Daily Market Highlights

Negotiated cash fed cattle prices ended up last week at steady money to a little higher with moderate trade and demand on Friday. Live prices were $1 higher at $124/cwt., except for steady in the western Corn Belt at $123-$126. Dressed sales were steady to $3 higher at $197-$200.

Cattle futures closed higher Monday, led by Feeder Cattle and supported by higher cash prices and resurgent wholesale beef values.

Live Cattle futures closed an average of 67¢ higher.

Feeder Cattle futures closed an average of $1.46 higher ($1.12 to $1.82 higher).

Corn futures closed mostly unchanged to fractionally mixed.

Soybean futures closed mostly fractionally higher to 1¢ higher.

Wholesale beef values were sharply higher on Choice and firm 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 $3.39 higher Monday afternoon at $217.65/cwt. Select was 26¢ higher at $213.41.

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Major U.S. financial indices closed higher Monday, supported by tech stocks and positive quarterly earnings reports.

The Dow Jones Industrial Average closed 175 points higher. The S&P 500 closed 18 points higher. The NASDAQ was up 87 points.

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“Total commercial beef production for 2018 is projected at 26.9 billion lbs., up 2.6% from one year ago and just fractionally smaller than the record U.S. beef production of 27.1 billion lbs. in 2002,” says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly market comments. “Beef production in 2019 is forecast at a record 27.4 billion lbs, up 1.8% year over year. Total beef production is likely to grow through 2020 at least.”

Along the way, Peel says total cattle slaughter last year was 2.5% more, with steer slaughter 0.7% less than in 2017 and heifer slaughter 6.5% more. Total cow slaughter was 6.5% more year over year, including 8.6% more beef cows.

Negotiated cash fed cattle trade was undeveloped through Friday afternoon, based on USDA reports, though expectations were for steady to higher prices.

Cattle futures closed narrowly mixed, following the previous session’s correction.

Except for 2¢ lower in near Apr, Live Cattle futures closed an average of 32¢ higher.

Except for $1.35 lower in the back contract and 15¢ higher in Nov, Feeder Cattle futures closed an average of 19¢ lower.

Corn futures closed mostly 1¢ to 2¢ higher.

Soybean futures closed mostly 1¢ to 2¢ higher.

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

Choice boxed beef cutout value was $1.13 lower Friday afternoon at $214.26/cwt. Select was 27¢ higher at $213.15.

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Major U.S. financial indices closed mostly higher Friday, supported by energy stocks and the positive employment outlook.

Total nonfarm payroll employment increased by 304,000 in January, according to the U.S. Bureau of Labor Statistics. The unemployment rate edged up to 4.0%.

Hourly earnings for all employees on private non-farm payrolls in January rose by 3¢ to $27.56, following a 10¢ gain in December. Over the year, average hourly earnings have increased by 85¢, or 3.2%.

The Dow Jones Industrial Average closed 64 points higher. The S&P 500 closed 2 points higher. The NASDAQ was down 17 points.

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Between 1979 and 1998, U.S. consumer beef demand declined by 50%, reminded Randy Blach, CattleFax CEO, at that organization’s annual Outlook Seminar last week.

Since then, demand increased, in part, because the industry increased product quality and consistency. For instance, Blach pointed out the percentage of Choice and Prime cattle increased 50% since 2004 to 79% last year.

“We finally started listening to the consumer and they rewarded us,” Blach says. He explains if beef demand hadn’t grown for the last two decades, fed steer prices today would be $20/cwt. less and steer calf prices would be $50 less.

“We have a changing consumer today. Are we willing to make the next changes to assure we’re providing consumer with what is important to them?” Blach asked. Among growing consumer demands, he cites things such as traceability and verification.

Negotiated cash fed cattle trade was undeveloped through Thursday afternoon.

Month-end positioning appeared to be the primary pressure on cattle futures Thursday. For the short term, there was also chatter about this week’s extreme cold dampening consumer demand across impacted areas.

Live Cattle futures closed an average of $1.36 lower.

After 27¢ lower in expiring Jan, Feeder Cattle futures closed an average of $1.38 lower.

Corn futures closed mostly 2¢ to 4¢ lower.

