Daily Market Highlights

Negotiated cash fed cattle trade ranged from a standstill to limited with very light demand through Tuesday afternoon, according to the Agricultural Marketing Service.

Cattle futures closed lower amid light trade Tuesday, led by Feeder Cattle, which was pressured by Corn futures once again.

Feeder Cattle futures closed an average of $1.25 lower through the front five contracts, then down 18¢ to 30¢ at the back. 

Live Cattle futures closed an average of 47¢ lower, except for 73¢ higher in the back contract.

Choice boxed beef cutout value was $1.61 lower Tuesday afternoon at $264.88/cwt. Select was 91¢ lower at $248.58/cwt. Also of note, steer byproduct value spiked 80¢ to $13.93/cwt.

Grain futures bounced higher Tuesday with hotter, drier weather forecast in the Corn Belt and wheat challenges in the West.

Corn futures closed 12¢ to 16¢ higher through Jly ‘22, and then mostly 2¢ to 6¢ higher.

Soybean futures closed 10¢ to 15¢ higher through Sep ‘22, and then 8¢ to 9¢ higher.

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Major U.S. financial indices recovered a majority portion of what was lost in the previous day’s steep selloff as investors seemed content to bet on the dip.

The Dow Jones Industrial Average closed 550 points higher. The S&P 500 closed 65 points higher. The NASDAQ was up 224 points.

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“Across day-parts, the motivations for visiting restaurants are evolving, necessitating a refocus on how restaurant operators target consumers,” says David Portalatin, food industry advisor for the NPD Group (NPD). “Quality, value, and innovation will always be relevant to the consumer, but we also need to recognize that in many ways the world has fundamentally changed.”

Depending on new consumer rhythms of home, school, and work-life, recovery of each day-part — morning meal, lunch, dinner, and P.M. Snack — will be key to the restaurant industry’s recovery.

For instance, online or physical visits for the morning meal (breakfast and morning snack periods) were 5% less in May than the same time last year and 11% less than two years earlier. Since morning meal visits are habitual, recovery for this day-part will depend on consumers returning to workplaces and schools, according to NPD.

Lunch traffic was 4% less year over year in May and 10% less than two years ago, so recovery relies on more employees returning to workplaces, as well as more midday activities such as shopping.

Visits during the dinner day-part were 5% less than a year earlier and 12% less than two years ago. According to NPD, restaurant’s ability, particularly full service restaurants, to operate at total capacity will aid in recovery of this day-part, as will consumer comfort with dining in, and more business and recreational travel.

On the other hand, P.M. Snack visits in May were 8% more than last year and 3% more than two years ago as more flexible work schedules blur day-parts. Operators need to innovate their food and beverage offerings to grow traffic in this day-part, say the NPD folks.

Overall, total restaurant visits were 23% percent more year over year in May but were 6% less than two years earlier.

Negotiated cash fed cattle trade was mostly inactive on very light demand in the western Corn Belt through Monday afternoon. Elsewhere, it was at a standstill, according to the Agricultural Marketing Service.

Last week, live trade was generally steady: $120/cwt. in the Southern Plains; $123-$125 in Nebraska; $125 in the western Corn Belt. Dressed trade was steady in Nebraska at $196-$202 and steady to $5 lower in the western Corn Belt at $196-$197.

Cattle futures faded early pressure from outside markets to close mostly higher.

Feeder Cattle futures closed an average of 52¢ higher, except for 5¢ lower in Apr. 

Live Cattle futures closed narrowly mixed, from and average of 46¢ lower to an average of 16¢ higher.

Choice boxed beef cutout value was $1.45 lower Monday afternoon at $266.49/cwt. Select was $2.30 lower at $249.49/cwt.

Grain futures closed mixed Monday with traders eyeing sharply lower outside markets and weather.

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

Soybean futures closed 14¢ to 26¢ lower through Sep. ’22 and then mostly 9¢ lower.

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Equity markets tumbled Monday with investors fretting the potential economic slowdown from resurgent COVID-19 cases among the unvaccinated.

