Weekly Market Highlights

Cattle Current Weekly Highlights—Week ending May 22, 2020

Cash fed cattle prices underpinned more optimism last week, with buyers mostly paying more for calves and feeder cattle amid increased auction volume.

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

Feeder Cattle futures closed an average of $2.23 lower week to week on Friday.

“There are two aspects of the market worth noting and they are that prices for most classes of cattle are holding their ground or showing slight improvements and the number of cattle being marketed is increasing,” says Andrew P. Griffith, agricultural economist at the University of Tennessee, in his weekly market comments. “Even though the economy is not completely business as usual, it does seem the workforce and consumers are trying to achieve some sort of normalcy… Many of the animals that are hitting the feeder calf and feeder cattle market at this time were probably delayed to some degree as producers attempted to manage through the coronavirus pandemic. At the same time, there are producers who are looking to purchase cattle and those producers are likely behind on making purchases because cattle did not come to market from the middle of March through early May. Thus, these producers may have to purchase a little heavier animal than typical to meet their needs.

Feedlot Placements Down 22%

Markets will likely view Friday’s monthly USDA Cattle on Feed report as neutral, with numbers about mirroring pre-report estimates.

For feedlots with 1,000 head or more capacity, April placements of 1.43 million head were 22.26% less than the prior year. April marketings of 1.46 million head were 24.32% less than a year earlier. On-feed inventory May 1 was 5.14% less at 11.20 million head.

In the latest monthly Livestock, Dairy and Poultry Outlook (LDPO), analysts with USDA’s Economic Research Service (ERS) estimated there were 20.54 million head of cattle outside feedlots Apr. 1. That was 657,000 head more (+3.30%) than the same time a year earlier.

As the backlog of market-ready fed cattle continues to grow and feedlot margins are squeezed, ERS expects feeder cattle prices to remain under pressure.

“Based on recent price data, the second-quarter 2020 feeder steer price was lowered by $2 to $121/cwt. The third-quarter 2020 price forecast was lowered $5 to $123 and the fourth-quarter 2020 price was lowered $17 to $118,” say ERS analysts. “As a result, this month’s annual price forecast for 2020 was $124.50/cwt., close to last month’s forecast. The price forecast for first-quarter 2021 is expected to remain relatively low at $125. Feeder steer prices are expected to improve in the second half of 2021 on increased demand. The 2021 annual feeder steer price is forecast at $131.50, more than 5% higher than 2020.”

Fed Cattle Prices Bounce Higher

Negotiated cash fed cattle traded ended up mainly $5-$10 higher on a live basis last week at mostly $120/cwt. in the Southern Plains and at $119-$120 in Nebraska. Dressed trade was mostly $10 higher at mainly $190.

Other than 70¢ and 87¢ higher on either end of the board, Live Cattle futures closed an average of 41¢ lower week to week on Friday.

“This is the first week since the beginning of January when finished cattle prices exceeded year-ago prices from the same week. Additionally, this is only the third week this year when finished cattle prices have been higher than year-ago prices,” Griffith says. “There is a good possibility that finished cattle prices will see year- over-year gains, given that current prices are improving and year-ago prices were declining. The environment today is much different than a year ago, which provides optimism for year-over-year price gains, but that does not mean finished cattle prices will continue to surge higher. Increasing fed cattle slaughter will do the most to improve prices, but the rest will be left up to a consumer base that is struggling with cash flow.”

USDA estimated total cattle slaughter for the week at 555,000 head, which would be 56,000 head more (+11.2%) than the previous week, but 92,000 head fewer (-14.2%) than the same week a year earlier. Year to date, cattle slaughter of 12.11 million head is 893,000 head fewer (-6.9%) than the same period least year.

“The buildup in fed cattle supplies that are market ready is expected to have a substantial and lasting effect on fed cattle prices,” say ERS analysts. “Prices will remain low as the supply of market-ready cattle remains above the sector’s ability to process them, and the supply issue is expected to linger through 2021.”

Consequently, ERS lowered this year’s average price forecast for fed steers (five-area direct) to $104.08/cwt.: $118.32 in the first quarter; $99 in the second and third quarters; $100 in the fourth quarter. The projected annual average price for next year is $109.

Keep in mind the forecast runs counter to current cash prices, which appear to be supported by packers’ willingness to give back some of their margins.

Wholesale Beef Value Decline Continues

As packing capacity recovers and beef production increases, wholesale beef values continue heading south.

Choice boxed beef cutout value was $37.58 lower week to week on Friday at $396.74/cwt. Select was $44.88 lower at $374.18.

“The increase in slaughter and the increase in beef production is slowly lowering boxed beef prices at a time when consumers are preparing for the unofficial start of summer,” Griffith notes. “Generally, this is a weekend when consumers head to the grocery store and spend a little extra at the meat counter to get good quality middle meats to throw on the grill. This typical action will likely be muted this year as unemployment rates have spiked and retail beef prices are extremely high. In some instances, ground beef may even be too expensive for many consumers to consider as the main course when celebrating Memorial Day. It is difficult to imagine consumers trading a steak for a pork chop or a chicken breast but that may be the case if consumers are already running low on cash.”

Friday to Friday Change

 

Weekly Auction Receipts

 

May 22 Auction Direct

Video/net

Total
 

204,800

(+33,800)

51,200

(+24,000)

1,800

(-32,800)

257,800

(-23,000)

 

CME Feeder Index

CME Feeder Index* May 21 Change
  $126.24 +  $1.44

*Thursday-to Thursday for CME Feeder Index

 

Cash Stocker and Feeder

North Central

Steers-Cash May 22 Change
600-700 lbs. $150.55 +   $0.10
700-800 lbs. $139.24 –    $0.44
800-900 lbs. $130.99 +   $4.23

 

South Central

Steers-Cash May 22 Change
500-600 lbs. $154.23 + $0.34
600-700 lbs. $141.13 + $0.28
700-800 lbs. $131.59 + $1.71

 

Southeast

Steers-Cash May 22 Change
400-500 lbs. $150.63 + $2.67
500-600 lbs. $140.39 + $0.99
600-700 lbs. $130.86 + $2.08

(AMS National Weekly Feeder & Stocker Cattle Summary)

 

Wholesale Beef Value

Boxed Beef  (p.m.) May 22 ($/cwt) Change
Choice $396.74 –  $37.58
Select $374.18 –  $44.88
Ch-Se Spread $22.56 +   $7.30

 

Futures

Feeder Cattle  May 22 Change
Aug $128.800 –  $2.275
Sep $130.150 –  $2.600
Oct $131.250 –  $2.700
Nov $132.075 –  $2.500
Jan ’21 $131.175 –  $2.050
Mar $130.925 –  $1.750
Apr $131.350 –  $1.725
Aug $131.775 n/a

 

Live Cattle   May 22 Change
Jun $97.700 + $0.700
Aug $97.325 –  $0.500
Oct $99.400 –  $0.950
Dec $102.750 –  $0.425
Feb ’21 $106.700 –  $0.125
Apr $109.575 –  $0.275
Jun $102.575 –  $0.425
Aug $101.825 –  $0.200
Oct $104.800 + $0.875

 

Corn  May 22 Change
Jly  $3.180 – $0.012
Sep $3.226 – $0.004
Dec $3.326 +$0.006
Mar ’21 $3.452 +$0.006
May $3.526 +$0.006
Jly $3.580 +$0.006

 

Oil CME-WTI May 22 Change
Jly $33.25 + $3.73
Aug $33.65 + $3.53
Sep $34.14 + $3.45
Oct $34.49 + $3.38
Nov $35.18 + $3.28
Dec $35.18 + $3.17

 

Equities

Equity Indexes May 22 Change
Dow Industrial Average  24465.14 +  779.72
NASDAQ    9324.59 +  310.03
S&P 500    2955.45 +     91.75
Dollar (DXY)       99.80 –        0.56
Cattle Current Weekly Highlights—Week ending May 22, 2020 2020-05-24T13:35:47-05:00

Cattle Current Weekly Highlights—Week ending May 15, 2020

Cash cattle prices mainly increased last week, in the face of volatile futures trade, clouded by how soon and how much packing capacity will return, the growing backlog of market-ready fed cattle, as well as demand uncertainty tied to the reopening of the U.S. economy and consumer economic wherewithal.

Nationwide, calves and feeder cattle traded $1-$5/cwt. higher, according to the Agricultural Marketing Service (AMS).

“The best demand, by far, remains on light calves suitable for backgrounding,” say AMS analysts. “Seller interest improved somewhat, while some ranchers continue to resist the current market.” Even so, they point out that auction volume continued heavy as cattle came to town from winter wheat and ryegrass pastures in the Southern Plains.

Feeder Cattle futures closed an average of $3.89 lower week to week on Friday, giving back about half of what was gained the previous week.

“It is extremely risky, from a market analyst standpoint, to make a statement about the direction of cattle prices, but the past couple of weeks give the appearance that the market may be finding some stability,” says Andrew P. Griffith, agricultural economist at the University of Tennessee, in his weekly market comments. “The key to a stronger feeder cattle market is feedlots being able to move the current cattle out and opening up pen space. This can only be done if slaughter rates begin to accelerate. The thought is that cattle prices will recover as slaughter capacity recovers. However, there will still be seasonal tendencies that influence the market. There will be some changes to seasonal tendencies as fewer cattle have been placed in feedlots the past couple of months, but those seasonal changes may not be as drastic as some people may think. The cattle that are still in the country are going to be heavier placements, which means fewer days on feed.”

