Daily Market Highlights

Negotiated cash fed cattle trade ranged from slow to limited trade on light demand up north, to mostly inactive in the Southern Plains, through Friday afternoon, according to the Agricultural Marketing Service.

For the week:

Live prices in the Southern Plains were steady at $114/cwt.

Live prices in Nebraska were $1-$2 higher at $113-$114. Dressed trade was steady to $2 higher at $180.

Live prices in the western Corn Belt were steady to $3 higher at $114-$115. Dressed trade was steady to $2 higher at $180.

The five-area direct average steer price through Thursday was $113.78/cwt. on a live basis, which was 50¢ lower than the previous week and $5.10 less than the prior year. The average steer price in the beef of $180.07 was 75¢ less than the prior week and $10.19 less than the previous year.

Estimated total cattle slaughter last week was 611,000 head, which was 42,000 head fewer than the previous week. Estimated year-to-date cattle slaughter of 3.95 million head is 185,000 head fewer (-4.47%) than the same period last year. Estimated year-to-date beef production of 3.35 billion lbs. is 68.2 million lbs. less (-2.0%) than a year earlier.

Cattle futures closed higher Friday with support from consolidating grain futures prices, as well as the outlook for higher cash prices next week, given the frigid weather and what appeared to be sluggish fed cattle trade for the week.

Live Cattle futures closed an average of 98¢ higher, from 22¢ lower toward the back to $2.05 higher toward the front.

Feeder Cattle futures closed an average of 98¢ higher (60¢ to $1.70 higher).

Choice boxed beef cutout value was 59¢ lower Friday afternoon at $232.37/cwt. Select was 64¢ higher at $220.93.

Corn futures closed 2¢ to 4¢ lower through Jly ‘22, and then mostly fractionally lower to 1¢ lower. 

Soybean futures closed 4¢ to 5¢ higher through Aug ‘21, and then mostly fractionally higher to 2¢ higher. 

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Major U.S. financial indices edged higher Friday, supported by higher oil prices and prospects for additional federal economic stimulus.

The Dow Jones Industrial Average closed 27 points higher. The S&P 500 closed 18 points higher. The NASDAQ was up 69 points.

Crude Oil futures (WTI-CME) closed an average of $2.57 higher through the front six contracts, week to week on Friday. That’s an average of $6.98 higher over the last two weeks.

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As might be suspected, the novelty of the pandemic overwhelmed conventional logic and expectations in many areas.

For instance, as COVID-19 began upending economies and supply chains last April, the Food and Agricultural Policy Institute (FAPRI) at the University of Missouri provided projected impacts. At the time, analysts there expected the pandemic would lead to lower prices for livestock producers. That happened, but not to the degree or for the reasons anticipated.

“In hindsight they note that they incorrectly assumed that supply chain concerns would play only a minor part in the story, and that the main cause of lower producer prices would be weaker consumer demand. They expected a contracting U.S. economy to reduce disposable income, and that consumers with less money in their pockets would choose to buy less meat and other high-value food products,” according to a recent FAPRI draft document—Expected and Unexpected Impacts of COVID-19 on U.S. Markets for Animal Products. That’s part of an investigation into the impacts of the COVID-19 pandemic on agriculture, food, and related supply chains, conducted by FAPRI and Texas A&M University’s Cross-Border Threat Screening and Supply Chain Defense (CBTS) DHS Center of Excellence.

Instead, real disposable income in the U.S. increased significantly, even as real GDP plunged, due to government stimulus programs. Domestic meat consumption increased slightly year over year, in the face of higher prices.

For context, FAPRI researchers note the average price paid to livestock producers declined 20% in April. At the same time, consumer prices began to increase sharply for meat, poultry, fish and eggs. By June, consumer prices were 10% more than in March. Both matched expectations as costs increased for meat processing and delivery.

“As packing plants were able to return to more normal levels of capacity utilization and as other supply chain problems were resolved or at least mitigated, these trends reversed,” say FAPRI researchers. “Consumer prices for meat and other animal products declined by more than 5% between June and November, while farm-level prices for animal products increased by 20% between April and November. It would be a mistake to say things are back to normal in the sector, but the situation has improved dramatically since the depths of the crisis last spring.”

Negotiated cash fed cattle trade was slow on light demand in all major cattle feeding regions through Thursday afternoon, according to the Agricultural Marketing Service. There were a few live trades in Nebraska, but too few to trend.

For the week so far, live trade in the Southern Plains is steady at $114/cwt. Dressed trade is steady to $2 higher at $180 in Nebraska and the western Corn Belt. Live trade in the latter two regions last week was at $112-$114.

