Daily Market Highlights

Negotiated cash fed cattle prices surged higher on Friday. Live prices were mainly $3-$4 higher at mostly $114-$115/cwt., except for $2-$3 higher in the western Corn Belt at $112-$113. Dressed sales were $6 higher at $180.

Higher fed cattle prices, strengthening wholesale beef values and apparent position squaring helped lift Cattle futures.

Live Cattle futures closed an average of 86¢ higher (50¢ to $1.32 higher).

Feeder Cattle futures closed an average of 58¢ higher.

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

Choice boxed beef cutout value was 37¢ higher Friday afternoon at $213.47/cwt. Select was 52¢ higher at $198.83.

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Major U.S. financial indices slid sharply on Friday, with continued investor jitters about rising interest rates and global trade. The decline came in spite of positive economic news that included the economy growing at 3.5% in the third quarter, according to the U.S. Commerce Department.

The Dow Jones Industrial Average closed 296 points lower. The S&P 500 closed 46 points lower. The NASDAQ was down 151 points.

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“Year-to-date cattle slaughter through September was 2.6% above last year and 8.6% above the previous 3-year average. Year-to-date steer and heifer slaughter is 1.2% below and 7.6% above last year respectively,” according to analysts with the Agricultural Marketing Service. “Year-to-date beef cow slaughter is 10.7% above a year ago and 22.8% above the previous 3-year average. With that many beef cows moved to slaughter this year, some analysts are looking at late 2019 futures to see if current $114-$116 prices are realistic.”

Cattle futures, led by Feeder Cattle, mostly softened Thursday, with no change in fundamentals but uncertainty surrounding the level of cash fed cattle trade this week in terms of both volume and price.

Except for 7¢ higher in spot Oct, Live Cattle futures closed an average of 78¢ lower (52¢ to $1.27 lower).

Feeder Cattle futures closed an average of $1.38 lower (65¢ to $2.30 lower).

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

Choice boxed beef cutout value was $1.71 higher Thursday afternoon at $213.10/cwt. Select was 49¢ higher at $198.31.

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Major U.S. financial indices surged on Thursday, recovering a fair portion of the previous session’s steep losses. Support was attributed to mainly oversold conditions, as well as positive quarterly earnings from folks like Microsoft and Amazon.

The Dow Jones Industrial Average closed 401 points higher. The S&P 500 closed 49 points higher. The NASDAQ was up 209 points.

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Another chapter in the regulation of fake meat unfolded the past couple of days at a joint public meeting hosted by the United States Department of Agriculture (USDA) and the U.S. Food and Drug Administration (FDA). The meeting—Use of Animal Cell Culture Technology to Develop Products Derived from Livestock and Poultry—included discussions about the safety and marketing of cell-based fake meat, as well as which agency will ultimately have regulatory control.

The North American Meat Institute (NAMI) continued to argue that the USDA Food Safety and Inspection Service (FSIS) has primary jurisdiction for regulation of new cell-based meat products.

FSIS oversight includes the USDA mark of inspection, providing consumer confidence that a product has been deemed wholesome by the agency.

Likewise, Jennifer Houston, president-elect of the National Cattlemen’s Beef Association (NCBA) explained, “Ensuring lab-grown fake meat products are subject to strong, daily inspection by USDA’s trained professionals is essential. The health of consumers is on the line, and USDA is far better suited to ensure the safety of lab-grown products.”

Mark Dopp, NAMI senior vice president of Regulatory and Scientific Affairs, also detailed the importance and benefits of USDA’s label approval process, which protects companies from frivolous lawsuits and gives consumers confidence that products are accurately labeled and not represented to be something they are not.

“USDA can be trusted to enforce truthful, transparent labeling of the products under its jurisdiction,” explained Kevin Kester, NCBA president. “Beef producers welcome competition, but product labels and marketing must be based on sound science, not the misleading claims of anti-animal agriculture activists.”

Although cash fed cattle trade remained undeveloped through Wednesday afternoon on light to moderate demand, there were some early live sales in the western Corn Belt on Tuesday at $112/cwt., which was $2 more than last week.

There were only 1,051 head offered in the weekly Fed Cattle Exchange Auction, and no takers. There were two lots passed out at $105.

Stronger wholesale beef prices, notions of steady-to-higher fed cattle prices, as well as a surge in Lean Hog futures, helped Cattle futures firm Wednesday.

Live Cattle futures closed an average of 71¢ higher (50¢ to $1.20 higher).

Except for 45¢ lower in spot Oct, Feeder Cattle futures closed an average of 48¢ higher.

