Daily Market Highlights

Negotiated cash fed cattle trade last week ended up $1-$3 higher at $119/cwt. ($116 in the western Corn Belt). Dressed trade was steady to $4 higher at $187.

Feeder Cattle futures gained some ground Monday, amid limited trade, while Live Cattle closed narrowly mixed, despite stronger cash prices and wholesale beef values.

Live Cattle futures closed 32¢ lower to 32¢ higher.

Feeder Cattle futures closed an average of 67¢ higher. 

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 $1.13 higher Monday afternoon at $215.42/cwt. Select was 44¢ higher at $200.94.

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Extreme volatility continued on Wall Street Monday with steep losses early and then recovery later on, led by tech stocks.

The Dow Jones Industrial Average closed 34 points higher. The S&P 500 closed 4 points higher. The NASDAQ was up 51 points.

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“The latest meat trade data shows that meat exports are continuing to help offset record meat production in 2018,” explains Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in December market comments.  “Each of the major meats—beef, pork and poultry—are projected to reach record levels in 2018 and will combine to push total U.S meat production to a record level of 102.3 billion lbs., up 2.6% year over year. However, 2018 per capita meat consumption in the U.S. is projected at 218.7 lbs., up 1.0% year over year. The smaller increase in meat consumption compared to production is largely due to the net movement of meat offshore through meat exports. Thus far in 2018 (January-October), total meat exports of 13.3 billion lbs. consist of broiler (44.0%); pork (36.3%); and beef (19.7%).

Moreover, Peel explains U.S. meat exports are forecast to increase next year, while total meat imports are forecast to decrease. 

“Continued improvements in the net trade balance will be critical to partially offset total 2019 meat production forecast at 103.7 billion lbs., up 1.4% year over year and another record level,” Peel says. “Domestic per capita total meat consumption is forecast to hold steady in 2019.”

However, Peel also pointed out earlier this fall, “There is general agreement that trade disruptions will likely reduce U.S. and global macroeconomic growth in 2019. While the beef industry has avoided most of the direct tariff impacts thus far, indirect tariff impacts will continue to grow unless the trade situation is resolved very soon. Consumers will see growing tariff impacts that may impact consumer spending and beef demand…Tariff-driven price increases could push consumers to cheap and abundant pork and poultry at the expense of beef demand.”

Negotiated cash fed cattle trade remained mostly undeveloped through Friday afternoon, according to USDA reports. There was some light to moderate trade in the western Corn Belt at $115-$117/cwt., which was $1 higher than the previous week. Early dressed sales were steady at $183-$185. By late in the day, AMS reported some dressed trade in Nebraska at $187, which was $2-$4 more than the previous week.

Cattle futures closed narrowly mixed in choppy trade.

Live Cattle futures closed an average of 22¢ higher, except for 5¢ to 27¢ lower at either end of the board.

Other than 17¢ higher in spot Jan, Feeder Cattle futures closed unchanged to an average of 22¢ lower. 

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

Choice boxed beef cutout value was $1.62 higher Friday afternoon at $214.29/cwt. Select was $2.28 higher at $200.50.

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Major U.S. financial indices plunged again to end the week.

Pressure included ongoing worries about global economic growth and trade, as well as fewer jobs than expected in the monthly national employment report.

Total nonfarm payroll employment increased by 155,000 in November, according to the U.S. Bureau of Labor Statistics. The unemployment rate remained unchanged at 3.7%. 

Average November hourly earnings for all employees on private nonfarm payrolls rose by 6¢ to $27.35. Over the year, average hourly earnings have increased by 81¢ cents, or 3.1%.

The Dow Jones Industrial Average closed 558 points lower. The S&P 500 closed 62 points lower. The NASDAQ was down 129 points.

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U.S. beef exports continue at a torrid pace, according to data released by USDA and compiled by the U.S. Meat Export Federation (USMEF).

October beef exports totaled 117,838 metric tons (mt), up 6% from a year ago, valued at $727.4 million, which was 10% more year over year and the second-highest monthly total on record.

For January through October, beef exports totaled 1.13 million mt, 9% more than last year, while value was 17% more at $6.92 billion. For beef muscle cuts only, exports increased 12% percent in volume (867,714 mt) and 19% in value ($6.19 billion).

 “Demand for U.S. beef continues to climb in nearly every region of the world, with annual records already falling in some markets,” says Dan Halstrom, USMEF president and CEO. “Per-head export value will also easily set a new record in 2018, which illustrates the strong returns exports are delivering for cattle producers and for the entire supply chain.”

