Daily Market Highlights

Cattle futures rose Wednesday as fundamental strength returned.

Feeder Cattle futures closed an average of $1.52 higher (57¢ higher at the back to $2.12 higher toward the front).

Live Cattle futures closed an average of 46¢ higher.

Negotiated cash fed cattle trade was limited on light demand in all major cattle feeding regions through Wednesday afternoon, with too few transactions to trend, according to the Agricultural Marketing Service.

Live prices last week were $143/cwt. in the Southern Plains and $145 in Nebraska and the western Corn Belt. Dressed prices were $228.

Choice Boxed beef cutout value was 98¢ lower Wednesday afternoon at $247.06/cwt. Select was $2.69 lower at $219.22.

Corn futures closed 1¢ to 2¢ higher.

Soybean futures closed 10¢ to 13¢ lower through Sep ‘23 and then mostly 7¢ lower.

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Major U.S. financial indices settled slightly lower Wednesday as investors took a breather and profits, apparently, in a volatile session that started out sharply lower before recovering most of the ground by the end. 

The Dow Jones Industrial Average closed 42 points lower. The S&P 500 closed 7 points lower. The NASDAQ was down 27 points.

West Texas Intermediate Crude Oil futures (CME) closed $1.24 to $1.86 higher higher though the first six contracts.

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Less beef is grading Choice in recent months and the Choice-Select spread is growing due in part to less beef production from steers and heifers and more from cows, says Brenda Boetel, extension livestock economist at the University of Wisconsin-River Falls.

In the latest issue of In the Cattle Markets, Boetel explains beef production was 1.7% higher year over year through the first three quarters of 2022, but steer slaughter is down 1.7%, while heifer slaughter is up 0.9% and cow slaughter is up 0.7%.

“Combining weekly slaughter and dressed weights leaves fed beef production about 1.6% higher than a year ago while cow beef is up 4.3%,” Boetel says. “The percent of carcasses presented for grading over the last month that are grading Prime and Choice are running about 1.4% and 0.7% below a year ago, respectively. About 0.7% more carcasses are grading Select than a year ago.”

The Choice-Select spread since September 1 has averaged $24.26/cwt. since Sept. 1, compared to $31.69 last year, according to Boetel.

“The Choice-Select spread tends to increase seasonally from the end of January until mid-June and then decrease until end of September, before resuming an increase until before the December holidays,” Boetel explains. “Except for a short-lived dip after Labor Day, the Choice-Select spread has been steadily increasing since the end of February when the spread was at a negative $2.00 on February 23, 2022 (meaning Select boxed cutout was higher than Choice boxed cutout).”

Feeder Cattle futures closed an average of 64¢ lower Tuesday, pressured by higher Corn futures.

Live Cattle futures closed narrowly mixed, from an average of 24¢ lower to an average of 17¢ higher, supported by wholesale beef prices showing signs of reaching the seasonal bottom.

Choice Boxed beef cutout value was $2.10 higher Tuesday afternoon at $248.04/cwt. Select was 60¢ higher at $221.91/cwt.

Negotiated cash fed cattle trade ranged from mostly inactive on very light demand to a standstill in all major cattle feeding regions through Tuesday afternoon, according to the Agricultural Marketing Service.

Live prices last week were $143/cwt. in the Southern Plains and $145 in Nebraska and the western Corn Belt. Dressed prices were at $228.

Corn futures closed 2¢ to 4¢ higher, helped along by the export-positive decline in the Dollar.

Soybean futures closed mostly 11¢ to 16¢ higher with support from the rally in Crude Oil futures.

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Major U.S. financial indices continued to rally for a second consecutive session Tuesday. Although the weaker Dollar and lower bond yields were supportive, there’s no making sense of investors’ collective day-to-day whims. 

The Dow Jones Industrial Average closed 825 points higher. The S&P 500 closed 112 points higher. The NASDAQ was up 360 points.

West Texas Intermediate Crude Oil futures (CME) closed $2.66 to $2.89 higher though the first six contracts.

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Agricultural producer sentiment declined from August to September, according to the latest Purdue University/CME Group Ag Economy Barometer. It declined 5 points to a reading of 112 in September, driven mostly by producers’ weakened perception of current conditions. The Current Conditions Index declined 9 points to 109. However, the Index of Future Expectations also weakened, declining 3 points from a month earlier to a reading of 113.

