Daily Market Highlights

Cattle futures started weak and finished stronger Tuesday. Fundamental reasons were hard to come by, especially given the sharp decrease in wholesale beef values. Potential support could have stemmed from the rally in Lean Hogs (after the front two contracts) and pressure on Corn.

Live Cattle futures closed an average of $2.34 higher (from 87¢ higher at the back to $3.00 higher toward the front).

Feeder Cattle futures closed an average of $1.92 higher ($1.55 to $2.20 higher).

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

Choice boxed beef cutout value was $7.82 lower Tuesday afternoon at $243.15/cwt. Select was $9.18 lower at $228.96.

Corn futures closed mostly fractionally lower to 2¢ lower through Mar ‘21 and then mostly fractionally higher to 1¢ higher. Pressure included Tuesday’s USDA reports (see below).

Soybean futures closed 1¢ to 3¢ higher through Aug ’21 and then fractionally lower to 2¢ lower.

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Major U.S. financial indices closed lower Tuesday, with continued pressure in the energy market, overall uncertainty related to COVID-19 and month-end and quarter-end book balancing.

The Dow Jones Industrial Average closed 410 points lower. The S&P 500 closed 42 points lower. The NASDAQ was down 74 points.

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Corn and soybean stocks were less than anticipated, but expected planting intentions were higher, especially for corn, according to the Grain Stocks and Prospective Plantings reports issued by USDA on Tuesday. The National Agricultural Statistics Service (NASS) noted that Mar. 1 on-farm stock estimates included 2019 production from acres that were still standing and expected to be harvested when the survey was conducted in early March.

Corn

Corn planted area for all purposes in 2020 is estimated at 97.0 million acres, which would be 8% more or 7.29 million acres more than last year. If realized, this will be the highest planted acreage since 2012, according to NASS. Acreage increases from last year of 800,000 or more are expected in Indiana, Illinois, Ohio, and South Dakota.

Corn stocks in all positions Mar. 1 totaled 7.95 billion bu., down 8% from the same time a year earlier. Of the total stocks, 4.45 billion bu. were stored on farms, down 13% from a year earlier. Off-farm stocks of 3.50 billion bu. are up slightly from a year ago.

Soybeans

Soybean planted area for 2020 is estimated at 83.5 million acres, up 10% from last year. Increases of 250,000 acres or more are anticipated in Arkansas, Illinois, Kansas, Michigan, Minnesota, Missouri, North Dakota, Ohio, and South Dakota.

Soybeans stored in all positions Mar. 1 totaled 2.25 billion bu., down 17% from the previous year. Soybean stocks stored on farms are estimated at 1.01 billion bu., down 20% from a year ago. Off-farm stocks of 1.24 billion bu. are down 15%.

Wheat

All wheat planted area for 2020 is estimated at 44.7 million acres, down 1% from last year. This represents the lowest all wheat planted area since records began in 1919. The 2020 winter wheat planted area of 30.8 million acres is 1% less than last year and down slightly from the previous estimate. This represents the second lowest planted acreage on record for the United States.

All wheat stored in all positions Mar. 1 totaled 1.41 billion bu., down 11% from a year earlier. On-farm stocks are estimated at 339 million bu., down 8% from last March. Off-farm stocks of 1.07 billion bu. are down 12% from a year ago.

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“A lot more market volatility is likely to come as the effects of COVID-19 ripple through our economy,” says David Anderson, Extension livestock economist at Texas A&M University, in the latest issue of In the Cattle Markets. “While we come to grips with all the demand implications it’s worth recognizing that it is occurring in the time of cyclically peak beef supplies.”

With two days left in the first quarter, Anderson explained, year over year: fed steer and heifer slaughter was up 5.4%; cow and bull slaughter was 4.5% higher; average steer dressed weights were 22.5 lbs. heavier; average heifer dressed weights were 13.7 lbs. heavier; cow weights were up 2.6 lbs. 

At the time, Anderson says increased slaughter numbers and heavier weights resulted in 6.7% more first-quarter beef production.

Cattle futures showed signs of support early but ended mostly lower on Monday.