Cattle futures closed narrowly mixed on Thursday.

Live Cattle futures closed an average of 52¢ higher, except for 80¢ lower in spot Feb. 

Feeder Cattle futures closed an average of 20¢ lower, except for unchanged to an average of 9¢ higher in three contracts.

Choice boxed beef cutout value was 6¢ lower through Thursday afternoon at $232.96/cwt. Select was 67¢ lower at $220.29.

The average dressed steer weight the week ending Jan. 30 was 920 lbs., which was 6 lbs. lighter than the previous week but 23 lbs. heavier than the same week a year earlier, according to USDA’s Actual Slaughter Under Federal Inspection report. The average dressed heifer weight of 853 lbs. was 2 lbs. heavier than the prior week and 20 lbs. heavier than the previous year.

Grain futures recovered some gains from the previous session’s steep decline as markets continue carving out a trading range.

Corn futures closed 6¢ to 7¢ higher through the front three contracts, and then 1¢ to 4¢ higher. 

Soybean futures closed 10¢ to 15¢ higher through Nov ‘21, and then mostly 3¢ to 5¢ higher. 

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Major U.S. financial indices closed narrowly mixed Thursday. Pressure included softer energy prices and more jobless claims than the trade expected.

Initial unemployment insurance claims for the week ending Feb. 6 were 793,000, which was 19,000 fewer than the previous week, according to the U.S. Department of Labor.

The Dow Jones Industrial Average closed 7 points lower. The S&P 500 was up 6 points. The NASDAQ was up 53 points.

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USDA’s latest Feed Outlook provides perspective on the global demand fueling higher grain prices.

For instance, the latest estimate for 2020-21 U.S. corn exports of 2,600 million bu. would be the most ever and 162 million bu. more than the previous record set in 2017-18.

“Export prospects improved due to increased shipments to China this year, culminating in 38.8 million bu. in December to that country, as reported by the Census Bureau,” according to analysts with USDA’s Economic Research Service (ERS). “September through December shipments to China reached 124 million bu., compared with less than a million during the same period in 2019-20. Total U.S. exports through December are 628 million bu., compared with 371 million during the same period in 2019-20. USDA Agriculture Marketing Service Export Inspections through Feb. 4 indicate a strong pace of exports since the New Year.”

ERS projects China will import 40.3 million tons of corn, barley, oats, and sorghum in 2020-21, more than double what that nation imported in 2019-20. Analysts cite high domestic prices and strong demand from that nation’s livestock sector as drivers to the increase.

“This change—coupled with lower coarse grain production and exports in the Black Sea region of Europe, due to hot and dry growing conditions in several key production regions—has substantially impacted 2020-21 feed grain trade,” say ERS analysts. “Price levels across the world are substantially higher than they were a year ago. China has increased its market share of trade for nearly every feed-grain commodity in 2020-21. Other significant import markets have seen their import outlooks reduced due to higher prices and increased competition.”

Negotiated cash fed cattle trade was slow on light demand in Kansas through Wednesday afternoon at $114/cwt. on a live basis, which was steady with last week.

Trade was also slow on light demand in the western Corn Belt with early dressed sales steady to $2 higher at $180. Live prices there last week were at $112-$114.

Elsewhere, trade was limited on light demand, with too few transactions to trend, according to the Agricultural Marketing Service.

Last week: live prices in the Texas Panhandle and Nebraska were at mostly $114; dressed trade in Nebraska was at $178-$180.

Cattle feeders offered 1,251 head (10 lots) in Central Stockyards’ weekly Fed Cattle Exchange auction. Of those, 518 head (four lots) from the Southern Plains sold for a weighted average price of $114/cwt., via live weight and Bid-the-Grid. That was steady with the previous week’s country trade in the region.

Slaughter steers and heifers sold $3-$5 higher at Sioux Falls Regional in South Dakota. There were 147 head of Choice 3-4 steers weighing an average of 1,548 lbs., bringing an average of $113.79. That was at the upper end of last week’s country price for the region.

Cattle futures closed mixed on Wednesday. Sharply lower Corn futures helped boost Feeder Cattle, while softer Choice wholesale beef values and demand uncertainty pressured Live Cattle.

Live Cattle futures closed an average of 87¢ lower, from 55¢ lower to $1.32 lower.

Feeder Cattle futures closed an average of 39¢ higher, from 10¢ to 85¢ higher

Choice boxed beef cutout value was $1.27 lower Wednesday afternoon at $233.02/cwt. Select was 23¢ higher at $220.96.

