Weekly Market Highlights

Based on weekly auctions monitored by Cattle Current, cash calf and feeder cattle prices started last week mainly steady to higher and then lost ground as the week progressed, except for parts of the Southeast.

Nationwide, Steers and heifers sold $1-$3/cwt. lower, according to the Agricultural Marketing Service. The exception was steady to $2 higher in the Southeast.

Declining Feeder Cattle futures, beneath the weight of increasing feed costs, helped pressure cash prices.

Week to week on Friday, Corn futures closed an average of 9.6¢ higher through the remaining two old-crop contracts and then an average of 16.4¢ higher through the first four new-crop contracts. 

Week to week on Friday, Feeder Cattle futures closed an average of $4.93 lower.

Drought also applied pressure to calf and feeder cattle prices in some regions.

“Demand for grass cattle was slightly lower this week as concerns over drought conditions and higher feed prices weighed on the market,” explained the AMS reporter on hand for Wednesday’s weekly sale at Public Auction Yards in Billings, MT.

With all of that said, in the latest Livestock, Dairy and Poultry Outlook, USDA’s Economic Research Service (ERS) increased forecast feeder steer prices for the remainder of this year, based on recent price strength. Compared to the previous month, projected feeder steer prices (basis Oklahoma City) increased $6 in the second quarter to $140.00/cwt., $3 in the third and fourth quarters to $143. The annual average feeder steer price was projected $3.50 higher at $140.

“Prices are improving, but I think we will continue to see producers cut into their cow herds based on high feed prices and drought,” says David Anderson, Extension livestock economist at Texas A&M University, in the latest Texas Crop and Weather Report. “There is typically less beef production on higher feed prices, historically, and drier-than-normal weather outlooks will be a factor going forward.”

Fed Cattle Prices Edge Higher

Negotiated cash fed cattle prices were mainly steady to higher last week, but short of what many hoped.

For the week, live prices were steady in the Texas Panhandle at $120/cwt., steady to $1 higher in Nebraska at $123-$124, unevenly steady in Colorado at $122 and at $1 lower in the western Corn Belt at $122-$124. Dressed prices were $1 higher in Nebraska at $196; steady to $1 lower in the western Corn Belt at $194-$196.

The recent change in basis is likely part of the reason for less robust price progress, as some feedlots have more incentive to trade at the current price.

Week to week on Friday, Live Cattle futures closed an average of $2.41 lower ($1.45 lower at the back to $3.40 lower toward the front). Lean Hog futures added pressure with weekly U.S. net pork export sales running out of significant steam.

Also, while total cattle slaughter was less than expected year over year in the first quarter, it was still the second most on record, according to USDA. ERS analysts say part of that stemmed for more cow slaughter than anticipated. Those analysts expect fed cattle marketings and beef production to increase in the second half of the year, leading to a year-over-year increase of about 60 million lbs.

Beef Prices Up

Wholesale beef prices continued their month-long march higher last week, but at a more moderate pace. Choice boxed beef cutout value was $3.88 higher week to week on Friday at $276.05/cwt. Select was $5.03 higher at $269.10.

In the latest issue of In the Cattle Markets, Anderson says it’s worth remembering beef demand strength, heading into the pandemic.

“A growing economy, falling unemployment, and consumer preferences trending towards higher USDA quality grade beef were building demand,” Anderson says, in the latest issue of In the Cattle Markets. “…The retail all fresh beef demand index scored 119 for 2020, the best in 20 years. That index is calculated using per capita consumption, USDA, BLS retail prices, which only reflect grocery store prices. Regardless, it suggests that we exit the pandemic with a strong base of beef demand.”

Moreover, Anderson says the approaching grilling season, further opening of U.S. businesses and pent-up consumer demand promise to boost prices.

Week to Week Change

Weekly Auction Receipts

CME Feeder Index

Thursday through Thursday…

Cash Stocker and Feeder

North Central

South Central

Southeast

(AMS National Weekly Feeder & Stocker Cattle Summary)

Wholesale Beef Value

Futures

Equities

Negotiated cash fed cattle prices bounced higher last week, supported by increasingly positive supply fundamentals and rampant wholesale beef values.

Choice boxed beef cutout value was $19.32 higher week to week on Friday at $272.17/cwt. Select was $17.10 higher at $264.07. That’s a staggering $42.18 higher for Choice over the last three weeks and $44.12 higher for Select.

Analysts with the Livestock Marketing Information Center (LMIC) say further reopening the U.S. restaurant industry—the need to refill those pipelines—is likely behind the price rally’s trajectory, at least in part.

“…This rally is likely necessary to prepare the hospitality sector for re-boot but seems unlikely to have long term staying power,” say LMIC analysts, in the latest Livestock Monitor.

In established trade for the week, negotiated cash fed cattle prices were $3 higher on a live basis in the Southern Plains at $120, $5-$7 higher in Nebraska at $125, $5 higher in the western Corn Belt at $123-$125 and $4-$7 higher in Colorado (compared to two weeks earlier) at $120-$123. Dressed prices were $5-$7 higher at $195.

“Where the market moves from here will largely depend on who has leverage in the marketplace, and it is clear cattle feeders are gaining leverage they have not seen in many months. Look for finished cattle prices to gain a few more dollars through April,” says Andrew P. Griffith, agricultural economist at the University of Tennessee, in his weekly market comments.

The latest monthly World Agricultural Supply and Demand Estimates (WASDE) project the annual average five-area direct fed steer price at $116/cwt. That’s $1 higher than the previous month’s estimate, based on current price strength and firm demand. Projected average prices are $117 in the second quarter, $115 in the third quarter and $120 in the fourth quarter.

Week to week on Thursday, Live Cattle futures closed an average of $2.45 higher and then gave back an average of $1.10 on Friday.

WASDE projected 2021 beef production 60 million lbs. more than the previous month at 27.64 billion lbs.

Calf and Feeder Prices Gain

Based on weekly sales monitored by Cattle Current, calf and feeder cattle prices were mainly higher last week.

