Daily Market Highlights

Note: Futures and equity markets were closed yesterday. As well, some AMS reports were unavailable due to the holiday.

Negotiated cash fed cattle prices last week were $156/cwt. on a live basis in the Southern Plains and Nebraska, where dressed prices were $252. Live prices in the western Corn Belt were $157-$159.

Choice boxed beef cutout value was 81¢ higher Monday afternoon at $277.43/cwt. Select was 34¢ lower at $256.55/cwt.

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Historically low hay stocks could prompt more beef cow liquidation this winter, says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly market comments.

He points out Dec. 1 hay stocks for the nation were 16.4% less than the previous 10-year average at 71.9 million tons, in the recent USDA Crop Production report. It was the least on record going back to 1973. Peel notes hay production last year was the lowest on record in data that began in 1974.

“Each of the top 10 states for hay stocks was down compared to the 10-year average and collectively were down 20.8% from the 2012-2021 average Dec. 1 stocks level,” Peel says. “The largest hay stocks on December 1 were in Texas — 25.8% below the 10-year average for the state. Other top 10 states were down from the 10-year average ranging from Tennessee (down 10.9%) to Oklahoma (down 32.7%).” 

Combined total hay production in the top 10 states represents 43% of U.S. total hay production and was down 18.7% compared to the 10-year average for those states, according to Peel. He adds that eight of the top 10 beef cow states are among the top 10 hay production states.

“The December storm already will have taken a chunk out of the reported Dec. 1 hay stocks,” Peel says. “New forage production is several months away in the south and even farther away in northern regions.”

Negotiated cash fed cattle trade ranged from slow to moderate on moderate demand in the Southern Plains and Nebraska through Friday afternoon, according to the Agricultural Marketing Service. Elsewhere, it was limited on light demand.

For the week, in a light test, live prices were $1 lower at $156/cwt. in the Southern Plains and Nebraska, and at $157-$159 in the western Corn Belt. Dressed prices in Nebraska were generally steady at $252; they were $252 in the western Corn Belt a week earlier.

Choice boxed beef cutout value was 87¢ lower Friday afternoon at $276.62/cwt. Select was 12¢ lower at $256.89/cwt.

Live cattle futures firmed Friday despite lower cash fed cattle prices and the seasonal turn lower in wholesale beef prices.

Live Cattle futures closed an average of 31¢ higher, except for 7¢ lower in near Apr.

However, higher Corn futures pressured Feeder Cattle futures an average of 86¢ lower (2¢ to $1.40 lower).

Corn and Soybean futures continued to gain Friday on the bullish WASDE.

Corn futures closed mostly 1¢ to 4¢ higher.

Soybean futures closed 3¢ to 8¢ higher through Aug ‘23 and then mostly 1¢ to 2¢ lower.

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Major U.S. financial indices rose again Friday with follow-through support from suggestions of easing inflation.

The Dow Jones Industrial Average closed 112 points higher. The S&P 500 closed 15 points higher. The NASDAQ was up 78 points.

West Texas Intermediate Crude Oil futures (CME) closed $1.29 to $1.47 higher through the front six contracts.

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Despite the significantly different year-over-year economic environment in December, consumers were slow to begin spending differently, according to data trends in Consumer Food Insights Reports from Purdue University’s Center for Food Demand Analysis and Sustainability.

The survey-based report assesses food spending, consumer satisfaction and values, support of agricultural and food policies and trust in information sources.

Household food expenditures were up more than 15% in December compared to the previous January. “But it is worth pointing out that our indicators like food security and food satisfaction have not similarly moved in any one direction, which is a good sign that wellbeing has likely not decreased on average,” says Jayson Lusk, the head and Distinguished Professor of Agricultural Economics at Purdue, who leads the center.

Consumer shopping behaviors were similar to July, but consumers were shopping at discount stores more and spending less on discretionary expenses, according to the latest report. As well, 22% said they were switching to cheaper brands, compared to 17% in July.

“Broadly speaking, consumers faced some budget constraints this holiday season,” Lusk says. “About a third said they were worried about being able to afford gifts, but this was far from the majority. When we compare responses to inflation in December to this past summer, most of these behaviors have not increased in frequency.”