Grain futures fell hard on Wednesday, with likely profit taking following the WASDE report leaving South American production unchanged, whereas the trade expected a reduction.

Corn futures closed 11¢ to 21¢ lower through the front four contracts, 5¢ to 8¢ lower through the next five contracts and then mostly 1¢ to 2¢ lower.

Soybean futures closed 24¢ to 47¢ lower through Jan ‘22, 12¢ to 18¢ lower through the next five contracts and then mostly 8¢ lower.

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Major U.S. financial indices closed narrowly mixed Wednesday, as positive quarterly corporate earnings competed with a gloomy labor outlook.

In a speech to the Economic Club of New York on Wednesday, Federal Reserve Chair, Jerome Powell, painted a dour picture of the current labor market, in the pandemic’s wake, illustrating the daunting challenge to achieving maximum employment.

“After rising to 14.8% in April of last year, the published unemployment rate has fallen relatively swiftly, reaching 6.3% in January. But published unemployment rates during COVID have dramatically understated the deterioration in the labor market. Most importantly, the pandemic has led to the largest 12-month decline in labor force participation since at least 1948,” Powell explained. “… In addition, the Bureau of Labor Statistics reports that many unemployed individuals have been misclassified as employed. Correcting this misclassification and counting those who have left the labor force since last February as unemployed would boost the unemployment rate to close to 10% in January.”

The Dow Jones Industrial Average closed 69 points higher. The S&P 500 was down 1 point. The NASDQ was down 35 points. 

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“On-feed numbers are currently high but will moderate through the remainder of the year with smaller placements and smaller calf numbers. Further, the currently very large carcass weights will shrink into the spring as winter weather has its impact,” says Stephen Koontz, agricultural economist at Colorado State University, in the latest issue of In the Cattle Markets.

USDA’s recent Cattle report estimates the 2020 calf crop 1% less year over year at 35.1 million head. Analysts with the Livestock Marketing Information Center (LMIC) also point out estimates of the previous year’s calf crop were revised lower by about 500,000 head.

“The inventory report was decidedly bullish for cattle prices over the next three years. Tighter supplies of cattle will move through the system, lowering beef production,” say LMIC analysts, in the latest Livestock Monitor.

While declining cattle numbers will support cattle prices overall, Koontz sees more potential for fed cattle prices than those for calves and feeder cattle, due to the run up in feed prices.

“Even with the substantial increases in corn and soybean futures prices for nearby contracts, the current corn basis across the Central and Southern Plains remains strong – cash activity and price levels have followed the futures rally,” Koontz explains. “In this setting, these increases are not temporary but rather permanent. And permanent for cattle feeding cost-of-gains.”

LMIC analysts say drought and feed costs could impact cow-calf returns significantly. However, they believe higher year-over-year calf prices will support positive returns.

“I believe cow-calf producers should look hard at Livestock Revenue Protection (LRP) insurance,” Koontz says. “My outlook communications discussed the potential for returning to normal seasonal patterns and opportunities this year. For cow-calf producers that involves diversifying and making some sales in the spring and early summer, with fed cattle and beef price rallies. I am concerned that this year may play out more like last year. In 2020, selling opportunities evaporated through March. If the current changes to feed costs persists then we may be in for a repeat.”

Negotiated cash fed cattle trade was mostly inactive on light demand in the Southern Plains through Tuesday afternoon, according to the Agricultural Marketing Service. Elsewhere, trade was at a standstill.

Pressure in Corn futures helped boost Cattle futures Tuesday, especially Feeder Cattle.

Live Cattle futures closed an average of 32¢ higher (15¢ to 87¢ higher) except for an average of 25¢ lower in two contracts.

Feeder Cattle futures closed an average of $1.32 higher.

Choice boxed beef cutout value was $1.91 lower Tuesday afternoon at $234.29/cwt. Select was 12¢ higher at $220.73.

Corn futures closed 7¢ to 8¢ lower through the front three contracts and then mostly 1¢ to 2¢ lower. Estimated U.S. and world ending stocks were more than the average of expectations.

Soybean futures closed mostly 10¢ to 14¢ higher through Jan ‘22 and then mostly 8¢ to 9¢ higher.

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Major U.S. financial indices closed narrowly mixed Tuesday.

The Dow Jones Industrial Average closed 9 points lower. The S&P 500 closed 4 points lower. The NASDAQ was up 20 points.

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USDA’s Economic Research Service (ERS) increased projected beef production for 2021 and lowered expected fed steer prices slightly, in the latest monthly World Agricultural Supply and Demand Estimates (WASDE).