Week to week on Thursday, Feeder Cattle futures closed an average of $3.81 higher and then gave back an average of $1.55 on Friday.

“Yearling cattle prices have been slow to take off, but Feeder Cattle futures contract prices caught fire the past couple of weeks,” says Griffith. “Not only has the futures market provided optimism, cash feeder cattle prices have begun to increase. Cash yearling cattle prices are expected to continue increasing, given current Feeder Cattle futures.”

Corn futures took Friday’s WASDE report in stride, but the low and narrowing stocks to use ratio will maintain current price strength and likely price volatility.

USDA projected the 2020-21 U.S. corn price at $4.30/bu., which was unchanged from the previous month.

Significantly higher feed costs than last year will encourage feedlots to place cattle at heavier weights, says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University. In turn, stocker and backgrounders have more incentive to add more weight to cattle.

In his weekly market comment, Peel points out current weekly average cash corn prices are reported at $5.85/bu. in Dodge City, at $5.99/bu. in Garden City and at $6.01/bu. in the Texas Triangle. He explains those prices are 79-82% more than the lows in August.

Economic Growth and Inflation

Growing optimism about the economy fully reopening sooner than later lifted outside markets and bolstered Cattle futures last week.

“Thanks to the ingenuity of the scientific community, hundreds and millions of people are being vaccinated, and this is expected to power recoveries in many countries later this year,” explained Gita Gopinath, Chief Economist and Director of the Research Department at the International Monetary Fund (IMF). “We are now projecting a stronger recovery for the global economy compared with our January forecast.”

Specifically, IMF projects global GDP this year at 6.0% and 4.4% in 2022. That’s from the organization’s latest World Economic Outlook.

Domestically, analysts with CoBank’s Knowledge Exchange (CBKE) say consensus forecasts point to 7% U.S. GDP growth this year, the fastest rate of expansion since 1984. They note the U.S. economy continues to outperform expectations as stimulus funds fuel robust consumer spending.

On the other side of the ledger, those analysts expect inflation to increase.

“Any inflation that results from resurgent demand will be in addition to the base-effect inflation that we are certain to have in coming months,” according to the latest CBKE quarterly report. “Inflation is typically measured in year-over-year terms, and base effects occur when inflation readings are skewed because of price anomalies in the prior year. In 2020, prices for many goods and services dove in the middle months of the year as demand suddenly dropped. Those 2020 price declines will widen year-over-year inflation over the next couple of quarters, and new upward price pressure should push headline inflation above 3%. We expect this burst of inflation to be short-lived as the economy recalibrates, but we could experience inflation over 2% well into 2022.”

Week to Week Change

Weekly Auction Receipts

Last Available

CME Feeder Index

Thursday through Thursday…

*Wednesday-to Wednesday for CME Feeder Index

Cash Stocker and Feeder

Last Available

North Central

South Central

Southeast

(AMS National Weekly Feeder & Stocker Cattle Summary)

Wholesale Beef Value

Futures

Thursday to Thursday

Thursday to Thursday

Thursday to Thursday

Thursday to Thursday

Thursday to Thursday

Equities

Higher cash fed cattle prices and the extraordinary surge in wholesale beef values helped Cattle futures maintain most of the previous week’s sharp gains, despite midweek pressure from surging grain prices.

Nationwide, steers and heifers sold $1-$4/cwt. higher, according to the Agricultural Marketing Service (AMS).

“As the major feedstocks for cattle were sharply higher, buyers wanted to procure more thinner fleshed cattle that will have compensatory gain instead of a fleshier one that will not feed very efficiently,” say AMS analysts.

Feeder Cattle futures closed narrowly mixed, week to week on Thursday, from 35¢ lower to 45¢ higher. During the same period, Corn futures closed an average of 16¢ higher through the front six contracts, elevated by a surprising USDA Prospective Plantings report (see below).

Prices for lightweight cattle should be nearing the seasonal peak, according to Andrew P. Griffith, agricultural economist at the University of Tennessee.

“There is certainly room for prices to push higher the next three to four weeks, but the momentum is expected to slow, and prices will turn the other direction as summer nears,” Griffith explains, in his weekly market comments. “The yearling cattle market has started to creep higher with the advent of a strengthening futures market. Summer and fall Feeder Cattle futures contracts made about $8 gains in March before being slowed by the USDA planting intentions and grain stocks reports.”

Grain Futures Spike Higher

U.S. producers intend to plant more acres to corn and soybeans this year than in 2020, according to the Prospective Plantings report. However, estimates were around significantly less than pre-report expectations for both crops.

Producers surveyed across the United States intend to plant an estimated 91.1 million acres of corn in 2021. That’s 325,000 more acres than last year, but about 2 million acres shy of expectations.

Soybean growers intend to plant 87.6 million acres in 2021, up 5% from last year, but about 2.5 million acres shy of pre-report expectations by private analysts. If realized, this will be the third highest planted acreage on record.

Corn and Soybean futures were limit up on Wednesday.

Griffith notes continued strength in Feeder Cattle futures, in the face of the grain friendly report suggests cattle producers expect corn and soybean prices to moderate.

“This is very likely in that the prices being projected for corn and soybeans should pull more acres into production,” Griffith says. “An increase in acreage should result in increased total production and thus lower prices. At this point, this is all speculation. What is known is that some extremely favorable prices for selling corn, soybeans, and feeder cattle can be captured today by using the futures market or forward contracting. The alternative to capturing these prices is doing nothing and simply crossing days off the calendar.”

Fed Cattle Prices Gain

By the end of the week, live prices were $2 higher in the Southern Plains at $117/cwt., $2 higher in Nebraska at mostly $118 (some up to $121) and $3-$4 higher in the western Corn Belt at $119-$120. Dressed trade was $5 higher at $190.

“Cattle feeders are slowly gaining leverage, and packers once again have several extra dollars to play with as beef prices increase,” Griffith says. “This does not mean packers will go down without a fight, but fed cattle prices will continue to creep higher the next several weeks. Live Cattle futures are pricing the June contract at nearly a $2.50 premium to April and August at a $1.50 premium. If this price pattern were to materialize, it would be a contra-seasonal price movement for finished cattle.”

