Daily Market Highlights

Cattle Current Daily—July 31, 2020

So far for the week, negotiated cash fed cattle prices on a live basis are $1 higher in the Southern Plains at $97/cwt., $2 higher in Nebraska at $100, steady in Colorado at $98 and steady to $2 higher in the western Corn Belt at $100-$102. Dressed prices are $2 higher at $160.

Cattle futures closed higher again Thursday. Along with cash strength, support included bullish export news with net sales of 29,500 metric tons (mt) for the week of July 23—a market year high—up 89% from the previous week and up 81% from the previous four-week average. That according to the U.S. Export Sales report from USDA’s Foreign Agricultural Service.

Except for 15¢ lower in away Oct, Live Cattle futures closed an average of 41¢ higher.

Feeder Cattle futures closed an average of $1.05 higher (67¢ higher at the back to $1.85 higher toward the front).

Choice boxed beef cutout value was 69¢ higher Thursday afternoon at $201.80/cwt. Select was $2.01 higher at $191.50.

The average dressed steer weight the week ending July 18 of 899 lbs. was 3 lbs. less than the prior week but 33 lbs. more than the same week a year earlier, according to USDA’s Actual Slaughter Under Federal Inspection report. The average dressed heifer weight of 829 lbs. was the same as a week earlier but 34 lbs. heavier than the prior year.

Corn futures closed mostly fractionally higher. 

Soybean futures closed mostly 1¢ to 2¢ higher.

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Except for the tech sector, major U.S. financial indices closed lower Thursday, pressured by the expected but historic decline in second-quarter GDP.

Real gross domestic product decreased at an annual rate of 32.9% in the second quarter, according to the advance estimate released by the Bureau of Economic Analysis. Real GDP in the first quarter decreased 5%.

The Dow Jones Industrial Average closed 225 points lower. The S&P 500 closed 12 points lower. The NASDAQ closed 44 points higher.

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Potentially, the heated debate and hectic work related to enhancing price discovery in cash fed cattle markets reached a crossroads this week.

The National Cattlemen’s Beef Association’s (NCBA) Live Cattle Marketing Committee and the NCBA Board of Directors unanimously passed policy that supports voluntary efforts to improve cash fed cattle trade during the next 90 days, with the potential for mandates in the future if robust regional cash trade numbers are not reached by the industry.

Specifically, according to the organization’s resolution:

“NCBA supports a voluntary approach that:

“1) Increases frequent and transparent negotiated trade to regionally sufficient level, to achieve robust price discovery determined by NCBA funded and directed research in all major cattle feeding regions, and

“2) Includes triggers to be determined by a working group of NCBA producer leaders by October 1, 2020. 

“BE IT FURTHER RESOLVED, if the voluntary approach does not achieve robust price discovery as determined by NCBA funded and directed research, and meet the established triggers that increase frequent and transparent negotiated trade to a regionally sufficient level, and triggers are activated, NCBA will pursue a legislative or regulatory solution determined by the membership.

“BE IT FURTHER RESOLVED, NCBA support a three-year review/sunset provision on any negotiated trade solutions implemented to allow for a thorough cost benefit analysis to be conducted.”

That came after intense debate and more than six hours of wrangling, not to mention the years of effort leading up to it, including the research referenced in the resolution.

As an aside, depending on cash trade levels deemed sufficient in each region, there are a number of ways to achieve a deeper pool of cash fed cattle trade data, everything from changing the approach to confidentiality in livestock mandatory reporting (up for reauthorization in September), to bid-the-grid base prices, to a number of other voluntary options mentioned in the recent USDA Boxed Beef & Fed Cattle Price Spread Investigation Report. Stephen Koontz, agricultural economist at Colorado State University previously outlined many of those options in his ongoing research.

“The policy we passed today is the result of every state cattlemen’s association coming together to work through their differences and finding solutions that meet the needs of their members, all of whom agree that our industry needs more robust price discovery,” says  NCBA President Marty Smith. “This policy provides all players in the industry the opportunity to achieve that goal without seeking government mandates.”

The Live Cattle Marketing Committee considered several proposals, each aimed at encouraging greater volumes of cash cattle trade.