Fed Cattle Prices Continue Higher

Packing capacity continues to recover from COVID-19 slowdowns, albeit slowly.

Estimated slaughter under federal inspection last week was 499,000 head, which was 47,000 head more than the previous week and 74,000 head more than two weeks earlier, but still 163,000 head fewer than same week last year, according to the Agricultural Marketing Service (AMS).

That helped boost fed cattle prices, although it remains difficult to get a firm handle on value as prices continue across a wide range and as packers appear to be paying more than current fundamentals dictate.

The five-area direct weighted average steer price through Thursday was $11.36 higher than the previous week at $111.40/cwt. The average price in the beef was $19.90 higher at $179.30.

Regionally, negotiated cash fed cattle prices were $10-$15 higher on a live basis at $115/cwt. in Kansas, $119-$120 in Nebraska and $115 in the western Corn Belt. AMS reported live prices at the Texas Panhandle at mostly $110, while the Texas Cattle Feeders Association reported its members trading steers at a weighted average price of $112.53 and heifers at $113.29. Dressed prices in the North were $10-$30 higher at $180.

“It will likely take many weeks for slaughter rates to catch up with the growing backlog of fed cattle and get the industry current once again,” says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly market comments. “Meantime, all sectors of the industry are responding to the need to slow cattle down and hold them longer in a variety of production settings before proceeding to finish in feedlots. Fed cattle weights are increasing and pushing carcass weights higher counter-seasonally.”

The average five-area direct fed steer price (FOB) in April was $10.46/cwt. less than the previous month at $102.02, according to the most recent monthly report from USDA. In the beef (delivered), the average steer price of $159.27 was $19.30 less.

Other than $2.35 higher in spot Jun, Live Cattle futures closed an average of $3.55 lower week to week on Friday, giving back a little more than half of what was gained the previous week.

“It is understandable for there to be a gap in cash prices and the futures market since it is not June, but the basis is just too large right now,” Griffith says. “There are still a lot of skeptics that think finished cattle prices will continue to falter, but the market is demanding meat protein. There is no way to guess what will happen to finished cattle prices, but feedlots will continue to market as many cattle as possible with the strong basis and backed up cattle.”

Wholesale Beef Values Appear to Top

Wholesale beef values declined sharply Wednesday–the first day-to-day decline since Apr. 8–likely signaling the Covid-skewed top was established.

Choice boxed beef cutout value was $26.56 lower week to week on Friday at $434.32/cwt. Select was $29.93 lower at $419.06.

“The main story from a meat perspective is the daily and weekly slaughter levels. Cattle slaughter the first quarter of the year exceeded 621,000 head every week except the first week of the year. There was even a week when cattle slaughter nearly reached 685,000 head just prior to April,” Griffith explains. “Slaughter levels then declined rapidly as facilities closed or reduced harvest levels in the middle of April. Slaughter levels on a weekly basis fell to about 425,000 head the last week of April and starting into May.”

USDA projects beef production at 25.76 billion lbs. this year, according to the latest monthly World Agricultural Supply and Demand Estimates (WASDE). That’s 1.68 billion lbs. less (-6.12%) than the April forecast and would be 1.39 billion lbs. less (-5.12%) than last year.

Friday to Friday Change

Weekly Auction Receipts

 

May 15 Auction Direct

Video/net

Total
 

171,000

(-11,100)

75,200

(-8,500)

35,400

(+6,100)

281,600

(-13,500)

 

CME Feeder Index

CME Feeder Index* May 14 Change
  $124.80 +  $3.66

*Thursday-to Thursday for CME Feeder Index

 

Cash Stocker and Feeder

North Central

Steers-Cash May 15 Change
600-700 lbs. $150.45 +   $5.24
700-800 lbs. $139.68 +   $4.24
800-900 lbs. $126.76 +   $4.86

 

South Central

Steers-Cash May 15 Change
500-600 lbs. $153.89 + $3.27
600-700 lbs. $140.85 + $3.03
700-800 lbs. $129.88 + $3.16

 

Southeast

Steers-Cash May 15 Change
400-500 lbs. $147.96 + $0.11
500-600 lbs. $139.40 + $1.80
600-700 lbs. $128.78 + $1.59

(AMS National Weekly Feeder & Stocker Cattle Summary)

 

Wholesale Beef Value

Boxed Beef  (p.m.) May 15 ($/cwt) Change
Choice $434.32 –  $26.56
Select $419.06 –  $29.93
Ch-Se Spread $15.26 +   $3.37

 

Futures

Feeder Cattle  May 15 Change
May $124.725 –  $3.175
Aug $131.075 –  $5.875
Sep $132.750 –  $5.400
Oct $133.950 –  $5.075
Nov $134.575 –  $5.050
Jan ’21 $133.225 –  $4.650
Mar $132.675 –  $3.025
Apr $133.075 –  $3.950

 

Live Cattle   May 15 Change
Jun $97.000 + $2.350
Aug $97.825 –  $2.375
Oct $100.350 –  $3.925
Dec $103.175 –  $4.525
Feb ’21 $106.825 –  $4.825
Apr $109.850 –  $4.375
Jun $103.000 –  $3.200
Aug $102.025 –  $2.575
Oct $103.925 –  $2.575

 

Corn  May 15 Change
Jly  $3.192 -0-
Sep $3.230 – $0.016
Dec $3.320 – $0.036
Mar ’21 $3.446 – $0.044
May $3.520 – $0.044
Jly 3.574 – $0.046

 

Oil CME-WTI May 15 Change
Jun $29.43 + $4.69
Jly $29.52 + $3.35
Aug $30.12 + $2.07
Sep $30.69 + $1.18
Oct $31.11 + $0.63
Nov $31.56 + $0.29

 

Equities

Equity Indexes May 15 Change
Dow Industrial Average  23685.42 –   645.90
NASDAQ    9014.56 –   106.76
S&P 500    2863.70 –     66.10
Dollar (DXY)       100.36 +        1.26
Cattle Current Weekly Highlights—Week ending May 15, 2020 2020-05-18T13:49:37-05:00

Cattle Current Weekly Highlights—Week ending May 8, 2020

Demand increased for calves and feeder cattle–especially after mid-week–helped along by stronger cash fed cattle prices and increasing confidence that the previous week’s Executive Order–mandating meat and processing facilities remain open–will help normalize the supply chain, eventually.

Steers and heifers sold steady to $5/cwt. higher, according to the Agricultural Marketing Service (AMS).

Feeder Cattle futures closed an average of $8.83 higher week to week on Friday.

“From a fundamental standpoint, the futures market started the year overvaluing feeder cattle. However, coronavirus resulted in a huge selloff, which then sent the market into undervaluing feeder cattle which has persisted for nearly two months,” says Andrew P. Griffith, agricultural economist at the University of Tennessee, in his weekly market comments. “It would seem the market is adjusting to the current environment and trying to bring feeder cattle values back in line with a more fundamental expectation for the year. The futures market likely still has feeder cattle undervalued to a slight degree, looking into the summer and fall contracts, but the market is much more in line with expectations.”

Griffith adds that both cash and futures prices will likely remain volatile as the market seeks equilibrium.

Cash Fed Cattle Prices Gain

Negotiated cash fed cattle trade ended the week on a decidedly higher. Live sales in the Southern Plains were at $115/cwt., which was $5 more than earlier in the week and $10-$20 higher than the previous week. Live sales in Nebraska were $19-$20 higher than the previous week at $114-$115. Live sales in the western Corn Belt were mainly $3-$10 higher than the previous week at mostly $103; dressed sales there were $20-$30 higher at mostly $180.

“This strength is most likely due to the slight increase in estimated cattle slaughter and continued strong demand for beef,” Griffith says.

According to AMS, estimated cattle slaughter under federal inspection for the week was reported at 452,000 head, still well below where it needs to be, but 27,000 head more than the previous week.

Live Cattle futures closed an average of $6.02 higher week to week on Friday ($3.50 higher at the back to $7.65 higher toward the front.

Although day-to-day gains moderated as the week wore on, the bottleneck in beef packing and processing continued to boost wholesale beef values.

Choice boxed beef cutout value was $83.43 higher week to week on Friday at $460.88/cwt. Select was $91.86 higher at $448.99.

Cattle slaughter and beef production continue vastly lower year over year, while the backlog of fed cattle continues to build.

Estimated cattle slaughter for the week ending May 2 was 425,000 head, which was 38% less year over year, according to Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly market comments. For the past four weeks (through May 2), he says total cattle slaughter averaged 26.4% less than the same weeks last year–down 689,000 head, or a little more than a week’s worth of cattle slaughter.

Similarly, Peel explains beef production was down 35% the previous week, compared to a year earlier; an average of 25% less for the past four weeks. Relative to the first 14 weeks of the year, before current COVID-19 production declines began, he says the combined 520 million lbs. of reduced beef production over the last four weeks equates to losing a week’s worth of production.

“Given when packing plant workers began to be impacted and the additional attention now focused on protecting worker health, it is likely that we are currently at or very near the worst point of packing plant disruptions,” Peel says. “However, it is unclear how fast plants will resume production levels in the coming weeks. It is likely that the effective capacity will be reduced permanently or certainly for the foreseeable future because of the safety changes needed at packing plants. The impacts on cattle markets will linger for many weeks before backlogs are cleaned up and markets are current again.”

