Daily Market Highlights

Volatility in negotiated cash fed cattle trade continues so far this week. Dressed prices were at $160/cwt. in the western Corn Belt Monday, then $150 on Tuesday with too few transactions to trend. Likewise, with too few transactions to trend early dressed sales in Nebraska were at $150, compared to $150-$160 the previous week.

Cattle futures edged higher Tuesday, making for a third consecutive session of mostly higher prices, underpinned by runaway wholesale beef values, while offering a glimmer of stability.

Live Cattle futures closed an average of 45¢ higher.

Except for 77¢ lower in spot Apr, Feeder Cattle futures closed an average of 67¢ higher.

Wholesale beef values continued to shatter records Tuesday.

Choice boxed beef cutout value was $18.98 higher Tuesday afternoon at a $330.82/cwt. Select was $22.10 higher at $320.88.

According to various news reports, President Trump was close to signing an executive order, utilizing the Defense Production Act to mandate packing plants remain open, in order to protect the nation’s food supply (see below).

Other than 2¢ lower and 1¢ lower in the front two contracts, Corn futures closed mainly fractionally higher to 2¢ higher.

Soybean futures closed 1¢ to 4¢ lower through Nov ’20 and then 3¢ to 8¢ higher.

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Major U.S. financial indices softened Tuesday. Pressure appeared to include skittishness over the Fed meeting Wednesday, as well as declining consumer confidence.

The Conference Board Consumer Confidence Index® declined 31.9 points from March to April to 86.9, according to The Conference Board (TCB). Although the Present Situation Index–based on consumers’ assessment of current business and labor market conditions–declined from 166.7 to 76.4, the Expectations Index–based on consumers’ short-term outlook for income, business and labor market conditions–improved from 86.8 in March to 93.8 in April.

“The 90-point drop in the Present Situation Index, the largest on record, reflects the sharp contraction in economic activity and surge in unemployment claims brought about by the COVID-19 crisis,” explains Lynn Franco, TCB Senior Director of Economic Indicators. “Short-term expectations for the economy and labor market improved, likely prompted by the possibility that stay-at-home restrictions will loosen soon, along with a re-opening of the economy. However, consumers were less optimistic about their financial prospects and this could have repercussions for spending as the recovery takes hold.”

The Dow Jones Industrial Average closed 32 points lower. The S&P 500 closed 15 points lower. The NASDAQ closed 122 points lower.

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“In small communities around the country where we employ over 100,000 hard-working men and women, we’re being forced to shutter our doors. This means one thing–the food supply chain is vulnerable,” says John Tyson, Chairman of the Board for Tyson Foods, in a letter published as an ad in Sunday’s New York Times and other newspapers. “As pork, beef and chicken plants are being forced to close, even for short periods of time, millions of pounds of meat will disappear from the supply chain. As a result, there will be limited supply of our products available in grocery stores until we are able to reopen our facilities that are currently closed.”

The United Food and Commercial Workers International Union (UFCW) estimates 22 meat packing plants closed–including union and non-union plants–at some point in the past two months. Closures reduced pork slaughter by 25% and beef slaughter by 10%, according to the organization.

“UFCW estimates have confirmed 20 worker deaths in meatpacking and food processing. In addition, at least 5,000 meatpacking workers and 1,500 food processing workers have been directly impacted by the virus,” according to a UFCW news release published Monday. “Those directly impacted include individuals who have tested positive for COVID-19, missed work due to self-quarantine, are awaiting test results, or have been hospitalized, and/or are symptomatic.”

“Tyson and every company across this vital industry, must immediately join with UFCW in calling for federal and state elected leaders to designate these frontline workers as first responders,” said UFCW International President Marc Perrone, in a Tuesday statement. “Temporary first responder status ensures these workers have priority access to the COVID-19 testing and protective equipment they need to continue doing these essential jobs. Our federal leaders must enforce clear guidelines to ensure every employer lives up to the high safety standards these workers deserve and the American people expect.”

“We have a responsibility to feed our country. It is as essential as healthcare. This is a challenge that should not be ignored,” explained Tyson, in his letter. “Our plants must remain operational so that we can supply food to our families in America. This is a delicate balance because Tyson Foods places team member safety as our top priority…The government bodies at the national, state, county and city levels must unite in a comprehensive, thoughtful and productive way to allow our team members to work in safety without fear, panic or worry.”

Cattle futures started the week with modest gains, amid sluggish trade and supported by outside markets, as well as Friday’s bullish Cattle on Feed report.