After $1.75 lower in spot Apr, Live Cattle futures closed narrowly mixed , from 52¢ lower to 17¢ higher.

Feeder Cattle futures closed an average of 74¢ lower (2¢ lower toward the front to $2.27 lower at the back).

Wholesale beef values were lower on light demand and heavy offerings, according to the Agricultural Marketing Service.

Choice boxed beef cutout value was $1.87 lower Monday afternoon at $250.97/cwt. Select was $4.24 lower at $238.14.

Corn futures closed mostly 3¢ to 4¢ lower.

After fractionally higher to 1¢ higher in the front three contracts, Soybean futures closed mostly 5¢ to 8¢ lower.

The USDA Grain Stocks and Prospective Plantings reports are scheduled to be released Tuesday morning.

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The equities whipsaw continued Monday, to the upside this time, with major U.S. financial indices gaining back most of what was lost in the previous session.

Support included an announcement from Johnson & Johnson (J&J) that the company selected a lead COVID-19 vaccine candidate from constructs it has been working on since January. The company expects to initiate human clinical studies of its lead vaccine candidate by September 2020 at the latest. According to a statement, J&J anticipates the first batches of a COVID-19 vaccine could be available for emergency use authorization in early 2021, a substantially accelerated timeframe in comparison to the typical vaccine development process.

The Dow Jones Industrial Average closed 690 points higher. The S&P 500 closed 85 points higher. The NASDAQ was up 271 points.

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In his weekly market comments, Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, provides some perspective on recent extreme market volatility, as well as underscoring the distinct dynamics of various cattle and beef markets.

Peel points out the Dow Jones Industrial Average dropped from more than 29,000 points in the third week of February to less than 19,000 a month later. During the same time, he says the Jun Live Cattle contract fell from about $112/cwt. to $86, reflecting ongoing concern about weakening U.S. and global macroeconomic conditions resulting from COVID-19, as well the risk of labor disruptions at packing plants.

Also from mid-February to mid-March, Peel explains, “Cash fed cattle prices declined from nearly $120/cwt. to a low around $106 on broader concerns reflected in the Live futures as well as the supply pressure of increased beef production.” He adds that year-to-date beef production is up 6.3% through mid-March, but cash fed cattle prices increased the last couple of weeks, due to the sharp demand increase for retail beef.

Similarly, macroeconomic uncertainty pressured Feeder Cattle futures from more than $143 in mid-February to about $109 a month later.

“Cash feeder cattle prices followed futures with the Oklahoma combined auction prices for 500-550 lb. No. 1 steer prices dropping from about $184/cwt. in the third week of February to a low near $152 one month later,” Peel says. “Prices for 750-800 lb. No. 1 steers declined from about $139/cwt. to $117 over the same period…The squeeze on available feeder supplies pushed feeder prices sharply higher last week by 10-12% over the previous week. Ripple effects will likely impact feeder cattle markets in the coming weeks.”

At the same time, as of Monday, the Choice boxed beef cutout value was 11% higher than the same time a year earlier and Select was about 9% higher.

“The different patterns of boxed beef, fed and feeder cattle prices in the past six weeks illustrates vividly the fact that these markets operate with very distinct dynamics,” Peel says, explaining “These dynamics have become very apparent as the distinction between the current market situation and expectations for future supply and demand conditions has widened.”

Cattle futures, fell hard again Friday as traders continue to exit contracts and beef demand uncertainty grows.

Live Cattle futures closed an average of $3.52 lower ($2.55 to limit-down $4.50 in spot April).

Feeder Cattle futures closed limit-down $4.50.

Wholesale beef values were steady to weak on light to moderate demand and moderate to heavy offerings, according to the Agricultural Marketing Service.

Choice boxed beef cutout value was 73¢ lower Friday afternoon at $252.84/cwt. Select was 21¢ higher at $242.38.

Corn futures closed mostly 2¢ to 3¢ lower.

After unchanged to 1¢ higher in the front three contracts, Soybean futures closed mostly 6¢ to 9¢ lower.

