Daily Market Highlights

Negotiated cash fed cattle trade was at a standstill in all major regions through Tuesday afternoon, according to the Agricultural Marketing Service.

Last week, live prices were at $122-$123/cwt. in the Southern Plains at $123/cwt. Live and dressed sales were at $128 and $202-$208, respectively, in Nebraska and the western Corn Belt.

Cattle futures declined Tuesday with follow-through pressure tied to concerns about recently slower packer production, post Labor Day demand and declining wholesale beef prices. Month-end position squaring was also a factor.

Feeder Cattle futures closed an average of 72¢ lower (7¢ to $1.20), except for 7¢ higher in May.

Live Cattle futures closed an average of 76¢ lower (10¢ to $1.43 lower). 

Through midday today, though, Cattle futures were rebounding some, helped along by further declines in Grain futures.

Choice boxed beef cutout value was 67¢ lower Tuesday afternoon at $342.11/cwt. Select was 52¢ lower at $312.03/cwt.

Corn and Soybean futures closed lower with continued pressure from uncertainty surrounding the impact of Hurricane Ida.

Corn futures closed down mostly 5¢ to 8¢.

Soybean futures closed mostly 4¢ to 10¢ lower through new-crop contracts, and then mostly 2¢ to 3¢ higher.

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Major U.S. financial indices softened Tuesday, pressured in part by weaker consumer confidence. The Conference Board Consumer Confidence Index® declined to 113.8 in August from 125.1 in July.

“Consumer confidence retreated in August to its lowest level since February 2021 (95.2),” says Lynn Franco, Senior Director of Economic Indicators at The Conference Board. “Concerns about the Delta variant—and, to a lesser degree, rising gas and food prices—resulted in a less favorable view of current economic conditions and short-term growth prospects. Spending intentions for homes, autos, and major appliances all cooled somewhat; however, the percentage of consumers intending to take a vacation in the next six months continued to climb. While the resurgence of COVID-19 and inflation concerns have dampened confidence, it is too soon to conclude this decline will result in consumers significantly curtailing their spending in the months ahead.”

The Dow Jones Industrial Average closed 39 points lower. The S&P 500 closed 6 points lower. The NASDAQ was down 7 points.

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How many beef cows are going to town due to drought is a popular current wonderment, one with no easy answer, says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly market comments.

“We do know is that beef cow slaughter is up 8.7% year over year through mid-August. If we assume the current level of year-over-year increase continues for the remainder of the year, it implies an annual beef cow slaughter of 3.55 million head. That would be a net culling rate of 11.4%, the highest beef herd culling rate since 2011,” Peel says. “The average culling rate the past two years, since the cyclical peak in 2019, has been 10.25%. Over the past 35 years, across cycles of expansion and liquidation, the average herd culling rate has been 9.65% annually.

“However, because the drought started so early in the year (carried over from last year), it is likely that beef cow slaughter was shifted earlier in the year. Producers likely have already culled cows that would have been culled later in the year anyway. I doubt that the 8.7% year-over-year beef cow slaughter rate will persist for the remainder of the year. Nevertheless, the drought continues unabated and cow slaughter rates will likely remain strong.”

Further, Peel says heifer retention levels remain unclear.

 “The January Cattle report showed that beef replacement heifers were 18.7% of the cow herd, a level that would support stable herd inventories,” Peel explains. “The total number of beef replacement heifers (which includes heifer calves and coming first calf heifers) and the subset of heifers calving in 2021 were both fractionally higher year over year in the January numbers. No doubt, producers in drought areas have had to adjust replacement heifer numbers along with cows. Some heifer calves that were indicated as replacements in January likely were shifted into feedlots. It is not clear how many.”

Heifer slaughter is 1.4% higher so far this year, but Peel points out last year’s slaughter levels were skewed by Covid disruptions.

“Finally, there is the question of how producers not in drought areas have responded in 2021,” Peel says. “Forage conditions have been good in some regions and it is not clear if producers may be holding more cows and heifers to offset some of the drought region impacts. In short, we don’t know what would have happened in the absence of the drought and we don’t know for sure how the remainder of the year will finish. After playing with lots of numbers and assumptions, my best guess at this point is that the drought has added one-half to one percent of additional beef herd liquidation this year.”

Negotiated cash fed cattle trade was at a standstill in all major regions through Monday afternoon, according to the Agricultural Marketing Service.

