Daily Market Highlights

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

For the week, live prices were $1-$2 higher at $115/cwt. in the Southern Plains and $116 in the Northern Plains. Dressed trade was $2-$3 higher in Nebraska at $185. Trade was yet to be established in the western Corn Belt, according to AMS, but various reports suggested trade in the region at as much as $3 higher than the previous week.

Cattle futures continued to edge higher Friday, buoyed by the week’s stronger cash prices and wholesale beef values.

Live Cattle futures closed an average of 36¢ higher, except for 20¢ lower in the back contract.

Feeder Cattle futures closed an average of 39¢ higher, from 15¢ higher toward the back to 90¢ higher in spot Apr. 

Choice boxed beef value was $1.21 higher Friday afternoon at $237.66/cwt. Select was $1.52 higher at $227.77.

Estimated total cattle slaughter the week ending Mar. 26 was 646,000 head, according to USDA. That was 19,000 head more than the previous week, but 39,000 head fewer (-5.69%) than the same week a year earlier. Estimated total year-to-date cattle slaughter of 7.75 million head was 278,000 head fewer (-3.46%) than the same time last year. Estimated year-to-date beef production of 6.50 billion lbs. was 143.1 million lbs. less (-2.15%).

Corn futures closed mostly 1¢ higher, except for 3¢ and 6¢ higher at either end of the board.

Soybean futures closed 6¢ to 13¢ lower through the front six contracts, and then mostly 2¢ higher.

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

Major U.S. financial indices closed sharply higher Friday with a late-session surge tied to the Federal Reserve announcement that banks meeting stress criteria can return to normal levels of dividend disbursement and share repurchases at the end of June. That ability was limited since the beginning of the pandemic.

Investors were likely also encouraged by the latest data from the U.S. Bureau of Economic Analysis, suggesting tame inflation. It showed the personal consumption expenditure price index, excluding food and energy prices, increased just 0.1% month to month in February and just 1.4% year over year.

The Dow Jones Industrial Average closed 453 points higher. The S&P 500 closed 65 points higher. The NASDAQ was up 161 points.

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

“There was a time in the beef industry when $200/cwt. was the primary resistance point for the weekly Choice boxed beef cutout value. However, the $200 level appears to be the primary support point in that the weekly Choice boxed beef price has not been below this level since the week ending Oct. 20, 2017,” says Andrew P. Griffith, agricultural economist at the University of Tennessee, in his weekly market comments.

Griffith says Choice boxed beef cutout values exceeded $200 for the first time in May 2013 (looking back as far as 2004). Between May 2013 and October 2017, he explains the Choice prices swung to levels on either side of $200 but exceeded the level since then.

“Choice beef prices have been strong the first quarter of 2021 and they are only expected to get stronger in the second quarter as grilling season hits full stride,” Griffith says. “Many consumers have ample disposable income because they have not been traveling. Thus, they can spend some of that money on their eating experience. There is no reason to attempt to predict how high boxed beef prices will go this spring, but they are likely to test the $250 mark.”

Negotiated cash fed cattle trade continued through Thursday afternoon, with limited to slow trade on light to moderate demand. For the week, live prices are $1-$2 higher on a live basis at $115/cwt. in the Southern Plains, $115-$116 in Nebraska and $116 in Colorado. Dressed trade in Nebraska is $3-$5 higher at $185. Trade was yet to be established in the western Corn Belt.

Cattle futures continued mostly higher Thursday, supported by stronger cash prices and wholesale beef values.

Net U.S. beef export sales of 18,900 metric tons for the week ending Mar. 18 were 27% less than the previous week but 3% more than the prior four-week average, according to the weekly U.S. Export Sales report. Increases were primarily for Japan, South Korea, China, Taiwan and Chile.

Live Cattle futures closed an average of 45¢ higher through the front five contracts, and then unchanged to an average of 18¢ lower.

Feeder Cattle futures closed an average of 98¢ higher, from 37¢ to $1.80 higher. 

Choice boxed beef cutout value was $1.61 higher Thursday afternoon at $236.45/cwt. Select was $2.18 higher at $226.25.

The average dressed steer weight of 904 lbs. was 4 lbs. heavier than the prior week and 3 lbs. heavier than the previous year, according to USDA’s Actual Slaughter Under Federal Inspection report for the week ending Mar. 13. The average dressed heifer weight of 832 lbs. was 1 lb. lighter than the previous week and 3 lbs. lighter than the previous year.

