Daily Market Highlights

There were a few negotiated cash fed cattle trades in Nebraska and the western Corn Belt on Friday at $127-$128/cwt. on a live basis, and a few in the beef at $205; too few to trend.

For the week, trade was generally steady at $128 in the Southern Plains and Nebraska. Dressed trade was also steady at $205.

A rally in Lean Hogs and expectations for fewer feedlot placements helped underpin Cattle futures on Friday.

Live Cattle futures closed an average of 52¢ higher (15¢ higher in the back contract to 75¢ higher).

Feeder Cattle futures closed an average of $1.03 higher (72¢ to $1.70 higher).

Corn futures closed mostly fractionally lower to 1¢ lower.

Soybean futures closed 5¢ to 7¢ lower through Jan. ’20 and then mostly 3¢ to 4¢ lower.

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

Choice boxed beef cutout value was 9¢ higher Friday afternoon at $226.13/cwt. Select was 24¢ higher at $218.78.

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Major U.S. financial indices closed lower Friday, but well off of session lows. Pressure came early with the monthly jobs report, indicating significantly few new jobs last month than expected. That and the bleaker outlook from the European Central Bank a day earlier bolstered angst about an economic slowdown.

Total non-farm employment grew by only 20,000 in February, according to the Bureau of Labor Statistics.

Average hourly earnings for all employees on private nonfarm payrolls rose by 11¢ in February to $27.66. Hourly earnings increased by 3.4% over the past year.

The Dow Jones Industrial Average closed 22 points lower. The S&P 500 closed 5 points lower. The NASDAQ was down 13 points.

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Feedlot placements continued lower month to month in January, according to Friday’s Cattle on Feed report. Placements of 1.96 million head were 5.27% less (-109,000 head) than a year earlier. Keep in mind the report reflects feedlots with 1,000 head or more capacity. Most analysts expected the decline to be a touch steeper, but the report likely will be gauged as neutral.

As for placement weights: 41.61% went on feed weighing up to 699 lbs.; 49.72% weighed 700-899 lbs.; 8.67% weighed 900 lbs.  

Marketings in January of 1.91 million head were 2.80% more (+52,000 head) than the previous January.

Cattle on feed Feb. 1 were 11.68 million head, which was 0.41% more (+48,000 head) than a year earlier.

Weekly negotiated cash fed cattle got underway Thursday with moderate trade and demand in the Southern Plains. Prices were steady with the previous week at $128/cwt. Though too few transactions to trend, there was also light to moderate trade in Nebraska at $128, which was steady with the bulk of the previous week’s sales in the region.

Steady cash prices helped lift Live Cattle futures.

Live Cattle futures closed an average of 53¢ higher (5¢ higher in spot Apr to 92¢ higher).

Short covering, apparently, and perhaps positioning ahead of Friday’s Cattle on Feed report helped Feeder Cattle futures gain back a fair portion of what was lost in the previous two sessions.

Feeder Cattle futures closed an average of $1.52 higher (45¢ in the back contract to $2.35 higher).

Corn futures closed mostly 3¢ to 6¢ lower.

Soybean futures closed mixed from 3¢ lower to 1¢ higher.

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

Choice boxed beef cutout value was $1.11 higher Thursday afternoon at $226.04/cwt. Select was 17¢ higher at $218.54.

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Major U.S. financial indices sunk lower Thursday, as investors fretted over a bleaker economic outlook for European Union (EU) countries.

In a prepared press statement yesterday, Mario Draghi, president of the European Central Bank (ECB) explained real GDP for the Euro area increased by only 0.2% in the fourth quarter last year, following growth of 0.1% in the third quarter.

“Real GDP growth remained unexpectedly sluggish in the fourth quarter of 2018, and recent indicators point to substantially weaker than previously expected activity also in the first half of 2019,” according to ECB staff macroeconomic projections for the euro area released yesterday. “While some temporary factors are likely to have contributed to the slowdown in activity in late 2018, the broad-based worsening of economic sentiment indicators across countries and sectors in recent months suggests that more persistent adverse factors have also been at play and that the underlying cyclical momentum is somewhat weaker than previously assessed.”