Cattle Current Daily—July 31, 2020 2020-07-30T18:36:56-05:00

Cattle Current Daily—July 30, 2020

Negotiated cash fed cattle trade was $1 higher in the Southern Plains Wednesday at $97/cwt., according to the Agricultural Marketing Service. Although too few to trend, there were also some live sales in Nebraska at $98 and in the western Corn Belt at $99-$101. Early dressed sales were at $160.

Slaughter steers and heifers also sold steady to $1 higher at Sioux Falls Regional in South Dakota, where 184 head of Choice 2-3 steers weighed an average of 1,475 lbs. and brought an average price of $101.12.

Cash strength helped Cattle futures extend gains Wednesday.

Except for 2¢ lower in the back contract, Live Cattle futures closed an average of 77¢ higher (47¢ to $1.07 higher).

Feeder Cattle futures closed an average of 98¢ higher (25¢ to $1.47 higher), amid extremely light trade.

Wholesale beef prices continue to drag bottom, though. Choice boxed beef cutout value was $1.85 lower Wednesday afternoon at $201.11/cwt. Select was $1.17 higher at $189.49.

Corn futures closed 3¢ to 4¢ lower through May ’21 and then mostly fractionally lower to 1¢ lower.

Soybean futures closed fractionally lower to 5¢ lower though May ’21 and then mostly 1¢ to 3¢ higher.

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Major U.S. financial indices closed higher Wednesday. Besides tech stocks bouncing higher, support included the Federal Reserve leaving interest rates unchanged, as expected.

“Weaker demand and significantly lower oil prices are holding down consumer price inflation. Overall financial conditions have improved in recent months, in part reflecting policy measures to support the economy and the flow of credit to U.S. households and businesses,” according to a statement from the Fed. “The path of the economy will depend significantly on the course of the virus. The ongoing public health crisis will weigh heavily on economic activity, employment, and inflation in the near term, and poses considerable risks to the economic outlook over the medium term.”

The Dow Jones Industrial Average closed 160 points higher. The S&P 500 closed 40 points higher. The NASDAQ closed 140 points higher.

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“We want beef to be the protein of choice, and we want the entire U.S. beef industry to be trusted and respected for its commitment to quality, safety, and sustainability,” says Kim Brackett, an Idaho rancher and leader of the Beef Industry Long Range Plan (BILRP) taskforce.

That group unveiled its plan for 2021-2025 at this week’s National Cattlemen’s Beef Association (NCBA) Cattle Industry Summer Business Meeting in Denver. The BILRP—updated every five years since 1995—is a designed to help the beef industry establish a common set of objectives and priorities. It communicates the industry’s strategic direction and provides insight to how the industry can serve its stakeholders by growing beef demand.

“The task force invested many hours, discussing the current state of the industry and what we need to accomplish over the next five years. We feel we’ve established some important priorities and strategies, as well as benchmarks for success that will help keep our industry on track through 2025 and beyond,” Brackett says.

The 2021-2025 Beef Industry Long Range Plan includes the following industry objectives:

  1. Grow global demand for U.S. beef by promoting beef’s health and nutritional benefits, satisfying flavor and unparalleled safety.
  2. Improve industry-wide profitability by expanding processing capacity and developing improved value-capture models.
  3. Intensify efforts in researching, improving, and communicating U.S. beef industry sustainability.
  4. Make traceability a reality in the U.S. beef industry.

Core strategies and goals to achieve those objectives include:

(core strategy in bold type; sample of goals in italics)

Drive growth in beef exports. 

*Grow U.S. beef exports to 17% of U.S. beef production by 2025.

*By 2025, 75% of all cattle producing states are participating in a nationwide animal disease traceability program (e.g. U.S. Cattle Trace).

Grow consumer trust in beef production.

*Grow BQA certifications by a cumulative total of 10% per year and achieve national standardization of the BQA program by 2023.

Develop and implement better business models to improve price discovery and value distribution across all segments.

*Maintain a beef cowherd of 30-31 million with a growth target of 32.0 to 32.5 million head.

*Grow packing capacity by 7% (7,000 head per day) by 2025.

