Daily Market Highlights

Through Thursday, the average five-area direct fed steer price (AMS) was $104.84 on a live basis, compared to $112.68 the previous week. The dressed steer price was $166.65, versus $179.17 the prior week.

Regionally, live prices were $3-$4 lower in the Southern Plains at $104/cwt. in the Texas Panhandle and at $103-$107 in Kansas. Live trade was $5-$10 lower in Nebraska at $105-$108; $5-$9 less in the western Corn Belt at $103-$105. Dressed trade was $10-$20 lower in Nebraska at $165; $13-$15 lower in the western Corn Belt at $160-$172.

Cattle futures drifted lower on Friday amid light trade and lower cash prices.

Live Cattle futures closed an average of 72¢ lower.

Feeder Cattle futures closed an average 88¢ lower.

Wholesale beef values closed lower, minus the steep pitch of recent weeks. Choice boxed beef cutout value was $4.92 lower Friday afternoon at $230.64/cwt. Select was 61¢ lower at $219.27.

Corn futures closed mostly fractionally lower to 1¢ lower.

Soybean futures closed mostly 2¢ to 5¢ higher through Jan ’21 and then mostly fractionally lower.

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Major U.S. financial indices closed higher Friday, gaining back a portion of the previous day’s steep selloff, tied to queasiness over escalating COVID-19 cases in some states.

The Dow Jones Industrial Average closed 477 points higher. The S&P 500 closed 39 points higher. The NASDAQ closed 96 points higher.

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“Considerable uncertainty remains in the U.S. and global markets going forward,” says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his latest weekly market comments. “While domestic protein markets continue to sort out the COVID-19 and recessionary impacts, meat trade is generally offering a much needed bright spot across all protein industries.” 

Based on the latest trade data, Peel explains U.S. beef exports in April were 3.4% less year over year, but are 6.9% more for January through April. He adds that beef imports are 3.3% more year to date, compared to 2019. Also, U.S. pork exports are 35.2% more than in 2019 for January through April and U.S. broiler exports are up 7.8%.

“China continues to struggle with the impacts of African Swine Fever (ASF) and the resulting protein shortages. This is supporting U.S. protein exports,” Peel explains. He points out U.S. pork exports to China, year to date, were 458.2% more than last year. Although sparse, U.S. beef exports to China also continue to grow, up 38.7% so far this year.

USDA’s Foreign Agricultural Service (FAS) left its forecast for 2020 U.S. exports of livestock poultry and dairy unchanged at $32.4 billion, in the latest quarterly Outlook for U.S. Agricultural Trade.

“Strengthened demand for pork and dairy products offsets a decline for beef and poultry products,” say FAS analysts. “Strong demand from China continues to drive growth in U.S. pork exports. The beef forecast is lowered nearly $300 million to $7.2 billion as lower volumes are only partially offset by the higher prices associated with tighter domestic supplies.” Beef export last year were about $7.3 billion.

Negotiated cash fed cattle trade continued lower on Thursday, with live trade in the Texas Panhandle $4 lower at $104/cwt. and $1-$5 lower in Kansas at $103-$107, according to the Agricultural Marketing Service (AMS).

“With the slaughter pace inching closer to normal and beef cutout values dropping, the focus may soon be turning to the surplus of market ready cattle that history says will have to be whittled away at by getting to a price low enough to stimulate surplus demand,” noted the AMS reporter on hand for the weekly sale at South Central Regional Stockyards in Vienna, MO.

Cattle futures closed narrowly mixed to narrowly lower, fading more intense pressure early in the session. Declining cash prices and sharply lower outside markets added drag, while export sales provided some lift. Net beef export sales were up 66% (week ending June 4) from the previous week and up noticeably from the prior four-week average, according to the weekly Export Sales report from USDA’s Foreign Agricultural Service. Increases were primarily for South Korea, Japan, Mexico and Canada.

Live Cattle futures closed narrowly mixed, from 35¢ lower to 22¢ higher.

Feeder Cattle futures closed an average 54¢ lower.

The average five-area direct live steer price (FOB) in May was $111.53/cwt., which was $9.51 more than the previous month, according to USDA. The average dressed steer price in the beef was $179.02 (delivered), which was $19.75 more than the previous month.