Beef production was estimated at 27.54 billion lbs., which was 350 million lbs. more (+1.29%) than the previous month. That would be 388 million lbs. more (+1.43%) than last year. Estimated beef production increased mostly on higher cattle slaughter and heavier than expected early-year cattle weights.

The average five-area direct fed steer price was projected 50¢ lower for the annual average at $115/cwt. Average prices are forecast at $113 in the first and second quarters, $114 in the third quarter and $119 in the fourth quarter.

Total red meat and poultry production for this year was projected at 107.60 billion lbs., which was 500 million lbs. more (+0.47%) than the previous month. That would be 1.08 billion lbs. more (+1.01%) than last year.

Among other WASDE highlights:

Corn—The outlook is for higher exports and lower ending stocks, which were projected 50 million bu. less than the previous month. The expected 2020-21 season-average corn price received by producers was raised 10¢ to $4.30/bu. 

Soybeans—The outlook is for increased exports and lower ending stocks. The U.S. season-average soybean price for 2020-21 is forecast at $11.15/bu., unchanged from the previous month. Soybean meal price is forecast $10 more per short ton at $400. The soybean oil price forecast was raised 1.5¢ to 40.0¢/lb. 

Wheat—The supply and demand outlook for 2020-21 U.S. was largely unchanged. The season-average farm price was raised 15¢/bu. to $5.00, based on NASS prices reported to date and expectations for futures and cash prices for the remainder of the marketing year.

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

Regionally, prices last week were mainly $1-$2 higher on a live basis at $114/cwt. in the Southern Plains, mostly $114 in Nebraska and at $112-$114 in the western Corn Belt. Dressed trade was steady to $2 higher at $178-$180.

The five-area direct steer price was $113.64/cwt. last week on a live basis, which was $1.00 more than the previous week. The average steer price in the beef of $179.26 was $1.70 higher.

Live Cattle futures mostly edged higher Monday, helped along by the higher cash prices and prospects of higher money this week as the coldest temperatures of the year erode cattle performance.

Live Cattle futures closed an average of 18¢ higher, except for 15¢ lower and 10¢ lower at either end of the board.

Feeder Cattle futures closed lower beneath the weight of grain futures, which likely got a boost from positioning ahead of Tuesday’s World Agricultural Supply and Demand Estimates.

Feeder Cattle futures closed an average of $1.29 lower, from 72¢ lower toward the front to $2.15 lower at the back.

Choice boxed beef cutout value was $1.62 higher Monday afternoon at $236.20/cwt. Select was 18¢ lower at $220.61.

Corn futures closed 11¢ to 15¢ higher through the front three contracts and then mostly 1¢ to 6¢ higher.

Soybean futures closed mostly 14¢ to 21¢ higher.

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Major U.S. financial indices closed higher Monday, with support from resurgent energy prices and optimism about the vaccination rollout getting the economy reopened sooner than later.

West Texas Intermediate Crude Oil futures on the CME were $1.08 to $1.15 higher through the front six contracts on Monday. That’s a little more than $5 higher week to week.

The Dow Jones Industrial Average closed 237 points higher. The S&P 500 closed 28 points higher. The NASDAQ was up 131 points.

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Although U.S. beef exports were 5% lower last year, in volume (1.25 million metric tons—mt) and value ($7.65 billion), they finished 2020 with a near record December, according to data released by USDA and compiled by the U.S. Meat Export Federation (USMEF).

December beef exports totaled 119,892 mt, up 8% from December 2019 and the largest in nearly 10 years. Export value in December was $744 million, up 9% from a year ago and the second highest total on record. Fourth-quarter volume was 4.5% more year over year. Beef exports to China were record-large in 2020. A new volume record was also achieved in Taiwan.

Foodservice restrictions in many major markets impacted beef exports significantly, but they trended higher late in the year, bolstered by very strong retail and holiday demand.

“Consumers across the world responded to the COVID-19 pandemic by seeking high-quality products they could enjoy at home, and U.S. beef and pork definitely met this need,” Says Dan Halstrom, USMEF president and CEO. “We expect these retail and home-delivery demand trends to continue even as sit-down restaurant dining recovers, creating robust opportunities for U.S. red meat export growth.”

Beef export value per head of fed slaughter was $349.19 in December, up 9% year over year and the highest level since April. For the year, beef export value per head of fed slaughter was down 2% at $302.31.

U.S. pork exports reached nearly 3 million mt in 2020, topping the 2019 record by 11%. Pork export value climbed 11% to a record $7.71 billion. Exports set new annual records in China/Hong Kong, Central America, Vietnam and Chile, and achieved strong fourth quarter growth in Japan and Mexico.