For consumers, Peel emphasizes there is no shortage of beef in the country. Any lack of availability encountered will be temporary.

Even so, there will likely continue to be plenty of angst from the ranch gate to the retail meat case.

“Soon, U.S. consumers will begin to see in their local meat case the effects of the beef and pork plant shut downs in April, with potentially 30% less meat on shelves and prices up to 20% above last year,” according to a new report from CoBank’s Knowledge Exchange Division: Closed Meat Cases Today Mean Empty Meat Cases this Summer. “For cattle and hog producers, the bottlenecks created by the plant slowdowns and shut downs have meant they will lose billions of dollars this year and be forced to euthanize millions of pigs. In spite of President Trump’s executive order to re-open the plants, per capita COVID-19 cases around U.S. meat plants have continued to climb, raising the risk of further plant capacity disruptions.”

U.S. Beef Exports and Imports Continue to Add Value

As scarcer beef supplies spawn more retail and food service outlets to limit customer purchases, some consumers wonder why the U.S. continues to export beef. Similarly, as cattle prices sag and run opposite of wholesale beef values, some producers question why the U.S. continues to import beef.

“Closing off or limiting beef exports does not necessarily mean greater amounts of beef in U.S. retail grocery stores, nor does limiting imports mean greater cattle prices,” says Brenda Boetel, livestock economist at the University of Wisconsin-River Falls. “The reason is because beef exported is not the same as beef imported. Even with beef production down, the importance of keeping export markets (and import markets) open is vital to the long-term health of the cattle industry.”

More specifically, in the latest issue of In the Cattle Markets, Boetel explains the mix of U.S. beef exports add value to domestic cattle prices as international customers place a higher value on some beef products than U.S. consumers.

Likewise, importing beef–mostly lean trim–helps bolster U.S. ground beef demand and keep it more price competitive than using higher value parts of the domestic carcasses.

U.S. beef exports were record high for the first quarter, according to the latest data released by USDA and compiled by the U.S. Meat Export Federation (USMEF).

U.S. beef exports in March totaled 115,308 metric tons (mt), up 7% from a year earlier. Value was 4% more at $702.2 million. Japan, South Korea, Mexico, Canada and Taiwan drove export growth for the month.

First-quarter beef exports climbed 9% from a year earlier to 334,703 mt; valued at $2.06 billion, which was 8% higher.

Beef export value per head of fed slaughter was $308.21 in March, down 8% from the very high March 2019 average. For the first quarter, per-head export value increased 2% to $317.06.

Friday to Friday Change

Weekly Auction Receipts

 

May 8 Auction Direct

Video/net

Total
 

182,100

(-37,100)

83,700

(+8,200)

29,300

(+28,000)

295,100

(-900)

 

CME Feeder Index

CME Feeder Index* May 7 Change
  $121.14 +  $1.75

*Thursday-to Thursday for CME Feeder Index

 

Cash Stocker and Feeder

North Central

Steers-Cash May 8 Change
600-700 lbs. $145.21 –    $1.71
700-800 lbs. $135.44 +   $1.35
800-900 lbs. $121.90 –    $0.63

 

South Central

Steers-Cash May 8 Change
500-600 lbs. $150.62 + $1.27
600-700 lbs. $137.82 + $1.80
700-800 lbs. $126.72 + $4.55

 

Southeast

Steers-Cash May 8 Change
400-500 lbs. $147.85 + $2.60
500-600 lbs. $137.60 + $0.19
600-700 lbs. $127.19 + $1.53

(AMS National Weekly Feeder & Stocker Cattle Summary)

 

Wholesale Beef Value

Boxed Beef  (p.m.) May 8 ($/cwt) Change
Choice $460.88 + $83.43
Select $448.99 + $91.86
Ch-Se Spread $11.89 –  $8.24

 

Futures

Feeder Cattle  May 8 Change
May $127.900 + $10.075
Aug $136.950 + $9.300
Sep $138.150 + $9.100
Oct $139.025 + $9.125
Nov $139.625 + $9.150
Jan ’21 $137.875 + $8.800
Mar $135.700 + $7.575
Apr $137.025 + $7.550

 

Live Cattle   May 8 Change
Jun $94.650 + $7.400
Aug $100.200 + $7.650
Oct $104.275 + $7.475
Dec $107.700 + $6.725
Feb ’21 $111.650 + $6.275
Apr $114.225 + $6.700
Jun $106.200 + $4.950
Aug $104.600 + $3.550
Oct $106.500 + $3.500

 

Corn  May 8 Change
May $3.190 +$0.076
Jul $3.192 +$0.008
Sep $3.246 – $0.008
Dec $3.356 – $0.010
Mar ’21 $3.490 – $0.012
May $3.564 – $0.018

 

Oil CME-WTI May 8 Change
Jun $24.74 + $4.96
Jly $26.17 + $3.88
Aug $28.05 + $3.85
Sep $29.51 + $3.82
Oct $30.48 + $3.69
Nov $31.27 + $3.53

 

Equities

Equity Indexes May 8 Change
Dow Industrial Average  24331.32 +   607.63
NASDAQ   9121.32 +   516.37
S&P 500    2929.80 +     99.09
Dollar (DXY)         99.10 +        0.31
Cattle Current Weekly Highlights—Week ending May 8, 2020 2020-05-09T17:58:42-05:00

Cattle Current Weekly Highlights—Week ending May 1, 2020

At least shades of normalcy returned to calf and feeder cattle markets last week, with auction receipts of 219,200 head being more year over year for the first time in 10 weeks, according to the Agricultural Marketing Service (AMS).

Renewed volume, relative to the continued packing bottleneck and slowed feedlot turnover, went a long ways in explaining some weaker auction prices week to week, despite gains in Cattle futures.

Nationwide, steers and heifers sold steady to $4 /cwt. lower, according to AMS. The exception was $2-$4 higher for heifers weighing 700-900 lbs. in the North Central and South Central regions.

Not counting recently minted away-Apr, Feeder Cattle futures closed an average of 68¢ higher week to week on Friday (10¢ to $1.25 higher), except for $1.62 lower in Mar.

Given ongoing market uncertainty, Andrew P. Griffith, agricultural economist at the University of Tennessee says he continues to receive questions from producers about whether to sell calves now or wait.

“There are very few, if any, acceptable outcomes, given the current environment,” Griffith says, in his weekly market comments. “Determining the true value of the cattle is nearly impossible in this environment, given the risk that the buyer is taking. That is not to say the current marketing environment is any riskier than it was in January, but buyers’ perceptions of risk have changed, which means they are not going to be as willing to bid up for cattle. Not knowing when anything will improve may mean that many producers just have to take their losses today and hope the next round is more profitable.”

It’s also worth noting that cattle are starting to move to market from wheat pasture.

Fed Prices Battle for Steady

Negotiated cash fed cattle prices ended the week across a wide range but generally steady with the previous week with live prices at $95-$100 in the Texas Panhandle, $95-$105 in Kansas and Nebraska and at $93-$100 in the western Corn Belt. Dressed sales were at $150-$160.

Through Thursday, the negotiated five-area daily weighted average direct live steer price was $1.03 less than the previous week at $95.92/cwt. It was 23¢more in the beef at $154.50.

Live Cattle futures closed an average of $2.79 higher week to week on Friday ($1.55 higher at the back to $4.62 higher in spot Jun), not counting newly minted away Oct.

“Cash cattle continue to trade with a strong basis compared to the June Live Cattle futures price, which is trading near $87-$88, which means hedged cattle can still make some money for the feedlot operator,” Griffith says. “The rather large basis points to a disconnect between the cash and futures market at this time, but that disconnect is largely the risk of the unknown. The one known fact is that cattle feeders still have cattle that need to be marketed and they can only slow growth so much.”

Support for the fed cattle market last week included the Executive Order signed by President Trump mandating that meat packing and processing facilities remain open. At the time, estimated daily hog and cattle slaughter were both down about 40% compared to the same time last year, according to Jayson Lusk, noted Purdue University food and agricultural economist, in his blog.

“Plant closures and slow-downs from COVID-19 have reached such levels that it will be impossible for consumers not to notice effects on meat prices or availability in the coming weeks,” Lusk says.

“While there are currently no widespread shortages of beef, we are seeing supply chain disruptions because of plant closures and reductions in the processing speed at many, if not most, beef processing plants in the United States. We thank President Trump for his recognition of the problem and the action he has taken to begin correcting it,” says Colin Woodall chief executive officer of the National Cattlemen’s Beef Association.

“The executive order will help ensure a steady, reliable supply of high-quality U.S. protein-not only for customers in the United States, but across the globe,” says Dan Halstrom, president and CEO of the U.S. Meat Export Federation (USMEF). “The U.S. meat industry is already taking extraordinary steps to ensure worker safety, including COVID-19 testing, temperature checks, use of personal protective equipment and social distancing of employees. But further action is needed to stabilize our meat supply chain, and USMEF greatly appreciates the Trump administration’s prioritization of safe and consistent meat production and processing during this difficult time.”

Under the Executive Order and the authority of the Defense Production Act, USDA will work with meat processing to affirm they will operate in accordance with the CDC and OSHA guidance, and then work with state and local officials to ensure that these plants are allowed to operate, according to U.S. Agriculture Secretary Sonny Perdue.

Of course, there can be a Grand Canyon’s worth of difference between packing and processing plants remaining open and operating at capacity. Until something approaching normalcy returns to beef packing, risk premiums will likely continued to be applied to fed cattle prices and paid for available beef.