The survey results also show that where people spend their dollars has not shifted. However, Lusk notes that the popularity of online grocery shopping appears to be declining, which raises questions about the lower limits of online food shopping and whether it was largely buoyed by the COVID pandemic.

Report data also suggests consumers could readily access most desired food items as supply chain disruptions eased.

“This year, chicken was the most reported item that people were unable to find at the grocery store,” says Sam Polzin, a food and agriculture survey scientist for the center and co-author of the report. “Given that we are in the middle of the deadliest bird flu outbreak, this is unsurprising.”

Cattle futures closed lower Thursday, with pressure from the continued lack of cash fed cattle direction and the Corn-friendly World Agricultural Supply and Demand Estimates (see below).

Corn futures closed to 13¢ to 15¢ higher through the front three contracts, then 5¢ to 7¢ higher through Jly ’24.

Soybean futures closed 14¢ to 25¢ higher through Aug ‘23 and then mostly 1¢ to 3¢ higher.

Feeder Cattle futures closed an average of $1.06 lower through the front half of the board, and then unchanged to an average of 17¢ higher.

Live Cattle futures closed an average of 26¢ lower, except for unchanged and 7¢ higher in two away contracts.

Negotiated cash fed cattle trade ranged from mostly inactive on very light demand in the Southern Plains to limited on light demand through Thursday afternoon, according to the Agricultural Marketing Service.

Although too few to trend, there were some early dressed sales in Nebraska at $252/cwt. and a few on a live basis in the western Corn Belt at $158-$159.

Live prices last week were $157/cwt. in the Southern Plains and Nebraska and $158-$160 in the western Corn Belt. Dressed prices were $252.

Choice boxed beef cutout value was $3.24 lower Thursday afternoon at $277.49/cwt. Select was $1.09 lower at $257.01/cwt.

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Major U.S. financial indices rose Thursday with support from the monthly Consumer Price Index, which indicated easing inflation.

The Consumer Price Index for All Urban Consumers (CPI-U) declined 0.1% in December on a seasonally adjusted basis, after increasing 0.1% in November, according to the U.S. Bureau of Labor Statistics. The all items index increased 6.5% over the last 12 months before seasonal adjustment.

The Dow Jones Industrial Average closed 216 points higher. The S&P 500 closed 13 points higher. The NASDAQ was up 69 points.

West Texas Intermediate Crude Oil futures (CME) closed 88¢ to 98¢ higher through the front six contracts.

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ERS projected the annual average five-area direct fed steer price for this year at $158.50/cwt., in the January World Agricultural Supply and Demand Estimates. That was $2.50 more than the previous month’s estimate, based on expected demand strength. The price would be $14.10 more than the projected annual average last year. By quarter and compared to the previous month, ERS increased projected prices by $4 to $157 in the first quarter, by $3 to $157 in the second quarter and by $2 to $157 in the third quarter.

Among other WASDE highlights…

Corn

The 2022/23 U.S. corn outlook was reduced for production, food, seed and industrial use, feed and residual use, exports, and ending stocks. Corn production was estimated 200 million bushels lower than the previous month’s estimate, harvested area was trimmed by 1.6 million acres and ending stocks were lowered 15 million bushels. The season-average corn price received by producers was unchanged at $6.70 per bushel.

Soybeans

Soybean production was estimated 69 million bushels lower with estimated harvested area 0.3 million acres less. The U.S. season-average soybean price for 2022/23 was projected 20¢ higher at $14.20 per bushel. Soybean meal was projected $15 higher at $425 per short ton. The soybean oil price was unchanged at 68¢ per pound.

Wheat

The 2022/23 U.S. wheat outlook was for increased supplies, larger domestic use, unchanged exports, and lower ending stocks. The season-average farm price was unchanged at $9.10 per bushel.

Cattle futures closed lower Wednesday with the lack of cash fed cattle direction and firmer Corn futures prices.

Feeder Cattle futures closed an average of 65¢ lower, from 7¢ to $1.17 lower.

Live Cattle futures closed an average of 19¢ lower, except for unchanged in spot Feb.

Negotiated cash fed cattle trade ranged from very limited on light demand to a standstill through Wednesday afternoon, according to the Agricultural Marketing Service.

Live prices last week were $157/cwt. in the Southern Plains and Nebraska and $158-$160 in the western Corn Belt. Dressed prices were $252.