Wholesale beef values closed lower, minus the steep pitch of recent weeks. Choice boxed beef cutout value was 50¢ lower Thursday afternoon at $235.56/cwt. Select was $2.96 lower at $219.88.

The average dressed steer weight for the week ending May 30 was 891 lbs., which was 3 lbs. lighter than the previous week, but 49 lbs. heavier than the previous year, according to USDA’s Actual Slaughter Under Federal Inspection report. The average dressed heifer weight of 826 lbs. was even with the prior week and 47 lbs. heavier than the previous year.

Corn futures closed mostly 1¢ to 2¢ higher.

Other than fractionally higher in the front three contracts, Soybean futures closed mostly 2¢ to 3¢ lower. 

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Major U.S. financial indices closed sharply lower Thursday, pressured by the recent increase in COVID-19 cases and investor worry that reopening the nation’s economy could stall.

The Dow Jones Industrial Average closed 1,861 points lower. The S&P 500 closed 188 points lower. The NASDAQ closed 527 points lower.

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USDA’s Economic Research Service (ERS) estimates this year’s beef production at 26.67 billion lbs., which is 910 million lbs. more (+3.53%) than the previous month’s estimate. That would be 481 million lbs. less (-1.77%) than in 2019. In the latest monthly World and Agricultural Supply and Demand Estimates, ERS analysts say the increase reflects slaughter levels recovering quicker than anticipated a month earlier.

“Cattle price forecasts are raised, reflecting current price strength and increased packer demand,” say ERS analysts. “For 2021, cattle prices are also raised on expected continued strength of packer demand in the first part of the year.”

The annual fed steer price for this year is projected at $108.60/cwt., which is $4.50 more than the previous month’s expectation. By quarter, USDA pegs the average fed steer price at $118.32 in the first quarter, $106 in the second quarter, $104 in the third quarter and $106 in the fourth quarter. The projected price for the first quarter next year is $104.

ERS estimates total red meat and poultry production 1.43 billion lbs. more (+1.38%) than the previous month at 105.00 billion lbs. That would be 261 million lbs. less (-0.25%) than in 2019.

Among other WASDE highlights:

Corn

The 2020-21 U.S. corn outlook was little changed, with fractional increases to beginning and ending stocks. Ending stocks were projected 5 million bu. higher at 3.3 billion bu. The season-average farm price was unchanged at $3.20/bu.

Soybeans

U.S. soybean supply and use projections for 2020-21 include higher beginning stocks, higher crush, and slightly lower ending stocks. With higher soybean crush more than offsetting higher beginning stocks, 2020-21 ending stocks are projected at 395 million bushels. The 2020-21 season-average soybean and product price forecasts were unchanged: $8.20 per bushel, down 30¢ from 2019-20. Soybean meal prices are forecast at $290 per short ton, down $10 from 2019-20. Soybean oil prices are forecast at 29.0¢/lb., up 0.5¢ from 2019-20.

Wheat

Total 2020-21 wheat production was forecast at 1,877 million bu., and total supplies were raised 16 million to 3,000 million. Domestic use and exports for the new marketing year were unchanged, while ending stocks were raised 16 million bushels to 925 million, which would be a 6-year low. Last month, ERS projected 2020-21 ending stocks 69 million bu. lower than the previous year at 909 million. The projected season-average farm price last month was projected at $4.60/bu., unchanged from the previous year, with expectations for U.S. corn prices to restrain U.S. wheat prices.

Negotiated cash fed cattle trade staggered ahead Wednesday with live sales in the Southern Plains mostly unevenly steady at $108/cwt. A day earlier, dressed trade in Nebraska was $10-$20 lower than last week at $165, according to the Agricultural Marketing Service.

Cattle feeders offered 1,447 head in the weekly Fed Cattle Exchange auction on Wednesday. Just one lot—228 head of Texas heifers—sold for a weighted average price of $105/cwt. for delivery at 1-17 days.

Choice steers and heifers sold $2.50-$3.00 lower at the fat auction in Tama, IA, where 120 head of Choice 2-4 steers weighing an average of 1,375 lbs. brought an average price of $106.59.

At Sioux Falls Regional in South Dakota, slaughter steers and heifers sold steady to $4 lower. There were 206 head of Choice 3-4 steers weighing an average of 1,590 lbs. and bringing an average of $105.27.

Cattle futures closed mostly lower with the softer cash tone and continued decline in wholesale beef values.