“Estimated slaughter under federal inspection for the week was reported at a miniscule 425,000 head, which was 40,000 head less than last week and 248,000 head less than last year,” say AMS analysts. “During this week, fed steer and heifer slaughter was estimated some days at 50,000 head, which would be almost half of what can be done when plants are running at full capacity.”

Choice boxed beef cutout value was $84.08 higher week to week (+28.7%) on Friday at $377.45/cwt. Select was $78.11 higher (+28.0%) at $357.13.

Friday to Friday Change

Weekly Auction Receipts

 

May 1 Auction Direct

Video/net

Total
 

219,200

(+61,100)

75,500

(+15,100)

1,300

(-3,100)

296,900

(+73,100)

 

CME Feeder Index

CME Feeder Index* Apr. 30 Change
  $119.39 –   $0.09

*Thursday-to Thursday for CME Feeder Index

 

Cash Stocker and Feeder

North Central

Steers-Cash May 1 Change
600-700 lbs. $146.92 –    $3.54
700-800 lbs. $134.09 –    $0.23
800-900 lbs. $122.53 –    $2.16

 

South Central

Steers-Cash May 1 Change
500-600 lbs. $149.35 –  $3.77
600-700 lbs. $136.02 –  $1.26
700-800 lbs. $122.17 –  $0.24

 

Southeast

Steers-Cash May 1 Change
400-500 lbs. $145.25 –  $3.81
500-600 lbs. $137.41 –  $2.08
600-700 lbs. $125.66 –  $3.13

(AMS National Weekly Feeder & Stocker Cattle Summary)

 

Wholesale Beef Value

Boxed Beef  (p.m.) May 1 ($/cwt) Change
Choice $377.45 + $84.08
Select $357.13 + $78.11
Ch-Se Spread $20.13 + $5.78

 

Futures

Feeder Cattle  May 1 Change
May $117.825 + $0.375
Aug $127.650 + $1.250
Sep $129.050 + $1.250
Oct $129.900 + $0.975
Nov $130.475 + $0.150
Jan ’21 $129.075 + $0.100
Mar $128.125 –  $1.625
Apr $129.475 n/a

 

Live Cattle   May 1 Change
Jun $87.250 + $4.625
Aug $92.550 + $3.650
Oct $96.800 + $2.325
Dec $100.975 + $2.550
Feb ’21 $105.375 + $2.525
Apr $107.525 + $2.350
Jun $101.250 + $2.050
Aug $101.050 + $1.550
Oct $103.000 n/a

 

Corn  May 1 Change
May $3.114 – $0.042
Jul $3.184 – $0.046
Sep $3.254 – $0.020
Dec $3.366 -0-
Mar ’21 $3.502 +$0.010
May $3.582 +$0.026

 

Oil CME-WTI May 1 Change
Jun $19.78 + $2.84
Jly $22.29 + $1.07
Aug $24.20 + $0.34
Sep $25.69 –  $0.02
Oct $26.79 + $0.02
Nov $27.74 + $0.07

 

Equities

Equity Indexes May 1 Change
Dow Industrial Average  23723.69 –     51.58
NASDAQ   8604.95 –     29.57
S&P 500    2830.71 –       6.03
Dollar (DXY)         98.79 –       1.50
Cattle Current Weekly Highlights—Week ending May 1, 2020 2020-05-03T13:07:05-05:00

Cattle Current Weekly Highlights—Week ending Apr. 24, 2020

Increased auction volume returned this week amid narrowly mixed trade as markets tried to sort through slowing beef production and volatile outside markets, in search of when and how the U.S. economy can reopen.

Nationwide, calves and feeders sold from $2 lower to $2/cwt. higher, according to the Agricultural Marketing Service (AMS).

“Grazing calves have started to see their demand wane this week as turnout dates have come and gone. Bigger feeders seem to have stabilized and found some footing,” say AMS analysts.

Except for 27¢ higher in spot Apr and 47¢ lower in Aug, Feeder Cattle futures closed an average of $1.35 lower week to week on Friday (32¢ lower at the back to $2.15 lower).

“The soft prices (calves and feeders) primarily stem from the cattle market assembly line backing up or bottlenecking at the packer level,” explains Andrew P. Griffith, agricultural economist at the University of Tennessee, in his weekly market comments. “The reduced slaughter levels are backing finished cattle up in the feedlot, which means there is limited pen space for new feeder cattle placements. Since there is little space to put feeder cattle, feedlot managers are not willing to bid very hard to pull those cattle out of the country and into their yards because then they have more mouths to feed and nowhere to go with the animals that need to be leaving. This also puts a strain on the calf market because some stocker and backgrounding operations are at capacity and not able to move their heavy feeders to the feedlot.”

Normally, the monthly Cattle on Feed report published Friday would be hailed as more than bullish with 22.69% fewer placements in March than the previous year, 13.11% more marketings in the month and an on-feed inventory Apr. 1 (11.20 million head) 5.49% less. Of course, the notion of normal left a ways back.

Fed Prices Crumble

The choke point of packing capacity grew last week as COVID-19 sidelined workers. According to AMS, the past three weeks of cattle slaughter account for three of the four sparsest weeks since mandatory price reporting began in 2001.

USDA estimated last week’s cattle slaughter at 469,000 head, which would be 6.6% less than the prior week and 26.9% less than the same week a year ago. Year to date, estimated cattle slaughter is 1.9% less than in 2019 at 10.16 million head.

“A backlog of fed cattle at this level will be impossible to eliminate in a timely fashion, resulting in fed supplies remaining above slaughter capacity for several months,” say AMS analysts. “Anecdotes of fed cattle being pulled ahead for slaughter by two to three weeks–around the beginning to middle of February– have now disintegrated to being two to three weeks behind. That is what happens when daily slaughter for the five-day workweek averages 85,000 head compared to 120,000 head.”

“There are no indications this situation will get better moving through the month of May, but the hope is the economy begins to reopen and health is not an issue,” Griffith says. “These are the only two things this market cares about right now. If these two things do not change, then prices will remain depressed, as will cattle feeders’ attitudes. If the economy does start to reopen, then it will be hitting grilling season square in the nose, which should provide support for finished cattle.”

Negotiated cash fed cattle trade for the week through Friday afternoon was $5-$10 lower on a live basis in the Southern Plains at $100/cwt. in Kansas and $95-$100 in the Texas Panhandle. It was up to $10 lower in Nebraska and the western Corn Belt at $95. Dressed trade was from $8 lower to $10 higher at mostly $160, compared to the previous week’s light test.

For all of the gyrations, five-area daily weighted average direct negotiated prices through Thursday were mainly steady week to week with live steers at $96.95 and dressed steers at $154.27.

Live Cattle futures closed an average of $2.83 lower week to week on Friday ($1.50 lower at the back to $9.67 lower in spot Apr).

On the other side of the trade, wholesale beef values screamed higher as buyers scrambled for declining supplies on the cusp of grilling season.

Choice boxed beef cutout value was $54.38 higher week to week on Friday at $293.37/cwt. Select was $51.82 higher at $279.02.

“At this time, plant reductions are mostly resulting in some product disruptions and perhaps temporary shortages of fresh meat,” explained Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly comments. “Barring a catastrophic combination of plant closures or extended periods of plant disruptions, significant shortages of meat are not expected. However, the combination of processing disruptions and the continuing challenges of supply chain disruptions means that consumers will likely experience limited meat supplies and selection in grocery stores in the coming weeks.”

Friday to Friday Change

Weekly Auction Receipts

 

Apr.24 Auction Direct

Video/net

Total
 

158,100

(+59,300)

60,400

(+11,000)

4,400

(-42,600)

222,900

(+27,700)

 

CME Feeder Index

CME Feeder Index* Apr. 23 Change
  $119.48 +   $3.73

*Thursday-to Thursday for CME Feeder Index

 

Cash Stocker and Feeder

North Central

Steers-Cash Apr. 24 Change
600-700 lbs. $150.46 –    $2.96
700-800 lbs. $134.32 +   $0.31
800-900 lbs. $124.69 +   $1.05

 

South Central

Steers-Cash Apr. 24 Change
500-600 lbs. $153.12 –  $0.02
600-700 lbs. $137.28 + $0.37
700-800 lbs. $122.41 + $1.15

 

Southeast

Steers-Cash Apr. 24 Change
400-500 lbs. $149.06 –  $1.31
500-600 lbs. $139.49 –  $1.44
600-700 lbs. $128.79 + $1.24

(AMS National Weekly Feeder & Stocker Cattle Summary)

 

Wholesale Beef Value

Boxed Beef  (p.m.) Apr.24 ($/cwt) Change
Choice $293.37 + $54.38
Select $279.02 + $51.82
Ch-Se Spread $14.35 + $2.56

 

Futures

Feeder Cattle  Apr. 24 Change
Apr $119.800 + $0.275
May $117.450 –  $1.825
Aug $126.400 –  $2.000
Sep $127.800 –  $2.150
Oct $128.925 –  $1.900
Nov $130.325 –  $0.950
Jan ’21 $128.975 –  $0.325
Mar $129.750 –  $0.325

 

Live Cattle   Apr. 24 Change
Apr $84.975 –  $9.675
Jun $82.625 –  $3.675
Aug $88.900 –  $2.200
Oct $94.475 –  $1.650
Dec $98.425 –  $1.450
Feb ’21 $102.850 –  $1.650
Apr $105.175 –  $1.825
Jun $99.200 –  $1.850
Aug $99.500 –  $1.500

 

Corn  Apr. 24 Change
May $3.156 – $0.066
Jul $3.230 – $0.062
Sep $3.274 – $0.062
Dec $3.366 – $0.068
Mar ’21 $3.492 – $0.060
May $3.556 – $0.064

 

Oil CME-WTI Apr. 24 Change
May $16.94 –  $8.09
Jun $21.22 –  $8.20
Jly $23.86 –  $7.34
Aug $25.71 –  $6.37
Sep $26.77 –  $5.94
Oct $27.67 –  $5.63

 

Equities

Equity Indexes Apr. 24 Change
Dow Industrial Average  23775.27 –  467.22
NASDAQ    8634.52 –     15.62
S&P 500    2836.74 –     37.82
Dollar (DXY)      100.29 +      0.57
Cattle Current Weekly Highlights—Week ending Apr. 24, 2020 2020-04-26T15:42:57-05:00

Cattle Current Weekly Highlights—Week ending Apr. 17, 2020

Calves and feeder cattle traded steady to higher last week as a sense of stability returned to Cattle futures and as hopes grew for the U.S. economy opening sooner rather than later as COVID-19 appeared to plateau.

