Daily Market Highlights

Negotiated cash fed cattle prices were $3-$4 higher on a live basis in the Northern Plains on Friday at mostly $113/cwt., according to the Agricultural Marketing Service. That was with slow trade and light demand. Dressed sales in Nebraska were $5 higher at $178.

There were a few live sales in the Southern Plains at $113 and a few dressed trades in the western Corn Belt at $178, but too few to trend.

On Thursday, live sales in the western Corn Belt were $2-$7 higher at $112. Dressed trade the previous week was at $170-$173.

The prior week, live sales were at $110-$111 in the Texas Panhandle and at $110 in Kansas. 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.

Despite higher cash cattle prices and increasing wholesale beef values, Cattle futures closed lower Friday, as grain futures continued to climb. Month-end position squaring likely played a role, too.

Live Cattle futures closed an average of $1.23 lower.

Feeder Cattle futures closed an average of $1.96 lower.

Corn futures closed mostly 3¢ to 6¢ higher mixed, except for 9¢ to 12¢ higher in the front three contracts.

Soybean futures closed 10¢ to 16¢ higher through Sep ‘22, and then 7¢ to 9¢ higher.

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Major U.S. financial indices closed sharply lower Friday, pressured by more investor worries about the potential impact from short sellers being challenged by buyers in stocks like GameStop.

The Dow Jones Industrial Average closed 620 points lower. The S&P 500 closed 73 points lower. The NASDAQ was down 266 points.

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The nation’s beef cow herd began this year with 31.16 million head, according to the semi-annul Cattle report from USDA on Friday. That’s 181,000 head fewer or 0.58% less than the previous year.

The number of beef heifers retained for replacement of 5.81 million head was 3,200 head more than the previous year, just 0.06% more.

As of Jan. 1, the calculated number of calves outside feedlots was 25.66 million head, which were 62,000 head fewer (-0.24%) than a year earlier. That’s 3.35% less than 2 years earlier.

Milk cows Jan. 1 of 9.44 million head were 97,400 (+1.04%) more than the previous year.

The inventory of all cattle and calves was estimated at 93.59 million head, down 198,000 (-0.21%) from a year earlier.

Negotiated cash fed cattle trade was limited on light demand in Kansas through Thursday afternoon, according to the Agricultural Marketing Service. There were a few live trades at $112/cwt., which was $2 higher than last week.

Trade was mostly inactive on light demand in Nebraska and the western Corn Belt with too few transactions to trend. It was at a standstill in the Texas Panhandle and Colorado.

The average dressed steer weight the week ending Jan. 16 was 925 lbs., which was 2 lbs. heavier than the previous week and 18 lbs. heavier than the same week last year, according to USDA’s Actual Slaughter Under Federal Inspection report. The average dressed heifer weight of 850 lbs. was 1 lb. lighter than the prior week but 16 lbs. heavier than the previous year.

Cattle futures edged lower Thursday amid light trade. 

Live Cattle futures closed an average of 38¢ lower, except for 7¢ higher in near Apr.

Feeder Cattle futures closed an average of 41¢ lower, other than 7¢ and 10¢ higher at either end of the board.

Choice boxed beef cutout value was $2.33 higher Thursday afternoon at $231.99/cwt. Select was $1.89 higher at $220.88.

Corn futures closed fractionally mixed to 1¢ higher through the front three contracts, 3¢ lower through Jly ‘22, and then mostly fractionally lower.

Soybean futures closed mostly 14¢ to 21¢ lower.

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Major U.S. financial indices rebounded Thursday, paring some of the steep losses from the previous session. Support included estimate-beating quarterly corporate earnings from the likes of American Airlines and Apple.

Although a bit less than traders expected, fourth-quarter GDP came in at 4.0%, according to the U.S. Bureau of Economic Analysis.

Also, weekly initial unemployment insurance claims came in less than expected at 847,000, according to the U.S. Department of Labor. That was 67,000 fewer than the previous week.

The Dow Jones Industrial Average closed 300 points higher. The S&P 500 closed 36 points higher. The NASDAQ was up 66 points.

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“As the U.S. foodservice sector climbs out of the hole left by 2020, the animal protein sector will not only need to realign itself with the survivors of the last year, but also remain flexible,” says Will Sawyer, lead animal protein economist with CoBank.

