Daily Market Highlights

Although too few transactions to trend, there were some live negotiated cash fed cattle sales in Nebraska on Tuesday at $110/cwt. on a live basis and at $170-$175 in the beef. That was $5 higher than Monday on a live basis and steady with last week’s trade. Dressed sales were steady to $5 higher than on Monday; dressed sales last week were at mostly $175.

Elsewhere, established trends so far this week occurred on Monday, with live sales in the Texas Panhandle steady to $5 lower than last week at $105-$110 and $10 lower in Kansas at $100.

But, Cattle futures rallied Tuesday, finally. Whether a technical gasp or a step toward a turning point, harsh volatility will likely continue. Support included brighter cash prospects, soaring wholesale beef values and the bounce in equity markets, following the steep losses in the previous session.

Live Cattle futures closed an average of $3.44 higher, from $1.77 higher at the back to $4.50 higher in the front three contracts.

Feeder Cattle futures closed an average of $3.37 higher.

Wholesale beef values rocketed higher again Tuesday, with good demand and heavy offerings.

Choice boxed beef cutout value was $15.77 higher Tuesday afternoon at $239.93/cwt. Select was $12.61 higher at $229.32. Over the last two days, Choice increased $31.99 and Select was up $27.34.

Corn futures closed 6¢ to 10¢ lower in the front three contracts and then mostly 2¢ to 3¢ lower.

Other than fractionally higher to 2¢ higher in the front three contracts, Soybean futures closed mostly 5¢ lower.

*******************************

At least for a day, major U.S. financial indices closed higher, recovering a portion of the previous day’s washout, as the Federal government pledged more financial support to citizens and businesses, in the wake of coronavirus.

The Dow Jones Industrial Average closed 1,048 points higher. The S&P 500 closed 143 points higher. The NASDAQ was up 430 points.

*******************************

Response to COVID-19 continues to force everyone in the cattle and beef business to ponder potential impacts on how they operate.

For instance, according to the Livestock Marketing Association (LMA) Tuesday, “With respect to public attendance at livestock auction markets, LMA is aware that many states and areas are enforcing varied crowd size limits and have mandated restrictions on operation of cafés or other food services. LMA is working with markets on a case-by-case basis to evaluate all parameters and impacts on their sales and strongly suggests markets develop contingency plans accordingly.”

Strategies LMA provided auction market members include:

• Familiarize yourself with and follow rapidly changing local and state rules regarding assembly of crowds.
• Work with café operators to follow location-specific guidance, which may include closure or offering to-go service only.
• If you are in a situation where you need to limit crowd size, then request that consignors deliver livestock and return home rather than remaining at the facility.
• Offer consignors flexibility in picking up their checks, such as delivery or pickup from their vehicle in the parking lot.
• Instruct any employee or visitor exhibiting symptoms of illness to remain home and request that any employee or visitor who is a member of a population of heightened vulnerability to consider avoiding areas where people are gathering.
• Evaluate all options to utilize web broadcast or phone bidding.

As for USDA services, according to a statement Tuesday from the Food Safety and Inspection Service, Animal and Plant Health Inspection Service and Agricultural Marketing Service:

“In this time of much uncertainty, we know that many of you have questions about how the department will continue to ensure that grading and inspection personnel are available. We have all seen how consumers have reacted to the evolving coronavirus situation and how important access to food is to a sense of safety and wellbeing. It is more important than ever that we assure the American public that government and industry will take all steps necessary to ensure continued access to safe and wholesome USDA-inspected products.

“These agencies are prepared to utilize their authority and all administrative means and flexibilities to address staffing considerations. Field personnel will be working closely with establishment management and state and local health authorities to handle situations as they arise in your community. As always, communication between industry and government will be key. We are all relying on early and frequent communication with one another to overcome challenges as they arise.”

Markets remain firmly entrenched in the COVID-19 panic that is forcing widespread disruptions to how people go about their business, while slowing economic wheels.

Live Cattle futures showed signs of life Monday, with surging wholesale beef values, but sank hard again, as did Feeder Cattle.

Live Cattle futures closed an average of $3.73 lower.

Feeder Cattle futures closed an average of $4.47 lower, limit-down in all but one contract.