Week to week on Thursday, Live Cattle futures closed an average of $1.04 higher (47¢ to $1.47 higher).

Significant strength in outside markets help bolster beef market optimism. Although investors are leery of increased inflation and interest rates, the increased rate of COVID-19 vaccinations and apparently bottomless government coffers continue to underpin equity markets. The Dow Jones Industrial Average was 533 points higher, week to week on Thursday. The NADASQ closed 502 points higher. The S&P 500 was up 110 points.

Wholesale Beef Prices Climb

Choice boxed beef cutout value was $15.19 higher week to week on Friday at $252.85/cwt. Select was $19.20 higher at $246.97. That’s $22.86 higher for Choice over the last two weeks; $27.02 higher for Select.

“The two drivers of higher beef prices are likely restaurants increasing dining capacity and consumers continuing to use discretionary spending on their eating experience, since many do not feel comfortable traveling yet,” Griffith explains. “How these factors change as an increasing number of Americans get a coronavirus vaccine will be determined in coming months. Another boost to the beef market will be the return of fans to baseball stadiums. Stadiums may not be filled to capacity, but those who are there will likely be eating hamburgers and beef hotdogs.”

Week to Week Change

Weekly Auction Receipts

CME Feeder Index

Thursday through Thursday…

*Wednesday-to Wednesday for CME Feeder Index

Cash Stocker and Feeder

North Central

South Central

Southeast

(AMS National Weekly Feeder & Stocker Cattle Summary)

Wholesale Beef Value

Futures

Equities

Negotiated cash fed cattle prices finally budged beyond their seven-week rut and wholesale beef values continued to make seasonal gains. Both helped support higher Cattle futures prices for the week. All of that and the fast approaching grass season helped calves and feeder cattle trade from steady to mainly higher, based on the weekly auctions monitored by Cattle Current.

Steers and heifers sold steady to $5/cwt. higher, except for $4-$7 higher in the Northern Plains, according to the Agricultural Marketing Service (AMS).

“Demand was good to very good as order buyers were aggressive at filling the needs of feedlot managers and backgrounders,” say AMS analysts. “The supply of lightweight cattle continues to be tight which is keeping that market red hot…”

“Calf and feeder cattle prices are attempting to push higher as grass fever heats up and as many Feeder Cattle futures contracts tested contract highs this week,” says Andrew P. Griffith, agricultural economist at the University of Tennessee (UT), in his weekly market comments. “… Feeder Cattle futures are offering a great opportunity to hedge a strong price on cattle that will be marketed between August and November.”

Specifically, Griffith explains those contracts offer a 150 to 240-day  backgrounding period to capitalize on current prices, while offering a wide marketing window. In the meantime, he notes cool-season grasses are about two weeks ahead of schedule in the Southeast.

Feeder Cattle futures closed an average of $3.18 higher week to week on Friday (60¢ higher at the back to $5.70 higher in spot Apr).

The CME Feeder Cattle Index was $2.72 higher week to week on Thursday at $136.75.

“There is some concern by cattle producers that higher feed prices could put significant pressure on feeder cattle prices, but that is not a concern if one takes advantage of what the market is currently offering in the form of price risk management,” Griffith says.

Consolidating to lower Corn futures prices added optimism to cattle markets. Corn futures closed an average of 4.6¢ lower through the front six contracts, week to week on Friday.

“December corn is approaching a key support level of $4.60/bu.. If prices fall below $4.60, the next level of support will be $4.40,” says Aaron Smith, UT crops marketing specialist , in his weekly market comments. “Next week’s Prospective Plantings report (Mar. 31) could provide a major push (up or down) for corn prices depending on USDA estimates. Current estimates are 92 million acres of corn and 90 million acres of soybeans. The harvest price ratio of 2.6 still favors soybeans, but if weather cooperates, many farmers may plant corn. Heading into the report, having some production priced should be strongly considered, as historically, this report has moved markets.”

Cash Fed Cattle Prices Increase

Negotiated cash fed cattle prices were $1-$2 higher last week at $115/cwt. in the Southern Plains and $116 in the Northern Plains, according to  AMS. Dressed trade was $2-$3 higher in Nebraska at $185. Trade was yet to be established in the western Corn Belt, according to AMS, but various reports suggested trade in the region at as much as $3 higher than the previous week.

Week to week on Friday, Live Cattle futures closed an average of $2.08 higher (75¢ higher at the back to $3.10 higher).

“The slight progression in prices this week provide optimism for further price improvement moving through April and into May. The market continues to trade at a large discount to April Live Cattle futures, but cash prices for finished cattle have the ability to push above the $120 price level,” Griffith says.

Meanwhile, wholesale beef prices are making seasonal strides higher.

Choice boxed beef cutout value was $7.67 higher week to week on Friday at $237.66/cwt. Select was $7.82 higher at $227.77.

Plus, optimism continues to grow for the steady pace of COVID-19 vaccinations to continue bringing back some normalcy to markets and everyday life.

“There is considerable optimism for fed cattle markets going forward, beginning in the second quarter and especially in the second half of the year,” says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly market comments. “…Feedlots have been somewhat front-loaded thus far in 2021 which has contributed to the sluggish fed cattle markets in the first quarter of the year. Feedlot supplies should tighten in the second half of the year after working through current inventories.”

Friday to Friday Change

Weekly Auction Receipts

CME Feeder Index

Thursday through Thursday…

*Wednesday-to Wednesday for CME Feeder Index

Cash Stocker and Feeder

North Central

South Central

Southeast

(AMS National Weekly Feeder & Stocker Cattle Summary)

Wholesale Beef Value

Futures

Equities

Calves and feeder cattle continued to trade mixed last week, but mainly higher, with the strongest demand for grass cattle once again.

Nationwide, steers and heifers sold mostly steady to $5/cwt. higher, with instances of $6-$8 higher, according to the Agricultural Marketing Service (AMS).