Last week, live prices were at $122-$123/cwt. in the Southern Plains at $123/cwt. Live and dressed sales were at $128 and $202-$208, respectively, in Nebraska and the western Corn Belt.

Lower Corn futures helped boost Feeder Cattle futures Monday. They closed an average of 62¢ higher (10¢ to $1.75), except for spot Sep, down 60¢.

Recent sluggishness in the pace of packer buying continued to pressure Live Cattle futures again Monday. They closed an average of 57¢ lower (18¢ to $1.75). 

Choice boxed beef cutout value was $2.56 lower Monday afternoon at $342.78/cwt. Select was $2.97 lower at $312.55/cwt.

Front-month Corn and Soybean futures fell hard with barge delivery uncertainty stemming from Hurricane Ida.

Corn futures closed 6¢ to 17¢ lower through new-crop contracts and then mostly 3¢ lower.

Soybean futures closed 11¢ to 54¢ lower in the front seven contracts and then mostly 4¢ to 7¢ lower.

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Major U.S. financial indices closed mixed on Monday, with tech stocks pushing the S&P 500 to its 12th all-time high in August. The after-effects of Hurricane Ida pushed gasoline higher but hurt insurers.

The Dow Jones Industrial Average closed 56 points lower. The S&P 500 19 points higher. The NASDAQ was up 136 points. 

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Logic and current calf prices suggest the nation’s calf crop may be less than what USDA estimated in the semiannual Cattle report released last month, according to the Livestock Marketing Information Center (LMIC).

“Steer calf prices in the Southern Plains have been robust in 2021. Calves weighing 500-600 lbs. have averaged between 6% and 16% higher from June through mid-August. The calf market is incredibly hot, given the higher cost of feed,” say LMIC analysts, in the latest Livestock Monitor. “Reports of droughts and liquidation would have implied early weaning was a given in 2021 but the data has shown little signs that is happening to a large degree.”

For instance, they point to the most recent monthly Cattle on Feed report, which pegged 15% fewer July placements weighing less than 700 lbs., compared to the previous year.

“High feed costs should drive calf prices lower, reducing the incentive to place lighter weight cattle into feedlots. Drought affected areas should have started early weaning and shipped more small animals to feedlots,” say LMIC analysts. “Given the limited forage and high hay costs, it would seem likely that more calves would be moving at these prices that are substantially higher than a year ago. These incongruent signals point towards a smaller calf crop (July 1 estimate). That would explain both the higher prices and limited number of placements seen in July. August might show greater movement of smaller feeders, and the timing may be slower than initially thought.”

Despite the lack of sustained follow-through support from the most recent Cattle on Feed report, volatile outside markets and an apparent top in wholesale beef values, cash cattle and futures mainly gained last week.

Live Cattle futures closed an average of $1.02 higher (7¢ to $1.45 higher) week to week on Friday, except for $2.27 lower in almost-spent spot Aug.

On the cash side of the fence, negotiated fed cattle prices last week, were $1-$2 higher on a live basis in the Southern Plains at $123/cwt. However, the anemic pace of trade meant there was  no established trend in the North. Live prices the previous week were at $125-$127 in Nebraska and at $127 in the westerner Corn Belt. Dressed trade the previous week was at $200 in Nebraska and at $200-$205 in the western Corn Belt.

Sluggish trade pressured Live Cattle futures on Friday. Part of that stemmed from reports of mechanical problems at various plants last week.

Through Thursday, USDA’s Agricultural Marketing Service (AMS) reported 33,363 head traded direct in the five-area regions, compared to 60,342 at the same time the previous week and 65,386 head a year earlier.

Live Cattle futures closed an average of 52¢ lower through the front four contracts (5¢ lower to $1.27 lower in spot Aug) and then an average of 28¢ higher.

Overall, though, recently expanding open interest provided support, as does the reality of improving supply-side fundamentals.

As Derrell Peel, Extension livestock marketing specialist at Oklahoma State University pointed out in his weekly market comments,

“August represents the sixth consecutive monthly decline in feedlot inventories from the February peak, a decrease of 1.032 million head or 8.5% over the six months. In the previous five years, he says the average feedlot inventory decline from the spring high to summer low has been 6.2%.” 