Promote and capitalize on the multiple advantages of beef.

*By 2025, achieve a Wholesale Beef Demand Index of 124.

Improve the business and political climate for beef.

*By 2025, at least 75% of producers will agree that the beef industry is effectively addressing opportunities and challenges in a way that enhances the business climate for beef.

Safeguard and cultivate investment in beef industry research, marketing and innovation.

*Quantify the existing public research funding for beef industry production issues and grow that funding by 25% by 2025.

*Increase national industry program funding for beef marketing, research and promotion efforts to $100 million by 2025.

Cattle Current Daily—July 30, 2020 2020-07-29T18:14:46-05:00

Cattle Current Daily—July 29, 2020

Although too few transactions to trend, there was some early negotiated cash fed cattle trade Tuesday. Live prices in the Southern Plains were on either side of steady at $95/cwt. in the Texas Panhandle and $95.00-$97.50 in Kansas, according to the Agricultural Marketing Service. Early dressed sales in the western Corn Belt were at $161, compared to $158 last week.

Cattle futures closed higher Tuesday, off of session highs and square in the same trading channel of recent weeks.

Live Cattle futures closed an average of 48¢ higher (22¢ to $1.17 higher).

Feeder Cattle futures closed an average of 78¢ higher (15¢ to $1.67 higher).

Choice boxed beef cutout value was 41¢ higher Tuesday afternoon at $202.96/cwt. Select was $1.81 lower at $188.32.

Corn futures closed mostly 3¢ to 4¢ lower.

Soybean futures closed 8¢ to 12¢ lower.

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Major U.S. financial indices closed lower Tuesday. Pressure included some likely profit taking in tech stocks and uncertainty about how quickly lawmakers will come to terms on another round of federal economic aid to address COVID-19.

The Dow Jones Industrial Average closed 205 points lower. The S&P 500 closed 20 points lower. The NASDAQ closed 134 points lower.

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Surging COVID cases across the nation and subsequent rollbacks in re-opening plans are stalling the U.S. restaurant industry’s recovery, according to The NPD Group. Since the second week of June, declines in major restaurant chain customer transactions range from 11% to 14% less than a year earlier. Until then, declines improved steadily for about six weeks.

“I believe there is still a lot of upside recovery for restaurants, but for now we’re stuck in neutral until we can get the industry operating at full capacity,” says David Portalatin, NPD food industry advisor. “The recovery phase will then tell us whether the industry can recapture enough customer traffic to get back to the pre-COVID baseline, or whether the new normal will reflect a re-set where consumers prepare more meals in their home kitchens for a longer term.”

Major restaurant chain total customer transactions were 12% less year over year for the week ending July 19, which was 2% more positive than the prior week, according to NPD’s CREST® Performance Alerts.

That same week, 78% of restaurants were in geographies permitting on-premises dining with varying capacity restrictions. For instance, 13% of the nation’s restaurant units are in California, where on-premise dining is prohibited.

Moreover, many restaurants continue to operate at capacities that are significantly less than normal in terms of menu offerings and store hours. Restaurant operators make those decisions based partly on the pandemic situation overall and partly on the difficulty in attracting labor.

Quick service restaurant chains (QSR) were responsible for improving customer transaction declines for the week ending July 19. QSR transactions were 11% less compared to the prior year. Full service restaurant (FSR) chain transactions were down 27%. According to NDP, FSR transactions would be worse without a significant shift to off-premises. In June, FSR off-premises traffic increased 91% versus year ago, while on-premises traffic declined 62%.

“Certainly full service restaurants need to recover their lost on-premises business since that will always be their main source of volume,” says Portalatin. “But, I wouldn’t be surprised to see new casual dining models emerge that are designed to optimize off-premises capabilities for the long-term.”

Cattle Current Daily—July 29, 2020 2020-07-28T20:27:27-05:00

Cattle Current Daily—July 28, 2020

Cattle futures closed mostly lower Monday, despite logic suggesting a friendly to neutral Cattle on feed report Friday. Besides technical pressure and near expiration of spot Live Cattle, less estimated week-to-week cattle slaughter and the higher year-to-year cattle inventory could have lent bearishness.