In the new Great Grocery Grab report from CoBank’s Knowledge Exchange Division, Sawyer explains the importance of individual foodservice channels varies significantly by animal protein species and by producer.

For instance, ground beef makes up a majority of beef volume through foodservice, but it represents only about one-third of the value due to its low price point. Conversely, the high-value steaks and roasts that are primarily sold in full-service restaurants and hotels comprise a quarter of the volume of beef sold through foodservice but nearly half of beef sales.

Some foodservice channels rebounded through the pandemic to achieve sales growth, as evidenced by the positive comparable-store sales at quick-service and fast casual restaurant concepts since the summer.

Full-service restaurants, however, continue to face double-digit declines in sales. In November, full-service restaurant sales were down 36% compared to last year while total foodservice sales were down 17%. Sawyer adds that in-restaurant dining will be vulnerable as long as consumers remain wary of dining indoors and COVID-19 cases remain elevated.

Although foodservice sales continue to improve, the report suggests sales may not return to pre-pandemic levels until the second half of 2022.

Relative to the realignment and flexibility mentioned earlier, according to the report, “In many cases that includes the large, publicly traded, franchise and multi-location limited-service restaurants. For beef, that could very well mean a long-term shift in high-value steak consumption to retail as the upscale restaurants have been especially hard hit and seen a significant number of closures.”

Negotiated cash fed cattle trade was at a standstill in Kansas and the Northern Plains through Wednesday afternoon, according to the Agricultural Marketing Service. Elsewhere, trade was mostly inactive on light demand, with too few transactions to trend. With that said, early indications point toward higher prices.

Cattle feeders offered 1,570 head (11 lots) in Central Stockyard’s weekly Fed Cattle Exchange Auction, all from the Southern Plains. Of those, 1,128 head (seven lots) sold for a weighted average price of $112.97/cwt. ($112.95 for steers and $113.00 for heifers). The marketing method included both live weight and Bid-the-Grid™. Country trade in the region last week was at $110-$111.

Also, slaughter steers and heifers traded $3-$4 higher in the fat auction at Sioux Falls Regional, where 128 head of Choice 3-4 steers brought an average price of $110.06. That’s at the top end of the $105-$110 paid in country trade last week.

Cattle futures closed lower Wednesday with Live Cattle pressured by the lack of cash direction and lower outside markets, while Feeder Cattle continued to adjust to the rebound in Corn futures.

Live Cattle futures closed an average of 54¢ lower.

Feeder Cattle futures closed an average of 92¢ lower, from 2¢ lower in the spot contract to $1.67 lower at the back.

Choice boxed beef cutout value was 66¢ higher Wednesday afternoon at $229.66/cwt. Select was $1.66 higher at $218.99.

Corn futures closed 1¢ to 2¢ lower, except for fractionally higher to 1¢ higher in the front three contracts.

Soybean futures closed 2¢ to 4¢ higher through Sep ‘21 and then mostly 3¢ to 5¢ lower.

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Major U.S. financial indices closed sharply lower Wednesday. Various analysts placed the most blame on disappointing corporate quarterly earnings. There were also growing concerns that the short-seller scourge in stocks like GameStop and AMC was inflicting enough damage on particular hedge funds to fuel negative ripples in other parts of the market.

The Dow Jones Industrial Average closed 633 points lower. The S&P 500 was down 98 points. The NASDAQ was down 355 points. 

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Recent data from the NPD Group (NPD) underscores how far the U.S. restaurant industry rebounded so far from the economic devastation wrought by dine-in closures and other pandemic disruptions.

Although mandated dine-in restrictions held back all restaurant segments, particularly full service, NPD researchers say consumer demand for restaurant meals, and the ability to serve the demand with a host of off-premises services enable the industry to persevere.

For instance, restaurant digital orders, were already increasing before the pandemic (+19% year over year in January 2020), but exploded through the pandemic, up 145% year over year in December, according to NPD’s daily tracking of consumers’ use of restaurants and other foodservice outlets.

Similarly, carry-out, delivery, and drive-thru were also growing before the pandemic.

Carry-out, which represents the largest share of off-premises modes, increased orders by 3% in January 2020 and by 10% in December, compared to a year earlier. Carry-out ended 2020 holding 46% of off-premises order share.