The Dow Jones Industrial Average closed 725 points lower. The S&P 500 closed 68 points lower. The NASDAQ was down 152 points.

CME WTI Crude Oil futures closed $4.77 to $5.39 lower through the front six contracts.

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“High feed prices mostly impact how cattle are produced. In an environment of high feed prices, the industry incentives are to make cattle bigger before feedlot placement and to slow down the rate of cattle production somewhat. For cow-calf and stocker producers, this means more opportunities for retained stockers and stocker production to heavier weights in response to those market signals,” says Derrell Peel, Extension livestock marketing specialist, in his weekly market comments.

More specifically, Peel explains feeder cattle markets respond to increased feed costs by reducing the price premium of lightweight feeders.

“This represents a reduction in the price rollback or price slide for feeder cattle as weight increases,” Peel says. “The result is to increase the value of gain for stocker production and thereby encourage cattle to achieve more weight prior to placement in the feedlot. More emphasis on stocker production also slows down the movement of cattle into the feedlot and reduces feed demand by spreading out feeder cattle over more time.”

Another way of looking at it, Peel says is that the price of lightweight feeder cattle would be significantly higher relative to heavy feeders with lower feed costs and the market line would be steeper and would be close to the green line.

Negotiated cash fed cattle trade was at a standstill in the Southern Plains through Friday afternoon, according to the Agricultural Marketing Service. Elsewhere, it was limited on light to moderate demand with too few transactions to trend.

For the week, live trade was generally steady in the Southern Plains at $120/cwt. and at $123 in Nebraska. It was unevenly steady in the western Corn Belt at $125.00-$125.50. There was no established dressed trade.

Choice boxed beef cutout value was $1.93 lower Friday afternoon at $267.94/cwt. Select was 69¢ lower at $251.79/cwt.

Total estimated cattle slaughter last week was 653,000 head, which was 78,000 head more than the previous holiday-shortened week.

Year-to-date estimated total cattle slaughter of 17.94 million head is 802,000 head more (+4.68%) than the same period last year.

Year-to-date estimated total beef production of 14.85 billion lbs. is 706.5 million lbs. more (+4.99%) than last year.

Cattle futures lost some ground Friday amid generally steady cash prices, lower outside markets and stronger Wheat futures.

That was despite front-month Lean Hog futures surging higher in response to news that African Swine Fever (ASF) was confirmed in Germany’s domestic swine population for the first time, by the National Reference Laboratory for African Swine Fever at the nation’s Friedrich-Loeffler Institute (FLI). The disease was confirmed in one sow at an organic farm and two pigs at a smallholdings farm, in districts near the border between Germany and Poland. The disease was confirmed in a wild boar in the same region last September.

Feeder Cattle futures closed an average of $1.14 lower (72¢ to $1.75 lower).

Live Cattle futures closed an average of 68¢ lower (12¢ to 95¢ lower).

Grain futures closed mixed Friday.

Corn futures closed 3¢ to 8¢ lower through new-crop contracts and then fractionally higher to 3¢ higher.

Soybean futures closed 7¢ to 11¢ higher through Aug. ’22 and then mostly 2¢ to 3¢ higher.

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Even though U.S. retail and food service sales increased 0.6% month to month in June — more than analysts expected — according to the U.S. Census Bureau, major U.S. financial indices faltered Friday, amid inflation worries and some likely profit taking.

The Dow Jones Industrial Average closed 299 points lower. The S&P 500 closed 32 points lower. The NASDAQ was down 115 points. 

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USDA boosted expected average feeder steer prices by $5/cwt. for upcoming quarter, based on current price strength.

Specifically, in the latest Livestock, Dairy and Poultry Outlook, USDA projects the average price of feeder steers (750-800 lbs., Oklahoma City) at $146/cwt. in the third quarter and $148 in the fourth quarter for an annual average of $142.13. Next year, prices are forecast to be $144 in the first quarter and $142 in the second quarter with an annual average price of $146.50 in 2022.