Moreover, Peel notes lighter year-over-year carcass weights also provide more indication that feedlots are getting more current. He adds lower carcass weights also reflect the impact and incentives stemming from sharply higher feedlot cost of gain, which should help hold carcass weights in check.

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“Auction calf and stocker prices have moved counter-seasonally higher in July-August, while feeder cattle markets, which typically increase through the summer, have shown a strong seasonal price increase,” Peel says.

Feeder Cattle futures closed an average of 60¢ higher on Friday (15¢ higher toward the front to $2.40 higher at the back). Week to week they closed an average of 88¢ higher, except for 85¢ lower in new spot Sep. That was with Corn futures closing an average of 16.4¢ higher through the front six contracts.

The CME Feeder Cattle Index was $3.60 higher week to week on Thursday at $159.39.      

In his weekly market comments, Andrew P. Griffith, agricultural economist at the University of Tennessee explains stronger prices suggested by Feeder Cattle futures are helping keep cash prices higher for lighter weight calves than would be normally expected this time of year.

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Wholesale beef values appeared to top last week with Labor Day purchases mostly in the books.

Choice boxed beef cutout value was 28¢ higher week to week on Friday at $345.34/cwt. Select was $3.01 lower at $315.52.

However, Griffith points out beef in cold storage at the end of July was the least since November of 2014 when slaughter was light and beef prices were elevated.

“Strong beef prices in the current market are again what is reducing the quantity of beef in cold storage,” Griffith says. “Generally, 91% or more of the beef in cold storage is boneless beef, which is primarily made up of grinding beef. As is evident in wholesale beef prices, beef demand remains strong and continues to support higher prices. This strong demand and strong prices will likely continue to result in beef in cold storage remaining below year-ago levels. However, beef in cold storage will seasonally increase throughout the remainder of the year as cattle weights increase and more animals enter the slaughter mix. The big question is how long can wholesale beef prices remain at such strong levels. The answer is not clear, but prices are not expected to collapse in the near future.”

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Major U.S. financial indices closed higher Friday, buoyed by comments from Federal Reserve Chair Jerome Powell.

“The timing and pace of the coming reduction in asset purchases will not be intended to carry a direct signal regarding the timing of interest rate liftoff, for which we have articulated a different and substantially more stringent test,” explained Powell. “We have said that we will continue to hold the target range for the federal funds rate at its current level until the economy reaches conditions consistent with maximum employment, and inflation has reached 2% and is on track to moderately exceed 2% for some time. We have much ground to cover to reach maximum employment, and time will tell whether we have reached 2% inflation on a sustainable basis.”

The Dow Jones Industrial Average closed 242 points higher. The S&P 500 closed 39 points higher. The NASDAQ was up 183 points.

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Consumer prices for food surged in July, compared to the previous year but overall year-to-date prices remain closer to the 20-year average.

Consumer at-home food prices were 2.6% higher year over year in July, according to the Change in Food Price Indexes from USDA’s Economic Research Service. At-home meat prices were 5.9% higher — beef and veal prices were 6.5% more, pork prices were up 7.8% and poultry prices were 5.3% higher. Prices for food away from home were up 4.6% year over year.

Year to date, at-home food prices were up 1.9% — beef and veal prices were 4.2% more, pork prices were up 4.4% and poultry prices were 2.6% higher. Prices for food away from home were up 3.1% year over year.

The forecast is for at-home prices to be up an average 2.5% to 3.5% this year — beef and veal prices are projected 4.0% to 4.5% higher, pork prices are forecast 5.0% to 6.0% higher and poultry prices are projected 3.0% to 4.0% higher. Prices for food away from home are projected to 3.5% to 4.5% higher.

For perspective, the 20-year average annual price change for at-home food prices is 2.0% — 4.4% for beef and veal prices, 2.2% for pork prices and 2.1% for poultry prices. The annual average change for food away from home is 2.8%.

Negotiated cash fed cattle trade was mostly inactive on light demand in Kansas through Thursday afternoon, according to the Agricultural Marketing Service. Elsewhere, it was slow on light demand.

Live sales in the Texas Panhandle were $1-$2 higher at $123/cwt. Although too few to trend, early live sales were $1-$3 higher in Nebraska at $128 and $1 higher in the western Corn Belt at $127. Early dressed sales were $1-$2 higher at $202 in Nebraska and $202.00-$206.50 in the western Corn Belt.