“Buyers pursued all classes of feeder cattle, despite high feed cost,” say AMS analysts. “The supply of feeders weighing 600-950 lbs. is much greater, with backgrounded steers and heifers, and saw moderate to good demand, especially for those with good weighing conditions.”

AMS analysts also note auction receipts were lighter in the Midwest and Northern Plains last week as some auctions transition to a semi-monthly schedule and as the late winter storm hampered some cattle movement.

High corn prices and stagnant cash fed cattle prices helped pressure Cattle futures last week, although fundamentals suggest markets are on the cusp of moving higher.

“After the fed cattle market works through ample cattle supplies in the first half of the year, beef production is expected to decrease year over year in the second half of the year. Live Cattle futures for the fall suggest higher fed cattle prices in the last half of the year,” says, Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly market comments.

Similarly, Peel points to the premium for fall Feeder Cattle futures, compared to nearby contracts, explaining that summer stocker prospects are promising at this point in time.

“Feeder steer prices for February 2021 averaged $131.82/cwt. for steers weighing 750-800 lbs., sold at Oklahoma National Stockyards, just over $6 above a year ago,” say analysts with USDA’s Economic Research Service (ERS), in the latest monthly Livestock, Dairy and Poultry Outlook. “However, prices for the first two weeks of March are almost $8 above the same month last year.”

ERS increased the expected first-quarter average for feeder steers by $1 to $133/cwt. Price projections were unchanged for the remainder of the year: $134 in the second quarter; $139 in the third quarter; $140 in the fourth quarter; $136.50 for the 2021 average.

In the meantime, Feeder Cattle futures gave back a majority of the previous week’s gains, closing an average of $1.89 lower week to week on Friday (90¢ lower toward the back to $3.80 lower toward the front).

Week to week on Friday, Corn futures closed an average of 14¢ higher in the front two contracts (old crop) and then an average of about 7¢ lower through the next four.

Fed Cattle Prices Show Some Give

Negotiated cash fed cattle prices last week were steady on a live basis at $114/cwt. in Kansas, steady to $1 higher in Nebraska at $114, $1-$2 higher in the western Corn Belt at $114-$115. Prices were a touch higher than steady in the Texas Panhandle, with the Texas Cattle Feeders Association reporting $114.24 for steers and $114.30 for heifers. Dressed trade was $2 higher in Nebraska and $2-$4 higher in the western Corn Belt at $182.

“Live steer prices in the five-area marketing region are nearly flat since the first week of February, hovering around $114/cwt., despite a strong rally in the comprehensive cutout to near-record levels for the month of February,” explain ERS analysts. “An abundant supply of fed cattle on feed over 150 days Feb. 1 that is greater than the same time last year, along with the inability to process a portion of those cattle due to the winter storm system in February, likely did not support higher prices in line with typical seasonal patterns.”

Week to week on Friday, Live Cattle futures closed an average of $1.26 lower (35¢ lower at the back to $2.20 lower).

“Cattle feeders have watched the Apr Live Cattle contract continue to struggle, unable to get to the $120.00 mark, as Apr is normally the high of the year, when supplies of market-ready cattle are the tightest,” say AMS analysts. “We have seen a very unusual premium in the Live Cattle Jun and Aug contracts for this time of year.”

Choice boxed beef cutout value was $4.12 higher week to week on Friday at $229.99/cwt. Select was 32¢ lower at $219.95.

“Boxed beef cutout values are finding a bottom and seeing strength, as the food service industry is expected to see more business, with expectations for restaurant industry sales to increase through spring into summer,” according to AMS analysts. As well, they point to expectations for increased retail demand heading into grilling season.

No COF Surprises

Cattle feeders placed 1.68 million head in February, according to the monthly Cattle on Feed report from USDA—for feedlots with 1,000 head or more capacity. That was 1.86% less than a year earlier and close to average expectations ahead of the report for a decline of 1.7%.

Recent winter storms that closed sale barns may have limited placements. On the other hand, current and expected wheat prices may elevate feedlot placements in March, as more producers with a dual-purpose winter wheat crop look to put it in the bin.

“…the expectation that relatively high wheat prices may discourage the grazing-out of small grains pastures and move more cattle into feedlots sooner than previously expected is anticipated to shift placements from the second quarter to the first quarter,” ERS analysts say. “As a result, some fed cattle marketings are expected to shift from the fourth quarter to the third quarter.”

Feedlot marketings in February of 1.73 million head were 43,000 head fewer (-2.42%) year over year. Expectations ahead of the report were for a decline of 2.6%.

“Because of the weather disruption, there is a temporal shift of expected steer and heifer marketings out of the first quarter to be marketed in the second quarter,” say ERS analysts.

Cattle on feed March 1 of 12.0 million head were 189,000 head more (+1.60%), the second highest inventory for the month since the data series began in 1996. Average pre-report expectations were for an increase of 1.5%.

Friday to Friday Change

Weekly Auction Receipts

CME Feeder Index

Thursday through Thursday…

*Wednesday-to Wednesday for CME Feeder Index

Cash Stocker and Feeder

North Central

South Central

Southeast

(AMS National Weekly Feeder & Stocker Cattle Summary)

Wholesale Beef Value

Futures

Equities

Calves and feeder cattle sold mixed at the weekly auctions monitored by Cattle Current last week, but mainly steady to higher in the Southeast.

Sluggish, stagnant negotiated cash fed cattle prices, tied to the abundant supply, and seasonally weaker wholesale beef prices continue to hamper markets. On the other hand, improving supply fundamentals after the first quarter and the potential for a demand bounce from COVID-19 economic stimulus are boosting confidence.

Passage of the federal government’s $1.9 trillion coronavirus relief funding added support to overall equity and commodity markets last week, along with growing optimism the nation’s vaccination program is paving the way toward economic recovery.

Week to week on Friday, Feeder Cattle futures closed an average of $2.42 higher ($1.25 higher at the back to $4.20 higher toward the front).

The CME Feeder Cattle Index was 72¢lower week to week on Thursday at $134.13.