Negotiated cash fed cattle trade and prices were mostly $1 higher in the Southern Plains at $114/cwt. on a live basis, with moderate trade and demand, according to the Agricultural Marketing Service.

In Nebraska, trade was slow to moderate with moderate demand through Friday afternoon. Live prices were steady to $1 higher at $112-$114, but mostly $114. Dressed trade there on Thursday was steady to $2 higher at $178-$180.

Live prices in the western Corn Belt on Thursday were at $112-$114, which was generally $1.50-$2.00 higher. Dressed prices were mainly steady to $2 higher at $178-$180.

The average dressed steer weight the week ending Jan. 23 was 926 lbs., according to USDA’s Actual Slaughter Under Federal Inspection report. That was 1 lb. heavier than the previous week and 25 lbs. heavier than the prior year. The average dressed heifer weight of 851 lbs. was 1 lb. heavier than the previous week and 19 lbs. heavier than the prior year.

Total estimated cattle slaughter last week was 653,000 head, the same as the previous week; 22,000 head more than the same week last year. Year-to-date estimated cattle slaughter of 3.34 million head is 178,000 fewer (-5.0%) than the same time last year.

Cattle futures edged lower Friday, with recently softer wholesale beef values, some likely week-end profit taking, and in the face of higher cash prices.

Live Cattle futures closed an average of 21¢ lower, except for an average of 15¢ higher in the front two contracts.

Feeder Cattle futures closed an average of 48¢ lower, from 25¢ lower at the back to $1.22 lower in spot Mar.

Corn futures closed fractionally mixed to 1¢ lower through Jly ’22 and then 3¢ to 9¢ higher.

Soybean futures closed 1¢ to 3¢ higher, except for 1¢ to 5¢ lower in the front three contracts.

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Major U.S. financial indices continued higher Friday.

Month-to-month non-farm payroll increased by 49,000 in January, according to the U.S. Bureau of Labor Statistics. That was a touch softer than expectations. The unemployment rate fell by 0.4% to 6.3%. Average hourly earnings for all employees on private non-farm payrolls increased by 6¢ to $29.96.

The Dow Jones Industrial Average closed 92 points higher. The S&P 500 closed 15 points higher. The NASDAQ was up 78 points.

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Plant-based alternatives to traditional meats remain a tiny percentage of domestic consumption, but deserve attention in understanding the marketplace.

In recent survey-based research funded by the beef checkoff, given a choice between selecting beef or a plant-based alternative, approximately 25% would choose the latter. However, authors of the report—The Impacts of New Plant-Based Protein Alternatives on U.S. Beef Demand—say that comes with some caveats.

“Some of the individuals who choose the plant-based alternative are unlikely to consume much, if any, beef. In this sense, growth in the market share of plant-based alternatives is not entirely coming at the cost of reduced beef demand, and indeed if a plant-based alternative simply replaces a substitute competitor (like a chicken sandwich) or reflects overall growth in protein demand, the impacts on beef demand are likely to be negligible,” explain the agricultural economists behind the study: Jayson Lusk at Purdue University, Glynn Tonsor and Ted Schroeder at Kansas State University.

“Nonetheless, the fact that roughly a quarter of consumers indicate they’d choose a plant-based alternative suggests there is ample room for this market to grow, relative to its current position of under 1% market share,” they say. “Stated differently, our estimates suggest we will likely continue to witness significant growth in the plant-based alternative market even if all that changes is increased availability; and prices remain fixed at the status quo and consumer preferences and beliefs remain unchanged.”

Among the main findings:

• Cattle-based beef is currently chosen in the marketplace about three times more often than plant-based protein alternatives.
• Beef has a good image. Consumers’ perceptions of Taste, Appearance, Price, and Naturalness of beef greatly exceeds that for plant-based proteins. Average response scores for 15 meat/protein attributes indicate more consumers favor beef over plant-based protein. Overall consumer perceptions of nutrients accurately reflect information posted on nutrient contents panels of both beef and plant-based retail items.
• Regular meat consumers (68% of the study’s full sample) are much less likely to select a plant-based item when a beef item is available. The typical regular meat consumer is willing to pay $1.87 more at a restaurant for a beef burger meal than a Beyond Meat burger meal. Conversely, those declaring an alternative diet (Vegan, Vegetarian, Flexitarian, or other) are willing to pay $1.48 more for a Beyond Meat than beef burger meal. Likewise, in retail settings the typical regular meat consumer is willing to pay $0.29/lb. more for store-brand, 80% lean ground beef than Beyond Meat, while those with an alternative diet would pay $2.32/lb. more for Beyond Meat than beef.
• Characteristics of consumers most likely to select plant-based proteins include younger, those with children under the age of 12, having higher household income, residing in a Western state, and affiliating with the Democratic party. Consumers who select plant-based proteins place greater importance on environmental and animal welfare concerns when making food choices than consumers predicted to choose traditional animal proteins.

