,000 fewer than the previous week and the lowest level since March 14 last year.

The Dow Jones Industrial Average closed 6 points lower. The S&P 500 closed 13 points higher. The NASDAQ was up 94 points.

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Slaughter data continues to suggest beef cow herd liquidation.

“The cow herd is in contraction mode this year as the drought and tough economical factors have made ranchers think of ways to keep the cow herd together,” according to analysts with the Agricultural Marketing Service. “Preliminary data from NASS puts the beef cow slaughter rate at around 9% more than a year ago and near 20% more than the previous five-year average. Heifer slaughter is 4.3% more than last year and 10.7% more than the previous five-year average. Producers will be looking at pregnancy checking females even more serious this year as production costs continue to rise.”

August beef and dairy cow slaughter was 6% higher year over year, according to USDA’s Economic Research Service (ERS), in the latest monthly Livestock, Dairy and Poultry Outlook. Combined cow slaughter was 7% more through the first four weeks of September, compared to the previous year.

“The increase in cow slaughter is likely the result of weaker margins in the dairy sector, which is affecting herd decisions and concerns about forage availability, and continued drought in parts of the country. These conditions are expected to result in increased cow slaughter in the fourth quarter.” say ERS analysts.

ERS increased forecast beef production for next year by 120 million lbs. to 26.99 billion lbs. on higher anticipated overall cattle slaughter.

“Dry conditions are expected to support relatively large placements in the second half of 2021, supporting a higher forecast of fed cattle slaughter in 2022,” ERS analysts explain. “However, production in the second half of the year will reflect lower placements as a result of expected tighter supplies of cattle outside feedlots in 2022.”

Negotiated cash fed cattle trade was slow with moderate demand in all major cattle feeding regions through Wednesday afternoon, according to the Agricultural Marketing Service.

Trade in the Southern Plains was mostly steady at $124/cwt.

Although too few to trend, there were some early live sales in Nebraska at $124.00-$126.50, and some in the western Corn Belt at $124-$125, compared to $124 in both regions last week. Early dressed sales were steady at $196.00.

Cattle futures closed higher Wednesday, bolstered by higher outside markets, leveling wholesale beef values, slightly higher cash prices and positioning ahead of Friday’s Cattle on Feed report. Trade volume remained on the low side.

Live Cattle futures closed an average of 74¢ higher (50¢ to 95¢ higher).

Choice boxed beef cutout value was 85¢ lower Wednesday afternoon at $280.03/cwt. Select was $1.27 higher at $262.80/cwt.

Feeder Cattle futures closed an average of $1.05 higher (50¢ to $1.32 higher).

Higher outside markets and energy prices helped boost Corn Futures Wednesday, while exports and more non-commercial interest boosted the entire grain complex.

Corn futures closed 7¢ to 9¢ higher — mostly 8¢ higher — across most of the board.

Soybean futures closed mostly 18¢ to 20¢ higher through Jan ‘23.

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Major U.S. financial indices closed mainly higher on the back of quarterly corporate earnings reports that continue to beat estimates.

The Dow Jones Industrial Average closed 152 points higher. The S&P 500 closed 16 points higher. The NASDAQ was up 7 points.

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Projected cattle feeding returns are expected to improve for most of the next eight months, reflecting higher fed cattle prices and lower cost of gain compared to recent months, according to the latest Historical and Projected Kansas Feedlot Net Returns from Kansas State University. 

After a projected -$4.24 per head for fed steers in October, forecast returns between November and June of next year range from -$9.26 in January to +$94.49 in March.

Losses are projected in only three of those months: -$1.24/head in November, -$9.26 in January and -$3.25 in June.

Feedlot Cost of Gain for steers was projected to be $115.22/cwt. in October. It declines steadily from there: $112.81 in November to $100.83 in June.

Keep in mind that these projections are cash-based and reflect no price risk management.

Negotiated cash fed cattle trade ranged from limited on light demand to a standstill through Tuesday afternoon, according to the Agricultural Marketing Service. There were too few transactions to trend.

