Daily Market Highlights 2017-06-02T12:08:41-05:00

Daily Market Highlights

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Cattle Current Daily—Aug. 12, 2020

Although too few to trend, there were a few early negotiated cash fed cattle sales in Kansas on Tuesday at $103/cwt. on a live basis, and a few in the western Corn Belt at $105.

The recent bump higher in fed cattle prices and a promising outlook for more of the same this week, along with higher wholesale beef values, helped Cattle futures gain a little ground Tuesday.

Live Cattle futures closed an average of 73¢ higher (50¢ to $1.15 higher), except for 7¢ lower in the back contract.

Feeder Cattle futures closed an average of 93¢ higher.

Choice boxed beef cutout value was 88¢ higher Tuesday afternoon at $208.08/cwt. Select was $1.09 higher at $195.02.

Grain futures mainly hovered on Tuesday as traders awaited Wednesday’s monthly World Agricultural Supply and Demand Estimates.

Corn futures closed fractionally higher to 1¢ higher through May ’21 and then mostly fractionally lower. 

Soybean futures closed unchanged to 1¢ higher through Mar ’21 and then fractionally lower to 3¢ lower.

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Major U.S. financial indices closed lower on Tuesday, apparently pressured mostly by confusion surrounding government attempts to develop another round of COVID economic stimulus.

The Dow Jones Industrial Average closed 104 points lower. The S&P 500 closed 26 points lower. The NASDAQ closed 185 points lower.

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For all of the change spawned by the pandemic, overall inclusion of beef and pork in daily meals remained steady from February through June, according to the first multi-month summary from the Meat Demand Monitor (MDM). That project, partly funded by the beef and pork checkoffs, tracks U.S. consumer preferences, views, and demand for meat, with separate analysis for retail and food service channels.

Launched in February, the MDM summary includes data from over 10,000 survey respondents.

Among highlights:

**Grocery meat demand peaked in April, while food service meat demand was lowest in April.

**Taste, Freshness, Safety, and Price persistently rank highest in importance to protein purchasing decisions, with Price increasing in importance since the pandemic began.

**Away-from-home consumption of beef and pork for all three daily meals declined since February.

**Across restaurant groups, the Fast Casual group gained share, perhaps reflecting drive-thru or curbside capabilities, while the Local Independent group lost share.

**Across sources of protein for at-home consumption, the Grocery Store group gained prevalence while the Mass Merchandiser group lost share.

Agricultural economists at Kansas State University and Purdue University provide MDM coordination and analysis.

By | August 11th, 2020|Daily Market Highlights|

Cattle Current Daily—Aug. 11, 2020

The weekly five-area weighted average steer price last week was $101.34/cwt. on a live basis, which was $2.68 more than the previous week. The average dressed steer price was $163.20, which was $3.17 higher.

Stronger cash fed cattle prices and firmer wholesale beef values helped Cattle futures gain a little ground Monday.

Live Cattle futures closed an average of 67¢ higher.

Feeder Cattle futures closed an average of 32¢ higher (2¢ to 85¢ higher).

Choice boxed beef cutout value was $1.73 higher Monday afternoon at $207.20/cwt. Select was $1.18 higher at $193.93.

Corn futures closed 1¢ to 2¢ higher.            

Soybean futures closed mostly 3¢ to 4¢ higher.

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Major U.S. financial indices closed mixed on Monday, pressured by profit taking in tech stocks, but buoyed by Executive Order from president Trump that would extend some of the recently-ended coronavirus aid to the unemployed.

The Dow Jones Industrial Average closed 357 points higher. The S&P 500 closed 9 points higher. The NASDAQ closed 42 points lower.

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Cattle feeding returns appear to be more promising for the fourth quarter, but plenty of uncertainty remains, according to the Livestock Marketing Information Center (LMIC).

On the up side, LMIC analysts point to lower projected breakeven levels and more optimistic Live Cattle futures for the fourth quarter. LMIC projections for fed cattle prices are in line with the recent futures prices, if not slightly more optimistic for December and into 2020.

In the meantime, LMIC projects cattle feeding returns to continue in the red. The organization estimated losses for cattle marketed in July at about $200 per head, the fifth consecutive month of red ink.

For perspective, LMIC estimates assume feeding out a 750-lb. steer in a commercial Southern Plains feedlot and include all costs of production. The estimates are not survey-based and presume normal weather conditions. Cash prices are used; neither fed cattle prices nor feedstuff costs are hedged. Estimates assume a normal marketing window, based on a standard cost of gain.

“Fed cattle prices in Kansas averaged $95.23/cwt. in July, leaving only $200-$300 to cover variable costs during the feeding timeframe per animal,” explain LMIC analysts. “For most feedlots, regardless of feeding 120 days or 180 days, it was not enough to cover costs. KSU feedlot data suggests that the cost of gain was about $500 per head in May to feed a steer to slaughter weight…September marketed cattle face a lower breakeven, which in early August indicated a net return very close to $0 per head.”

With expected lower feed costs, fed cattle prices remain the primary risk, according to LMIC.

By | August 10th, 2020|Daily Market Highlights|

Cattle Current Daily—Aug. 10, 2020

Negotiated cash fed cattle trade for the week was mainly $3 higher through Friday afternoon at $103/cwt. on a live basis and at $163 in the beef.

Through Thursday, the five-area direct weighted average steer price was $101.28 on a live basis, which was $2.79 higher than the previous week. The average dressed steer price was $163.19, which was $3.17 higher than the prior week. Compared to the same time last year, though, those prices were $12.83 less and $19.38 less, respectively.

Cattle futures edged lower on Friday, entrenched in the long-worn sideways channel, and with some likely profit taking.

Except for 17¢ higher in spot Aug, Live Cattle futures closed an average of 51¢ lower (7¢ to 87¢ lower).

Except for 22¢ and 7¢ higher in two away contracts, Feeder Cattle futures closed an average of 37¢ lower.

Choice boxed beef cutout value was 81¢ higher Friday afternoon at $205.47/cwt. Select was 74¢ higher at $192.75.

Corn futures closed mostly 2¢ lower. 

Soybean futures closed mostly 9¢ to 10¢ lower.