Earlier in the week, analysts with USDA’s Economic Research Service (ERS) raised expectations for fed steer prices, too. In the July World Agricultural Supply and Demand Estimates, ERS forecast the average five-area fed steer price at $120/cwt. in the third quarter, $123 in the fourth quarter and $127 in the first quarter of next year.

“Based on Agricultural Marketing Service data — actual and estimated daily cattle slaughter — the percentage of heifer slaughter compared to that of steers for June 2021 was estimated 2.5% higher than a year ago. The estimated percentage of federally inspected cow slaughter to total slaughter for June 2021 was 0.5% higher than June 2020,” say ERS analysts.

Based on the U.S. Drought Monitor, ERS estimates approximately 34% of the nation’s cattle are in regions experiencing some level of drought.

“Pasture and range in much of the western and northern United States continue to be in very poor to poor conditions, which is likely affecting cow slaughter in regions where forage availability has become critical,” say ERS analysts. “However, to the extent that the increase in aggregate slaughter numbers is driven by higher expected cow numbers and that heifers have recently been a higher proportion of steer and heifer slaughter, average carcass weights are expected to be lower.”

Negotiated cash fed cattle trade was at a standstill in the Texas Panhandle through Thursday afternoon. Elsewhere, it was limited on light to moderate demand with too few transactions to trend.

On Wednesday, live sales in Nebraska were steady with the previous week at $123/cwt. and unevenly steady in the western Corn Belt at $125.00-$125.50. Last week, dressed trade in both regions was at $196-$202.

A day earlier, live trade in the Southern Plains was generally steady at $120.

Cattle futures closed narrowly mixed Thursday with pressure from sluggish cash fed cattle sales and continued erosion of wholesale beef values. Weekly U.S. beef export sales also took a breather.

Net U.S. beef export sales for the week ending July 8 were 9,300 metric tons (2021), which was 61% less than the previous week and 44% less than the prior four-week average, according to the Weekly U.S. Export Sales report. Increases were primarily for Japan, Mexico, China, Taiwan), and South Korea. 

Feeder Cattle futures closed mixed, from 25¢ lower to 43¢ higher.

Live Cattle futures closed mixed, from an average of 17¢ lower to an average of 9¢ higher, except for unchanged in the back contract.

Choice boxed beef cutout value was $3.01 lower Thursday afternoon at $269.87/cwt. Select was $1.27 lower at $252.48/cwt.

The average dressed steer weight the week ending July 3 was 884 lbs., according to USDA’s Actual Slaughter Under Federal Inspection report. That was 1 lb. heavier than the previous week but 12 lbs. lighter than the same week a year earlier. The average dressed heifer weight of 811 lbs. was 1 lbs. lighter than the previous week and 15 lbs. lighter than the previous year.

Corn futures closed 2¢ to 4¢ lower through Jul ’22 and then 2¢ to 3¢ higher.

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

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Major U.S. financial indices closed mixed Thursday, despite positive quarterly corporate earnings reports and jobless progress.

Initial unemployment insurance claims the week ending July 10 were 360,000. That was 26,000 fewer than the previous week and the fewest since March 14 last year.

The Dow Jones Industrial Average closed 54 points higher. The S&P 500 closed 14 points lower. The NASDAQ was down 102 points.

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“With record U.S. beef production forecast this year, U.S. beef exports are forecast to strengthen their position in the global marketplace,” according to a special report from USDA’s Foreign Agricultural Service (FAS). “Meanwhile, lower production in Australia and tighter exportable supplies from Argentina are expected to limit the global availability of beef. For 2021, U.S. beef exports are forecast to reach a record 1.5 million metric tons (mt) carcass weight equivalent (cwe), up 16% compared to last year and 8% above the 2018 high.”

Through the first five months this year, exports to South Korea accounted for 25% of all U.S. beef export in terms of both volume and value, according to the report.

FAS analysts note that exports to China continue to grow, although they still represent a sliver of that nation’s imports.

“U.S. beef has benefited from the Economic and Trade Agreement between the United States and the People’s Republic of China (also known as the Phase One Agreement), which expanded market access for U.S. beef by eliminating several long-standing non-tariff barriers,” according to the report. Through May 2021, China ranks as the third-largest U.S. market by both volume and value, surpassing both Mexico and Canada which have historically been ranked as top U.S. markets.”