Steers and heifers traded $5-$10/cwt. higher in the South Central region, according to the Agricultural Marketing Service (AMS). Prices were steady to $4 higher in the North Central and Southeast regions.

Auction receipts continued lighter than normal as some producers hold cattle, hoping markets will improve. Auction volume was less than 100,000 head for the third time in five weeks, according to AMS–about 18.5% less than in 2019 so far this year.

Except for unchanged in spot Apr and 47¢ lower in Aug, Feeder Cattle futures closed an average of $1.14 higher on Friday, compared to the previous Thursday (57¢ to $2.10 higher).

“The recommendation for most producers has been to hold on to cattle and try to lengthen the potential marketing window, and that recommendation holds today,” says Andrew P. Griffith, agricultural economist at the University of Tennessee, in his weekly market comments. “Unfortunately, there are producers that can no longer hold on to cattle, which limits their flexibility. One alternative some producers could consider is shipping cattle to the feedlot. This is a potential solution for producers who can afford to hold on to cattle and do not need the cash flow to sustain business operations. Several producers will need the cash flow, given they have been purchasing feed all winter, and fertilizer bills will be due sooner rather than later. These are the producers who are in the toughest position because there are very few alternatives. Many producers will simply have to make the best decision for today, given the available information. There is no reason to look back a month from now and wish the decision was different.”

Packing Constraints Pressure Fed Cattle Prices

Slowing beef packing and processing, due to COVID-19, pressured negotiated cash fed cattle prices amid a light test.

Live trades were mostly steady in the Southern Plains at mainly $105/cwt. They were steady to $11 lower in the north at $94-$105 in Nebraska and at $95-$105 in the western Corn Belt. Dressed sales were steady to $18 lower at $155-$165 in Nebraska and at $150-$168 in the western Corn Belt.

“The reduction in production means there is not as much need for cash cattle purchases to fill in production holes throughout the week, as many of these facilities are trying to make sure they get all of their contracted cattle processed with a limited labor resource in many instances,” Griffith explains. “What few cattle trade in the cash market will mean lower prices week-over-week, which will play into lower formula prices as well.”

“This predicament could result in a situation not previously seen in the beef industry,” explained Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his Monday market comments. At the time, JBS had closed its Greeley, CO plant for two weeks, according to the Colorado governor’s office.

“It may simply not be possible to slaughter animals in a timely manner,” Peel explained. “Last summer, the loss of a single packing plant in Kansas resulted in relatively little decrease in overall cattle slaughter as production was shifted to other plants; increased Saturday slaughter largely offset the loss of the fire-damaged plant. In the current situation, closure or reduced chain speeds across multiple plants may make it impossible to keep up with slaughter.”

Negotiated cash trade for the week was slightly less than 10,000 head (noon Friday), according to AMS. Those analysts say that would be the sparsest volume since mandatory livestock reporting began in 2001.

Except for 52¢ and 42¢ lower in Oct and Dec, Live Cattle futures closed an average of 90¢ higher from the previous Thursday through Friday (22¢ to $1.92 higher).

Between slower production and anemic returns, feedlot placements are likely to be lower year over year for the next several months, perhaps significantly lower. David Anderson, Extension livestock economist with Texas A&M University provided his outlook for the next Cattle on Feed report, in a webinar hosted by the Texas and Southwestern Cattle Raisers Association Friday afternoon. He sees March placements 20% less than the previous year, March marketings up near 13% and the Apr. 1 cattle on feed inventory being 5% less.

“One of the key factors moving forward will be pasture and range conditions,” say analysts with the Livestock Marketing Information Center, in the latest Livestock Monitor. “Good forage conditions will allow cattle to gain weight outside the feedlot and buy time, which at this point looks like a pivotal hedge/risk management option. If drought becomes an issue, it will force placements into feedlots even if economic conditions for feeding animals is weak. Cattle feeding returns are expected to be negative until fall 2020. Producers selling feeder animals in a drought market will likely face prices sharply below a year ago.”           

On the other side of the equation, reduced production from supply chain disruptions continues to lift wholesale beef values.

Choice boxed beef cutout value was $15.06 higher week to week on Friday at $238.99/cwt. Select was $18.87 higher at $227.20.

“From a consumer perspective, there is concern about meat availability at the local grocery store, while slaughter facilities are trying to manage around employee health and the agricultural producers who are supplying live animals to the facility. When slaughter levels are reduced then animals will start backing up in the feedlot or finishing barn,” says Griffith. “This means cattle feeders and hog finishers have to decide what to do with these animals. Most cattle feeders will feed cattle to heavier weights until they can physically move them to the slaughter facility. This means pen space is not opening up, which backs up feeder cattle and calves.”

Friday to Friday Change

Weekly Auction Receipts

 

Apr. 17 Auction Direct

Video/net

Total
 

98,800

(-141,00)

49,400

(-14,200)

47,000

(+42,400)

195,200

(+14,100)

 

CME Feeder Index

CME Feeder Index* Apr. 16 Change
  $115.75 –  $0.47

*Thursday-to Thursday for CME Feeder Index

 

Cash Stocker and Feeder

North Central

Steers-Cash Apr. 17 Change
600-700 lbs. $153.42 + $10.24
700-800 lbs. $134.01 +   $7.78
800-900 lbs. $123.64 +   $6.47

 

South Central

Steers-Cash Apr. 17 Change
500-600 lbs. $153.14 + $3.49
600-700 lbs. $136.91 –  $1.11
700-800 lbs. $121.26 + $1.03

 

Southeast

Steers-Cash Apr. 17 Change
400-500 lbs. $150.37 –  $0.57
500-600 lbs. $140.93 + $1.77
600-700 lbs. $127.55 –  $0.46

(AMS National Weekly Feeder & Stocker Cattle Summary)

 

Wholesale Beef Value

Boxed Beef  (p.m.) Apr.17 ($/cwt) Change
Choice $238.99 + $15.06
Select $227.20 + $18.87
Ch-Se Spread $11.79 –    $3.81

 

Futures

Feeder Cattle  Apr. 17 Change
Apr $119.525 -0-
May $119.275 + $0.325
Aug $128.400 –  $0.475
Sep $129.950 + $0.575
Oct $130.825 + $0.925
Nov $131.275 + $1.325
Jan ’21 $129.300 + $2.100
Mar $130.075 + $1.625

 

Live Cattle   Apr. 17 Change
Apr $94.650 + $0.650
Jun $86.300 + $1.925
Aug $91.100 + $0.350
Oct $96.125 –  $0.525
Dec $99.975 –  $0.425
Feb ’21 $104.500 + $0.225
Apr $107.000 + $0.675
Jun $101.050 + $1.200
Aug $101.000 + $1.300

 

Corn  Apr. 17 Change
May $3.322 – $0.094
Jul $3.392 – $0.074
Sep $3.336 – $0.080
Dec $3.434 – $0.072
Mar ’21 $3.552 – $0.070
May $3.620 – $0.070

 

Oil CME-WTI Apr. 17 Change
May $18.27 –  $4.49
Jun $25.03 –  $3.79
Jly $29.42 –  $2.58
Aug $31.20 –  $1.92
Sep $32.08 –  $1.50
Oct $32.71 –  $1.25

 

Equities

Equity Indexes Apr. 17 Change
Dow Industrial Average  24242.29 + 523.12
NASDAQ    8650.14 +   496.56
S&P 500    2874.56 +   84.74
Dollar (DXY)         99.72 +      0.16
Cattle Current Weekly Highlights—Week ending Apr. 17, 2020 2020-04-19T16:47:37-05:00

Cattle Current Weekly Highlights—Week ending Apr. 10, 2020

Auction receipts continued lighter last week as sellers of calves and feeder cattle sort their options amid bearish COVID-19 markets.

Feeder steers and heifers sold $3-$7/cwt. lower, according to the Agricultural Marketing Service (AMS).

Even though equity markets surged higher on increasing optimism about COVID-19 reaching a peak in this country, helping to drag Cattle futures higher, it had an overanxious, unrealistic feel.

Feeder Cattle futures closed an average of $9.98 higher week to week on Thursday, ($8.85 to $11.75 higher).