Live Cattle futures closed an average of 90¢ lower, except for 75¢ higher in the back contract.

Feeder Cattle futures closed an average of $1.90 lower (35¢ to $3.12 lower), except for an average of 22¢ higher in the back three contracts.

Choice boxed beef cutout value was 78¢ lower Monday afternoon at $202.55/cwt. Select was 50¢ lower at $190.13.

Corn futures closed mostly fractionally mixed.

Soybean futures closed mostly 2¢ to 3¢ higher.

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Major U.S. financial indices closed higher Monday, led by tech stocks and buoyed by hopes surrounding another round of federal economic aid to address COVID-19.

The Dow Jones Industrial Average closed 114 points higher. The S&P 500 closed 23 points higher. The NASDAQ closed 173 points higher.

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There’s still plenty of backlogged market-ready fed cattle to work through, but it appears progress is being made, says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly market comments.

“The calculated estimates of cattle on feed over 120 days are still very large compared to last year, but the difference has decreased by some 160,000 head since May,” Peel says, referring to Friday’s monthly Cattle on Feed report. “It appears that the backlog is decreasing but a sizable number of cattle remain to be cleaned up before feedlots will be current. In the January-April period, feedlot placements were down just over 1 million head year over year.”

Peel also notes the report may highlight some regional drought impacts, with increased June placements of cattle weighing less than 700 lbs. in Texas and Colorado.

As for the semiannual Cattle inventory report, also issued Friday, Peel says the slow decrease in beef cow numbers, relative to January, and the same number of beef replacement heifers suggest no accelerated liquidation at this point.

“The second half of the year may tell the tale as cow-calf producers react to fall calf market conditions,” Peel says. “Overall, it appears that cattle numbers continue a slow tightening of inventories going forward.”  

Cattle Current Daily—July 28, 2020 2020-07-27T19:57:04-05:00

Cattle Current Daily—July 27, 2020

Through Thursday, the average five-area direct fed steer price was $97.23/cwt. on a live basis, which was 91¢ higher than the previous week, but $18.20 less than the same time last year.

Regionally, negotiated cash fed cattle trade for the week was generally $1-$2 higher on a live basis at $96/cwt. in the Southern Plains, $98 in the Northern Plains and $99-$100 in the western Corn Belt. Dressed trades were mostly $1 higher at $158.

Cattle futures closed narrowly mixed Friday.

Live Cattle futures closed an average of 29¢ higher, except for 35¢ and 32¢ lower in Feb and Apr and unchanged in away Dec.

Except for 2¢ higher in spot Aug, Feeder Cattle futures closed from unchanged to an average of 34¢ lower.

Choice boxed beef cutout value was 49¢ lower Friday afternoon at $201.77/cwt. Select was 16¢ lower at $190.63.

Corn futures closed mostly unchanged to fractionally higher.

Soybean futures closed mostly fractionally higher to 1¢ higher, except for fractionally lower to 2¢ lower in the front four contracts.

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Major U.S. financial indices closed lower Friday, led by tech stocks once again.

The Dow Jones Industrial Average closed 182 points lower. The S&P 500 closed 20 points lower. The NASDAQ closed 98 points lower.

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USDA’s monthly Cattle on Feed report—for feedlots with 1,000 head or more capacity—was close to widespread expectations.

Cattle on feed July 1 of 11.44 million head was 42,000 head fewer (-0.36%) than the prior year. That was the second highest inventory for the date since the series began in 1996, according to the National Agricultural Statistics Service.

Placements in June of 1.80 million head were 37,000 head more (+2.10%) than the prior year. That was on the low end of expectations, which could be considered market friendly. In terms of weights, 41% went on feed weighing 699 lbs. or less, 43% weighing 700-899 lbs. and 16% weighing 900 lbs. or more.

Marketings in June of 1.97 million head were 26,000 head more (+1.33%) than a year earlier.

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USDA’s semiannual Cattle report mainly mirrored pre-report estimates and suggests a continued plateau in beef cow numbers, with potential downside pressure.