Wholesale beef values rocketed higher Monday, with heavy offerings, as retailers replenished supplies windrowed by consumers stocking up.  There was also likely some defensive buying against potential challenges in the supply chain.

Choice boxed beef cutout value was $16.22 higher Monday afternoon at $224.36/cwt. Select was $14.73 higher at $216.71.

Corn futures closed 11¢ and 10¢ lower in the front two contracts and then mostly 4¢ to 6¢ lower.

Soybean futures closed 18¢ to 27¢ lower through Jly ’21 and then mostly 14¢ to 16¢ lower.

*******************************

Major U.S. financial indices on Monday gave back everything recovered in the previous session, despite aggressive action by the Fed over the weekend and the economic support previously announced by the White House.

West Texas Intermediate Crude Oil futures on the CME closed $2.76 to $3.03 lower through the front six contracts, down to $28.70 in spot Apr.

The Dow Jones Industrial Average closed 2,997 points lower. The S&P 500 closed 324 points lower. The NASDAQ was down 970 points.

*******************************

“The cattle and beef industry, along with the rest of the U.S. and global economy is in uncharted waters with the coronavirus pandemic. There are many unknowns about the timing, severity and aftermath of the disease,” says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly market comments. “For the beef industry, there are longer term questions about overall impact on domestic and international beef demand, with questions about a U.S. and global recession looming large. In the short run, the actions needed to manage the epidemiology of COVID-19 is having significant impacts on beef supply chains.”

Peel explains beef products flow through three primary market channels: retail (grocery), food service and exports; each using separate supply chains. Domestically, based on USDA data, he says food at home, which approximately matches retail grocery, represents about 46% of total food expenditures in the U.S. Food away from home represents about 54% of total food expenditures. 

“The immediate response to COVID-19 is to limit travel, gatherings and public activities. Reduced travel, fewer restaurant visits and school closures all impact the HRI sector (hotels, restaurants, institutions),” Peel explains. “This implies a dramatic shift of food from the food service (HRI) sector into retail grocery sales. This represents huge demands on grocery store sales and the logistics of supplying retail stores. For beef, there is immediate demand for more processing, packaging and shipping of beef for retail sale and less processing and shipping of meat through food service distribution channels.”

Moreover, Peel notes each marketing channel utilizes a different mix of beef products.

“There will be a variety of impacts on markets for specific beef products,” Peel explains. “For example, increased demand for ground beef has resulted in local shortages of product at grocery stores, while reduced restaurant demand may result in weaker middle meat sales. We can expect significant disruptions and stress on beef supply chains given the consumption changes associated with requirements to control COVID-19.”

Should the labor forces of beef packing, processing, or shipping be directly impacted by COVID-19, Peel says supply chain disruptions could be more significant.

Note: Cattle Current is dependent on a couple other businesses to house the Cattle Current website, edit the podcast and the like. If Cattle Current goes missing in the days/weeks ahead, it will likely be due to COVID-19 disrupting one of those businesses. If such a disruption occurs, we’ll get back on schedule as quickly as possible.

Negotiated cash fed cattle trade was established at $110/cwt. on a live basis last week, which was $3 lower in the Southern Plains and Nebraska; $2-$5 lower in the western Corn Belt. Dressed sales were $5-$7 lower at $175-$176. There were trades at lower money later in the week, but too few to trend.

Cattle futures attempted to follow equity markets higher early on Friday, but ended mostly expanded limit-down, amid chatter about the potential of coronavirus to disrupt packing plant operations. I could find no confirmed reports of closures or reduced schedules for the major packers, but the vulnerability is a logical concern, given cattle numbers and strained packing capacity. 

Live Cattle futures closed an average of $4.38 lower. That’s an average of $7.37 lower in the last two sessions.

Feeder Cattle futures closed an average of $6.51 lower. That’s an average of $11.01 lower in the previous two sessions.

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

Choice boxed beef cutout value was $2.13 higher Friday afternoon at $2018.14/cwt. Select was $4.10 higher at $201.98. Although food service demand will likely suffer for a time as more consumers stay at home, retail demand is likely benefiting from those same consumers stocking up.

Corn futures closed mostly 1¢ higher.

Soybean futures closed 8¢ to 10¢ lower through Jan ’21 and then mostly 3¢ lower.