Corn futures closed mostly 2¢ to 4¢ lower.

Soybean futures closed 10¢ to 18¢ lower.

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

Major U.S. financial indices closed higher Thursday, in a late-session surge, supported by more positive labor data than the trade expected. Weekly initial unemployment insurance claims the week ending Mar, 20 were 684,000, according to the U.S. Department of Labor. That was 97,000 fewer than the previous week.

The Dow Jones Industrial Average closed 199 points higher. The S&P 500 closed 20 points higher. The NASDAQ was up 15 points.

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

Persistently and bullishly strong Lean Hog futures continue offering support to beef, tied in part to speculation whether China’s hog herd rebuilding from African Swine Fever is going as well as that government’s reports claim.

“While China’s governmental inventory data as of December 2020 show sow and hog inventory were 92.1% and 93.1% of their respective 2017 levels (MARAC 2021), recent record-high piglet, sow, hog, and pork prices suggest a large persistent supply shortage,” say analysts with the Center for Agricultural Research and Development (CARD) at Iowa State University.

“China’s record pork and live swine imports in 2020 suggest that China’s hog rebuilding might be fast but of low genetic quality. Specifically, it seems likely that the retention of low-quality commercial generation gilts helped rebuild the herd but set back the national breeding system by abandoning purebred grandparents and parent generation propagation (Dim Sums 2021).”

In CARD’s winter Agricultural Policy Review—Is China’s Hog Rebuilding Complete? Reconciling Inventory and Price Data—analysts explain China’s recently launched Live Hog futures also suggest traders expect prices to remain elevated into 2022.

Negotiated cash fed cattle trade was light on light to moderate demand in the Southern Plains through Wednesday afternoon, with live price $1 higher than last week at $115/cwt.

Elsewhere, trade was limited on light demand, according the Agricultural Marketing Service. There were a few live trades in Nebraska at $115-$116, but too few to trend. Prices last week were at $114 in the Northern Plains and at $114-$115 in the western Corn Belt. Dressed prices were at $180-$182.

Cattle feeders offered 2,633 head in Central Stockyards’ weekly Fed Cattle Exchange auction. Of those, 1,550 head sold for an average price of $115.89/cwt., all via live weight. Texas prices were at $115/cwt. and Nebraska prices were at $116, which was $2 higher than last week’s country trade.

Choice steers and heifers sold $1.50-$2.50 higher at the fat auction in Tama Iowa. There were 67 Choice 2-4 steers weighing an average of 1,487 lbs., brining an average price of $117.15/cwt. That was $2-$3 higher than country trade in the region last week.

At Sioux Falls Regional in South Dakota, though, slaughter steers sold steady to $2 lower and slaughter heifers traded steady to $1 lower. There were 152 Choice 2-3 steers weighing an average of 1,468 lbs., bringing an average of $112.72.

Cattle futures closed higher Wednesday, supported by stronger cash prices and softer Corn futures prices.

Live Cattle futures closed an average of 59¢ higher, except for unchanged in spot Apr.

Feeder Cattle futures closed an average of $1.32 higher, from 32¢ higher in waning spot Mar to $2.70 higher.

Choice boxed beef cutout value was 85¢ higher Wednesday afternoon at $234.84/cwt. Select was $1.16 lower at $224.07.

Corn futures closed mostly fractionally lower to 2¢ lower, except for 2¢ and 3¢ higher in the front two contracts.

Soybean futures closed mostly 6¢ to 9¢ higher.

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

Major U.S. financial indices extended losses Wednesday, pressured by a selloff in big tech stocks and despite strong gains earlier in the session.

The Dow Jones Industrial Average closed 3 points lower. The S&P 500 closed 21 points lower. The NASDAQ was down 265 points.

West Texas Intermediate Crude Oil futures (CME) closed $2.97 to $3.42 higher through the front six contracts, mostly gaining back the previous session’s decline, and presumably related to reports that a cargo ship ran aground in the Suez Canal, blocking traffic.

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

“U.S. agricultural exports are largely expected to continue a faster pace in 2021 with help from weakness in the U.S. dollar,” says Tanner Ehmke, manager of CoBank’s Knowledge Exchange (CBKE).