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Major U.S. financial indices closed mainly sideways on Friday as investors weighed the impasse over additional federal coronavirus aid against stouter employment numbers than expected.

Total non-farm employment increased 1.8 million month-to-month in July and the national unemployment rate declined 0.9% to 10.2%, according to the U.S. Bureau of Labor Statistics.

Average hourly earnings for all employees on private non-farm payrolls rose by 7¢ to $29.39.

The Dow Jones Industrial Average closed 46 points higher. The S&P 500 closed 2 points higher. The NASDAQ closed 97 points lower.

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Recently expired COVID-19 unemployment benefits could hamstring the struggling recovery in the U.S. restaurant sector, according to the NPD Group (NPD).

“Up until July 31, somewhere between 25 and 30 million Americans were receiving Federal Pandemic Unemployment Compensation as part of the federal government’s CARES Act, which has provided $600 a week of enhanced unemployment benefits,” explains David Portalatin, NPD food industry advisor. “These unemployment benefits translated to between $15-$18 billion per week being put into consumers’ bank accounts, and for context, total restaurant industry sales right now are a bit less than $8 billion per week.”

For the week ending July 26, U.S. major restaurant chain customer transactions were down 11%, compared to a year earlier, but 1% more positive than the previous week, according to NPD’s CREST®Performance Alerts.

Customer transactions at major quick service restaurant chains were even with the prior week and down 11% year over year. Full service restaurants chain transactions were 24% less than the same week last year, but improved 3% week to week.

The NPD folks note that full service restaurants were still recovering from the Great Recession, which ended more than 10 years ago, when the COVID pandemic prompted shelter-at-home orders and mandated dine-in closures. Along the way, consumers began leaning more toward quick service restaurants, too.

“Long before COVID, consumers were already favoring quick service restaurants and off-premises dining, and this trend has accelerated during the pandemic and will most likely be a behavior that will stick,” Portalatin says. “For full service restaurants it will mean more flexible operations, delivering on the on-premises experience and optimizing off-premises services. I see this as a sea change for the U.S. restaurant industry.”

By | August 8th, 2020|Daily Market Highlights|

Cattle Current Daily—Aug. 7, 2020

Negotiated cash fed cattle trade had yet to fully develop through Thursday afternoon, according to the Agricultural Marketing Service, but early prices are mostly $3 higher, with established trade in the Southern Plains at mostly $100/cwt. Although too few to trend, there were some early trades in Nebraska ($163 dressed) and in the western Corn Belt at $103 on a live basis and at $163 in the beef.

Cattle futures were mixed but mostly softer. The latest U.S. Export sales report offered no support. Net beef export sales for the week ending July 30 were down 55% from the previous week and down 35% percent from the prior four-week average, according to USDA’s Foreign Agricultural Service. June exports were down hard (see below).

Except for 32¢ and 42¢ higher on either end of the board, Live Cattle futures closed an average of 45¢ lower.

Except for 15¢ lower in Sep, Feeder Cattle futures closed an average of 87¢ lower (52¢ to $1.32 lower).

Choice boxed beef cutout value was $1.09 higher Thursday afternoon at $204.66/cwt. Select was $1.19 higher at $192.01.

The average dressed steer weight for the week ending July 25 was 903 lbs., which was 4 lbs. heavier than the previous week and 34 lbs. heavier than the same week a year earlier, according to USDA’s Actual Slaughter Under Federal Inspection report. The average dressed heifer weight of 829 lbs. was the same as the previous week but 29 lbs. heavier than the previous year.

Total cattle slaughter for the week of 639,971 head was 11,692 head fewer than the same week last year, but beef production of 533.7 million lbs. was 7.8 million lbs. more.

Corn futures closed unchanged to fractionally mixed. 

Soybean futures closed mostly fractionally lower to 1¢ lower.

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Major U.S. financial indices closed higher Thursday, led by tech stocks and supported by fewer weekly initial jobless claims than anticipated.

Initial claims for the week of Aug. 1 were 249,000 fewer than the prior week at 1.19 million, according to the U.S. Department of Labor.

The Dow Jones Industrial Average closed 185 points higher. The S&P 500 closed 21 points higher. The NASDAQ closed 109 points higher.

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Supply disruptions, restrictions on foodservice and weakening economies in major import markets helped confound U.S. beef exports in June, according to data released by USDA and compiled by the U.S. Meat Export Federation (USMEF).

June beef exports were close to the May lows, down 33% from a year ago to 79,013 metric tons (mt), with value falling 32% to $492.3 million. Exports were below year-ago levels to most markets but trended higher to Canada, China and South Africa. For January through June, beef exports fell 9% below last year’s pace in volume (591,609 mt) and were 10% lower in value ($3.63 billion).

Beef export value per head of fed slaughter averaged $219.53 in June, down 32% year over year. The first-half average was $300.43 per head, down 4%.

“We expected that the interruptions in red meat production would continue to weigh on June exports, but anticipated more of a rebound from the low May totals, particularly for beef,” says USMEF President and CEO Dan Halstrom. “But, it takes time for the entire chain to adjust to supply shocks, and thus it was another difficult month for exports. However, weekly U.S. export data suggest an upward trend in demand in most markets, and with production recovering, the U.S. has regained its supply advantage. So, we expect beef and pork exports to regain momentum in the second half of the year.”

June pork exports totaled 207,181 mt, which were 3% less than a year ago, while export value fell 9% to $516.3 million. Exports continued to trend higher than a year ago to China/Hong Kong, but were the lowest since October.

By | August 6th, 2020|Daily Market Highlights|

Cattle Current Daily—Aug. 6, 2020

There was no negotiated cash fed cattle trade summary available from USDA at press time Wednesday, but indications continued to point to higher prices for the week.

For instance, Choice steers and heifers sold $3.50 to $3.75 higher at the fat auction in Tama, Iowa. There were 127 head of Choice 2-4 steers weighing an average of 1,382 lbs. and bringing an average of $104.32/cwt.

Cattle feeders offered 1,474 head in the weekly Fed Cattle Exchange Auction—all from the Southern Plains. Of those, 1,400 head sold: 960 head for delivery of 1-9 days at an average weighted price of $99.95/cwt.; 440 head for delivery at 1-17 days for a weighted average price of $100.