*******************************

Major U.S. financial indices on Friday grappled back a major chunk of the previous session’s steep losses. Optimism was fueled by a number of moves by the Federal government to battle COVID-19 and its economic impact:

• President Trump instructed the Energy Department to purchase oil for the U.S. strategic petroleum reserve, to help stabilize and boost energy prices.
• The White House announced more coronavirus tests would be available this week.
• The U.S. House of Representatives was on its way to passing the Families First Coronavirus Response Act (H.R. 6201), a legislative package supported by President Trump. Among other things, it includes free coronavirus testing, an emergency paid sick days program, senior nutritional assistance and SNAP flexibility for low-income jobless workers. The legislation passed Saturday morning.

The Dow Jones Industrial Average closed 1,985 points higher. The S&P 500 closed 230 points higher. The NASDAQ was up 673 points.

On Sunday, the Federal Open Market Committee (FOMC) lowered the target range for the federal funds rate to 0.00% to 0.25%.

“The effects of the coronavirus will weigh on economic activity in the near term and pose risks to the economic outlook,” according to an FOMC statement. “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. This action will help support economic activity, strong labor market conditions, and inflation returning to the Committee’s symmetric 2% objective.”

The FOMC statement also notes, based on available economic data, the U.S. economy enters the days of COVID-19 on solid footing with strong job gains, low unemployment and increasing economic activity.

“To support the smooth functioning of markets for Treasury securities and agency mortgage-backed securities that are central to the flow of credit to households and businesses, over coming months the Committee will increase its holdings of Treasury securities by at least $500 billion and its holdings of agency mortgage-backed securities by at least $200 billion,” according to the statement.

*******************************

Gauging the ultimate impact of COVID-19 on the cattle business, much less the U.S. and global economies is impossible at this stage. While you can find some similarities, there appears to be no direct parallel between this market shock and black swan events impacting cattle markets in the past.

Best as anyone can tell, COVID-19 should be temporary, at least for this year. As the director general of the World Health Organization pointed out earlier in the week, more than 90% of reported global coronavirus cases were in four countries at the time. The epidemic was declining significantly in two of those, including in China, the epicenter of the pandemic.

It seems unlikely that overall economic impact on the U.S. economy will be as severe or as long lasting as what followed the financial and liquidity mess that spawned the Great Recession.

For one thing, this isn’t a financial problem, but a biologic one impacting supply chains and demand. For another, the U.S. and many central banks around the world are aggressively taking action to minimize the economic impact, in concert, in some cases. Besides which, the nation’s finances are much stronger by about any measure, compared to those days heading into the Great Recession.

At some stage, when it appears the worst is over, it’s easy to imagine a sharp market bounce in response to less uncertainty and pent up demand. For instance, even before the epidemic slows in the U.S., international demand for U.S. beef could be on the rise as recovering countries get back to what will then be a new form of business as usual.

In the meantime, wholesale beef values continue to hold together domestically, as consumers shift toward eating more meals at home.

“Most markets in the cattle and beef complex are moving contra-seasonally, due to world heath issues and the economic slowdown that comes with it,” says Andrew P. Griffith, agricultural economist at the University of Tennessee, in his weekly market comments. “When relief finally comes is anyone’s guess, but there should be just as strong of profits on the other side of this market as there are losses in the current environment.”

Equities and futures markets plunged deeper Thursday amid a growing list of event cancellations, altered business schedules and continued widespread panic related to coronavirus and its impact on the domestic and global economies.

Except for $2.97 lower in the back two contracts, Live Cattle futures closed limit-down $3.00.

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

Wholesale beef values were lower on Choice and higher on Select with light to moderate demand and moderate to heavy offerings, according to the Agricultural Marketing Service.

Choice boxed beef cutout value was $1.16 lower Thursday afternoon at $206.01/cwt. Select was $1.39 higher at $197.88.

Corn futures closed mostly 3¢ to 6¢ lower.

Soybean futures closed mostly 10¢ to 14¢ lower.

*******************************

Major U.S. financial indices had their worst day since 1987, according to market pundits.

The Dow Jones Industrial Average closed 2,352 points lower. The S&P 500 closed 260 points lower. The NASDAQ was down 750 points. So, over the last two sessions, the Dow Jones Industrial Average is down 3,816 points, the S&P 500 is down 400 points and the NASDAQ is 1,142 points lower.