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

Choice boxed beef cutout value was $1.11 higher Wednesday afternoon at $211.39/cwt. Select was 96¢ higher at $197.82.

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Major U.S. financial indices plunged Wednesday. Pressures appeared to be many and varied, everything from declining tech and bank stocks to concerns about economic growth, tied to worries about trade and rising interest rates.

For instance, sales of new single-family houses in September were 5.5% less than the prior month’s adjusted rate, according to the U.S. Census Bureau and the U.S. Department of Housing and Urban Development. Although home sales were 3.5% more year over year, September sales represented the slowest pace since December of 2016, according to the National Association of Home Builders (NAHB).

The Dow Jones Industrial Average closed 608 points lower. The S&P 500 closed 84 points lower. The NASDAQ was down 329 points.

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“Stocker budgets for winter grazing still look quite favorable, unless grazing delays stretch out too long and cut days available for winter grazing down excessively,” says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly market comments.

On the one hand, Peel explains precipitation in Oklahoma for the past month is the second most on record (187% of normal); the most all time in the last 90 days. That provides lots of promise.

“Producers may, in fact, be looking to stock a bit heavier than usual with potential for better than average wheat forage production this winter,” Peel says.

On the other hand, the extraordinary moisture is delaying some planting and development.

“For the first time in many years, turnout for wheat grazing is likely to be delayed by excess moisture across many regions of the state,” Peel explains. “Some wheat that was planted early is getting close to being ready to graze but some producers have struggled to get cattle ready for grazing. Wet, sloppy conditions make health challenges worse and producers have backed off of purchases recently. Some cattle sellers have also had difficulty gathering and getting cattle to market.”

Cattle futures softened Tuesday, following the previous session’s strong gains, apparently pressured mostly by the lower outside markets.

Live Cattle futures closed an average of 48¢ lower (2¢ to 92¢ lower).

Feeder Cattle futures closed an average of 75¢ lower.

Wholesale beef values were higher 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 $1.00 higher Tuesday afternoon at $210.28/cwt. Select was 80¢ lower at $196.86.

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Major U.S. financial indices closed lower again Tuesday, pressured by quarterly earnings reports from the likes of Caterpillar and 3M.

The Dow Jones Industrial Average closed 125 points lower. The S&P 500 closed 15 points lower. The NASDAQ was down 31 points.

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Total pounds of beef in freezers Sept. 30 were 1% more than the previous month and 3% more than the same time a year earlier, according to the latest USDA Cold Storage report. That appears to be a demand win, given the significant production increase through the summer.

Frozen pork supplies were 1% more than the previous month but 5% less than the same time a year earlier.

Total red meat supplies in freezers were up 1% from the previous month but down 1% from last year.

Total frozen poultry supplies were down slightly from the previous month but up 10% from a year ago.

Apparently, traders viewed Friday’s Cattle on Feed report as bullish overall (see below), helping to boost Cattle futures Monday.

Live Cattle futures closed an average of $1.10 higher (55¢ to $1.32 higher).

Feeder Cattle futures closed an average of $1.92 higher ($1.00-$2.97 higher).

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

Choice boxed beef cutout value was $1.35 higher Monday afternoon at $209.28/cwt. Select was $3.42 higher at $197.66.

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Major U.S. financial indices closed lower Monday, pressured by bank stocks and trade worries.

The Dow Jones Industrial Average closed 126 points lower. The S&P 500 closed 11 points lower. The NASDAQ was up 19 points.

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From an expectations perspective, Stephen Koontz, agricultural economist at Colorado State University says Friday’s Cattle on Feed report is long-term bullish but short-term bearish.

Although September placements were less than expected (4.6% less than a year earlier), so were marketings (3.59% less).

“The drop off in marketings, regardless of placements, suggests the need for strong slaughter volumes the next two months,” Koontz explains, in the most recent issue of In the Cattle Markets. “On-feed numbers are nothing short of enormous, and placements in July and August were close to 7% above the prior year. The availability of market-ready cattle come the end of this year and the first of next will be substantial. However, the marketplace has handled the large volume of beef so far this year, and much of last, perfectly. Saturday slaughter volumes have been strong, packer and retailer margins have been excellent, slaughter weight increases are typical for the season but not excessive, and domestic demand is appearing to favor beef while exports have been excellent.”

Cattle futures continued to soften Friday, pressured in part by a lack of positive news, deterioration in Lean Hog futures and perhaps positioning ahead of the monthly Cattle on Feed report (see below).

Live Cattle futures closed an average of 47¢ lower.

Feeder Cattle futures closed an average of 66¢ lower.