Except for 2¢ and 5¢ lower in two contracts, Live Cattle futures closed an average of 34¢ higher.

Except for 15¢ lower in Sep, Feeder Cattle futures closed an average of 59¢ higher.

Choice boxed beef cutout value was 58¢ lower Wednesday morning at $203.66/cwt. Select was 56¢ higher at $191.01.

Corn futures closed 1¢ to 3¢ higher. 

Soybean futures closed 1¢ to 3¢ lower through Mar ’21 and then mostly 1¢ higher.

The five-area direct weighted monthly average fed steer price in July was $96.57/cwt. on a live basis, which was $7.25 less than in June and $15.63 less than the previous July. The average dressed steer price of $157.69 was $8 less than the previous month and $20.54 less than the prior year.

The average monthly fed heifer price of $96.22 was $9.24 less than in June and $15.88 less than in July of last year. The average heifer price in the beef was $157.32, which was $8.70 less month to month and $20.91 less year over year.

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Major U.S. financial indices closed higher Wednesday, amid mixed economic news. Support included more promise for another COVID-19 vaccine candidate and ongoing Congressional wrestling for more pandemic aid. Pressure included a more pessimistic labor outlook.

Private sector employment increased by 167,000 jobs from June to July according to the closely watched ADP National Employment Report®.  That was significantly less than traders expected.

The Dow Jones Industrial Average closed 373 points higher. The S&P 500 closed 21 points higher. The NASDAQ closed 57 points higher.

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Heading into Labor Day–the last grilling holiday of the summer–David Anderson, Extension livestock economist at Texas A&M University says the recent surge in orders suggests retailers are making a push to feature beef.

“Big beef featuring will be welcome,” Anderson says, in the latest issue of In the Cattle Markets. “Slowly working off the backlog (fed cattle) and moving more beef into retail is slowly pulling cattle prices higher. The weekly Choice beef cutout hit its low for the year, so far, at $201.24/cwt. for the week ending July 18. Since then, it has clawed back to $202.34. But, as with fed cattle, large beef supplies are keeping the pressure on the wholesale market.”

Although the aforementioned backlog continues, Anderson notes fed cattle slaughter is almost equal to year-ago levels. Specifically, he says fed cattle slaughter for June and July, combined, was 99.9% of a year earlier. He adds that along with increased cow slaughter and heavier carcass weights beef production for the last eight weeks was more than the same time period last year.

“In coming weeks, watch for progress on the fed cattle slaughter front, more featuring for Labor Day and increasing beef exports as prices decline. All of these should act to boost fed cattle prices going into late summer,” Anderson says.

By | August 5th, 2020|Daily Market Highlights|

Cattle Current Daily—Aug. 5, 2020

Cattle futures closed mostly narrowly lower on Tuesday, awaiting cash direction. Early indications are cash fed cattle have some room to grow this week.

Live Cattle futures closed an average of 35¢ lower.

Except for an average of 14¢ higher in two mid-board contracts, Feeder Cattle futures closed an average of 22¢ lower.

Choice boxed beef cutout value was 42¢ lower Tuesday afternoon at $204.24/cwt. Select was 5¢ higher at $190.45.

Positive crop conditions and weather weighed on grain futures, Tuesday.

Corn futures closed 6¢ to 9¢ lower through Jly ’21 and then mostly 1¢ lower.

Soybean futures closed 11¢ to 14¢ lower through Mar ’21 and then 4¢ to 9¢ lower

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Major U.S. financial indices closed higher Tuesday, with increasing hopes of Congress agreeing to additional coronavirus relief.

The Dow Jones Industrial Average closed 164 points higher. The S&P 500 closed 11 points higher. The NASDAQ closed 38 points higher.

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Month-to-month farmer sentiment was virtually unchanged in July, according to the Purdue University/CME Group Ag Economy Barometer. The index increased 1 point to a reading of 118, which was 30% lower than in February before the pandemic began.

Producers’ perspective on current versus future conditions shifted, though. The Index of Current Conditions rose 12 points from June to a reading of 111, and the Index of Future Expectations fell 5 points to a reading of 121.

“Although overall farmer sentiment in July did not change much compared to June, sentiment was still much weaker than in February before the impact of coronavirus hit,” says James Mintert, the barometer’s principal investigator and director of Purdue University’s Center for Commercial Agriculture. “In July, farmers indicated they were a bit less concerned about the current economic situation on their farms than earlier this spring, but they are less optimistic about the future, perhaps as a result of the recent resurgence in COVID-19 cases. Still, two-thirds of producers responding to this month’s survey said they believe Congress should provide additional economic assistance to farmers in 2020 to help offset the pandemic’s impact on agriculture.”

Among survey highlights:

**56% of producers said they plan to reduce their farm machinery purchases compared with a year ago; while 38% said they plan to keep machinery purchases about the same.

**16% of respondents expect farmland values to rise over the next 12 months compared with 10% in June. Looking ahead, however, 48% said they expect values to rise over the next five years compared with 55% in the previous survey.

**More than half of survey respondents said they were less likely to attend in-person educational events in 2020, as a result of COVID-19 concerns. When asked what their top information source would be in lieu of attending in-person events, 36% chose farm magazines, 19% chose online webinars, 17% chose farm radio and 17% chose websites.

The Ag Economy Barometer, based on responses from 400 U.S. agricultural producers, was conducted July 20-24.

By | August 4th, 2020|Daily Market Highlights|

Cattle Current Daily—Aug. 4, 2020

Last week’s five-area direct weighted average steer price was $98.66/cwt. on a live basis, which was $1.42 more than the previous week. The average dressed steer price was $160.03, which was $1.93 more than the prior week.

Cattle futures continued to maintain and extend recent gains Monday, except for the back months of Feeder Cattle. Support includes cash strength, thoughts of increased food service demand when schools resume this fall and the highest level of open interest since the middle of March.

Live Cattle futures closed an average of 42¢ higher.

Feeder Cattle futures closed mixed, from an average of 47¢ higher across the front half of the board to an average of 65¢ lower across the back half.

Choice boxed beef cutout value was $1.40 higher Monday afternoon at $204.66/cwt. Select was 51¢ higher at $190.40.

Corn futures closed 1¢ to 2¢ higher through Jly ’21 and then mostly fractionally higher.