Beef export value equated to $317.53 per head of fed slaughter in October, up 5% from a year ago. For January through October, the per-head average was up 15% to $320.50.

Negotiated cash fed cattle trade was undeveloped through Thursday afternoon.

Cattle futures softened but closed well off of session lows that came early, driven in part by the plummeting stock market (see below).

Live Cattle futures closed an average of 48¢ lower. 

Except for an average of 35¢ lower in the back two contracts, Feeder Cattle futures closed an average of $1.22 lower. 

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

Choice boxed beef cutout value was 59¢ lower Thursday afternoon at $212.67/cwt. Select was $1.36 higher at $198.22.

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Maybe it still pays to leave that cash in the coffee can. Wall Street took a wild ride Thursday, with the Dow plunging nearly 800 points early on—driven in part by the overnight free fall in stock index futures —before ultimately recovering most of the loss. That followed the previous session’s steep losses.

Recent pressure includes the yield curve inversion, as a possible barometer of looming domestic economic recession, as well as fears of a global economic slowdown, tied to lingering trade issues. Support for the day included reports that the Fed may be less aggressive in raising interest rates after the December meeting.

The Dow Jones Industrial Average closed 79 points lower. The S&P 500 closed 4 points lower. The NASDAQ was up 29 points.

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“On average, bankers estimated that farmland prices declined by 4.0% over the past 12 months and expect farmland prices to fall by another 3.2% over the next 12 months,” according to the most recent Rural Mainstreet Economy Report from Creighton University.

“More than ever, farmland values are extremely dependent upon quality, and location, location, location,” says Fritz Kuhlmeier, CEO of Citizens State Bank at Lena, IL.

The monthly report is built from surveys of rural community bank CEOs in a 10-state region dependent on agriculture and/or energy. It includes the Rural Mainstreet Index (RMI), a real-time measure of rural economic health. The overall index expanded to 54.3 in October from 51.5 in September. The index ranges between 0 and 100 with 50.0 representing growth neutral. That’s the ninth consecutive month the index climbed above growth neutral. 

“Our surveys over the last several months indicate that the Rural Mainstreet economy is expanding outside of agriculture. However, the negative impacts of tariffs and low agriculture commodity prices continue to weaken the farm sector,” says Ernie Goss, PhD, Jack A. MacAllister Chair in Regional Economics at Creighton University’s Heider College of Business. 

Major U.S. stock exchanges were closed Wednesday, saluting the life of patriot and former president George Herbert Walker Bush.

Negotiated cash fed cattle trade was undeveloped through Wednesday afternoon, but early signs pointed to at least steady money.

For instance, there were only two lots of steers from Kansas (219 head) offered in the weekly Fed Cattle Exchange auction. Both sold at a weighted average price of $117.83/cwt. for delivery at 1-9 days. That price was right at last week’s average country trade for the region.

Likewise, prices for Ch 2-4 steers ($115.58-$116.63) at the Tama fat cattle auction in Iowa were at the upper end of country prices in the western Corn Belt last week.

Cattle futures closed higher Wednesday—led by Feeder Cattle—building on gains from the previous session, although trade and overall direction were limited.

Live Cattle futures closed an average of 71¢ higher. 

Feeder Cattle futures closed an average of $1.02 higher. 

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

Choice boxed beef cutout value was 60¢ lower Wednesday afternoon at $213.26/cwt. Select was 65¢ lower at $196.86.

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“Restaurant operators are somewhat more optimistic about sales growth in the coming months, with their outlook rising to a six-month high,” according to the National Restaurant Association (NRA), in that organization’s most recent Restaurant Performance Index (RPI) report. “However, restaurant operators remain generally less bullish about the direction of the overall economy.”

Stronger same-store sales and customer traffic pushed the RPI to a slight gain in October at 101.2; it was 101.1 a month earlier. Index values above 100 indicate key industry indicators are in a period of expansion.

The RPI is comprised of the Current Situation Index (CSI) and the Expectations Index (EI). Month to month, the CSI increased from 100.6 to 100.9. The EI was stable at 101.6.

Negotiated cash fed cattle trade was undeveloped through Tuesday afternoon.

Cattle futures gained some traction, in the face of sharply lower outside markets. Feb Live Cattle led the way. Ultimately, Feeder Cattle tagged along to a lesser degree.

Except for 15¢ lower in the back contract, Live Cattle futures closed an average of 95¢ higher (30¢ to $1.47 higher).

