Negotiated cash fed cattle trade ended the week $2-$3 lower at $119/cwt. on a live basis and $3 lower in the beef at $190.
Recent oversold conditions continued to help lift Cattle futures higher Friday as traders positioned for the three-day weekend.
Live Cattle futures closed an average of $1.17 higher, from 77¢ higher to $1.80 higher toward the front of the board.
Feeder Cattle futures closed an average of $2.36 higher. That’s an average of $3.62 higher in the last two sessions.
Wholesale beef values were higher on good demand and moderate offerings, according to the Agricultural Marketing Service.
Choice boxed beef cutout value was $1.64 higher Friday afternoon at $208.09/cwt. Select was $1.92 higher at $205.71.
Corn futures closed mostly 2¢ to 3¢ lower.
Soybean futures closed 2¢ lower to 2¢ higher.
Major U.S. financial indices closed little changed Friday, amid mixed economic news and as investors positioned for the holiday weekend.
The Dow Jones Industrial Average closed 25 points lower. The S&P 500 closed 6 points higher. The NASDAQ was up 19 points.
“The cattle herd is expected to decline cyclically in the early part of the projection as producers respond to lower returns,” say USDA analysts, in the Agricultural Projections to 2029, released Friday. “A decline in cattle numbers early in the period will likely contribute to higher cattle prices, although a modest herd expansion the rest of the period pressures cattle prices lower. Rising slaughter weights, due to efficiencies from nutrition and genetics, will further support gains in beef production. Overall, beef production levels are expected to rise to 29.5 billion lbs. by 2029.”
The five-area direct fed steer price is projected to be $116/cwt. this year, then range from $116.37 (2024) to $121.39 (2023) over the next five years. From there, through 2029, the estimated range is $110.58 (2028) to $114.70 (2026).
USDA projects this year’s feeder steer price (basis Oklahoma City) to be $141/cwt. It ranges from $138.13 (2028) to $151.27 (2023) for the remainder of the projection period.
This year’s projected farm calf price of $160/cwt. is the lowest of the projection period, which ranges from $165.17 (2028) to $180.88 (2023).
Keep in mind short-term projections in the report began with the October 2019 USDA World Agricultural Supply and Demand Estimates report. Projections don’t include recent trade deals, such as the Japan-U.S. free trade agreement, phase-one China trade deal or the U.S.-Mexico-Canada trade agreement.
“Robust demand provides incentives for the continued growth of the U.S. livestock sector over the next 10 years,” say USDA analysts. “In the beef cattle industry, the feed price ratio (cattle price/feed price) is expected to decline over the projection period, reflecting both modestly lower cattle prices and slowly rising feed prices, suggesting lower returns to production.”
Macroeconomic assumptions to the projections (completed in August last year) include:
Global macroeconomic conditions reflect real economic growth that is lower than in the 2010-2019 period, a relatively strong but declining U.S. dollar, and rising oil prices, which are expected to reach $91 per barrel by 2029.
Global real economic growth is projected to average 2.7% annually over the next decade, 2020-29. The United States is expected to average 1.8% growth annually, while developed countries, as a group, are expected to experience an average of 1.5% percent annual growth. Meanwhile, growth in the developing countries remains faster than the global average, but declines from 4.8% annual average growth during 2010-19, to 4.3% during 2020-29.
Steady global economic growth supports longer-term gains in world food demand, global agricultural trade, and U.S. agricultural exports. Economic growth in developing countries is especially important because food consumption and feed use are particularly responsive to income growth in those countries.