Other than 27¢ higher in spot Jun, Live Cattle futures closed an average of $1.09 lower.

Feeder Cattle futures closed an average $1.07 lower (67¢ lower at the back to $1.57 lower in spot Aug).

Choice boxed beef cutout value was $10.94 lower Wednesday afternoon at $236.06/cwt. Select was $5.11 lower at $222.84.

Corn futures closed mostly 1¢ to 2¢ lower.

Other than fractionally higher to 2¢ higher in the front four contracts, Soybean futures closed mostly 2¢ lower. 

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Major U.S. financial indices closed mixed Wednesday, with tech stocks enjoying the most support overall. Pressure likely stemmed from the Federal Open Markets Committee (FOMC) projections that reaffirm the lengthy economic recovery ahead.

The FOMC projects the median real GDP at -6.5 for this year, 5.0 in 2021 and 3.5 in 2022. Median PCE inflation is projected at 0.8 this year, 1.6 next year and 1.7 in 2022.

“The ongoing public health crisis will weigh heavily on economic activity, employment, and inflation in the near term, and poses considerable risks to the economic outlook over the medium term,” according to an FOMC statement. “In light of these developments, the Committee decided to maintain the target range for the federal funds rate at 0.0% to 0.25%. The Committee expects to maintain this target range until it is confident that the economy has weathered recent events and is on track to achieve its maximum employment and price stability goals.”

The Dow Jones Industrial Average closed 282 points lower. The S&P 500 closed 17 points lower. The NASDAQ closed 66 points higher.

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“Current proposals to increase the number of cattle transacted through a particular channel is unlikely to affect beef demand derived from consumers and passed along the supply chain to producers or alter the current supply of fed cattle ready for harvest,” says Elliott Dennis, Extension livestock economist at the University of Nebraska-Lincoln, in the latest issue of In the Cattle Markets.

He’s referring to recent policy proposals to mandate that packers buy a specific percentage of their weekly fed cattle needs each week in the spot cash market. One, referred to as the 50-14 rule, led by Senator Chuck Grassley (R-IA) and Senator Jon Tester (D-MT) would mandate large-scale packers procure a minimum of 50% of total cattle purchased in the cash market each week for delivery within 14 days.

“The hope is that by increasing cash trade transactions it will solve issues with price discovery, effectively increasing negotiated cash prices,” Dennis explains. “Supply of fed cattle and demand for wholesale beef determines the price of fed cattle. In order to increase fed cattle prices, the 50-14 rule would either need to reduce the supply of fed cattle or increase the demand for wholesale beef. While the rule would increase negotiated cash transactions helping in price discovery in a given week, it is unlikely to affect the underlying fed cattle market supply and demand conditions to effectively increase cash price levels.”

In the meantime, during the pandemic, Dennis points out there have been significant shifts in the percentage of cattle traded via formula and those marketed with a negotiated grid.

“In April, formula trade was 74% of total weekly transactions and negotiated grid was 4%,” Dennis explains. “In May, formula trade fell to 48% and negotiated grid was 20%. The past few weeks, cattle sold on formula steadily increased while cattle on the negotiated grid have decreased. There has been little change in the negotiated cash and forward contract trade, on average for the U.S., since January 1, 2020.”

There are regional differences

“Formula trade fell in the Texas-Oklahoma-New Mexico region but not below five-year historical levels. This was offset by trade in the negotiated grid. Formula priced cattle fell from 95% of cattle priced in April to 30% in May. This was replaced entirely by negotiated grid priced cattle,” Dennis explains. “In both the Texas-Oklahoma-New Mexico and Kansas region there was little movement in the negotiated price. Pricing in Nebraska has been somewhat more volatile. Negotiated cash fell to a historic low of 2% of transactions in May and was entirely offset by increased formula trade. Negotiated grid and forward contract transactions were historically constant.”

During this period of time, Dennis notes that heavyweight carcass discounts declined as carcass weights increased contra-seasonally, due to the backlog in market-ready fed cattle. Quality premiums also shifted since the beginning of the year.

“The underlying makeup of cattle transactions the market is seeing is likely more due to a change in the grid premiums and discounts than a fundamental shift in producer preference for the way cattle are transacted,” Dennis says.

Other than a few dressed trades reported by the Agricultural Marketing Service (AMS) in the western Corn Belt on Tuesday at $166/cwt. and too few to trend, negotiated cash fed cattle trade remained undeveloped.