Except for 17¢ lower in spot Apr, Live Cattle futures closed an average of $1.01 higher.

Feeder Cattle futures closed an average of 67¢ higher.

Wholesale beef values continued to rocket higher with the bottleneck in packer capacity disrupting the supply chain.

Choice boxed beef cutout value was $18.47 higher Monday afternoon at a record high of $311.84/cwt. Select was $19.76 higher at $298.78.

Corn futures closed 6¢ to 10¢ lower through Mar ’21 and then mostly 3¢ to 5¢ lower.

Soybean futures closed mostly 1¢ to 3¢ lower.

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Major U.S. financial indices closed higher again on Monday, with optimism that some states are nearing at least partial reopening. Gains came despite another rugged day for oil prices: West Texas Intermediate on the CME closed $1.20 to $4.16 lower through the front six contracts; spot Jun closed at $12.78.

The Dow Jones Industrial Average closed 358 points higher. The S&P 500 closed 41 points higher. The NASDAQ closed 95 points higher.

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“There will be at least several more months of this economic environment, and it could easily stretch into 2021,” say analysts with the Livestock Marketing Information Center (LMIC), in the latest Livestock Monitor.

With volatile and uncertain markets in mind, those analysts offer four suggestions to cow-calf producers.

First, LMIC analysts say to monitor forage availability on the operation, as always, but also keep track of it locally and regionally.

“Pasture conditions this year will be critical to regional and national marketing flows of calves and yearlings,” according to LMIC analysts. “Many more animals are headed to spring and summer grazing programs than in recent years because of the drop in the number of animals being placed into feedlots, a trend that may continue for several months. Poor pasture and range conditions could cause bunches of cattle to move into the markets quickly. Further, more winter feed will be required if producers who typically don’t hold over calves into the new calendar year, did so in 2020.”

As mentioned in Cattle Current last week, the start to growing season is off to a drier start than last year. According to the U.S. Drought Monitor, 26.92% of the nation was classified from D0 (abnormally dry) to D4 (exceptional drought), for the week of Apr. 21. That’s 14.57% more than the same week last year.

Next, LMIC analysts suggest keeping an eye on feedlot placements provided by the National Agricultural Service (NASS), in the monthly Cattle on Feed report. They explain the data provides some insight to how aggressive feedlots are replacing cattle and at what weights. Conversely, it offers a notion of the number of cattle left to be placed.

Third, monitor feedstuff availability and prices, especially corn.

“Be aware of trends in soybean meal and in hay prices. The two major drivers of calf and yearling prices are fed animal prices and the cost of gain in a feedlot,” LMIC analysts explain. “Critical will be the number of corn acres planted in the Midwestern states. Beginning with planting season, the markets will focus on spring and early summer growing conditions. Low feedstuff costs can become a supportive market factor for late summer and early fall yearling and calf prices. Drought will do the opposite.”

Finally, they say to pay attention to the dairy business. One option available to hard-pressed producers in that sector is cow culling, which could pressure prices further, depending on the level and timing.

“Prepare for price volatility,” say LMIC analysts. “As conditions change, be ready to adjust marketing plans. It is especially important to communicate with family, partners, and financial institutions.”

Reduced beef packing production, due to COVID-19, continues to boost uncertainty and wreak havoc on market fundamentals as cattle feeders compete for slaughter access. Consider last week’s fluctuating cash prices for fed cattle.

Through Friday afternoon, negotiated cash fed cattle trade for the week was $5-$10 lower on a live basis in the Southern Plains at $100/cwt. in Kansas and $95-$100 in the Texas Panhandle. It was up to $10 lower in Nebraska and the western Corn Belt at $95. Dressed trade was from $8 lower to $10 higher at mostly $160, compared to the previous week’s light test.

For all of the gyrations, five-area daily weighted average direct negotiated prices through Thursday were mainly steady week to week with live steers at $96.95 and dressed steers at $154.27.

So far, the packing bottleneck appears nowhere near as dire as that faced by pork producers in 1998, when the fat hog price plummeted to about $8/cwt. toward the end of the year, due to sudden and significantly reduced packing capacity. But, it’s understandable why some are recalling the memory.

Wholesale beef values are running the opposite direction, fueled by declining supplies and what seems to be at least constant demand.

Choice boxed beef cutout value was $9.08 higher Friday afternoon at a record high of $293.37/cwt. Select was $6.13 higher at $279.02.

Cattle futures mainly consolidated and hovered, other than front-month Live Cattle.

