Daily Market Highlights

Negotiated cash fed cattle trade was limited on light demand in Nebraska and the western Corn Belt through Friday afternoon. There were a few live sales in both regions at $136/cwt. and a few in the beef at $218, but too few transactions to trend.

Cattle futures closed narrowly mixed in sluggish, light trade.

Except for 37¢ higher in Apr, Live Cattle futures closed an average of 25¢ lower.

Feeder Cattle futures closed an average 53¢ higher (22¢ to 67¢ higher).

Choice boxed beef cutout value was 82¢ higher Friday afternoon at $251.21/cwt. Select was 28¢ higher at $220.29.

****************************

Major U.S. financial indices closed in opposite directions on Friday, with Goldman Sachs contributing to Dow Gains, while slipping prices in leading tech stocks like Apple and Amazon pressured the NASDAQ.

The Dow Jones Industrial Average closed 89 points higher. The S&P 500 closed 2 points lower. The NASDAQ closed 113 points lower.

******************************

“Beef production for 2017 is lowered primarily on lighter carcass weights, which more than offsets higher expected slaughter in the later part of 2017,” say analysts with USDA’s Economic Research Service, in the monthly World Agricultural Supply and Demand Estimates released Friday. “Higher expected placements support a higher 2018 beef forecast…The forecast for total meat production is lowered from last month per 2017 but is raised for 2018”

The projected 5-area fed steer price for the year increased $2 on the low end of the range and $1 on the high end to $122-$126/cwt. Price projections are $132-$135 for the second quarter, $118-$124 in the third quarter and $113-$123 in the fourth quarter.

Cash fed cattle traded about $4.50 higher in the weekly Fed Cattle Exchange Auction on Thursday at an average price of $136.75. Only about 25% of the 1,396-head offering sold—and that was for delivery at 1-17 days. Country trade failed to materialize to a large enough degree for a trend in any of the major cattle feeding regions through the afternoon.

Cattle futures backed away from firm early support to trade narrowly mixed in Live Cattle and lower in Feeder Cattle.

Live Cattle futures closed 17¢ lower to 17¢ higher, except for 45¢ lower in away Jun.

Feeder Cattle futures closed an average 83¢ lower (65¢ to $1.02 lower).

Choice boxed beef cutout value was 32¢ lower Thursday afternoon at $250.39/cwt. Select was 11¢ higher at $220.01.

****************************

Major U.S. financial indices closed slightly higher on Thursday, with investors apparently satisfied there is no lethal testimony coming to the Trump administration via former FBI director James Comey.

The Dow Jones Industrial Average closed 8 points higher. The S&P 500 closed fractionally higher. The NASDAQ closed 24 points higher.

******************************

Despite the May decline in the Restaurant Performance Index, based on the first quarter, consumer spending grew by 1.3% and visits to restaurants and foodservice outlets held steady. That’s according to The NPD Group, a leading global information company, which continually tracks the foodservice industry.

Fortunes depend on the segment of foodservice.

Areas offering the most convenience to customers, like delivery and drive-thru, grew in the first quarter by 2% and 3%, respectively, according to NPD Group’s CREST® foodservice market research, which tracks daily how U.S. consumers use restaurants and foodservice outlets. Visits to what are termed fast-casual restaurants, grew visits by 3%, mainly due to unit expansion.

On the other side of the scale, NPD data says visits to casual dining restaurants fell by 4%, while visits to midscale/family dining restaurants declined by 3%.

Negotiated cash fed cattle trade remained at a standstill in the country yesterday. That’s not surprising, given the previous day’s sudden and steep sell0ff in Cattle futures, along with Wednesday’s weekly Fed Cattle Exchange auction being postponed until today due to technical problems.

Live Cattle futures rebounded some, helped by fundamental support, but front-month Feeder Cattle contracts continued to erode.

Live Cattle futures closed an average of 99¢ higher (57¢ to $1.22 higher).

Feeder Cattle futures closed 22¢ to 72¢ lower in the front three contracts and then an average of $1.14 higher.