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Major U.S. financial indices closed sharply lower Friday, as investors seemed to focus more on COVID-19 and its ultimate impact than the massive stimulus bill passed by Congress.

The Dow Jones Industrial Average closed 915 points lower. The S&P 500 closed 88 points lower. The NASDAQ was down 295 points.

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“As tough as today is for cattle producers, the longer the coronavirus lasts, the more damage will be done. In response to the unprecedented and devastating impact of this pandemic on our industry, Congress enacted Coronavirus Aid, Relief, and Economic Security (CARES) Act. The CARES Act provides USDA’s Office of the Secretary with an additional $9.5 billion ‘to prevent, prepare for, and respond to coronavirus’,” according to a letter sent to U.S. Agriculture Secretary Sonny Perdue on Friday, from the National Cattlemen’s Beef Association (NCBA) and 46 state affiliates.

The letter encourages Perdue to consider several principles as USDA develops vehicles to deliver this assistance to cattle producers. Among them:

• “As the largest segment of the U.S. agriculture industry, U.S. cattle production accounts for $67 billion (18%) of the $371 billion in total cash receipts from agricultural commodities in 2018. We are present in all fifty states on 729,000 farm operations that are the lifeblood of our rural economies. While coronavirus has undoubtedly impacted all segments of American agriculture, the impact of this crisis is uniquely acute for cattle producers who are not eligible for traditional safety net programs offered by USDA and the Small Business Administration.
• “While there are multiple preliminary economic assessments relative to the impact of coronavirus on cattle markets, we believe that no single entity is better equipped than USDA to lead this effort. We encourage USDA to implement this effort by utilizing its unique expertise and available resources, while also working directly with the academic community and livestock industry experts to determine the full extent of need and most equitable measures of response.
• “Marketing cattle in the United States is, by nature, highly volatile and complex with multiple links in the cattle supply chain. Cow-calf producers, seedstock producers, stockers and backgrounding operations, and cattle feeders have all been impacted by this pandemic. We believe assistance must be delivered equitably across all producer segments of the cattle supply chain based on need. Further, business size and structure are not reliable determinants of financial need or viability during this unprecedented occurrence and should not be a prohibiting factor for eligibility.
• “We firmly believe that economic assistance for cattle producers should not only prioritize financial loss due to COVID-19, but also be market-oriented, not disrupt or mask market signals, and not be a permanent subsidy program.

Cattle futures, continued to lose ground Thursday amid light demand, continued declines in open interest and concerns about beef demand relative to growing supplies.

For the week ending Mar. 14, the average dressed steer weight was 2 lbs. lighter than the previous week at 901 lbs., but 36 lbs. heavier than the a year earlier, according to USDA’s Actual Slaughter Under Federal Inspection report. The average dressed heifer weight of 835 lbs. was 5 lbs. heavier than the previous week and 30 lbs. heavier than the prior year.

Live Cattle futures closed an average of $2.56 lower ($1.92 lower at the back to $3.00 in spot April).

Feeder Cattle futures closed an average of $3.45 lower ($1.27 lower in expiring Mar to $4.50 lower at the back of the board).

Wholesale beef values were lower on light demand and moderate offerings, according to the Agricultural Marketing Service.

Choice boxed beef cutout value was $1.73 lower Thursday afternoon at $253.57/cwt. Select was 92¢ lower at $242.17.

Corn futures closed mostly fractionally higher to 1¢ higher.

After mostly fractionally higher to 2¢ higher through Jan ‘21, Soybean futures closed 4¢ to 5¢ higher.

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Major U.S. financial indices closed sharply higher Thursday, on the heels of the U.S. Senate passing a $2 trillion COVID-19 relief package and despite the fact that weekly jobless claims were far and away the most in U.S. history.

For the week ending Mar. 21, the advance figure for seasonally adjusted initial jobless claims was 3,283,000, an increase of 3,001,000 from the previous week’s revised level, according to the U.S. Department of Labor. The previous high was 695,000 in October of 1982.

The Dow Jones Industrial Average closed 1,351 points higher. The S&P 500 closed 154 points higher. The NASDAQ was up 413 points.