Except for 97¢ and 30¢ lower in the front two contracts, and 10¢ lower in away Apr, Live Cattle futures closed an average of 43¢ higher.

Feeder Cattle futures closed an average of 47¢ higher.

Logic suggests the market should view Friday’s monthly Cattle on Feed report as bullish to at least neutral, given the plunge in placements and spike in marketings (see below). That may not be the case, though, as it also underscores how many more cattle than normal need to be placed at some point.

Corn futures closed mostly 1¢ to 3¢ lower.

Soybean futures closed mostly 7¢ to 10¢ lower.

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Major U.S. financial indices closed higher Friday, as crude oil prices continued to maintain stability.

The Dow Jones Industrial Average closed 260 points higher. The S&P 500 closed 38 points higher. The NASDAQ closed 139 points higher.

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Even fewer cattle were placed and even more cattle were marketed in March than expected, according to the monthly Cattle on Feed report issued Friday.

Between depressed prices keeping more cattle outside of feedlots and the slower turnover in feedyards, plenty of folks suspected feedlot placements would be significantly fewer year over year. In fact, the 1.56 million head placed in feedlots with 1,000 head or more capacity was 22.69% less (457,000 head fewer). That was the least for the month since the data series began in 1996, according to AMS. The decline was about 4.8% more than average analyst estimates ahead of the report.

In terms of placement weights, 34.04% went on feed weighing 699 lbs. or less; 52.15% weighing 700-899 lbs. and 13.81% weighing 900 lbs. or more.

Marketings in March of 2.01 million head were 13.11% more (+233,000 head) than the previous year. That was the second most for the month since the data series began. Heading into the report, analysts expected, on average, marketings to increase 12.3%.

Cattle on feed Apr. 1 of 11.30 million head were 5.49% less (656,000 head fewer) than the previous year. That was about 0.7% less than pre-report estimates.

Although still $7-$8 lower than last week, dressed trade in the north rebounded from the previous day to mostly $160/cwt. on Thursday.

Cattle futures continued to be pressured by uncertainty regarding slowing beef production and how soon some sense of normalcy can return.

Except for 10¢ and 7¢ higher in two contracts, Live Cattle futures closed an average of 96¢ lower (20¢ lower to $3.00 lower in spot Apr).

Except for 95¢ and 60¢ higher in the front two contracts, Feeder Cattle futures closed an average of $1.09 lower.

Wholesale beef values took another broad step higher Thursday, as demand continues to outpace declining supplies.

Choice boxed beef cutout value was $8.54 higher Thursday afternoon at a record high of $284.29/cwt. Select was $11.87 higher at $272.89.

Corn futures closed mostly 1¢ lower to 1¢ higher.

Soybean futures closed 2¢ to 4¢ higher through Sep ‘20, and then mostly 2¢ to 3¢ lower.

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Major U.S. financial indices closed little changed Thursday, following wide gyrations during the session. Support included more recovery in crude oil prices, while pressure included another expected surge (4.43 million) in weekly initial jobless claims, according to the U.S. Labor Department.

The Dow Jones Industrial Average closed 39 points higher. The S&P 500 closed 1 point lower. The NASDAQ closed fractionally lower.

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How long beef packing plant production remains constrained by COVID-19 is the next unknown markets are pricing, says Stephen Koontz, agricultural economist at Colorado State University. He adds, “Some certainty to the course of the CORVID-19 pandemic will be needed to mitigate this risk.”

Although the inventory of long-fed cattle is climbing, in the most recent issue of In the Cattle Markets, Koontz says the uncertainty of pricing short-term needs and availability will be unclear for at least another month, given the fact that Friday’s Cattle on Feed report accounts for inventory at the first of April, with flows from March.

Incidentally, heading into the monthly Cattle on Feed report, analysts surveyed by Urner Barry, with data shared by the Daily Livestock Report see March placements down about 18%, March marketings 12% higher and the Apr. 1 on-feed inventory 5% less year over year.

“Fed cattle prices continue to soften and the impact of delayed marketings will weigh on the market until summer,” Koontz says.

In the meantime, carcass weights continue to be significantly heavier than last year’s depressed levels.

The average dressed steer weight for the week ending Apr. 11 was 886 lbs., according to USDA’s weekly Livestock Slaughter report. That was 3 lbs. lighter than the previous week, but 22 lbs. heavier than the previous year. The average dressed heifer weight was 826 lbs., which was 1 lb. heavier than the prior week and 24 lbs. heavier than the same week last year.