Negotiated cash fed cattle trade in Nebraska was slow on light demand through Wednesday afternoon, according to the Agricultural Marketing Service. Compared to the last reported market on Monday, live sales traded $2 lower at $123/cwt. Last week, dressed sales were at $196-$202/cwt.

In the Southern Plains and Western Corn Belt, trade was mostly inactive on light demand. On Tuesday in the Southern Plains, live sales traded mostly at $120/cwt. In the Western Corn Belt, last week live sales traded from $124-$126/cwt. and dressed at $196-$202/cwt.

Cattle futures tried to extend gains early Wednesday but apparently ran out of technical steam.

Feeder Cattle were also pressured by strong gains in Corn futures.

Feeder Cattle futures closed an average of $2 lower (from $1.55 to $2.42).

Live Cattle futures closed an average of 41¢ lower, except for 12¢ higher in the back contract.

Choice boxed beef cutout value was 46¢ lower Wednesday afternoon at $272.88/cwt. Select was $2.99 lower at $253.75/cwt.

Front-month grain futures continued higher with a hotter, drier forecast and reports of storm-damaged beans in some areas of the Corn Belt.

Corn futures closed 15¢ to 18¢ higher through new-crop contracts and then mostly unchanged to fractionally higher.

Soybean futures closed 29¢ to 38¢ higher through the front six contracts and then mostly 20¢ to 25¢ higher.

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Major U.S. financial indices closed narrowly mixed on Wednesday.

Support included testimony from Federal Reserve Chair Jerome Powell to the U.S. House Committee on Financial Services. He stressed the Fed remained committed to maintaining the federal funds rate near zero and the current level of asset purchases until the Fed’s long-term goal of inflation exceeding 2% for some time.

“Inflation has increased notably and will likely remain elevated in coming months before moderating. Inflation is being temporarily boosted by base effects, as the sharp pandemic-related price declines from last spring drop out of the 12-month calculation,” Powell explained. “In addition, strong demand in sectors where production bottlenecks or other supply constraints have limited production has led to especially rapid price increases for some goods and services, which should partially reverse as the effects of the bottlenecks unwind. Prices for services that were hard hit by the pandemic have also jumped in recent months as demand for these services has surged with the reopening of the economy.”

The Dow Jones Industrial Average closed 44 points higher. The S&P 500 closed 5 points higher. The NASDAQ closed 33 points lower.

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Despite increased beef cow slaughter this year, less dairy cow slaughter and beef imports are helping maintain cull cow prices at higher levels, according to James Mitchell, Extension livestock economist with the University of Arkansas.

“Southern Plains slaughter cow prices have averaged 8.1% above 2020 and 14.7% above 2019 prices,” Mitchell says, in the most recent issue of In the Cattle Markets. “In 2021, dairy cow slaughter has averaged 0.9% below 2020 slaughter and 3.7% lower than 2019 slaughter. USDA forecasts beef imports to be down 10% this year.”

“Cull beef cows contribute to ground beef production as a source of 90% lean trimmings, blended with 50% lean trimmings to make the majority of our ground beef and hamburger,” Mitchell explains. “The other two sources of lean trimmings are dairy cows and lean beef imports. For context, in 2019 and 2020, cull beef and dairy cows represented 28.4% and 27.6% of total U.S. beef trim supplies, respectively. Fed cattle trimmings are the main source of 50% lean trim. In 2020, fed trim accounted for 41.3% of total U.S. supplies.”

Lean trim and ground beef prices are also underpinning cull cow prices, Mitchell says.

“Fresh 90% lean trimmings have averaged 4% below 2020 prices but 11% higher than 2019 prices, Mitchell explains. “BLS data through May 2021 shows that ground beef prices have averaged $4.04/lb.  or 0.5% higher than 2020. Lean ground beef prices have averaged 1.6% and 9.9% above 2020 and 2019 prices, respectively. The only way to have higher prices with larger supplies of cull cows and lean trimmings is with strong ground beef demand.”