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

Choice boxed beef cutout value was $1.11 higher Friday afternoon at $207.93/cwt. Select was $1.89 higher at $194.24.

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Major U.S. financial indices closed narrowly mixed Friday. Strong quarterly earnings reports provided support, while worries about global trade and higher interest rates continued to pressure.

The Dow Jones Industrial Average closed 64 points higher. The S&P 500 closed 1 point lower. The NASDAQ was down 36 points.

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Both bears and bulls can likely find support in Friday’s monthly Cattle on Feed report, with fewer placements and slightly fewer cattle on feed than expected, but also fewer marketings.

Cattle on feed Oct. 1 were the most since the data series began in 1996 at 11.40 million head, which was 5.43% (+587,000 head) more than last year. Most analysts expected to see about 6% more. That’s for feedlots with a capacity of 1,000 head or more.

While most analysts ahead of the report expected September placements to be about even with last year, the 2.05 million head placed were 4.60% less (-99,000 head) than a year earlier.

“High placements have been seen despite profitability concerns,” explained analysts with Allendale, Inc., ahead of Friday’s report. “Kansas State estimates a $110 loss per head on finished cattle in September. First-half 2019 marketings are slated for $122-$125 breakevens. August placements determine a part of the March through early August beef supply.”

In terms of weights, 36.81% went on feed weighing 699 lbs. or less; 43.69% weighing 700-899 lbs.; 19.5% weighing 900 lbs. or more. That continues the trend of recent months.

September marketings of 1.72 million head were 3.59% less (-64,000 head) than the previous year. Expectations ahead of the report were for marketings to be about even.

Of the 12 major cattle feeding states listed in the report, South Dakota was the only one with fewer cattle on feeder Oct. 1, year over year. There were 2.30% more steers on feed than a year earlier and 11.03% more heifers.

There was limited negotiated cash fed cattle trade Thursday with light to moderate demand in all major cattle feeding regions, but too few transactions to trend in any region. So far this week, trade has been at $109-$111/cwt. on a live basis in Nebraska and the western Corn Belt, with dressed sales in those regions at $174.

Cattle futures closed mostly narrowly mixed Thursday.

Other than 15¢ higher in spot Oct, Live Cattle futures closed an average of 17¢ lower.

Feeder Cattle futures closed mixed but mostly higher. The front two contracts were an average of $1.12 higher and then 7¢ lower to 35¢ higher across the rest of the board.

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

Choice boxed beef cutout value was $2.26 higher Thursday afternoon at $206.82/cwt. Select was $1.16 higher at $192.35.

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Wall Street continued to search for a bottom in the recent sell-off as major U.S. financial indices closed steeply lower Thursday. Among pressures cited by analysts are lingering worries about the trade impasse with China and higher interest rates, as well as some thoughts that tech stocks are valued too high.

The Dow Jones Industrial Average closed 327 points lower. The S&P 500 closed 40 points lower. The NASDAQ was down 157 points.

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“Fourth-quarter 2018 is likely to be characterized by feedlots feeding cattle longer than previously expected, lowering expected fourth-quarter fed cattle slaughter,” say analysts with USDA’s Economic Research Service (ERS), in this month’s Livestock, Dairy and Poultry Outlook. “This is largely responsible for reducing the 2018 commercial beef production forecast from the previous month. The beef production forecast for 2019 was raised on greater expected placements in second-half 2018 and first-half 2019.”

Projected beef production for this year was lowered by 150 million lbs. to 26.9 billion lbs., based on expectations of fewer steers and heifers to be slaughtered more than offsetting additional cows in the slaughter mix.

Projected beef production for next year was raised by 190 million lbs. to 27.9 billion lbs., based aforementioned projections for more placements than expected.

“The expected higher number of fed cattle to be slaughtered was partially offset by an expectation of lower dressed weights in early 2019,” ERS analysts say.

Negotiated cash fed cattle trade picked up in the North Wednesday with moderate demand and slow to moderate trade. Live prices were steady to $2 lower in Nebraska at $109-$111/cwt., and steady to $1 higher in the western Corn Belt at $109-$110. Dressed trade was steady in Nebraska at $174; steady to $1 lower in the western Corn Belt at $173-$174.

There were 1,103 head offered in the weekly Fed Cattle Exchange Auction, but no takers.

Cattle futures softened Wednesday, led by Feeder Cattle.

Other than 27¢ higher in spot Oct, Live Cattle futures closed an average of 31¢ lower.

Other than 5¢ higher in spot Oct, Feeder Cattle futures closed an average of 67¢ lower.