Soybean futures closed 1¢ to 3¢ higher.

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Major U.S. financial indices closed higher Monday, fueled by the continued rally in big tech stocks, as well as positive manufacturing news.

Economic activity in the manufacturing sector grew in July, with the overall economy notching a third consecutive month of growth, say the nation’s supply executives in the latest Manufacturing ISM® Report On Business®.

Specifically, the July PMI® rose 1.6 percentage points month to month in July to 54.2%. 

The Dow Jones Industrial Average closed 236 points higher. The S&P 500 closed 23 points higher. The NASDAQ closed 157 points higher.

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“Beef supply conditions have stabilized, albeit at higher levels of production year over year in the second half of 2020. Beef demand will be critical in determining overall beef prices and, subsequently, cattle prices going forward,” says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly market comments. 

As for any product, Peel explains beef demand is generally a function of consumers’ willingness and ability to purchase specific quantities of the product at various price levels.

Consumer ability to purchase a product is related to the level of consumers’ discretionary income. Generally, Peel says macroeconomic conditions, including overall GDP levels, along with unemployment, are indicative of income levels. 

The advance estimate for U.S. real GDP in the second quarter was a staggering -32.9%, according to the U.S. Bureau of Economic Analysis. The nation’s unemployment rate in June was 11.1%.

“This highlights questions about the impact of the pandemic on beef demand in the first half of the year and, more importantly, beef demand for the remainder of the year,” Peel says.

Ability aside, Peel explains consumer willingness to purchase beef has to do with underlying preferences, which tend to be relatively stable, evolving over long periods of time.

“In the short run, willingness to purchase beef will depend on the relative prices of other products, particularly substitute products that may be consumed in place of a particular product,” Peel says. “For specific beef products, this is a complicated consideration, including other proteins such as pork and poultry, as well as the multitude of other beef products that may be chosen by consumers. In periods of low income, beef consumers may trade down from high cost beef products to lower valued products. Food service demand, which remains diminished, will emphasize this impact going forward.”

By | August 3rd, 2020|Daily Market Highlights|

Cattle Current Daily—Aug. 3, 2020

Negotiated cash fed cattle prices ended the week generally $1-$2 higher on a live basis at $97/cwt. in the Southern Plains, $100 in Nebraska, $98 in Colorado and steady at $101-$102 in the western Corn Belt. Dressed prices were $2 higher at $160.

Through Thursday, the average five-area direct weighted steer prices was $98.49/cwt. on a live basis, which was $1.26 more than the previous week, but $15.48 less than the same time last year. The average dressed steer price of $160.02 was $1.92 higher than the previous week, but $24.49 less than the previous year.

Cattle futures closed higher again Friday, helped along by cash strength, as well as week-end and month-end positioning and book squaring.

Live Cattle futures closed an average of $1.01 higher.

Feeder Cattle futures closed an average of $1.63 higher.

Choice boxed beef cutout value was $1.46 higher Friday afternoon at $203.26/cwt. Select was $1.61 lower at $189.89.

Corn futures closed mostly fractionally higher. 

Soybean futures closed 2¢ to 4¢ higher.

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Major U.S. financial indices closed higher Friday, at the end of a volatile session, but supported by bullish quarterly earnings posted by big tech stocks.

The Dow Jones Industrial Average closed 114 points higher. The S&P 500 closed 24 points higher. The NASDAQ closed 157 points higher.

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“Federally inspected beef production has been above year-ago levels since the second week of June, while federally inspected cattle slaughter is down nearly 70,000 head over the same timeframe, compared to last year,” explains Andrew P. Griffith, agricultural economist at the University of Tennessee, in his weekly market comments. “The increase in beef production stems from heavier cattle that spent more days on feed than was anticipated.”

The average dressed steer weight the week ending July 18 of 899 lbs. was 3 lbs. less than the prior week but 33 lbs. more than the same week a year earlier, according to USDA’s Actual Slaughter Under Federal Inspection report. The average dressed heifer weight of 829 lbs. was the same as a week earlier but 34 lbs. heavier than the prior year.

At the same time, the percentage of fed cattle grading Choice and Prime continues to grow, relative to the same time last year.

Griffith notes only 0.7% more cattle graded Choice through the first 23 weeks of this year, compared to the same time in 2019. But, 2.4% more graded Choice year over year during the past six weeks.

More broadly, according to weekly USDA National Steer and Heifer Estimated Grading Percent reports, from the week ending May 2 through the week ending July 18, 70.60% to 73.58% graded Choice each week, compared to 69.59% to 71.63% for the same weeks last year.

For the same period of time this year, carcasses grading Choice and Prime ranged from 81.89% to 84.34% each week, compared to 77.11% to 78.82% last year.

“This year-over-year increase is likely to continue through the end of the year, which means more Choice beef on the market. This may keep the Choice-Select spread in check the next several months compared to last year’s wide spread,” Griffith says.

By | August 1st, 2020|Daily Market Highlights|

Cattle Current Daily—July 31, 2020

So far for the week, negotiated cash fed cattle prices on a live basis are $1 higher in the Southern Plains at $97/cwt., $2 higher in Nebraska at $100, steady in Colorado at $98 and steady to $2 higher in the western Corn Belt at $100-$102. Dressed prices are $2 higher at $160.

Cattle futures closed higher again Thursday. Along with cash strength, support included bullish export news with net sales of 29,500 metric tons (mt) for the week of July 23—a market year high—up 89% from the previous week and up 81% from the previous four-week average. That according to the U.S. Export Sales report from USDA’s Foreign Agricultural Service.

Except for 15¢ lower in away Oct, Live Cattle futures closed an average of 41¢ higher.

Feeder Cattle futures closed an average of $1.05 higher (67¢ higher at the back to $1.85 higher toward the front).

Choice boxed beef cutout value was 69¢ higher Thursday afternoon at $201.80/cwt. Select was $2.01 higher at $191.50.

The average dressed steer weight the week ending July 18 of 899 lbs. was 3 lbs. less than the prior week but 33 lbs. more than the same week a year earlier, according to USDA’s Actual Slaughter Under Federal Inspection report. The average dressed heifer weight of 829 lbs. was the same as a week earlier but 34 lbs. heavier than the prior year.

