Daily Market Highlights

Cattle Current Daily—Aug. 29, 2019

Although still largely undeveloped through Wednesday afternoon, negotiated cash fed cattle trade appears steady to weaker than last week.

For instance, slaughter steers and heifers sold fully $1 lower at Sioux Falls Regional in South Dakota on Wednesday. There were 337 Choice 2-3 steers weighing an average of 1,433 lbs. that brought an average of $108.01/cwt.

A day earlier, negotiated trade in the western Corn Belt was at $109 on a live basis, which was $1 less than the previous week. Although too few to trend, there were some dressed sales in the region on Wednesday at $173. Dressed prices last week were $174-$178.

Also, there were 734 head offered in the weekly Fed Cattle Exchange auction—432 head (two lots of Nebraska heifers) sold for $106/cwt. for delivery at 1-17 days. Negotiated live prices in Nebraska last week were at $107-$108.

Despite early support from higher outside markets, Cattle futures continued mostly lower Wednesday amid light trade; extremely light trade in Feeder Cattle. Pressure included the early tone of the cash fed cattle market, as well as the overall decline in wholesale beef values that continue to adjust toward pre-fire levels.

Except for 20¢ higher in the back contract, 32¢ higher in almost spent Aug and unchanged in away Oct, Live Cattle futures closed an average of 50¢ lower.

Other than 20¢ higher in soon to expire Aug, Feeder Cattle futures closed an average of 87¢ lower.

Wholesale beef values were lower 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 $3.80 lower Wednesday afternoon at $232.96/cwt. Select was $1.10 higher at $211.81.

Corn futures closed 3¢ to 5¢ higher through Jul ’20 and then mostly fractionally lower.

Soybean futures closed 4¢ to 6¢ higher.

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Major U.S. financial indices closed higher Wednesday, recovering ground lost in the previous session. Support included the increase in crude oil prices, tied to a significantly steeper decline in U.S. crude oil inventories than expected.

The Dow Jones Industrial Average closed 258 points higher. The S&P 500 closed 18 points higher. The NASDAQ was up 29 points.

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“As part of our continued efforts to monitor the impact of the fire at the beef processing facility in Holcomb, KS, I have directed USDA’s Packers and Stockyards Division to launch an investigation into recent beef pricing margins to determine if there is any evidence of price manipulation, collusion, restrictions of competition or other unfair practices,” said U.S. Secretary of Agriculture Sonny Perdue, in a statement yesterday. If any unfair practices are detected, we will take quick enforcement action. USDA remains in close communication with plant management and other stakeholders to understand the fire’s impact to industry.”

Jennifer Houston, president of the National Cattlemen’s Beef Association says the announcement demonstrates the government’s understanding that the fire placed extreme strain on the cattle industry. 

“We encourage USDA to look at all aspects of the beef supply chain and to utilize internal and external expertise in this investigation,” Houston adds. “We believe it adds transparency that will help build confidence in the markets among cattlemen and women.”

“Cattle producers have sound reason to question market events that transpired after the Holcomb fire,” says Bobby Simpson, president of the Missouri Cattlemen’s Association (MCA). “While a sharp decrease in slaughter capacity was anticipated, slaughter actually increased some 9,000 head from the week prior to the fire. Further, most expected this market disruption to cause uncertainty, but few could believe in one week fed cattle prices would drop 5% and Choice boxes would spike 9% while total slaughter increased. All the while, prices for feeder calves plummeted. The financial woes do not reside within one segment of the industry. It impacts the entire chain and causes lending institutions a high level of uncertainty as equity dwindles across the board.

“There is no harm in conducting an investigation to ensure integrity of the markets and to respond to the justified concerns of thousands of U.S. cattle producers. In fact, it’s simply the right thing to do. No matter the result of the investigation, good can come from better understanding what took place and how to best mitigate future disruptions.”

Certainly, punishment is due to anyone found guilty of the actions Perdue mentioned. If no wrongdoing is found, however, then hopefully the investigation will appease those who believe something other than market forces were at work, propelling wholesale beef value so high, while fed cattle prices took a step back.