Cattle feeders offered 4,671 head in the weekly Fed Cattle Exchange auction on Wednesday. Of those, 860 head sold: 726 head for delivery at 1-9 days for a weighted average price of $100/cwt.; 174 head for delivery at 1-17 days for a weighted average price of $92.67. That was mainly on par with country trade so far this week.

Similarly, Choice 2-3 steers at Sioux Falls Regional (114 head) in South Dakota weighing an average of 1,453 lbs. sold for an average price of $100.15/cwt. across a range of $93.50-$102.00.

Wholesale beef values rocketed higher again Wednesday, as demand outpaces declining supplies.

Choice boxed beef cutout value was $15.90 higher Wednesday afternoon to a presumed record high of $275.75/cwt. Select was $12.20 higher at $261.02.

All of that seemed to have Cattle futures stuck in a wait-and-see mode, with light support and two-sided trade, other than a sharp drop in spot Live Cattle, given the likely continuation of near-term pressure on cash prices as the supply chain tries to sort its COVID-19 worker challenges.

Except for $2.65 lower in waning spot Apr, Live Cattle futures closed from 30¢ lower to 32¢ higher.

Except for 7¢ lower in May and 25¢ lower in the back contract, Feeder Cattle futures closed an average of 27¢ higher.

Corn futures closed mostly 4¢ to 8¢ higher through Mar ’21 and then mostly 2¢ to 3¢ higher.

Soybean futures closed 5¢ lower to 4¢ higher through Mar ‘21, and then mostly 8¢ to 10¢ lower.

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Major U.S. financial indices closed higher Wednesday, buoyed by resurgent oil prices. Although spot Jun West Texas Intermediate crude oil futures on the CME closed at an anemic $13.78, it was $2.21 higher than the previous day; the front six months closed $2.00-$2.34 higher.

The Dow Jones Industrial Average closed 456 points higher. The S&P 500 closed 62 points higher. The NASDAQ closed 232 points higher.

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Disruptions in beef production and consumption, due to COVID-19, began showing up in freezers last month, according to USDA’s Cold Storage report.

There were 502.42 million lbs. of beef in freezers Mar. 31, which was 2% more than the previous month and 11% more than the previous year. Of that, boneless beef cuts (466.87 million lbs.) was record large for the month–the data series began in 1972.

Incidentally, USDA’s annual Livestock Slaughter report also was published on Wednesday.

Commercial cattle slaughter last year of 33.6 million head was 2% more than the previous year, with federal inspection (FI) comprising 98.6% of the total. The average live weight was 1,344 lbs., down 6 lbs. from the previous year. Steers comprised 49.3% of the total FI cattle slaughter, heifers 29.7%, dairy cows 9.7%, other cows 9.6%, and bulls 1.6%. Non-dairy cows (other) numbered 3.19 million head, which was 5.5% (+165,700) more than in 2018.

Beef production last year was record high at 27.2 billion lbs., which was 1% more than the previous year.

Back to Cold Storage, frozen pork supplies in freezers Mar. 31 (621.93 million lbs.) were down 4% from the previous month, but 2% higher than last year. Pork belly stocks (78.82 million lbs.) were 6% higher month to month and 34% higher year over year.

Total red meat supplies in cold storage totaled 1.17 billion lbs., down 2% from the previous month, but 7% more than the previous year.

Total frozen poultry supplies (1.31 billion lbs.) were 4% higher than the previous month, but 2% less than a year earlier. However, total chicken supplies in cold storage of 921.42 million lbs. was record large for the month; 6% (+53.06 million lbs.) more than the same month last year. It included record-large supplies of breast and breast meat, legs and thigh meat.

COVID-19 infections at packing plants, as well as precautionary measures, continue to hamper production speed and volume, while cleaving a wider divide between fed cattle prices and wholesale beef values.

Early negotiated cash fed cattle trade stumbled from the blocks Tuesday with dressed prices up north $5-$18 lower at $150/cwt. Live sales in Nebraska were mainly sharply lower at mostly $95. Early live sales in the Texas Panhandle were $5 lower at $100.

Wholesale beef values continued to scream higher, though, as buyers scramble to procure the declining supplies.

Choice boxed beef cutout value was $11.47 higher Tuesday afternoon at $259.85/cwt. Select was $10.83 higher at $248.82. Week to week, that’s $33.18 higher for Choice and $33.05 higher for Select. For perspective, the highest price for Choice following the Tyson plant fire last summer was $241.74.

Cattle futures, especially Live Cattle sagged lower, helped along by another down day in equity markets. 

Live Cattle futures closed an average of $1.23 lower (82¢ to $1.92 lower).