Live prices last week were steady in the Southern Plains on a live basis at $124/cwt. and steady to $2 higher at $124 in Nebraska and the western Corn Belt. Dressed prices were at $196, which was steady in Nebraska but steady to $3 higher in the western Corn Belt.

Choice boxed beef cutout value was 79¢ higher Tuesday afternoon at $280.88/cwt. Select was $1.72 higher at $261.53/cwt.

Cattle futures closed narrowly mixed Tuesday amid light trade with Feeder Cattle futures showing signs of firming.

Live Cattle futures closed mixed, from an average of 25¢ lower to an average of 13¢ higher.

Feeder Cattle futures closed mixed, from an average of 34¢ lower through the front five contracts to an average of 64¢ higher the rest of the way.

Corn futures closed mostly 1¢ to 2¢ lower.

Soybean futures closed mostly 6¢ to 8¢ higher.

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Major U.S. financial indices closed higher Tuesday, propelled once again by strong quarterly corporate earnings reports.

The Dow Jones Industrial Average closed 198 points higher. The S&P 500 closed 33 points higher. The NASDAQ was up 107 points.

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Higher costs make this a good winter to focus more intently on feed management, says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University.

Based on USDA’s Agricultural Prices for August, Peel points out national average alfalfa hay prices week 20.5% higher year over year. The national average price for other hay was up 13.4%.

“The epicenter of hay market impacts appears to be North Dakota along with surrounding states. Prices for alfalfa hay in August (North Dakota) were up 109.5% year over year with other hay prices up 69.4%,” Peel explains, in his weekly market comments. “In South Dakota, August alfalfa hay price was up 62.0% and other hay price was up 62.9%. Minnesota prices for alfalfa and other hay were up 63.1% and 54.5%, respectively. In Montana, alfalfa hay price was up 53.8% over last year in August and other hay price was up 39.3%.”

Even in the Southern Plains, where there was less drought impact, hay prices were higher. Specifically, Peel says other hay prices are 23.5% higher year over year in Oklahoma and up 10.6% in Texas. At the same time, current corn prices in the region are 40-50% higher.

“With higher prices for hay and supplement feeds, producers can reduce winter feeds costs with enhanced management. The process begins with understanding nutritional requirements of cattle by stage of production. Testing and weighing hay will help determine the nutritional contribution of hay to meet cattle needs,” Peel says. “Careful feeding of hay can help reduce waste and make hay stretch farther. Determine the additional needs for protein and energy and source supplement feeds that provide needed nutrients.”

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

Live prices last week were steady in the Southern Plains on a live basis at $124/cwt. and steady to $2 higher at $124 in Nebraska and the western Corn Belt. Dressed prices were at $196, which was steady in Nebraska but steady to $3 higher in the western Corn Belt.

The five-area direct average steer price last week was 88¢ higher at $123.84/cwt. The average steer price in the beef was 33¢ higher at $195.70.

Cattle futures started the week softer amid technical considerations and traders apparently seeking more price direction. Another day of stronger Corn futures added pressure to Feeder Cattle. Some might also be considering positions ahead of the monthly Cattle on Feed report due out Friday.

Feeder Cattle futures closed an average of $1.52 lower, (50¢ lower at the back to $2.07 lower toward the front).

Live Cattle futures closed an average of 43¢ lower, except for an average of 8¢ higher in the back two contracts.

Choice boxed beef cutout value was 15¢ lower Monday afternoon at $280.09/cwt. Select was 81¢ lower at $259.81/cwt.

Corn futures got a follow-through boost from export sales, which were 85% more than the prior four-week average, according to the latest U.S. Export Sales report for the week ending Oct. 7. They closed mostly 4¢ to 5¢ higher.

Soybean futures closed mostly 1¢ to 3¢ higher.

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Major U.S. financial indices closed mainly higher Monday, buoyed by strong quarterly corporate earnings reports.

The Dow Jones Industrial Average closed 36 points lower. The S&P 500 closed 15 points higher. The NASDAQ was up 124 points.

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USDA’s Economic Research Service lowered the projected average fourth-quarter feeder steer price (basis 750-800 lbs., Oklahoma City) by $4 compared to the previous month to $151.00/cwt., based on more quarterly feedlot placements than expected. That took about $1.00 from the average annual price projection — compared to the previous month — to $144.80.