“Perhaps now more than ever it is essential for the industry collectively to accurately identify its comparative advantage and leverage that in subsequent strategic efforts,” say the researchers. “In many ways we do not believe existence of plant-based proteins alters the industry’s global comparative advantage as a major, grain-finished beef industry. Nonetheless, this and other foundations of the industry’ comparative advantage must underpin future industry efforts.”

Last week, Impossible Foods, maker of the Impossible Burger, cut suggested retail prices by 20% for grocery stores throughout the United States. The company is introducing similar price cuts at retail stores in Canada, Singapore and Hong Kong.

Negotiated cash fed cattle trade was slow with light to moderate demand in Nebraska and the western Corn Belt through Thursday afternoon, according to the Agricultural Marketing Service.

Although there were too few to trend, early dressed sales in Nebraska were at $180/cwt., which was $2 more than last week. Live sales there last week were at $112-$113.

In the western Corn Belt, early dressed sales were steady to $2 higher than last week at $178-$180, but too few to trend. Early live sales were 50¢ to $3 higher at $113, but too few to trend.

Trade was mostly inactive on very light demand in the Southern Plains. Live prices there last week were at $113.

Cattle futures closed higher Thursday, extending gains from the previous session, with moderating grain futures prices and the outlook for higher cash fed cattle prices.

Live Cattle futures closed an average of 50¢ higher, from 12¢ higher to $1.30 higher.

Feeder Cattle futures closed an average of 63¢ higher.

Choice boxed beef cutout value was $1.03 lower Thursday afternoon at $234.25/cwt. Select was $2.95 lower at $220.44.

Corn futures closed fractionally mixed to 2¢ lower through Sep ’21 and then mostly 1¢ to 2¢ higher.

Soybean futures closed mostly 1¢ to 4¢ higher through Sep ‘21, and then mostly 7¢ to 8¢ higher.

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Major U.S. financial indices closed higher Thursday, buoyed by positive quarterly corporate earnings reports and more optimism about the labor situation.

Initial unemployment insurance claims for the week ending Jan. 30 were 779,000, which was 33,000 fewer than the previous week and less than the trade expected.

The Dow Jones Industrial Average closed 332 points higher. The S&P 500 was up 41 points.  The NASDAQ was up 167 points.

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Potentially, moisture chances could improve this spring and summer for some of the nation’s driest areas. That’s due to early indications that the current La Niña is weakening and could become neutral by summer.

That was one of the key messages from Allen Dutcher, Extension agricultural climatologist at the University of Nebraska-Lincoln, during Thursday’s Virtual BEEF Experience.

Likewise, according to the latest update from NOAA’s Climate Prediction Center, “La Niña is expected to continue through the Northern Hemisphere winter with a potential transition to ENSO-neutral conditions during the spring.

Even if more moisture returns more quickly than originally anticipated, Dutcher explained the 2020 drought left no moisture for most of the High Plains, meaning that it will take a least a year for native pastures in the region to recover.

Snowpack will drive drought risk in the High Plains, Dutcher said, adding that so far this year it’s significantly more than the same time in 2020.

Finally, with the way weather conditions are shaping up, Dutcher Expects late winter storms followed by an active severe weather season. Shorter term, he says conditions for the next 30 days are conducive to some powerful storms.

Negotiated cash fed cattle trade was at a standstill in Kansas and Nebraska through Wednesday afternoon, according to the Agricultural Marketing Service. Elsewhere, trade was mostly inactive on very light demand.

Cattle feeders offered 1,362 head (eight lots) in Central Stockyard’s weekly Fed Cattle Exchange Auction, all from the Southern Plains. Of those, 699 head sold (four lots of heifers) for a weighted average price of $113.71/cwt., via live weight and Bid-the-Grid. That was a bit higher than country trade in the region last week.

At Sioux Falls Regional fat auction, though, slaughter steers and heifers sold steady to $2 lower. There were 436 head of Choice 3-4 steers weighing an average of 1,554 lbs. bringing an average of $110.66/cwt. That was at the low end of the last week’s country price.

Cattle futures closed narrowly mixed, but mostly edged higher after the front months on Wednesday. Pressure included resurgent grain futures prices and softer wholesale beef values.

