Negotiated cash fed cattle trade ranged from slow to limited trade on light demand up north, to mostly inactive in the Southern Plains, through Friday afternoon, according to the Agricultural Marketing Service.
For the week:
Live prices in the Southern Plains were steady at $114/cwt.
Live prices in Nebraska were $1-$2 higher at $113-$114. Dressed trade was steady to $2 higher at $180.
Live prices in the western Corn Belt were steady to $3 higher at $114-$115. Dressed trade was steady to $2 higher at $180.
The five-area direct average steer price through Thursday was $113.78/cwt. on a live basis, which was 50¢ lower than the previous week and $5.10 less than the prior year. The average steer price in the beef of $180.07 was 75¢ less than the prior week and $10.19 less than the previous year.
Estimated total cattle slaughter last week was 611,000 head, which was 42,000 head fewer than the previous week. Estimated year-to-date cattle slaughter of 3.95 million head is 185,000 head fewer (-4.47%) than the same period last year. Estimated year-to-date beef production of 3.35 billion lbs. is 68.2 million lbs. less (-2.0%) than a year earlier.
Cattle futures closed higher Friday with support from consolidating grain futures prices, as well as the outlook for higher cash prices next week, given the frigid weather and what appeared to be sluggish fed cattle trade for the week.
Live Cattle futures closed an average of 98¢ higher, from 22¢ lower toward the back to $2.05 higher toward the front.
Feeder Cattle futures closed an average of 98¢ higher (60¢ to $1.70 higher).
Choice boxed beef cutout value was 59¢ lower Friday afternoon at $232.37/cwt. Select was 64¢ higher at $220.93.
Corn futures closed 2¢ to 4¢ lower through Jly ‘22, and then mostly fractionally lower to 1¢ lower.
Soybean futures closed 4¢ to 5¢ higher through Aug ‘21, and then mostly fractionally higher to 2¢ higher.
Major U.S. financial indices edged higher Friday, supported by higher oil prices and prospects for additional federal economic stimulus.
The Dow Jones Industrial Average closed 27 points higher. The S&P 500 closed 18 points higher. The NASDAQ was up 69 points.
Crude Oil futures (WTI-CME) closed an average of $2.57 higher through the front six contracts, week to week on Friday. That’s an average of $6.98 higher over the last two weeks.
As might be suspected, the novelty of the pandemic overwhelmed conventional logic and expectations in many areas.
For instance, as COVID-19 began upending economies and supply chains last April, the Food and Agricultural Policy Institute (FAPRI) at the University of Missouri provided projected impacts. At the time, analysts there expected the pandemic would lead to lower prices for livestock producers. That happened, but not to the degree or for the reasons anticipated.
“In hindsight they note that they incorrectly assumed that supply chain concerns would play only a minor part in the story, and that the main cause of lower producer prices would be weaker consumer demand. They expected a contracting U.S. economy to reduce disposable income, and that consumers with less money in their pockets would choose to buy less meat and other high-value food products,” according to a recent FAPRI draft document—Expected and Unexpected Impacts of COVID-19 on U.S. Markets for Animal Products. That’s part of an investigation into the impacts of the COVID-19 pandemic on agriculture, food, and related supply chains, conducted by FAPRI and Texas A&M University’s Cross-Border Threat Screening and Supply Chain Defense (CBTS) DHS Center of Excellence.
Instead, real disposable income in the U.S. increased significantly, even as real GDP plunged, due to government stimulus programs. Domestic meat consumption increased slightly year over year, in the face of higher prices.
For context, FAPRI researchers note the average price paid to livestock producers declined 20% in April. At the same time, consumer prices began to increase sharply for meat, poultry, fish and eggs. By June, consumer prices were 10% more than in March. Both matched expectations as costs increased for meat processing and delivery.
“As packing plants were able to return to more normal levels of capacity utilization and as other supply chain problems were resolved or at least mitigated, these trends reversed,” say FAPRI researchers. “Consumer prices for meat and other animal products declined by more than 5% between June and November, while farm-level prices for animal products increased by 20% between April and November. It would be a mistake to say things are back to normal in the sector, but the situation has improved dramatically since the depths of the crisis last spring.”