Cattle Current Daily—Aug. 29, 2019 2019-08-28T18:23:03-05:00

Cattle Current Daily—Aug. 28, 2019

Other than a few live sales in the western Corn Belt at $109/cwt.—too few to trend—negotiated cash fed cattle trade remained undeveloped through Tuesday afternoon, according to USDA’s Afternoon National Slaughter Cattle Review.

Cattle futures continued recent yo-yo movement, to the downside this time, with sluggish trade and traders apparently waiting for further direction.

Except for 7¢ lower in the back contract, Live Cattle futures closed an average of 83¢ lower.

Other than 10¢ lower in soon to expire Aug, Feeder Cattle futures closed an average of $1.21 lower, (92¢ to $2.25 lower).

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

Choice boxed beef cutout value was $1.30 lower Tuesday afternoon at $236.76/cwt. Select was 95¢ lower at $210.71.

Corn futures closed mostly 1¢ to 2¢ lower.

Soybean futures closed mostly 4¢ to 7¢ lower.

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Major U.S. financial indices closed lower Tuesday, amid fretting over trade issues and possibilities of a coming recession, as indicated by the yield curve inversion.

The Dow Jones Industrial Average closed 120 points lower. The S&P 500 closed 9 points lower. The NASDAQ was down 26 points.

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Although feedlot marketing remained aggressive last month, the estimated supply of cattle on feed more than 120 days was 0.7% more than the previous year, according to Brenda Boetel, a livestock economist at the University of Wisconsin-River Falls.

“Total cattle on feed inventory saw the largest July-to-August decline since 2008,” Boetel explains in the most recent In the Cattle Markets. “Although cattle are currently being marketed in a timely manner, there is danger that this pace will slow and currentness will slip. Given the decrease in slaughter capacity due to the Tyson fire, Saturday slaughter will need to continue to keep the market current. Keeping up with the increased supply in the fourth quarter will be a challenge.”

Further, Boetel says current placement weights may suggest placement rates accelerating at a faster clip later.

“Placements of cattle weighing less than 800 lbs. were down 7.6%, while cattle weighing over 800 lbs. saw placements increase 7.7%. Placements as a percentage of marketings were down 8% year-over-year from July 2018. Seasonally, net feedlot placements as a percentage of marketings typically increase between June and October,” Boetel says. “Given that we have seen a decrease in this number, while the number of feeder cattle remains high indicates placements will be increasing at a faster rate later this fall.”

Cattle Current Daily—Aug. 28, 2019 2019-08-27T17:59:53-05:00

Cattle Current Daily—Aug. 27, 2019

Negotiated cash fed cattle trade ended up $1 higher in the Southern Plains last week at $106/cwt. Live prices were also $1 higher in Nebraska at $107-$108 and steady to $3.50 higher in the western Corn Belt at mostly $110. Dressed trade was $6-$10 higher in Nebraska at $175-$178, in a light test. In the western Corn Belt, dressed prices were $4-$6 higher at $174-$178.

Week to week (ending Aug. 25), the average 5-area direct steer price was 44¢ more on a live basis at $107.12, according to USDA. The average dressed steer price was $4.39 more at $175.34.

That was with 55,786 head of fed cattle slaughter, which were 10,874 more than the previous week. Estimated total cattle slaughter for the week was 654,000 head, according to USDA’s Weekly Livestock, Poultry and Grain Highlights. That was 3,000 head more than the previous week’s estimated slaughter. Total estimated cattle slaughter the week of the Tyson fire was 645,000 head.

Cattle futures made strong gains to start the week, buoyed by Friday’s friendlier than expected Cattle on Feed report, the weekend announcement of a new trade pact with Japan (see below), as well as reports that China is willing to renew trade talks with the U.S.

Live Cattle futures closed an average of $1.29 higher, recapturing most of Friday’s decline.

Feeder Cattle futures closed an average of $1.80 higher, recovering about three-quarters of what was lost in the previous session.

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

Choice boxed beef cutout value was 54¢ higher Monday afternoon at $238.06/cwt. Select was $1.05 lower at $211.66.