Live Cattle futures closed an average of 38¢ higher, except for an average of 28¢ lower in the front two contracts.

Feeder Cattle futures closed an average of 29¢ higher, except for an average of 36¢ lower in the front three contracts.

Choice boxed beef cutout value was $1.48 lower Wednesday afternoon at $235.28/cwt. Select was $1.65 lower at $223.39.

Corn futures closed 4¢ to 9¢ higher through May ‘22 and then mostly unchanged to fractionally lower.

Soybean futures closed 9¢ to 16¢ higher through Sep ‘21, and then mostly 1¢ to 4¢ higher.

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

The Dow Jones Industrial Average closed 36 points higher. The S&P 500 closedp 3 points higher. The NASDAQ was up 2 points.

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Fundamentally speaking, numbers are beginning to shift back into the producer’s favor. Last year’s cattle prices should be the lowest for several years.

“The number of steers and heifers going through our packing plants over the course of the next several years is going to shrink. As it declines, so will our beef production, and prices are going to get higher. We’ll see a transition to a higher trending, more profitable cow-calf operator, feedstock operator and cattle feeder,” said Randy Blach, CattleFax CEO, at last week’s annual International Livestock Forum hosted by Colorado State University and the National Western Stock Show

Blach used fed cattle slaughter capacity utilization to illustrate how leverage should swing back toward producers. It ranged from 102% in 2016 to 110% last year as cattle numbers ran ahead of hook space. As fed cattle supplies decline, capacity utilization will drift back toward 100%, mostly after this year.

At the same time, Blach expects consumer beef demand to continue near last year’s extraordinary pace. It was the most in 30 years, according to Blach, based on the Annual U.S. Consumer Beef Demand Index, which was near 180 in 2020, compared to just over 160 the previous year. That was with record beef, pork and poultry production.

“That speaks to the quality of the product that we’re producing in this country,” Blach says. He explained Prime and Choice beef production increased from approximately 11 to 12 billion lbs. in the early 2000s to around 18 billion lbs. last year.

Along the way, the Choice-Select spread maintained its strong pace, while the spread between Choice and the upper two-thirds of Choice grew. The Prime-Choice spread sagged this year due to the dearth of restaurant business.

“We produce more high-quality beef and consumers continue to say they want more,” Blach said. Since 2000, he noted that beef gained 7% share of total meat spending, away from pork and poultry.

Note: the above is from an upcoming article that will be published in F&R Livestock Resource.

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

Last week, cash fed cattle prices ended up $2-$3 higher in the Southern Plains at $113/cwt., $3 higher in the Northern Plains at $113 and $2.50-$5.00 higher in the western Corn Belt at $110.00-$112.50. Dressed trade was $5-$8 higher at $178.

Cattle futures gained again on Tuesday, supported by softer Corn futures, last week’s stronger cash prices and higher Lean Hog futures.

Live Cattle futures closed an average of 64¢ higher (40¢ higher at the back to $1.10 higher in spot Feb).

Feeder Cattle futures closed an average of $1.21 higher.

Choice boxed beef cutout value was $1.08 higher Tuesday afternoon at $236.76/cwt. Select was 55¢ lower at $225.04.

Corn futures closed 5¢ to 6¢ lower through the front three contracts and then mostly fractionally higher.

Soybean futures closed 10¢ to 11¢ lower through the front four contracts, and then mostly 2¢ lower to fractionally higher.

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Major U.S. financial indices closed sharply higher again Tuesday. Reportedly, much of the optimism had to do with growing investor confidence the recent barrage against short sellers of stocks like GameStop is in check.

Another day higher in energy markets added support—the front six contracts of West Texas Intermediate crude oil futures on the CME were up an average of $2.41 in the last two sessions.

The Dow Jones Industrial Average closed 475 points higher. The S&P 500 closed 52 points higher. The NASDAQ was up 209 points.

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Agricultural producer sentiment declined in January, driven by weaker expectations about the future, according to the Purdue University/CME Group Ag Economy Barometer.

The Index of Current Conditions declined 3 points to 199, while the Index of Future Expectations dropped 10 points to 151. The overall Ag Economy Barometer was 7 points less month to month in January, at 167. From October to January, the Index of Future Expectations dropped 19%. The Index of Current Conditions increased 12% over the same period.

“The ongoing strength in the Current Conditions Index appears to be driven by the ongoing rally in crop prices, while the deterioration in the Future Expectations Index seems to be motivated by longer-run concerns about policies that could impact U.S. agriculture in the future,” says James Mintert, the barometer’s principal investigator and director of Purdue University’s Center for Commercial Agriculture.