Weaker outside markets and the lack of follow-through support pressured Cattle futures Thursday.

Feeder Cattle futures closed an average of 95¢ lower, except for 15¢ higher spot Aug.

Live Cattle futures closed an average of 55¢ lower, except for 15¢ higher in the back contract.

Choice boxed beef cutout value was 38¢ higher Thursday afternoon at $347.27/cwt. Select was $3.90 higher at $319.59.

Corn futures closed mostly 1¢ to 6¢ lower, except for 1¢ higher in spot Sept.

Soybean futures closed mostly 6¢ to 10¢ lower, except for 21¢ higher in spot Sept.

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Major U.S. financial indices closed lower on Thursday after explosions in Kabul, outside an airport gate, killed both U.S. service members and civilians. Investors are also uncertain whether the Federal Reserve will give a clear signal this week for timing on tapering emergency support.

The Dow Jones Industrial Average closed 192 points lower. The S&P 500 closed 26 points lower. The NASDAQ was down 96 points.

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USDA increased expectations for U.S. beef exports during the current fiscal year, in the latest Outlook for U.S. Agricultural Trade. Compared to the last quarterly report, projected U.S. beef export value increased $800 million to $8.4 billion on higher unit values and volumes to China, Mexico, and South Korea.

Projected export value for U.S. livestock, dairy and poultry exports increased $2.2 billion to $36.4 billion due to increases in all product groups except pork.

Next year, USDA expects beef exports to be $100 million less than this year due to lower exportable supplies. Fiscal year 2022 livestock, poultry, and dairy exports were forecast $400 million higher than this year at $36.8 billion primarily due to growth in dairy and poultry products.

Forecast total U.S. agricultural export value this year increased $9.5 billion from the previous estimate to $173.5 billion, mainly due to higher livestock, poultry, and dairy exports, as well as the adoption of a new definition of agricultural products.

“Beginning with this publication, the report is adopting the World Trade Organization’s (WTO) definition of ‘Agricultural Products,’ which adds ethanol, distilled spirits, and manufactured tobacco products, among others, while removing rubber and allied products from the previous USDA definition,” according to analysts with USDA’s Economic Research Service (ERS).

U.S. agricultural exports next year were projected $4.0 billion higher than this year at $177.5 billion.

“The global COVID-19 pandemic remains the primary factor affecting economic activity across the globe. The prevalence of the Delta variant has renewed concerns over pandemic-induced pressure on public health infrastructures, softening consumer spending and global supply chain recovery,” say ERS analysts. “Microchip manufacturing and the shipping of physical goods are two aspects of the global economy that continue to observe elevated prices from supply chain disruptions. Despite these economic challenges, employment statistics and consumer confidence have remained strong, pointing to a continued economic recovery through the end of 2021. World real gross domestic product (GDP) is projected to increase by 5.7% in the remainder of 2021, and subsequently increase by 4.6% in 2022.”

Growth projections for real U.S. GDP this year were raised to 6.2% from previous estimate of 5.8%.

Negotiated cash fed cattle trade ranged from inactive to limited through Wednesday afternoon with too few transactions to trend, according to the Agricultural Marketing Service.

Last week, live sales were at $121-$122/cwt. in the Texas Panhandle, $122 in Kansas, $125-$127 in Nebraska and $127 in the western Corn Belt. Dressed sales were at $200 in Nebraska and at $200-$205 in the western Corn Belt.

There was just a light run for Wednesday’s fat cattle auction in Tama, IA (313 head), but Choice steers and heifers traded $1.50 to $1.75/cwt. higher. There were 127 Choice 2-4 steers weighing an average of 1,377 lbs., bringing an average of $131.43.

Slaughter steers sold $2-$4 lower at Sioux Falls Regional in South Dakota. Fat heifers traded steady to $1 lower. There were 313 Choice 3-4 steers weighing an average of 1,532 lbs., bringing an average of $126.52/cwt.

Lack of cash direction, positioning from strong gains to start the week and softer wholesale beef values weighed on Live Cattle futures Wednesday.

Live Cattle futures closed an average of 76¢ lower (5¢ to $1.40 lower), except for unchanged to an average of 7¢ higher in three contracts toward the middle of the board.

Higher Corn futures added pressure to Feeder Cattle.

Feeder Cattle futures closed an average of 58¢ lower, except for 72¢ higher in almost spent Aug and 17¢ higher in the back contract.