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You already know that agriculture is one of this nation’s critical infrastructures, with its essential nature magnified by the COVID-19 fallout. A new economic impact study released yesterday puts numbers to it, indicating one-fifth of the nation’s economy and one-fourth of American jobs are linked to the food and agriculture sectors, either directly or indirectly, accounting for a total economic impact of $7.63 trillion.

“This research helps shore up something we already knew: food and agriculture is critical to all Americans and the economic prosperity of our country,” says Dr. Barb Glenn, CEO of the National Association of State Departments of Agriculture. She adds that recent events are testing the resiliency of our agriculture and food system.

An example of that resilience and creativity beyond the ranch gate can be seen in helping retailers restock in the wake of the surge in consumer demand for food, water and cleaning products in recent weeks.

An ad-hoc partnership between the International Foodservice Distributors Association and FMI-Food Industry Association connects foodservice distributors with excess capacity (products, transportation services, warehousing services) to assist food retailers and wholesalers requiring additional resources.

The study was commissioned by 21 food and agriculture groups and can be found at feedingtheeconomy.com.

Negotiated cash fed cattle prices roared higher Wednesday with moderate trade and good demand in all regions. Live prices were $8-$10 higher than last week at $119-$120/cwt. Dressed sales were $15-$20 higher at $190.

Likewise, fed cattle prices were significantly higher in the weekly Fed Cattle Exchange auction Wednesday, with 1,614 head for current delivery (1-9 days) selling for a weighted average price of $119.77/cwt. Most of those were from the Southern Plains. Another 837 head sold for delivery at 1-17 days for a weighted average price of $117.73. There were 5,886 head offered.

Cattle futures, though, closed mixed but mostly lower on likely profit taking and squeamishness about what happens with beef demand after the initial flood of consumer stockpiling runs its course (see below).

Except for $2.30 higher in spot Apr, Live Cattle futures closed an average of $1.46 lower (87¢ to $2.52 lower).

Except for $1.85 higher in spot Mar and 5¢ higher in Aug, Feeder Cattle futures closed an average of $1.02 lower (40¢ to $1.60 lower).

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

Choice boxed beef cutout value was $1.01 lower Wednesday afternoon at $255.30/cwt. Select was $2.39 lower at $243.09.

Corn futures closed mostly 1¢ to 2¢ higher.

After 1¢ to 5¢ lower in the front three contracts, Soybean futures closed mostly 5¢ to 8¢ higher.

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Major U.S. financial indices closed mixed Wednesday, higher on expectations the massive government economic stimulus package was close at hand, but soured by the fact that Congress was still at the wrestling stage.

The Dow Jones Industrial Average closed 495 points higher. The S&P 500 closed 28 points higher. The NASDAQ was down 33 points.

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Although the recent surge in boxed beef prices could continue this week, as retailers restock shelves, Brenda Boetel, livestock economist at the University of Wisconsin—River Falls says, “There is no evidence that consumers are eating more beef currently, and as such the demand will likely decrease significantly once the supply system catches up with the rush demand of the last few weeks.”

Further, in the latest issue of In the Cattle Markets, Boetel explains significant long-term value comes from consumers eating high-quality beef cuts at restaurants. Restaurant traffic continues to lag, of course, in the wake of COVID-19.

“Luckily, the grilling season is right around the corner and that should help alleviate some of the expected drop in prices,” Boetel says.

Although there was too little negotiated cash fed cattle trade through Tuesday afternoon for AMS to report a trend, signs point to higher prices this week.

For instance, the five-area direct dressed steer and heifer price on Monday was $10 more than Friday at $185/cwt. Wholesale beef values remain elevated. Plus Cattle futures were limit-up again Tuesday, with expanded limits.

Live Cattle futures closed limit-up $4.50.

Except for $5.00 higher in spot, Apr, Feeder Cattle futures closed limit-up $6.75.

Choice boxed beef cutout values were lower on Choice and firm on Select with light to moderate demand and moderate offerings, according to the Agricultural Marketing Service.