*******************************

Although COVID-19 and the ensuing panic are upending markets, Stephen Koontz, agricultural economist at Colorado State University, noted earlier in the week that signs of slowing domestic and global economic growth were already increasing.

The broader U.S. macro economy entered the current debacle in reasonably good shape, with healthy levels of employment and consumer spending. At the same time, in the most recent issue of In the Cattle Markets, Koontz points out business investment was relatively weak and had been since it became clear that trade issues and their impact on the global economy would continue to linger.

Koontz also notes government spending stimulus was due to run its course this year, while any economic growth from tax cuts appeared focused in subsectors rather than the economy as a whole.

Globally, Koontz explains macroeconomics were much weaker than in the U.S. For instance, he says economic growth for European and Asian economies was modestly to substantially weaker year over year.

Cattle market headwinds were also swirling ahead of coronavirus.

“Protein balance sheets have clearly shown and continue to show a problem for the first quarter of 2020 for beef, and for much of the year for pork and poultry. Numbers of animals and carcass weights are higher through the first quarter and have the potential to be higher for the rest of the year for the competing meats,” Koontz explains. “Downward pressures on protein prices required substantial exports to not have much weaker prices than the prior year. Supplies have materialized and exports have not. Global economic uncertainty adds to this. For cattle markets, price pressure will persist through April and possibly into May. Placements through the last half of 2019 were delayed by the slaughter plant fire. October and November placements were strong. On-feed numbers and marketings will be relatively heavy until the summer. And slaughter weights are substantially above last year…

“These factors, and the broader macroeconomic concerns, suggest persistent weakness in cattle prices through the spring. And, until the dynamics of the health crisis are more certain, there will be considerable volatility.”

Negotiated cash fed cattle traded in the Southern Plains and Nebraska at $110/cwt. on a live basis Monday, which was $3 lower; $2-$5 lower in the western Corn Belt at the same money. Early dressed sales were $5-$7 lower at $175-$176.

Three lots—460 head—were offered in the weekly Fed Cattle Exchange auction. All sold for an average weighted price of $110/cwt., with delivery of 1-9 days for 384 head; 1-17 days for the remainder.

Cattle futures reversed directions again Wednesday, closing mostly limit-down and subsumed once again by coronavirus fears and sharply lower outside markets.

Live Cattle futures closed an average of $2.84 lower.

Feeder Cattle futures closed an average of $4.48 lower. 

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

Choice boxed beef cutout value was 8¢ higher Wednesday afternoon at $207.17/cwt. Select was $2.22 lower at $196.49.

Corn futures closed mostly 2¢ to 4¢ lower.

Soybean futures closed 3¢ to 5¢ lower.

Incidentally, CME Group announced Wednesday evening that it will close its Chicago trading floor as of the close of business this Friday the 13th, as a precaution to reduce large gatherings that can contribute to the spread of coronavirus, in line with the advice of medical professionals. All products will continue to trade on CME Globex as they do today.

That organization joins an expanding list of companies, groups and sports leagues cancelling, suspending and altering. You may have heard the Houston Stock Show and Rodeo cancelled the remainder of this year’s run Wednesday afternoon, with 11 days left; the NCAA also announced attendance at the upcoming March Madness basketball tournaments for both women and men will be limited to players, families and essential staff…the list goes on.

*******************************

Major U.S. financial indices tanked on Wednesday after the World Health Organization (WHO) declared COVID-19 a global pandemic.

In a Wednesday press briefing, Dr. Tedros Adhanom Ghebreyesus, WHO director general said, “We’re deeply concerned, both by the alarming level and spread, and by the alarming levels of inaction. We have, therefore, made the assessment that COVID-19 can be characterized as a pandemic. Pandemic is not a word to be used lightly or carelessly. It’s a word, if misused, can cause unreasonable fear or unjustifiable acceptance that the fight is over, leading to unnecessary suffering and death.”

At the time, there were 118,000 cases of COVID-19 in 114 countries and 4,291 fatalities.

According to Dr. Tedros more than 90% of current COVID-19 cases are in four countries, with the epidemic declining significantly in two of those: China and Korea. As of noon Wednesday, the Center for Disease Control and Prevention cited 938 U.S. cases, in 38 states and the District of Columbia; 29 deaths.