However, in the latest monthly Livestock, Dairy and Poultry Outlook, ERS increased the projected annual average feeder steer price for next year by 50¢ to $155.50, based on expectations of tighter feeder cattle supplies in the second half of the year. Prices are forecast to average $153.00 in the first quarter, $151 in the second and $156.00 in the third quarter.

As mentioned in Cattle Current previously, ERS lowered the forecast fourth-quarter five-area direct average steer price by $4 to $127, based on seasonal trends and large supplies of fed cattle. However, the projected fed cattle price increased for the second half of 2022 on anticipated firm demand and tighter fed cattle supplies.

ERS projected the annual average fed steer price at $128.75, compared to this year’s expected average of $121.06. Average prices are forecast at $130.00 in the first quarter, $128 in the second and $126.00 in the third quarter.

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

Live prices last week were steady in the Southern Plains on a live basis at $124/cwt. and steady to $2 higher at $124 in Nebraska and the western Corn Belt. Dressed prices were at $196, which was steady in Nebraska but steady to $3 higher in the western Corn Belt.

Estimated total cattle slaughter last week of 646,000 head was 11,000 head fewer than the previous week. Year-to-date estimated total cattle slaughter of 26.3 million head is 806,000 head more than last year (3.2%). Year-to-date estimated total beef production of 21.72 billion lbs. is 588.9 million lbs. more than a year earlier (+2.8%).

Live Cattle futures closed an average of 50¢ higher with follow-through support from the previous session tied to firmer cash prices and higher outside markets.

Feeder Cattle futures closed an average of 71¢ lower, pressured by a surge in Corn futures and week-end positioning.

Corn futures closed mostly 7¢ to 9¢ higher.

Soybean futures closed mostly 9¢ to 11¢ higher.

Choice boxed beef cutout value was 8¢ lower Friday afternoon at $280.24/cwt. Select was 6¢ lower at $260.62.

The average dressed steer weight for the week ending Oct. 2 was 916 lbs., according to USDA’s Actual Slaughter Under Federal Inspection report. That was 2 lbs. heavier than the previous week but 8 lbs. lighter than a year earlier. The average dressed heifer weight of 836 lbs. was 3 lbs. heavier than the previous week but 7 lbs. lighter than the same week last year.

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Major U.S. financial indices closed higher again Friday, boosted by follow-through support and another day of strong corporate quarterly earnings reports. U.S. food service and retail sales also grew more than expected in September — up 0.7%, according to the U.S. Census Bureau.

The Dow Jones Industrial Average closed 382 points higher. The S&P 500 closed 33 points higher. The NASDAQ was up 73 points.

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Due to increasing natural gas prices, nitrogen fertilizer prices are relatively high compared to recent years and are expected to remain high and possibly increase through next spring, says Dave Franzen, Extension soil science specialist at North Dakota State University.

“China has supplied about a third of the world’s phosphate, and it has essentially banned exports through 2022,” Franzen explains. “That puts the burden of supply on other countries, including the United States.”

According to Franzen, the U.S. is not in a great position for mine and production expansion due to serious environmental concerns. This means that phosphate prices, which are already high, will continue to increase at least through 2022.

As for the Nitrogen side of the equation, the price for taking winter delivery of natural gas is now trading at a seven-year high as global scarcity concerns and a more measured return to domestic production growth have fueled early buying, according to the latest quarterly report from CoBank’s Knowledge Exchange Division (CKE).

“The market appears to be concerned that the demand for U.S. natural gas exports is so strong that there may be little flexibility in meeting domestic demand, should another cold winter unfold. Exports have risen significantly, with the U.S. now exporting about 10% of its dry gas production, a 30% increase compared to year ago levels,” say CoBank analysts.

As mentioned in Cattle Current last week, the CKE report explains rapidly rising input costs and product shortages are hitting agriculture particularly hard, as agricultural commodity prices have flattened and inflation compresses margins. In part, input shortages and increasing input costs stem from ongoing supply chain disruptions spun by the pandemic.