The U.S. dollar weakened substantially since March 2020 and is expected to experience modest deflation in 2021. CoBank analysts explain a weaker dollar generally makes U.S. agricultural products more competitive on the global export market. However, commodities are affected differently, given the diversity in global export competition and foreign exchange rates. 

CBKE published a recent report—Dollar Divergence: U.S. Dollar Index Does Not Reflect True Dollar Impact on U.S. Ag Exports—examining the impact of currency dynamics on agricultural exports, in addition to fundamental factors such as tariffs and weather conditions.

CBKE utilized the foreign exchange (FX) rates of key agricultural exporting countries that the U.S. competes with, rather than the dollar index (DXY), which those analysts say is heavily weighted toward the euro. The research reveals a more nuanced effect of FX rates on U.S. grain, livestock, dairy, tree nuts, and cotton exports.

“In the final months of 2020, U.S. protein exports started to benefit from the strengthening of the Australian dollar and the euro against the U.S. dollar, helping animal protein exports to end the year on a high note,” according to the report. “The

outlook for a strong Australian dollar and euro in 2021 should make U.S. beef and pork exports the largest beneficiaries of a weaker dollar in the coming year.”

At the same time, CBKE analysts explain the U.S. trade weighted grain and oilseed index strengthened by 14% in 2020 and is expected to gain another 4%-5% this year. The U.S. dollar’s strength, relative to the currencies of major exporters like Brazil, Argentina and Ukraine, is driving the stronger index.

“A casual observer could argue that corn and soybean exports will face headwinds in 2021 since the index strength implies that U.S. exports become less price competitive,” says Kenneth Scott Zuckerberg, lead grain and farm supply economist with CoBank. “But this was not the case in 2020 nor is it expected to be in 2021 due to Chinese demand.”

China has been aggressively buying U.S. grain for feed as it rebuilds its hog herd, leveraging its strong currency relative to the U.S. dollar despite the dollar’s strength in relation to other currencies.

“In addition to currency, a more normal year for U.S. meat processing capacity, the rebound in global foodservice demand, and the trend in China’s meat and poultry imports will be the primary drivers of a good year for U.S. protein exports in 2021,” according to the report.

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

Last week, prices were at $114/cwt. on a live basis in the Southern Plains and Northern Plains, and at $114-$115 in the western Corn Belt. Dressed trade was at $180-$182.

Cattle futures continued higher Tuesday, supported by rising wholesale beef prices and strength in Lean Hog futures, amid light trade.

Live Cattle futures closed an average of 66¢ higher, from 10¢ higher at the back to $1.12 higher toward the front.

Feeder Cattle futures closed an average of 39¢ higher.

Choice boxed beef cutout value was $3.04 higher Tuesday afternoon at $233.99/cwt. Select was $2.18 higher at $225.23.

Corn futures closed mostly fractionally higher to 2¢ higher.

Soybean futures closed 5¢ to 8¢ higher.

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

Major U.S. financial indices closed lower Tuesday, pressured by increasing domestic and international COVID-19 infections, and the potential for that to create further supply chain disruptions, while further slowing economic recovery.

The Dow Jones Industrial Average closed 308 points lower. The S&P 500 closed 30 points lower. The NASDAQ down 149 points.

West Texas Intermediate Crude Oil futures (CME) closed $3.12 to $3.80 lower through the front six contracts.

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

The Creighton University Rural Mainstreet Index (RMI) soared to 71.9 in March—the highest level since the data series began in January of 2006—up from 53.8 the previous month. The index was above growth neutral (50.0) for the fifth time in six months.

“Sharp gains in grain prices, federal farm support, and the Federal Reserve’s record-low interest rates have underpinned the Rural Mainstreet Economy,” says Ernie Goss, PhD, Jack A. MacAllister Chair in Regional Economics at Creighton University’s Heider College of Business.

“Only 3.1% of bank CEOs indicated economic conditions worsened from the previous month. Even so, current rural economic activity remains below pre-pandemic levels,” according to Goss.

The RMI is borne by a monthly survey of community bank presidents and CEOs in non-urban agricultural and energy-dependent portions of a 10-state area. Bankers from Colorado, Illinois, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, South Dakota and Wyoming are included.

Approximately, 68.8% of bank CEOs reported that their local economy was expanding; the remaining 31.2% indicated little or no growth.

Highlights from the March survey include:

The farmland price index climbed to 71.9 in March, up from 60.0 the previous month and the highest level since November 2012. March was the sixth consecutive month the index was above growth neutral. Bankers reported that approximately 12.3% of farmland sales were cash sales, which is down from 17.3% recorded in February 2020.

