Cattle futures closed mixed on Wednesday, mostly higher for Feeder Cattle. Support included higher wholesale beef values, tied to slowing beef production, due to COVID-19. Based on futures prices the last couple of days, much of that appears to have been priced into the market previously.
Other than unchanged to 50¢ lower in three contracts, Live Cattle futures closed an average of 54¢ higher (7¢ higher at the back to $1.02 higher in the front two contracts).
Other than 60¢ lower in spot Apr, Feeder Cattle futures closed an average of 95¢ higher (37¢ to $1.50 higher).
Wholesale beef values were sharply higher on good demand and light offerings, according to the Agricultural Marketing Service.
Choice boxed beef cutout value was $3.86 higher Wednesday afternoon at $230.53/cwt. Select was $6.45 higher at $222.22.
Corn futures closed 3¢ to 6¢ lower through Jly ’21 and then 2¢ lower.
Soybean futures closed mostly 5¢ to 9¢ lower.
Major U.S. financial indices closed lower Wednesday with early quantification of domestic COVID-19 economic impact.
Advance estimates of U.S. retail and food services sales for March 2020, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, declined 8.7% from February to March at $483.1 billion, according to the U.S. Commerce Department. That was 6.2% less compared to March of last year.
Crude oil prices also continued lower, with West Texas Intermediate on the CME closing $1.36 to $2.30 lower across the front six months starting in Jun. Spot May closed at $19.87.
The Dow Jones Industrial Average closed 445 points lower. The S&P 500 closed 62 points lower. The NASDAQ closed 122 points lower.
More broadly, the International Monetary Fund, in the latest World Economic Outlook, projects global economic growth at -3% this year. That’s 6.3% less than the January outlook and assumes the pandemic and containment requirements peak in the second quarter for most countries.
“This makes the Great Lockdown the worst recession since the Great Depression, and far worse than the Global Financial Crisis,” according to IMF. “…activity is projected to remain below the level we had projected for 2021, before the virus hit. The cumulative loss to global GDP over 2020 and 2021 from the pandemic crisis could be around $9 trillion, greater than the economies of Japan and Germany, combined.”
Economic losses in the cattle industry, stemming from COVID-19, will reach $13.6 billion, according to a study–Economic Damages to the U.S. Beef Cattle Industry Due to COVID-19–conducted by a team of industry-leading agricultural economists led by Derrell Peel, Breedlove Professor of Agribusiness and Extension livestock marketing specialist at Oklahoma State University. It was commissioned by the National Cattlemen’s Beef Association (NCBA) to assist USDA in determining how best to allocate CARES Act relief funds to cattle producers.
“This study confirms that cattle producers have suffered massive economic damage as a result of the COVID-19 outbreak and those losses will continue to mount for years to come, driving many producers to the brink of collapse and beyond if relief funds aren’t made available soon,” says NCBA CEO Colin Woodall. “This study also clearly illustrates the fact that while the relief funds provided by Congress were a good first step, there remains a massive need for more funding to be allocated as soon as members of Congress reconvene.”
Woodall pointed out that relief funds that were meant to provide aid directly to cattle producers were divided among multiple commodities, many of which already have government programs in place to support production. However, cattle producers have always maintained their independence from government programs, and most operate today without the safety net others enjoy.
“It’s only because of the extraordinary circumstances we face today that cattle producers need relief. While we appreciate the many members of Congress who supported the cattle industry and ensured cattle producers were eligible for relief funds, we need these same members to do more to make certain every cattle producer who needs relief can access funding. That’s why we’re calling today for additional funds to be made available specifically for cattlemen and women,” said Woodall.
Cow-calf producers will be impacted the most, with COVID-19-related losses estimated at $3.7 billion, or $111.91 per head for each mature breeding animal in the United States. Without offsetting relief payments, those losses could increase by $135.24 per mature breeding animal, for an additional impact totaling $4.45 billion in the coming years.
Economic losses for stockers and backgrounders were estimated at $159.98 per head, for a total economic impact of $2.5 billion in 2020.
Losses in the cattle feeding sector were estimated at $3.0 billion or $205.96 per head.
Researchers included: Derrell S. Peel, Oklahoma State University; Dustin Aherin, Rabobank; Randy Blach, CattleFax; Kenneth Burdine, University of Kentucky; Don Close, Rabobank; Amy Hagerman, Oklahoma State University; Josh Maples, Mississippi State University; James Robb, Livestock Marketing Information Center; and Glynn Tonsor, Kansas State University.