Corn futures closed mostly fractionally higher. 

Soybean futures closed mostly 1¢ to 2¢ higher.

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Except for the tech sector, major U.S. financial indices closed lower Thursday, pressured by the expected but historic decline in second-quarter GDP.

Real gross domestic product decreased at an annual rate of 32.9% in the second quarter, according to the advance estimate released by the Bureau of Economic Analysis. Real GDP in the first quarter decreased 5%.

The Dow Jones Industrial Average closed 225 points lower. The S&P 500 closed 12 points lower. The NASDAQ closed 44 points higher.

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Potentially, the heated debate and hectic work related to enhancing price discovery in cash fed cattle markets reached a crossroads this week.

The National Cattlemen’s Beef Association’s (NCBA) Live Cattle Marketing Committee and the NCBA Board of Directors unanimously passed policy that supports voluntary efforts to improve cash fed cattle trade during the next 90 days, with the potential for mandates in the future if robust regional cash trade numbers are not reached by the industry.

Specifically, according to the organization’s resolution:

“NCBA supports a voluntary approach that:

“1) Increases frequent and transparent negotiated trade to regionally sufficient level, to achieve robust price discovery determined by NCBA funded and directed research in all major cattle feeding regions, and

“2) Includes triggers to be determined by a working group of NCBA producer leaders by October 1, 2020. 

“BE IT FURTHER RESOLVED, if the voluntary approach does not achieve robust price discovery as determined by NCBA funded and directed research, and meet the established triggers that increase frequent and transparent negotiated trade to a regionally sufficient level, and triggers are activated, NCBA will pursue a legislative or regulatory solution determined by the membership.

“BE IT FURTHER RESOLVED, NCBA support a three-year review/sunset provision on any negotiated trade solutions implemented to allow for a thorough cost benefit analysis to be conducted.”

That came after intense debate and more than six hours of wrangling, not to mention the years of effort leading up to it, including the research referenced in the resolution.

As an aside, depending on cash trade levels deemed sufficient in each region, there are a number of ways to achieve a deeper pool of cash fed cattle trade data, everything from changing the approach to confidentiality in livestock mandatory reporting (up for reauthorization in September), to bid-the-grid base prices, to a number of other voluntary options mentioned in the recent USDA Boxed Beef & Fed Cattle Price Spread Investigation Report. Stephen Koontz, agricultural economist at Colorado State University previously outlined many of those options in his ongoing research.

“The policy we passed today is the result of every state cattlemen’s association coming together to work through their differences and finding solutions that meet the needs of their members, all of whom agree that our industry needs more robust price discovery,” says  NCBA President Marty Smith. “This policy provides all players in the industry the opportunity to achieve that goal without seeking government mandates.”

The Live Cattle Marketing Committee considered several proposals, each aimed at encouraging greater volumes of cash cattle trade.

By | July 30th, 2020|Daily Market Highlights|

Cattle Current Daily—July 30, 2020

Negotiated cash fed cattle trade was $1 higher in the Southern Plains Wednesday at $97/cwt., according to the Agricultural Marketing Service. Although too few to trend, there were also some live sales in Nebraska at $98 and in the western Corn Belt at $99-$101. Early dressed sales were at $160.

Slaughter steers and heifers also sold steady to $1 higher at Sioux Falls Regional in South Dakota, where 184 head of Choice 2-3 steers weighed an average of 1,475 lbs. and brought an average price of $101.12.

Cash strength helped Cattle futures extend gains Wednesday.

Except for 2¢ lower in the back contract, Live Cattle futures closed an average of 77¢ higher (47¢ to $1.07 higher).

Feeder Cattle futures closed an average of 98¢ higher (25¢ to $1.47 higher), amid extremely light trade.

Wholesale beef prices continue to drag bottom, though. Choice boxed beef cutout value was $1.85 lower Wednesday afternoon at $201.11/cwt. Select was $1.17 higher at $189.49.

Corn futures closed 3¢ to 4¢ lower through May ’21 and then mostly fractionally lower to 1¢ lower.

Soybean futures closed fractionally lower to 5¢ lower though May ’21 and then mostly 1¢ to 3¢ higher.

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Major U.S. financial indices closed higher Wednesday. Besides tech stocks bouncing higher, support included the Federal Reserve leaving interest rates unchanged, as expected.

“Weaker demand and significantly lower oil prices are holding down consumer price inflation. Overall financial conditions have improved in recent months, in part reflecting policy measures to support the economy and the flow of credit to U.S. households and businesses,” according to a statement from the Fed. “The path of the economy will depend significantly on the course of the virus. The ongoing public health crisis will weigh heavily on economic activity, employment, and inflation in the near term, and poses considerable risks to the economic outlook over the medium term.”

The Dow Jones Industrial Average closed 160 points higher. The S&P 500 closed 40 points higher. The NASDAQ closed 140 points higher.

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“We want beef to be the protein of choice, and we want the entire U.S. beef industry to be trusted and respected for its commitment to quality, safety, and sustainability,” says Kim Brackett, an Idaho rancher and leader of the Beef Industry Long Range Plan (BILRP) taskforce.

That group unveiled its plan for 2021-2025 at this week’s National Cattlemen’s Beef Association (NCBA) Cattle Industry Summer Business Meeting in Denver. The BILRP—updated every five years since 1995—is a designed to help the beef industry establish a common set of objectives and priorities. It communicates the industry’s strategic direction and provides insight to how the industry can serve its stakeholders by growing beef demand.

“The task force invested many hours, discussing the current state of the industry and what we need to accomplish over the next five years. We feel we’ve established some important priorities and strategies, as well as benchmarks for success that will help keep our industry on track through 2025 and beyond,” Brackett says.

The 2021-2025 Beef Industry Long Range Plan includes the following industry objectives:

  1. Grow global demand for U.S. beef by promoting beef’s health and nutritional benefits, satisfying flavor and unparalleled safety.
  2. Improve industry-wide profitability by expanding processing capacity and developing improved value-capture models.
  3. Intensify efforts in researching, improving, and communicating U.S. beef industry sustainability.
  4. Make traceability a reality in the U.S. beef industry.