Choice boxed beef cutout value was 26¢ higher Wednesday afternoon at $250.71/cwt. Select was 33¢ higher at $219.90.

******************************

Major U.S. financial indices tilted higher on Wednesday, basically ending the day where they began. Sliding oil prices, due to a surprising increase in U.S. Crude Oil and gasoline inventories added pressure.

The Dow Jones Industrial Average closed 37 points higher. The S&P 500 closed 3 points higher. The NASDAQ closed 22 points higher.

******************************

Producer sentiment toward the agricultural economy held steady in May, continuing a trend of overall higher optimism, according to the latest Purdue University and CME Group Ag Economy Barometer.

At 130 points, the May barometer reading is on par with the prior month.

While overall sentiment remained the same, there were some changes in the barometer’s sub-indices. The Index of Current Conditions fell 10 points from April to 117. On the other hand, the Index of Future Expectations increased 4 points in May, marking the second-consecutive month of growth. Both reflect higher levels of producer optimism than at the same time last year.

Producer sentiment hovered around the 130-point mark for five of the last six months and remains significantly stronger than a year ago when it was 97. By the way, the Ag Economy barometer is based on a monthly survey of 400 agricultural producers from across the country.

Cattle futures closed sharply lower on Tuesday in a volatile day of trading with continued support through mid-day—contract highs in some months—and then mostly limit-down in Feeder Cattle, with Live Cattle tagging along. That was with another bump higher in Choice wholesale beef value. There seems no easy explanation for the abrupt sell-off. Today’s weekly Fed Cattle Exchange auction should provide a clearer glimpse of fundamental reality.

Live Cattle futures closed an average of $2.16 lower ($1.80 to $2.60 lower).

Feeder Cattle futures closed an average of $4.39 lower (mostly limit-down $4.50).

Choice boxed beef cutout value was $2.10 higher Tuesday afternoon at $250.45/cwt., the first time above $250 since July of 2105. Select was 13¢ higher at $219.57. The Choice-Select was $30.88 in the afternoon.

*******************************

On Wall Street, major U.S. financial indices edged lower again on Tuesday, in what some analysts described as defensive positioning ahead of potential market-rattling events later this week, which include the general election in Great Britain.

The Dow Jones Industrial Average closed 47 points lower. The S&P 500 closed 6 points lower. The NASDAQ closed 20 points lower.

*******************************

Although U.S. red meat exports slowed moderately from the previous month’s steamy pace, they remained significantly higher year-over-year, according to statistics released by USDA and compiled by the U.S. Meat Export Federation.

Beef exports in April were 13% more than a year earlier for volume at 99,786 metric tons. Value was 14% more at $550.4 million. For the year through April, beef exports were 14% higher in volume and 18% more in value at $2.16 billion, compared to the same period last year.

April export value per head of fed slaughter averaged $283.52, which was 12% more than a year ago and the highest so far this year. Through April, per-head export value averaged $271.57, up 11%.

Follow-though buying and reports of increased commercial support helped push Feeder Cattle futures higher on Monday with Live Cattle tagging along. There was also plenty of chatter about expectations for higher wholesale beef values and higher cash fed cattle prices this week.

Live Cattle futures closed an average of $1.19 higher in half of the contracts, including $1.27 higher in spot Jun and $1.07-$1.22 higher in the back three contracts. Other months were an average of 39¢ higher.

Feeder Cattle futures closed an average of $2.51 higher, from $1.15 higher in spot Aug to $3.72 higher at the back.

Choice boxed beef cutout value was $3.11 higher Monday afternoon at $248.35/cwt. Select was $1.38 higher at $219.44. The Choice-Select spread hit a new high at $28.91.

******************************

On Wall Street, Major U.S. financial indices closed slightly lower on Monday, with little new economics news, bit still close to record-high levels.

The Dow Jones Industrial Average closed 22 points lower. The S&P 500 closed 2 points lower. The NASDAQ closed 10 points lower.