The National Agricultural Statistics Service pegs all cattle and calves July 1 at 103 million head, which is 100,000 head more (+0.09%) than a year earlier.

There were 32.05 million beef cows and heifers that calved, which was 250,000 head fewer (-0.77%) less than the same time a year earlier.

The 4.4 million beef heifers retained for replacement were the same as a year earlier.

Cattle on feed July 1 (all feedlots) was 13.6 million head, the same as in 2019.

Cattle on feed in feedlots with capacity of 1,000 or more head accounted for 84.1% of the total cattle on feed on July 1, which was slightly less than the prior year.

Estimated feeder cattle outside feedlots July 1 of 37.4 million head was 300,000 head more (+0.80%) than a year earlier.

Cattle Current Daily—July 27, 2020 2020-07-25T19:26:51-05:00

Cattle Current Daily—July 24, 2020

Negotiated cash fed cattle trade for the week so far is generally $1-$2 higher on a live basis at $96/cwt. in the Southern Plains, $98 in the Northern Plains and $99-$100 in the western Corn Belt. Dressed trades are mostly $1 higher at $158.

Cattle futures softened a touch Thursday, despite firmer cash fed cattle and wholesale beef prices, and ahead of Friday’s Cattle on Feed report and the semiannual Cattle inventory report.

Live Cattle futures closed an average of 51¢ lower (20¢ at the back to $1.12 lower toward the front).       

Except for 50¢ higher in spot Aug, Feeder Cattle futures closed from unchanged to an average of 14¢ lower.

Choice boxed beef cutout value was $1.11 higher Thursday afternoon at $202.26/cwt. Select was $1.51 higher at $190.79.

The average dressed heifer weight for the week ending July 11 was 902 lbs. which was 6 lbs. heavier than the previous week and 37 lbs. heavier than the same week last year, according to USDA’s Actual Slaughter Under Federal Inspection report. The average dressed heifer weight of 829 lbs. was 3 lbs. heavier than the prior week and 38 lbs. more than the prior year.

Corn futures closed mostly fractionally higher to 1¢ higher.

Soybean futures closed 4¢ to 7¢ higher through Mar ’21 and then mostly 1¢ to 3¢ higher.

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Major U.S. financial indices closed lower Thursday, led by tech stocks and pressured by indicators of ongoing COVID-based unemployment.

Initial unemployment claims for the week ending July 18 were 1.42 million, which was up 109,000 from the previous week, according to data from the U.S. Department of Labor.

The Dow Jones Industrial Average closed 353 points lower. The S&P 500 closed 40 points lower. The NASDAQ closed 244 points lower.

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USDA’s monthly Livestock Slaughter report for June underscores the massive recovery in cattle slaughter, as well as the impact of continued heavier carcass weights. What follows is slaughter and production under federal inspection.

June fed cattle slaughter of 2.4 million head was 542,900 head more (+31.94%) than in May, and 13,000 head more (+0.58%) than the same month last year.

Keep in mind there were 26 business days, counting Saturdays, versus 25 last year.

However, year to date, fed cattle slaughter through June of 12.08 million was 772,600 head fewer (-6.01%) than the same time last year.

Total cattle slaughter in June of 2.82 million head was 597,600 head more (+26.89%) than in May and 51,300 head more than last year (+1.85%).

Year to date, total cattle slaughter through June of 15.50 million was 769,200 head fewer (-4.73%) than the same time last year.

Federally inspected beef production in June of 2.33 billion lbs. was 507 million lbs. more (+27.74%) than in May, and 134.9 million lbs. more (+6.13%) than a year earlier.

Year to date through June, however, beef production of 12.78 billion lbs. was 279.7 million lbs. less (-2.14%) than the same time last year.

Heavier carcass weights continue to close the gap between beef production and the number of cattle harvested. For instance, the average dressed steer weight in June of 893 lbs. was 42 lbs. heavier year over year. Year to date through June, the average dressed steer weight of 897 lbs. is 33 lbs. heavier.

Likewise, the average dressed heifer weight in June of 824 lbs. was 37 lbs. heavier than the previous year. Year to date through June, the average dressed heifer weight of 829 lbs. is 25 lbs. heavier.