“Concerns about input costs and, in some cases, availability are key factors behind the relative weakness in this month’s sentiment,” says James Mintert, the barometer’s principal investigator and director of Purdue University’s Center for Commercial Agriculture. “However, a growing number of producers are also concerned about the impact of rising interest rates on their farm operations.”

Higher input costs remain the primary concern. In September, 44% of respondents chose “higher input costs” as their number one concern, while 23% chose “rising interest rates,” and 14% chose “availability of inputs.”

When asked to look ahead to 2023, the largest share (38%) of respondents expect input prices to rise from 1% to 9%, compared to 2022 prices. Nearly a fourth (24%) of producers expect input prices to rise from 10% to 19%; and 9% of survey respondents said they expect an input price rise of 20% or more.

The Farm Capital Investment Index declined to a record low of 31 in September, as producers continue to indicate now is not a good time to make large investments in their operations. Among respondents indicating now is a bad time to make large investment, 46% said increasing prices for farm machinery and new construction was the reason. As well, 21% indicated that rising interest rates were a primary reason, up from 14% in August.

Producers’ perspective on farmland values continues to soften. The Short-Term Farmland Value Expectations Index fell 5 points to 123. The Long-Term Farmland Value Expectations Index fell 7 points to 139. Compared to a year ago, the short-term index is down 21%, while the long-term index is 12% lower. 

The Ag Economy Barometer is calculated each month from 400 U.S. agricultural producers’ responses to a telephone survey. This month’s survey was conducted between September 19-23.

Cattle futures bounced back Monday, helped along by higher wholesale beef values.

Choice Boxed beef cutout value was $2.19 higher Monday afternoon at $245.94/cwt. Select was $1.18 higher at $221.31/cwt.

Feeder Cattle futures closed an average of $1.23 higher.

Live Cattle futures closed an average of 89¢ higher.

Negotiated cash fed cattle trade was at a standstill in all major cattle feeding regions through Monday afternoon, according to the Agricultural Marketing Service.

Live prices last week were $143/cwt. in the Southern Plains and $145 in Nebraska and the western Corn Belt. Dressed prices were at $228.

Corn futures closed 3¢ higher through Jly ‘23 and then 1¢ to 2¢ lower.

Soybean futures closed 5¢ to 9¢ higher.

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Major U.S. financial indices rallied back Monday with the start of the new week and quarter. Support included oversold conditions and a decline in bond yields.

The Dow Jones Industrial Average closed 765 points higher. The S&P 500 closed 92 points higher. The NASDAQ was up 239 points.

West Texas Intermediate Crude Oil futures (CME) closed $2.91 to $4.14 higher though the first six contracts.

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As the last leg of the current cattle cycle unfolds with herd contraction since 2018-19, Josh Maples, Extension livestock economist at Mississippi State University, offers insights to the current cattle cycle, likely cyclically high prices ahead and the trigger for expansion.

“How long we continue to contract will be directly impacted by drought and pasture conditions. The current drought draws comparisons to the 2011-2013 and has led to similar liquidation impacts on the cattle inventory. Herd expansion will be difficult until the drought abates,” Maples explains in the latest Cattle Market Notes Weekly.

“Producer profitability will be the key driver of when the next expansion phase occurs and when the next cattle cycle begins.”

Maples offers 2014-15 as an example. Record high prices were achieved during the last cycle low for cattle numbers, which was driven by drought and seven years of herd contraction.

“Just a few years ago, the thought of reaching those record price levels again seemed far-fetched. However, we are again experiencing many of the same ingredients that led to the 2014-15 market,” Maples says. “Cattle futures markets for 2023 are at levels not seen since 2015. The timing is still up in the air, and beef demand will certainly matter, but the end of the current cattle cycle may ultimately not look all that different from the end of the last one.”

Feeder Cattle futures tanked Friday with pressure from Corn futures surging in response to USDA’s Grain Stocks report Friday (see below).

Corn futures closed 5¢ to 8¢ higher through Jly ’23 and then 2¢ to 3¢ higher.