The ECB projects GDP growth at 1.1% this year, down from 1.7% in their previous forecast.

The Dow Jones Industrial Average closed 200 points lower. The S&P 500 closed 22 points lower. The NASDAQ was down 84 points.

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U.S. beef exports blasted through previous records for value last year, according to year-end 2018 statistics released by USDA and compiled by the U.S. Meat Export Federation (USMEF). Exports also achieved a new high for volume.

Beef export value last year was $8.33 billion, which was $1.06 billion more—15% more—than the previous record set a year earlier. The volume of 1.35 million metric tons (mt) was 7% more than the previous year and 5% more than the previous record set in 2011.

Beef export value per head of fed slaughter last year was also record high at $323.14, which was 13% more than the previous year and 8% more than the previous record set in 2014.

South Korea accounted for half of the $1 billion surge in beef exports. Japan, Taiwan and the ASEAN region also fueled demand growth.

Negotiated cash fed cattle trade remained undeveloped through Wednesday afternoon, but a variety of indicators suggested at least steady prices this week.

At Sioux Falls Regional in South Dakota, Ch 2-4 steers brought $125.50 to $129.75/cwt. on Wednesday. The deepest test of Ch 2-4 steers at Tama, IA brought an average price of $130.81.

Through Tuesday, the 5-area direct live steer price was $128.50 on a smattering of trades, about even with the previous week.

There were only 300 head offered in the weekly Fed Cattle Exchange auction, and no takers.

Live Cattle futures puttered in place Wednesday, drifting a touch lower, while Feeder Cattle continued to soften amid light trade.

Other than 7¢ higher in spot Apr, Live Cattle futures closed an average of 26¢ lower.

Feeder Cattle futures closed an average of 79¢ lower (22¢ to $1.02 lower).That’s an average of about $1.50 lower in the last two sessions.

Corn futures closed 2¢ to 3¢ lower through Jul ’20 and then mostly fractionally lower.

Soybean futures closed 10¢ to 11¢ lower through Aug ’20 and then 7¢ to 9¢ lower.

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

Choice boxed beef cutout value was 89¢ higher Wednesday afternoon at $224.93/cwt. Select was 58¢ higher at $218.37.

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Major U.S. financial indices closed lower Wednesday, without much fundamental direction, but apparent rally fatigue as investors wait for a resolution to U.S.-China trade talks.

The Dow Jones Industrial Average closed 133 points lower. The S&P 500 closed 18 points lower. The NASDAQ was down 70 points.

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Despite lighter year-to-year carcass weights, beef production continued to climb in January, according to the most recent USDA Livestock Slaughter report.

Total beef production in January of 2.31 billion lbs. was 30.8 million lbs. more than the previous year (+1.35%).

Fed steer and heifer slaughter under federal inspection of 2.19 million head was 61,200 head more (+2.87%) than the previous year.

Total cattle slaughter of 2.79 million head was 72,100 head (+2.66%) than a year earlier.

Average steer dressed weight in January was 886 lbs., which was 7 lbs. lighter than a year earlier. Average dressed heifer weight was 12 lbs. lighter at 824 lbs.

Total red meat production in January of 4.70 billion lbs. was 114.1 million lbs. more (+2.49%) than the same month a year earlier.

Front-month Live Cattle futures firmed Tuesday, following pressure in the previous session, perhaps suggesting traders took a harder look at currently favorable fundamentals; open interest continues to grow. Feeder Cattle gave back the previous day’s gains amid light trade.

Except for 47¢ higher in spot Apr, Live Cattle futures closed narrowly mixed (20¢ lower to 5¢ higher).

Feeder Cattle futures closed an average of 70¢ lower.

Corn futures closed mostly 1¢ to 2¢ higher.

Soybean futures closed 1¢ to 2¢ lower through Mar ’20 and then mostly fractionally higher.

Wholesale beef values were firm on fairly good demand and moderate offerings, according to the Agricultural Marketing Service.