Andrew P. Griffith, agricultural economist at the University of Tennessee emphasizes and illustrates COVID-19 market volatility, in his weekly market comments.

“In three weeks, the price of the May Feeder Cattle contract declined from $135 to less than $110/cwt. It then took just five days for the contract price to jump back over $130. The sudden increase in price was then followed by eight days of struggling prices that actually saw some contracts trade below $105 at the first of this week,” Griffith explains. “The market price will likely continue this rollercoaster ride, but it will not be a fun one for most participants. The plan for most producers should be to remain calm and keep doing what is being done. There is no reason to have any kneejerk reactions at this time.”

Fed Cattle Prices Sag

Negotiated cash fed cattle prices ended up $7 lower on a live basis last week at $105/cwt. in the Southern Plains, according to AMS. Dressed trade in Nebraska and the western Corn Belt was $7-$12 lower at $168. A light test was noted in all regions.

“Last week’s negotiated purchases of slaughter steers and heifers nationwide (28,923 head) was the second smallest volume reported since mandatory reporting started in 2001,” say AMS analysts.“Slaughter levels were lower than in recent weeks as several facilities have been affected by worker attendance. Cattle slaughter under federal inspection was estimated at 536,000 head for the week, 90,000 less than the previous week and 103,000 less than a year ago.”

Live Cattle futures closed an average of $6.33 higher week to week on Thursday, from $1.17 higher in spot Apr to $8.82 higher.

“The strong basis continues to provide cattle feeders incentive to market cattle in a timely manner,” Griffith says, noting the wide discount of futures to cash.

“It looks like cattle trading this week will be trading at least $10/cwt. higher than the April Live Cattle contract, while the June Live Cattle contract is trading $9 lower than the April price. It is hard to imagine live cattle cash trade dipping into the mid to upper $80 area in the next two months, but that is what the futures market is predicting,” Griffith says.

Boxed Beef prices continued to decline. Choice boxed beef cutout value was $6.51 lower week to week on Friday at $223.93/cwt. Select was $7.51 lower at $208.33.

“One would expect these prices to continue to moderate in the coming weeks as the beef supply chain continues to adjust to the current situation of more retail beef buying and less food service purchases,” Griffith says. “However, the change in consumption patterns of retail versus food service is not the only hurdle to overcome. There have been several packing facilities that are reducing production or shutting down due to the coronavirus, which will most likely reduce production.”

Smithfield Foods, Inc. announced Sunday that its Sioux Falls, SD facility–one of the largest pork processing facilities in the U.S.–will remain closed until further notice.

“The closure of this facility, combined with a growing list of other protein plants that have shuttered across our industry, is pushing our country perilously close to the edge in terms of our meat supply,” explained Kenneth M. Sullivan, Smithfield president and CEO.

According to various news sources, JBS is closing its beef packing plant in Greeley, CO through Tuesday of this week, for deep cleaning facilities and screening new workers. Reportedly, 36 JBS workers tested positive for COVID-19 infections through the end of last week.

“Unfortunately, COVID-19 cases are now ubiquitous across our country. The virus is afflicting communities everywhere. The agriculture and food sectors have not been immune,” Sullivan explained. “Numerous plants across the country have COVID-19 positive employees. We have continued to run our facilities for one reason: to sustain our nation’s food supply during this pandemic. We believe it is our obligation to help feed the country, now more than ever. We have a stark choice as a nation: we are either going to produce food or not, even in the face of COVID-19.”

Friday to Friday Change

Weekly Auction Receipts

 

Apr. 10 Auction Direct

Video/net

Total
 

112,900

(-66,200)

63,600

(+42,100)

4,600

(+4,100)

181,100

(-20,000)

 

CME Feeder Index

CME Feeder Index* Apr. 8 Change
  $116.79 –  $9.30

*Thursday-to Thursday for CME Feeder Index

 

Cash Stocker and Feeder

North Central

Steers-Cash Apr. 10 Change
600-700 lbs. $143.18 –  $5.42
700-800 lbs. $126.23 –  $6.33
800-900 lbs. $117.17 –  $3.53

 

South Central

Steers-Cash Apr. 10 Change
500-600 lbs. $149.65 –  $6.64
600-700 lbs. $138.02 –  $4.15
700-800 lbs. $120.23 –  $2.50

 

Southeast

Steers-Cash Apr. 10 Change
400-500 lbs. $150.94 –  $5.07
500-600 lbs. $139.16 –  $5.48
600-700 lbs. $128.01 –  $3.39

(AMS National Weekly Feeder & Stocker Cattle Summary)

 

Wholesale Beef Value

Boxed Beef  (p.m.) Apr.10 ($/cwt) Change
Choice $223.93 –  $6.51
Select $208.33 –  $7.51
Ch-Se Spread $15.60 + $1.00

 

Futures

Feeder Cattle  Apr. 9 Change
Apr $119.525 + $8.850
May $118.950 + $7.300
Aug $128.875 + $11.225
Sep $129.375 + $11.525
Oct $129.900 + $11.750
Nov $129.950 + $11.275
Jan ’21 $127.200 + $8.950
Mar $128.450 + $8.950

 

Live Cattle   Apr. 9 Change
Apr $94.000 + $1.175
Jun $84.375 + $1.300
Aug $90.750 + $6.350
Oct $96.650 + $8.700
Dec $100.300 + $8.825
Feb ’21 $104.275 + $8.200
Apr $106.325 + $8.175
Jun $99.850 + $7.550
Aug $99.700 + $6.700

 

Corn  Apr. 9 Change
May $3.316 – $0.018
Jul $3.366 – $0.018
Sep $3.416 – $0.004
Dec $3.506 +$0.010
Mar ’21 $3.622 +$0.010
May $3.690 +$0.014

 

Oil CME-WTI Apr. 9 Change
May $22.76 –  $2.56
Jun $28.82 + $0.77
Jly $32.00 + $2.08
Aug $33.12 + $2.21
Sep $33.58 + $2.08
Oct $33.96 + $1.96

 

Equities

Equity Indexes Apr. 9 Change
Dow Industrial Average  23719.37 + 2305.93
NASDAQ    8153.58 +   666.27
S&P 500    2789.82 +   262.92
Dollar (DXY)         99.56 –         0.54
Cattle Current Weekly Highlights—Week ending Apr. 10, 2020 2020-04-12T16:27:02-05:00

Cattle Current Weekly Highlights—Week ending Apr. 3, 2020

Seemingly bottomless Cattle futures prices cast a pall over cash markets last week, amid continued COVID-19 uncertainty.

Feeder steers sold $5-$17/cwt. lower in the North Central and South Central areas, according to the Agricultural Marketing Service (AMS). Feeder heifers in the same regions traded $7-$15 lower. Calves in the Southeast sold from steady to $5 higher early in the week to steady to $5 lower later in the week.

“Prices are tracking $10-$20 lower than a year ago,” say AMS analysts. “Demand was reported as moderate to good in auctions this week as buyers did want to procure cattle, just at lower price levels. Some backgrounders who sold yearlings did not recoup the first cost of those calves.”

Feeder Cattle futures closed an average of $11.36 lower week to week on Friday, ($7.45 lower at the back to $12.82 lower toward the front).

“Maybe even worse than the fact that prices (cash) are struggling is the extreme volatility in the futures market,” says Andrew P. Griffith, agricultural economist at the University of Tennessee, in his weekly market comments. “In the past six weeks, the April Feeder Cattle futures contract traded from $142/cwt. down to $108. It then traded back over $130 before going back under $110. Such volatility makes it difficult for anyone to physically want to trade cattle.”

The AMS reporter on hand for this week’s sale at Green City Livestock Auction in Missouri aptly summed up the current market situation: “Volatile doesn’t seem a strong enough word to describe the situation anymore, as daily limit up and down moves at the CME are almost expected…Those big moves take all the confidence out of a cash market and make it difficult for producers to decide when to turn loose as well as for buyers to figure what one is worth.”

Fed Cattle Prices Sink

Negotiated cash fed cattle trade remained largely undeveloped through Friday afternoon. However, according to the Agricultural Marketing Service (AMS), there was a light test of live sales in all regions Wednesday at mostly $112/cwt. and at $175-$180 in the beef. That was $6-$8 less than last week on a live basis and $10-$15 less dressed.

“Last week’s prices were wildly higher and this week’s prices were wildly lower,” Griffith says. “The unknowns of the coronavirus are enough to result in huge price swings in the market but those movements would still imply market efficiency. Where the inefficiency comes in is when government officials begin telling people what to do and how to act…Technically, the market is still acting as efficiently as it can, but there are cattle producers being caught in the whiplash.”

Live Cattle futures closed an average of $6.47 lower week to week on Friday, from $4.00 lower at the back to $12.62 lower in spot Apr.

“A lot more market volatility is likely to come as the effects of COVID-19 ripple through our economy,” says David Anderson, Extension livestock economist at Texas A&M University, in the latest issue of In the Cattle Markets. “While we come to grips with all the demand implications it’s worth recognizing that it is occurring in the time of cyclically peak beef supplies.”

With two days left in the first quarter, Anderson explained, year over year: fed steer and heifer slaughter was up 5.4%; cow and bull slaughter was 4.5% higher; average steer dressed weights were 22.5 lbs. heavier; average heifer dressed weights were 13.7 lbs. heavier; cow weights were up 2.6 lbs. 

Wholesale beef values sank lower as it appeared the initial onslaught of increased retail demand was coming to an end.

