The weighted average five-area direct fed steer price last week was $95.98/cwt. on a live basis, which was $1.11 higher than the previous week but $17.39 less than the same week last year. The average price in the beef was $157.60, which was $3.92 higher than the prior week but $25.21 less than the prior year, according to USDA. Fed cattle transactions of 83,634 head were 3,098 head fewer than the prior week but 19,304 head more (+30%) than the same week a year earlier.
Firmer to higher cash fed cattle prices helped Cattle futures close mostly higher Monday. Feeder Cattle were also supported by a steep decline in Corn futures.
Except for an average of 25¢ lower through the front three contracts, Live Cattle futures closed an average of 31¢ higher.
Feeder Cattle futures closed an average of $1.41 higher.
Choice boxed beef cutout value was $1.24 lower Monday afternoon at $203.26/cwt. Select was $2.41 lower at $191.88.
Friday’s World Agricultural Supply and Demand Estimates and continued positive crop progress weighed on grain futures to start the week.
Corn futures closed 6¢ to 7¢ lower through Jul ’21 and then mostly 2¢ to 4¢ lower.
Soybean futures closed 12¢ to 15¢ lower through May ’21 and then 5¢ to 10¢ lower.
Major U.S. financial indices roared higher early Monday, buoyed by positive coronavirus vaccine progress. Investor sentiment turned bearish, though, after California announced it was closing indoor restaurants, bars and movie theatres, in order to slow recently escalating COVID-19 cases.
The Dow Jones Industrial Average closed 10 points higher. The S&P 500 closed 29 points lower. The NASDAQ closed 226 points lower.
Nationwide, pasture and range conditions continue to erode, according to the latest USDA Crop Progress report for the week ending July 12.
36% of pasture and range was rated in Good (31%) or Excellent (5%) condition, which was 32% less than last year. 30% was rated in Poor (19%) or Very Poor (11%) condition, compared to 8% at the same time last year.
Cattle states with 30% or more of the pasture and range in Poor and Very Poor condition include: Arizona (31%); California (55%); Colorado (44%); New Mexico (58%); Oregon (54%); Texas (39%); Wyoming (36%).
According to the U.S. Drought Monitor (July 7) 48.51% of the Continental U.S. was rated from abnormally dry to extreme drought. That was 3.09% more than the previous week and 37.68% more than the same time last year.
29% of corn was silking, which was 3% less than last year but 15% more than the five-year average. 3% was at the dough stage, which was 1% more than last year, but on par with the average. 69% is rated as Good (52%) or Excellent (17%), which is 11% more than last year. 8% was rated as Poor (6%) or Very Poor (2%), which was 4% less than a year earlier.
48% of soybeans were blooming, which was 29% more than last year and 8% more than the average. 11% were setting pods, compared to 3% last year and 10% for average. 68% was rated as Good (54%) or Excellent (14%), which was 14% more than last year. 7% was rated as Poor (5%) or Very Poor (2%), compared to 12% the previous year.
Beef production played a role in the precipitous decline in May U.S. beef exports, but higher prices and economic turmoil wrought by COVID-19 were likely factors, too.
As mentioned in Cattle Current last week, U.S. beef exports in May were 33% less than a year earlier, and the least in 10 years, according to data released by USDA and compiled by the U.S. Meat Export Federation (USMEF). Value was 34% less than the same time last year at $480.1 million.
“It is not clear how much of the drop in May beef exports was due to reduced supply and how much was due to reduced demand because of global recession,” says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly market comments. “Beef production dropped 19.7% in April followed by a 19.9% drop in May. There is little doubt that May beef exports were curtailed in part simply due to a lack of available product. No doubt, some export orders were simply unable to be filled in May. It is likely, however, that part of the decrease in beef exports was due to macroeconomic weakness in some countries, combined with higher U.S. beef prices. Choice boxed beef prices increased to a monthly average of $263.35/cwt. in April, up from the March level of $228.05/cwt. May Choice boxed beef prices increased to $420.00/cwt., up 84.2% over the March levels.”
In terms of specific markets, Peel explains May exports to Japan, the leading U.S. market, were 26.3% less year over year. Beef exports to Korea, the second leading U.S. market were 21.7% less. They were 78.0% less to Mexico, which recently occupied the position as third largest importer of U.S. beef.
“The drop in beef exports to Mexico, in particular, is very concerning,” Peel says. “It is doubtful that reduced supply alone explains the 78.0% drop. Mexico is experiencing a sharp recession, compounded by a weaker Mexican Peso in April and May (with some recovery in June). In 2019, Mexico accounted for 14.0% of total U.S. beef exports for the year, but in May only amounted to 4.4% of total monthly exports. May exports of pork to Mexico were down 21.9% and broiler exports were down 27.6%, highlighting the overall demand weakness in Mexico.”
Looking ahead, Peel notes U.S. beef production in June recovered to about 97% of year-ago levels. Choice boxed beef prices declined to an average of $242.30/cwt.
“Now that production has substantially recovered, the U.S. industry is better able to meet the needs of both domestic and international customers,” explains Dan Halstrom, USMEF president and CEO. “While the foodservice and hospitality sectors face enormous challenges, they are on the path to recovery in some markets while retail demand remains strong. Retail sales have also been bolstered by a surge in e-commerce and innovations in home meal replacement, as convenience remains paramount.”
“June beef exports will likely bounce back significantly from the May drop but it will be important going forward to monitor both the residual impact of April-May processing disruptions and the ongoing global economic weakness to see how beef export prospects develop in the second half of the year,” Peel says.