Choice boxed beef cutout value was 49¢ higher Tuesday afternoon at $224.04/cwt. Select was 58¢ higher at $217.79.

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Major U.S. financial indices leaked lower Tuesday. Support included strong quarterly earnings from retailers such as Target and Kohl’s. Drag included the lack of resolution to trade talks between the U.S. and China.

The Dow Jones Industrial Average closed 13 points lower. The S&P 500 closed 3 points lower. The NASDAQ was down 1 point.

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Farmer sentiment weakened last month amid increasing concerns about marketing risk and continued uncertainty around tariffs, according to the latest  Purdue-CME Group Ag Economy Barometer.

The February barometer—based on a survey of 400 U.S. agricultural producers—declined 7 points from the previous month to 136.

“Last month we saw a significant boost in optimism among agricultural producers after the announcement of the second round of MFP payments; however, it appears the positive impact eroded quickly,” says James Mintert, the barometer’s principal investigator and director of Purdue University’s Center for Commercial Agriculture. “Compared to responses from a year ago, fewer farms said they expect their operation to grow in the future, which could be a sign of increasing financial stress. We’re also seeing a growing number of farms concerned about marketing risk, ranking it as the biggest risk facing their operations.”

The monthly survey includes measures of producer sentiment toward current conditions and future expectations. In February, both indexes declined. The Index of Current Conditions saw the biggest drop, down from 132 to 119, whereas the Index of Future Expectations weakened slightly, down from 148 to 145.

When producers were asked whether they have plans to grow or increase the size of their current operation in 2019, 50% of respondents said that they either “have no plans to grow” or “plan to reduce in size,” compared to 39% in 2018. Last month, when 25% of farmers surveyed indicated they expected to take out a larger operating loan in 2018 versus 2019, a follow-up question found that 27% of those farms were taking out larger loans due to unpaid operating debt carryover, suggesting they were experiencing financial stress.

Live Cattle futures softened Monday, perhaps on profit taking, given stronger cash prices and higher wholesale beef values. Feeder Cattle gained, though, with some chatter crediting support to the potential impact of the recent arctic blast.

Other than 30¢ and 2¢ higher in the back two contracts, Live Cattle futures closed an average of 44¢ lower.

Other than 2¢ lower in the front two contracts, Feeder Cattle futures closed an average of 86¢ higher.

Corn futures closed fractionally higher to 1¢ higher.

Soybean futures closed 4¢ to 5¢ higher.

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

Choice boxed beef cutout value was $2.26 higher Monday afternoon at $223.55/cwt. Select was 42¢ higher at $217.21.

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Major U.S. financial indices closed lower Monday, with more data pointing toward slowing domestic economic growth. In this case, it was less construction spending than expected for December, according to the latest report from the U.S. Department of Commerce.

The Dow Jones Industrial Average closed 206 points lower. The S&P 500 closed 10 points lower. The NASDAQ was down 17 points.

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“It appears that herd expansion is nearly over, although the level of beef replacement heifers is large enough to support a minimal level of additional herd expansion in 2019,” says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly market comments.

Peel is referring to last week’s Cattle report. Although there were more beef cows Jan 1—299,500 more than a year earlier—significantly fewer beef heifers were retained as replacements.

Specifically, there were 5.92 million beef replacement heifers Jan. 1, according to the Cattle report. That was 183,300 head fewer than a year earlier or 3.0% less.

“Beef replacement heifers as a percent of the beef cow herd on Jan. 1 of 2019 was 18.7%. This ratio is down from 19.4% one year ago as heifer retention moves closer to levels consistent with zero herd growth,” Peel explains. “A record heifer retention level occurred in 2016 with beef replacement heifers at 21.0% of the beef cow herd. Over the past 30 years this ratio has averaged 17.8%.”

That doesn’t mean the herd will necessarily shrink much after hitting the cyclical peak.

 “While cyclical expansion may be mostly complete, there is no indication of herd liquidation at this time. Average cattle prices are expected to continue at current levels and seem likely to hold cattle numbers steady in 2019,” Peel says. “Future market conditions, good or bad, could prompt additional expansion or liquidation in 2020 and beyond. Producers should continue to monitor domestic and international market conditions to see what new cattle market direction emerges in the coming months.”