Delivery orders were 1% higher year over year in January and ended the year up 137%. Even with the triple-digit gain in orders, delivery still holds the smallest off-premises order share at 11%.

Drive-thru orders in 2020 increased from +4% year over year in January to +22% in December, ending the year with a 44% share of off-premises orders.       

“Digital orders for pick-up and all off-premises modes will be a growth engine for the U.S. restaurant industry moving forward,” says David Portalatin, NPD food industry advisor. “Consumers, both new and former users, have now experienced the convenience of digital ordering, especially for carry-out and delivery, and will continue using these services long after the pandemic is over.”  

Negotiated cash fed cattle trade was at a standstill in the Northern Plains and the Southern Plains through Tuesday afternoon, according to the Agricultural Marketing Service. Trade in the western Corn Belt was inactive on very light demand.

Heavy snow in parts of Nebraska and Kansas could help push trade to later in the week.

Live Cattle futures closed an average of 44¢ higher Tuesday, supported by rising wholesale beef values.

Choice boxed beef cutout value was $2.33 higher Tuesday afternoon at $229.06/cwt. Select was $1.12 higher at $217.33.

Feeder Cattle futures, however, closed an average of $1.80 lower, pressured by another day of sharply higher grain futures.

Corn futures closed 11¢ to 20¢ higher through Sep ‘21, 2¢ to 4¢ higher through Jly ’22 and then mostly 2¢ higher.

Soybean futures closed 17¢ to 26¢ higher through Jan ‘22 and then 11¢ to 16¢ higher.

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Major U.S. financial indices closed marginally lower Tuesday.

The Dow Jones Industrial Average closed 22 points lower. The S&P 500 closed 5 points lower. The NASDAQ was down 9 points.

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If recent data is any indication, the U.S. likely started 2021 with fewer beef cows than last year.

“On Thursday, the monthly Livestock Slaughter report revealed what many industry analysts have been watching all year,” say analysts with the Agricultural Marketing Service (AMS). “The 2020 preliminary Federally Inspected (FI) steer slaughter was near 3% below the previous year and over 4% below the three-year average. Heifer slaughter was nearly 4% below a year ago and nearly 3% larger than the three-year average.”

Further, AMS analysts explain 2020 FI beef cow slaughter was 2% more than the previous year and 9% more than the three-year average.

“The estimates for the feedlot mix Jan. 1, 2021 were 61.85% steers and 38.15% heifers. This is up slightly from these same estimates in October 2020 and very near the feedlot mix reported in January 2020,” says Josh Maples, Extension livestock economist at Mississippi State University, in the latest issue of In the Cattle Markets. “The percentage of heifers in the feedlot mix trended up from 2015-2019 as a result of the cattle cycle, but 2020 quarterly totals were slightly lower than 2019, due in part to the feedlot disruptions in the spring and summer.”

Depending on the economist, estimates are for the beef cow herd to be 0.5-1.0% less year over year.

USDA’s Cattle report, providing Jan. 1 estimates of the U.S. cattle inventory will be published Friday afternoon.

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 sales were mostly steady to $1 on either side of steady at $110-$111/cwt. in the Southern Plains, $109-$110 in the Northern Plains and at $105-$110 in the western Corn Belt. Dressed trade was steady to $3 lower at $170-$173.

The average five-area direct fed steer price last week was $109.23/cwt. on a live basis, which was 29¢ less than the prior week. The average steer price in the beef of $172.58 was 48¢ less.

Cattle futures shrugged off Friday’s monthly Cattle on Feed report and resurgent grain futures on Monday. They were pressured at the outset, but closed mostly higher by the end of the day, retaining strong gains from the previous session.

Live Cattle futures closed an average of 37¢ higher (2¢ to $1.07 higher), except for 20¢ lower in the spot contract.

Feeder Cattle futures closed an average of $1.11 higher (12¢ to $1.87 higher), except for 70¢ and 30¢ lower in the front two contracts.

Choice boxed beef value was $3.91 higher at $226.73/cwt. Select was $2.87 higher at $216.21.

Grain futures bounced back Monday from the previous session’s selloff as markets carve out a new trading range.

Corn futures closed 11¢ higher through the front three contracts and then mostly 2¢ to 4¢ higher.