Choice boxed beef cutout value was $3.80 lower Wednesday afternoon at $280.73/cwt. Select was 23¢ lower at $258.10/cwt

Corn futures closed fractionally higher to 1¢ higher through Sep ’23 and then mostly 2¢ lower

Soybean futures closed 2¢ to 8¢ higher through Aug ‘23 and then mostly 3¢ to 6¢ lower.

Cattle futures closed lower Wednesday with the lack of cash fed cattle direction and firmer Corn futures prices.

Feeder Cattle futures closed an average of 65¢ lower, from 7¢ to $1.17 lower.

Live Cattle futures closed an average of 19¢ lower, except for unchanged in spot Feb.

Negotiated cash fed cattle trade ranged from very limited on light demand to a standstill through Wednesday afternoon, according to the Agricultural Marketing Service.

Live prices last week were $157/cwt. in the Southern Plains and Nebraska and $158-$160 in the western Corn Belt. Dressed prices were $252.

Choice boxed beef cutout value was $3.80 lower Wednesday afternoon at $280.73/cwt. Select was 23¢ lower at $258.10/cwt.

Corn futures closed fractionally higher to 1¢ higher through Sep ’23 and then mostly 2¢ lower

Soybean futures closed 2¢ to 8¢ higher through Aug ‘23 and then mostly 3¢ to 6¢ lower.

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Major U.S. financial indices climbed Wednesday with traders apparently betting that the CPI report will reflect cooling inflation.

The Dow Jones Industrial Average closed 268 points higher. The S&P 500 closed 50 points higher. The NASDAQ was up 189 points.

West Texas Intermediate Crude Oil futures (CME) closed $2.12 to $2.31 higher through the front six contracts.

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Eyes Thursday will focus on the monthly World Agricultural Supply and Demand Estimates, with many interested to see if USDA makes further adjustments on the demand side of the corn ledger, and if so, to what degree.

“Exports for corn and soybeans have been sluggish for the U.S. and tend to pause ahead of the South American crop in an effort to avoid paying high U.S. prices for corn and soybeans,” say analysts with the Livestock Marketing Information Center (LMIC), in the latest Livestock Monitor. “Corn exports for the 2022/2023 marketing year are off last year’s pace more than 25%.”

Daniel O’Brien, Extension agricultural economist at Kansas State University, explained in last month’s Grain Market Outlook newsletter, “It is possible that in coming USDA WASDE reports U.S. export demand could remain so weak that the USDA is forced to reduce its U.S. corn export projection further yet, which all else being equal would lead to higher forecasts of U.S. corn ending stocks in the current Marketing Year (2022-23).”

Negotiated cash fed cattle trade ranged from mostly limited on light demand to a standstill through Tuesday afternoon, according to the Agricultural Marketing Service.

Live prices last week were $157/cwt. in the Southern Plains and Nebraska and $158-$160 in the western Corn Belt. Dressed prices were $252.

Choice boxed beef cutout value was $1.61 lower Tuesday afternoon at $284.53/cwt. Select was $1.27 lower at $258.33/cwt.

Cattle futures closed narrowly mixed Tuesday, despite early Corn futures momentum.

Feeder Cattle futures closed from an average of 16¢ lower to an average of 26¢ higher.

Live Cattle futures closed an average of 17¢ higher, except for unchanged in spot Feb.

Corn futures closed mostly 1¢ to 3¢ lower.

Soybean futures closed widely mixed.

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Major U.S. financial indices eased higher Tuesday with little conviction.

The Dow Jones Industrial Average closed 186 points higher. The S&P 500 closed 27 points higher. The NASDAQ was up 106 points.

West Texas Intermediate Crude Oil futures (CME) closed 30¢ to 49¢ higher through the front six contracts.

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Without a doubt, most market fundamentals point to a considerably stronger cattle market across all sectors this year, says Kenny Burdine, Extension livestock economics specialist at the University of Kentucky, in the latest Cattle Market Notes Weekly.