Feeder Cattle futures closed an average of $2.68 lower.

Live Cattle futures closed an average of 53¢ lower (17¢ to 85¢ lower), except for unchanged in the back contract.

Soybean futures closed 32¢ to 46¢ lower through Aug. ’23 and then mostly 21¢ to 25¢ lower, reacting to softer oil prices and the Grain Stocks report.

Negotiated cash fed cattle trade ranged from mostly inactive with light demand to limited on light demand through Friday afternoon, with too few transactions to trend, according to the Agricultural Marketing Service.

For the week, live prices were steady at $143/cwt. in the Southern Plains and at $144-$145 in Nebraska. Prices were steady to $3 lower in the western Corn Belt at $145. Dressed prices were steady to $1 higher in Nebraska at $228-$233 and at the bottom of last week’s range in the western Corn Belt at $228.

Choice boxed beef cutout value was $2.33 lower Friday afternoon at $243.75/cwt. Select was 35¢ higher at $220.13.

Estimated total cattle slaughter was 3,000 head less week over week at 664,000 head, but was 24,000 head more than the same week last year. Year-to-date estimated total cattle slaughter of 25.36 million head was 385,000 head more (+1.5%) than the same time last year. Estimated total year-to-date beef production of 20.91 billion lbs. was 282 million lbs. more (+1.4%).

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Major U.S. financial indices continued to fall Friday with growing concerns about inflation and tightening monetary policy squelching economic growth here and abroad. The Personal Consumption Expenditure (PCE) Index excluding food and energy grew 0.6% from July to August, which was more than anticipated. Year over year, the PCE was 4.9% higher, according to the U.S. Bureau of economic analysis.

The Dow Jones Industrial Average closed 500 points lower. The S&P 500 closed 54 points lower. The NASDAQ was down 161 points.

West Texas Intermediate Crude Oil futures (CME) closed $1.61 to $1.74 lower through the front six contracts.

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Old crop corn stocks stored in all positions on Sept. 1 totaled 1.38 billion bu., up 12% year over year, but less than trade expectations, according to USDA’s quarterly Grain Stocks report. Of the total stocks, 510 million bu. were stored on farms, which was 29%. more than a year earlier. Off-farm stocks of 867 million bu. were 3% more than the prior year.

NASS analysts say 2021 corn production was revised 41.4 million bu. lower with downward revisions in planted area (93.3 million acres), harvested area (85.3 million acres) and grain yield (176.7 bu./acre).

Old crop soybean stocks of 274 million bu. stored in all positions on Sept. 1 were 7% more than the previous year and more than the trade expected.

Soybean stocks stored on farms totaled 62.9 million bu., down 8% from a year ago. Off-farm stocks of 211 million bu. were 12% more year over year.

Soybean production was 30.2 million bu. more with harvested area revised higher (86.3 million acres), as well as yield (51.7 bu./acre).

All wheat stored in all positions Sept. 1 totaled 1.78 billion bu., which was less than 1% more than the previous year and in line with trade expectations.

On-farm wheat stocks were estimated at 591 million bu., up 41% from last September. Off-farm stocks of 1.18 billion bu. were 13% less than a year earlier.

Cattle futures finally rallied back Thursday, supported by oversold conditions.

Feeder Cattle futures closed and average of $2.19 higher. Live Cattle futures closed an average of $1.02 higher.

Negotiated cash fed cattle trade was limited on light demand in all major cattle feeding regions through Thursday afternoon with too few transactions to trend, according to the Agricultural marketing Service.

So far this week, live prices are steady at $143/cwt. in the Southern Plains and at $144-$145 in Nebraska. Prices are steady to $3 lower in the western Corn Belt at $145. Dressed prices are steady to $1 higher in Nebraska at $228-$233 and at the bottom of last week’s range in the western Corn Belt at $228.

Choice boxed beef cutout value was $1.47 lower Thursday afternoon at $246.08/cwt. Select was 57¢ higher at $219.78.

Corn futures closed mostly fractionally higher toward the front and then 2¢ to 3¢ higher.

Soybean futures closed mostly 4¢ to 5¢ higher.

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Major U.S. financial sold off Thursday, basically giving back what was gained in the previous session with investors apparently returning their focus to a slowing economy.