Except for 10¢ lower in spot Jan, Feeder Cattle futures closed an average of 59¢ higher. 

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

Choice boxed beef cutout value was 78¢ higher Tuesday afternoon at $213.86/cwt. Select was $1.67 lower at $197.51.

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Major U.S. financial indices dove lower Tuesday, reportedly pressured by a flattening yield curve, which investors fear portend an economic slowdown.

The Dow Jones Industrial Average closed 799 points lower. The S&P 500 closed 90 points lower. The NASDAQ was down 283 points.

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Agricultural producer sentiment held steady in November with producers remaining optimistic about the state of the agricultural economy, according to results from the Purdue University-CME Group Ag Economy Barometer.

The barometer reading of 134 was 1% lower than in October, but remains similar to levels last spring before trade disruptions began. The barometer utilizes a survey of 400 agricultural producers from across the country.

“Although there was a modest decline in the barometer this month, there was some evidence that producers are becoming more confident regarding the U.S. agricultural economy’s future,” says James Mintert, the barometer’s principal investigator and director of Purdue University’s Center for Commercial Agriculture.

The barometer’s two sub-indices remained mostly unchanged from October. The Index of Current Conditions held at 115, and the Index of Future Expectations dropped 3 points to a reading of 143.

Other Barometer Survey Highlights

50% expect higher farmland values over the next five years, significantly more than a month earlier when 21% said they expected farmland values to increase.

13% expect farm profitability to improve in the next 12 months.

44% expect to see equity diminish in the coming year.

75% said they were either ‘somewhat or very concerned’ that Congress had not passed new farm bill legislation.

Negotiated cash fed cattle trade ended up mostly $1-$2 higher on a live basis last week at $118/cwt. in the Southern Plains, $114-$116 in the western Corn Belt and $116-$118.50 in Nebraska. Dressed trade was $3-$6 higher in the western Corn Belt at $183-$186. In Nebraska, it was steady to $2 less than the bulk of the previous week’s trade at $183-$185.

Despite stronger cash prices, firmer wholesale beef values and positive news regarding U.S.-China trade (see below), Cattle futures softened to start the week. Pressure included the decline in Lean Hog futures, as well as recently strengthening grain prices, where Feeder Cattle are concerned.

Live Cattle futures closed an average of 49¢ lower (5¢ to 72¢ lower).

Feeder Cattle futures closed an average of $1.40 lower, (72¢ lower in spot Jan to $1.72 lower at the back).

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

Choice boxed beef cutout value was 47¢ higher Monday afternoon at $213.08/cwt. Select was 77¢ higher at $199.18.

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Major U.S. financial indices closed higher Monday, boosted by comments following the weekend meeting between President Trump and President Xi Jinping of China, during the G20 Summit in Argentina.

Included in a statement from President Trump’s press secretary:

“On Trade, President Trump has agreed that on Jan. 1, 2019, he will leave the tariffs on $200 billion worth of product at the 10% rate, and not raise it to 25% at this time. China will agree to purchase a not-yet-agreed-upon, but very substantial, amount of agricultural, energy, industrial, and other product from the United States to reduce the trade imbalance between our two countries. China has agreed to start purchasing agricultural product from our farmers immediately.

“President Trump and President Xi have agreed to immediately begin negotiations on structural changes with respect to forced technology transfer, intellectual property protection, non-tariff barriers, cyber intrusions and cyber theft, services and agriculture. Both parties agree that they will endeavor to have this transaction completed within the next 90 days. If at the end of this period of time, the parties are unable to reach an agreement, the 10% tariffs will be raised to 25%.”

The Dow Jones Industrial Average closed 287 points higher. The S&P 500 closed 30 points higher. The NASDAQ was up 110 points.

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Cull cow prices likely reached their seasonal low in November, according to Derrell Peel, Extension livestock marketing specialist at Oklahoma State University. However, he emphasizes making sense of the cull market has been challenging this year.

From May through October this year, Peel says cull cow prices averaged 13-15% less than the previous year. In his weekly market comments, he explains, Cull cow prices typically begin a slight recovery in December following the November seasonal low.

From current levels, he says seasonal trends suggest breaking cow prices of $53.47/cwt. in January; $58.26 in February; $59.53 in March; $59.94 by April; and $60.85 by May.

“One of the big factors contributing to weak cull cow prices has been weak cow boxed beef prices in the second half of 2018,” Peel says. “In the last week of November, cow boxed beef prices were 7.8% lower than year-earlier levels and have averaged 8.3% lower year over year since mid-year.”