“The number of stocker cattle buyers is increasing as warm weather has resulted in cool season perennial pastures starting to green and grow,” says Andrew P. Griffith, agricultural economist at the University of Tennessee, in his weekly market comments. “This trend will continue the next several weeks as spring and summer grazing operations look to fill pastures with lightweight cattle that will be efficient on grass and that will be ready for the feedlot in late summer or early fall. The primary interest in cattle is the lightweight animals. Heavier feeder cattle that would be destined for the feedlot are not garnering as much interest.”

In the meantime, Derrell Peel, Extension livestock marketing specialist at Oklahoma State University points out auction volumes will increase in the Southern Plains over the next few weeks as cattle grazing dual-purpose winter wheat pasture head to market.

“Another factor hanging over feeder markets is the dramatic rise in feed costs and feedlot cost of gain,” Peel says, in his weekly market comments. “The latest summary of the Kansas Focus on Feedlots data shows that feedlot cost of gain for closeouts in January was up 8.6% from the recent low in October. Feedlot cost of gain will continue to increase and reflect higher grain prices in the coming months. Feeder prices will continue to adjust in response higher feed prices as the year progresses.”

There was a brief, slight respite last week with Corn futures closing an average of 5.5¢ lower on Friday, through the front six contracts (2.6¢ to 12.8¢ lower).

“U.S. corn market prices continue to rise, largely driven by strong export demand and tight global supplies,” say analysts with USDA’s Economic Research Service (ERS), in the latest USDA Feed Outlook. “The average cash-spot corn-market prices for Central Illinois and the Gulf for February 2021 were $5.56/bu. and $6.24/bu., respectively. By comparison, the same prices in February 2020 were $3.75 and $4.29.”

ERS left the 2020-21 U.S. corn supply and use outlook unchanged in the latest monthly World Agricultural Supply and Demand Estimates (WASDE) released last week. The projected season-average farm price also was unchanged at $4.30/bu. 

Fed Cattle Prices Continue Steady

During the next several months, cattle feeders should begin wresting some long-held market leverage back from beef packers. Until then, packers are holding prices in check.

Negotiated cash fed cattle prices were steady last week at $114/cwt. in the Southern Plains, steady to $1 higher at $114 in Colorado, steady in Nebraska at $113-$114 and steady to $1 lower in the western Corn Belt at $112-$113. Dressed trade was steady in Nebraska at $180 and steady to $2 lower in the western Corn Belt at $178-$180.

Week to week on Friday, Live Cattle futures an average of $1.68 higher (87¢ to $2.70 higher) except for 2¢ lower in spot Apr.

“For six consecutive weeks, finished cattle have traded steady, with the 5-area weighted average price being in less than a $0.50/cwt. range,” Griffith says. “This screams packer leverage and complete control of the market in the short term. How long packers will maintain this leverage is not known. The supply information would indicate leverage shifting to cattle feeders fairly soon. However, it seems we do not always have complete information in this analysis. The April Live Cattle contract has declined $6 over a four-week period and the cash price is showing no signs of making a run to $120, much less to $126 where it peaked. A rally through the end of March will go a long way to positivity throughout the cattle complex.”

Fed steer price forecasts were unchanged in the latest WASDE at $113/cwt. for the first and second quarters, $114 in the third quarter and $119 in the fourth quarter for an annual average of $115.

Wholesale Beef Prices Soften

Choice boxed beef cutout value was $5.46 lower week to week on Friday at $225.87/cwt. Select was 58¢ lower at $220.27.

Griffith points out declining Choice prices the past couple of weeks, as well as the narrowing Choice-Select price spread are typically associated with January and February, rather than March.

“January and February tend to be the weakest demand months for beef, which depresses beef prices. Similarly, the shift in beef consumption during the winter months tends to be from middle meats to end meats, which results in the narrowing of the Choice-Select spread,” Griffith explains. “As the market moves through March, Choice beef prices tend to escalate more quickly than Select prices, because the market is gearing up for post-Easter demand and the grilling season.”

ERS analysts increased estimated beef production for this year by 40 million lbs. in the latest WASDE to 27.58 billion lbs.

“First-half beef production is raised from last month as lower expected fed cattle slaughter in the first quarter is more than offset by higher first-half non-fed cattle slaughter,” according to ERS analysts. “Second-half production is adjusted to reflect a more rapid pace of first-quarter feedlot placements.”

Total red meat and poultry production was reduced 127 million lbs. to 107.47 billion lbs., with expected reductions in pork, broiler and turkey production.

Friday to Friday Change

Weekly Auction Receipts

CME Feeder Index

Thursday through Thursday…

*Wednesday-to Wednesday for CME Feeder Index

Cash Stocker and Feeder

North Central

South Central

Southeast

(AMS National Weekly Feeder & Stocker Cattle Summary)

Wholesale Beef Value

Futures

Equities

Except for steady to mostly higher in the Southeast, calves and feeder cattle sold mixed last week, based on auction sales monitored by cattle Current.

“Corn made another sharp gain on Tuesday and the recent volatility in that market along with the fact that cattle feeders have been unable to achieve higher prices for fed cattle made buyers conservative on some of the heavier yearlings,” explained the AMS market reporter on hand for Tuesday’s sale at Kingsville Livestock Auction in Missouri, where steers weighing 850-900 lbs. sold $5-$8 lower.

Worries about rising inflation rates and interest rates competed with optimism about pandemic recovery, fueling overall commodity and equity market uncertainty.

The CME Feeder Cattle Index was $4.06 lower week to week on Thursday at $134.85.

Week to week on Friday, Feeder Cattle futures closed an average of $1.94 higher (7¢ to $3.20 higher), except for an average of $3.81 lower in the front two contracts.

“Whiplash is running rampant through Feeder Cattle futures,” says Andrew P. Griffith, agricultural economist at the University of Tennessee, in his weekly market comments. “Since the start of 2021, March Feeder Cattle futures prices have traded in nearly a $15 range.