The Dow Jones Industrial Average closed 458 points lower. The S&P 500 closed 78 points lower. The NASDAQ was down 314 points.

West Texas Intermediate Crude Oil futures (CME) closed 78¢ to 92¢ lower through the front six contracts.

Negotiated cash fed cattle trade was active on very good demand in Nebraska Wednesday with live prices steady at $144-$145/cwt. and dressed prices mainly steady to $4 lower at $228.

Trade was slow on moderate demand in the western Corn Belt, where there were a few live sales at $144-$145 and a few in the beef at $228, but too few to trend, according to the Agricultural Marketing Service. Prices there last week were $145-$148 and $227-$234, respectively.

Trade in the Southern Plains ranged from limited to mostly inactive on light demand. Live prices there the previous day were steady at $143.

Choice boxed beef cutout value was 88¢ lower Wednesday afternoon at $247.55/cwt. Select was $2 lower at $219.21.

Cattle futures weakened again Wednesday with hangover pessimism from recent sessions.

Feeder Cattle futures closed an average of 72¢ lower (32¢ to $1.12 lower).

Live Cattle futures closed an average of 50¢ lower except for 15¢ higher in the back contract.

Corn and Soybean futures crawled higher, perhaps on increasing Russian rhetoric and positioning ahead of Friday’s Grain Stocks report.

Corn futures closed mostly 3¢ higher.

Soybean futures closed 5¢ to 9¢ higher.

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Major U.S. financial indices rallied Wednesday, apparently based mainly on oversold conditions. 

The Dow Jones Industrial Average closed 549 points higher. The S&P 500 closed 72 points higher. The NASDAQ was up 222 points.

West Texas Intermediate Crude Oil futures (CME) closed $2.82 to $3.65 higher through the front six contracts.

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Economic conditions continue to deteriorate in the 10-state region dependent on agriculture and/or energy, monitored by the Rural Mainstreet Index (RMI).    

“The Rural Mainstreet economy is now experiencing a downturn in economic activity. Supply chain disruptions and inflationary pressures from higher farm input costs continue to constrain growth,” says Ernie Goss, Jack A. MacAllister Chair in Regional Economics at Creighton University’s Heider College of Business. “Farmers and bankers are bracing for escalating interest rates, higher farm input costs, and drought.”

The Creighton University Rural Mainstreet Index (RMI) fell for the fifth straight month, sinking below growth neutral for a fourth consecutive month, according to the monthly survey of bank CEOs.

Four of 10 bankers indicated that high and escalating farm input costs were the greatest economic challenge to their bank and area over the next 12 months.

More than one of five, or 21.4%, of bank CEOs reported drought impacts were the greatest economic challenge going forward.

Cattle futures continued lower with outside markets Tuesday.

Feeder Cattle futures closed an average of $1.02 lower.

Live Cattle futures closed an average of 67¢ lower.

Negotiated cash fed cattle trade was steady in the Southern Plains Tuesday at $143/cwt. on slow trade and moderate demand.

Elsewhere, trade was inactive on light demand.

Last week, live prices were $144-$145 in Nebraska and $145-$148 in the western Corn Belt. Dressed prices were $228-$232 in Nebraska and $227-$243 in the western Corn Belt.

Choice Boxed beef cutout value was $1.07 higher Tuesday afternoon at $248.91/cwt. Select was 1.27 lower at $222.08/cwt.

Corn futures closed 1¢ to 2¢ higher through Jly ‘23 and then mostly unchanged to fractionally lower.

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

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Major U.S. financial indices closed mixed Tuesday as a relief rally from recent steep losses fell short. 

The Dow Jones Industrial Average closed 125 points lower. The S&P 500 closed 7 points lower. The NASDAQ was up 26 points.

West Texas Intermediate Crude Oil futures (CME) closed $1.14 to $1.79 higher through the front six contracts.

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Winter wheat planting increased 10% week to week (Sept. 25), according to the latest USDA Crop Progress report.

31% of winter wheat was planted, which was 10% more than the previous week, 1% less than last year but 1% more than the five-year average. 9% was emerged, which was 7% more than the previous week, 2% more than last year and 3% more than average.