Cattle futures closed mostly higher with more active trade.

Live Cattle futures closed an average of $1.09 higher through the front five contracts (10¢ higher in Feb to $2.20 higher in spot Jun), and then an average of 12¢ lower. 

Feeder Cattle futures closed an average 73¢ higher (32¢ higher toward the back to $1.17 higher in spot Aug).

Choice boxed beef cutout value was $7.58 lower Tuesday afternoon at $247.00/cwt. Select was $3.17 lower at $227.95.

As of Tuesday morning, beef packing facilities were operating at 98% of their average capacity, compared to the same time last year, according to USDA. Pork facilities were at 95%, and poultry facilities were operating at 98%.

Corn futures closed 3¢ to 6¢ lower through May ’21 and then mostly 1¢ lower.

Soybean futures closed mostly 1¢ to 4¢ lower through Jly ‘21 and then mainly 7¢ to 8¢ lower.

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Major U.S. financial indices gave back some of the recent gains on Tuesday, on likely profit taking.

The Dow Jones Industrial Average closed 300 points lower. The S&P 500 closed 25 points lower. The NASDAQ closed 29 points higher.

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Major restaurant chain customer transactions continue to improve as a growing number of restaurant dine-in services reopen, according to the NPD Group (NPD).

For the week ending May 31, U.S. restaurant chain transactions declined by 18% compared to same period a year ago, which represented a 3% week-over-week improvement, according to NPD’s CREST^®Performance Alerts.

That same week, transactions at major full service restaurant chains, which were hardest hit by the dine-in closures, were 37% less than a year ago, a 15% increase from the prior week. Quick service restaurant chain transactions, which represent the bulk of industry transactions, declined by 16% compared to a year ago, versus an 18% decline for the week ending May 24.

More than 68% of all restaurant units are in states, counties, or municipalities where they are permitted to reopen their on-premise dining service, according to NPD’s ReCount^®restaurant census. Although that doesn’t mean all restaurants in those areas reopened, it is an indicator of loosening regulations.

“The U.S. foodservice industry today remains solidly in the re-start phase as restaurants begin to reopen their on-premise operations,” says David Portalatin, NPD food industry advisor. “The industry will move to the recovery phase when all states reopen on-premise dining and we can begin to make a detailed assessment of how many permanent restaurant closures there are and how that will affect what the industry will look like as it re-emerges.” 

Cattle futures softened to start the week, extending losses from the previous session. Pressure included last week’s softer cattle prices, light trade and demand uncertainty.

Other than 7¢ to 22¢ higher in the front three contracts, Live Cattle futures closed an average of 66¢ lower (15¢ lower to $1.10 lower at the back). 

Feeder Cattle futures closed an average $1.17 lower.

Choice boxed beef cutout value was $6.90 lower Monday afternoon at $254.58/cwt. Select was $15.30 lower at $231.12.

Corn futures closed 2¢ higher.

Soybean futures closed mostly 1¢ lower through Aug ‘21 and then mainly 3¢ higher.

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Major U.S. financial indices closed higher on Monday, extending gains from the previous session’s strong performance. Support included carryover optimism from last Friday’s bullish employment report.

The Dow Jones Industrial Average closed 461 points higher. The S&P 500 closed 38 points higher. The NASDAQ closed 110 points higher.

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The weighted average five-area direct live fed steer price was $3.32 lower week to week on Friday at $112.39/cwt. The dressed price was $4.79 lower at $179.04. Prices were $113.76 and $184.21 at the same time last year.

However, the range in negotiated cash fed cattle prices continued across a broad range, with live prices in the Southern Plains at mostly $105-$117/cwt., $110-$118 in Nebraska and $108-$114 in the western Corn Belt. Dressed prices were at $175-$185.

“This wide range in prices is largely due to regional supply and demand. Regions with a large supply of market ready cattle and limited demand are seeing the lowest prices, while regions with strong demand and a relatively smaller supply are seeing higher prices,” explains Andrew P. Griffith, agricultural economist with the University of Tennessee, in his weekly market comments. “This may not be the only reason for the disparity in prices as other factors are at play, but supply and demand are generally what push prices one way or the other. It is difficult to predict what prices will be as the market moves through the glut of cattle, but there is sure to be downward pressure throughout the summer and fall. The market is attempting to align itself with supply and demand.”