Core strategies and goals to achieve those objectives include:

(core strategy in bold type; sample of goals in italics)

Drive growth in beef exports. 

*Grow U.S. beef exports to 17% of U.S. beef production by 2025.

*By 2025, 75% of all cattle producing states are participating in a nationwide animal disease traceability program (e.g. U.S. Cattle Trace).

Grow consumer trust in beef production.

*Grow BQA certifications by a cumulative total of 10% per year and achieve national standardization of the BQA program by 2023.

Develop and implement better business models to improve price discovery and value distribution across all segments.

*Maintain a beef cowherd of 30-31 million with a growth target of 32.0 to 32.5 million head.

*Grow packing capacity by 7% (7,000 head per day) by 2025.

Promote and capitalize on the multiple advantages of beef.

*By 2025, achieve a Wholesale Beef Demand Index of 124.

Improve the business and political climate for beef.

*By 2025, at least 75% of producers will agree that the beef industry is effectively addressing opportunities and challenges in a way that enhances the business climate for beef.

Safeguard and cultivate investment in beef industry research, marketing and innovation.

*Quantify the existing public research funding for beef industry production issues and grow that funding by 25% by 2025.

*Increase national industry program funding for beef marketing, research and promotion efforts to $100 million by 2025.

By | July 29th, 2020|Daily Market Highlights|

Cattle Current Daily—July 29, 2020

Although too few transactions to trend, there was some early negotiated cash fed cattle trade Tuesday. Live prices in the Southern Plains were on either side of steady at $95/cwt. in the Texas Panhandle and $95.00-$97.50 in Kansas, according to the Agricultural Marketing Service. Early dressed sales in the western Corn Belt were at $161, compared to $158 last week.

Cattle futures closed higher Tuesday, off of session highs and square in the same trading channel of recent weeks.

Live Cattle futures closed an average of 48¢ higher (22¢ to $1.17 higher).

Feeder Cattle futures closed an average of 78¢ higher (15¢ to $1.67 higher).

Choice boxed beef cutout value was 41¢ higher Tuesday afternoon at $202.96/cwt. Select was $1.81 lower at $188.32.

Corn futures closed mostly 3¢ to 4¢ lower.

Soybean futures closed 8¢ to 12¢ lower.

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Major U.S. financial indices closed lower Tuesday. Pressure included some likely profit taking in tech stocks and uncertainty about how quickly lawmakers will come to terms on another round of federal economic aid to address COVID-19.

The Dow Jones Industrial Average closed 205 points lower. The S&P 500 closed 20 points lower. The NASDAQ closed 134 points lower.

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Surging COVID cases across the nation and subsequent rollbacks in re-opening plans are stalling the U.S. restaurant industry’s recovery, according to The NPD Group. Since the second week of June, declines in major restaurant chain customer transactions range from 11% to 14% less than a year earlier. Until then, declines improved steadily for about six weeks.

“I believe there is still a lot of upside recovery for restaurants, but for now we’re stuck in neutral until we can get the industry operating at full capacity,” says David Portalatin, NPD food industry advisor. “The recovery phase will then tell us whether the industry can recapture enough customer traffic to get back to the pre-COVID baseline, or whether the new normal will reflect a re-set where consumers prepare more meals in their home kitchens for a longer term.”

Major restaurant chain total customer transactions were 12% less year over year for the week ending July 19, which was 2% more positive than the prior week, according to NPD’s CREST® Performance Alerts.

That same week, 78% of restaurants were in geographies permitting on-premises dining with varying capacity restrictions. For instance, 13% of the nation’s restaurant units are in California, where on-premise dining is prohibited.

Moreover, many restaurants continue to operate at capacities that are significantly less than normal in terms of menu offerings and store hours. Restaurant operators make those decisions based partly on the pandemic situation overall and partly on the difficulty in attracting labor.

Quick service restaurant chains (QSR) were responsible for improving customer transaction declines for the week ending July 19. QSR transactions were 11% less compared to the prior year. Full service restaurant (FSR) chain transactions were down 27%. According to NDP, FSR transactions would be worse without a significant shift to off-premises. In June, FSR off-premises traffic increased 91% versus year ago, while on-premises traffic declined 62%.

“Certainly full service restaurants need to recover their lost on-premises business since that will always be their main source of volume,” says Portalatin. “But, I wouldn’t be surprised to see new casual dining models emerge that are designed to optimize off-premises capabilities for the long-term.”

By | July 28th, 2020|Daily Market Highlights|

Cattle Current Daily—July 28, 2020

Cattle futures closed mostly lower Monday, despite logic suggesting a friendly to neutral Cattle on feed report Friday. Besides technical pressure and near expiration of spot Live Cattle, less estimated week-to-week cattle slaughter and the higher year-to-year cattle inventory could have lent bearishness.

Live Cattle futures closed an average of 90¢ lower, except for 75¢ higher in the back contract.

Feeder Cattle futures closed an average of $1.90 lower (35¢ to $3.12 lower), except for an average of 22¢ higher in the back three contracts.

Choice boxed beef cutout value was 78¢ lower Monday afternoon at $202.55/cwt. Select was 50¢ lower at $190.13.

Corn futures closed mostly fractionally mixed.

Soybean futures closed mostly 2¢ to 3¢ higher.

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Major U.S. financial indices closed higher Monday, led by tech stocks and buoyed by hopes surrounding another round of federal economic aid to address COVID-19.

The Dow Jones Industrial Average closed 114 points higher. The S&P 500 closed 23 points higher. The NASDAQ closed 173 points higher.

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There’s still plenty of backlogged market-ready fed cattle to work through, but it appears progress is being made, says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly market comments.

“The calculated estimates of cattle on feed over 120 days are still very large compared to last year, but the difference has decreased by some 160,000 head since May,” Peel says, referring to Friday’s monthly Cattle on Feed report. “It appears that the backlog is decreasing but a sizable number of cattle remain to be cleaned up before feedlots will be current. In the January-April period, feedlot placements were down just over 1 million head year over year.”

Peel also notes the report may highlight some regional drought impacts, with increased June placements of cattle weighing less than 700 lbs. in Texas and Colorado.

As for the semiannual Cattle inventory report, also issued Friday, Peel says the slow decrease in beef cow numbers, relative to January, and the same number of beef replacement heifers suggest no accelerated liquidation at this point.