Except for 37¢ higher in the back contract, Feeder Cattle futures closed an average of 50¢ lower.

Corn futures closed mostly 3¢ to 6¢ lower.

Soybean futures closed mostly 4¢ to 7¢ higher.

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Major U.S. financial indices closed sharply lower again Tuesday. Along with anemic quarterly earnings reports, investors seemed to continue their focus on unraveling crude oil prices as a bellwether of economic misery to come.

A day after the expiring May contract for West Texas Intermediate futures closed at -$37.63, new spot month Jun closed $8.86 lower at $11.57.

The Dow Jones Industrial Average closed 631 points lower. The S&P 500 closed 86 points lower. The NASDAQ closed 297 points lower.

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The U.S. Senate approved $484 billion emergency relief legislation Tuesday evening, which would provide an additional $321 billion in funding for the Paycheck Protection Program (PPP). Of this amount, $60 billion is set aside for small lenders and community-based financial institutions that serve the needs of unbanked/underserved small businesses, according to the National Cattlemen’s Beef Association (NCBA).

Authorizing language was included to allow agricultural enterprises as defined by section 18(b) of the Small Business Act (15 U.S.C. 647(b)) with not more than 500 employees to receive Economic Injury Disaster Loan (EIDL) grants and loans.

“We are pleased to see the reaffirmation of Congress’s intent that cattle producers be granted access to the EIDL program administered by the Small Business Administration,” says Ethan Lane, NCBA vice president of government affairs. “We urge the House of Representatives to move swiftly to approve this package and deliver these funds to producers across the country who are continuing to keep grocery store shelves full during this economic disaster.” 

The proposed legislation comes just days after USDA announced the Coronavirus Food Assistance Program (CFAP). The program includes $16 billion in direct payments to farmers and ranchers including $9.5 billion of emergency funding from the CARES Act and $6.5 billion of funding from the Commodity Credit Corporation (CCC). Additionally, CFAP includes $3 billion in purchases of meat, dairy and produce to support producers and provide food assistance to those in need.  CFAP is funded from the Coronavirus Aid, Relief and Economic Security Act (CARES), the Families First Coronavirus Response Act (FFCRA) and other USDA programs.

More specifically, in his weekly market comments, Derrell Peel, Extension livestock marketing specialist at Oklahoma State University explains, “The beef cattle industry will receive $5.1 billion of CFAP funding to partially offset 2020 losses due to COVID-19. Cattle producers will receive a single direct payment determined by two calculations, including 85% of price losses from Jan. 1 to Apr. 15, 2020 and 30% of expected losses for two quarters after April 15. In order to qualify, commodities must have experienced at least a 5% price decrease between January and April. USDA expects to begin sign-up in early May and distribute payments by late May or early June.”

Slowing beef production took a toll on cash fed cattle prices last week, while putting the fire beneath wholesale beef values.

There were only 16,520 head confirmed fed steer and heifer trades last week, compared to 112,499 the same week last year, according to the Agricultural Marketing Service (AMS).

The AMS five-area direct average weekly weighted price for steers was $102.28/cwt. on a live basis, which was $2.72 less than the prior week. In the beef, steers traded $10.82 less at $157.18.

On the other end, Choice boxed beef cutout value was $9.39 higher Monday afternoon at $248.38/cwt. Select was $10.79 higher at $237.99 (see below).

Cattle futures softened Monday with pressure from slowing beef production and outside markets. 

Live Cattle futures closed an average of 68¢ lower (30¢ to $1.20 lower).

Feeder Cattle futures closed an average of 77¢ lower (7¢ lower toward the back to $2.00 lower toward the front).

Corn futures closed 5¢ to 6¢ lower, except for 8¢ and 7¢ lower in the front two contracts.

Soybean futures closed 4¢ to 6¢ lower through Jan ’21 and then mostly 2¢ to 3¢ lower. 

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Major U.S. financial indices closed lower Monday, rattled by a historic spot-month rout of crude oil futures.

May WTI Crude Oil futures, which expires Tuesday, closed at -$37.63. That’s not a misprint. It closed at -$37.63. The next spot month, Jun, closed $58.06 higher at $20.43, but $4.60 lower than the previous session. Plentiful supplies, anemic demand and storage costs all contribute to the lack of overall buyer incentive.

The Dow Jones Industrial Average closed 592 points lower. The S&P 500 closed 51 points lower. The NASDAQ closed 89 points lower.