Wholesale beef prices trended lower for the second consecutive day.

Choice boxed beef cutout value was 69¢ lower Wednesday afternoon at $346.89/cwt. Select was $1.21 lower at 315.69.

Total federally inspected cattle slaughter in July of 2.8 million head was 65,800 fewer (-2.3%) than the previous year. Total cattle slaughter for January through July of 19.25 million head was 880,700 more (+4.8%) year over year.

Commercial beef production in July of 2.3 billion lbs. was 104 million lbs. less (-4.3%) year over year. For January through July, beef production of 16.2 billion lbs. was 758.1 million lbs. more (+4.9%) than the same time last year. The average live weight was down 14 lbs. from the previous year, at 1,349 lbs.

Total commercial red meat production in July of 4.4 billion lbs. was 429.5 million lbs. less (-8.9%) than the previous year. Total commercial red meat production for January through July was 32.3 billion lbs., which was 645.6 million lbs. more (+2.0%).

Corn futures closed mostly 6¢ to 12¢ higher.

Soybean futures closed mostly 8¢ to 12¢ higher, except for mainly 1¢ higher in new-crop contracts.

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Major U.S. financial indices edged higher Wednesday amid optimism variant Covid infections could be peaking in the U.S.

The Dow Jones Industrial average closed 39 points higher. The S&P 500 closed 9 points higher. The NASDAQ was up 22 points.

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“Solid grain prices, the Federal Reserve’s record-low interest rates, and growing exports have underpinned the Rural Mainstreet Economy,” according to 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% above that for the same period in 2020. This has been a prime factor supporting the Rural Mainstreet economy.”

Creighton University’s Rural Mainstreet Index (RMI) was 65.3 in August, the ninth consecutive month above the growth-neutral level of 50.0. The index is based on surveys of bank CEOs in rural areas of a 10-state region dependent on agriculture and/or energy.

Approximately, 34.4% of bank CEOs reported that their local economy expanded between July and August.

The farmland price index advanced 5.6 points from July to 76.6 in August. That was the 11th consecutive month of levels above growth-neutral. The last time such a stretch occurred was in 2012-13.

The August farm equipment-sales index declined to 64.7 from 67.2 in July. Readings over the last several months represent the strongest consistent growth since 2012.

Approximately 15.6% of bankers reported that continuing drought conditions were the greatest threat to their banking operations over the next 12 months.

“Rising COVID-19 infections, the turmoil in Afghanistan, and negative views of current infrastructure bills before Congress damaged the economic outlook of bank CEOs. Only 9.4% of bankers support passage of the $3.5 trillion infrastructure bill currently winding through Congress,” says Goss.

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

Last week’s five-area direct average steer price was $2.19 higher on a live basis at $125.47/cwt. The average steer price in the beef was 5¢ higher at $200.68.

Cattle futures closed mixed Tuesday. Follow-through support prevailed through most of the session.

Live Cattle closed mainly higher, boosted by the cash outlook and the 13,688-contract increase in open interest the previous day.

Live Cattle futures closed an average of 47¢ higher, except for an average of 45¢ lower in the front two contracts.

Choice boxed beef cutout value was 45¢ lower Tuesday afternoon at $347.58/cwt. Select was $2.50 lower at $316.90.

Rising Corn futures prices, as well as  likely position squaring and profit taking pressured Feeder Cattle.

Feeder Cattle futures closed an average of 81¢ lower, except for 37¢ higher in spot Aug.

Corn and Soybean futures closed higher Tuesday, supported by crop conditions in the weekly Crop Progress report (see below).

Corn futures closed mostly 6¢ to 9¢ higher.

Soybean futures closed 30¢ to 43¢ higher through Aug ’22 and then mostly 23¢ to 28¢ higher.

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Major U.S. financial indices closed higher Tuesday, buoyed by follow-through support from FDA’s full approval of the Pfizer-BioNTech Covid vaccine.

The Dow Jones Industrial Average closed 30 points higher. The S&P 500 closed 6 points higher. The NASDAQ was up 77 points.

Crude Oil futures (WTI-CME) continued to climb, up $1.83 to $1.91 through the front six contracts.

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Total pounds of beef in freezers July 31 were down slightly from the previous month and down 9% from last year, according to USDA’s monthly Cold Storage report.