Choice boxed beef cutout value was $1.01 lower Tuesday afternoon at $256.31/cwt.; it was $229 at the same time last year. Select was 34¢ higher at $245.48.

Corn futures closed mostly 1¢ to 2¢ higher.

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

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Major U.S. financial indices rebounded Tuesday, fueled by expectations that Congress was close to passing a massive economic stimulus package.

The Dow Jones Industrial Average closed 2,112 points higher. The S&P 500 closed 209 points higher. The NASDAQ was up 557 points.

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“Disruptions in normal activities due to COVID-19 have produced a surge in at-home food demand. Recent reports indicate a 77% year-over-year increase in grocery meat sales in mid-March,” says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly market comments. “The spike in grocery demand has overwhelmed the retail meat supply chain, resulting in temporary shortages of meat in many grocery stores.  The shortages are due to the tremendous logistical challenges of shifting meat supplies from food service channels to retail grocery channels.”

There is no shortage of meat, of course. Peel points out beef, pork and poultry production was record large in the first quarter and is projected to be record large this year at 109.3 billion lbs., 4.3% more than last year.

“Beef production is projected to be 1.9% higher year over year in 2020, totaling 27.7 billion lbs.,” according to Peel. “Increased beef production is concentrated in the first half of the year. Total steer and heifer slaughter is up 3.9% year over year for the year to date. Steer carcass weights for the year to date are up over 21 lbs. year over year with heifer carcass weights up over 12 lbs. First-quarter beef production is estimated to increase 6.6% over last year.”

Beef in freezers is also 5% more than last year, as of Feb. 29, according to the most recent USDA monthly Cold Storage report. It was 3% more than the previous month.

Frozen pork supplies were up 6% from the previous month and up 7% from last year.

Total red meat supplies in freezers were up 3% from the prior month and up 5% from last year.

Total frozen poultry supplies were slightly more than the previous month, but down 4% from a year earlier.

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Progress continues in implementing the agriculture-related provisions of the U.S.-China Phase One Economic and Trade Agreement, according to Tuesday’s announcement from the U.S. Department of Agriculture (USDA) and the Office of the U.S. Trade Representative (USTR).

Among the recent actions:

*China notified the United States of proposed maximum residue levels for three hormones commonly used in U.S. beef production. This recognition by China of safe and science-based U.S. production methods particularly benefits trade with China in beef, a fast-growing market that imported $8.4 billion worth of beef products in 2019. China also removed all references to age restrictions on the beef and beef products list. For the first time since 2003, U.S. beef producers will have access for nearly all beef products into China. USDA estimates American cattlemen could export up to $1 billion per year under this improved trading environment.

*Both countries signed a regionalization agreement that will allow U.S. poultry exports from unaffected regions of the country to continue, in the event of a detection of highly pathogenic avian influenza or virulent Newcastle disease in a particular region of the United States. This action will help protect the increased access American farmers have gained in China’s poultry market. U.S. poultry exports have the potential to exceed $1 billion per year.

*China updated its list of U.S. facilities eligible to export distillers dried grains with solubles (DDGS). In 2015, U.S. producers exported $1.6 billion worth of DDGS to China. This action, if coupled with the removal of other trade barriers, will allow U.S. exporters to recapture this market.

“These steps show that China is moving in the right direction to implement the Phase One agreement,” says Agriculture Secretary, Sonny Perdue. “We will continue to work with China to ensure full implementation of its commitments and look forward to seeing further improvement and progress as we continue our ongoing bilateral discussions.”

Although trade was light, Cattle futures closed limit up Monday, higher for the third consecutive session— higher in four of the last five sessions. Support included sky-rocketing wholesale beef values, Tyson’s announcement last week of a one-time support payment for cattle it harvests this week—$5/cwt. on a live basis and $7.94/cwt. in the beef—as well as the friendly Cattle on Feed report. China buying U.S. grain last week also helped.

Live Cattle futures closed limit-up $3.00. At $101.60, spot Live Cattle remains hugely discounted to cash.

Feeder Cattle futures closed limit-up $4.50.