Soybean futures closed 3¢ to 5¢ lower through Jul ’20 and then 1¢ to 2¢ lower. 

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

Choice boxed beef cutout value was $2.66 lower Thursday afternoon at $215.39/cwt. Select was 12¢ lower at $212.88.

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Major U.S. financial indices closed mostly higher Thursday, buoyed by strong quarterly earnings reports and spillover support from the steep increases in the previous session.

The Dow Jones Industrial Average closed 15 points lower. The S&P 500 closed 23 points higher. The NASDAQ was up 98 points.

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Although increasing cattle supplies will likely pressure cattle prices across all sectors this year, Kevin Good, CattleFax analyst says robust economic demand, U.S. job growth and higher wages will remain supportive.

“The relatively strong calf market we saw in 2018 will be under pressure this year,” explained Good, at Thursday’s CattleFax Outlook Seminar in New Orleans. “However, values in the spring should have the potential to reach the mid-$180s. On the other hand, a larger calf crop and softer demand have the potential to erode prices to the $140-level next fall, so there is certainly more price risk in feeder cattle and calves than in the fed cattle markets in 2019.”

CattleFax projects 750 lb. steer prices at $130-$160/cwt., with an average at $147/cwt.

Fed cattle prices are expected to be steady this year, averaging $117/cwt., with market resistance at the $130-level and downside risk to $100/cwt. at the low end of the trading range, according to Good.

As for cull cows, Good says, “Years of expansion and poor operating margins in the dairy sector are generating more cull cows, which weighs on the markets. The additional supply and the limited packing capacity for non-fed cattle will result in a market which averages approximately $55/cwt. during 2019, with a spring high near $60/cwt. and a fall low in the lower $40s.”

Look for more insights from the CattleFax Outlook in Monday’s Cattle Current

Negotiated cash fed cattle trade was undeveloped through Wednesday afternoon. There were 1,684 head offered in the weekly Fed Cattle exchange auction and no takers.

Limited trading interest held Cattle futures to a narrow, though mostly slightly higher trading range.

Except for 32¢ lower in spot Feb, Live Cattle futures closed an average of 17¢ higher.

Other than 27¢ and 2¢ lower at either end of the board, Feeder Cattle futures closed an average of 15¢ higher, except for unchanged in Oct.

Corn futures closed mostly 2¢ to 3¢ higher through Jul ’20 and then mostly 1¢ higher.

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

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

Choice boxed beef cutout value was 8¢ lower Wednesday afternoon at $218.05/cwt. Select was 43¢ higher at $213.00.

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Major U.S. financial indices closed sharply higher Wednesday. Along with strong quarterly earnings from the likes of Boeing and Apple, support included the Fed standing pat on interest rates.

“The Committee continues to view sustained expansion of economic activity, strong labor market conditions, and inflation near the Committee’s symmetric 2% objective as the most likely outcomes,” according to a statement from the FOMC. “In light of global economic and financial developments and muted inflation pressures, the Committee will be patient as it determines what future adjustments to the target range for the federal funds rate may be appropriate to support these outcomes.”

The Dow Jones Industrial Average closed 434 points higher. The S&P 500 closed 41 points higher. The NASDAQ was up 154 points.

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“While the need for increasing exports is clear, it’s frequently met with concern or skepticism among some producers and others in the supply chain,” says Will Sawyer, animal protein economist with CoBank’s Knowledge Exchange Division. He explains “Concerns lie primarily in the fear that themore exports play a role in supply and demand, themore exposure producers and industry participants have to increased market volatility and lower margins.”

Look to other protein sectors and other countries, however, and the reward of growing export markets outweighs the risk.

Greater reliance on export markets has resulted in higher prices for the animal protein sectors in other exporting nations, including Australia, Brazil and Canada, according to C0Bank. Analysis shows that greater profitability has offset price volatility for beef, pork and poultry producers in each of those countries, despite declining domestic consumption in both Australia and Canada.

“Profitable growth has always been at the core of the industry, and has enabled producers and processors to recover from the historic volatility and costs from 2007 through 2012,” Sawyer says. He adds, “The groundwork has already been laid from the supply chain, to industry representation, to let trade drive the industry forward over the next decade. Long-term, he says exports will be the key driver for further expansion across the animal protein sector.”

