The week’s mostly steady to stronger negotiated cash fed cattle trade helped lift Cattle futures on Thursday.
Except for 30¢ lower in the back contract, Live Cattle futures closed an average of 50¢ higher.
That was despite the latest U.S. Export Sales report from USDA’s Foreign Agricultural Service. For the week ending July 6, net U.S. beef export sales of 9,500 metric tons (mt) were 23% less than the previous week and 51% less than the previous four-week average. Increases were primarily for Japan, South Korea, China, Mexico, and Taiwan.
Feeder Cattle futures closed an average of 56¢ higher.
At $133.69, the CME Feeder Cattle Index was at the highest level since the first part of March.
Choice boxed beef cutout value was 24¢ lower Thursday afternoon at $203.59/cwt. Select was 69¢ lower at $194.83.
USDA’s latest weekly Actual Slaughter Under Federal Inspection report underscores the continued recovery in beef packing capacity. Total fed cattle slaughter for the week of June 27 was 532,820 head, which was 20,029 more than the previous week–the most since the last week of March–but 5,221 head fewer than the previous year. Total cattle slaughter of 664,812 head was 19,151 head more than the previous week, but 5,499 head fewer than the previous year.
That same report speaks to the continued backlog of fed cattle, with the average dressed steer weight for the week at 896 lbs., which was 6 lbs. heavier than the previous week and 42 lbs. more than the previous year. The average dressed heifer weight of 826 lbs. was 3 lbs. heavier than the previous week and 37 lbs. heavier than the same time a year earlier.
Grain futures continued to firm and gain Thursday, helped along by weather and harvest, in the case of wheat. There was also likely some positioning ahead of the monthly World Agricultural Supply and Demand Estimates, due out Friday.
The aforementioned Export Sales report was also supportive.
Net corn export sales of 599,200 mt for 2019-2020 were up 66% from the prior week and up 30% from the prior four-week average. Increases were primarily for China, Colombia, Mexico, Honduras and Nicaragua.
Net soybean export sales of 952,200 mt for 2019-2020 were up noticeably from the previous week and up 60% from the prior four-week average. Increases were primarily for China, Indonesia, Pakistan, Bangladesh and Mexico.
Corn futures closed mostly 1¢ to 2¢ higher.
Soybean futures closed 1¢ to 4¢ higher.
Major U.S. financial indices closed mixed on Thursday. While tech stocks continued to surge higher, climbing coronavirus infections in the U.S. cast a pall.
The Dow Jones Industrial Average closed 361 points lower. The S&P 500 closed 17 points lower. The NASDAQ closed 55 points higher.
“The COVID-19 pandemic continues to have devastating impacts on public health and the economies of the U.S. and many other countries. There is much uncertainty about the future impacts of COVID-19, but even in the best of circumstances, the economic impacts are enormous,” says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his latest market comments.
He points to the sobering GDP projections made by a host of organizations.
The U.S. Federal reserves estimates U.S. GDP this year at -6.5%. The Organization for Economic Cooperation and Development projects -7.3%, but -8.5% if there’s a secondary coronavirus outbreak. The International Monetary Fund (IMF) sees GDP at -8.0%.
Further, Peel says the Federal Reserve’s most recent forecast is for the U.S. unemployment rate this year to be 9.3%.
Peel shared this observation from the IMF:
“The COVID-19 pandemic has had a more negative impact on activity in the first half of 2020 than anticipated, and the recovery is projected to be more gradual than previously forecast. In 2021 global growth is projected at 5.4%. Overall, this would leave 2021 GDP some 6.5 percentage points lower than in the pre-COVID-19 projections of January 2020.”