Choice boxed beef cutout value was $22.40 lower week to week on Friday at $230.44/cwt. Select was $26.54 lower at $215.84.

“More and more states are ordering residents to stay at home, which means more meals are being prepared and consumed at home instead of away from home. One would think this change would influence meat consumption and meat disappearance,” Griffith says. “Boxed beef prices are still extremely strong, but they are likely to decline further and the extent of the price decline will likely depend on how long the current situation persists. Things are likely to get worse before they get better.”

Feed Prices Appear Friendly

Corn planted area for all purposes in 2020 is estimated at 97.0 million acres, which would be 8% more or 7.29 million acres more than last year. That’s according to USDA’s Prospective Plantings report. If realized, this will be the highest planted acreage since 2012, according to the National Agricultural Statistics Service. Acreage increases from last year of 800,000 or more are expected in Indiana, Illinois, Ohio, and South Dakota.

“Weather delays may change that number to the downside; reduced demand from ethanol will also be a contributing factor,” say AMS analysts. “As expected, U.S. ethanol production dramatically declined last week and reported the largest week-to-week decline ever recorded. Ethanol blender demand decreased again this week and is the lowest blender demand on record since they started collecting the data in 2010.”

As demand for oil declines and as oil prices declined further with the price war between the U.S. and Russia, ethanol demand follows suit, pressuring corn prices.

 

Friday to Friday Change

Weekly Auction Receipts

 

Apr. 3 Auction Direct

Video/net

Total
 

179,100

(+91,900)

21,500

(-500)

500

(-3,700)

201,100

(+87,700)

 

CME Feeder Index

CME Feeder Index* Apr. 2 Change
  $121.07 –  $9.37

*Thursday-to Thursday for CME Feeder Index

 

Cash Stocker and Feeder

North Central

Steers-Cash Apr. 3 Change
600-700 lbs. $148.60 –  $7.06
700-800 lbs. $132.56 –  $10.62
800-900 lbs. $120.70 –  $12.35

 

South Central

Steers-Cash Apr. 3 Change
500-600 lbs. $156.29 –  $5.01
600-700 lbs. $142.17 –  $3.63
700-800 lbs. $122.73 –  $14.31

 

Southeast

Steers-Cash Apr. 3 Change
400-500 lbs. $156.01 –  $2.21
500-600 lbs. $144.64 + $0.41
600-700 lbs. $131.40 –  $0.97

(AMS National Weekly Feeder & Stocker Cattle Summary)

 

Wholesale Beef Value

Boxed Beef  (p.m.) Apr. 3 ($/cwt) Change
Choice $230.44 –  $22.40
Select $215.84 –  $26.54
Ch-Se Spread $14.60 + $4.14

 

Futures

Feeder Cattle  Apr. 3 Change
Apr $108.250 –  $12.350
May $108.100 –  $12.825
Aug $114.425 –  $12.675
Sep $115.800 –  $11.775
Oct $116.900 –  $11.625
Nov $117.550 –  $11.250
Jan ’21 $117.350 –  $10.900
Mar $120.250 –  $7.450

 

Live Cattle   Apr. 3 Change
Apr $88.325 –  $12.625
Jun $80.850 –  $8.575
Aug $84.300 –  $6.150
Oct $88.500 –  $5.825
Dec $92.350 –  $5.975
Feb ’21 $97.025 –  $5.600
Apr $99.950 –  $4.550
Jun $93.450 –  $4.975
Aug $93.000 –  $4.000

 

Corn  Apr. 3 Change
May $3.306 – $0.154
Jul $3.366 – $0.150
Sep $3.422 – $0.138
Dec $3.506 – $0.136
Mar ’21 $3.620 – $0.120
May $3.682 – $0.102

 

Oil CME-WTI Apr. 3 Change
May $28.34 + $6.83
Jun $30.90 + $5.75
Jly $32.33 + $4.20
Aug $33.00 + $2.95
Sep $33.37 + $2.07
Oct $33.62 + $1.48

 

Equities

Equity Indexes Apr. 3 Change
Dow Industrial Average  21052.53 –   584.25
NASDAQ    7373.08 –   129.30
S&P 500    2488.65 –     52.82
Dollar (DXY)      100.68 +    2.375
Cattle Current Weekly Highlights—Week ending Apr. 3, 2020 2020-04-07T14:22:07-05:00

Cattle Current Weekly Highlights—Week ending Mar. 27, 2020

Oversold conditions and atypically high wholesale beef prices, tied to the shift in more consumers eating at home, helped lift Cattle futures and negotiated cash fed cattle prices last week. In turn, cash calf and feeder cattle prices found some traction.

Steers and heifers sold $8-$15/cwt. higher, according to the Agricultural marketing Service (AMS). Auction receipts continued sparser than normal, stalled by understandable producer caution.

“Much of this stronger undertone is likely associated with the strong week that feeder cattle futures experienced and the strong week for live cattle sales,” explains Andrew P. Griffith, agricultural economist the University of Tennessee, in his weekly market comments.

Feeder Cattle futures closed an average of $2.12 higher week to week on Friday, not counting recently minted away Mar (65¢ higher at the back to $3.30 higher).

Except for 10¢ and 30¢ lower in two contracts, Live Cattle futures closed an average of 54¢ higher week to week on Friday, from 12¢ higher to $2.30 higher in spot Apr.

Extreme volatility continued, though, with limit-up and expanded limit-up moves early in the week and then limit-down and near-limit down moves toward the end of the week.

“Despite the stronger prices, the volatility in the futures market will keep many cattle producers on the sidelines as it should,” Griffith says. “…Market volatility is not a big issue for producers who do not have anything that needs to be marketed immediately, because they are only experiencing a loss in value of a commodity. Alternatively, those who must market cattle in the near term may actually experience that loss in value. As an example, a person with a load of feeder cattle two weeks ago may have been offered $10-$15/cwt. less for those animals than they may have been offered this week. That equates to a $5,000 to $7,500 difference in value over a two-week period on a 50,000 lb. load. The situation cattle producers are traversing right now is the exact reason price risk management should be included in a producer’s business plan.”

Fed Cattle Prices Climb

Wholesale beef values continued extraordinarily high last week, relative to supplies and seasonal expectations.

Choice boxed beef cutout value was 91¢ lower week to week on Friday at $252.84/cwt. Select was $2.21 higher at $242.38.

Wholesale price strength helped boost fed cattle prices. Week to week through Thursday, the five-area direct fed steer price was $9.64/cwt. higher on a live basis at $119.44. It was $16.20 higher in the beef at $189.31.

Regionally, negotiated cash fed cattle prices were mostly $8-$10 higher on a live basis at $118-$120/cwt. in the Southern Plains and $119-120 up north. Dressed sales were $15-$20 higher at $190.

“Slaughter cow prices skyrocketed early in the  week at auctions nationwide,” say AMS analysts. “Demand for boneless lean ground beef continued to move higher as cow plants needed product to move through the marketing chain to fill ground beef orders place by retailers. With most restaurants nationwide either closed or only filling carry out orders, grocery stores have had trouble finding enough protein products to fully stock their cases.”  

Earlier in the week, Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, explained in his weekly market comments, “Disruptions in normal activities due to COVID-19 have produced a surge in at-home food demand. Recent reports indicate a 77% year-over-year increase in grocery meat sales in mid-March. The spike in grocery demand overwhelmed the retail meat supply chain, resulting in temporary shortages of meat in many grocery stores. The shortages are due to the tremendous logistical challenges of shifting meat supplies from food service channels to retail grocery channels.”

Peel emphasized for consumers that there is no shortage of beef or other meats. Beef, pork and poultry production was record large in the first quarter and is projected to be record large this year at 109.3 billion lbs., 4.3% more than last year.

“Beef production is projected to be 1.9% higher year over year in 2020, totaling 27.7 billion lbs.,” according to Peel. “Increased beef production is concentrated in the first half of the year. Total steer and heifer slaughter is up 3.9% year over year for the year to date. Steer carcass weights for the year to date are up over 21 lbs. year over year with heifer carcass weights up over 12 lbs. First-quarter beef production is estimated to increase 6.6% over last year.”

Uncertain domestic demand in tandem with increasing beef supplies helped pressure Live Cattle futures at the end of the week.

As Brenda Boetel, livestock economist at the University of Wisconsin-River Falls explained in the latest issue of In the Cattle Markets, “There is no evidence that consumers are eating more beef currently, and as such the demand will likely decrease significantly once the supply system catches up with the rush demand of the last few weeks.”