“The wide price swings were most evident in January, followed by a much narrower trading range in February. However, futures started March on a negative note, which means there will have to be a large swing to the upside for sellers to see any benefit on the cash market. Summer and fall Feeder Cattle futures contracts tend to rally out of March, but that does not mean much for the spring contracts. All eyes are on the finished cattle market to help determine where feeder cattle prices should be this spring. March-placed cattle generally come off feed in the August and September time period, which means the August Live Cattle market is a major determinant of current feeder cattle prices. If there is a Live Cattle price rally this spring, then that could result in cattle feeders being willing to bet on the come or bet on higher prices in the future, which may mean they will be willing to spend some of their profits to pay up for feeder cattle. The current market dynamics present a great example of why it is important to be an active cattle marketer compared to a passive marketer.”

Rising feed costs continue to hamper calf and feeder cattle prices, as well.

Week to week on Friday, Corn futures closed an average of 9¢ higher through the front six contracts, except for an average of 1¢ lower in near May and Jly.

Week to week on Friday, Soybean futures closed an average of 25¢ higher through the front six contracts.

USDA issues the monthly World Agricultural Supply and Demand Estimates Tuesday (Mar. 9), which hold the potential to add price volatility.

Fed Cattle Trudge Steady

Negotiated cash fed cattle prices continued in the steady rut last week, as packers exploited plentiful supplies and sold-ahead inventory. Plenty of folks also expect more wheat pasture cattle to move this month, given the current value of harvesting a dual-purpose winter wheat crop.

For the week, established trade was steady on a live basis at $114/cwt. in the Southern Plains and Northern Plains. Dressed trade in Nebraska was $2 lower at $180. The previous week, live sales in the western Corn Belt were at $114, with dressed trade at $182.

Week to week on Friday, Live Cattle futures closed an average of 97¢ higher (2¢ to $1.50 higher) except for an average of 70¢ lower in the front two contracts.

As mentioned in the last Cattle Current weekly summary, Kevin Good, vice president of industry relations and analysis at CattleFax sees this year as a tale of two halves.

“There are more cattle in the system early in 2021 with big supplies on feed and heavy weights, however the second part of the year will transition to tighter calf crops and tighter slaughter,” Good explained during the Feb. 24 CattleFax Outlook during the virtual 2021 Cattle Industry Convention Winter Reboot.

CattleFax projects total slaughter this year to be 33.5 million head, which would be 700,000 head more year over year. Average carcass weights are projected 4 lbs. lighter.  Beef production is projected 500 million lbs. more than 2020 to 27.6 billion lbs.

Choice boxed beef cutout value was $9.20 lower week to week on Friday at $231.33/cwt. Select was $8.88 lower at $220.85.

Friday to Friday Change

Weekly Auction Receipts

CME Feeder Index

Thursday through Thursday…

*Wednesday-to Wednesday for CME Feeder Index

Cash Stocker and Feeder

North Central

South Central

Southeast

(AMS National Weekly Feeder & Stocker Cattle Summary)

Wholesale Beef Value

Futures

Equities

Based on the weekly auctions monitored by Cattle Current last week, demand was strongest for lighter cattle suitable for summer grazing.

“The strengthening prices at the local level are being spurred by two factors at this point. The primary driver of lightweight calf prices is grass fever. Grass is slowly beginning to green; some marginal growth is evident in fescue pastures, while cool season annuals should really take off over the next couple of weeks,” says Andrew P. Griffith, agricultural economist at the University of Tennessee, in his weekly market comments. “The strengthening price is not based on what grass is available but what is expected to be available. Thus, this is just the start of the price run as some producers are attempting to get a few cattle purchased before prices peak.”

Summer and fall Feeder Cattle futures are the other current price driver, according to Griffith.

“If the summer and fall contract months remain at current levels or push higher, then one can expect calf prices to continue to increase over the next six to eight weeks,” Griffith says. “There does appear to be some disconnect between Feeder Cattle futures and Corn futures, but there is no reason to try to outguess that disconnect. The key is to take advantage of what the market is offering and capitalize on prices in the near term.”

In the meantime, higher feed costs continue to challenge Feeder Cattle futures overall. They closed an average of $1.57 lower week to week on Friday, from 10¢ lower to $2.77 lower. 

Week to week on Friday, Corn futures closed an average of 8¢ higher through the front six contracts.

Week to week on Friday, Soybean futures closed an average of 25¢ higher through the front six contracts.

“Tight global stocks and export demand for grain, oilseeds, and cotton continue to drive prices higher,” says Aaron Smith, Extension crop marketing specialist at the University of Tennessee, in his weekly Crop Comments. “China has been the major purchaser of U.S. agricultural products, however demand from other countries has also been robust…Brazil’s soybean harvest continues to be two to three weeks behind normal pace, limiting exports of soybeans to global purchasers. The cold weather across the Southern Plains last week has many concerned that winter kill could affect hard red winter wheat production.”

CattleFax analysts expect cattle prices to improve significantly after markets wade through currently plentiful fed cattle supplies.

Second-Half Optimism

Kevin Good, CattleFax vice president of industry relations and analysis sees this year shaping up as a tale of two halves, with prices continuing to struggle through the first two quarters and then finding plenty of lift in the second half of the year.

During its Market Outlook Wednesday, as part of the National Cattlemen’s Beef Association Winter Reboot, Good explained leverage will begin swinging back in producers’ favor as packing plant capacity utilization declines with smaller cattle harvest supplies.

CattleFax projects modest herd liquidation of 200,000 beef cows this year and 350,000 head next year, due in part to the likelihood of expanding La Niña drought this spring and summer.

In terms of price expectations, CattleFax projects:

• Annual average steer calf price (550 lbs.) at $170/cwt., with a range of $160-$180.
• Annual average feeder steer price (800 lbs.) at $145 with a range of $135-$160.
• Annual average fed steer price at $119 with a range of $108-$128.
• Annual average utility cow price at $64 with a range of $52 to $74.                 
• Annual average bred cow price at $1,600/hd with a range of $1,200 to $1,900.

At the same time, CattleFax expects consumer beef demand to continue strong.