Negotiated cash fed cattle trade was $1.50-$3.50 higher on a live basis Friday at $128-$130/cwt. in the western Corn Belt, $128-$129 in Nebraska and, according to the Texas Cattle Feeders Association, at $128 in the Texas Panhandle. In the beef, prices were $3 more than the previous week at $205 with a few up to $206 in the western Corn Belt.

Live Cattle futures mostly edged higher on fundamental strength Friday, while nearby Feeder Cattle dropped, perhaps with queasiness about increased numbers waiting to go on feed, plus the slower pace of fed cattle marketing.

Other than 30¢ and 7¢ lower at either end of the board, Live Cattle futures closed an average of 16¢ higher.

Feeder Cattle futures closed an average of 92¢ lower across the front half of the board (20¢ lower to $1.65 lower in spot Mar) and then an average of 38¢ higher (5¢ higher to $1.30 higher in the back contract).

Corn futures closed 1¢ to 2¢ higher.

Soybean futures closed mostly 1¢ to 2¢ higher.

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

Choice boxed beef cutout value was $1.34 higher Friday afternoon at $221.29/cwt. Select was $1.52 higher at $216.79.

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Major U.S. financial indices closed higher Friday, with growing optimism regarding a U.S.-China trade deal. That was tempered by economic news, such as that from the Institute for Supply Management (ISM)—Manufacturing Report on Business—pointing to slowing domestic economic growth.

“Comments from the panel reflect continued expanding business strength, supported by notable demand and output, although both were softer than the prior month,” said Timothy R. Fiore, CPSM, C.P.M., Chair of ISM’s Manufacturing Business Survey Committee. “Demand expansion continued, with the New Orders Index reaching the mid-50s, the Customers’ Inventories Index scoring lower and remaining too low, and the Backlog of Orders returning to a low-50s expansion level. Consumption (production and employment) continued to expand but fell a combined 8.9 points from the previous month’s levels. Inputs — expressed as supplier deliveries, inventories and imports — stabilized at a mid-50s level and had a slight negative impact on the PMI®. Inputs continue to reflect an easing business environment, confirmed by Prices Index contraction.”

The Dow Jones Industrial Average closed 110 points higher. The S&P 500 closed 19 points higher. The NASDAQ was up 62 points.

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“The April live cattle contract is running more than a $9 premium to the June contract and more than a $13 premium to the August contract. At the same time, the finished cattle market is trading between a negative $1 to negative $2 basis compared to the April contract,” says Andrew P. Griffith, agricultural economist at the University of Tennessee, in his weekly market comments. “Considering this scenario, there is a large price gap to fill between now and the June contract. As likely or as unlikely as it may seem that finished cattle prices will decline $9 between April and June, the market could actually have more swing than what is being represented by futures. Steer slaughter the first couple of months of 2019 has been below previous year levels, which likely means there are more animals waiting in the balance the next few months.”

Fed cattle slaughter in December of 2.01 million head was 0.67% less (-13,500 head) than the previous December, according to the latest USDA Livestock Slaughter report. December beef production of 2.12 billion lbs. was 1.52% less (-32.6 million lbs.) than the same month in 2017.

Negotiated cash fed cattle trade, undeveloped through Thursday afternoon, is setting up to be another late or after-hour affair again this week.

Live Cattle futures mostly tread water, while continued anemic trade, likely month-end position squaring and pessimism about growing fed cattle supplies later in the year helped pressure Feeder Cattle.

Other than 55¢ higher in spot Feb and unchanged in Jun, Live Cattle futures closed an average of 19¢ lower.

Feeder Cattle futures closed an average of $1.03 lower through the front three contracts and then an average of 27¢ lower, except for 12¢ higher in Nov.

Corn futures closed mostly 2¢ to 3¢ lower.

Soybean futures closed mostly 3¢ to 6¢ lower.