The March farm equipment sales index rose to 63.5, its highest reading since February 2013, and up from 62.7 in February. After 86 straight months of readings below growth neutral, farm equipment bounced into growth territory for the last four months.

For the first time since September of last year, bankers reported an expansion in loan volumes. The March loan volume index increased to 60.9 from February’s 46.1.

The confidence index, which reflects bank CEO expectations for the economy six months out, rose to 76.7 and up from 64.0.

“Looming federal farm support payments, improving grain prices, and advancing exports have supported confidence, offsetting negatives from pandemic-ravaged retail and leisure and hospitality companies in the rural economy,” Goss says.

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

Last week, prices were at $114/cwt. on a live basis in the Southern Plains and Northern Plains, and at $114-$115 in the western Corn Belt. Dressed trade was at $180-$182.

The average five-area direct fed steer price last week was $114.23/cwt. on a live basis, which was 61¢ more than the prior week. The average steer price in the beef was $181.33, which was $2.01 higher.

Cattle futures found some traction Monday amid relatively light trade, following the late-week decline. Support included lower Corn futures, higher outside markets, stronger wholesale beef prices and the neutral Cattle on Feed report.

Live Cattle futures closed an average of 40¢ higher.

Feeder Cattle futures closed an average of 28¢ higher, expect for unchanged in Apr.

Choice boxed beef cutout value was 96¢ higher Monday afternoon at $230.95/cwt. Select was $3.10 higher at $223.05.

Corn futures closed 5¢ to 8¢ lower in the front three contracts, and then mostly 2¢ to 3¢ lower.

Soybean futures closed mostly 5¢ lower, after 1¢ higher in the front two contracts.

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

Major U.S. financial indices closed higher Monday, buoyed by declining Treasury yield rates and increased demand for big tech stocks.

The Dow Jones Industrial Average closed 103 points higher. The S&P 500 closed 27 points higher. The NASDAQ was up 162 points.

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

“There is considerable optimism for fed cattle markets going forward, beginning in the second quarter and especially in the second half of the year,” says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly market comments. “…Feedlots have been somewhat front-loaded thus far in 2021 which has contributed to the sluggish fed cattle markets in the first quarter of the year. Feedlot supplies should tighten in the second half of the year after working through current inventories.”

For context, Peel says fed steer and heifer slaughter is 0.8% more year over year for the first nine weeks of 2021; steer and heifer carcass weights are 13-14 lbs. heavier year over year. He explains that reality, along with last month’s weather-based packer disruptions, overwhelmed the opportunity for a seasonal rally in cash fed cattle prices.

Market-ready fed cattle supplies will begin to tighten, though, with total feedlot placements for the last six months 2.3% less year over year, according to Peel. Placements in February were 1.86% less than a year earlier, according to the latest USDA Cattle on Feed report.

“Currently Live Cattle futures for April and June are trading at roughly the same level with June; at times, premium to April. This is unusual because June is usually at a significant discount to April Live Cattle futures. In fact, the previous five-year average discount of June to April Live Cattle futures in March is -$8.47/cwt.,” Peel says. “The fact that April and June are at equal levels this year is due to weak April prices relative to June expectations. Live Cattle futures prices for October and December reflect additional optimism for fed cattle markets in late 2021 and heading into 2022.”

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

Prices last week were steady on a live basis at $114/cwt. in Kansas, steady to $1 higher in Nebraska at $114, $1-$2 higher in the western Corn Belt at $114-$115. Prices were a touch higher than steady in the Texas Panhandle, with the Texas Cattle Feeders Association reporting $114.24 for steers and $114.30 for heifers. Dressed trade was $2 higher in Nebraska and $2-$4 higher in the western Corn Belt at $182.

Cattle futures closed mostly lower Friday with follow-through selling and higher Corn futures prices. That was despite what appears to be fundamental market improvement stemming from higher wholesale beef values and the likelihood for cash fed cattle prices to begin moving higher.

Choice boxed beef cutout value was $1.38 higher Friday afternoon at $229.99/cwt. Select was $1.84 higher at $219.95.