Total red meat production in June under federal inspection of 4.74 billion lbs. was 1.03 billion lbs. more than in May (+27.71%) and 403.50 million lbs. more than a year earlier (+9.31%).

Year to date through June, total red meat production of 26.55 billion lbs. is just 14.7 million lbs. less (-0.06%) than the same time a year ago.

Cattle Current Daily—July 24, 2020 2020-07-23T19:30:34-05:00

Cattle Current Daily—July 23, 2020

Negotiated cash fed cattle prices trended higher through Wednesday afternoon, according to the Agricultural Marketing Service (AMS). Live sales in Colorado were $2 higher than last week at $98/cwt. In Nebraska, live trades were 50¢ to $2 higher at $98; dressed sales were $1.00-$1.50 higher at $158.00-$158.50.

Cattle feeders sold 422 head of the 1,022 offered in the weekly Fed Cattle Exchange auction—all from the Southern Plains. Of those 103 head sold for a weighted average price of $96/cwt. (1-9 day delivery) and 319 head sold for a weighted average price of $96.12 (9-17 day delivery). Those prices mirrored country trade in the region on Tuesday.

Cattle futures closed mixed, but mostly slightly higher on Wednesday, with more strength later in the session. Some positioning is likely Thursday, ahead of Friday’s Cattle on Feed report and the semiannual Cattle inventory report.

Live Cattle futures closed mixed, from an average of 24¢ lower through the front four contracts to an average of 42¢ higher.  

Feeder Cattle futures closed an average of 31¢ higher.

Choice boxed beef cutout value was 27¢ higher Wednesday afternoon at $201.15/cwt. Select was $2.02 lower at $189.28.

Corn futures closed 2¢ to 4¢ higher.

Soybean futures closed mostly 1¢ to 2¢ higher.

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Major U.S. financial indices closed higher Wednesday, buoyed by promising coronavirus vaccine news and chatter about additional federal economic stimulus.

The Dow Jones Industrial Average closed 165 points higher. The S&P 500 closed 18 points higher. The NASDAQ closed 25 points higher.

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USDA released its investigation into cattle and beef price reactions to last summer’s fire at the Tyson plant in Holcombe, KS and to disruptions wrought by COVID-19.

The report—Boxed Beef & Fed Cattle Price Spread Investigation Report—details market conditions and prices before, during and after those events, although the pandemic continues.

Keep in mind this USDA investigation does not examine potential violations of the Packers and Stockyards Act. USDA continues to cooperate with the Department of Justice Antitrust Division in that agency’s current investigation.

Instead, the report provides the logic and details behind the price reactions of the two black swan events: higher wholesale beef prices and lower fed cattle prices spawned by disruption to packing capacity and by altered demand flow, in the case of the pandemic.

No surprises, no matter how distasteful the reality.

“Record high meat prices are not a surprise,” says Stephen Koontz, agricultural economist at Colorado State University, reflecting on COVID impacts, specifically, in Economic Reasons for What was Observed in Fed Cattle and Beef Markets During the Spring of 2020.

“The grocery store supply chain was emptied during the closures of local economies and then had difficulty catching up,” Koontz explains. “Further, prices associated with specific cuts that consumers typically prepare at home were the highest. Prices of cuts sold at restaurants initially dropped to record lows and then rallied as consumers made substitutions and began purchasing cuts they did not buy typically. However, all rallied as total beef supplies diminished with closures and partial operations.

“Record low livestock prices are also not a surprise. If packers cannot run or cannot run at typical throughput levels—especially if animal supplies are abundant—then the marginal value of that last group of animals that is not sold is close to zero. And the last pen or truckload or group of animals is a perfect substitute for the first. It is the marginal value of the last product that sets the market. This point is critical. In fact, that is what is communicated by economists when supply and demand curves are drawn. The equilibrium quantity and price are what is traded at the lowest marginal value to buyers and the highest marginal value to sellers.”

The USDA report also offers considerations relative to price discovery, market transparency and price risk management.

Cattle Current Daily—July 23, 2020 2020-07-22T19:44:10-05:00

Cattle Current Daily—July 22, 2020

Although too few to trend, there were some early live sales in the Southern Plains on Tuesday at $96/cwt., which was $1 higher than last week.