On the other hand, Griffith says price expectations for late-summer and early fall feeder cattle continue to improve.

Negotiated cash fed cattle prices were lower across a broad range last week. The weighted average five-area direct live steer price was $2.97 lower week to week on Thursday at $112.68/cwt. The dressed price was $4.13 lower at $179.17. Prices were $113.51 and $184.16 at the same time last year.

Softer cash prices, declining wholesale beef values and the outlook for continued price erosion weighed on Cattle futures Friday.

Live Cattle futures closed an average of $1.59 lower in the front four contracts, then an average of 52¢ lower (17¢ to 95¢ lower). 

Feeder Cattle futures closed an average $1.15 lower, from 55¢ lower in spot Aug to $1.35 lower at the back.

Choice boxed beef cutout value was $10.78 lower Friday afternoon at $261.48/cwt. Select was $13.99 lower at $246.42.

Corn futures closed mostly 2¢ higher.

Soybean futures closed mostly 2¢ to 4¢ higher across the front half of the board and then mainly fractionally lower to 1¢ lower.

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Major U.S. financial indices closed higher on Friday, buoyed by a surprising surge in employment.

Total nonfarm payroll employment rose by 2.5 million in May, according to the U.S. Bureau of Labor Statistics. The unemployment rate declined by 1.4% to 13.3%.

Average hourly earnings for all employees on private non-farm payrolls fell by 29¢ in May to $29.75, following a gain of $1.35 in April.

“Today’s report shows much higher job creation and lower unemployment than expected, reflecting that the re-opening of the economy in May was earlier, and more robust, than projected,” says U.S. Secretary of Labor Eugene Scalia. “

“Millions of Americans are still out of work, and the Department remains focused on bringing Americans safely back to work and helping States deliver unemployment benefits to those who need them. However, it appears the worst of the coronavirus’s impact on the nation’s job markets is behind us.”

The Dow Jones Industrial Average closed 829 points higher. The S&P 500 closed 81 points higher. The NASDAQ closed 198 points higher.

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“Considering all the challenges the U.S. red meat industry faced in April, export results were encouraging,” says Dan Halstrom, president and CEO of the U.S. Meat Export Federation (USMEF). “Exporters lost several days of slaughter and processing due to COVID-19, and shipments to Mexico and some other Latin American markets declined due to slumping currencies and the imposition of stay-at-home orders. Despite these significant headwinds, global demand for U.S. beef and pork remained strong.”

April beef exports were down 6% from a year ago to 98,613 metric tons (mt), with value falling 11% to $600.9 million, according to data released by USDA and compiled by the USMEF. But, exports achieved outstanding growth in Japan, where U.S. beef is benefiting from reduced tariffs under the U.S.-Japan Trade Agreement. Exports also trended higher to China, following the late-March implementation of the U.S.-China Phase One Economic and Trade Agreement.

For January through April, beef exports totaled 433,316 mt, up 5% from a year ago, valued at $2.66 billion (up 3%).

With lower April slaughter numbers, beef export value per head of fed slaughter climbed to a record $363.35, up 19% from April 2019. For the first four months of the year, per-head export value increased 5% to $326.47.

“International customers are relieved to see U.S. production rebounding, solidifying our position as a reliable supplier,” Halstrom says. “This helps address a major concern for buyers, as COVID-19 has disrupted meat production in many countries, not just the United States. Demand remains robust for U.S. red meat, especially at retail, but USMEF is actively working with our foodservice customers across the globe to help ensure a strong recovery for the restaurant, catering and hospitality sectors. Many are adjusting to an entirely new business climate, and the U.S. industry assisting them in this process can help ensure that U.S. pork, beef and lamb will be featured on their menus.”

U.S. pork exports in April were 264,048 mt, up 22% from a year ago but the lowest since November 2019. Export value of $682.8 million was up 28% year-over-year but the lowest since October 2019. Through the first four months of 2020, pork exports remain on a record pace at 1.1 million mt, up 35% from a year ago, with value up 45% to $2.91 billion.

Negotiated cash fed cattle prices were sharply lower in the Southern Plains on Thursday at $105/cwt., which was $13 less than the bulk of the previous week’s trade. For the week, established live prices in the North are $3-$4 lower than the previous week at $109-$117 in Nebraska and at mostly $110 in the western Corn Belt. Dressed prices for the week are steady to $10 lower at $175-$185.