According to Randy Blach, CattleFax CEO, domestic consumer beef demand last year was the strongest in more than 30 years, based on the U.S. Consumer Beef Demand Index. That was helped by consumer incomes being replaced almost entirely by government stimulus.

Internationally, CattleFax expects U.S. beef exports to increase at least 5% this year.

There are headwinds, of course.

Even before considering the drought, Mike Murphy, CattleFax vice president of research and risk management services, said both supply and demand mean feed costs will likely remain elevated into the next crop marketing year.

Fed Cattle Struggle for Steady

As it is, last week was a tooth-pulling contest for negotiated cash fed cattle prices to end up generally steady. Live trade was steady with the previous week in Nebraska and the Southern Plains at $114/cwt.; steady to $1 lower at $114 in the western Corn Belt. Dressed trade was steady to $2 higher at $182.

Week to week on Friday, Live Cattle futures an average of $1.65 lower, from 72¢ lower to $3.65 lower toward the front.

“It appears that some feeder cattle were carried over into 2021 and likely is reflected in the relatively large January placements,” explains Derrell Peel, Extension livestock marketing specialist, in his weekly market comments. “Feeder supplies are somewhat front-loaded early in 2021 but should tighten up in the second half of the year.”

Feedlot placements in January were 2.017 million head, according to the latest Cattle on Feed report. That was about 3% more year over year.  

“This is a difficult environment to market finished cattle,” Griffith says. “Nothing seems to be in tune with normal tendencies. A negative basis of $2 to $3 is not unheard of in February, but it is also not that common. Cattle feeders will be hoping for cash and futures prices to converge moving into the April contract as convergence is advantageous to hedging strategies.”

Choice boxed beef cutout value was $1.30 higher week to week on Friday at $240.53/cwt. Select was $1.83 higher at $229.73.

Friday to Friday Change

Weekly Auction Receipts

CME Feeder Index

Thursday through Thursday…

*Wednesday-to Wednesday for CME Feeder Index

Cash Stocker and Feeder

North Central

South Central

Southeast

(AMS National Weekly Feeder & Stocker Cattle Summary)

Wholesale Beef Value

Futures

Equities

Frigid, record-breaking temperatures, ice and snow across a wide swath of the nation slowed cattle movement and disrupted supply chains last week, especially in the Southern Plains.

With so many auctions closed last week, due to weather, and receipts reduced at others, it was tough to come up with much of a price trend. Based on the auctions monitored by Cattle Current, prices were mixed but generally steady to higher.

Optimism this week may be tempered as the nation thaws, with the potential for feedlots to slow marketing in efforts to recover some of the lost gain, and with more January placements than expected (see below).

Week to week on Friday, Feeder Cattle futures closed mixed, from an average of $1.45 lower in the front three contracts to an average of 57¢ higher. 

The CME Feeder Cattle Index was $2.77 higher week to week on Thursday at $138.11, the highest since December.

“There is optimism for feeder cattle to gain momentum, but much of this optimism is pushed towards the summer and fall feeder cattle market,” says Andrew P. Griffith, agricultural economist at the University of Tennessee, in his weekly market comments. “Summer and fall Feeder Cattle contracts are trading at a clear $10 premium to spring contracts. Thus, the optimism is for five to six months in the future. Producers should keep an eye on the Feeder Cattle Index and deferred futures and price cattle accordingly.”

USDA’s Economic Research Service (ERS) lowered expectations for feeder steer prices, in the latest Livestock, Dairy and Poultry Outlook.

“Feeder steer prices for January 2021 averaged $133.94/cwt. for steers weighing 750-800 lbs. sold at Oklahoma City National Stockyards, about 7% below the average for January 2020. With prices for the first two weeks of February almost $7 below the same month last year, the first-quarter 2021 forecast was lowered $2 to $132/cwt.,” say ERS analysts. “Revisions to the 2020 calf crop tightened anticipated feeder cattle supplies in second-half 2021. However, higher expected feed costs offset expectations for stronger prices the rest of the year; as a result, the second-half 2021 feeder steer price forecasts are unchanged from last month.”

ERS forecasts the feeder steer price at $134/cwt. in the second quarter, $139 in the third and $140 in the fourth quarter for an annual average of $136.25. That would be only 80¢ more than the 2020 average.

Feedlot Placements Up

Traders may view the latest monthly Cattle on Feed report as somewhat bearish, with January placements of 2.017 million head. That was about 3% more year over year and about 3% more than pre-report expectations. The report accounts for feedlots with 1,000 head or more capacity.

“With higher placements in January, rising feed costs are likely to become more of a focus and concern,” say analysts with the Livestock Marketing Information Center, in the latest Livestock Monitor. “The weekly Omaha corn price for January averaged $5.04/bu., which is a 15.2% ($0.67 per bushel) rise over December 2020 and 32.0% ($1.23 per bushel) higher than last year. High feed costs may incentivize cow-calf operators to add more weight to calves before placing into feedlots. This may be a challenge as much of the western U.S. remains in drought, potentially limiting available pasture and feed supplies. The harsh winter weather in mid-February likely depleted hay stocks in some areas.”

Feedlot marketings in January of 1.822 million head were 5.6% less year over year and slightly fewer than expected.

Total cattle on feed Feb. 1 of 12.106 million head were 1.5% more than a year earlier and about 0.5% more than expectations. That’s the second most for the month since the data series began in 1996.

Fed Cattle Prices Mainly Steady

Negotiated cash fed cattle trade last week ended up steady in the Southern Plains at $114/cwt., according to the Agricultural Marketing Service. Live trades were steady to $1 higher in Nebraska at $114; dressed trade steady to $1 higher at $180-$181. In the western Corn Belt, prices were steady to $2 higher on a live basis at $114-$115 and steady to $2 higher in the beef at $180-$182.

Through Thursday, the five-area direct average steer price was $114.11/cwt. on a live basis, which was 33¢more than the previous week but $5.66 lower than the same week last year. The average five-area dressed steer price was 64¢ higher week to week at $180.71, which was $9.39 less year over year.