Corn futures closed mostly fractionally higher.

Soybean futures closed 6¢ to 10¢ higher.

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Major U.S. financial indices closed higher Monday with the aforementioned reports that China wants to return to the trade negotiation table with the U.S.

The Dow Jones Industrial Average closed 269 points higher. The S&P 500 closed 31 points higher. The NASDAQ was up 101 points.

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Positive news for U.S. beef exports came over the weekend with the announcement that the U.S. and Japan reached agreement, in principal, on a bilateral trade pact. In terms of value, Japan continues to be the leading customer for U.S. beef.

According to U.S. Trade Representative Robert Lighthizer, the agreement focuses on agriculture, industrial tariffs and digital trade.

“In the agriculture area, it will be a major benefit for beef, pork, wheat, dairy products, wine, ethanol, and a variety of other products,” Lighthizer explained during a Sunday press conference. “It will lead to substantial reductions in tariffs and non-tariff barriers across the board…this will allow us to compete more effectively with people across the board, particularly the TPP countries and Europe.”

The U.S. tariff disadvantage in Japan increased when the U.S. withdrew from the Trans Pacific Partnership (TPP), while the other 11 nations involved in TPP ultimately agreed to the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP). With it, key U.S. beef export competitors, including Australia and Canada, gained tariff advantage over the U.S. on beef exports to Japan.

“This announcement is tremendous news for U.S. farmers and ranchers, and for everyone in the red meat supply chain, because it will level the playing field for U.S. pork and beef in the world’s most competitive red meat import market,” says Dan Halstrom, president and CEO of the U.S. Meat Export Federation (USMEF). “It is also a very positive development for our customer base in Japan, which USMEF and our industry partners have spent decades building. These customers have been very loyal to U.S. pork and beef, but our exports to Japan could not reach their full potential under Japan’s current tariff structure.”

According to Lighthizer, Japan currently imports about $14 billion worth of U.S. agricultural products.

“The Meat Institute applauds the Trump Administration for negotiating better access to a critical and growing market for American beef and pork,” says Julie Anna Potts, CEO of the North American Meat Institute. “The U.S. will be better able to compete with the Comprehensive and Progressive Trans-Pacific Partnership nations and the European Union for valuable market share.”

“Removing the massive 38.5% tariff on U.S. beef will level the playing field in Japan, and we are very thankful to President Trump and his trade team for continuing to fight on behalf of America’s ranching families,” says Jennifer Houston, president of the National Cattlemen’s Beef Association. “Last year, Japanese consumers purchased over $2 billion of U.S. beef, accounting for roughly one-quarter of overall U.S. beef exports.”

Cattle Current Daily—Aug. 27, 2019 2019-08-26T19:53:02-05:00

Cattle Current Daily-Aug. 26, 2019

Negotiated cash fed cattle trade was $1 higher in the Southern Plains on Friday at $106/cwt. Although there were too few transactions to trend, early sales were higher in Nebraska at $108 on a live basis and $175-$178 in the beef; $176 in the western Corn Belt.

Cattle futures closed sharply lower Friday beneath the weight of a variety of factors that included record-high July U.S. red meat production, the sharp month-to-month increase in frozen beef supplies and sharply lower outside markets tied to increasingly volatile trade relations between the U.S. and China.

Live Cattle futures closed an average of $1.56 lower, except for 35¢ lower in spot Aug.  

Feeder Cattle futures closed an average of $2.50 lower ($1.05 to $3.17 lower).

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

Choice boxed beef cutout value was $1.76 lower Friday afternoon at $237.52/cwt. Select was $3.20 lower at $212.71.

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

Soybean futures closed mostly 9¢ to 12¢ lower through Jul ’20 and then mostly 2¢ to 8¢ lower.

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Major U.S. financial indices plummeted lower Friday with accelerated tariffs and counter-tariffs between the U.S. and China.

The Dow Jones Industrial Average closed 626 points lower. The S&P 500 closed 75 points lower. The NASDAQ was down 239 points.