The Dow Jones Industrial Average closed 1,464 points lower. The S&P 500 closed 140 points lower. The NASDAQ was down 392 points.

*******************************

USDA lowered expected fed steer prices (five-area direct) for this year by $2.50 from the previous month to $114.50/cwt., in the latest World Agricultural Supply and Demand Estimates (WASDE). That’s based on current price weakness, as well as increased expected beef production.

Compared to the previous month, analysts with USDA’s Economic Research Service (ERS) increased anticipated beef production this year by 220 million lbs. to 27.7 billion lbs., which would be 549 million lbs. more (+2.02%) than last year.

Total red meat and poultry production for 2020 was estimated 647 million lbs. more than the previous month at 109.43 billion lbs. That would be 4.17 billion lbs. more (+3.96%) than in 2019.

ERS pegs fed steer prices at $118 in the first quarter, $114 in the second quarter, $111 in the third quarter and $114 in the fourth quarter.

“The 2020 beef import forecast is raised from last month on higher expected imports of processing grade beef, while the export forecast is reduced on weaker anticipated demand in several markets,” say ERS analysts.

Among other WASDE highlights:

U.S. corn supply and use outlook for 2019-20 was unchanged. The season-average corn price received by producers was lowered 5¢ to $3.80/bu. based on observed prices to date.

U.S. soybean supply and use projections for 2019-20 were mostly unchanged. The U.S. season-average soybean price is projected at $8.70/bu., down 5¢. The soybean oil price is projected at 31.5¢/lb., down 2¢. Soybean meal prices are unchanged at $305/short ton.

U.S. wheat supply and demand outlook was unchanged. The projected season-average farm price is also unchanged at $4.55/bu.

Cattle futures finally found some traction Tuesday, gaining back a little better than half of the previous day’s sharp losses, once gain following the same trajectory as equity markets.

Live Cattle futures closed an average of $1.79 higher ($1.10 higher to $2.60 higher in spot Apr). 

Feeder Cattle futures closed an average of $2.51 higher ($1.55 higher in spot Mar to $3.10 higher). 

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

Choice boxed beef cutout value was 27¢ lower Tuesday afternoon at $207.09/cwt. Select was $3.61 lower at $198.71.

Corn futures closed mostly 3¢ to 4¢ higher through Jly ’21 and then 1¢ to 2¢ higher.

Soybean futures closed mostly 4¢ to 7¢ higher.

*******************************

Major U.S. financial indices closed sharply higher Tuesday after a whipsaw ride and buoyed by chatter out of the White House about economic stimulus to bolster the domestic economy in the wake of coronavirus.

It also helped that crude oil recovered some of the previous day’s sharp selloff.

West Texas Intermediate Crude Oil futures on the CME closed $2.90 to $3.23 higher through the front six contracts.

The Dow Jones Industrial Average closed 1,167 points higher. The S&P 500 closed 135 points higher. The NASDAQ was up 393 points.

*******************************

U.S. beef exports in January were 2.5% more than a year earlier at 107,347 metric tons (mt) and export value was 5% more at $672.7 million according to data released by USDA and compiled by the U.S. Meat Export Federation (USMEF).

In fact, beef muscle cut exports were the highest ever for the month of January at 81,342 mt, up 4% from a year ago, while muscle cut value increased 5% to $589.2 million.

Export value per head of fed slaughter was $302.93, up 3% from a year ago.

USMEF President and CEO Dan Halstrom notes coronavirus had an impact on red meat exports, which will likely be more evident in February and March data. At the same time, he says a number of supply and demand fundamentals and market access improvements underpinned continued strong export volumes.

“The first quarantine actions in China were taken in late January and the calendar had turned to February before coronavirus became a major health concern in countries such as South Korea and Japan,” Halstrom explains. “But despite logistical challenges, a severe decline in tourism and a notable impact on sit-down dining, overall demand for red meat in these markets is quite resilient. Retail meat sales remained strong and both retailers and restaurateurs are utilizing e-commerce and delivery services at unprecedented levels. While it’s definitely a challenging situation, the Asian food industry is adapting to these conditions and finding creative ways to accommodate consumers.”