A video synopsis, and the full report, “Protein Passport: Exporting Your Way to Growth,” are available at cobank.com.

Negotiated cash fed cattle trade was undeveloped through Tuesday afternoon.

Higher wholesale beef values and likely less beef production than anticipated so far this year, due to weather helped Cattle futures mostly edge higher.

Live Cattle futures closed an average of 17¢ higher (7¢ to 42¢ higher).

After 82¢ and 10¢ lower in the front two contracts, Feeder Cattle futures closed an average of 15¢ higher.

Corn futures closed mostly 1¢ to 2¢ lower.

Soybean futures closed mostly 3¢ to 4¢ lower. 

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

Choice boxed beef cutout value was 73¢ higher Tuesday afternoon at $218.13/cwt. Select was 96¢ higher at $212.57.

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Major U.S. financial indices closed mixed Tuesday as investors fretted about looming Apple quarterly earnings and the Fed meeting on Wednesday.

The Dow Jones Industrial Average closed 51 points higher. The S&P 500 closed 3 points lower. The NASDAQ was down 57 points.

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Heading into Wednesday’s Fed meeting, few analysts expect another increase in interest rates, given recent market volatility and the apparent drag lingering trade issues are having on global and domestic GDP.

In the recent 2019 outlook report from CoBank’s Knowledge Exchange Division, analysts say, “The FOMC is no longer locked into a tightening cycle aimed at returning to ‘neutral’ conditions. Instead, we expect the Fed to lean dovish as it

attempts to take its foot off the gas and coast safely through 2019. The greatest threat to this approach will be the risk of stagflation–a slowing economy and

a resurgence in inflation. Under such circumstances, the Fed may allow inflation to move higher than 2% if longer run inflation expectations remain anchored and their economic projections indicate that inflation is likely to normalize back to 2% over the intermediate term.”

Recently firm wholesale beef values, near-steady cash prices and continued performance-dampening weather helped Cattle futures gain some ground Monday, led by Feeder Cattle.

Live Cattle futures closed an average of 33¢ higher.

After 10¢ higher in spot Jan, Feeder Cattle futures closed an average of 70¢ higher.

Corn futures closed unchanged to fractionally mixed.

Soybean futures closed 1¢ to 2¢ 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 39¢ higher Monday afternoon at $217.40/cwt. Select was 42¢ lower at $211.61.

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Major U.S. financial indices closed lower Monday, basically retracing upward steps taken in the previous session. Pressure included the likes of Caterpillar and chipmaker Nvidia attributing part of their weaker forecasts to softer Chinese trade.

The Dow Jones Industrial Average closed 208 points lower. The S&P 500 closed 20 points lower. The NASDAQ was down 79 points.

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The federal government is open for business again, at least temporarily, meaning USDA agencies can begin providing market data. The exception during the shutdown was price data that continued to flow from the Agricultural Marketing Service. That information is why some livestock economists attribute little market impact to the missing data up to this point.

But, in his weekly market comments, Derrell Peel, Extension livestock marketing specialist at Oklahoma State University says, “Among many repercussions of the federal government shutdown, agricultural data has been severely disrupted. Some reports will resume after a delay and some may be completely skipped. Numerous crop, livestock and trade reports were missed in January, which are important for cattle and beef markets.

“Missing from delayed or skipped January reports are the monthly crop production (including the December 1 hay stocks by state) and the annual crop production report that will confirm 2018 production of corn and other feed grains, soybeans and hay. The grain stocks report provides information about crop market conditions for the current marketing year. The winter wheat/canola seedings report will provide information about winter wheat pasture.”

During the shutdown, the World Agricultural Supply and Demand Estimates for January, actual daily slaughter data and the January Cattle on Feed report went missing. The Jan 1 Cattle inventory report was originally scheduled to go out the end of this week; presumably it will be delayed, at the least.

“As well, the January livestock trade data (for November) was not reported and will be important to close out 2018 livestock and meat import and export totals,” Peel says. “Detailed weekly cattle slaughter data has not been reported since early December, along with carcass weights by slaughter class. These are important to finalize 2018 beef production totals and also to assess the current status of cattle markets, including weather impacts.”