“The calf market improved in 2022, but higher production costs kept most cow-calf operators from fully enjoying the price improvement. Reduced fall pasture growth and poor wheat grazing conditions also prevented the fall calf market from reaching levels it would have seen otherwise,” Burdine explains. “As we move into spring, the impacts of expensive feed will be somewhat overshadowed by grazing opportunities. In truth, the calf market has improved quite a bit since fall. However, with fall 2023 CME Feeder cattle futures well above $2/lb., we are likely to see calf price levels that we have not seen since 2015 once we start seeing some spring pasture growth.”

Cattle futures strengthened Monday with firm to bullish fundamental support.

Feeder Cattle futures closed an average of 84¢ higher.

Live Cattle futures closed an average of 96¢ higher.

Corn and Soybean futures wavered to start the week as traders await the WASDE this week.

Corn futures closed mostly 1¢ lower.

Soybean futures closed mostly 4¢ to 7¢ lower.

Negotiated cash fed cattle trade ranged from mostly inactive on very light demand to a standstill through Monday afternoon, according to the Agricultural Marketing Service.

Live prices last week were $157/cwt. in the Southern Plains and Nebraska and $158-$160 in the western Corn Belt. Dressed prices were $252.

Choice boxed beef cutout value was $3.15 higher Monday afternoon at $286.14/cwt. Select was 26¢ higher at $259.60/cwt.

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Major U.S. financial indices closed mixed Monday.

The Dow Jones Industrial Average closed 112 points lower. The S&P 500 closed 2 points lower. The NASDAQ was up 66 points.

West Texas Intermediate Crude Oil futures (CME) closed 86¢ to $1.02 higher through the front six contracts.

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Calf and feeder cattle buyers are rolling into the new year with a bang.

Demand was good to very good at auctions last week, according to the Agricultural Marketing Service (AMS). Volume was heavy, as is typically the case during the first week of the year — 262,300 head at auction and 338,700 head when combined with direct and video-internet sales.

Prices so far are generally $15-$20/cwt. higher than the previous year, according to AMS.

As an example, the price of 500-lb. Medium and Large #1 steers at Oklahoma auctions averaged $227.50/cwt. the first week of 2023, up 19.3% year over year, according to Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly market comments. The price of 800-lb. steers averaged $180.97/cwt., which was 14.7% more than a year earlier.

“The cattle and beef market momentum at the end of 2022 has carried over into the first week of the new year,” Peel says. “The new year looks to contrast with last year with noticeably tighter cattle numbers, especially at the feedlot level, driven by previous herd liquidation and sharply lower feeder cattle supplies.”

Peel notes Feeder Cattle futures anticipate higher prices and tightening supply fundamentals, given the $26 price increase from the nearby Jan contract of about $182 to the $209 price for Nov.

“Drought remains the biggest issue for many producers aggravated by persistently high feed costs,” Peel says. “The revenue side of cattle production will be less of a concern in 2023, at least as far as cattle prices go. However, managing and maintaining production and managing the rising cost of production will continue to be major challenges for cattle producers this year.”

Negotiated cash fed cattle trade was slow on light demand in Nebraska through Friday afternoon, according to the Agricultural Marketing Service. Live prices for the week were $1 lower at $157/cwt., and dressed prices were steady at $252.

Elsewhere, trade ranged from limited on light demand to mostly inactive on very light demand with too few transactions to trend.

For the week, live prices were steady in the Southern Plains at $157 and steady to $1 higher in the western Corn belt at $158-$160, where dressed prices were steady to $2 higher at $252.

Choice boxed beef cutout value was $1.36 higher Friday afternoon at $282.99/cwt. Select was $2.39 higher at $259.34/cwt.

Cattle futures eased lower Friday pressured in part by firming Corn futures and static cash trade.

Feeder Cattle futures closed an average of 65¢ lower, from 22¢ lower at the back to $1.10 lower in spot Jan, except for 22¢ higher in the back contract.

Live Cattle futures closed an average of 44¢ lower (20¢ to 72¢ lower).

Export announcements helped Corn and especially Soybean futures close higher Friday.

Corn futures closed 1¢ higher in the front three contracts and then mostly fractionally mixed to 2¢ lower.

Soybean futures closed 13¢ to 34¢ higher through Jan ‘24 and then mostly 3¢ to 6¢ higher.

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For brief year-end perspective…

The five-area direct average steer price for 2022 was $144.52/cwt. on a live basis. That was $21.35 more (+17.3%) than the previous year and $36.33 more (+33.6%) than in 2020. The five-area average fed steer price for the year was $229.74 in the beef, which was $36.06 more than the previous year (+18.6%) and $57.47 more (+33.4%) than in 2020.

