First today, a special prayer for all of those being affected by wildfires in the Texas Panhandle and in Oklahoma. So far, one of five active fires has burned more than 850,000 acres, according to the Texas Department of Agriculture. On Tuesday, the Texas governor issued a disaster declaration in 60 counties. If you’re wondering how to help, the Texas Cattle Feeders Association always does an amazing job tracking needs and opportunities.
Now, for your market update…
Cattle futures softened Wednesday with pressure including likely profit taking and month-end positioning.
Live Cattle futures closed an average of $1.13 lower (80¢ to $1.60 lower).
Feeder Cattle futures closed an average of $2.80 lower ($2.12 to $3.85 lower).
Negotiated cash fed cattle trade was slow on light demand in the Southern Plains, through Wednesday afternoon, according to the Agricultural Marketing Service. FOB live prices were steady in the Texas Panhandle at $183/cwt. and steady to $1 higher in Kansas at $183.
Elsewhere, trade ranged from mostly inactive on light demand to a standstill with too few transactions to trend.
Last week, FOB live prices were $183 in Nebraska and $182-$183 in the western Corn Belt. Dressed delivered prices were $292 in Nebraska and $290-$292 in the western Corn Belt.
Slower beef packer production continued to support wholesale beef values. Choice boxed beef cutout value was $1.29 higher Wednesday afternoon at $303.03/cwt. Select was $2.54 higher at $292.94/cwt.
Turning to row crops, Corn and Soybean futures received some support from chatter about bearish weather in South America.
Corn futures closed 1¢ to 5¢ higher, with most of the support in the front contracts.
Soybean futures closed mostly 3¢ to 4¢ higher.
KC HRW Wheat futures closed 4¢ to 6¢ lower, except for 2¢ higher in spot Mar.
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Major U.S. financial indices edged lower Wednesday.
The Dow Jones Industrial Average closed 23 points lower. The S&P 500 closed 8 points lower. The NASDAQ was down 87 points.
West Texas Intermediate Crude Oil futures (CME) closed 33¢ to 43¢ lower through the front six contracts.
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Global beef demand is likely to remain steady this year despite economic challenges and consumer shifts toward lower-priced proteins, according to the recent Rabobank Global Beef Quarterly.
“While there was some channel shifting and movement to lower-priced options for beef, overall demand held up relatively well in 2023, supporting consumption levels,” says Angus Gidley-Baird, Rabobank senior analyst, animal protein.
Across most markets, beef retail prices have risen since 2019, and the impact of inflation in 2022 and 2023 added to the cost of living, pressuring consumers’ budgets and changing spending patterns, according to the report. With consumers trending toward cheaper options in 2023, foodservice and retail companies began promoting value-based propositions more frequently, some of which outperformed.
Still, Rabobank expects GDP growth rates to slow and unemployment rates to rise in many countries this year. Rising unemployment suggests that upward pressure on wages should ease, and if inflation remains high, real wages should decline, putting more pressure on household income. Rabobank forecasts 2024 GDP growth in the U.S. at less than 1%.
“With limited or negative real wage growth expected in 2024, coupled with the higher cost environment, we believe global beef consumption will at best remain steady and possibly decline through 2024, with some notable regional variations,” according to Gidley-Baird.
On the other side of the scale, Rabobank maintains a neutral outlook for global beef production, with increases in Australia and Brazil offsetting declines in Europe and the US.
Trade flows are also shifting. For instance, according to the report,
due to its reasonable economic outlook and lower domestic supplies, the U.S. is likely to lead the beef price-setting market and to draw increased volumes from Australia, New Zealand, Brazil, Canada, and Mexico, according to the report.
“Value will become the predominant theme across most markets in order to retain consumers faced with balancing the tighter economic conditions,” Gidley-Baird says.