“The second half of the year may tell the tale as cow-calf producers react to fall calf market conditions,” Peel says. “Overall, it appears that cattle numbers continue a slow tightening of inventories going forward.”  

By | July 27th, 2020|Daily Market Highlights|

Cattle Current Daily—July 27, 2020

Through Thursday, the average five-area direct fed steer price was $97.23/cwt. on a live basis, which was 91¢ higher than the previous week, but $18.20 less than the same time last year.

Regionally, negotiated cash fed cattle trade for the week was generally $1-$2 higher on a live basis at $96/cwt. in the Southern Plains, $98 in the Northern Plains and $99-$100 in the western Corn Belt. Dressed trades were mostly $1 higher at $158.

Cattle futures closed narrowly mixed Friday.

Live Cattle futures closed an average of 29¢ higher, except for 35¢ and 32¢ lower in Feb and Apr and unchanged in away Dec.

Except for 2¢ higher in spot Aug, Feeder Cattle futures closed from unchanged to an average of 34¢ lower.

Choice boxed beef cutout value was 49¢ lower Friday afternoon at $201.77/cwt. Select was 16¢ lower at $190.63.

Corn futures closed mostly unchanged to fractionally higher.

Soybean futures closed mostly fractionally higher to 1¢ higher, except for fractionally lower to 2¢ lower in the front four contracts.

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Major U.S. financial indices closed lower Friday, led by tech stocks once again.

The Dow Jones Industrial Average closed 182 points lower. The S&P 500 closed 20 points lower. The NASDAQ closed 98 points lower.

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USDA’s monthly Cattle on Feed report—for feedlots with 1,000 head or more capacity—was close to widespread expectations.

Cattle on feed July 1 of 11.44 million head was 42,000 head fewer (-0.36%) than the prior year. That was the second highest inventory for the date since the series began in 1996, according to the National Agricultural Statistics Service.

Placements in June of 1.80 million head were 37,000 head more (+2.10%) than the prior year. That was on the low end of expectations, which could be considered market friendly. In terms of weights, 41% went on feed weighing 699 lbs. or less, 43% weighing 700-899 lbs. and 16% weighing 900 lbs. or more.

Marketings in June of 1.97 million head were 26,000 head more (+1.33%) than a year earlier.

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USDA’s semiannual Cattle report mainly mirrored pre-report estimates and suggests a continued plateau in beef cow numbers, with potential downside pressure.

The National Agricultural Statistics Service pegs all cattle and calves July 1 at 103 million head, which is 100,000 head more (+0.09%) than a year earlier.

There were 32.05 million beef cows and heifers that calved, which was 250,000 head fewer (-0.77%) less than the same time a year earlier.

The 4.4 million beef heifers retained for replacement were the same as a year earlier.

Cattle on feed July 1 (all feedlots) was 13.6 million head, the same as in 2019.

Cattle on feed in feedlots with capacity of 1,000 or more head accounted for 84.1% of the total cattle on feed on July 1, which was slightly less than the prior year.

Estimated feeder cattle outside feedlots July 1 of 37.4 million head was 300,000 head more (+0.80%) than a year earlier.

By | July 25th, 2020|Daily Market Highlights|

Cattle Current Daily—July 24, 2020

Negotiated cash fed cattle trade for the week so far is generally $1-$2 higher on a live basis at $96/cwt. in the Southern Plains, $98 in the Northern Plains and $99-$100 in the western Corn Belt. Dressed trades are mostly $1 higher at $158.

Cattle futures softened a touch Thursday, despite firmer cash fed cattle and wholesale beef prices, and ahead of Friday’s Cattle on Feed report and the semiannual Cattle inventory report.

Live Cattle futures closed an average of 51¢ lower (20¢ at the back to $1.12 lower toward the front).       

Except for 50¢ higher in spot Aug, Feeder Cattle futures closed from unchanged to an average of 14¢ lower.

Choice boxed beef cutout value was $1.11 higher Thursday afternoon at $202.26/cwt. Select was $1.51 higher at $190.79.

The average dressed heifer weight for the week ending July 11 was 902 lbs. which was 6 lbs. heavier than the previous week and 37 lbs. heavier than the same week last year, according to USDA’s Actual Slaughter Under Federal Inspection report. The average dressed heifer weight of 829 lbs. was 3 lbs. heavier than the prior week and 38 lbs. more than the prior year.

Corn futures closed mostly fractionally higher to 1¢ higher.

Soybean futures closed 4¢ to 7¢ higher through Mar ’21 and then mostly 1¢ to 3¢ higher.

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Major U.S. financial indices closed lower Thursday, led by tech stocks and pressured by indicators of ongoing COVID-based unemployment.

Initial unemployment claims for the week ending July 18 were 1.42 million, which was up 109,000 from the previous week, according to data from the U.S. Department of Labor.

The Dow Jones Industrial Average closed 353 points lower. The S&P 500 closed 40 points lower. The NASDAQ closed 244 points lower.

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USDA’s monthly Livestock Slaughter report for June underscores the massive recovery in cattle slaughter, as well as the impact of continued heavier carcass weights. What follows is slaughter and production under federal inspection.

June fed cattle slaughter of 2.4 million head was 542,900 head more (+31.94%) than in May, and 13,000 head more (+0.58%) than the same month last year.

Keep in mind there were 26 business days, counting Saturdays, versus 25 last year.

However, year to date, fed cattle slaughter through June of 12.08 million was 772,600 head fewer (-6.01%) than the same time last year.

Total cattle slaughter in June of 2.82 million head was 597,600 head more (+26.89%) than in May and 51,300 head more than last year (+1.85%).

Year to date, total cattle slaughter through June of 15.50 million was 769,200 head fewer (-4.73%) than the same time last year.

Federally inspected beef production in June of 2.33 billion lbs. was 507 million lbs. more (+27.74%) than in May, and 134.9 million lbs. more (+6.13%) than a year earlier.

Year to date through June, however, beef production of 12.78 billion lbs. was 279.7 million lbs. less (-2.14%) than the same time last year.