 

Friday to Friday Change

Weekly Auction Receipts

 

Mar. 27 Auction Direct

Video/net

Total
 

87,200

(+28,200)

22,000

(+11,800)

4,200

(-12,300)

113,400

(+27,700)

 

CME Feeder Index

CME Feeder Index* Mar. 26 Change
  $130.44 + $9.06

*Thursday-to Thursday for CME Feeder Index

 

Cash Stocker and Feeder

North Central

Steers-Cash Mar. 27 Change
600-700 lbs. $155.66 + $9.05
700-800 lbs. $143.18 + $10.05
800-900 lbs. $133.05 + $7.41

 

South Central

Steers-Cash Mar. 27 Change
500-600 lbs. $161.30 + $15.04
600-700 lbs. $145.80 + $11.26
700-800 lbs. $137.04 + $16.31

 

Southeast

Steers-Cash Mar. 27 Change
400-500 lbs. $158.22 + $14.08
500-600 lbs. $144.15 + $10.65
600-700 lbs. $132.37 + $10.14

(AMS National Weekly Feeder & Stocker Cattle Summary)

 

Wholesale Beef Value

Boxed Beef  (p.m.) Mar. 27 ($/cwt) Change
Choice $252.84 –  $0.91
Select $242.38 + $2.21
Ch-Se Spread $10.46 –  $3.12

 

Futures

Feeder Cattle  Mar. 27 Change
Apr $120.600 + $1.775
May $120.925 + $2.675
Aug $127.100 + $3.300
Sep $127.575 + $2.700
Oct $128.525 + $2.450
Nov $128.800 + $1.300
Jan ’21 $128.250 + $0.650
Mar $127.700 n/a

 

Live Cattle   Mar. 27 Change
Apr $100.950 + $2.300
Jun $89.425 –  $0.100
Aug $90.450 –  $0.300
Oct $94.325 + $0.325
Dec $98.325 + $0.125
Feb ’21 $102.625 + $0.225
Apr $104.500 + $0.125
Jun $98.425 + $0.300
Aug $97.000 + $0.350

 

Corn  Mar. 27 Change
May $3.460 – $0.024
Jul $3.516 – $0.022
Sep $3.560 – $0.014
Dec $3.642 – $0.010
Mar ’21 $3.740 – $0.008
May $3.784 – $0.010

 

Oil CME-WTI Mar. 27 Change
May $21.51 –  $1.12
Jun $25.15 + $0.79
Jly $28.13 + $2.20
Aug $30.05 + $2.95
Sep $31.30 + $3.28
Oct $32.14 + $3.34

 

Equities

Equity Indexes Mar. 27 Change
Dow Industrial Average  21636.78 +2463.30
NASDAQ    7502.38 +  622.86
S&P 500    2541.47 +  236.55
Dollar (DXY)      98.31 –        4.51
Cattle Current Weekly Highlights—Week ending Mar. 27, 2020 2020-03-29T17:47:57-05:00

Cattle Current Weekly Highlights—Week ending Mar. 20, 2020

Market carnage and uncertainty spawned by the COVID-19 panic prompted lots of calf and feeder cattle sellers last to hold cattle or offer fewer than they would otherwise. In fact, auction receipts were the least for a non-holiday week since the current report format was established in 2002, according to the Agricultural Marketing Service (AMS).

There were some week-to-week price gains for some classes at some auctions, but according to AMS, overall, steers and heifers sold $5-$10/cwt. lower, with instances of $12-$15 lower.

“It is likely feeder cattle receipts will continue to be light next week as cattle producers attempt to wait out the market suppression,” says Andrew P. Griffith, agricultural economist at the University of Tennessee, in his weekly market comments. “The risk in this is that there is no way to know how short or how long market prices will remain under pressure…The best advice today is for producers to keep one eye on the market and the other eye on national and world efforts to mitigate the length of this pandemic.”

Thanks to a late-week rally, supported by the extraordinary increase in wholesale beef values, Cattle futures closed higher week to week for the first time in five weeks.

Feeder Cattle futures closed an average of $4.47 higher week to week on Friday (2.60 higher to $7.72 higher in spot Mar).

Except for 22¢ and 50¢ lower in two contracts, Live Cattle futures closed an average of $1.06 higher week to week on Friday 42¢ higher to $3.07 higher in spot Apr).

The monthly Cattle on Feed report published Friday should be supportive, mirroring pre-report expectations. February placements for feedlots with 1,000 head or more capacity were 1.71 million head, which was 7.91% less (-147,000 head) than the previous year. Marketings in February of 1.77 million head were 5.47% more (+92,000 head) than the previous year. The on-feed inventory Mar. 1 of 11.81 million head was 0.18% more (+21,000 head), compared to a year earlier.

Fed Cattle Prices Firm

When all was said and done, negotiated cash fed cattle trade last week was steady to $2 higher on a live basis at $110-$112/cwt. and fully steady in the beef at $175.

According to the Texas Cattle Feeders Association on Friday, “Tyson announced this afternoon that for all fed cattle harvested next week, they will make a one-time assistance payment to cattle feeders of $5/cwt. live and $7.94/cwt. dressed.”

Choice boxed beef cutout value was $45.61 higher week to week on Friday at $253.75/cwt. Select was $38.19 higher at $240.17.

That’s the fastest rally on record, according to AMS analysts.

“As businesses and schools continue to close, along with restaurants, consumers swarmed the meat cases to stockpile protein items. Reports of empty meat cases started last week, all over the country,” AMS analysts explain. “The magnitude of the buying caught retailers by surprise, and as this consumer-driven market rages on, it appears that the cutout will be volatile in the short term.”

“There will be a variety of impacts on markets for specific beef products,” explained Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly market comments. “For example, increased demand for ground beef has resulted in local shortages of product at grocery stores, while reduced restaurant demand may result in weaker middle meat sales. We can expect significant disruptions and stress on beef supply chains given the consumption changes associated with requirements to control COVID-19.”

Should the labor forces of beef packing, processing, or shipping be directly impacted by COVID-19, Peel says supply chain disruptions could be more significant.

“The dynamics of the beef market have changed the past couple of weeks, which is what is driving market prices,” Griffith explains. “Restaurants and food retailers demand different cuts; packers have had to adjust to meet these needs because of the change in consumption patterns across the nation. Thus, packers are taking advantage of what the market is offering them at this time. The market is offering lower cattle prices and strong prices for beef cuts that go to grocery stores. The market is not offering as much value for beef cuts that would typically enter the restaurant business. The market will adjust as more and more unknowns are resolved.”

Equity Markets Continue Lower

Despite fiscal stimulus announced so far, U.S. financial markets continue to plunge lower.

Week to week on Friday, the Dow Jones Industrial Average closed 4,012 points lower. The broader S&P 500 closed 406 points lower.

Keep in mind, the collapse in crude oil prices adds to the overall economic weakness. Although already under pressure from softer demand and plentiful supplies, OPEC added undue and unexpected price pressure when it decided to increase production in retaliation against Russia.

Week to week on Friday, West Texas Intermediate Crude Oil futures on the CME were an average of $7.87 lower through the front six contracts.

“The uncertainty in the cattle market and most other markets persist as market participants try to determine the true impact from coronavirus. As more and more information becomes available, the market will continue to try to find an equilibrium point,” Griffith says. “The market will eventually find that equilibrium. However, it may take longer than some expect because market participants are treading through unfamiliar and murky water.”

 

Friday to Friday Change

Weekly Auction Receipts

 

Mar. 20 Auction Direct

Video/net

Total
 

59,000

(-139,200)

10,200

(-11,800)

16,500

(+14,600)

85,700

(-135,400)

 

CME Feeder Index

CME Feeder Index* Mar. 19 Change
  $121.38 –  $6.53

*Thursday-to Thursday for CME Feeder Index

 

Cash Stocker and Feeder

North Central

Steers-Cash Mar. 20 Change
600-700 lbs. $146.61 –  $4.89
700-800 lbs. $133.13 –  $2.75
800-900 lbs. $125.64 –  $0.21

 

South Central

Steers-Cash Mar. 20 Change
500-600 lbs. $146.26 –  $11.93
600-700 lbs. $134.54 –  $9.31
700-800 lbs. $120.73 –  $5.46

 

Southeast

Steers-Cash Mar. 20 Change
400-500 lbs. $144.14 –  $11.31
500-600 lbs. $133.50 –  $9.63
600-700 lbs. $122.23 –  $10.11

(AMS National Weekly Feeder & Stocker Cattle Summary)

 

Wholesale Beef Value

Boxed Beef  (p.m.) Mar. 20 ($/cwt) Change
Choice $253.75 + $45.61
Select $240.17 + $38.19
Ch-Se Spread $13.58 + $7.42

 

Futures

Feeder Cattle  Mar. 20 Change
Mar $120.725 + $7.725
Apr $118.825 + $6.225
May $118.250 + $3.775
Aug $123.800 + $2.625
Sep $124.875 + $2.600
Oct $126.075 + $3.150
Nov $127.500 + $4.250
Jan ’21 $127.600 + $5.450

 

Live Cattle   Mar. 20 Change
Apr $98.650 + $3.075
Jun $89.525 –  $0.225
Aug $90.750 + $1.575
Oct $94.000 + $0.200
Dec $98.200 –  $0.500
Feb ’21 $102.400 + $0.425
Apr $104.375 + $0.575
Jun $98.125 + $0.575
Aug $96.650 + $1.000

 

Corn  Mar. 20 Change
May $3.436 – $0.220
Jul $3.494 – $0.190
Sep $3.546 – $0.130
Dec $3.632 – $0.098
Mar ’21 $3.732 – $0.094
May $3.774 – $0.100

 

Oil CME-WTI Mar. 20 Change
Apr $22.43 –  $9.30
May $22.63 –  $9.48
Jun $24.36 –  $8.23
Jly $25.93 –  $7.22
Aug $27.10 –  $6.64
Sep $28.02 –  $6.34

 

Equities

Equity Indexes Mar. 20 Change
Dow Industrial Average  19173.18 –  4012.44
NASDAQ    6879.52 –    995.36
S&P 500    2304.92 –    406.10
Dollar (DXY)      102.00 +        3.31
Cattle Current Weekly Highlights—Week ending Mar. 20, 2020 2020-03-21T19:01:54-05:00

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