Negotiated cash fed cattle trade was mostly inactive on very light demand in all major cattle feeding regions through Friday afternoon, according to the Agricultural Marketing Service.
Last week, live prices were generally $2 lower in the Southern Plains at $108/cwt., and $4-$5 lower in the western Corn Belt at $104-$105. Dressed trade was $4 lower in the western Corn Belt at $168. The previous week, prices in Nebraska were at $110 on a live basis and at $172-$174 in the beef.
Through Thursday, the weighted average five-area direct fed steer price was $106.86/cwt., which was $2.91 less than the previous week and $11.95 less than the previous year. The average steer price in the beef was $167.80, which was $4.49 less than the previous week and $20.31 less than the same time last year.
Estimated total cattle slaughter last week of 665,000 head was 2,000 head less than the previous week and 11,000 head fewer than the same week last year. Total estimated year-to-date cattle slaughter of 30.63 million head is 1.07 million less (-3.38%) than a year earlier.
Estimated beef production last week of 559 million lbs. was 800,000 less than the previous week. Estimated year-to-date beef production of 25.46 billion lbs. was 227 million lbs. less (-0.88 %) than the same time last year.
Choice was 71¢ lower at $213.88/cwt. Select was $2.76 lower at $195.71.
Cattle futures closed higher Friday, extending gains from the previous session as open interest creeps higher, perhaps emboldened by an apparent top in year-over year carcass weights and demand promise with FDA issuing emergency use authorization for the first COVID-19 vaccine (see below).
Live Cattle futures closed an average of 95¢ higher, from 42¢ to $1.40 higher.
Feeder Cattle futures closed an average of $1.01 higher, from 45¢ higher toward the back to $2.12 higher in spot Jan.
Corn futures closed mostly 1¢ to 2¢ higher.
Soybean futures closed mostly 5¢ to 7¢ higher.
Major U.S. financial indices closed narrowly mixed again Friday, amid continued uncertainty regarding economic stimulus talks.
Positive news came with the U.S. Food and Drug Administration (FDA) issuing the first emergency use authorization for a vaccine for the prevention of coronavirus disease 2019 (COVID-19) caused by severe acute respiratory syndrome coronavirus 2 (SARS-CoV-2) in individuals 16 years of age and older. The emergency use authorization allows the Pfizer-BioNTech COVID-19 Vaccine to be distributed in the U.S.
“While not an FDA approval, today’s emergency use authorization of the Pfizer-BioNTech COVID-19 Vaccine holds the promise to alter the course of this pandemic in the United States,” says Peter Marks, M.D., Ph.D., Director of the FDA’s Center for Biologics Evaluation and Research. “With science guiding our decision-making, the available safety and effectiveness data support the authorization of the Pfizer-BioNTech COVID-19 Vaccine because the vaccine’s known and potential benefits clearly outweigh its known and potential risks. The data provided by the sponsor have met the FDA’s expectations as conveyed in our June and October guidance documents.”
The Dow Jones Industrial Average closed 47 points higher. The S&P 500 closed 4 points lower. The NASDAQ was down 27 points.
“The virus calls the shots. The current resurgence means we’re probably in for a tough winter, with a slowdown in economic growth. If the virus is under control by the end of the summer, we’ll have brisk growth with falling unemployment by the fall,” says Larry DeBoer, an agricultural economist at Purdue University.
In his general economic outlook, part of the Purdue Ag Econ Report (PAER) Annual Outlook, DeBoer details pandemic-driven economic impacts thus far and expectations for the next 12 months. Among the highlights:
**Real GDP was $670 billion smaller in the third quarter 2020 compared to the fourth quarter 2019.
“Two-thirds of this decline was consumption spending, and all of that was due to services,” DeBoer explains. “Consumption spending is the driver of this recession. Concern about social consumption is the driver of that drop. And the virus is the driver of that concern. The economy cannot fully recover until the virus is controlled.”
**“Investment spending is down just 2.9% since the fourth quarter. It was down 29% in the depths of the Great Recession,” DeBoer says. “Investment has held up this time. Investment in business structures has fallen by 15%, but business equipment is down only 2%. Perhaps businesses are retooling to enable social distancing. Home construction is up 5%.”
**“Even though private income fell at an annual rate of 12% from February to April, CARES Act benefits increased total personal income by 10%. This helped support consumer spending,” DeBoer explains. “Expect the inflation rate to rebound to 1.8% during the 12-months of 2021.”
**“As the vaccine rolls out and confidence rises, the accumulated savings, low interest rates, modest gas prices and added government aid should allow consumers to act. Fourth quarter consumer spending growth is likely to be high,” DeBoer says.
**“Add up consumers, business investment, government purchases and trade, and real GDP should grow about 4.3% in 2021. That would be the highest growth rate since 1999,” DeBoer explains. “Expect the unemployment rate to be around 5.6% by this time next year.”
In the meantime, DeBoer says, “The resurgence of the virus and the expiration of many CARES Act provisions at the end of the year may stall our recovery in this quarter and the next.”