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 5¢ lower Wednesday afternoon at $204.56/cwt. Select was $1.36 lower at $191.19.

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Major U.S. financial indices wobbled lower Wednesday, amid mixed quarterly earnings reports and continued angst over higher interest rates.

The Dow Jones Industrial Average closed 91 points lower. The S&P 500 closed fractionally lower. The NASDAQ was down 2 points.

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Analysts with USDA’s Economic Research Service raised expected feeder cattle prices (OKC, 750-800 lbs.) to $150-$156/cwt. for the fourth quarter, based on expectations of continued strong demand.

“Price information from Oklahoma National Stockyards for feeder steers weighing 750-800 lbs. suggests that there is competition for ownership of these animals,” ERS analysts say, in the latest monthly Livestock, Dairy and Poultry Outlook. “Coupled with counter-seasonal gains in prices for lighter-weight feeder cattle, this may suggest that winter forage conditions have improved over last year.”

ERS estimates feeder prices at $141-$149 in the first quarter next year, $143-$153 in the second quarter and $145-$155 in the third quarter.

Likewise, ERS raised the expected fourth-quarter price for fed steers (5-area Direct) to $110-$114 on a projected slower marketing pace.

“The slower pace is likely in part a reflection of lighter placement weights during the spring months, but may also reflect a desire by feedlots to capture premiums implied by October and December futures,” ERS analysts explain. “Although fed steer prices in the 5-area marketing region for September averaged above year-earlier levels, expected increased supplies of cattle available for slaughter in fourth-quarter 2018 are likely to pressure prices relative to last year.”

Cattle futures closed mostly lower Tuesday, buoyed by support late in the day, but amid limited trade and interest overall.

Except for 12¢ and 10¢ higher, in near Feb and Apr, respectively, Live Cattle futures closed an average of 30¢ lower.

Feeder Cattle futures closed an average of 63¢ lower.

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

Choice boxed beef cutout value was 19¢ lower Tuesday afternoon at $204.61/cwt. Select was 66¢ higher at $192.55.

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Major U.S. financial indices surged higher Tuesday, lifted by strong quarterly earnings across a broad base of companies, including Morgan Stanley, Netflix and United Health.

The Dow Jones Industrial Average closed 547 points higher. The S&P 500 closed 59 points higher. The NASDAQ was up 214 points.

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Although most expectations are for September feedlot placements to be about even with last year, in this Friday’s monthly Cattle on Feed report, a majority of analysts expect the on-feed number Oct. 1 to be about 6% more.

For instance, analysts at Allendale, Inc. expect placements to be 0.2% more than last year (2.154 million head). If so, they say that would be the largest placement for the month in seven years and mark the fifth consecutive month of higher year-over-year placements.

“High placements have been seen despite profitability concerns,” say Allendale analysts. “Kansas State estimates a $110 loss per head on finished cattle in September. First-half 2019 marketings are slated for $122-$125 breakevens. August placements determine a part of the March through early August beef supply.”

The folks at Allendale expect marketings in September to be 0.7% less than last year at 1.771 million head. They look for the number of cattle on feed Oct. 1 to be 5.9% more than a year earlier at 11.446 million head, which would be record high for the month since the data series that began in 1996.

Sharply higher wholesale Choice beef cutout values helped boost Live Cattle futures Monday. That provided support to Feeder Cattle, after follow-through pressure tied in part to higher gain prices.

Live Cattle futures closed an average of 95¢ higher (55¢ higher to $1.80 higher in near Dec).

Feeder Cattle futures closed an average of 70¢ higher.

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

Choice boxed beef cutout value was $2.09 higher Monday afternoon at $204.80/cwt. Select was 39¢ lower at $191.89.

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Despite positive quarterly earnings reports, investors started the week with renewed pessimism; pushing U.S. financial indices lower Monday.

The Dow Jones Industrial Average closed 89 points lower. The S&P 500 closed 16 points lower. The NASDAQ was down 66 points.

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Retail prices for beef and pork drifted lower in September, reversing a trend from the summer months, according to the Livestock Marketing Information Center (LMIC), in the latest Livestock Monitor. Retail chicken prices moved lower, too, but within a narrow range established early last year.

“The biggest retail price decline from August to September was for Choice Beef, falling 15¢ per pound,” say LMIC analysts. “Even with the drop in price, compared to 12 months earlier, prices were still 2% higher. That compares with retail pork prices that were 5% lower than a year earlier and chicken prices that were lower by a fraction of a percent.” They note the prices are based on Bureau of Labor Statistics survey data that is compiled by USDA’s Economic Research Service (ERS).