26% of pasture and range was rated as Good (22%) or Excellent (4%), which was 2% less than a week earlier but 3% more than a year earlier. Conversely, 43% was rated as Poor (23%) or Very Poor (20%), which was the same as the previous week but 3% less than a year earlier.

92% of corn was dented, which was 4% less than last year and 2% less than the five-year average. 58% was mature, which was 14% less than a year earlier and 3% less than average. 12% was harvested, which was 5% less than last year and 2% less than the average. 52% was rated as Good (42%) or Excellent (10%), which was the same as the prior week but 7% less than a year earlier. 21% was rated Poor (12%) or Very Poor (9%) the same as a week earlier but 6% more than a year earlier.

63% of soybeans were dropping leaves, which was 10% less than last year and 2% less than the average. 8% were harvested, compared to 15% last year and 13% for average. 55% were rated as Good (46%) or Excellent (9%) which was the same as the previous week and 3% less than the prior year. 15% were rated Poor (10%) or Very Poor (5%), which was the same as the previous week but 1% more than the prior year.

Cattle futures weakened further Monday, along with other commodities and financial markets as fears about a contracting economy, high unabated inflation and increasing interest rates ruled the day.

Feeder Cattle futures closed an average of $1.75 lower ($1.20 lower toward the front to $2.40 lower in the back contract.

Live Cattle futures closed an average of $1.32 lower (77¢ to $1.70 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.

Last week, live prices were $143/cwt. in the Southern Plains, $144-$145 in Nebraska and $145-$148 in the western Corn Belt. Dressed prices were $228-$232 in Nebraska and $227-$243 in the western Corn Belt.

Choice boxed beef cutout value was 79¢ lower Monday afternoon at $247.84/cwt. Select was $4.04 higher at $223.35.

Corn futures closed 8¢ to 11¢ lower through Sep ’23 and then mostly 5¢ lower.

Soybean futures closed mostly 11¢ to 15¢ lower.

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Major U.S. financial indices closed sharply lower again Monday with the surging dollar and continued   worries about climbing interest rates and recessionary fears.

The Dow Jones Industrial Average closed 329 points lower. The S&P 500 closed 38 points lower. The NASDAQ was down 65 points.

West Texas Intermediate Crude Oil futures (CME) closed $2.03 to $2.14 lower through the front six contracts.

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“Both feedlot inventories and cattle slaughter have remained stubbornly high this year due to drought-forced movement of cattle out of the country. Total fed cattle slaughter thus far in 2022 is up 0.8% as the 1.7% decrease in steer slaughter for the year to date is offset by a 4.9% increase in heifer slaughter,” says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly market comments. “Total cow slaughter is up 5.6% so far this year, driven by a 13.4% increase year over year in beef cow slaughter. Total cattle slaughter is up 1.8% year over year thus far in 2022, with female (cow plus heifer slaughter) accounting for 50.9% of total cattle this year. Cattle slaughter and beef production are projected to decrease year over year in the fourth quarter but higher than expected beef production in the first three quarters of the year likely mean that annual totals for beef production will be steady or fractionally higher year over year. Feedlot production, cattle slaughter and beef production are all expected to decrease sharply in 2023.”

Referencing Friday’s Cattle on Feed report, Peel explains, feedlot inventories grow seasonally in the fall but are expected to increase less this year and trail last year’s record levels.

“In the past four months — May – August — total placements were down 0.6% year over year with placements under 700 lbs. up 5.3% and placements over 700 pounds down 3.7% compared to last year. Past placements of lightweight cattle suggest fewer cattle available for placement going forward,” Peel says.

Cattle futures softened again Friday amid sharply lower outside markets, rising interest rates and perhaps some prescient defensiveness ahead of the monthly Cattle on Feed report.

Feeder Cattle futures closed an average of 61¢ lower, except for an average of 28¢ higher in two contracts.

Live Cattle futures closed an average of 89¢ lower.

Negotiated cash fed cattle trade ranged from mostly inactive on light demand to slow on light to moderate demand through Friday afternoon, according to the Agricultural Marketing Service.

Based on the last established trends, live prices for the week were $1 higher in the Southern Plains at $143/cwt., steady to $4 higher in the western Corn Belt at $148 and $1 higher in Nebraska at $144. Dressed prices were $2-$8 higher in the western Corn Belt at $228-$234 and $2-$5 higher in Nebraska at $228-$232.