Based on the last report of the year, estimated beef production for 2022 was 27.8 billion pounds, which was 369.7 million pounds more (+1.3%) year over year. Estimated total cattle slaughter for the year was estimated to be 33.7 million head, which was 499,000 head more (+1.5%) than the previous year.

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Major U.S. financial indices surged higher Friday with a couple of reports suggesting that inflation may be cooling.

Although more jobs than expected were added in December, wage growth declined slightly from the previous month.

Total non-farm payroll employment increased by 223,000 in December, according to the U.S. Bureau of Labor Statistics. Average hourly earnings for all employees on non-farm payrolls increased 9¢ (+0.3%) to $32.82.

As well, the Institute for Supply Management purchasers index for services declined for the first time in more than two years.

The Dow Jones Industrial Average closed 700 points higher. The S&P 500 closed 86 points higher. The NASDAQ was up 264 points.

West Texas Intermediate Crude Oil futures (CME) closed 10¢ to 18¢ higher through the front six contracts.

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Economic and logistical headwinds finally caught up to U.S. beef exports in November, however export value through the first 11 months of the year already exceeded the record of $10.58 billion achieved the previous year.

November beef exports totaled 115,777 mt, down 6% from the previous year’s large volume, while export value declined nearly 20% to $846.6 million, according to data released by USDA and compiled by the U.S. Meat Export Federation (USMEF).

For the first 11 months of the year, beef export value increased 14% year-over-year to $10.9 billion. January-November export volume was 1.36 million mt, up 3% from the record pace of 2021.

November beef export value equated to $382.46 per head of fed slaughter, down 20% from a year ago, but the January-November average was up 13% to $452.42.

“Similar to the previous month, November results for U.S. beef exports reflected severe headwinds in our large Asian markets,” explains Dan Halstrom, USMEF president and CEO. “Key currencies in the region were still slumping, which impacted the buying power of importers and consumers. COVID cases and lockdowns in China were also intensifying, prompting widespread protests and the eventual lifting of many restrictions. But the U.S. dollar mainly peaked in late October and early November and global demand has remained relatively strong. Even with a high level of economic uncertainty, 2022 has been a fantastic year for U.S. beef exports and the outlook for the coming year remains positive.”

Negotiated cash fed cattle trade was light on light to moderate demand in the Southern Plains through Thursday afternoon, according to the Agricultural Marketing Service. Early live sales were steady with last week at $157/cwt.

Elsewhere, trade was limited on light demand with too few transactions to trend.

Last week, live prices were $158 in Nebraska and $157-$160 in the western Corn Belt. Dressed prices were $250-$252.

Cattle futures traders took a breather Thursday, and likely some profits, following the strong session a day earlier and awaiting more cash direction.

Feeder Cattle futures closed an average of 96¢ lower, from 65¢ lower at the back to $1.67 lower toward the front.

Live Cattle futures closed an average of 36¢ lower, except for 7¢ higher in spot Feb.

Nearby grain and Soybean futures continued to drift lower.

Corn futures closed mostly 1¢ to 4¢ lower.

Soybean futures closed mostly 12¢ lower through Aug ‘23 and then 7¢ to 9¢ lower.

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Major U.S. financial indices closed lower Thursday, with much of the pressure attributed to stronger employment numbers than expected and the notion that leaves the Fed no quarter to ease up on interest rates.

Private sector employment increased by 235,000 jobs in December and annual pay was up 7.3% year-over-year, according to the December ADP® National Employment ReportTM produced by the ADP Research Institute® in collaboration with the Stanford Digital Economy Lab.

“The labor market is strong but fragmented, with hiring varying sharply by industry and establishment size,” says Nela Richardson, ADP chief economist. “Business segments that hired aggressively in the first half of 2022 have slowed hiring, and in some cases cut jobs in the last month of the year.”

The Dow Jones Industrial Average closed 339 points lower. The S&P 500 closed 44 points lower. The NASDAQ was down 153 points.

West Texas Intermediate Crude Oil futures (CME) closed 77¢ to 83¢ higher through the front six contracts. 

