Negotiated cash fed cattle trade ranged from mostly inactive on light demand to a standstill in all major cattle feeding regions through Friday afternoon, according to the Agricultural Marketing Service.
Last week, live prices were $2 lower in Kansas at $138/cwt. and $4 lower in the Texas Panhandle at $136. Dressed prices were $2 lower in Nebraska at $218.
Estimated total cattle slaughter last week was 657,000 head, which was 11,000 head fewer than the prior week. Year-to-date estimated total cattle slaughter of 32.17 million head was 886,000 head more (+2.8%) than the same period last year. Estimated year-to-date before production of 26.64 billion lbs. is 628 million lbs. more (+2.4%) than last year.
Cattle futures limped lower Friday, pressured by softer cash prices and pre-holiday positioning. Increasing carcass weights amid declining wholesale beef prices added weight.
The average dressed steer weight the week ending Dec. 4 was 928 lbs., according to USDA’s Actual Slaughter Under Federal Inspection report. That was 2 lbs. heavier than the previous week, 6 lbs. heavier than two weeks earlier and the same week a year earlier. The average dressed heifer weight was 4 lbs. heavier than the previous week at 851 lbs. and 1 lb. heavier than the same week last year.
Feeder Cattle futures closed an average of $1.78 lower (95¢ lower at the back to $2.62 lower toward the front).
Live Cattle futures closed an average of 61¢ lower.
Choice boxed beef cutout value was 4¢ higher Friday afternoon at $263.01/cwt. Select was 14¢ higher at $248.28.
Corn futures closed 1¢ to 2¢ higher in the front three contracts and then mostly fractionally lower.
Soybean futures closed 6¢ to 10¢ higher in the front five contracts and then mostly unchanged to fractionally lower.
Major U.S. financial indices closed lower again Friday with pressure from escalating Covid infections and the outlook for tighter monetary policy.
The Dow Jones Industrial Average closed 532 points lower. The S&P 500 closed 48 points lower. The NASDAQ was down 10 points.
The U.S. economy is poised to slow next year relative to 2021, but economic growth will continue at a pace that is well above average, according to analysts with CoBank’s Knowledge Exchange (CKE). They explain consumers have powered the economic recovery since mid-2020 and that will continue in the coming year. Consumer spending is expected to rise another 4% to 5% in 2022 and GDP is expected to grow by roughly 4.5%, according to CKE’s comprehensive year-ahead outlook report from.
The CoBank 2022 outlook report examines several key factors that will shape agriculture and market sectors that serve rural communities throughout the U.S.
“The COVID-19 omicron variant is shaping up to be the wild card of early 2022 and it could delay the rebalancing of the U.S. economy,” says Dan Kowalski, vice president of CoBank’s Knowledge Exchange. “If omicron disrupts the services industry, the majority of consumer spending will again revert to goods, compounding supply chain and inflation problems. However, at this early stage, we expect omicron to have only a modest impact on the economy.”
Among report highlights:
If the global economy is to perform well in 2022, it will do so despite three significant headwinds: a persistent pandemic, monetary tightening in the U.S. and slowing growth in China.
The pandemic has significantly altered how our economy functions, with the greatest impact coming from what we consume. Through October, in 2021 Americans spent 18% more on goods and about 1% less on services than they did in 2019. Compounded by a labor shortage, it is easy to see why supply chains have become one of the biggest economic challenges of the pandemic—demand has significantly exceeded the capacity of our existing system. Fortunately, we have likely experienced the worst of the bottlenecks, which should diminish in the coming year.
The Fed will want to extend the economic recovery as long as possible before raising interest rates. But it will also be cognizant that the longer inflation remains elevated the higher the likelihood that it leads to a perpetuating cycle of higher prices and higher wages.
The U.S. farm economy will continue to struggle with the ongoing supply chain dysfunction and cost inflation issues that emerged in the summer of 2021. Historically strong prices will be more than offset by increases in cost structure for nearly all crop production including row crops, fruits and vegetables, and hay. CoBank economists do not anticipate any significant pullback in farm-level costs until Q3, at the earliest.
The Bureau of Labor and Statistics’ Consumer Price Index for all meats, poultry, fish, and eggs hit an all-time high in October, up 12% year over year. As restaurant and grocery prices adjust, consumer-level meat inflation is likely to continue well into the new year. While higher retail prices could limit consumption growth, tighter cattle supplies, ongoing broiler breeder issues and sow herd reductions should support favorable processor margins through at least the first half of 2022. Although beef exports have been robust during the second half of 2021, the collective U.S. protein opportunity to China may have already peaked.