Negotiated cash fed cattle trade continued lower on Thursday, with live trade in the Texas Panhandle $4 lower at $104/cwt. and $1-$5 lower in Kansas at $103-$107, according to the Agricultural Marketing Service (AMS).
“With the slaughter pace inching closer to normal and beef cutout values dropping, the focus may soon be turning to the surplus of market ready cattle that history says will have to be whittled away at by getting to a price low enough to stimulate surplus demand,” noted the AMS reporter on hand for the weekly sale at South Central Regional Stockyards in Vienna, MO.
Cattle futures closed narrowly mixed to narrowly lower, fading more intense pressure early in the session. Declining cash prices and sharply lower outside markets added drag, while export sales provided some lift. Net beef export sales were up 66% (week ending June 4) from the previous week and up noticeably from the prior four-week average, according to the weekly Export Sales report from USDA’s Foreign Agricultural Service. Increases were primarily for South Korea, Japan, Mexico and Canada.
Live Cattle futures closed narrowly mixed, from 35¢ lower to 22¢ higher.
Feeder Cattle futures closed an average 54¢ lower.
The average five-area direct live steer price (FOB) in May was $111.53/cwt., which was $9.51 more than the previous month, according to USDA. The average dressed steer price in the beef was $179.02 (delivered), which was $19.75 more than the previous month.
Wholesale beef values closed lower, minus the steep pitch of recent weeks. Choice boxed beef cutout value was 50¢ lower Thursday afternoon at $235.56/cwt. Select was $2.96 lower at $219.88.
The average dressed steer weight for the week ending May 30 was 891 lbs., which was 3 lbs. lighter than the previous week, but 49 lbs. heavier than the previous year, according to USDA’s Actual Slaughter Under Federal Inspection report. The average dressed heifer weight of 826 lbs. was even with the prior week and 47 lbs. heavier than the previous year.
Corn futures closed mostly 1¢ to 2¢ higher.
Other than fractionally higher in the front three contracts, Soybean futures closed mostly 2¢ to 3¢ lower.
Major U.S. financial indices closed sharply lower Thursday, pressured by the recent increase in COVID-19 cases and investor worry that reopening the nation’s economy could stall.
The Dow Jones Industrial Average closed 1,861 points lower. The S&P 500 closed 188 points lower. The NASDAQ closed 527 points lower.
USDA’s Economic Research Service (ERS) estimates this year’s beef production at 26.67 billion lbs., which is 910 million lbs. more (+3.53%) than the previous month’s estimate. That would be 481 million lbs. less (-1.77%) than in 2019. In the latest monthly World and Agricultural Supply and Demand Estimates, ERS analysts say the increase reflects slaughter levels recovering quicker than anticipated a month earlier.
“Cattle price forecasts are raised, reflecting current price strength and increased packer demand,” say ERS analysts. “For 2021, cattle prices are also raised on expected continued strength of packer demand in the first part of the year.”
The annual fed steer price for this year is projected at $108.60/cwt., which is $4.50 more than the previous month’s expectation. By quarter, USDA pegs the average fed steer price at $118.32 in the first quarter, $106 in the second quarter, $104 in the third quarter and $106 in the fourth quarter. The projected price for the first quarter next year is $104.
ERS estimates total red meat and poultry production 1.43 billion lbs. more (+1.38%) than the previous month at 105.00 billion lbs. That would be 261 million lbs. less (-0.25%) than in 2019.
Among other WASDE highlights:
The 2020-21 U.S. corn outlook was little changed, with fractional increases to beginning and ending stocks. Ending stocks were projected 5 million bu. higher at 3.3 billion bu. The season-average farm price was unchanged at $3.20/bu.
U.S. soybean supply and use projections for 2020-21 include higher beginning stocks, higher crush, and slightly lower ending stocks. With higher soybean crush more than offsetting higher beginning stocks, 2020-21 ending stocks are projected at 395 million bushels. The 2020-21 season-average soybean and product price forecasts were unchanged: $8.20 per bushel, down 30¢ from 2019-20. Soybean meal prices are forecast at $290 per short ton, down $10 from 2019-20. Soybean oil prices are forecast at 29.0¢/lb., up 0.5¢ from 2019-20.
Total 2020-21 wheat production was forecast at 1,877 million bu., and total supplies were raised 16 million to 3,000 million. Domestic use and exports for the new marketing year were unchanged, while ending stocks were raised 16 million bushels to 925 million, which would be a 6-year low. Last month, ERS projected 2020-21 ending stocks 69 million bu. lower than the previous year at 909 million. The projected season-average farm price last month was projected at $4.60/bu., unchanged from the previous year, with expectations for U.S. corn prices to restrain U.S. wheat prices.