Although overall beef demand remains strong, Peel explains cow beef demand is more uncertain, with most going into ground beef. So, along with total cow slaughter being 7.2% more than last year, he says it’s possible that large supplies of pork and poultry are applying more pressure to ground beef demand.

Even so, Peel expects a relative tightening of cow beef supplies to support a near-normal increase in cull cow prices heading into the new year.

Negotiated cash fed cattle trade remained largely undeveloped through USDA’s late-afternoon report Friday. There were some live sales in the western Corn Belt at $115/cwt., unevenly steady with Wednesday’s $114-$116, which was $1-$2 higher than the previous week. There was some early dressed trade in Nebraska at $183, but too few transactions to trend; prices the previous week were at $180-$185, mostly $185.

Live Cattle futures firmed on Friday (17¢ lower to 32¢ higher), supported by the steady to higher feel in the cash market.

Feeder Cattle futures softened amid continued lackluster trade and perhaps some month-end position squaring. Except for 7¢ lower in the back two contracts, Feeder Cattle futures closed an average of 60¢ lower.

Though futures prices remain channel-bound, there continue to be expectations for a secondary boost, if and when China and the U.S. settle their trade differences. The notion is that China’s ongoing problems with African Swine Fever mean that nation needs to import lots more pork, potentially significantly more from the U.S. President Trump and China’s President Xi Jingping were scheduled to meet over the weekend during the G20 Summit.

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

Choice boxed beef cutout value was even with the previous day Thursday afternoon at $212.61/cwt. Select was 12¢ lower at $198.41.

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Major U.S. financial indices closed higher Friday, apparently boosted by optimism that the U.S. and China would make headway in solving their trade issues when leaders meet during the G20 Summit in Argentina over the weekend.

The Dow Jones Industrial Average closed 199 points higher. The S&P 500 closed 22 points higher. The NASDAQ was up 57 points.

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Leaders of the United States, Mexico, and Canada signed the U.S.-Mexico-Canada Agreement (USMCA) on Friday, during the G-20 meeting in Argentina. The USMCA maintains unrestricted, duty-free trade for beef and cattle in North America. It also maintains science-based trade standards.

All three countries must complete their own domestic processes before the USMCA comes into force. In the U.S., Congress will need to pass legislation to implement the deal. The U.S. International Trade Commission is currently conducting an investigation into the likely impacts of USMCA.

“With the signing of the, U.S. beef producers are one step closer to knowing that unrestricted, science-based trade will continue in North America,” says Kevin Kester, president of the National Cattlemen’s Beef Association. “The agreement brings the trading relationship with our neighbors into the 21st century – and clearly rejects the failed beef and cattle trade policies of the past. Open markets have helped U.S. producers flourish and created billion-dollar markets for U.S. beef. We look forward to working with Congress to get USMCA passed into law as quickly as possible.”

Other than early live sales in the western Corn Belt Wednesday, which were $1-$2 higher than last week at $114-$116/cwt., negotiated cash fed cattle trade remained undeveloped through Thursday afternoon.

Cattle futures dipped, recovering some from the strongest early pressure. Other than, arguably, more interest flowing to Lean Hogs, there seemed no apparent fundamental reason for the decline. Given the current support of fed cattle prices, it was one of those sessions that left you wondering exactly what components comprise electronic-trading algorithms, and perhaps more important, how far ahead.

After 17¢ lower in spot Dec and 27¢ lower in near Feb, Live Cattle futures closed an average of 97¢ lower (52¢ to $1.30 lower).

Feeder Cattle futures closed an average of $1.46 lower.

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

Choice boxed beef cutout value was 67¢ lower Thursday afternoon at $212.61/cwt. Select was 3¢ higher at $198.53.

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Major U.S. financial indices trickled lower Thursday, as investors digested the interest rate news and trade hopes that boosted markets the previous day.

Battered nearby Crude Oil futures (WTI-CME) bounced about $1 higher.

The Dow Jones Industrial Average closed 27 points lower. The S&P 500 closed 6 points lower. The NASDAQ was down 18 points.

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Judging by projections in the latest Outlook for U.S. Agricultural Trade, beef exports will continue to lead the way next year.

Projected beef exports for fiscal year 2019 (October-September) were projected $500 million higher than the August forecast at $7.6 billion. That would be about $278 million more than this year. According to analysts with USDA’s Economic Research Service (ERS), the increase is driven mostly by higher unit values.