Estimated total cattle slaughter of 624,000 head for the week ending March 20 were 23,000 head fewer (-0.35%) than the previous week and 36,000 head fewer (-5.45%) than the same week a year earlier. Year-to-date estimated total cattle slaughter of 7.1 million head is 244,000 fewer (-3.3%) than the same period a year earlier. Year-to-date estimated total beef production of 5.97 billion lbs. is 110.2 million lbs. less (-1.81%).

Live Cattle futures closed an average of 75¢ lower (17¢ to $1.25 lower), except for 12¢ higher in the back contract.

Feeder Cattle futures closed an average of $1.06 lower (62¢ to $2.00 lower).

Corn futures closed 2¢ to 3¢ higher, except for 11¢ and 8¢ higher in the front two contracts. 

Soybean futures closed 12¢ to 24¢ higher through Jan ‘22, and then mostly 5¢ to 6¢ higher.

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

The Dow Jones Industrial Average closed sharply lower Friday, driven by bank stocks. The popular explanation was the Federal Reserve’s decision to allow a rule to elapse at the end of the month, which allowed banks to hold less capital relative to Treasury notes and other holdings. The fear, in part and supposedly, is that making banks set aside more capital could make them less willing lenders.

The Dow Jones Industrial Average closed 234 points lower. The S&P 500 closed 2 points lower. The NASDAQ was up 99 points.

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

Cattle feeders placed 1.68 million head in February, according to the monthly Cattle on Feed report from USDA—for feedlots with 1,000 head or more capacity. That was 1.86% less than a year earlier and close to average expectations ahead of the report for a decline of 1.7%.

In terms of weight, 37.4% went on feed weighing 699 lbs. or less. 51,89% weighing 700-899 lbs. and 10.69% weighing 900 lbs. or more.

Marketings in February of 1.73 million head were 43,000 head fewer (-2.42%) year over year. Expectations ahead of the report were for a decline of 2.6%.

Cattle on feed March 1 of 12.0 million head were 189,000 head more (+1.60%), the second highest inventory for the month since the data series began in 1996. Average pre-report expectations were for an increase of 1.5%.

Negotiated cash fed cattle trade was $2 higher on a dressed basis in Nebraska Thursday at $182.00/cwt., according to the Agricultural Marketing Service. That was on slow trade and light demand, but might suggest front-end inventory is current enough for prices to finally move beyond the rut of the last seven weeks. Live trade in Nebraska was at $114 on Wednesday.

Trade was limited on light demand in most other regions with too few transactions to trend.

On Wednesday, live prices were $2 higher in the western Corn Belt at $114-$115. Dressed trade in the region last week was at $178-$180.

Cattle futures closed sharply lower amid likely technical correction and positioning ahead of Friday’s Cattle on Feed report, despite wholesale beef values gathering some seasonal steam, sharply lower Corn futures and the likelihood that cash fed cattle prices are on the cusp of moving higher.

Pressure also included sharply lower Lean Hog futures, tied to chatter out of China that it’s close to rebuilding its hog herd to pre-ASF levels. That diverges widely from private sector reports citing further ASF challenges.

Net U.S. beef export sales were 25,900 metric tons (mt) the week ending Mar. 11, according to the weekly U.S. Export Sales report from USDA’s Foreign Agricultural Service. That was 24% more than the previous week and 39% more than the prior four-week average. Increases were primarily for Japan, South Korea, China, Taiwan, and Hong Kong.

Live Cattle futures closed an average of $1.92 lower.

Feeder Cattle futures closed an average of $1.78 lower (20¢ lower at the back to $3.55 lower).

Choice boxed beef cutout value was 14¢ higher Thursday afternoon at $228.61/cwt. Select was 52¢ higher at $218.11.

The average dressed steer weight the week ending Mar. 6 was 900 lbs. according to USDA’s weekly Actual Slaughter Under Federal Inspection report. That was 1 lb. heavier than the previous week but 3 lbs. lighter than the previous year. The average dressed heifer weight of 833 lbs. was 1 lb. lighter than the previous week but 3 lbs. heavier than the prior year.

Corn and soybean futures closed sharply lower Thursday. The most plausible explanations include rainier forecasts for South America and worries about how many acres might show up in USDA’s Prospective Plantings report due out at the end of the month. There’s also likely some queasiness about U.S. and Chinese officials meeting in Alaska this week.

Net U.S. corn export sales for 2020-21 were 985,900 mt the week ending Mar. 11, which was up noticeably from the previous week and from the prior four-week average.