Choice boxed beef cutout values were sharply higher on good demand and heavy offerings.

Choice boxed beef cutout value was $3.57 higher Monday afternoon at $257.32/cwt. Select was $4.97 higher at $245.14.

Corn futures closed mostly fractionally higher to 1¢ higher.

Soybean futures closed 10¢ to 21¢ higher through Jan ‘21, and then 1¢ higher to mostly 2¢ lower.

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Major U.S. financial indices closed lower Monday as the U.S. Senate failed for a second time to agree to legislation for massive economic stimulus, in the wake of COVID-19.

The Dow Jones Industrial Average closed 582 points lower. The S&P 500 closed 67 points lower. The NASDAQ was down 18 points.

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Glynn Tonsor, agricultural economist at Kansas State University estimates economic losses in the cattle industry, due to COVID-19, at $7.98 billion to $9.44 billion, representing two broad approaches for approximating damages for the U.S. cattle sector.

Up front, Tonsor emphasizes the estimates are not to be taken as final, precision estimates, but as a timely broad approximation to offer the industry context.

Tonsor arrived at the $7.98 billion estimate by considering recent price estimates and cattle inventory.

For prices, Tonsor utilized estimates updated last week by the Livestock Marketing Information Center (LMIC).

Compared to January:

LMIC reduced the first-quarter price estimate for fed cattle (1,400 lbs.) by $7 to $117/cwt.; $18 less in the second quarter to $103.50.

LMIC reduced the first-quarter price estimate for feeder cattle (750 lbs.) by $5 to $140.50/cwt.; $23.50 less in the second quarter to $124.50.

LMIC increased the first-quarter price estimate for calves (550 lbs.) by $4 to $170/cwt., but reduced second-quarter expectations by $20 to $149.50.

You can find price estimates for the other quarters in Tonsor’s factsheet.

Bottom line, Tonsor estimates per-head damage for the year at $126 for fed cattle, $98 for feeder cattle, and $58 for calves.

“Moving from damages per head to an economic impact estimate requires an inventory-impacted number,” Tonsor explains. “USDA NASS estimated the total beef cow inventory to be 31.32 million head in their January Cattle report. If we approximate that for every 100 cows we ultimately have 92 offspring sold, this would suggest, for a full calendar year, 28.81 million calves will be sold by the cow-calf sector. Proceeding forward, presuming 2% death loss rates for subsequent sectors, results in 28.24 million feeder cattle and 27.67 million fed cattle being sold, subsequently.”

The other approach Tonsor took, which arrives at $9.44 billion in losses, considers declining Feeder Cattle and Live Cattle futures prices. Again, you can see Tonsor’s path to the calculation in the factsheet.

When all was said and done, negotiated cash fed cattle trade last week was steady to $2 higher on a live basis at $110-$112/cwt. and fully steady in the beef at $175.

According to the Texas Cattle Feeders Association on Friday, “Tyson announced this afternoon that for all fed cattle harvested next week, they will make a one-time assistance payment to cattle feeders of $5/cwt. live and $7.94/cwt. dressed.”

Firmer cash prices and wholesale beef values helped Cattle futures extend gains Friday, following the previous session’s limit-up move, despite lower outside markets.

Live Cattle futures closed an average of $1.82 higher, from 60¢ higher to $3.55 higher in spot Apr. Thursday to Thursday, Open Interest declined 46,267 contracts to 285,018, the lowest level since September of 2018.

Feeder Cattle futures closed and average 0f $4.56 higher.

Choice wholesale boxed beef values were sharply higher and Select was lower with light to moderate demand and moderate to heavy offerings.

Choice boxed beef cutout value was $3.88 higher Friday afternoon at $253.75/cwt. Select was 89¢ lower at $240.17.

Corn futures closed 1¢ lower to 1¢ higher.

Soybean futures closed mostly 11¢ to 19¢ higher through Sep ‘21, and then 6¢ to 8¢ higher.

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Coronavirus fears continued to roil equity markets Friday amid another day of volatile trade that left major U.S. financial indices sharply lower. Specific pressure included, the stay-home order issued in New York and softer crude oil prices, as well as CME auctioning the portfolios of Ronin, LLC., a direct clearing firm.

