Negotiated cash fed cattle trade was light on light to moderate demand in the Southern Plains through Wednesday afternoon, with live price $1 higher than last week at $115/cwt.
Elsewhere, trade was limited on light demand, according the Agricultural Marketing Service. There were a few live trades in Nebraska at $115-$116, but too few to trend. Prices last week were at $114 in the Northern Plains and at $114-$115 in the western Corn Belt. Dressed prices were at $180-$182.
Cattle feeders offered 2,633 head in Central Stockyards’ weekly Fed Cattle Exchange auction. Of those, 1,550 head sold for an average price of $115.89/cwt., all via live weight. Texas prices were at $115/cwt. and Nebraska prices were at $116, which was $2 higher than last week’s country trade.
Choice steers and heifers sold $1.50-$2.50 higher at the fat auction in Tama Iowa. There were 67 Choice 2-4 steers weighing an average of 1,487 lbs., brining an average price of $117.15/cwt. That was $2-$3 higher than country trade in the region last week.
At Sioux Falls Regional in South Dakota, though, slaughter steers sold steady to $2 lower and slaughter heifers traded steady to $1 lower. There were 152 Choice 2-3 steers weighing an average of 1,468 lbs., bringing an average of $112.72.
Cattle futures closed higher Wednesday, supported by stronger cash prices and softer Corn futures prices.
Live Cattle futures closed an average of 59¢ higher, except for unchanged in spot Apr.
Feeder Cattle futures closed an average of $1.32 higher, from 32¢ higher in waning spot Mar to $2.70 higher.
Choice boxed beef cutout value was 85¢ higher Wednesday afternoon at $234.84/cwt. Select was $1.16 lower at $224.07.
Corn futures closed mostly fractionally lower to 2¢ lower, except for 2¢ and 3¢ higher in the front two contracts.
Soybean futures closed mostly 6¢ to 9¢ higher.
Major U.S. financial indices extended losses Wednesday, pressured by a selloff in big tech stocks and despite strong gains earlier in the session.
The Dow Jones Industrial Average closed 3 points lower. The S&P 500 closed 21 points lower. The NASDAQ was down 265 points.
West Texas Intermediate Crude Oil futures (CME) closed $2.97 to $3.42 higher through the front six contracts, mostly gaining back the previous session’s decline, and presumably related to reports that a cargo ship ran aground in the Suez Canal, blocking traffic.
“U.S. agricultural exports are largely expected to continue a faster pace in 2021 with help from weakness in the U.S. dollar,” says Tanner Ehmke, manager of CoBank’s Knowledge Exchange (CBKE).
The U.S. dollar weakened substantially since March 2020 and is expected to experience modest deflation in 2021. CoBank analysts explain a weaker dollar generally makes U.S. agricultural products more competitive on the global export market. However, commodities are affected differently, given the diversity in global export competition and foreign exchange rates.
CBKE published a recent report—Dollar Divergence: U.S. Dollar Index Does Not Reflect True Dollar Impact on U.S. Ag Exports—examining the impact of currency dynamics on agricultural exports, in addition to fundamental factors such as tariffs and weather conditions.
CBKE utilized the foreign exchange (FX) rates of key agricultural exporting countries that the U.S. competes with, rather than the dollar index (DXY), which those analysts say is heavily weighted toward the euro. The research reveals a more nuanced effect of FX rates on U.S. grain, livestock, dairy, tree nuts, and cotton exports.
“In the final months of 2020, U.S. protein exports started to benefit from the strengthening of the Australian dollar and the euro against the U.S. dollar, helping animal protein exports to end the year on a high note,” according to the report. “The
outlook for a strong Australian dollar and euro in 2021 should make U.S. beef and pork exports the largest beneficiaries of a weaker dollar in the coming year.”
At the same time, CBKE analysts explain the U.S. trade weighted grain and oilseed index strengthened by 14% in 2020 and is expected to gain another 4%-5% this year. The U.S. dollar’s strength, relative to the currencies of major exporters like Brazil, Argentina and Ukraine, is driving the stronger index.
“A casual observer could argue that corn and soybean exports will face headwinds in 2021 since the index strength implies that U.S. exports become less price competitive,” says Kenneth Scott Zuckerberg, lead grain and farm supply economist with CoBank. “But this was not the case in 2020 nor is it expected to be in 2021 due to Chinese demand.”
China has been aggressively buying U.S. grain for feed as it rebuilds its hog herd, leveraging its strong currency relative to the U.S. dollar despite the dollar’s strength in relation to other currencies.
“In addition to currency, a more normal year for U.S. meat processing capacity, the rebound in global foodservice demand, and the trend in China’s meat and poultry imports will be the primary drivers of a good year for U.S. protein exports in 2021,” according to the report.