Wholesale beef values were firm on Choice and sharply 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 49¢ higher Thursday afternoon at $219.95/cwt. Select was $2.48 higher at $215.27.

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Major U.S. financial indices closed lower Thursday, presumably on failed talks between the U.S. and North Korea, regarding the latter’s nuclear weapons.

Pessimism came despite stronger domestic economic growth in the fourth quarter than many expected. Real gross domestic product (GDP) increased at an annual rate of 2.6% in the fourth quarter of 2018, according to the initial estimate released by the Bureau of Economic Analysis. In the third quarter, real GDP increased 3.4%.

The Dow Jones Industrial Average closed 69 points lower. The S&P 500 closed 7 points lower. The NASDAQ was down 22 points.

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Cow-Calf producers continued to expand the nation’s beef cowherd last year by close to 1%, according to the delayed Cattle report issued by USDA on Thursday.

Specifically, 31.77 million beef cows Jan. 1 were 299,500 more than a year earlier or 0.95% more.

Of the eight states with more than 1 million beef cows, five began this year with more numbers: 135,000 head more in Texas (+2.99%); 67,000 head more in South Dakota (+3.83%); 62,000 head more in Oklahoma (+2.97%); 31,000 head more in Nebraska (+1.62%); 25,000 head more in Kansas (+1.67%).

As expected at this stage of the cattle cycle—expansion nearing the plateau—producers are retaining fewer replacements: 5.92 million beef replacement heifers Jan. 1 were 183,300 head fewer than a year earlier or 3.0% less.

States with the most year-to-year growth in beef replacement retention included: Florida, Michigan, North Dakota, Oregon, South Carolina, Tennessee and Washington.

The total inventory of all cattle and calves Jan. 1 of 94.76 million head were 461,700 more than a year earlier or 0.49% more

Estimated feeder cattle supply (cattle outside feedlots) of 26.38 million head was 0.98% more (+255,400 head) than Jan. 1 a year earlier.

By and large, estimates ahead of the report were in line with USDA estimates or a touch more conservative.

One more thing, despite tough, wet conditions for planting winter wheat, the 1.9 million head grazing small grain pastures in Kansas, Oklahoma and Texas is 400,000 head more (+26.67%) than a year earlier.

Negotiated cash fed cattle trade remained undeveloped through Wednesday afternoon.

Trends at fat cattle auctions were mixed. For instance, Choice 2-4 steers brought $129.23 to $129.83/cwt. at Tama, IA. On the other hand, significantly more Ch 2-4 steers (higher dressing) at Sioux Falls, SD brought $125.50-$126.75.

Only three lots of heifers (287 head) were offered in the weekly Fed Cattle Exchange auction on Wednesday, and no takers.

Even so, overall chatter continued to suggest higher prices when trade finally breaks loose this week, supported by strong beef fundamentals and the notion that packers appear to be even mort short-bought than last week.

Cattle futures basically paddled in place Wednesday, scooting forward a touch as traders awaited further cash direction.

Other than 17¢ lower in almost spent spot Feb, Live Cattle futures closed an average of 11¢ higher.

Feeder Cattle futures closed an average of 26¢ higher.

Corn futures closed 1¢ to 2¢ lower through Jul ‘20 and then mostly fractionally lower. 

Soybean futures closed fractionally mixed. 

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

Choice boxed beef cutout value was 21¢ lower Wednesday afternoon at $219.46/cwt. Select was 94¢ lower at $212.79.

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Major U.S. financial indices continued to soften Wednesday, with many analysts attributing the decline to comments made by U.S. Trade Representative, Robert Lighthizer, which highlighted the distance left between the U.S. and China in trade talks.

Testifying before the House Ways and Means Committee, Lighthizer explained, “…we have engaged in a very intense, extremely serious, and very specific negotiation with China on crucial structural issues for several months now. We are making real progress. If we can complete this effort–and again I say ‘if’–and can reach a satisfactory solution to the all-important outstanding issue of enforceability, as well as some other concerns, we might be able to have an agreement that helps us turn the corner in our economic relationship with China. Let me be clear: much still needs to be done both before an agreement is reached and, more importantly, after it is reached, if one is reached.”