Soybean futures closed 21¢ to 31¢ higher through Sep ‘22 and then mostly 14¢ to 19¢ higher.

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Major U.S. financial indices closed mixed Monday with some investors apparently wary of the barrage of corporate earnings reports due this week.

The Dow Jones Industrial Average closed 36 points lower. The S&P 500 closed 13 points higher. The NASDAQ was up 92 points. 

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Drought and dryness likely helped push December feedlot placements higher than expected, say analysts with the Livestock Marketing Information Center (LMIC).

As noted in Monday’s Cattle Current, December placements were 0.77% more than the previous year, according to the monthly Cattle on Feed report. Estimates ahead of the report expected a decrease of about 3%.

“Hay supplies are tighter and the whole feed complex has moved up significantly,” explain LMIC analysts, in the latest Livestock Monitor. “LMIC has feedlots break-evens for cattle placed in December around $109 in the Southern Plains.”

“Drought persisted across much of the west in 2020 and has extended into much of the Great Plains at the current time. Several states reveal the impact of the drought on hay production, supplies and the challenges for cattle producers in those regions,” says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly market comments.

For instance, Peel notes Dec. 1 hay stocks were 15% less in Colorado year over year and 36.4% less in New Mexico (the least since 1973). Alfalfa and other hay production for 2020 is also significantly less in those states.

“While overall U.S. hay supplies appear to be adequate, it is clear that some drought regions are experiencing severe challenges to get through the winter,” Peel says.  “The 16 Western and Plains states (not including Texas) had Dec. 1 hay stocks down 5.8% year over year.”

Although feed costs increased significantly since December, LMIC analysts point out, “In the last week, boxed beef cutout values have climbed on better demand, which has helped support cattle prices. If these prices hold, they will offset the higher feed costs, and help stabilize cattle feeding margins.”

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

Live sales for the week were mostly steady to $1 on either side of steady at $110-$111/cwt. in the Southern Plains, $109-$110 in the Northern Plains and $108-$110 in the western Corn Belt. Dressed trade was steady to $3 lower at $170-$173.

Through Thursday, the five-area direct average steer price was $109.23/cwt. on a live basis, which was 29¢ less than the previous week and $15.05 less than the same time last year. The average steer price in the beef was $172.59, which was 47¢ less than the previous week and $26.27 less year over year.

Sharply lower grain futures Friday helped fuel strong gains in Cattle futures. Higher wholesale beef prices added support, as did loftier Lean Hog futures, tied in part to reports of new African Swine Fever cases in China.

Live Cattle futures closed an average of $2.02 higher through the front four contracts, and then an average of 55¢ higher, except for 35¢ lower in the back contract.

Feeder Cattle futures closed an average of $2.81 higher, from $1.95 to $5.00 higher.

Choice boxed beef value was $1.62 higher Friday afternoon at $222.82/cwt. Select was $3.06 higher at $213.34.

Estimated total cattle slaughter for the week of 657,000 head was 6,000 more than the previous week and 13,000 head more than the same week last year. Estimated beef production for the week of 550.2 million lbs. was 5.4 million lbs. more than the previous week and 19.3 million lbs. more than the previous year.

Grain futures tumbled hard Friday, pressured by factors including profit taking and rains in South America.

Corn futures closed 17¢ to 23¢ lower through Jly ‘22 and then mostly 6¢ to 7¢ lower.

Soybean futures closed 44¢ to 58¢ lower through Aug ‘22 and then 31¢ to 38¢ lower.

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Major U.S. financial indices closed mixed Friday.

The Dow Jones Industrial Average closed 179 points lower. The S&P 500 closed 11 points lower. The NASDAQ was up 12 points.

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Markets could view Friday’s Cattle on Feed report (feedlots with 1,000 head or more capacity) as a bit bearish with December placements 0.77% more than the previous year, while estimates ahead of the report expected a decrease of about 3%. The 1.84 million head placements were the second most for the month since the data series began in 1996, according to the National Agricultural Statistics Service.

Marketings in December of 1.85 million head were 1% more than the prior year, slightly more than expectations ahead of the report.

The on-feed inventory Jan. 1 of 11.96 million head was slightly more than the previous year, whereas average of expectations was for a decline of about 0.5%.