Also positive for beef is the fact that U.S. pork exports in January were 36% higher year over year at 273,603 mt, while pork export value was 50% higher at $738.7 million—the second highest levels on record for both volume and value.

Pork exports to China/Hong Kong led the way: 263% more for volume and 361% more for value at $245.3 million.

Pork exports to Mexico, which were hampered by retaliatory duties in the first five months of 2019, increased 6% in volume and jumped 40% in value to $134.7 million.

“The January data really underscore the difficult situation U.S. pork was facing in Mexico a year ago,” Halstrom explains. “Exporters kept much of the volume moving, but the U.S. industry absorbed most of the 20% duty in the form of lower prices. With duty-free access restored and the U.S.-Mexico-Canada Agreement moving toward implementation, we look forward to a continued rebound in Mexico’s demand for U.S. pork.”

The weekly weighted average five-area direct price for fed steers was $1.68 lower on a live basis last week at $113.17/cwt. Steer prices in the beef were $3.98 lower at $180.80.

There were too few transactions to trend negotiated cash fed cattle in any region on Monday, but early sales were decidedly pessimistic with some live trade in Nebraska and the western Corn Belt at $110/cwt.; early dressed sales at $175.

Cattle futures started the week limit down and near limit-down as equity markets plunged amid continued uncertainty about COVID-19, coupled with the outbreak of an oil price war over the weekend that sent crude oil prices into free-fall.

Live Cattle futures closed an average of $2.89 lower.

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

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

Choice boxed beef cutout value was 11¢ lower Monday afternoon at $207.36/cwt. Select was 25¢ lower at $202.32.

Corn futures closed 2¢ to 5¢ lower.

Soybean futures closed mostly 15¢ to 21¢ lower.

*******************************

Major U.S. financial indices plunged Monday, to their lowest levels since early 2019, fueled by the continued spread of COVID-19 and the panic it spawns, as well as an oil price war.

The simple version goes something like this: Saudi Arabia and most of its OPEC allies wanted to cut oil production in an effort to stabilize oil prices, which were losing significant ground due to the COVID-19-slowed global economy. Russia said no, so Saudi Arabia set about offering oil at lower prices. As oil prices plummet, so does the economic health of companies tied to the energy sector.

Crude Oil futures—West Texas Intermediate on the CME—closed $8.98 to $10.15 lower through the front six contracts. Spot Apr closed $10.15 lower (-24.59%) than the previous session and $15.62 lower (-33.4%) week to week.

The Dow Jones Industrial Average closed 2,013 points lower. The S&P 500 closed 225 points lower. The NASDAQ was down 624 points.

*******************************

Although it’s too soon to tell if COVID-19 is impacting beef demand, or to what degree, Derrell Peel, Extension livestock marketing specialist at Oklahoma State University says it’s certainly possible there are negative impacts, especially where exports are concerned.

“There are a multitude of market factors to sort out including: new trade agreements, macroeconomic changes (stock market, interest rates, etc.), exchange rates, African Swine Fever, and others that will make it more difficult to determine the more direct impacts of COVID-19 on international and domestic beef markets,” Peel says. 

In the meantime, there has been little seasonal improvement to wholesale beef prices.

Compared to the prior year, for Choice, Peel says rib primal prices last week were 10.4% less, loin values were 10.8% less, brisket values were 13.8% less, chuck values were down 7% and rounds were 1.3% less. He adds Select primal values are also lower year over year.

“Weakness in boxed beef prices does not necessarily mean that beef demand is lower,” Peel says. “Beef production is up 5.1% year over year for the first eight weeks of 2020. Beef prices would normally be pressured with higher beef production even with stable demand.” 

Negotiated cash fed cattle trade ended up $2 lower on a live basis last week in Nebraska and the Southern Plains at $113/cwt. It was $1 higher to $2 lower in the western Corn Belt at $113-$115. Dressed trade was $5 lower in Nebraska at $180-$182; steady to $5 lower at the same money in the western Corn Belt.

Cattle futures dropped like a rock again Friday.

Live Cattle futures closed an average of $2.42 lower ($1.82 lower at the back to $2.90 lower in spot Apr).

Spot Apr Live Cattle closed at $105.75 on Friday. That’s $22.20 less (-17.35%) than the recent high of $127.95 Jan. 10 and lower than the $110.17 shortly after the Tyson plant fire.