Overall, the projection for total livestock, dairy, and poultry exports are forecast $200 million less than the August projection at $30.1 billion, pressured by weaker demand for dairy, poultry and products, hides and skins, as well as rendered products.

For context, according to ERS analysts, “Per capita world GDP growth is expected to be robust at 2.1% in 2018 and to remain healthy at 2.0% percent in 2019, led by a thriving U.S. economy…Per capita GDP growth in the United States of 2.2% in 2018 is expected to be sustained in 2019. In 2018, the U.S. economy is bolstered by strong consumer spending and favorable business investment. Income growth is expected to slow during 2019, due to diminishing effects of fiscal stimulus, rising inflation and slower economic growth outside the United States.”

Notions grew stronger yesterday for steady to higher cash fed cattle prices this week.

Early live sales in the western Corn Belt were $1-$2 higher at $114-$116/cwt., on slow trade and light demand.

There were 620 head (seven lots) offered in the weekly Fed Cattle Exchange auction. One lot (148 head) of steers from Kansas sold at $116.75/cwt. for delivery at 1-9 days. That’s toward the top of the price range for country trade in the region last week.

Live Cattle futures closed marginally mixed Wednesday, while Feeder Cattle softened slightly, amid light trade and a lack of direction.

Live Cattle futures closed narrowly mixed, from an average of 5¢ higher in three contracts to an average of 12¢ lower.

Feeder Cattle futures closed an average of 54¢ lower.

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

Choice boxed beef cutout value was 72¢ lower Wednesday afternoon at $213.28/cwt. Select was $1.74 lower at $198.50.

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Major U.S. financial indices closed sharply higher Wednesday, propelled by comments from Federal Reserve Chairman, Jerome Powell, suggesting interest rate increases may be nearing an end.

“Interest rates are still low by historical standards, and they remain just below the broad range of estimates of the level that would be neutral for the economy—that is, neither speeding up nor slowing down growth,” Powell explained in prepared remarks at the Economic Club of New York Wednesday. “My FOMC colleagues and I, as well as many private-sector economists, are forecasting continued solid growth, low unemployment, and inflation near 2%.”

The Dow Jones Industrial Average closed 617 points higher. The S&P 500 closed 61 points higher. The NASDAQ was up 208 points.

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“Declining unemployment rates and a small increase in population ages 16 and older corresponded to the addition of more than 650,000 jobs in rural counties between 2013 and 2017,” according to the recently released Rural America at a Glance, from USDA’s Economic Research Service (ERS).

“At the same time, falling labor force participation (due primarily to an aging population among non-Hispanic Whites) corresponded to a decline in employment of nearly 280,000, leaving a net increase in jobs of roughly 370,000,” ERS analysts say.

In 2016-2017, rural counties added population for the first time in a decade, according to the report, though the total rural population has remained close to 46.1 million since 2013.

“The recent upturn in rural population comes from increasing rates of net migration as opposed to natural change (births minus deaths). Increased net migration has coincided with declining rural unemployment, rising incomes, and declining poverty since 2013,” say ERS analysts.

Cattle futures closed mainly narrowly lower Tuesday, with little direction one way or the other.

Except for 5¢ higher in away Dec and unchanged at the back, Live Cattle futures closed an average of 21¢ lower.

Feeder Cattle futures closed an average of 28¢ lower.

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

Choice boxed beef cutout value was 45¢ lower Tuesday afternoon at $214.00/cwt. Select was 45¢ higher at $200.24.

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Major U.S. financial indices gained for the second consecutive day, reportedly buoyed by chatter about a U.S.-China trade truce.

The Dow Jones Industrial Average closed 108 points higher. The S&P 500 closed 8 points higher. The NASDAQ was fractionally higher.

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Although boxed beef cutout values never received as much seasonal pop as some expected, they continue to be strong in the face of increased production.

“The wholesale price of beef remained fairly strong through the holiday week. There may still be some end-of-the-year holiday beef buying on the table, which could provide support to the beef cutout,” says Andrew P. Griffith, agricultural economist at the University of Tennessee, in his weekly market comments. How much buying is left to be completed will determine the amount of support provided as retailers will soon be moving their focus to end cuts.”

Analysts with USDA’s Economic Research Service note that since early August, Choice wholesale beef cutout prices stayed well above year-earlier levels. 

“In fact, the weekly beef cutout price for the week ending Nov. 9 climbed to within June price levels despite higher year-over-year beef production for third-quarter 2018 and higher expected production in fourth-quarter 2018,” ERS analysts say in the latest monthly Livestock, Dairy and Poultry Outlook.