Week to week on Friday, Live Cattle futures closed mixed, from an average of $1.07 lower through the front five contracts to an average of 80¢ higher.

“The weather conditions many feedlot operators are navigating currently have a small impact on cattle soon to be marketed and a much larger impact on the rest of the animals,” Griffith explains. “The cold temperatures are sure to reduce average daily gain and increase feed intake. Thus, the higher cost of feed and fewer pounds to sell will negatively influence profitability. This does not mean those cattle will lose money, but profits will be smaller. Looking ahead, cattle feeders will be looking to gain some leverage from this situation moving into the spring to push prices north of $120.”

Wholesale Beef Prices Climb

Reduced slaughter last week, due to the weather, demonstrated once again the disparate forces of marginal demand: packer demand for fed cattle decreased, while retailers and food service competed harder for reduced beef production.

Choice boxed beef cutout value was $6.86 higher week to week on Friday at $239.23/cwt. Select was $6.97 higher at $227.90.

Estimated cattle slaughter for the week of 552,000 head was 56,000 head fewer than the previous week and 74,000 head fewer than the same week last year. Estimated year-to-date cattle slaughter of 4.50 million head is 263,000 head fewer (-5.52%) than last year. Estimated year-to-date beef production of 3.81 billion lbs. is 124.8 million lbs. less (-3.17%) than the same time last year.

Friday to Friday Change

Weekly Auction Receipts

CME Feeder Index

Thursday through Thursday…

*Wednesday-to Wednesday for CME Feeder Index

Cash Stocker and Feeder

Last available

North Central

South Central

Southeast

(AMS National Weekly Feeder & Stocker Cattle Summary)

Wholesale Beef Value

Futures

Equities

Based on weekly auctions monitored by Cattle Current, calves and feeder cattle traded mixed last week, supported by positive fundamentals but pressured by the frigid, icy weather that disrupted some markets.

Week to week on Friday, Feeder Cattle futures closed an average of $1.29 higher from 17¢ higher at the back to $2.57 higher at the front. Slightly softer Corn futures prices provided support.

Week to week on Friday, Corn futures closed an average of 7¢ lower through the front six contracts.

The latest monthly World Agricultural Supply and Demand Estimates (WASDE), from USDA’s Economic Research Service increased the expected 2020-21 season-average corn price received by producers by 10¢ to $4.30/bu. 

“The futures price expectation for feeder cattle remains a bright spot, as the market appears to be strong in the summer and fall months for moving cattle into the feedlot,” says Andrew P. Griffith, agricultural economist at the University of Tennessee, in his weekly market comments. “Most feeder cattle contracts are holding near the contract highs. This does not mean they will stay there, nor does it mean the market price will increase or decrease. All it means at this point is that optimism remains in the feeder cattle market…There are still several weeks before spring forage growth hits full speed. Thus, there should still be several more weeks before lightweight calf prices peak. However, the cost of holding those calves for four to eight more weeks should be considered.”

Cash Fed Cattle Trade Steady to Higher

Negotiated cash fed cattle trade last week was steady in the Southern Plains at $114/cwt. on a live basis, $1-$2 higher in Nebraska at $113-$114 and steady to $1 higher in the western Corn Belt at $112-$115. Dressed trade was steady to $2 higher at $180.

Week to week on Friday, Live Cattle futures closed an average of 79¢ higher (45¢ to $1.40 higher).

“The cash price remains $2 lower than the February Live Cattle contract, and there are two weeks left to close the gap,” Griffith says. “The more optimistic part of the market is April Live Cattle trading near $125. The ability to reach or surpass this price level is dependent on beef demand. Beef supply may play a role as well if the extremely cold temperatures persist and result in reduced cattle performance in the feedlot.”

The average dressed steer weight the week ending Jan. 30 was 920 lbs., which was 6 lbs. lighter than the previous week but 23 lbs. heavier than the same week a year earlier, according to USDA’s Actual Slaughter Under Federal Inspection report. The average dressed heifer weight of 853 lbs. was 2 lbs. heavier than the prior week and 20 lbs. heavier than the previous year.

USDA projects $115/cwt. for the annual average five-area direct fed steer price this year. Average prices are forecast at $113 in the first and second quarters, $114 in the third quarter and $119 in the fourth quarter.

Increased Beef Production Expected

Choice boxed beef cutout value was $2.21 lower week to week on Friday at $232.37/cwt. Select was 14¢ higher at $220.93.

Beef production for this year was estimated at 27.54 billion lbs., in the latest WASDE. That would be 388 million lbs. more (+1.43%) than last year.

Along with expected continued strong domestic beef demand, the latest U.S. beef export data suggests rebounding international markets.

Although U.S. beef exports were 5% lower last year, in volume (1.25 million metric tons—mt) and value ($7.65 billion), they finished 2020 with a near record December, according to data released by USDA and compiled by the U.S. Meat Export Federation (USMEF).

December beef exports totaled 119,892 mt, up 8% from December 2019 and the largest in nearly 10 years. Export value in December was $744 million, up 9% from a year ago and the second highest total on record.

Foodservice restrictions in many major markets impacted beef exports significantly, but they trended higher late in the year, bolstered by very strong retail and holiday demand.

“Consumers across the world responded to the COVID-19 pandemic by seeking high-quality products they could enjoy at home, and U.S. beef and pork definitely met this need,” Says Dan Halstrom, USMEF president and CEO. “We expect these retail and home-delivery demand trends to continue even as sit-down restaurant dining recovers, creating robust opportunities for U.S. red meat export growth.”

“The weekly beef export muscle cut data for the first five weeks of 2021 are on par with the strong start in 2020, which bodes well for exporting beef and thus price support. However, the domestic beef market is the primary driver of the industry,” Griffith says.

Friday to Friday Change

Weekly Auction Receipts

CME Feeder Index

Thursday through Thursday…

*Wednesday-to Wednesday for CME Feeder Index

Cash Stocker and Feeder

North Central

South Central

Southeast

(AMS National Weekly Feeder & Stocker Cattle Summary)

Wholesale Beef Value

Futures

Equities