Cattle futures faded the softer cash prices, though, with support including the weekly U.S. Export Sales report from USDA’s Foreign Agricultural Service. Net sales of 12,300 metric tons of beef for the week ending May 28 were 7% more than the previous week and 97% more than the prior four-week average. Increased beef export sales were mostly to South Korea, Japan, Canada, Hong Kong, and China.

Live Cattle futures closed an average of 86¢ higher, from 27¢ higher in spot Jun to $1.12 higher.

Feeder Cattle futures closed an average 89¢ higher, from 50¢ higher in spot Aug to $1.17 higher at the back.

Wholesale beef values continue to plunge, adjusting back to more normal fundamentals. Choice boxed beef cutout value was $23.64 lower Thursday afternoon at $272.26/cwt. Select was $16.37 lower at $260.41.

Total fed cattle slaughter for the week ending May 23 was 444,378 head, which was 51,816 head more (+13.2%) than the previous week and the most since the first week of April, according to USDA’s Actual Slaughter Under Federal Inspection report. Total cattle slaughter of 571,506 head was 52,383 head more (+10.1%) than the prior week and the most since the first week of April. Compared to the prior year, though, fed cattle slaughter was still 14.5% less and total cattle slaughter was 11.6% less.

The average dressed steer weight for the week was 894 lbs., which was 6 lbs. lighter than the previous week, but 52 lbs. more than the same week a year earlier. The average dressed heifer weight of 826 lbs. was 5 lbs. less than the previous week, but 41 lbs. heavier than the prior year.

The lowest U.S. Dollar since March supported Grain futures.

Corn futures closed 3¢ to 5¢ higher.

Soybean futures closed mostly 10¢ to 14¢ higher.

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Major U.S. financial indices closed narrowly mixed Thursday. Pressure included more initial jobless claims than the market expected.

Initial unemployment insurance claims for the week ending May 30 were 1.88 million, which was 249,000 fewer than the previous week, according to the U.S Labor Department.

The Dow Jones Industrial Average closed 11 points higher. The S&P 500 closed 10 points lower. The NASDAQ closed 67 points lower.

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Customer transaction declines at major U.S. restaurant chains continued to improve in the week ending May 24, according to The NPD Group (NPD).

With nearly 320,000 restaurant units in the U.S. allowed to offer some level of on-premise dining, total major restaurant chain transactions declined by 18% compared to the same week last year, which represented a week-to-week gain of 25 points. That’s according to NPD’s CREST^®Performance Alerts, which provides a weekly view of chain-specific transactions and share trends for 70 quick service, fast casual, midscale, and casual dining chains.

Major full service chain restaurant transactions declined by 42% versus same time last year, a 7-point improvement from the prior week’s decline.

Transactions at quick service restaurant chains were down 17% year over year, improving from the 20% decline a week earlier.

NPD’s CREST^®foodservice market research, indicates total industry traffic at chain and independent restaurants was down 35% in April compared to year ago, which aligns with NPD’s weekly restaurant chain transactions tracking.

“Among the most interesting behaviors we’re seeing is the rapid escalation of using technology to engage with restaurants,” says David Portalatin, NPD food industry advisor. “Going forward, we might expect a digital divide that sets apart restaurants with well-executed digital offerings and requires those without to turn to the newfound prowess of third-party platforms.”

Negotiated cash fed cattle prices continued softer week-to-week on Wednesday. Live prices were $117/cwt. in the Texas Panhandle, $110-$117 in Kansas and mostly $117 in Nebraska. Dressed trades were at $175-$185.

Cattle feeders offered 1,736 head in the weekly Fed Cattle Exchange auction Wednesday. Just one lot–199 steers from Texas–sold at a weighted average price of $110.50/cwt. for delivery at 1-17 days.

Despite softer cash prices, surging outside markets helped support Cattle futures on Wednesday.

Except for 10¢ lower in the back two contracts, Live Cattle futures closed an average of 40¢ higher, from 2¢ higher to $1.15 higher.

Feeder Cattle futures closed an average 84¢ higher.

Wholesale beef values continue to plunge as packing capacity recovers. Choice boxed beef cutout value was $22.83 lower Wednesday afternoon at $295.90/cwt. Select was $13.80 lower at $276.78.