Choice Boxed beef cutout value was 23¢ higher Friday afternoon at $248.63/cwt. Select was $2.80 lower at $219.31/cwt.

Corn and Soybean futures softened Friday with outside market concerns, including the impact the climbing U.S. dollar will have on exports.

Corn futures closed 10¢ to 13¢ lower.

Soybean futures closed 28¢ to 31¢ lower through Aug ‘23 and then 20¢ to 25¢ lower.

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Major U.S. financial indices closed sharply lower Friday as investors focused on climbing interest rates and recessionary fears.

The Dow Jones Industrial Average closed 468 points lower. The S&P 500 closed 64 points lower. The NASDAQ was down 198 points.

CME WTI Crude Oil futures closed $4.29 to $4.78 lower through the front six contracts.

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Feedlot placements were higher than expected again in August, according to the latest monthly Cattle on Feed report for feedlots with 1,000 head or more capacity. Placements in August of 2.11 million head were 9,000 head more year over year (+0.4%) but almost 2% more than pre-report expectations.

In terms of placement weights, 35% went on feed weighing 699 lbs. or less, 47% were 700-899 lbs. and 18% weighed 900 lbs. or more.

Marketings in August of 2.00 million head were 120,000 head more (+6.4%), which was in line with expectations.

Cattle on feed Sept 1 of 11.3. million head were 45,000 head more (+0.4%) than the previous year, which also mirrored expectations ahead of the report. It was the second largest inventory for the date since the data series began in 1996.

Negotiated cash fed trade ranged from slow to moderate on moderate demand in the Southern Plains through Thursday afternoon, according to the Agricultural Marketing Service. Prices so far this week are $1 higher at $143/cwt.

Elsewhere, trade was moderate on moderate to good demand.

Dressed trade in Nebraska was $2-$5 higher at $228-$232. Live prices there last week were $143.

In the western Corn Belt, live prices this week are steady to $1 higher at $144-$145 and $2 higher in the beef at $228

Even so, Cattle futures continued to weaken Thursday with pressure from struggling outside markets and likely positioning ahead of Friday’s Cattle on Feed report. Pre-report estimates expect placement to be down 1% or so compared to last year and on-feed numbers to be about even.

Feeder Cattle futures closed an average of $1.41 lower, except for 2¢ higher in spot Sep.

Live Cattle futures closed an average of 85¢ lower (30¢ to $1.40 lower).

Cattle futures are weaker again through noon today.

Corn and Soybean futures paddled in place Thursday with ongoing pressure from lower outside markets and the higher U.S. dollar, but also speculation about lower yields.

Corn futures closed mostly fractionally higher to 2¢ higher.

Soybean futures closed 2¢ to 4¢ lower through Jly ‘23 and then mostly fractionally mixed.

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Major U.S. financial indices closed lower again Thursday with growing concern about recession as the Fed battles inflation.

The Dow Jones Industrial Average closed 107 points lower. The S&P 500 closed 31 points lower. The NASDAQ was down 153 points.

CME WTI Crude Oil futures closed 55¢ to 66¢ higher through the front six contracts.

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“August cutout data showed a strong resurgence in interest for Prime graded beef, approaching levels not seen since January of 2022,” according to analysts with the Livestock Marketing information Center, in its Livestock Monitor. “The Prime cutout value was $330.57/cwt., up from July’s $317.51 value, and just short of January’s peak for the year of $341.12. Interestingly, other grades of beef cutout failed to rally and were even with the month before. Branded, Choice, and Select cutout values have held the $275-$250 range since March 2022.”

The loin and rib drove increased Prime cutout value.

“The strong interest in prime rib and loin values is associated with a seasonal component that has become much more pronounced since 2017 in the premiums between Prime and other grades of beef,” LMIC analysts say. “Fall of 2021 was one of the largest historical cutout spreads, in which Prime commanded more than $80/cwt. over Choice. Prime Rib values are on pace to approach last year’s high point, while Prime loin values are slightly weaker.” 

LMIC analysts point out 7.6% of carcasses graded Prime in August versus 8.7% the prior year.