******************************

Softer sales and customer traffic levels dampened optimism among restaurant operators, in the most recent Restaurant Performance Index (RPI) from the National Restaurant Association (NRA). The RPI fell 1.5% in April to a level of 100.3, which is barely into expansion territory.

For perspective, according to NRA, index values above 100 indicate that key industry indicators are in a period of expansion. Index values below 100 represent a period of contraction. So, the key indicators, especially the forward-looking ones still favor expansion.

That’s good news for livestock producers, says Katelyn McCullock, an economist with the American Farm Bureau Federation, in the latest issue of In the Cattle Markets. She explains the expansionary outlook suggests a boost in demand to help lessen the negative effects of the large production numbers that are expected in beef, pork and chicken.

Cattle markets finished the bullish week on a high note Friday, supported by increased cash fed cattle strength. Negotiated fed cattle prices for the week were mostly $4-$7 higher on a live basis at mostly $134.00-$137.50/cwt. Dressed trade was up to $10 higher week to week at $215-$220.

“Packer profitability has been better than expected and helped improve cash prices after sliding the past couple of weeks,” say analysts with the Agricultural Marketing Service. They add that fewer cattle have been grading Choice and packers have been willing to chase them.

Choice boxed beef cutout value was 34¢ lower Friday afternoon at $245.24/cwt. Select was 84¢ higher at $218.06.

Other than spot Jun trying to catch up to the week’s hefty increase in cash trade, traders were content to square Live Cattle positions on Friday, while Feeder Cattle futures churned ahead.

Live Cattle futures closed $3.40 higher in spot Jun, and then an average of 10¢ lower, except for 60¢ and 35¢ higher at the back.

Feeder Cattle futures closed an average of $1.40 higher in the front three contracts , an average of 34¢ higher in the next three, and then 87¢ lower and $2.07 higher at the back.

You’ve got to wonder how much of the week’s increase has to do with the Board betting on the reality of U.S. beef going to China. In the meantime, there’s little doubt that India’s announcement last week to ban the sale of cattle and buffalo for slaughter should provide support to global beef export prices.

******************************

Major U.S. financial indices closed at record-high levels on Friday despite a monthly unemployment report that missed estimates. Total non-farm payroll employment increased by 138,000 in May, according to the U.S. Bureau of Labor Statistics. That’s about 50,000 fewer than the trade expected. At 4.3%, the nation’s unemployment rate was slightly less than the previous month’s already-low rate.

The Dow Jones Industrial Average closed 62 points higher. The S&P 500 closed 9 points higher. The NASDAQ closed 58 points higher.

******************************

“The concern for producers is not achieving the highest price of the year, which may occur on one specific day, but hitting a period when prices are strong and profitable,” says Andrew P. Griffith, agricultural economist at the University of Tennessee, in his weekly market comments. He adds that recent strength in Feeder Cattle futures provides support to summer feeder cattle prices, which typically peak between late July and early September.

“There is no guarantee prices will remain this strong, but there is also no information suggesting prices should decline,” Griffith says. “Thus, producers who are not willing to take on the risk of declining prices may want to consider price risk management strategies at this time. Alternatively, producers willing to take a few risks may want to sit tight to see what happens the next few days.”

Cash fed cattle trade roared higher on Thursday: $4-$5 higher in the Southern Plains at $136-$137/cwt.; $4-$7 higher in Nebraska at $136.00-$137.50 on a live basis and $5-$7 higher in the beef at $215, a few up to $216. Dressed trade was also at $215 in the western Corn Belt, which was $5-$7 higher than the previous week.

That, higher outside markets and the previous session’s fundamental leanings helped propel Cattle futures sharply higher; limit higher in front months.

Live Cattle futures closed an average of $2.41 higher ($1.42 to $3.00 higher).

Except for 50¢ higher at the very back, Feeder Cattle futures closed an average of $4.15 higher ($3.57 to $4.50 higher).