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“At this time, plant reductions are mostly resulting in some product disruptions and perhaps temporary shortages of fresh meat,” says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly comments. “Barring a catastrophic combination of plant closures or extended periods of plant disruptions, significant shortages of meat are not expected.  However, the combination of processing disruptions and the continuing challenges of supply chain disruptions means that consumers will likely experience limited meat supplies and selection in grocery stores in the coming weeks.”

For perspective, Peel explains estimated cattle slaughter last week was 502,000 head, which was 6.3% less than the prior week and 21.8% less than the same week a year earlier. The previous week’s slaughter of 536,000 head was also significantly lower. Until then, for the first 14 weeks of the year, he notes cattle slaughter averaged 634,300 head per week, which was 4.3% more year over year.

“Total beef production in 2020 is still projected at a record level over 27 billion lbs., but the timing during the year is more volatile and somewhat choppy,” Peel says.

As expected, slowing beef production ended up hammering fed cattle prices.

Keeping in mind it was a light test, negotiated cash fed cattle trade ended last week steady to sharply lower. Live trades were mostly steady in the Southern Plains at mainly $105/cwt. They were steady to $11 lower in the north at $94-$105 in Nebraska and at $95-$105 in the western Corn Belt. Dressed sales were steady to $18 lower at $155-$165 in Nebraska and at $150-$168 in the western Corn Belt.

Cattle feeders offered 5,778 head in the weekly Fed Cattle Exchange auction held Friday. Just six lots–898 head–sold for a weighted average price of $105/cwt. for delivery at 1-17 days. Except for one lot from Nebraska, all cattle sold came from the Southern Plains.

Even so, cattle futures closed mostly higher Friday, supported by recent stability. 

Except for 85¢ and 17¢ lower in the front two contracts, Live Cattle futures closed an average of 95¢ higher (45¢ higher to $1.27 higher).

Except for 22¢ lower in Aug, Feeder Cattle futures closed an average of 68¢ higher.

Wholesale beef values continued higher to end the week.

Choice boxed beef cutout value was $3.12 higher Friday afternoon at $238.99/cwt. Select was $1.22 higher at $227.20.

Corn futures closed mostly 1¢ to 2¢ higher.

Soybean futures closed mostly 2¢ to 3¢ lower. 

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Major U.S. financial indices closed higher Friday, supported by continued indications at least part of the economy might be on the cusp of reopening.

“Our experts say the curve has flattened and the peak in new cases is behind us. Nationwide, more than 850 counties, or nearly 30% of our country, have reported no new cases in the last seven days,” said President Donald Trump, in a Thursday evening press briefing. “…my administration is issuing new federal guidelines that will allow governors to take a phased and deliberate approach to reopening their individual states.”

The Dow Jones Industrial Average closed 704 points higher. The S&P 500 closed 75 points higher. The NASDAQ closed 117 points higher.

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U.S. restaurant customer transactions declined by 41% the week ending Apr. 5, compared to a year earlier, according to The NPD Group (NPD). That follows a decline of 42% the previous week.

“The 41% decline in restaurant transactions is similar to last week and may indicate a bottom. We also need to be aware that further erosion could occur if consumers’ economic situations worsen,” says David Portalatin, NPD food industry advisor. “To date, many consumers have continued to buy restaurant meals through delivery, takeout, and drive-thru to the degree allowed by the restrictive environment; but with rising unemployment, payroll reductions, and temporary furloughs, consumers may begin to think differently about their food budgets overall.”

More specifically, quick service restaurant transaction declines were 38% for the week ending Apr. 5, according to NPD’s CREST® Performance Alerts, which provides a rapid weekly view of chain-specific transactions and share trends for 70 quick service, fast casual, midscale, and casual dining chains. 

Customer transactions at full service restaurants–already challenged prior to COVID-19–were down 79%.

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A new USDA program–the Coronavirus Food Assistance Program (CFAP)–will provide $16 billion in immediate, direct support to farmers and ranchers, where prices and market supply chains have been impacted and will assist producers with additional adjustment and marketing costs resulting from lost demand and short-term oversupply for the 2020 marketing year caused by COVID-19. 

That’s according to U.S. Agriculture Secretary Sonny Perdue, in a late Friday afternoon announcement

“During this time of national crisis, President Trump and USDA are standing with our farmers, ranchers, and all citizens to make sure they are taken care of,” explained Secretary Perdue, when making the announcement. “The American food supply chain had to adapt, and it remains safe, secure, and strong, and we all know that starts with America’s farmers and ranchers.”