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Competition from both inside and outside of the industry suggest land values will remain strong this year, according to Farmers National Company (FNC), a leading landowner services provider.

“What we are seeing is a true supply/demand scenario. There are simply more buyers willing to bid on the limited amount of land coming to the market,” says Paul Schadegg, FNC Senior Vice President of Real Estate Operations. “Current commodity markets and strong cash rents provide buyers with the necessary returns to meet their investment criteria while giving them the opportunity to expand operations or add land to their investment portfolio. Our anticipation is that these values will remain strong coming into the new year with continued strength in the ag economy although we may see less and less of the record sales.”

Traditional local farmer-operators are successful buyers of farmland 75% of the time, but with plenty of active bidding from land investors, according to FNC.

“While the investor may not always be the buyer of land, they are part of the competition driving the values higher,” Schadegg says. “We also expect this trend to continue as many investors see the long-term value of farmland, the opportunity to diversify investments and the value of land as a hedge against rising inflation.”

However, Schadegg also points to escalating inflation and interest rates as caution signs.

“These factors have the impact to decrease net farm income, erode operator equity and subsequently pressure farmland value,” Schadegg explains. “So, we sit at a somewhat precarious point in time where opportunity exists for both land sellers and buyers but is dependent on the continued strength of the agriculture economy to stabilize or grow.”

Farmers National Company manages more than 5,000 farms and ranches in 30 states comprising more than 2 million acres.

Feeder Cattle futures surged higher Wednesday, buoyed by early-week cash strength and sharply lower grain futures prices. Live Cattle followed along to a lesser degree.

Feeder Cattle futures closed an average of $2.42 higher, from $1.22 higher at the back to $3.45 higher toward the front.

Live Cattle futures closed an average of 50¢ higher.

Grain and soybean futures wilted beneath the weight of paltry U.S. export inspections, the high U.S. dollar and rains in South America.

Corn futures closed 11¢ to 16¢ lower through Jly ‘24 and then mostly 6¢ lower.

Soybean futures closed 6¢ to 9¢ lower through Nov ‘23 and then mostly 2¢ to 4¢ lower.

Negotiated cash fed cattle trade ranged from light on light to moderate demand in the western Corn Belt to inactive on light demand, with too few transactions to trend, according to the Agricultural Marketing Service.

Last week, live prices were $157/cwt. in the Southern Plains, $158 in Nebraska and $157-$160 in the western Corn Belt. Dressed prices were $250-$252.

Choice boxed beef cutout value was $4.05 lower Wednesday afternoon at $282.89/cwt. Select was $1.77 higher at $256.40/cwt.

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Major U.S. financial indices closed higher Wednesday, amid mixed economic news.

The Dow Jones Industrial Average closed 133 points higher. The S&P 500 closed 28 points higher. The NASDAQ was up 71 points.

West Texas Intermediate Crude Oil futures (CME) closed $3.51 to $4.09 lower through the front six contracts, pressured by worries about economic contraction in China. 

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Although cash calf and feeder cattle markets were thinly traded over the holidays, Stephen Koontz, agricultural economist at Colorado State University points out prices for 400-500 lb. calves in the Southern Plains increased from less than $200/cwt. in October to about $230 in December.

“Many of the market watchers that I talk with had anticipated a strong counter-seasonal market but not of this magnitude,” Koontz explains, in the most recent issue of In the Cattle Markets. “While calf prices have rallied and cow prices have been strong through the fall, there are certainly warning signs in the system.”

“Likewise, beef primal prices have showed good seasonal demand but not the quantum improvements of the prior years,” Koontz says. “Higher fed cattle prices and flat boxed beef values have resulted in packer margins being squeezed. The live-to-cutout spread was about $250 per head in November and there’s no post-COVID packer that I know of that can make money with that margin.”

In terms of technicals, Koontz explains cattle chart patterns are persistent.

“There are long-term uptrends in place and resistance planes are being broken as most contracts push into life-of-contract highs,” Koontz says. “But the cattle markets do not chart like the corn or soybean markets. Cattle do not jump to new higher levels. Rather, there are persistence moves higher with periods of sharp down moves. Live Cattle contracts have trends in place and have broken resistance – these are buy signals. Feeder Cattle look similar, but it will be interesting to see contracts test life-of-contract highs from last August.”