Corn futures closed mostly fractionally higher to 1¢ higher.

Soybean futures closed 5¢ to 7¢ higher through Jan ’21 and then mostly 3¢ to 4¢ higher.

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Major U.S. financial indices closed strongly higher Wednesday.

Positive news included fewer lost jobs than originally anticipated, based on the closely watched ADP National Employment Report^®. Still, private sector employment decreased by 2.76 million jobs from April to May, according to the report. 

“The impact of the COVID-19 crisis continues to weigh on businesses of all sizes,” says Ahu Yildirmaz, co-head of the ADP Research Institute. “While the labor market is still reeling from the effects of the pandemic, job loss likely peaked in April, as many states have begun a phased reopening of businesses.”

The Dow Jones Industrial Average closed 527 points higher. The S&P 500 closed 42 points higher. The NASDAQ closed 74 points higher. Those were the highest levels since the first part of March.

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“It’s too soon to talk too much about markets returning to normal, but the steady improvements associated with the packing industry facing fewer obstacles is a relief,” says Stephen Koontz, agricultural economist at Colorado State University, in the latest issue of In the Cattle Markets from the Livestock Marketing Information Center.

Koontz explains recent weekly commercial cattle slaughter under federal inspection is a little more than 71% of the year’s peak weekly volume, before COVID-19 began reducing slaughter capacity. The low point was approximately 60% of the peak.

“These slaughter numbers will determine when the cattle and beef markets return to more normal relationships,” Koontz says. “There are very large supplies and substantial inventory of long-fed cattle on feed. There has been a steady improvement in fed cattle and feeder cattle prices through last month and into the current. Continued improvement hinges on any further disruptions and steady elevation in slaughter numbers.”

From the lows of the year, Koontz points out: the five-area weighted average fed steer price is up about $15 at $115/cwt.; 7 to 8-weight feeder prices are up about $15 to $135; 4 to 5-weight calf prices are up about $8 to $170.

“But let’s not forget those steer and heifer slaughter weights are in a contra- seasonal increase and are no less than 40 lbs. per animal above last year. That’s a 4.8% increase in beef supplies due to carcass weights,” Koontz says. “And there are 4.8 million head of cattle on feed over 120 days, based on the last report. Working through these supplies will easily require the rest of the summer.”

Early negotiated cash fed cattle trade on Monday was unevenly steady with the bulk of last week’s trade. Live prices were at $118/cwt. in the Southern Plains and Nebraska. Dresses sales in Nebraska and the western Corn Belt were at $178-$187.

Cattle futures closed mixed but mainly higher Monday as traders weigh short term beef demand against increasing supplies and lower boxed beef values.

Live Cattle futures closed mixed, an average of 70¢ lower through the front three contracts (5¢ to $1.42 lower) and then an average of 88¢ higher.

Feeder Cattle futures closed an average of $2.05 higher.

Choice boxed beef cutout value was $22.19 lower Monday afternoon at $341.15/cwt. Select was $23.24 lower at $316.83.

Corn futures closed mostly 2¢ to 3¢ lower.

Soybean futures closed mostly unchanged to 1¢ higher.

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Major U.S. financial indices closed higher Monday, apparently on increasing optimism about reopening the economy and despite trade-quashing chatter between the U.S. and China, as well as curfews imposed in various cities, aimed at quelling recent violent protests.

The Dow Jones Industrial Average closed 91 points higher. The S&P 500 closed 11 points higher. The NASDAQ closed 62 points higher.

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“Barring a major setback, it appears that beef markets are moving past the worst of the disruptions that have caused upheaval in recent weeks,” says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly market comments. “The last few weeks have revealed much about the nature of specialized beef supply chains and much about the variable demands for the wide variety of beef products. It has also revealed how market prices adjust to wild swings in beef product demand and supply conditions.”

Those disruptions were first spawned by the massive shift in consumer beef demand toward retail purchases and away from food service as the pandemic quarantine began. Then came the disruptions to beef packing and processing.

“Cattle slaughter and beef production decreased on a year-over-year basis for four consecutive weeks. The lowest point occurred the last week of April when total cattle slaughter was down 34.8% year over year. Beef production that same week was down 33.8% compared to the same week one year ago,” Peel says.  “Significant recovery has occurred from that low with estimated cattle slaughter the week ending May 30 down 10.9% year over year. With cattle carcass weights increasing sharply due to delays in marketing fed cattle, estimated beef production last week was down just 7.6% year over year.”