For what it’s worth, between the announcement and a press briefing late Friday evening, I was unable to figure out if portions of the $16 billion are part of the previously announced $9.5 billion allocated for direct support to farmers and ranchers in the Coronavirus Aid, Relief, and Economic Security (CARES) Act. Either way, Secretary Perdue emphasized this was not an end to COVID-19 assistance from USDA. He said USDA will make the money available as quickly and efficiently as possible, but not how, exactly. Details will be forthcoming no doubt.

CFAP also includes $3 billion, in addition to the $16 billion, to purchase fresh produce, dairy, and meat. USDA will partner with regional and local distributors, whose workforce has been significantly impacted by the closure of many restaurants, hotels, and other food service entities, to make the purchases. USDA will begin with procurement of an estimated $100 million per month in fresh fruits and vegetables, $100 million per month in a variety of dairy products, and $100 million per month in meat products. The distributors and wholesalers will then provide a pre-approved box of fresh produce, dairy, and meat products to food banks, community and faith based organizations, and other non-profits serving Americans in need.

Negotiated cash fed cattle trade remained undeveloped through Thursday afternoon, according to the Agricultural Marketing Service (AMS). There were a few dressed trades reported in Nebraska and the western Corn Belt at $155/cwt., but too few to trend. The price there last week was at $168. Given the surge in wholesale beef prices this week, some are betting on at least steady money.

Choice boxed beef cutout value was $5.34 higher Thursday afternoon at $235.87/cwt. Select was $3.76 higher at $225.98. That’s $10.01 more for Choice since Monday and $14.58 more for Select.

The average steer dressed weight for the week ending Apr. 4 was 889 lbs., which was 2 lbs. lighter than the previous week, but 24 lbs. heavier than the prior year, according to USDA’s Actual Slaughter Under Federal Inspection report. The average dressed heifer weight was 825 lbs., the same as the prior week but 21 lbs. heavier than the same week last year.

Cattle futures closed higher Thursday, building on stability from the previous session. Trade and open interest continued to creep higher. 

Weekly beef export Sales (Apr. 3-9) reported by USDA’s Foreign Agricultural Service were also supportive. Net sales of 20,200 metric tons (mt) reported for 2020 were up 28% from the previous week and 16% from the prior four-week average. Increases came primarily from Japan, South Korea, Hong Kong, China and Taiwan.

Live Cattle futures closed an average of 92¢ higher (70¢ higher to $1.65 higher).

Feeder Cattle futures closed an average of $1.97 higher ($1.42 higher at the back to $2.90 higher toward the front).

Corn futures closed mostly 1¢ to 2¢ lower.

Soybean futures closed 5¢ to 6¢ lower through Mar ’21 and then 3¢ to 4¢ lower.

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Major U.S. financial indices wobbled higher Thursday as investors balanced negative economic impact from COVID-19 with hopefulness that plans are forthcoming for the nation to get back to work.

The Dow Jones Industrial Average closed 33 points higher. The S&P 500 closed 16 points higher. The NASDAQ closed 139 points higher.

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“As fed cattle prices fall and feedlot margins decline, feedlot operations will likely reduce placements and reduce bids for feeder calves,” say analysts with USDA’s Economic Research Service (ERS), in the monthly Livestock, Dairy and Poultry Outlook. “Relatively good pasture conditions might allow producers to keep cattle on grass and other pasture until prices begin to recover. To that end, these calves will likely be placed in feedlots at heavier weights, and expected average slaughter weights will be higher. Recent price data and expectations of weaker feedlot demand underpins a decrease in this year’s expected feeder calf prices.”

ERS projects the annual average feeder steer price (basis Oklahoma City) at $130.50/cwt., which would be $11.73 less (-8.25%) than in 2019. Average price in the first quarter of this year was $136.42. Prices are forecast at $123 in the second quarter, $128 in the third quarter and $135 in the fourth quarter.

“Slower demand and potentially slower rates of slaughter are expected to pressure cattle prices. However, prices are expected to improve through the rest of the year but remain well below year-ago levels,” say ERS analysts.

ERS projects the annual fed steer price (five-area direct) at $111/cwt. this year, which would be $5.78 less (-4.95%) than last year. Average fed steer price in the first quarter of this year was $118.32. Prices are forecast at $105 in the second quarter, $109 in the third quarter and $112 in the fourth quarter.

With decreased cattle feeding returns, uncertainty and feedlot placements in mind, ERS reduced projections for beef production in the third and fourth quarters. However, ERS analysts also say increased non-fed cattle slaughter and higher average dressed weights will partly offset the reduction in fed cattle.