“The firm was unable to meet its capital requirements going forward,” according to a statement from the CME. “Though Ronin is a direct clearing member, it does not handle customer business; and no clients were impacted by the auction.”

The Dow Jones Industrial Average closed 913 points lower. The S&P 500 closed 104 points lower. The NASDAQ was down 271 points.

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The monthly Cattle on Feed report published Friday should be supportive. Numbers came in about even with pre-report expectations.

February placements for feedlots with 1,000 head or more capacity were 1.71 million head, which was 7.91% less (-147,000 head) than the previous year. In terms of placement weights, 38.28% went on feed weighing 699 lbs. or less, 51.49% weighing 700-899 lbs. and 10.23% weighing 900 lbs. or more.

Marketings in February of 1.77 million head were 5.47% more (+92,000 head) than the previous year.

The on-feed inventory Mar. 1 of 11.81 million head was 0.18% more (+21,000 head), compared to a year earlier.

Cattle futures closed limit-up Thursday, supported by higher outside markets, the dramatic rise in wholesale beef values for the week, as well as firming cash fed cattle prices.

Live Cattle futures closed limit-up $3.00 across the board.

Feeder Cattle futures closed limit-up $4.50 across the board.

Incidentally, analysts surveyed by Urner Barry and reported in the Daily Livestock Report estimate feedlot placements in February to be 7.6% less than a year earlier, marketings in February to be 5.6% more and cattle on feed Mar. 1 to be 0.2% more. The monthly USDA Cattle on Feed report is scheduled for release Friday afternoon.

Wholesale beef values continued higher Thursday as retailers continue to re-stock.

Choice boxed beef cutout value was $2.63 higher Thursday afternoon at $249.87/cwt. Select was $2.56 higher at $241.06. Week to week, Choice was up $43.86 and Select was up $43.18.

Corn futures closed 7¢ to 10¢ higher through Sep ‘20 and then mostly fractionally higher to 4¢ higher.

Soybean futures closed 13¢ to 17¢ higher through near Aug, 3¢ to 9¢ higher through the next three contracts and then mostly 4¢ lower.

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Major U.S. financial indices closed higher Thursday, amid another day of volatile swings. Support included a COVID-19 stimulus package announced by the European Central Bank, as well as reports the U.S. Senate would soon release a third domestic relief package. Energy stocks also rebounded some.

West Texas Intermediate Crude Oil futures on the CME closed $4.33 to $4.85 higher through the front six contracts.

The Dow Jones Industrial Average closed 188 points higher. The S&P 500 closed 11 points higher. The NASDAQ was up 160 points.

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The outlook for the U.S. farm economy depends on the implementation of new trade agreements and the evolution of animal and human disease outbreaks, according to the latest analysis of national and global agricultural trends from the University of Missouri (MU).

Economists with MU’s Food and Agricultural Policy Research Institute (FAPRI) and the MU Agricultural Markets and Policy (AMAP) team release the annual U.S. Agricultural Market Outlook (USAMO) report each spring. The baseline projections for agricultural and biofuel markets were prepared using market information available in January.

“Macroeconomic assumptions are based on January forecasts by IHS Markit, which suggested moderate growth in the U.S. and global economies at that time,” says Patrick Westhoff, FAPRI director. “Those forecasts were prepared before much was known about the severity of the coronavirus (COVID-19) outbreak and before recent declines in stock market prices and interest rates.”

This year’s USAMO baseline assumes that China’s retaliatory tariffs on U.S. farm products remain in place and limit bilateral trade. FAPRI economists also explored one possible outcome of the phase-one trade deal, which assumes U.S. exports are exempt from those retaliatory tariffs and that China takes other steps to facilitate trade between the two countries.

Highlights of a baseline assuming continued trade friction with China

Cattle prices increase beginning in 2020, as exports increase and cattle inventories decline after five years of expansion.