Negotiated cash fed cattle trade was limited on light demand in the Texas Panhandle through Tuesday afternoon, according to the Agricultural Marketing Service. Compared to last week, early live sales traded steady at $120/cwt. In Kansas, trading was slow on moderate demand. Compared to last week, early live sales traded steady to $1 higher, mostly at $120/cwt.

In Nebraska and the Western Corn Belt, cash trading was mostly inactive on light demand. In Nebraska on Monday, live sales traded at $125/cwt.; dressed sales last week traded from $196-$202/cwt. In the Western Corn Belt, last week live sales traded from $124-$126/cwt. and dressed at $196-$202/cwt.

Whether it was hedging for inflation (see below) or simply considering the fundamentals and optimistic prices ahead, Live Cattle futures closed higher Tuesday, dragging Feeder Cattle along.

Live Cattle futures closed an average of $1 higher (45¢ to $1.92 higher).

Feeder Cattle futures closed an average of 82¢ higher (62¢ to $1.17 higher).

Choice boxed beef cutout value was $1.66 lower Tuesday afternoon at $273.34/cwt. Select was $2.03 lower at $256.74/cwt.

Net U.S. beef export sales were 23,700 metric tons (for 2021) the week ending July 1, according to USDA’s Weekly Export Sales report. That was 96% more than the previous week and 64% more than the prior four-week average.

Increases were primarily for South Korea, Japan, China, Mexico, and Canada. 

Grain futures edged higher with follow-through support from the previous day’s, WASDE.

Corn futures closed 7¢ to 8¢ higher through Jly ‘22, and then mostly 3 higher

Soybean futures closed mostly 1¢ to 3¢ higher.

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Major U.S. financial indices closed lower on Tuesday after reports the consumer price index rose 0.9% last month and 5.4% compared to June 2020 – higher than expected and the biggest jump since 2008.

The index for all items less food and energy rose 0.9% in June after increasing 0.7% percent in May, according to the U.S. Bureau of Labor Statistics.

The food index increased 0.8% in June. The beef index rose 4.5% in June, its steepest one-month increase since June of last year.

The Dow Jones Industrial Average closed 107 points lower. The  S&P 500 closed 15 points lower. The NASDAQ was down 56 points.

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Despite elevated feed costs, prospects for higher fed cattle prices are pushing projected feedlot returns higher, according to the latest monthly Focus on Feedlots Survey (FFS) from Kansas State University.

Currently, net returns projected for closeouts in June are -$11.22/head for steers and -$47.34/head for heifers. Estimated returns in May were +$3.71 for steers and -$39.91 for heifers.

After projected returns for steers of -$19.30/head in July, the FFS forecasts positive returns for the remainder of the year ranging from $3.34 (Sept.) to +$76.33 (Dec.). Feedlot cost of gain for September through December ranges from $126/cwt. (Sept.) to $137.08 (Dec.).

Projected returns follow a similar path for fed heifers.

Keep in mind that estimates exclude any price risk management.

Negotiated cash fed cattle trade was slow on light demand in Nebraska through Monday afternoon, according to the Agricultural Marketing Service. Early live sales traded steady to $2 higher than last week at $125/cwt. Dressed sales there last week were at $196-$202/cwt.

Trading in the Western Corn Belt was mostly inactive on very light demand. Last week, live sales traded from $124-$126/cwt. and dressed sales were at $196-$202/cwt.

In all other major trading regions, trading was at a standstill. Last week in the Texas Panhandle, live sales traded at $120/cwt. In Kansas, live sales were at $119-$120/cwt.

Live Cattle futures gained Monday, supported by higher prices forecast in the latest World Agricultural Supply and Demand Estimates (see below).

Live Cattle futures closed an average of 52¢ higher.

Feeder Cattle futures faltered with another session of higher Corn futures.

Feeder Cattle futures closed an average of 70¢ lower.

Choice boxed beef cutout value was $3.59 lower Monday afternoon at $275.00/cwt. Select was $1.36 higher at $258.77.