Corn futures closed 10¢ to 12¢ lower through the front three contracts, and then mostly 3¢ to 7¢ lower.

Net U.S. soybean export sales of 202,400 mt for 2020-21 were down 42% from the previous week and 31% from the prior four-week average.

Soybean futures closed 20¢ to 29¢ lower.

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

Major U.S. financial indices closed lower Thursday, pressured by surging bond yield rates, just a day after Federal Reserve Chair Jerome Powell expressed little concern that inflation would get out of hand.

The Dow Jones Industrial Average closed 153 points lower. The S&P 500 closed 58 points lower. The NASDAQ was down 409 points.

West Texas Intermediate on the CME closed $4.10 to $4.60 lower through the front six contracts. Reasons ranged from increasing inventory to the stronger dollar to the simple fact traders may have leaned too far over the skis of reality.

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

Lower government payments and higher farm production costs could outweigh the projected increase in livestock and crop sales in 2021, leading to lower year-over-year farm income, according to the latest analysis of national and global agricultural trends from the University of Missouri (MU).

Even so, analysts at the MU Food and Agricultural Policy Research Institute (FAPRI) project net farm income this year at $112 billion, which would be significantly higher than in 2015-2019. Net farm income increased to $121 billion in 2020, the highest level since 2013, primarily because of $46 billion in government payments.

“The COVID-19 pandemic upended agricultural markets, contributing to a dismal outlook for the farm economy in the spring and summer of 2020,” says Patrick Westhoff, FAPRI director and Howard Cowden Professor of Agricultural and Applied Economics in the MU College of Agriculture, Food and Natural Resources (CAFNR). “A series of emergency support programs provided record government payments to farmers, and prices for many commodities rebounded in the final months of the year, resulting in a large increase in 2020 net farm income. Looking ahead, the outlook is uncertain, but certainly more optimistic than it was a few months ago.”

Economists with FAPRI and the MU Agricultural Markets and Policy (AMAP) team release the annual U.S. Agricultural Market Outlook report each spring. The baseline projections for agricultural and biofuel markets through 2030 were prepared using market information available in January, but do not reflect any subsequent policy changes.

FAPRI projects cattle prices higher, especially after 2021, as beef cow numbers decline from 30.8 million head Jan. 1 this year to a low for the time series of 29.6 million in 2026 and 2027.

FAPRI projects the five-area direct annual fed steer price at $116.61/cwt. this year, $122.48 in 2022 and $127.28 in 2023. From there, price projections peak at $136.55 in 2027.

Projected steer calf prices (basis 600-650 lbs., Oklahoma City) follow a similar path: $149.08/cwt. this year, $162.88 in 2022, $170.63 in 2023; peaking at $184.36 in 2027.

That’s with corn prices projected to be highest this marketing year (2020-21) at $4.20/bu.; $4.06 in 2021-22; $3.99 in 2022-23; $3.93 in 2023-24; and then declining to $3.78 to $3.79 from 2025-26 through 2030-31.

FAPRI projects utility cow prices (basis Sioux Falls) at $60.56/cwt. this year, $64.73 in 2022, $66.34 in 2023; peaking at $71.80 in 2027.

Among other highlights from the latest report:

Consumer food price inflation increased to 3.4% in 2020, in part because of a wider gap between producer prices for livestock and consumer prices for meat. FAPRI projects food inflation at 2.1% this year and then similar to overall inflation in subsequent years.

Margins between farm and wholesale prices remain higher than historical averages, but declined from last spring’s record high levels caused by pandemic disruptions. “The extent to which retailers and processors continue to endure higher pandemic-related costs will affect the producer share of consumer meat expenditures,” say FAPRI analysts.

The outlook for U.S. beef exports to China and other markets remains positive, due to strong demand coupled with limited supplies among other major exporters.

Negotiated cash fed cattle trade was slow on light demand in Kansas and Nebraska through Wednesday afternoon. Live trade was steady in Kansas at $114/cwt. and steady to $1 higher in Nebraska at $114.

Elsewhere, trade ranged from limited on light demand, to mostly inactive on very light demand, with too few transactions to trend, according to the Agricultural Marketing Service.

Last week, live prices were at $114/cwt. in the Southern Plains and Colorado and $112-$113 in the western Corn Belt. Dressed prices were at $180 in Nebraska and at $178-$180 in the western Corn Belt.