Frozen pork supplies were up slightly from the previous month but down 4% from last year.

Total red meat supplies in freezers were up slightly from the previous month but down 8% from last year.

Total frozen poultry supplies were 2% more than last month but 17% less year over year.

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Nationally, pasture and range conditions continue to erode slightly for the week ending Aug. 22, according to the latest USDA Crop Progress report.

29% of pasture and range was rated as Good (23%) or Excellent (6%), which was the same as the previous week and 5% more than a year earlier. Conversely, 43% was rated as Poor (21%) or Very Poor (22%), which was 1% less than a week earlier and 1% more than a year earlier.

85% of corn was in the dough stage, which was 1% less than last year, but 4% more than the average. 41% was dented, the same as last year and 3% more than the average. 4% was mature, which was 1% less than last year but on par with average. 60% was in Good (46%) or Excellent (14%) condition, which was 2% less than the previous week and 4% less than a year earlier.

97% of soybeans were blooming, which 2% less than last year but the same as the five-year average. 88% were setting pods, which was 3% less than last year but 1% more than average. 3% were dropping leaves, compared to 4% last year and 3% for average. 56% were in Good (45%) or Excellent (11%) condition, which was 1% less than a week earlier and 13% less than the same week last year.

77% of spring wheat was harvested, which was 31% more than the previous year and 22% more than the five-year average.

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

Cash fed cattle prices last week were $1 higher in the Southern Plains at $122/cwt., $1-$2 higher in Nebraska at $125-$127 and $1-$2 higher in the western Corn Belt at $127. Dressed trade was mostly $2 higher in Nebraska at $200; from $1 to $2 higher to $4 lower in the western Corn Belt at $200.

Last week’s five-area direct average steer price was $2.19 higher on a live basis at $125.47/cwt. The average steer price in the beef was 5¢ higher at $200.68.

Lower year-over-year July feedlot placements and fewer cattle on feed year over year — based on the latest Cattle on Feed report — helped boost Cattle futures Monday, amid heavy and active trade.

Choice boxed beef cutout value was $2.97 higher Monday afternoon at $348.03/cwt. Select was 87¢ higher at $319.40.

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

Soybean futures closed 2¢ to 9¢ higher through Sep ’22 and then mostly 11¢ to 14¢ higher.

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Major U.S. financial indices climbed Monday, due in part to FDA’s full approval of the Pfizer-BioNTech COVID vaccine.

The Dow Jones Industrial Average closed 215 points higher. The S&P 500 closed 37 points higher. The NASDAQ was up 227 points.

Crude Oil futures (CME-WTI) roared back Monday, up an average of $3.42 through the front six contracts.

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“August is a tough time for fed cattle markets to move higher, but the market seems poised to break out from the constraints of the first half of the year as we move into the last part of the third quarter,” says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly market comments. “Meanwhile, auction calf and stocker prices have moved counter-seasonally higher in July-August, while feeder cattle markets, which typically increase through the summer, have shown a strong seasonal price increase.” He adds cull cow prices remain above year-ago levels, although they’re less than summer peak prices.

Reflecting on the monthly Cattle on Feed report that came out Friday, Peel notes feedlot inventories continue to fall, partly seasonally, but also reflecting the cleanup of the backlog of feedlot cattle from earlier in the year. 

“August represents the sixth consecutive monthly decline in feedlot inventories from the February peak, a decrease of 1.032 million head or 8.5% over the six months. In the previous five years, the average feedlot inventory decline from the spring high to summer low has been 6.2%.” 

Moreover, lighter year-over-year carcass weights also provide more indication that feedlots are getting more current. 

“Steer and heifer carcass weights dropped below year-ago levels in May and continue below year-earlier levels,” Peel says. “Carcass weights reached a seasonal low in June, a tad later than the normal May low and are rising seasonally into the last part of the year. Most recently, weekly steer carcass weights were 896 lbs., down 10 lbs. year over year but still 18 lbs. heavier than 2019 levels. Heifer carcass weights are currently 817 lbs., down 15 lbs. from last year but 11 lbs. above 2019.”

Peel adds that lower carcass weights also reflect the impact and incentives stemming from sharply higher feedlot cost of gain, which should help hold carcass weights in check.