Grain futures closed higher, supported by the WASDE.

Corn futures closed 15¢ to 16¢ higher through new-crop contracts, and then mostly 11¢ to 12¢ higher.

Soybean futures closed mostly 18¢ to 20¢ higher.

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Major U.S. financial indices closed higher on Monday, reaching all-time highs, with second-quarter earnings reports due this week.

The Dow Jones Industrial Average closed 126 points higher. The S&P 500 closed 15 points higher. The NASDAQ was up 31 points.

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USDA’s Economic Research Service (ERS) boosted expected fed cattle prices in the latest World Agricultural Supply and Demand Estimates (WASDE).

Specifically, based on recent price strength, ERS forecast the annual average five-area direct fed steer price $2.20 higher than the previous month at $119.20/cwt. Average prices are projected at $120 in the third quarter, $123 in the fourth quarter and $127 in the first quarter of next year.

Beef production for this year was estimated to be the same as the previous month at 27.91 billion lbs., which would be 731 million lbs. more (+2.69%) than last year. Projected beef production next year of 27.33 billion lbs. would be 580 million lbs. less (-2.08%) than this year.

Total red meat and poultry production is forecast to be 107.14 billion lbs. this year, which would be 580 million lbs. more (+0.54%) than last year. Next year’s total red meat and poultry production is forecast at 107.19 billion lbs.

Corn

Corn production for 2021-22 was projected 175 million bu. higher than the previous month based on increased planted and harvested area. National average corn yield was unchanged at 179.5 bu./acre.

With supply rising more than use, ending stocks were projected 75 million bu. more than the previous month.

The season-average farm price received by producers was lowered 10¢ to $5.60/bu. 

Soybeans

Soybean production was projected at 4.4 billion bu., the same as last month with harvested area of 86.7 million acres unchanged, as well as forecast yield of 50.8 bu./acre. With offsetting changes in supply and use, ending stocks were unchanged at 135 million bu.

The U.S. season-average soybean price for 2020-21 was forecast at $11.05/bu., down 20¢ from the previous month based on early-season sales at lower prices. The soybean meal price was projected at $395.00/short ton, down $10 from last month. The soybean oil price was forecast at 57.5¢/lb., down 1.5¢.

Wheat

All wheat production was lowered 152 million bu. to 1,746 million. The forecast all wheat yield of 45.8 bu./acre was 4.9 bu. less than last month. Beginning stocks were reduced on the latest NASS Grain Stocks report.

Projected exports and feed and residual usage were lowered to 875 and 170 million bu., respectively, on the reduction in durum and other spring wheat supplies. These would be the smallest U.S. wheat exports since the 2015-16 marketing year. Projected 2021-22 ending stocks were reduced 105 million bu. to 665 million, the lowest since 2013-14.

The projected 2021-22 season-average farm price was raised 10¢/bu. to $6.60.

Negotiated cash fed cattle trade was at a standstill in the Texas Panhandle though Friday afternoon, according to the Agricultural Marketing Service. Elsewhere, trade was limited on light demand.

For the week, live prices were generally steady to $2 lower in the Southern Plains at $119-$120/cwt. and steady to either side of steady at $123-$126 in the north. Dressed trade was steady in the western Corn Belt at $196-$202 but steady to $4 higher in Nebraska at  $198-$202.

The five-area direct average steer price through Thursday was $122.01/cwt. on a live basis, which was $1.81 less than the same period a week earlier. The average steer price in the beef was 34¢ higher at $198.48.

Feeder Cattle futures faded pressure through much of the session to close higher Friday, perhaps supported by some positioning ahead of Monday’s monthly World Agricultural Supply and Demand Estimates.

Feeder Cattle futures closed an average of $1.68 higher ($1.30 to $2.12 higher).

Live Cattle futures managed to edge higher but remained under pressure from declining wholesale beef values. Monday’s markets could come under pressure from the Executive order signed by President Biden Friday, aimed at a number of broad issues, including concentration and competition in several industries, including agriculture (see below).

Live Cattle futures closed an average of 51¢ higher, except for 5¢ lower in spot Aug.