Choice boxed beef cutout value was 4¢ higher Thursday afternoon at $245.58/cwt. Select was 96¢ lower at $217.22. The Choice-Select spread reached a new high of $28.36. Analysts with the Livestock Marketing Information Center pointed out recently that a surge in rib prices—record-high in some cases—is helping to underpin wholesale beef values.

******************************

Major U.S. financial indices closer sharply higher on Thursday, buoyed by the bullish payroll report from ADP.

Private sector non-farm employment increased by 253,000 jobs from April to May according to the closely–watched monthly ADP National Employment Report from the ADP Research Institute, in collaboration with Moody’s Analytics.

“Job growth is rip-roaring,” says Mark Zandi, chief economist of Moody’s Analytics. “The current pace of job growth is nearly three times the rate necessary to absorb growth in the labor force.” He adds that, increasingly, the primary challenge facing businesses will be a shortage of labor. Of course, that’s a challenge folks in the cattle business well understand.

The Dow Jones Industrial Average closed 135 points higher. The S&P 500 closed 18 points higher. The NASDAQ closed 48 points higher.

Cash fed cattle prices at yesterday’s weekly Fed Cattle Exchange Auction held mostly steady with the previous week’s country trade on current delivery. Of the 2,067 head offered, 1,257 head sold, mostly steers and mostly from the Southern Plains. The weighted average price was $132.24/cwt. for delivery at 1-9 days; the price last week was $132.54. The weighted average price this week for delivery at 1-17 days was $132.06; $128.30 for delivery at 17-30 days.

Cattle futures gained some traction as fundamentals seemed to win the race, although Live Cattle continues to maintain the steep discount to cash. The ongoing rally in front-month Lean Hog futures likely helped, too.

Live Cattle futures closed an average of $1.48 higher for a range of $1.12 to $1.85 higher.

Feeder Cattle futures closed an average of $1.89 higher for a range of $1.05 to $2.65 higher.

Wholesale beef values continued strong, with chatter about packers needing and wanting to restock following Memorial Day. Choice boxed beef cutout value was 29¢ higher Wednesday afternoon at $245.54/cwt. Select was $1.27 lower at $218.18.

******************************

Major U.S. financial indices edged lower on Wednesday. There seemed to be no overwhelming reason. Lower oil prices were likely part of it, as well as ongoing anxiety over lethargic domestic economic growth. For instance the Beige Book released by the Federal Reserve on Wednesday chronicles the ongoing slow pace of inflation.

According to that report, from early April to Late May, “Rapidly rising costs for lumber, steel, and other commodities tended to push input costs higher for some manufacturers and the construction sector, but, some Districts noted falling prices for certain final goods, including groceries, apparel, and autos. Energy prices and farm prices were mixed across products and among Districts.”

The Dow Jones Industrial Average closed 20 points lower. The S&P 500 closed 1 point lower. The NASDAQ closed 4 points lower.

******************************

According to David Anderson, Extension economist with Texas A&M University, “Steer weights are a full 30 lbs. below weights of a year ago—that was earlier this month.

In the latest issue of In the Cattle Markets, Anderson explains that both the ongoing incentive for cattle feeders to pull cattle forward, as well as the late winter storms, helped pressure carcass weights.

The result, Anderson says, is much tighter total beef supplies than implied by the number of cattle.

Cattle futures regained some stability on Tuesday, following run-on pressure early from the previous session’s sharp decline. Short covering appeared to be a primary driver, with Feeder Cattle leading; those contracts gained back about half of Friday’s losses.

Live Cattle futures closed an average of 78¢ higher (27¢ to $1.42 higher).

Feeder Cattle futures closed an average of $2.07 higher ($1.37 to $2.97 higher).

Corn futures closed mostly 4¢ to 6¢ lower.

Choice boxed beef cutout value was 35¢ lower Tuesday afternoon at $245.25/cwt. Select was $1.00 higher at $219.45.

******************************

Major U.S. financial indices trended lower on Monday, amid mixed economic news. Among data investors absorbed:

Personal Income and Personal Disposable Income grew at 0.4% in April, according to the U.S. Bureau of Economic Analysis. That was in line with expectations, but continues to speak to trudging economic growth.