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If anything, the monthly Cattle on Feed report should likely be viewed as neutral to slightly bullish, with July placements less than expected, while July marketings and the Aug. 1 inventory were in line with pre-report estimates.

Placements in July of 1.70 million head were 2.12% less than the previous year.In terms of placement weight, 36.36% went on feed weighing 699 lbs. or less; 46.62% weighing 700-899 lbs.; 17.00% weighing 900 lbs. or more.

Marketings in July of 2.00 million head were 6.89% more than the prior year.

Cattle on feed Aug. 1 of 11.11 million head were 0.17% more than the same time last year. “This makes the fourth month in a row that the on-feed number is the largest since the data series started in 1996,” according to the Agricultural Marketing Service. 

Cattle Current Daily-Aug. 26, 2019 2019-08-26T11:18:22-05:00

Cattle Current Daily—Aug. 23, 2019

Negotiated cash fed cattle trade remained largely undeveloped through Thursday afternoon, based on USDA reports. However, although too few to trend, there were some early dressed sales in Nebraska at $170-$178/cwt., which was $2 lower to $6 higher than last week. There were also a few dressed trades in the western Corn Belt at $178, which was $6-$8 higher than the previous week.

Despite more pressure in Lean Hogs, Cattle futures on Thursday took another measured step closer to where they were before the Tyson fire.

Live Cattle futures closed an average of 84¢ higher (40¢ higher at the back to $2.30 higher in spot Aug at $104.975). 

Feeder Cattle futures closed an average of 82¢ higher.

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

Choice boxed beef cutout value was $2.46 lower Thursday afternoon at $239.28/cwt. Select was 21¢ higher at $215.91.

Corn futures closed fractionally higher.

Soybean futures closed mostly 3¢ to 4¢ lower.

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Major U.S. financial indices closed narrowly mixed Thursday, with investors apparently content to wait for the much-anticipated speech from Fed Chairman Jerome Powell on Friday.

The Dow Jones Industrial Average closed 49 points higher. The S&P 500 closed 1 point lower. The NASDAQ was down 28 points.

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Commercial red meat production in July was record high for the month at 4.59 billion lbs., which was 8% more than the same time last year, according to USDA’s monthly Livestock Slaughter report released yesterday. Keep in mind there was an extra weekday in July this year.

The total included beef production for the month of 2.36 billion lbs., which was 6% more than last year. Average steer carcass weight for July was 866 lbs., which was 4 lbs. less than the same time a year earlier. The average carcass weight for heifers was 796 lbs., which was 7 lbs. less than the previous year.

Total cattle slaughter in July was 2.90 million head, which was 120,600 head more than the same month last year.

For January through July, commercial red meat production of 31.4 billion lbs. was 3% more than the same period last year. Accumulated beef production was 1% higher; pork production was up 5%.

Total pounds of beef in freezers as of July 31 were 12% more than the previous month, but 6% less than the previous year, according to the monthly USDA Cold Storage report.

Frozen pork supplies were down 3% from the previous month but were 9% more than last year.

Total red meat supplies in freezers were up 3% from the previous month and up 1% from last year.

Total frozen poultry supplies were 2% more than the previous month but 4% less than a year earlier.

Cattle Current Daily—Aug. 23, 2019 2019-08-22T22:53:11-05:00

Cattle Current Daily—Aug. 22, 2019

Negotiated cash fed cattle trade remained undeveloped through Wednesday afternoon, based on USDA reports.

Choice steers brought $1.75-$2.00/cwt. higher at the fat auction in Tama, Iowa. Ch 2-4 steers (152 head) at an average of 1,344 lbs. brought an average of $109.27/cwt. Choice heifers were $2.25-$2.50 higher.

Similarly, slaughter steers sold $3-$4 higher at Sioux Falls Regional in South Dakota; $5-$6 higher for slaughter heifers. Ch 2-3 steers (182 head) weighing an average of 1,440 lbs. brought an average of $108.89.

Incrementally, Cattle futures continued to recover some of last week’s steep losses, helped along by wholesale beef strength, as well as notions that Friday’s Cattle on Feed report should be neutral to slightly bullish (see below).