Cattle futures closed mixed on Tuesday, amid sluggish activity, as traders apparently waited for more cash direction.

Except for 2¢ higher in Apr, Live Cattle futures closed an average of 34¢ lower.        

Except for 27¢ lower and 2¢ lower in the front two contracts, Feeder Cattle futures closed an average of 57¢ higher (15¢ to $1.30 higher at the back).

Choice boxed beef cutout value was 86¢ lower Tuesday afternoon at $200.88/cwt. Select was 29¢ lower at $191.30.

Corn futures closed 3¢ to 5¢ lower.

Soybean futures closed 5¢ to 7¢ lower through Mar ’21 and then fractionally lower to 3¢ lower.

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Major U.S. financial indices closed mixed Tuesday, with apparent profit taking in tech stocks, but more optimism in financials.

The Dow Jones Industrial Average closed 159 points higher. The S&P 500 closed 5 points higher. The NASDAQ closed 86 points lower.

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Total customer transactions at major U.S. restaurant chains eroded the week ending July 12, down 14% compared to a year earlier, and down 3% more than the previous week, according to the NPD Group (NPD).

Transactions at quick service restaurants (QSRs) led the decline, down 4% week to week and 13% less than a year earlier. Full service restaurant (FSR) transactions improved 3% week to week to 26% less year over year, according to NPD’s CREST® Performance Alerts. That was something of a surprise given the fact that QSR transactions so far are faring the pandemic more positively than FSRs.

“Last week, when quick service restaurants drove the improvements in restaurant customer transaction declines, I highlighted the apparent divergence in trend between quick service and full service restaurants, supported by sound reasoning about on-premises and off-premises models, the pace of reopening and reclosing, and the resurgence in COVID-19 cases around the country,” explains David Portalatin, NPD food industry advisor. “The flip in declines this week from quick service restaurants to full service restaurants is a reminder that the world is unpredictable today and we should expect twists and turns on the bumpy road to recovery. Still, the pre-COVID trend that favored quick service restaurants and the segment’s expertise in offering off-premises services, like drive-thru and delivery, has accelerated during the pandemic and will continue to do so in the long-term.”

The estimated percentage of U.S. restaurants permitted to have on-premises dining in the week ending July 12 declined to 82% from 90% in the prior week, according to NPD’s restaurant census ReCount®.  The majority of the change was in California, where the state government rolled back recent reopening to off-premise dining only.

Cattle Current Daily—July 22, 2020 2020-07-21T19:39:17-05:00

Cattle Current—July 21-2020

Cattle futures softened some on Monday, likely with some profit taking from last week’s strong performance.

Live Cattle futures closed an average of 39¢ lower (25¢ lower to $1.00 lower in spot Aug). 

Feeder Cattle futures closed an average of $1.31 lower (32¢ to $2.30 lower).

Wholesale beef values edged higher Monday after dropping to the lowest levels last week since December of 2017.

Choice boxed beef cutout value was $1.27 higher Monday afternoon at $201.74/cwt. Select was $1.28 higher at $191.59.

Corn futures closed 2¢ to 4¢ lower through Jly ’21 and then fractionally lower to 1¢ lower.

Soybean futures closed mostly 3¢ to 5¢ higher.

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Major U.S. financial indices closed higher Monday, led by tech stocks, which were paced by Amazon.

The Dow Jones Industrial Average closed 8 points higher. The S&P 500 closed 27 points higher. The NASDAQ closed 263 points higher.

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“Beef production will be higher year over year for the remainder of the year. This may combine with limited demand to keep wholesale beef prices under pressure going forward,” says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his latest weekly market comments.     

The most recent World Agricultural Supply and Demand Estimates project beef production this year at 26.93 billion lbs., which would be just 0.81% less than last year. Heavier carcass weights are making up for lost slaughter earlier in the year.

For seasonal perspective, Peel explains carcass weights typically decline significantly in April, May and June. Last year, for instance, steer carcass weights declined 54 lbs. from January (896 lbs.) to a low of 842 lbs. the first week of June. This year, he notes average steer carcass weights in June of 896 lbs. were 16 lbs. less than in January.