Feeder Cattle futures closed an average of $3.36 lower.

Spot Mar Feeder Cattle closed at $130.70 on Friday, which was $16.75 less (-11.36%) than the recent high Jan. 10, but still slightly higher than the first week of September.

Wholesale beef values were steady on Choice and higher on Select with moderate to fairly good demand and light to moderate offerings, according to the Agricultural Marketing Service.

Choice boxed beef cutout value was 22¢ higher Friday afternoon at $207.47/cwt. Select was $1.51 higher at $202.57.

Corn futures closed 1¢ to 7¢ lower through May ’21 and then fractionally higher to 1¢ higher.

Soybean futures closed 2¢ to 5¢ lower through Jan ’21 and then mostly 2¢ to 3¢ higher.

*******************************

Major U.S. financial indices continued to extend losses Friday as the number of COVID-19 cases and deaths escalated in the U.S. and around the world.

That was despite a U.S. employment report that was significantly more positive than the trade expected.

Total nonfarm payroll employment rose by 273,000 in February, according to the U.S. Bureau of Labor Statistics. The unemployment rate was little changed at 3.5%. Average hourly earnings for all employees on private nonfarm payrolls in February increased by 9¢ to $28.52. Over the past 12 months, average hourly earnings increased by 3.0%.

The Dow Jones Industrial Average closed 256 points lower. The S&P 500 closed 51 points lower. The NASDAQ was down 162 points.

Crude Oil futures—West Texas Intermediate on the CME—closed $3.90 to $4.62 lower through the front six contracts. Those contracts were an average of $11.48 lower over the past two weeks.

*******************************

Although there’s no way to estimate the eventual long-term economic implications of COVID-19, Aaron Smith, crop marketing specialist at the University of Tennessee suggests a couple of areas that bear watching.

“First, the disruption to global markets and consequently exports of agricultural products may be substantial and could get worse,” says Smith, in his weekly market comments. “For agricultural commodities and products, both logistical issues and economic activity are at the forefront of trade issues. Getting vessels loaded or unloaded at ports can be problematic (both domestically and internationally). For example, there can be challenges with refrigeration units as a limited number of places to “plug in” large containers are available at importing ports. This could create issues with unloading ships and may result in perishable cargos being rendered unusable. From an economic activity standpoint, the restrictions to travel and the quarantining of some cities/regions reduces consumer spending (affecting economic growth/GDP) as dollars are not circulated in economies and thus impact demand for agricultural products. This is an oversimplification of very complex economic systems, but it is worthwhile to consider the short and long-term implications on US agricultural exports.”

Further, Smith says securing agricultural inputs produced in China could become a challenge for the upcoming planting season.

“The longer logistical disruptions continue, the greater the strain could be on domestic supplies of certain agricultural (and non-agricultural) inputs. This also may have longer term consequences as large multinational companies evaluate supply chains and risks,” Smith says.

Negotiated cash fed cattle trade continued $2 less than last week on Thursday at $113/cwt. in the Southern Plains and Nebraska. Although too few to trend there were some early dressed sales in Nebraska at $182, which was $3-$5 less than the previous week.

Cattle futures followed outside markets lower.

Live Cattle futures closed an average of 93¢ lower (40¢ lower to $2.62 lower in spot Apr).

Feeder Cattle futures closed an average of $1.87 lower ($1.70 to $2.77 lower).

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

Choice boxed beef cutout value was 43¢ higher Thursday afternoon at $207.25/cwt. Select was 45¢ lower at $201.06.

Carcass weights continue heavier year over year, according to USDA’s latest Actual Slaughter Under Federal Inspection report for the week ending Feb. 22.

The average dressed steer weight was 900 lbs., which was 26 lbs. more the same week a year earlier. The average dressed heifer weight was 13 lbs. more than a year earlier at 831 lbs. Week to week, dressed steer and heifer weights were 5 lbs. and 2 lbs. lighter, respectively.

Corn futures closed mostly 2¢ lower.

Soybean futures closed mostly 8¢ to 10¢ lower.

*******************************

Major U.S. financial indices dove South Thursday, driven once again by fears about coronavirus.

The Dow Jones Industrial Average closed 969 points lower. The S&P 500 closed 106 points lower. The NASDAQ was down 279 points.