Live Cattle futures closed an average of 53¢ higher (17¢ higher at the back to 95¢ higher).

Feeder Cattle futures closed an average of $1.09 higher (77¢ to $1.57 higher).

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

Choice boxed beef cutout value was 4¢ higher Wednesday afternoon at $241.74/cwt. Select was $1.43 higher at $215.70.

Corn futures closed mostly 1¢ to 2¢ higher.

Soybean futures closed mostly 3¢ to 4¢ higher.

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Major U.S. financial indices closed higher Wednesday, recovering losses from the previous session. Support included loftier quarterly earnings than expected from consumer giants Lowes and Target.

The Dow Jones Industrial Average closed 240 points higher. The S&P 500 closed 23 points higher. The NASDAQ was up 71 points.

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Positive forage conditions for longer grazing, as well as the bump higher in grain prices earlier this summer are among reasons market analysts seem to be expecting lower year-over-year July feedlot placements when the monthly Cattle on Feed report comes out Friday.

For instance, analysts at Allendale, Incestimate July placements to be 1.6% less than last year. Analysts surveyed by Urner Barry expect, on average, placements to be 0.5% less, according to the Daily Livestock Report.

If either are correct, Allendale analysts point out it would be the third consecutive month of placements below year-earlier levels.

“Concerns over feedlot profitability, and more restrained supplies of replacement feeders are two important reasons,” say Allendale analysts. “July placements supply a portion of the January through April finished cattle supply. Kansas State University estimates fed cattle finishing in that period may run losses averaging $106 per head.”

Helped along by an extra marketing day in July this year, both estimate marketings to be 6.6-6.8% more than a year earlier.

Allendale’s estimate puts marketing in July at 1.997 million head. That would be the most for the month in 11 years, according to analysts there.

Likewise, between both sources, cattle on feed Aug. 1 is estimated to be up 0.5-0.6%, compared to the same time last year.

Cattle Current Daily—Aug. 22, 2019 2019-08-21T19:12:46-05:00

Cattle Current Podcast—Aug. 21, 2019

Cattle markets on Tuesday continued to retrace some of last week’s steep losses.

Although negotiated cash fed cattle trade remained undeveloped through Tuesday afternoon, prices for the week were looking higher. Through Monday, though a light test, the 5-area direct steer price average was $109/cwt. on a live basis. Chatter also continued that less negotiated trade the last couple of weeks mean packers need to renew inventory.

Oversold conditions and continued erosion in Corn futures helped Cattle futures close higher.

Live Cattle futures closed an average of $1.49 higher through the front three contracts, and then an average of 42¢ higher.

Feeder Cattle futures closed an average of 64¢ higher, except for 12¢ lower in the back contract.

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

Choice boxed beef cutout value was $2.57 higher Tuesday afternoon at $241.70/cwt. Select was 25¢ lower at $214.27.

Despite softer week-to-week corn condition, Corn futures closed 4¢ to 5¢ lower through Jul ’20 and then fractionally mixed to 2¢ lower.

Soybean futures closed mostly fractionally mixed to 1¢ higher.

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Major U.S. financial indices closed lower Tuesday, with traders apparently taking profits from gains in the previous several sessions, perhaps prompted by lower Treasury yield rates.

The Dow Jones Industrial Average closed 173 points lower. The S&P 500 closed 23 points lower. The NASDAQ was down 54 points.

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As market reaction to the Tyson fire captures a lion’s share of attention, Elliott Dennis, Extension livestock economist at the University of Nebraska-Lincoln suggests it be considered within the context of the macro economy that already enveloped cattle markets.

“Chinese trade issues continued to weigh on the agriculture markets,” Dennis explains, in the latest issue of In the Cattle Markets. “Effects were seen in corn and soybeans, spilling over into the cattle markets. The markets avoided a selloff when President Trump delayed tariffs on Beijing until December. Cattle markets saw a response with Chinese purchases towards the end of this past week. In absence of China, several negotiated trade deals have yet to be ratified by Congress. Combined, this has weighed down the domestic market.”