Negotiated cash fed cattle trade was slow to moderate on light demand in Nebraska through Thursday afternoon. Dressed trade was unevenly steady with the previous week at $173/cwt. There were a few live sales at $109, but too few to trend; $109-$110 last week.

Trade was limited on light demand in Kansas with a few live trades at $110, which was steady with the previous day and week.

Elsewhere, trade was mostly inactive on light demand, according to the Agricultural Marketing Service. Live trade in the Texas Panhandle on Wednesday was at $110, steady to $1 lower than last week. Trade in Colorado on Wednesday was steady to $1 higher at $109-$110.

Last week, live sales in the western Corn Belt were at $108-$109; dressed trade at $173.

Although steady to weak cash prices are a disappointment this week, Live Cattle futures stabilized and gained Thursday, likely helped along by rising wholesale beef values. Feeder Cattle also continued to extend gains. Positioning ahead of Friday’s Cattle on Feed report likely played a role, too.

Live Cattle futures closed an average of 46¢ higher, from 2¢ higher at the back to $1.07 higher toward the front.

Feeder Cattle futures closed an average of 72¢ higher, from 2¢ to $1.62 higher, except for unchanged in the back contract.

Choice boxed beef cutout value was $2.29 higher Thursday afternoon at $221.20/cwt. Select was $3.00 higher at $210.28.

The average dressed steer weight the week ending Jan. 9 was 923 lbs., which was 3 lbs. heavier than the prior week and 19 lbs. heavier than the prior year, according to the USDA Actual Slaughter Under Federal Inspection report. The average dressed heifer weight of 851 lbs. was the same as a week earlier but 17 lbs. heavier than the same week a year earlier. Total cattle slaughter for the week of 652,330 head was 9,420 head more year over year. Beef production for the week of 549.1 million lbs. was 19.6 million lbs. more than the previous year.

Corn futures closed 1¢ to 3¢ higher through the front three contracts and then mostly unchanged to fractionally mixed.

Soybean futures closed 1¢ to 3¢ lower, except for fractionally higher to 2¢ higher in the front three contracts.

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Major U.S. financial indices closed narrowly mixed Thursday. Positive news included slightly fewer initial unemployment insurance claims than investors expected.

Initial unemployment insurance claims for the week of Jan. 16 were 900,000, according to the U.S. Department of Labor.

The Dow Jones Industrial Average closed 12 points lower. The S&P 500 closed 1 point higher. The NASDAQ was up 73 points.

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U.S. beef exports to China were record high from July through November of last year, suggesting progress and promise, but still represented less than 1% of the beef imported by that nation, according to USDA’s Economic Research Service (ERS). U.S. beef competitors accounted for 94% of China beef imports during that period.

“In part, this may be because the U.S. value per pound of total (bone-in and boneless) beef shipped to China is higher than that of most of its competitors in the China beef market,” ERS analysts explain, in the latest monthly Livestock, Dairy and Poultry Outlook.

ERS compared the unit values of China’s frozen boneless beef imports to help assess U.S. competitiveness. For January through November, U.S. unit value was $3.23/lb., compared to $1.90 to $2.79/lb. for Argentina, Uruguay, Brazil, New Zealand, and Australia. Those latter countries comprise most of China’s beef imports. Incidentally, the unit cost of Canadian imports to China was $4.01/lb.

“…A higher U.S. beef price reflects a better quality, grain-fed fresh/chilled product, which is different from what China typically imports from other countries,” ERS analysts explain.

For context, total U.S. beef exports in November of 277 million lbs. were 32 million lbs. (+13%) more year over year, driven mainly by moderate global economic recovery, according to ERS.

“China’s demand for animal proteins will continue to grow as its economy and population expand,” say ERS analysts. “Despite a higher unit price of U.S. beef and certain barriers that limit trade, China’s commitment to purchase an additional $200 billion of American-made goods and services over 2020 and 2021, under the U.S. China Phase 1 trade deal, could lead to continued growth of U.S. beef exports.”

Negotiated cash fed cattle trade was slow on light to moderate demand in Kansas through Wednesday afternoon. Live trades were unevenly steady with last week at $110/cwt. Trade was limited on light demand in the Texas Panhandle, where there were a few live sales at $110, but too few to trend. Elsewhere, trade was inactive with very light demand, according to the Agricultural Marketing Service.