“Cash feeder cattle markets continue to adjust to higher feed costs, partly in terms of general price levels but particularly in the relative prices of lightweight and heavy feeder cattle,” Peel says. “The flattening of the price line across weights translates into higher value of gain potential for added feeder cattle weight gain.”

Negotiated cash fed cattle trade was mostly inactive with light demand in all feeding regions through Friday afternoon, according to the Agricultural Marketing Service.

Live prices last week were $1 higher in the Southern Plains at $122/cwt., $1-$2 higher in Nebraska at $125-$127 and $1-$2 higher in the western Corn Belt at $127. Dressed trade was mostly $2 higher in Nebraska at $200; $2 higher to $4 lower in the western Corn Belt at $200.

The down day in grain futures Friday sparked Feeder Cattle futures, as did likely positioning ahead of what turned out to be a positive Cattle on Feed report (see below).

Feeder Cattle futures closed an average of $1.47 higher (75¢ to $2.60 higher). Week to week on Friday, they were an average of $1.17 higher.

Live Cattle futures closed an average of 53¢ higher, except for unchanged and 5¢ lower toward the back. Strength in wholesale beef values and slightly higher cash fed cattle prices provided support.

Choice boxed beef cutout value was $3.43 higher Friday afternoon at $345.06/cwt. Select was $2.12 higher at $318.53.

Corn futures closed down an average of 13¢ lower through the front six contracts, then mostly 5¢ to 9¢ lower.

Soybean futures closed an average of 27¢ lower through the front six contracts, then mostly 9¢ to 18¢ lower.

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Major U.S. financial indices closed higher Friday after a week of volatility. Investors have seemed concerned the Federal Reserve will initiate tapering plans just as the rapid spread of the delta variant may slow the economy. This week’s Jackson Hole symposium – now virtual – may offer more clues to what the Fed’s plans are for tapering.

The Dow Jones Industrial Average closed 226 points higher. The S&P 500 closed 36 points higher. The NASDAQ was up 173 points.

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Heading into Monday, it seemed likely traders would view Friday’s monthly Cattle on Feed report (feedlots with 1,000 head or more capacity) as neutral to somewhat friendly.

Placements in July of 1.74 million head were 154,000 head fewer (-8.1%) than the previous year. The average of analyst expectations ahead of the report projected a 7.0% decline.

As for placement weights, 36.2% went on feed weighing 600 lbs. or less, 48.0% weighing 700-899 lbs. and 15.8% weighing 900 lbs. or more.

Marketings in July of 1.9 million head were 90,000 fewer (-4.5%) year over year, compared to analysts expecting a decline, on average, of 3.6%.

Cattle on feed Aug. 1 of 11.07 million head were 210,000 head fewer (-1.9%) than the same time last year. That was about even with pre-report expectations.

Through midday Monday, Feeder Cattle and Live Cattle futures are strongly higher. Live Cattle were more than $2 higher in the front months, while Feeder Cattle were an average of $2.15 higher, except for spot Aug.

Negotiated cash fed cattle trade was mainly slow on light demand through Thursday afternoon, according to the Agricultural Marketing Service. So far this week, live prices in the North are generally $1-$2 higher at $125-$127/cwt. Price are steady to $1 higher in the Southern Plains at $121-$122.

Choice boxed beef cutout value was $1.55 higher Thursday afternoon at $341.63/cwt. Select was $6.61 higher at $316.41/cwt.

Net U.S. beef export sales for the week ending Aug. 12 were 11,100 metric tons for 2021, according to USDA’s weekly U.S. Export Sales report. That was 18% less than the previous week and 42% less than the prior four-week average. Increases were primarily for Japan, South Korea, China, Taiwan, and Mexico.

Cattle futures softened Thursday. More than anything, pressure seemed mostly tied to weakness in outside markets and in commodities overall as fund managers assess the impact of surging COVID cases on economic growth.

Live Cattle futures closed an average of 53¢ lower (20¢ to 90¢)

Feeder Cattle futures closed an average of 38¢ lower (23¢ to 58¢ lower)

Corn futures closed an average of 13¢ lower through the front six contracts, then fractionally to 7¢ lower.

Soybean futures closed an average of 30¢ lower through the front six contracts, then mostly 8¢ to 25¢ lower.

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Major U.S. financial indices closed mixed Thursday amid volatile trade. As mentioned, pressure included surging delta COVID-19 infections, as well as fretting over when the Fed will begin tapering stimulus.