“Longer term, beef demand may be affected by the economic recession,” Peel says. “Impacts have not been obvious thus far but unemployment is still high and some unemployment benefits will end this month. With COVID-19 far from controlled, considerable uncertainty remains regarding how school schedules, sporting activities and business travel could affect beef demand this fall.”

Cattle Current—July 21-2020 2020-07-20T20:24:42-05:00

Cattle Current Daily—July 20, 2020

Negotiated cash fed cattle prices ended the week generally steady.

The weighted average five-area direct fed steer price through Thursday was $96.32/cwt. on a live basis, which was 35¢ higher than the previous week, but $16.70 less than the same week last year. The average steer price in the beef was $157.58, which was 9¢ less than the previous week and $25.39 less than a year earlier.

Cattle futures meandered higher by Friday’s close, supported by the week’s optimism built by cash feeder prices and thoughts that the low may be in the books for fed cattle prices.

Except for unchanged in spot Aug, Live Cattle futures closed an average of 36¢ higher.       

Feeder Cattle futures closed an average of 38¢ higher.

Choice boxed beef cutout value was 33¢ lower Friday afternoon at $200.47/cwt. Select was 99¢ lower at $190.31.

The average dressed steer weight for the week ending July 4 was 896 lbs., according to USDA’s Actual Slaughter Under Federal Inspection report. That was even with the previous week and 35 lbs. heavier than the previous year. The average dressed heifer weight was 826 lbs., on par with the previous week but 34 lbs. heavier than the same week last year.

Estimated total cattle slaughter for the week ending July 18 was 650,000 head, according to USDA’s Agricultural Marketing Service. That would be 7,000 head fewer (-1.07%) than the previous week’s estimate and 5,000 head fewer (-0.76%) than the same week last year. Year to date estimated total cattle slaughter of 17.15 million head is 1.01 million head fewer (-5.56%) than last year.

Corn futures closed mostly 1¢ to 2¢ higher.

Soybean futures closed 4¢ higher through Jly ’21 and then fractionally higher to 3¢ higher.

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Major U.S. financial indices closed narrowly mixed Friday. Pressure included the expanding number of coronavirus cases.

The Dow Jones Industrial Average closed 62 points lower. The S&P 500 closed 9 points higher. The NASDAQ closed 23 points higher.

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U.S. beef exports are typically viewed in terms of tonnage, dollars and the impact on the U.S. beef industry, specifically. Export benefits run deeper, though.

Since 2015, indirect exports of corn and soybeans through beef and pork exports has been the fastest-growing category of corn and soybean use, according to the U.S. Meat Export Federation (USMEF).

For perspective, U.S. beef and pork exports last year used 480 million bushels of corn. Corn revenue generated by beef and pork exports totaled $1.8 billion (480 million bushels x average annual price of $3.75/bushel).

U.S. beef and pork exports also used about 3 million tons of distiller’s dried grains with solubles (DDGS) in 2019 at an annual average price of $137/ton, generating $411.8 million in revenue for ethanol mills’ co-products.

U.S. pork exports last year also used 2.12 million tons of soybean meal, which is the equivalent of 89.2 million bushels of soybeans. Soybean revenue generated by pork exports totaled $751.7 million (89.2 million bushels x average annual price of $8.43/bushel).

Snubbed to a different post, beef and pork exports last year contributed more than 12% of the per-bushel price of corn ($0.46/bushel) of an annual average price of $3.75/bushel.

All of that comes from a recently updated study conducted by World Perspectives, Inc. It helps explain why domestic corn and soybean growers invest a portion of their checkoff dollars in market development efforts conducted by USMEF.

“These are challenging times for everyone in U.S. agriculture, with producers facing difficult choices every day,” says Dan Halstrom, USMEF president and CEO. “USMEF greatly appreciates the foresight and confidence shown by the corn and soybean sectors when they invest in red meat exports. This study provides a detailed analysis of the value delivered by that investment.”

Cattle Current Daily—July 20, 2020 2020-07-18T19:58:53-05:00

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