*******************************

The U.S. inventory of all cattle and calves started the year 391,400 head fewer (-0.41%) than a year earlier at 94.41 million head. There were 374,000 fewer beef cows (-1.18%) at 31.32 million, according to the Jan. 1 Cattle report.

Herd contraction north of the border was more significant, according to USDA’s United States and Canadian Cattle and Sheep report published Thursday.

All cattle and calves in Canada Jan. 1 were 11.22 million head, which was 220,000 head fewer (-1.92%) than a year earlier. Beef cows of 3.56 million head were 94,600 head fewer (-2.59%).

Combined, the number of cattle and calves in the U.S. and Canada Jan. 1 were 105.63 million head, which was 611,400 head fewer (-0.58%) than the previous year. There were 34.88 million beef cows, which were 468,600 fewer (-1.33%).

Negotiated cash fed cattle trade developed in the Southern Plains Wednesday at $113/cwt., which was $2 lower than last week. Trade was light to moderate on moderate demand.

There were 566 head (three lots) offered in the weekly Fed Cattle Exchange auction at an offer price of $114; with no takers.

Cattle futures continued joined at the hip to equity markets on Wednesday, surging higher on the day.

Live Cattle futures closed an average of 92¢ higher (50¢ to $1.17 higher).

Feeder Cattle futures closed an average of $1.92 higher ($1.32 to $2.72 higher).

Wholesale beef values were steady on Choice and lower on Select with moderate demand and offerings, according to the Agricultural Marketing Service.

Choice boxed beef cutout value was 20¢ higher Wednesday afternoon at $206.82/cwt. Select was $1.19 lower at $201.51.

Corn futures closed 1¢ to 5¢ higher through Mar ’21 and then mostly unchanged to fractionally mixed.

Soybean futures closed 1¢ to 5¢ higher through the front three contracts and then mostly 6¢ lower.

*******************************

Major U.S. financial indices soared, Monday, amid positive economic news that included a steeper increase in private payrolls than expected.

Private sector employment rose by 183,000 last month, according to the ADP National Employment Report®.

“COVID-19 will need to break through the job market firewall if it is to do significant damage to the economy,” says Mark Zandi, chief economist of Moody’s Analytics. “The firewall has some cracks, but judging by the February employment gain it should be strong enough to weather most scenarios.”

Presumably, investors also were responding to the Super Tuesday Democratic Primary won by former vice-president, Joe Biden, who is seen as the more business friendly option on that side of the ticket.

The Dow Jones Industrial Average closed 1,175 points higher. The S&P 500 closed 126 points higher. The NASDAQ was up 334 points.

*******************************

Agricultural producer sentiment was record high in February, according to the Purdue/CME Group Ag Economy Barometer, which was up 1 point from the previous month to 168. Optimism stemmed from producer sentiment regarding current conditions.

“Almost across the board, producers indicated they were more optimistic about current conditions on their farms and in U.S. agriculture, and retained most of the improvement in future expectations exhibited in January,” says James Mintert, the barometer’s principal investigator and director of Purdue University’s Center for Commercial Agriculture. “Optimism about the agricultural trade outlook was underpinned by recent trade agreements and appeared to be the primary driver behind the improvement in sentiment.”

The Index of Current Conditions increased 12 points from January to a reading of 154. Meanwhile, the Index of Future Expectations fell 4 points below the record high set in January to a reading of 175.

The Ag Economy Barometer is based on a mid-month survey of 400 U.S. agricultural producers.

Over three-fourths (76%) of respondents said the USMCA and the China Phase One agreements either relieved their concerns about the effect of tariffs on their farms’ income “somewhat” (69%) or “completely” (7%); 17% said, “not at all”.

Although some voiced concerns about the possible impact of the COVID-19 virus on agricultural trade in mid-February, when the survey was conducted, producers remained relatively optimistic about the resumption of trade with China.

“As the COVID-19 virus footprint continues to expand, it remains to be seen whether it will impact farmer sentiment at home,” Mintert says.

Expectations for an improvement in farmland values also rose to an all-time high in February. When asked to look ahead five years, 59% of producers said they expect farmland values to rise, up from 50% in January. This was the most positive response to the question since data collection began in 2015.