The Ag Economy Barometer includes a survey of 400 U.S. agricultural producers. The latest was conducted Jan. 18-22.

Weakening agricultural producer expectations for the future appear to be motivated by concerns about several policy issues. For instance, confidence that the ongoing trade dispute with China will ultimately be resolved in a way that favors U.S. agriculture declined 12 points in January to 38%.

Producers are also significantly more concerned about potentially restrictive environmental policies: 83% of respondents in January expect to see more restrictive regulations from the new presidential administration, up 42 points from October. Significantly more also expect higher estate taxes and income taxes over the next five years.

Shorter term, nearly one-third of survey respondents expect improved financial performance this year than in 2020. When asked about the size of their operating loan, 17% of respondents expect their loan to increase this year. Of those, 20% said the increased loan is due to carrying over unpaid operating debt from the previous year. This implies that 3 to 4% of those surveyed are suffering financial stress. However, that’s down from 5-6% of farms identified as suffering financial stress a year earlier.

Farmers also remained bullish about short-term farmland values and cash rental rates. In January, 43% of respondents said they expect farmland values to rise over the next year (up 8 points from December) and 27% said they expect cash rental rates to rise in 2021 (up 9 points from the previous month).

Also of note, more respondents expressed interest in following specified production practices in order to capture carbon and market the sequestration.

Overall, 30% of respondents to the January survey said they are aware of opportunities to receive a payment for capturing carbon. Among that group, 22% said they have actively engaged in discussions about receiving a carbon capture payment. This implies that 6 to 7% of the producers in the January survey have given consideration to contractually sequestering carbon.

Finally, interest in receiving the COVID-19 vaccine quickly is trending higher. Respondents were asked if they planned to get vaccinated. Response choices were: Yes, as soon as possible; Yes, but not right away; No.

In January, 58% said they plan to get vaccinated as soon as possible, up from 39% in December, 36% in November, and 24% in October.

The average five-area direct fed steer price was $3.21 higher on a live basis last week at $112.44/cwt. The average steer price in the beef was $4.98 higher at $177.56.

Monday’s negotiated cash fed cattle trade summary was unavailable from AMS at press time.

Through Friday afternoon, prices were $3-$4 higher on a live basis in the Northern Plains at mostly $113/cwt. Dressed sales in Nebraska were $5 higher at $178.

On Friday, the Texas Cattle Feeders Association reported its members trading cattle at just over $2 more week to week: $112.80 for steers and $112.91 for heifers.

Softer Corn futures early on Monday, along with last week’s stronger cash prices, helped Cattle futures mostly gain.

Live Cattle futures closed an average of 76¢ higher, except for an average of 16¢ lower in the front two contracts.

Feeder Cattle futures closed an average of $1.08 higher (20¢ higher in spot Mar to $2.55 higher toward the back).

Corn futures closed mostly 1¢ to 3¢ higher.

Soybean futures closed mostly 9¢ to 12¢ higher through Sep ‘22, except for 3¢ to 4¢ lower in the front three contracts.

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Major U.S. financial indices closed sharply higher Monday, likely helped along by new-month positioning, and ahead of more corporate earnings reports this week.

The Dow Jones Industrial Average closed 229 points higher. The S&P 500 closed 59 points higher. The NASDAQ was up 332 points.

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“Both the inventory of beef replacement heifers, at 18.7% of the beef cow herd, and the number of heifers calving are at a level that does not indicate either herd liquidation or expansion, though the levels could support limited herd expansion in the coming year,” says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, reflecting on Friday’s semi-annual USDA Cattle report.

Likewise, in the latest issue of In the Cattle Markets, Matthew Diersen, a risk and business management specialist at South Dakota State University says, “The main takeaways were the stabilization of inventories, the smaller calf crop and fewer cattle outside of feedlots. The inventory levels have increased or consolidated in the Plains states, stretching from North Dakota to Texas, with levels generally lower elsewhere.”

Peel points to the drought-induced 14.5% year-over-year decline in Colorado beef cows and the 16.1% decrease in Colorado beef replacement heifers as perhaps the most notable headline from the Jan. 1 inventory numbers.

For those keeping score, Peel also notes the number of cattle grazing small grains pasture in Kansas, Oklahoma and Texas were 7.5% more year over year at 1.73 million head. He adds that the total estimated feeder supply of 7.245 million head in those same states was 1% more.

“In general, U.S. cattle inventories show little direction and are more stable than anything,” Peel says. “Market conditions, and perhaps drought in the coming months will determine the direction of cattle numbers in 2021 and beyond.”