Next, Dennis points to worries about global economic growth and the impact on beef demand. For instance, faltering manufacturing and company profits in the second quarter, as well as last week’s yield curve inversion heighten concerns about domestic economic recession.

“The beef market will need to find additional homes for the beef on the market,” Dennis says. “More beef on the domestic markets will further depress prices. While beef was doing a decent job at finding international homes, this trend will need to continue and, in some cases, increase. While domestic demand has been strong, there is greater uncertainty whether consumers will continue to have increasing disposable income in the future, due to inflation. If inflation spills into the consumer goods market, then this could further depress derived demand prices.”

Cattle Current Podcast—Aug. 21, 2019 2019-08-20T19:02:23-05:00

Cattle Current Daily—Aug. 20, 2019

Renewed stability defined cattle markets Monday, helped along by news that estimated cattle slaughter last week, following the Tyson fire, was 9,000 head more than the previous week at 651,000 head. That according to USDA’s Estimated Daily Livestock Under Federal Inspection reports.

When all was said and done last week, negotiated cash fed cattle traded mostly $5 lower in the Southern Plains at mostly $105/cwt. They were $6-$7 lower in Nebraska at mostly $107 and $5-$6 lower in the western Corn Belt at $106.50-$110.00. In Nebraska, dressed trade was at $165-$172 in a light test, which was $13-$15 lower. It was $9-$10 lower in the western Corn Belt at $170-$172.

Cattle futures showed signs of life early in Monday’s session but lost steam as the session progressed.

Live Cattle futures closed narrowly mixed, from and average of 12¢ lower to an average of 15¢ higher.

Other than $1.10 higher in spot Aug, Feeder Cattle futures closed narrowly mixed, from and average of 3¢ lower to an average of 29¢ higher.

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

Choice boxed beef cutout value was 44¢ higher Monday afternoon at $239.13/cwt. Select was $1.26 higher at $214.52.

Corn and Soybean futures softened with a more favorable weather outlook and worries about export demand.

Corn futures closed mostly 3¢ to 6¢ lower.

Soybean futures closed mostly 11¢ to 13¢ lower.

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Major U.S. financial indices continued to rally Monday, building on gains from the end of last week. Support included further strengthening of bond yields.

The Dow Jones Industrial Average closed 249 points higher. The S&P 500 closed 34 points higher. The NASDAQ was up 106 points.

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The degree of price movement following the fire at Tyson’s beef packing plant at Holcombe, KS may have been shocking, but the way the market reacted wasn’t, according to Derrell Peel, Extension livestock marketing specialist at Oklahoma State University.

Markets seek to coordinate equilibrium between supply and demand, Peel explains in his weekly market comments. When a severe shock occurs to either, markets seek to reestablish that equilibrium as quickly as possible.

“With fresh beef production suddenly decreased, boxed beef prices rose sharply to ration a suddenly limited supply,” Peel explains. “Choice boxed beef prices increased by over $22/cwt. or 10.3% in one week. This illustrates one of the most important functions of markets (one that is commonly taken for granted): markets make sure that we don’t run out of things. With less supply available, the market uses higher prices to determine how limited beef supplies will be allocated. It is a common market reaction. When a freeze hits Florida, orange juice prices begin to rise immediately, not because there is an immediate shortage of juice but to make sure that the current supply continues to be available over time. Markets will never tell a consumer that they cannot have a product but prices will rise enough to convince some consumers not to consume as much of the product at this time.”

As well, Peel says markets discourage wasting products.

“This is particularly important for perishable products. Thus, watermelon prices drop dramatically when the seasonal supply becomes available to make sure that all watermelons are consumed. Fed cattle ready for slaughter are no less perishable and the current drop in fed prices ensures that all possible adjustments are used to absorb the cattle into remaining industry capacity,” Peel says. “Prices decrease enough initially to provide ample incentive to change existing production plans and cover the additional costs of shifting logistics and timing of production.”

Looking ahead, Peel provides some context, via a similar situation almost 20 years ago, when the ConAgra beef packing plant at Garden City burned and never reopened. 