Cattle futures closed mixed on Wednesday, mostly higher for Feeder Cattle. Support included higher wholesale beef values, tied to slowing beef production, due to COVID-19. Based on futures prices the last couple of days, much of that appears to have been priced into the market previously.

Other than unchanged to 50¢ lower in three contracts, Live Cattle futures closed an average of 54¢ higher (7¢ higher at the back to $1.02 higher in the front two contracts).

Other than 60¢ lower in spot Apr, Feeder Cattle futures closed an average of 95¢ higher (37¢ to $1.50 higher).

Wholesale beef values were sharply higher on good demand and light offerings, according to the Agricultural Marketing Service.

Choice boxed beef cutout value was $3.86 higher Wednesday afternoon at $230.53/cwt. Select was $6.45 higher at $222.22.

Corn futures closed 3¢ to 6¢ lower through Jly ’21 and then 2¢ lower.

Soybean futures closed mostly 5¢ to 9¢ lower.

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Major U.S. financial indices closed lower Wednesday with early quantification of domestic COVID-19 economic impact.

Advance estimates of U.S. retail and food services sales for March 2020, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, declined 8.7% from February to March at $483.1 billion, according to the U.S. Commerce Department. That was 6.2% less compared to March of last year.

Crude oil prices also continued lower, with West Texas Intermediate on the CME closing $1.36 to $2.30 lower across the front six months starting in Jun. Spot May closed at $19.87.

The Dow Jones Industrial Average closed 445 points lower. The S&P 500 closed 62 points lower. The NASDAQ closed 122 points lower.

More broadly, the International Monetary Fund, in the latest World Economic Outlook, projects global economic growth at -3% this year. That’s 6.3% less than the January outlook and assumes the pandemic and containment requirements peak in the second quarter for most countries.

“This makes the Great Lockdown the worst recession since the Great Depression, and far worse than the Global Financial Crisis,” according to IMF. “…activity is projected to remain below the level we had projected for 2021, before the virus hit. The cumulative loss to global GDP over 2020 and 2021 from the pandemic crisis could be around $9 trillion, greater than the economies of Japan and Germany, combined.”

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Economic losses in the cattle industry, stemming from COVID-19, will reach $13.6 billion, according to a study–Economic Damages to the U.S. Beef Cattle Industry Due to COVID-19–conducted by a team of industry-leading agricultural economists led by Derrell Peel, Breedlove Professor of Agribusiness and Extension livestock marketing specialist at Oklahoma State University. It was commissioned by the National Cattlemen’s Beef Association (NCBA) to assist USDA in determining how best to allocate CARES Act relief funds to cattle producers.

“This study confirms that cattle producers have suffered massive economic damage as a result of the COVID-19 outbreak and those losses will continue to mount for years to come, driving many producers to the brink of collapse and beyond if relief funds aren’t made available soon,” says NCBA CEO Colin Woodall. “This study also clearly illustrates the fact that while the relief funds provided by Congress were a good first step, there remains a massive need for more funding to be allocated as soon as members of Congress reconvene.”

Woodall pointed out that relief funds that were meant to provide aid directly to cattle producers were divided among multiple commodities, many of which already have government programs in place to support production. However, cattle producers have always maintained their independence from government programs, and most operate today without the safety net others enjoy.

“It’s only because of the extraordinary circumstances we face today that cattle producers need relief. While we appreciate the many members of Congress who supported the cattle industry and ensured cattle producers were eligible for relief funds, we need these same members to do more to make certain every cattle producer who needs relief can access funding. That’s why we’re calling today for additional funds to be made available specifically for cattlemen and women,” said Woodall.

Cow-calf producers will be impacted the most, with COVID-19-related losses estimated at $3.7 billion, or $111.91 per head for each mature breeding animal in the United States. Without offsetting relief payments, those losses could increase by $135.24 per mature breeding animal, for an additional impact totaling $4.45 billion in the coming years.

Economic losses for stockers and backgrounders were estimated at $159.98 per head, for a total economic impact of $2.5 billion in 2020.

Losses in the cattle feeding sector were estimated at $3.0 billion or $205.96 per head.

Researchers included: Derrell S. Peel, Oklahoma State University; Dustin Aherin, Rabobank; Randy Blach, CattleFax; Kenneth Burdine, University of Kentucky; Don Close, Rabobank; Amy Hagerman, Oklahoma State University; Josh Maples, Mississippi State University; James Robb, Livestock Marketing Information Center; and Glynn Tonsor, Kansas State University.