Cattle feeders sold near 1,000 head in Central Stockyards’ weekly Fed Cattle Exchange auction. Those selling—all from Texas except one lot from Nebraska—traded on a live weight basis at $114.50/cwt.

Cattle futures mostly edged higher Wednesday, supported by softer Corn futures after the front two contracts, as well as resurgent Choice wholesale beef values. Perhaps there was also some early positioning against the monthly Cattle on Feed report (see below).

Live Cattle futures closed an average of 52¢ higher, from 5¢ higher at the back to $1.22 higher in spot Apr. 

Feeder Cattle futures closed an average of 39¢ higher (7¢ to $1.32 higher), except for 10¢ and 47¢ lower in the back two contracts.

Choice boxed beef cutout value was $1.54 higher Wednesday afternoon at $228.47/cwt. Select was $1.18 lower at $217.59.

Corn futures closed fractionally lower to 2¢ lower, except for 3¢ higher and fractionally higher in the front two contracts.

Soybean futures closed mostly 5¢ to 10¢ lower.

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

Major U.S. financial indices closed higher Wednesday, buoyed by reiteration from the Federal Reserve that it intends to maintain the dovish, accommodative stance toward interest rates.

“The Committee seeks to achieve maximum employment and inflation at the rate of 2% over the longer run. With inflation running persistently below this longer-run goal, the Committee will aim to achieve inflation moderately above 2% for some time so that inflation averages 2% over time and longer-term inflation expectations remain well anchored at 2%,” according to an FOMC statement. “The Committee expects to maintain an accommodative stance of monetary policy until these outcomes are achieved. The Committee decided to keep the target range for the federal funds rate at 0 to 0.25% and expects it will be appropriate to maintain this target range until labor market conditions have reached levels consistent with the Committee’s assessments of maximum employment and inflation has risen to 2% and is on track to moderately exceed 2% for some time.”

The Dow Jones Industrial Average closed 189 points higher. The S&P 500 closed 11 points higher. The NASDAQ was up 53 points.

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

Last month’s severe winter weather likely shifted some feedlot marketings.

“Because of the weather disruption, there is a temporal shift of expected steer and heifer marketings out of the first quarter to be marketed in the second quarter,” say analysts with USDA’s Economic Research Service (ERS), in the monthly Livestock, Dairy and Poultry Outlook.

Derrell Peel, Extension livestock marketing specialist at Oklahoma State University provides some perspective on how the widespread storm affected feedlot performance.

“Steer and heifer slaughter dropped 7.1% year over year in the middle two weeks of February before bouncing back. Steer carcass weights dropped sharply in February, declining by 20 lbs. from 919 lbs. to 899 lbs. in the last two weeks of the month,” Peel says, in is weekly market comments. “The last week of February marks the first time in 71 weeks (since October 2019) that weekly steer carcass weights were lower than the previous year. Heifer carcass weights dropped from 850 to 834 lbs. in the same period.”

That same storm closed sale barns, which may have limited feedlot placements for the month. On the other hand, current and expected wheat prices may elevate feedlot placements in March, as more producers with a dual-purpose winter wheat crop look to put it in the bin.

“…the expectation that relatively high wheat prices may discourage the grazing-out of small grains pastures and move more cattle into feedlots sooner than previously expected is anticipated to shift placements from the second quarter to the first quarter,” ERS analysts say. “As a result, some fed cattle marketings are expected to shift from the fourth quarter to the third quarter.”

USDA’s monthly Cattle on Feed report comes out Friday afternoon. Analysts surveyed by Urner Barry and reported by the Daily Livestock Report expect, on average, February feedlot placements to be 1.7% less than a year earlier, February marketings to be 2.6% less and the Mar. 1 inventory to be 1.5% more.

Negotiated cash fed cattle trade was mostly inactive on light demand in the western Corn Belt through Tuesday afternoon, with too few transactions to trend. Elsewhere, trade was at a standstill, according to the Agricultural Marketing Service.

Last week, live prices were at $114/cwt. in the Southern Plains and Colorado, $113-$114 in Nebraska and $112-$113 in the western Corn Belt. Dressed prices were at $178-$180.

Cattle futures closed mixed Tuesday. There was no cash direction, but Lean Hog futures continue to offer support, as does expanding open interest.

Live Cattle futures closed an average of 22¢ higher, except for an average of 62¢ lower in the front two contracts.