Support for the day included higher crude oil prices, supported by a decline in U.S. crude oil stockpiles last week, as well as indications OPEC is standing pat against President Trump’s request for that organization to loosen its restrictions on production.

The Dow Jones Industrial Average closed 72 points lower. The S&P 500 closed 1 point lower. The NASDAQ was up 5 points.

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USDA’s latest Livestock Slaughter report offers some perspective on the beef and red meat production growth last year, as well as underscoring the impact winter weather had on beef production in December.

Fed cattle slaughter in December of 2.01 million head was 0.67% less (-13,500 head) than the previous December. December beef production of 2.12 billion lbs. was 1.52% less (-32.6 million lbs.) than the same month in 2017.

For all of 2018, fed cattle slaughter of 25.8 million head was 1.66% more (+421,800 head) than the previous year.

Year to year, fed heifer slaughter was 6.45% more at 9.12 million head, while fed steer slaughter was 0.80% less at 16.64 million head.

Dressed steer weights in December of 894 lbs. were 9 lbs. less than the same time a year earlier. Dressed heifer weights of 843 lbs. were 11 pounds less. For all of 2018, however, dressed steer weights were 3 lbs. more than the previous year at 880 lbs. Dressed heifer weights were 5 lbs. more at 817 lbs.

Total cattle slaughter last year of 32.52 million head was 2.57% more (+813,800 head) than the previous year.

Total beef production of 26.87 billion lbs. last year was 2.59% more (+679.6 million lbs.) than in 2017.

Total red meat production last year of 53.41 billion lbs. was 2.73% (+1.42 billion lbs.) more than the previous year.

Cash trade was undeveloped through Tuesday afternoon, but expectations grew for higher prices based on the paltry volume of trade last week and the continued decline in carcass weights. Dressed steer weights for the week ending Feb. 9 were 4 lbs. lighter year over year at 885 lbs., according to USDA’s Actual Slaughter Under Federal Inspection report. Dressed heifer weights were 11 lbs. lighter at 822 lbs.

Cattle futures continued higher Tuesday, led by Live Cattle, which received support from the notion of higher cash prices, as well as continued strength in wholesale beef values. Lower grain prices also helped underpin Feeder Cattle support.

Live Cattle futures closed an average of 45¢ higher (25¢ higher to $1.02 higher in spot Feb).

Feeder Cattle futures closed an average of 70¢ higher.

Corn futures closed mostly 2¢ to 4¢ lower through near Dec and then mostly 1¢ lower. 

Soybean futures closed 5¢ to 8¢ lower through Mar ‘20 and then mostly 3¢ 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 12¢ higher Tuesday afternoon at $219.67/cwt. Select was 84¢ lower at $213.73.

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Major U.S. financial indices edged lower in choppy trade Tuesday, amid mixed economic news.

For instance, in a report delayed due to the government shutdown, privately owned housing starts in December were 11.2% less than in November and 10.9% less year to year, according to the U.S. Commerce Department.

On the other hand, in testimony to Congress yesterday, FOMC Chairman, Jerome Powell described strong domestic economic growth with estimated GDP last year of just less than 3%; strong employment numbers; inflation near the target of 2%.

“While we view current economic conditions as healthy and the economic outlook as favorable, over the past few months we have seen some crosscurrents and conflicting signals,” Powell explained. “Financial markets became more volatile toward year-end, and financial conditions are now less supportive of growth than they were earlier last year. Growth has slowed in some major foreign economies, particularly China and Europe. And uncertainty is elevated around several unresolved government policy issues, including Brexit and ongoing trade negotiations.”

The Dow Jones Industrial Average closed 33 points lower. The S&P 500 closed 2 points lower. The NASDAQ was down 5 points.

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When the Cattle inventory report finally comes out—scheduled for this Thursday—David Anderson, Extension livestock economist at Texas A&M University expects to see a slight increase in beef cow numbers.