Choice boxed beef cutout value was $1.42 higher Wednesday afternoon at $218.91/cwt. Select was 84¢ higher at $207.28.

Live Cattle futures edged lower again Wednesday as the week’s cash outlook appears either side of steady, despite continued strength in wholesale beef prices. They closed an average of 39¢ lower, except for from 2¢ higher in spot Feb.

Feeder Cattle futures extended gains Wednesday, helped along by another day of retreat in grain futures. They closed an average of 79¢ higher, from 40¢ to $1.12 higher.

Corn futures closed 4¢ to 6¢ lower through Jly ‘22 and then mostly 1¢ to 2¢ lower.

Soybean futures closed 16¢ to 21¢ lower.

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Major U.S. financial indices closed higher Wednesday, amid stronger than expected quarterly earnings reports from the likes of Netflix and Disney. President Biden’s inauguration likely removed a layer of investor uncertainty, as well.

The Dow Jones Industrial Average closed 257 points higher. The S&P 500 closed 52 points higher. The NASDAQ was up 260 points.

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Retail beef prices for 2020 were 9.7% more than the prior year, the steepest increase since 2014, when prices climbed 13.4% year over year, according to David Anderson, Extension livestock economist at Texas A&M University.

Anderson explains price increases in 2014 stemmed from tight supplies fostered by the drought. This year, much of it had to do with disruptions caused by the pandemic.

“Most of the increase in beef prices in 2020 occurred in the second quarter of the year, with price increasing 18% year over year. Beef prices also increased by 11% in the third quarter over the prior year,” Anderson says, in the latest issue of In the Cattle Markets. “In the aftermath of the drought, beef prices registered five consecutive quarters of year over year increases as supplies continued to decline and demand grew. In case anyone wondered, 2016 and 2017 were the last years that average all fresh retail beef prices declined compared to the prior year.”

Anderson notes All Fresh retail beef prices last year were above 2019 the entire year. The pre-pandemic price in March averaged $5.96/lb. and finished the year at $6.23. It peaked in June at $7.38.

“Several factors may be contributing to higher reported retail prices when wholesale and live cattle prices have been at or below last year’s levels,” Anderson says. “The data reflects only grocery store prices. Grocery stores have sold more beef, in volume and value, compared to the year before, due to restaurant shutdowns. It’s also likely that costs have increased between wholesale and retail levels due to compliance with coronavirus restrictions and constraints in processing. It may be difficult to get average retail prices below pandemic levels in coming months as beef production is expected to decline cyclically this year and, hopefully, the economy is able to fully open expanding restaurant demand.

Negotiated cash fed cattle trade was at a standstill in Kansas and the Northern Plains through Tuesday afternoon, according to the Agricultural Marketing Service. Elsewhere, trade was very limited with very light demand; too few transactions to trend.

Feeder Cattle futures extended gains Tuesday, helped along by softer Corn and Soybean futures. Live Cattle mostly edged lower.

Live Cattle futures closed an average of 26¢ lower, except for from 45¢ to $1.15 higher in the front three contracts.

Feeder Cattle futures closed an average of $1.44 higher, except for 17¢ lower in spot Jan. That’s mainly an average of $3.46 higher in the last two trading sessions.

Choice boxed beef cutout value was $2.45 higher through Tuesday afternoon at $217.49/cwt. Select was 60¢ higher at $206.44.

Corn futures closed 4¢ to 7¢ lower through the front six contracts, and then mostly 2¢ to 4¢ higher toward the back.

Soybean futures closed 23¢ to 31¢ lower through the front four contracts, mostly 7¢ to 8¢ lower through the next five contracts and then mostly 1¢ lower.

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Major U.S. financial indices closed higher Tuesday, amid chatter from the pending new Administration about another round of economic stimulus.

The Dow Jones Industrial Average closed 116 points higher. The S&P 500 closed 30 points higher. The NASDAQ was up 198 points.

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Although forecasts indicate increased year-over-year domestic red meat and poultry production, analysts with USDA’s Economic Research Service (ERS) expect per capita meat disappearance to decline about 1%, due to increased exports and reduced beef imports.

“Availability is the disappearance on the domestic market of what remains after exports and ending stocks are subtracted from the sum of production, beginning stocks, and imports. Dividing this amount by the U.S. population yields per capita disappearance,” explain ERS analysts, in the latest monthly Livestock, Dairy and Poultry Outlook (LDPO).