“Subsequent research confirmed initial reactions generally similar to the current situation.” Peel says. “Most of the negative impacts on fed cattle prices subsided in three to six weeks after the event. Packing capacity, relative to cattle supplies, is somewhat tighter this time, so the impacts may be slightly larger or longer-lived. Nevertheless, boxed beef and cattle markets will likely adjust relatively quickly in the coming weeks with final adjustments depending on the duration of the plant closure.” 

Cattle Current Daily—Aug. 20, 2019 2019-08-19T19:54:16-05:00

Cattle Current Daily—Aug. 19, 2019

Through late Friday afternoon, the only established negotiated cash fed cattle trade for the week remained the $105/cwt. paid in the Southern Plains, which was $5 less than the previous week. Although too few to trend, there were a few trades in Nebraska Friday at $106/cwt. on a live basis and at $172 in the beef.

Through Thursday the 5-area direct steer price was $105.40 on a live basis (7,941 head) and $170.46 in the beef (4,172 head). Week to week that was $8.71 less on a live basis and $12.11 less dressed.

Cattle futures were unable to hold early-session support Friday as another trip lower in Lean Hogs provided pressure.

After unchanged in spot Aug, Live Cattle futures closed an average of 57¢ lower (17¢ to 87¢ lower).

Feeder Cattle futures closed an average of 84¢ lower, (57¢ lower at the back to $1.20 lower in spot Aug).

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

Choice boxed beef cutout value was $2.57 higher Friday afternoon at $238.69/cwt. Select was $2.59 higher at $213.26.

Corn and Soybean futures grained support from the dryer weather outlook for the Corn Belt.

Corn futures closed 8¢ to 10¢ higher through Jul ’20 and then mostly 4¢ to 5¢ higher.

Soybean futures closed mostly 9¢ higher.

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Major U.S. financial indices rallied Friday, on the back of resurgent bond yields, apparently allaying recession fears among investors. It was inversion of the yield curve earlier in the week that drove steep losses, along with continued anxiety about global economic growth.

The Dow Jones Industrial Average closed 306 points higher. The S&P 500 closed 41 points higher. The NASDAQ was up 129 points.

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Although cattle markets had a firmer feel, albeit lower, at the end of the week,

plenty of market uncertainty remains following  the fire at Tyson Foods beef slaughter plant at Holcombe, KS Aug. 9.

Among what’s known:

“The plant operated at about 6,000 head of fed cattle per day, leaving a shortfall in the national packing capacity of 30,000 head for a five-day work week,” said representative of the Kansas Livestock Association (KLA), in a Monday assessment for its members. “According to CattleFax, that amounts to 6% of total U.S. fed cattle packing capacity the rest of the processing industry will need to absorb.”

“According to CattleFax, in order to compensate for the loss of capacity at Holcomb, the major packing plants in Texas, Kansas, Colorado, Nebraska, and Iowa, which represent 83 percent of U.S. fed slaughter capacity, would need to slaughter 8.2% more cattle per week, or run 3.3 more hours per week, to make up the production lost in Holcomb,” explained Colin Woodall, senior vice president of government affairs for the National Cattlemen’s Beef Association (NCBA) in a Tuesday letter to Greg Ibach USDA Under Secretary for Marketing and Regulatory Programs. “While we expect other processing facilities to take more cattle, the shortfall created by the Holcomb fire will be incredibly difficult to make up based on the current packing infrastructure.” On behalf of NCBA, Woodall requested, “…that APHIS and FSIS inspectors, along with AMS graders, be provided the flexibility needed to move to other plants and work expanded shift hours, including weekends, in order to help the packing segment of our industry process the cattle headed to harvest… we ask that Packers and Stockyards Division staff remain vigilant against any effort to illegally capitalize on the current market situation.”