The Dow Jones Industrial Average closed 50 points lower. The S&P 500 closed 2 points lower. The NASDAQ closed 7 points lower.

******************************

“Slowly growing feedlot inventories reflect the increase in feeder supplies resulting from three years of herd expansion,” says Derell Peel, Extension livestock marketing specialist at Oklahoma State University, in his latest weekly market comments. “The May 1 on-feed inventory is the highest monthly cattle on feed total since February of 2013 and the highest May total since 2012.”

Among the regional highlights Peel gleaned from Friday’s monthly Cattle on Feed report:

• While Texas remains the largest cattle feeding state, Peel says feedlot inventories there haven’t grown very fast in recent months. The May 1 inventory was unchanged from last month and was 1.2% lower than last year. According to Peel, current Texas feedlot numbers are 20.1% lower than the all-time monthly inventory peak of 3.08 million head that occurred in February/March of 2001.
• Like Texas, Peel says the inventory has also grown at a slow pace in Nebraska, which is the second largest cattle feeding state. Although, he adds that Nebraska continues to close the gap with Texas in terms of monthly on-feed inventory.
• On the other end of regional growth, Peel says, feedlot inventories in Kansas (the No. 3 cattle feeding state) have grown aggressively in recent months. He explains, “The current Kansas feedlot inventory of 2.28 million head is 6% more than last year and is the highest monthly total for the state since December of 2011.”
• “Colorado (the No.4 cattle feeding state) has also grown rapidly in the past few months,” Peel says. “The May 1 inventory there is 6.7% higher than last year and is the largest monthly total for the state since April, 2013.”
• Then there is Iowa, the No. 5 cattle feeding state in terms of on-feed inventory. Peel notes that feedlot inventories there have grown rapidly in the past six months with monthly placements averaging nearly 20% higher year over year. Peel explains, “This is the fastest growth in placements among the top five feedlot states and has pushed the current Iowa cattle-on-feed inventory to a record high for the data series going back to 1992.”

Lower cash fed cattle prices and the bearish Cattle on Feed report (see below) helped pressure Cattle futures to sharp losses on Friday.

Live Cattle futures closed an average of $2.17 lower ($1.22 to $2.85 lower).

Feeder Cattle futures closed an average of $4.02 lower ($3.52 to $4.30 lower).

Corn futures closed 3¢ to 5¢ higher.

Choice boxed beef cutout value was 51¢ lower Friday afternoon. Select was 53¢ lower. The Choice-Select spread was $27.15/cwt.

Even so, analysts with the Agricultural Marketing Service explained on Friday, “The feeder market continues to thrive despite slaughter cattle losing ground on Wednesday in direct feedlot trade. The momentum from the previous week’s positive advances continued to lend support and add confidence in the minds of feeder buyers.”  

******************************

Wall Street investors seemed content to drift into the holiday weekend, with major U.S. financial indices treading water on Friday.

The Dow Jones Industrial Average closed 2 points lower. The S&P 500 closed fractionally higher. The NASDAQ closed 4 points higher.

******************************

Friday’s monthly Cattle on Feed report will likely add pressure to calf prices, at least as the week begins.

Plenty of analysts were correct in thinking April feedlot placements would be higher, but most were too conservative in how broadly feedlots would respond to the spring rally in fed cattle prices.

April feedlot placements of 1.85 million head were 11% higher than the previous year. That’s about 4% more than pre-release estimates, according to Griffith.

In terms of weights, 53.2% (985,000 head) weighed 700-899 lbs. On the lighter end, 18.8% of the placements (348,000 head) went on feed weighing 600 lbs. or less.

Marketings of 1.70 million head were 3% more than last year, compared to estimates ahead of the report of 1.7%.

The net result is an on-feed inventory May 1 that was 2% more than a year earlier at 11.o million head. Most estimates ahead of the report forecast an inventory even with last year.