“We are likely about to the end of the growth part of the cattle cycle, as heifers on feed in the Cattle on Feed report, and cow and heifer slaughter data indicate,” says Anderson, in the latest issue of In the Cattle Markets. 

In his weekly market comments, Derrell Peel, Extension livestock marketing specialist at Oklahoma State University explains the estimated 7.28 million head of steers on feed at the beginning of the year were 0.7% less than a year earlier.

“This is the first year-over-year decrease in quarterly steer feedlot inventories since April 2017,” Peel says. “Heifer feedlot inventory was 4.41 million head, up 6.2% from last year. This is the 12th consecutive quarter of year-over-year increases in heifers on feed since January, 2016.”

Likewise, Anderson explains through early February heifer slaughter was up 8.5% and steer slaughter was down about 0.6%.

“There are several other numbers in the report (Cattle) worth looking at beyond the headline all cattle and calves number,” Anderson says. “Watch for the number of heifers held back for replacement. That should show another decline as the cycle peaks. Also watch for the calf crop estimate, in particular for revisions to past years’ data based on placement patterns. The number of cattle on small grains pasture will be interesting, gauging supplies of feeder cattle to come from wheat pasture country.”

Cattle feeders ended up being rewarded for their marketing patience last week. Late-week trade was mostly $1-$2 higher on a live basis at $126/cwt. in Kansas, $126.50 in Nebraska and $124.50-$128.00 in the western Corn Belt. Dressed sales were $2 higher at $202. There was no trend reported for the Texas Panhandle.

Higher cash trade, stronger wholesale beef values and Friday’s friendly Cattle on Feed report offered support to Cattle futures Monday, but that was tempered by more erosion in Lean Hog futures.

Live Cattle futures closed from an average of 9¢ lower to an average of 13¢ higher.

Except for an average of 40¢ lower in spot Mar, Feeder Cattle futures closed an average of 24¢ higher.

Corn futures closed mostly 3¢ to 4¢ lower.

Soybean futures closed mostly fractionally lower to 1¢ higher.

Wholesale beef values were steady on Choice and sharply 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 16¢ higher Monday afternoon at $219.55/cwt. Select was $2.22 higher at $214.57.

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Major U.S. financial indices closed higher Monday, buoyed by merger and acquisition news, as well as President Trump indicating he would extend the Mar. 1 deadline for imposing more tariffs on Chinese imports, in light of current trade talk progress.

The Dow Jones Industrial Average closed 60 points higher. The S&P 500 closed 3 points higher. The NASDAQ was up 26 points.

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There are no simple answers or strategies to address it, but Robert Johansson, USDA Chief economist, provided insight to the perennial dilemma of producing more than demanded.

“Our general expectation is for continued declines in real agricultural commodity prices over the next 10 years,” Johansson explained, at last week’s USDA Agricultural Outlook Forum. “Falling commodity prices are the result of continued production growth, which continues to outpace global demand. The remarkable increases in food production have resulted in large part from productivity growth, and have resulted in falling prices for agricultural commodities over the past half century.”

For instances, beef production today is 87% more than in 1960, according to Johansson, while the average steer prices is 44% less; 2005 is the economic base year.

During the same time, pork production increased by 143%, while hog prices declined 68%. Milk production increased 77%, while milk price declined 52%. Chicken production increased by 1,050%, while prices declined 56% (since 1964).

Obviously, the same trend applies to crops.

“Since 1960, soybean production has increased nearly 1,200%, while real soybean prices have fallen by 52%,” Johansson explained. “Corn production has grown by more than 400%, and prices have fallen by nearly 60%.” During the same time period, wheat production increased 215% and prices declined by 65%.

Overall, Johansson says the dramatic fall in net farm income in 2015 and 2016 seems to be leveling out, but at a lower level

“The current expectation of farm income at $66 billion in 2018 is a long way from the heights we saw when real net farm income peaked at $134 billion in 2013,” Johansson says. “Relative to the 10-year average, real net farm income is down 28%. Looking forward, net farm income is expected to rise slightly, remaining below $80 billion annually over the next 10 years.”