African swine fever (ASF) continues to have large impacts on global commodity markets. China’s pork production has declined sharply and only rebounds after 2021. This provides some opportunity for increased meat imports by China, but reduces global demand for soybean meal and other feeds.

Projected 2020 corn area planted is 92.9 million acres. With trend yields, 2020 corn production increases to 15 billion bu., putting downward pressure on corn prices, which are projected to average $3.57/bu. in 2020-21.

Projected soybean area increases by more than 10 million acres to 86.5 million acres in 2020. The increase in production drops projected soybean prices to $8.48/bu. for the 2020-21 crop.

Negotiated cash fed cattle trade continued Wednesday. Live trade in the western Corn Belt was $2-$5 higher than last week at $110-$112/cwt. Dressed trade was steady at $175. Although too few to trend through the afternoon, live trade in the Southern Plains was mostly steady to $3 lower at $110-$113. In Nebraska, live prices were steady at $110; steady to $5 lower in the beef at $170-$175.

Cattle feeders offered 4,680 head in the weekly Fed Cattle Exchange auction Wednesday. Of those, 1,813 head sold: 1,415 head for delivery at 1-9 days brought an average weighted price of $112.76/cwt.; 398 head for delivery at 1-17 days brought an average weighted price of $111.00. Offerings were from the Southern Plains, Nebraska and Colorado.

Cattle futures started strong Wednesday and then turned sharply lower as equity markets tanked, basically losing what was gained in the previous session.

Live Cattle futures closed an average of $3.78 lower, from $2.55 lower at the back to $4.40 lower.

Feeder Cattle futures closed an average of $3.49 lower, from 97¢ lower in spot Mar to limit-down $4.50.

Wholesale beef values were sharply higher again, with good demand and heavy offerings.

Choice boxed beef cutout value was $7.31 higher Wednesday afternoon at $247.24/cwt. Select was $9.18 higher at $238.50.

Corn futures closed 5¢ to 8¢ lower through Jly ‘21 and then mostly fractionally lower to 1¢ lower.

Soybean futures closed fractionally higher to 1¢ higher through Sep ’20 and then fractionally lower to 3¢ lower.

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Major U.S. financial indices closed sharply lower Wednesday, giving back most of the gains from the previous session, as investors fretted over the lack of clarity regarding the COVID-19 stimulus package being prepared by Congress.

West Texas Intermediate Crude Oil futures collapsed $5.14 to $6.58 lower through the front six contracts. Spot Apr closed at $20.37. That’s the lowest level in nearly two decades, according to various sources.

The Dow Jones Industrial Average closed 1,338 points lower. The S&P 500 closed 131 points lower. The NASDAQ was down 344 points.

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“Faltering fed cattle prices, due to coronavirus developments, have ratcheted down profitability prospects for non-hedged animals to be closed out in the coming months. Feeder cattle prices may come under increased pressure. The lack of projected profitability for fed cattle to be sold this summer (breakeven sale prices above what summer Live Cattle futures are offering), is likely to be a factor dampening placements of animals into feedlots,” say analysts with the Livestock Marketing Information Center (LMIC), in the latest Livestock Monitor.

LMIC has estimated monthly cattle feeding returns since the mid-1970s. Those estimates assume feeding-out a 750-lb. steer in a commercial Southern Plains feedlot and include all costs of production. The estimates are not survey-based and presume normal weather conditions. Cash prices are used, meaning that fed cattle prices and feedstuff costs are not hedged.

“In 2019, monthly returns averaged about $9.50 per steer, ranging from $180.92 for an animal sold in December down to -$152.85 for September. Over the prior five years (2014-18), the annual average was about $23.00 per steer. The 10-year per animal average was about -$7.00,” say LMIC analysts. “For steers sold during January, the LMIC estimated profitability at $150.00 to $151.00 per head. Just over a month ago, the LMIC projected that the February number would come in at $136.00 to $140.00 per steer. If the cattle were not hedged, that turned out to be optimistic. Hedged animals will return excellent profits through June sale dates…For steers (750 lbs.) placed on feed in February, which will have a sale date of August, the breakeven price based on current feedstuff costs is $109 to 111/cwt.”