The Dow Jones Industrial Average closed 67 points lower. The S&P 500 6 points higher. The NASDAQ was up 15 points higher at 14,542

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Most analysts expect the monthly Cattle on Feed report, due out Friday to be neutral to friendly.

For instance, David Anderson, Extension livestock economist at Texas A&M University looks for July placements to be 6-7% less year over year.

“Over the last five years, on average, placements have tended to decline slightly from June to July with last year being the exception,” Anderson says, in the latest issue of In the Cattle Markets. “One area of interest in the report will be any evidence of drought-forced earlier placements out of the West and Northern Plains.”

Anderson expects July marketings to be 3% less and the inventory of cattle on feed Aug. 1 to be 1.5% less. He adds that on-feed inventory tends to decline seasonally from June to a low in September.

“The Cattle on Feed report will likely provide more evidence of tightening fed cattle numbers and beef production to begin in 2022,” Anderson says. “Beef production has been below a year ago for five out of the last six weeks. Average federally inspected steer and heifer dressed weights continue to run below a year ago, fueling the decline in beef production. It’s also worth noting that the amount of beef grading Choice as a percent of all beef graded has been below last year for about seven weeks…Tighter supplies of Choice beef is likely keeping the Choice-Select spread wider than at this time last year and wider than the five-year average.

Negotiated cash fed cattle trade was slow on moderate demand in the North Tuesday at steady to higher money.

Live sales in Nebraska were $2 higher at $125 to $128/cwt. Dressed sales were generally $2 higher at $200, but some up to $205.

In the western Corn Belt, live sales were $1-$2 higher at $127. Although too few to trend, there were some dressed sales at $200, compared to $198-$204 last week.

Trade in the Texas Panhandle was slow on light demand. There were some live trades at $121 to $122 — steady to $1 higher than last week — but too few to trend.

In Kansas, trade was mostly inactive.

Cattle futures retraced recent softness, led by Feeder Cattle Wednesday. Support included the outlook for steady to higher cash fed cattle prices, as well as optimism about the monthly Cattle on Feed report due out Friday.

Feeder Cattle futures closed an average of $1.74 higher ($1.35 to $2.42 higher).

Live Cattle futures closed an average of 52¢ higher (2¢ to 92¢ higher), except for 17¢ lower in the back contract.

Choice boxed beef cutout value was $2.02 higher Wednesday afternoon at $340.08/cwt. Select was $3.03 higher at $309.80.

Corn futures closed mostly 1¢ to 3¢ higher.

Soybean futures closed 4¢ to 10¢ lower through Jly ’22 and then mostly fractionally lower to 1¢ lower.

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Major U.S. financial indices stepped lower Wednesday, pressured by the Federal Reserve making plans to begin tapering its bond buying program, possible by the end of the year, according to FOMC minutes released yesterday.

“Almost 60% of respondents anticipated the first reduction in the pace of net asset purchases to come in January, though, on average, respondents placed somewhat more weight than in the June surveys on the possibility of tapering beginning somewhat earlier,” according to the minutes.

The Dow Jones Industrial Average closed 382 points lower. The S&P 500 closed 47 points lower. The NASDAQ was down 120 points.

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USDA increased the projected average feeder steer price (750-800 lbs., basis Oklahoma City) for the remainder of this year and the first half of next year, based on recent price strength and declining cattle numbers.

In the latest Livestock, Dairy and Poultry Outlook, analysts with USDA’s Economic Research Service (ERS) project the average feeder steer price this year at $145.13/cwt., which is $3 more than last month. Average prices are projected at $153 in the second and third quarter. Compared to the previous month, that’s $7 higher in the third quarter and $5 higher in the fourth quarter.

ERS forecasts next year’s annual average feeder steer price $5 higher at $151.50. Prices are projected to average $149 in the first quarter next year and $147.00 in the second.

“The July five-area price for fed steers was $122.03/cwt., up more than $25 year over year and about $9 higher than the July 2019 average price,” according to ERS analysts. “The average five-area steer price for the week ending August 8 was $123.83, over $22 above a year ago.”

ERS increased the forecast fed steer price $4 to $124/cwt. in the third quarter and to $127 in the fourth quarter. The projected 2021 annual price increased  $2.00 to $121.20, compared to the previous month. ERS raised the expected average fed steer price next year by $4 to $126.