“Supply chain snarls are likely to persist well into 2022, and so will elevated inflation,” says Dan Kowalski, CKE vice president. “The latest producer price index data for August was up 20% year-over-year, while the consumer price index increased just 5.2%. So it’s clear that many businesses are passing only a small portion of those cost increases on to the final consumer. We expect that will change in the months ahead and many businesses will raise prices.”

Noting recent volatility in grain markets, Andrew P. Griffith, agricultural economist at the University says,  “At the end of the day, most of this volatility stems from a broader uncertainty in the U.S. economy and abroad as fertilizer prices continue to skyrocket and as energy prices do the same.”

“This means cattle producers need to put an increased focus on managing input prices,” Griffith says, in his weekly market comments. “Producers do not control the price of an input, but a producer does control how much of each input they utilize. High input prices will likely mean cattle producers will be forced to pick and choose the most important inputs for their operation and look for alternative solutions for the other inputs.”

Negotiated cash fed cattle trade was limited on moderate demand in Nebraska and the western Corn Belt through Thursday afternoon, according to the Agricultural Marketing Service. Live sales were steady to $2 higher in the western Corn Belt at $124/cwt., while dressed prices were steady at $196. There were too few to trend in Nebraska, where prices the previous day were steady to $2 higher at $124; steady in the beef at $196.

Trade in the Southern Plains was mostly inactive on light demand with too few transactions to trend. On Wednesday, live prices were steady at $124.

Higher outside markets and the slight increase in some regional cash prices helped draw more buying interest to Cattle futures Thursday.

Live Cattle futures closed an average of 78¢ higher (35¢ higher toward the back to $1.30 higher toward the front).

Feeder Cattle futures closed an average of 84¢ higher.

Choice boxed beef cutout value was 30¢ higher Thursday afternoon at $280.32/cwt. Select was $1.98 higher at $260.68.

Corn futures closed mostly 1¢ to 3¢ higher.

Soybean futures closed 5¢ to 11¢ higher through Sep ’22 and then mainly 1¢ lower.

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Major U.S. financial indices closed sharply higher Thursday, fueled by blue-chip quarterly earnings reports beating expectations. The continued rally in oil added spark, as did fewer weekly initial jobless claims than expected.

Weekly unemployment insurance claims for the week ending Oct. 9 numbered 293,000, according to the U.S. Department of Labor. That was 36,000 less than the previous week and the lowest level since March 14 of last year when they tallied 256,000.

The Dow Jones Industrial Average closed 534 points higher. The S&P 500 closed 74 points higher. The NASDAQ was up 251 points.

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Open interest in Cattle futures continues to dwindle.

For recent perspective, Live Cattle open interest declined from a high of 314,114 contracts toward the beginning of September to a low of 289,222 Sept. 21 and then bounced as high as 292,326 before the end of the month. So far in October, Live Cattle open interest ranges from a high of 292,386 contracts Oct. 4 to a low of 281,581 Oct. 13.

Matthew Diersen, risk and business management specialist in the Ness School of Management and Economics at South Dakota State University provides some insight in the latest issue of In the Cattle Markets, published by the Livestock Marketing Information Center. He uses Live Cattle futures settlement Oct. 5 and the Commitment of Traders (COT) report from Oct. 8.

“In Live Cattle, the open interest held by producers (very large feedlots and processors) has been declining by those with short positions and increasing by those with long positions. The opposite has been happening with managed money; with more shorts and fewer longs,” Diersen says. “In Feeder Cattle, the largest share of open interest is held by managed money. In recent weeks they have reduced long positions and added short positions.”

Diersen explains many commodity indexes include Live Cattle and some include Feeder Cattle.

“The COT includes a supplement with a breakdown of index traders that includes futures and options. For Live Cattle, about one-third of open interest is long positions of index traders. Generally, these would be fund managers that buy and hold futures, then repeatedly roll to new contracts, always maintaining some exposure to cattle. Their net exposure is about opposite that of commercial traders at this time,” he says. “For Feeder Cattle, the contracts held by index traders is much smaller compared to Live Cattle contracts and the balance is more evenly split between long and short positions, though they are still net long.”