In another letter, NCBA asked the U.S. Department of Transportation to declare an emergency suspension of Hours of Service for cattle haulers. The organization also sent a letter to the Commodity Futures Trading Commission, requesting that the agency, “…keep an even closer eye on the cattle markets to ensure that no market participant tries to use the uncertainty to manipulate or illegally take advantage of the situation…”

Tyson will rebuild the plant. At a late-week new conference, Tyson officials explained the area impacted by the fire was relatively small, in terms of square footage, but large in terms of the plant’s electric and hydraulic infrastructure. Officials said rebuilding will likely be a matter of months, rather than weeks.

As long suspected, beef packing capacity shuttered during historically long beef cowherd liquidation, fueled by historic drought, increased market vulnerability.

Live Cattle and Feeder Cattle futures were limit-down last Monday, then down the expanded limit in some contracts Tuesday as traders panicked and liquidated long positions. Part of the panic stemmed from seasonally and cyclically large fed cattle supplies at a time when beef packer capacity utilization was, by most accounts, already running historically high.

On the surface at least, lots of beef buyers were relying on the spot market for their immediate supply. There seems no other way to explain the massive surge in wholesale beef prices.

Cattle Current Daily—Aug. 19, 2019 2019-08-17T20:56:14-05:00

Cattle Current Daily—Aug. 16, 2019

Other than the $105 paid in the Southern Plains a day earlier, negotiated cash fed cattle trade remained undeveloped through Thursday afternoon.

Cattle futures mostly edged higher, with plenty of uncertainty in the wake of this week’s volatile trade.

After unchanged in spot Aug, Live Cattle futures closed an average of 37¢ higher, except for 27¢ and 2¢ lower in near Dec and Feb, respectively.

Other than 10¢ and 25¢ lower in two contracts toward the back, Feeder Cattle futures closed an average of 43¢ higher, (2¢ higher to $1.30 higher in spot Aug).

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

Choice boxed beef cutout value was $3.78 higher Thursday afternoon at $236.12/cwt. Select was $4.75 higher at $210.67. That was $19.24 for Choice week to week and $18.30 more for Select, driven by the recent supply disruption.

Corn futures closed mostly fractionally higher.

Soybean futures closed mostly 6¢ to 9¢ lower.

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Major U.S. financial indices closed mixed Thursday, stemming the steep slide from the previous day. Support included more than expected retail sales in July.

Advance estimates of U.S. retail and food services sales for July were $523.5 billion, which was of 0.7% more than the previous month and 3.4% more than the previous year, according to the U.S. Commerce Department.

The Dow Jones Industrial Average closed 99 points higher. The S&P 500 closed 7 points higher. The NASDAQ was down 7 points.

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Carcass weights continue lighter year over year, according the most recent USDA Actual Slaughter Under Federal Inspection report.

The average dressed steer weight for the week ending Aug. 3 was 872 lbs., which was 3 lbs. heavier than the previous week, but 8 lbs. lighter than a year earlier. The average dressed heifer weight of 805 lbs. was 5 lbs. heavier week to week, but 4 lbs. lighter year over year.

Total cattle slaughter for the week of 632,874 head was 8,419 more than the same week a year earlier. Fed cattle slaughter was 30,613 head fewer. Beef production for the week was 1.3 million lbs. more at 510.7 million lbs.

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Count analysts with the Livestock Marketing Information Center (LMIC) among those less bullish than USDA when it comes to corn production this year.

“The challenge for this year’s crop is now focused on favorable weather conditions to reach maturity in optimal condition,” say LMIC analysts, in the latest Livestock Monitor. “Delayed planting means that the crop will have less time to develop, which elevates the risks of lower average yields per acre and fewer acres of harvestable quality when combines move through the fields later this year.”

The USDA Crop Production estimates that drove corn prices lower this week forecast 90.01 million acres planted to corn, 82 million acres harvested, and yield at 169.5 bu./acre for production of an estimated 13.9 billion bu.

Between impacts of delayed planting and the chance of an early frost, LMIC forecasts 81.5 million corn acres harvested with an average yield of 166 bu./acre.

for production of 13.5 billion bu., the least since 2012. These numbers support a an average corn price at the farm for the new crop year of slightly more than $4/bu., according to LMIC analysts.

Cattle Current Daily—Aug. 16, 2019 2019-08-15T18:06:39-05:00

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