Choice boxed beef cutout value was $3.38 lower Friday afternoon at $278.59/cwt. Select was $2.65 lower at $257.41

Corn futures closed 6¢ to 8¢ lower through new-crop contracts, and then fractionally higher to 3¢ lower.

Soybean futures closed mostly 10¢ to 14¢ higher.

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Major U.S. financial indices closed higher Friday amid general economic optimism.

The Dow Jones Industrial Average closed 448 points higher. The S&P 500 closed 48 points higher. The NASDAQ up up 142 points. 

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Buckle Up.

President Biden signed an Executive order and USDA announced intentions Friday that could have plenty to say about producer marketing opportunities in decades to come.

“The COVID-19 pandemic led to massive disruption for growers, food workers, and consumers alike. It exposed a food system that was rigid, consolidated, and fragile. Meanwhile, those growing, processing and preparing our food are earning less each year in a system that rewards size over all else,” said Agriculture Secretary Tom Vilsack. “To shift the balance of power back to the people, USDA will invest in building more, better, and fairer markets for producers and consumers alike. The investments USDA will make in expanding meat and poultry capacity, along with restoration of the Packers and Stockyards Act, will begin to level the playing field for farmers and ranchers. This is a once in a generation opportunity to transform the food system so it is more resilient to shocks, delivers greater value to growers and workers, and offers consumers an affordable selection of healthy food produced and sourced locally and regionally by farmers and processors from diverse backgrounds. I am confident USDA’s investments in expanded capacity will spur millions more in leveraged funding from the private sector and state and local partners as our efforts gain traction across the country.”

Specifically, USDA intends to invest $500 million in American Rescue Plan funds to expand meat and poultry processing capacity, “…so that farmers, ranchers, and consumers have more choices in the marketplace.” USDA also announced more than $150 million for existing small and very small processing facilities.

“Concentration in food processing has contributed to bottlenecks in America’s food supply chain, too. Just a few meatpackers, with a few large processing facilities, process most of the livestock that farmers and ranchers raise into the meat that we buy,” according to the announcement. “For example, just four large meat-packing companies control over 80% of the beef market alone. One of the lessons from the COVID-19 pandemic is that this system is too rigid and too fragile. When COVID slowed or shuttered meat processing, many farmers had no place to go. Farmers were forced to depopulate their animals, while grocery store shelves went bare and demand for food assistance spiked. These vulnerabilities are not new. And, given current concerns about climate and cybersecurity, these risks are likely to grow even more sharply in the future.”

For the record, I’m unaware of any cattle depopulation due to the processing backlog, never mind other hyperbole in the USDA statements.

“…To facilitate effective enforcement of the Act (Packer and Stockyards), USDA will be conducting three rulemakings,” according to the announcement. “First, the rulemakings will clarify the conduct that USDA considers a violation of the Packers and Stockyards Act, including conduct that is unfair, deceptive, or unjustly discriminatory against farmers and growers. Second, they will address oppressive practices in chicken processing. Third, the rulemakings will reinforce the longstanding USDA position that it is not necessary to demonstrate harm or likely harm to competition in order to establish a violation of the Act.”

Lots to ponder in all of that, and to monitor closely.

Negotiated cash fed cattle trade was limited on light demand in the Southern Plains through Thursday afternoon, according to the Agricultural Marketing Service.

Elsewhere, trade was slow with moderate demand.

For the week, live prices are generally steady to $2 lower in the Southern Plains at $119-$120/cwt. and steady to either side of steady at $123-$125 in the north. Dressed trade is steady in the western Corn Belt at $196-$202 but steady to $4 higher in Nebraska at  $198-$202.

Cattle futures closed lower Thursday, pressured by declining wholesale beef prices and softer cash prices.

Feeder Cattle futures closed an average of $1.28 lower.

Live Cattle futures closed an average of $1.24 lower.

Choice was boxed beef cutout value was $2.93 lower Thursday afternoon at $281.97/cwt. Select was $2.02 lower at $260.06

Favorable weather continued to pressure Corn and Soybean futures Thursday.