Along the way, wholesale beef values skyrocketed overall, while price impacts varied across the carcass. For example, Peel points to increased demand for the Chuck and Round from March through April. Conversely, he explains prices for beef products dependent on food service demand, including many middle meat cuts, dropped in March before general shortages of products pushed prices higher in April and May. 

“Additional dynamics are expected as food service continues a slow recovery and macroeconomic conditions continue to affect beef demand, but hopefully beef product markets are settling back into a much more stable situation and with typical product price relationships reestablished,” Peel says. 

Negotiated cash fed cattle prices continued across a broad range last week. On a live basis, prices were steady to $5 lower in the Texas Panhandle at $115-$120/cwt., $5 less in Kansas at $115, steady to $7 less in Nebraska at $112-$120 and steady to $1 higher in the western Corn Belt at $115. Dressed prices were steady to $12 lower in Nebraska at $178-$190 and $5-$15 lower in the western Corn Belt at $175-$185.

Through Thursday, the five-area direct weighted steer price was $115.65/cwt. on a live basis and $183.30 in the beef. Week to week, that was $1.64 less and 45¢ less, respectively.

Cattle futures closed lower Friday, likely influenced by week-end and month-end position squaring. Never mind wonderments about how much packers are currently supporting fed cattle prices, relative to the lower levels suggested by fundamentals.

Live Cattle futures closed an average of $1.30 lower, (7¢ lower at the back to $1.75 lower in spot Jun).

Feeder Cattle futures closed an average of $1.01 lower (15¢ lower in spot Aug to $1.52 lower at the back).

Choice boxed beef cutout value was $6.22 lower Friday afternoon at $363.34/cwt. Select was $4.02 lower at $340.07.

Corn futures closed mostly 1¢ lower.

Soybean futures closed 4¢ to 6¢ lower through Jan ’21 and then mostly fractionally mixed to 1¢ lower.

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Major U.S. financial indices closed mixed Friday, amid volatile trade related to rising political tensions between the U.S. and China.

The Dow Jones Industrial Average closed 17 points lower. The S&P 500 closed 14 points higher. The NASDAQ closed 120 points higher.

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Disruptions in cattle slaughter, due to COVID-19, cloud the picture but analysts with the Livestock Marketing Information Center (LMIC) expect USDA’s July 1 Cattle report to reveal further declines in beef cow numbers.

“A smaller July 1 inventory will imply the same situation for Jan. 1, 2021. This would be the second consecutive year-on-year decline for the beef breeding herd that has only just begun this liquidation phase, which may now be sharper than previously expected,” say LMIC analysts, in the latest Livestock Monitor.

Before the pandemic began disrupting packing plants, LMIC analysts point out weekly beef cow harvest was running well ahead of year-ago levels. Beef cow slaughter was 2% to 20% below year-ago levels for the last seven weeks.

As for heifer slaughter, it’s 4% less so far this year, compared to 2019.

“Smaller heifer slaughter would normally imply, when discussing inventory, the possibility that this liquidation phase of the cattle cycle is over and producers are adding breeding type animals. There may be some individuals that are doing so, but the national picture suggests otherwise,” say LMIC analysts. “The decrease in heifer slaughter is misleading for a couple of reasons, but is not indicative of breeding herd growth. First, slaughter disruptions have caused data patterns that are atypical. The backlog of fed cattle is likely skewed towards more heifers; because of the lighter dressed weight, they can likely stay on feed longer than a heavyweight steer. Second, heifer slaughter should fall below a year ago after last year’s large numbers of heifers on feed and a smaller 2019 calf crop. Lastly, producers are cautious after a couple of years of negative returns for cow-calf operations. Many are not thinking of expanding. Adding worry for many in the West is the expanding drought conditions.”

Along with weather and forage availability, economics will continue to drive decisions about herd liquidation or expansion.

“Calf prices improved in recent weeks, but it remains to be seen what fall-weaned calves will bring. LMIC currently sees fourth-quarter calf prices as similar to a year ago,” explain LMIC analysts. “Expenses and feed costs are expected to be lower, and cull cow values have improved in some areas from last year. Under these assumptions, cow-calf returns should be better than the year before, but the outlook is still full of uncertainty.”