Beef production for this year was projected lower than the previous month at 27.2 billion lbs. but still would be more than in 2020.

“This adjustment was based in part on fewer fed cattle to be slaughtered in second-quarter 2021 as a result of lower expected placements in fourth-quarter 2020,” say ERS analysts. “Further, higher feed costs in 2021 are expected to negatively impact cattle carcass weights.”

According to USDA, from January through November of last year, total cattle slaughter was about 3% less than the previous year. Average carcass weights were about 3% heavier, though, which mostly offset decreased slaughter, in terms of beef production.

“Live steer prices in the five-area marketing region for the first week of January were reported at $111.27/cwt., more than $13 below last year for the same week and the lowest January starting price since 2011,” say ERS analysts. “However, the annual price forecast for 2021 was raised $0.50 to $115.50/cwt. on lower expected production and expected improved packer demand in 2021.”

USDA projects the average five-area direct fed steer price at $113 in the first and second quarters, at $115 in the third quarter and at $120 in the fourth quarter.

On the other end of the trade, ERS analysts say the average feeder steer price last year was about 5% less than the previous year at $135.45/cwt. That’s basis a 750-800 lb. steer selling at Oklahoma National Stockyards.

“Prices in the first two weeks of January 2021 averaged $134.81, about 7% below the monthly average for January 2020,” ERS analysts say. “To the extent that prices at the beginning of 2021 were higher than expected, the first-quarter 2021 forecast was raised $1 to $134/cwt. However, higher expected feed costs lowered expectations for prices the rest of the year, and as a result the annual price forecast for feeder steers was lowered $1 to $137.”

Specifically, the average feeder steer price is projected at $134/cwt. in the first and second quarters, $139 in the third quarter and $140 in the fourth quarter for an annual average of $136.75.

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

Live prices were generally $1-$3 lower last week at $108-$111/cwt. Dressed prices were $1-$4 lower at $172-$174.

The average five-area direct fed steer price last week was $109.52/cwt. on a live basis, which was $1.75 less than the previous week and $14.51 less than the same week last year. The average dressed steer price of $173.06 was $2.73 less than the prior week and $25.98 less than the prior year.

Futures and equity markets were closed Monday in observance of Martin Luther King Day.

Choice boxed beef cutout value was $2.12 higher Monday afternoon at $215.04/cwt. Select was $2.76 higher at $205.84.

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“As high feed prices push feedlot cost of gain up, feedlots have an incentive to buy more pounds and place heavier feeder cattle,” says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly market comments.  “Thus, the cattle industry responds to corn market signals to use less corn by placing cattle at heavier weights and using other (i.e. forage) feeds to add additional weight to cattle prior to feedlot placement. This is the advantage (and necessity!) of the cattle industry to use the ruminant capabilities of cattle to respond to the corn market situation. If all the cattle finished in feedlots in 2021 (that would have been fed anyway) are placed, say, an average of 100 lbs. heavier, the amount of reduction in total concentrate feed use is significant.”

Peel provides context for the extraordinary climb in feed costs—demand rationing—using cash corn prices in Dodge City, which averaged $3.41/bu. from January through September of last year. The price was more than $4 by mid-October and at $5.44 in mid-January.

“When feedlots demand heavier cattle, prices for lighter weight feeder cattle will decline relative to heavier cattle,” Peel explains. “For example, the price of 825 lb. steers in Oklahoma is currently about $131/cwt. When corn is, say, $3.65/bu., feedlots would be willing to pay roughly $155/cwt. for a 575 lb. steer, based on the cost of gain to put on the 250 lbs. from 575 to 825 lbs. When corn price increases to, say, $5.35/bu., the increased cost of gain means that the feedlot would only be willing to pay roughly $146/cwt. for a 575 lb. steer, even though the price of the 825 lb. steer has not changed.  Of course, higher feed prices likely also means that the overall feeder cattle price level will decline as well. 

“The change in feedlot demand for light versus heavy weight feeder cattle simultaneously provides incentives for stocker producers to add the needed additional weight to feeder cattle. In the example above, the value of stocker gain is roughly $0.75/lb. when corn is $3.65/bu. but increases to $0.97/lb. when corn price increases to $5.35/bu.