Corn futures closed down between 6¢ and 14¢ lower through the front six contracts.

Soybean futures closed between 1¢ and 7¢ lower through the front six contracts, except for spot July, up 3¢.

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Major U.S. financial indices fell on Thursday on fears prompted by the continued spread of the Delta variant of Covid-19. Reports suggest traders have gone from worrying that economic growth would fuel inflation to fears the virus will cause further damage economically.

The Dow Jones Industrial Average closed 260 points lower. The S&P 500 37 points lower. The NASDAQ was down 105 points.

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“Domestic beef demand looks to continue strong in the second half of the year and beef exports are expected to increase as well,” says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly market comments. “Strong beef demand and year-over-year decreases in beef production in the third and fourth quarters is expected to continue supporting wholesale beef values for the remainder of the year.”

The seasonal increase in boxed beef cutout prices was stronger than usual this year, according to Peel. He explains weekly average Choice boxed beef prices increased 63.8% from early January to early June. 

“Among the four major beef primals, values were higher across the board, led by the loin (up 93.0%), rib (up 60.0%), round (up 43.8%) and chuck (up 39.0%),” Peel says. “The smaller primals were also up strongly with increases for brisket (up 99.3%), short plate (up 107.5%) and flank (up 85.7%).”

According to Peel, wholesale price strength stemmed from a number of factors, including increased seasonal beef demand, strong export demand and food service inventory rebuilding, all underpinned by generally strong domestic protein demand.

Boxed beef prices declined since the early June peak but remain up since the beginning of the year. 

Negotiated cash fed cattle trade was moderate with moderate demand in the Texas Panhandle through Wednesday afternoon, according to the Agricultural Marketing Service. In Kansas, trading was slow on moderate demand. Live sales in both regions were steady to $2 lower at $120/cwt.

Trading in Nebraska and the Western Corn Belt was limited on light demand.

In Nebraska, a few dressed sales traded at $198-$202/cwt. Prices last week were $198 in the beef and $125.00-$126.50 on a live basis.

In the Western Corn Belt, a few live sales traded at $125/cwt. and a few dressed from $200-$202/cwt. Last week, prices were $124-$126 and $197-$202, respectively.

Feeder Cattle futures closed an average of $1.71 lower Wednesday amid likely profit taking from solid gains in the previous session.

Live Cattle futures closed an average of $1.15 lower with the steady to lower cash market and continued decline in wholesale beef values.

Choice boxed beef cutout value was $1.78 lower Wednesday afternoon at $284.90/cwt. Select was $1.23 lower at $262.08

Corn futures continued under pressure from the wetter, cooler forecast: 3¢ and 9¢ lower through the front six contracts.

Soybean futures bounced back from the previous day’s steep decline, helped along by eroding crop conditions. They closed 20¢ and 22¢ higher through the front six contracts.

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Major U.S. financial indices rose moderately on Wednesday with the S&P 500 closing at another record high.

The Dow Jones Industrial Average closed 104 points higher. The S&P 500 closed 14 points higher. The NASDAQ was up 1 point.

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“Over the last three months, beef cow slaughter totaled 818,000 head, the most since the 837,000 during the same period in 2010,” says David Anderson, livestock economist with Texas A&M AgriLife Extension Service. “Total cow slaughter over the same period is the largest since 2013. At that time, the industry was reducing the number of beef cows due mostly to low prices and then the drought in Texas and the Southwest.”

More specifically, in the July 5 issue of In the Cattle Markets, Anderson explains beef cow slaughter for the previous three months was the most since 2011 in the region that includes Texas, New Mexico and Oklahoma. It was the most since 2013 for the region including Arizona and Nevada.

Even so, Anderson points out cull cow prices are higher year over year.

“Cull cow prices usually increase from the beginning of the year until mid-year,” Anderson explains. “Southern Plains 85-90% lean cows increased at a normal seasonal rate to about $65/cwt. at the end of June, about $8 higher than last year. National cutter cow prices hit $67 (end of June), also about $8 above a year ago.”