Feeder Cattle futures closed narrowly mixed, from an average of 39¢ lower to an average of 9¢ higher.

Choice boxed beef cutout value was $2.16 higher Tuesday afternoon at $226.93/cwt. Select was 72¢ higher at $218.77.

Corn futures closed 1¢ to 4¢ higher through the front three contracts and then mostly fractionally lower.

Soybean futures closed 3¢ higher through the front three contracts and then fractionally higher to 1¢ higher.

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

Major U.S. financial indices closed mainly narrowly mixed Tuesday as investors awaited further direction from the Federal Reserve’s policy meeting statement Wednesday.

The Dow Jones Industrial Average closed 127 points lower. The S&P 500 closed 6 points lower. The NASDAQ was up 11 points.

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

Beef imports to the United States in January were 8.1% less than the previous year, driven by the least volume from Australia since 2005.

“Exportable beef supplies in Australia have become limited as more heifers and cows are held back for breeding and expanding the herd,” explain analysts with USDA’s Economic Research Service (ERS), in the latest monthly Livestock, Dairy and Poultry Outlook. “Australia shipped 31 million lbs. less beef year over year…The second-largest reduction of 8.9 million lbs. came from Mexico; imports were at the lowest volume shipped to the United States in January since 2016.”

Overall, ERS reduced its forecast for U.S. beef imports for this year, by 70 million lbs. to 2.94 billion lbs., due to less expected volume from Australia and New Zealand, as well as increased beef demand competition from Asia.

On the other side of the trade ledger, ERS projects U.S. beef exports for this year to be 3.145 billion lbs., just less than the record level in 2018.

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

Last week, live prices were at $114/cwt. in the Southern Plains and Colorado, $113-$114 in Nebraska and $112-$113 in the western Corn Belt. Dressed prices were at $180 in Nebraska and at $178-$180 in the western Corn Belt.

Cattle futures closed higher Monday with Live Cattle supported by growing open interest in the previous session, as well as decent cash trade volume last week.

Live Cattle futures closed an average of 76¢ higher (12¢ to $1.35 higher).

Feeder Cattle futures closed an average of 83¢ higher (32¢ to $1.35 higher).

Choice boxed beef cutout value was $1.10 lower Monday afternoon at $224.77/cwt. Select was $2.22 lower at $218.05.

Corn futures closed 2¢ to 10¢ higher through the front three contracts and then mostly 1¢ lower.

Soybean futures closed 3¢ to 7¢ higher through the front four contracts, then mostly unchanged to fractionally lower.  

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

Major U.S. financial indices closed higher Monday, buoyed by optimism about the pace of COVID-19 vaccines as it relates to fully reopening the economy.

The Dow Jones Industrial Average closed 174 points higher. The S&P 500 closed 25 points higher. The NASDAQ was up 139 points.

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

“Live steer prices in the five-area marketing region are nearly flat since the first week of February, hovering around $114/cwt., despite a strong rally in the comprehensive cutout to near-record levels for the month of February,” explain analysts with USDA’s Economic Research Service (ERS), in the latest monthly Livestock, Dairy and Poultry Outlook. “An abundant supply of fed cattle on feed over 150 days Feb. 1 that is greater than the same time last year, along with the inability to process a portion of those cattle due to the winter storm system in February, likely did not support higher prices in line with typical seasonal patterns.”

Although fed cattle prices languish, Derrell Peel, Extension livestock marketing specialist at Oklahoma State University notes the premium for June Live Cattle, compared to April, suggests optimism ahead.

“After the fed cattle market works through ample cattle supplies in the first half of the year, beef production is expected to decrease year over year in the second half of the year. Live Cattle futures for the fall suggest higher fed cattle prices in the last half of the year,” Peel says, in his weekly market comments.

Similarly, Peel points to the premium for fall Feeder Cattle futures, compared to nearby contracts, explaining that summer stocker prospects are promising at this point in time.

“Feeder steer prices for February 2021 averaged $131.82/cwt. for steers weighing 750-800 lbs., sold at Oklahoma National Stockyards, just over $6 above a year ago,” say ERS analysts. “However, prices for the first two weeks of March are almost $8 above the same month last year.”

ERS increased the expected first-quarter average for feeder steers by $1 to $133/cwt. Price projections were unchanged for the remainder of the year: $134 in the second quarter; $139 in the third quarter; $140 in the fourth quarter; $136.50 for the 2021 average.