Heavier carcass weights continue to close the gap between beef production and the number of cattle harvested. For instance, the average dressed steer weight in June of 893 lbs. was 42 lbs. heavier year over year. Year to date through June, the average dressed steer weight of 897 lbs. is 33 lbs. heavier.

Likewise, the average dressed heifer weight in June of 824 lbs. was 37 lbs. heavier than the previous year. Year to date through June, the average dressed heifer weight of 829 lbs. is 25 lbs. heavier.

Total red meat production in June under federal inspection of 4.74 billion lbs. was 1.03 billion lbs. more than in May (+27.71%) and 403.50 million lbs. more than a year earlier (+9.31%).

Year to date through June, total red meat production of 26.55 billion lbs. is just 14.7 million lbs. less (-0.06%) than the same time a year ago.

By | July 23rd, 2020|Daily Market Highlights|

Cattle Current Daily—July 23, 2020

Negotiated cash fed cattle prices trended higher through Wednesday afternoon, according to the Agricultural Marketing Service (AMS). Live sales in Colorado were $2 higher than last week at $98/cwt. In Nebraska, live trades were 50¢ to $2 higher at $98; dressed sales were $1.00-$1.50 higher at $158.00-$158.50.

Cattle feeders sold 422 head of the 1,022 offered in the weekly Fed Cattle Exchange auction—all from the Southern Plains. Of those 103 head sold for a weighted average price of $96/cwt. (1-9 day delivery) and 319 head sold for a weighted average price of $96.12 (9-17 day delivery). Those prices mirrored country trade in the region on Tuesday.

Cattle futures closed mixed, but mostly slightly higher on Wednesday, with more strength later in the session. Some positioning is likely Thursday, ahead of Friday’s Cattle on Feed report and the semiannual Cattle inventory report.

Live Cattle futures closed mixed, from an average of 24¢ lower through the front four contracts to an average of 42¢ higher.  

Feeder Cattle futures closed an average of 31¢ higher.

Choice boxed beef cutout value was 27¢ higher Wednesday afternoon at $201.15/cwt. Select was $2.02 lower at $189.28.

Corn futures closed 2¢ to 4¢ higher.

Soybean futures closed mostly 1¢ to 2¢ higher.

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Major U.S. financial indices closed higher Wednesday, buoyed by promising coronavirus vaccine news and chatter about additional federal economic stimulus.

The Dow Jones Industrial Average closed 165 points higher. The S&P 500 closed 18 points higher. The NASDAQ closed 25 points higher.

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USDA released its investigation into cattle and beef price reactions to last summer’s fire at the Tyson plant in Holcombe, KS and to disruptions wrought by COVID-19.

The report—Boxed Beef & Fed Cattle Price Spread Investigation Report—details market conditions and prices before, during and after those events, although the pandemic continues.

Keep in mind this USDA investigation does not examine potential violations of the Packers and Stockyards Act. USDA continues to cooperate with the Department of Justice Antitrust Division in that agency’s current investigation.

Instead, the report provides the logic and details behind the price reactions of the two black swan events: higher wholesale beef prices and lower fed cattle prices spawned by disruption to packing capacity and by altered demand flow, in the case of the pandemic.

No surprises, no matter how distasteful the reality.

“Record high meat prices are not a surprise,” says Stephen Koontz, agricultural economist at Colorado State University, reflecting on COVID impacts, specifically, in Economic Reasons for What was Observed in Fed Cattle and Beef Markets During the Spring of 2020.

“The grocery store supply chain was emptied during the closures of local economies and then had difficulty catching up,” Koontz explains. “Further, prices associated with specific cuts that consumers typically prepare at home were the highest. Prices of cuts sold at restaurants initially dropped to record lows and then rallied as consumers made substitutions and began purchasing cuts they did not buy typically. However, all rallied as total beef supplies diminished with closures and partial operations.

“Record low livestock prices are also not a surprise. If packers cannot run or cannot run at typical throughput levels—especially if animal supplies are abundant—then the marginal value of that last group of animals that is not sold is close to zero. And the last pen or truckload or group of animals is a perfect substitute for the first. It is the marginal value of the last product that sets the market. This point is critical. In fact, that is what is communicated by economists when supply and demand curves are drawn. The equilibrium quantity and price are what is traded at the lowest marginal value to buyers and the highest marginal value to sellers.”

The USDA report also offers considerations relative to price discovery, market transparency and price risk management.

By | July 22nd, 2020|Daily Market Highlights|

Cattle Current Daily—July 22, 2020

Although too few to trend, there were some early live sales in the Southern Plains on Tuesday at $96/cwt., which was $1 higher than last week.

Cattle futures closed mixed on Tuesday, amid sluggish activity, as traders apparently waited for more cash direction.

Except for 2¢ higher in Apr, Live Cattle futures closed an average of 34¢ lower.        

Except for 27¢ lower and 2¢ lower in the front two contracts, Feeder Cattle futures closed an average of 57¢ higher (15¢ to $1.30 higher at the back).

Choice boxed beef cutout value was 86¢ lower Tuesday afternoon at $200.88/cwt. Select was 29¢ lower at $191.30.

Corn futures closed 3¢ to 5¢ lower.

Soybean futures closed 5¢ to 7¢ lower through Mar ’21 and then fractionally lower to 3¢ lower.

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Major U.S. financial indices closed mixed Tuesday, with apparent profit taking in tech stocks, but more optimism in financials.

The Dow Jones Industrial Average closed 159 points higher. The S&P 500 closed 5 points higher. The NASDAQ closed 86 points lower.

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Total customer transactions at major U.S. restaurant chains eroded the week ending July 12, down 14% compared to a year earlier, and down 3% more than the previous week, according to the NPD Group (NPD).

Transactions at quick service restaurants (QSRs) led the decline, down 4% week to week and 13% less than a year earlier. Full service restaurant (FSR) transactions improved 3% week to week to 26% less year over year, according to NPD’s CREST® Performance Alerts. That was something of a surprise given the fact that QSR transactions so far are faring the pandemic more positively than FSRs.

“Last week, when quick service restaurants drove the improvements in restaurant customer transaction declines, I highlighted the apparent divergence in trend between quick service and full service restaurants, supported by sound reasoning about on-premises and off-premises models, the pace of reopening and reclosing, and the resurgence in COVID-19 cases around the country,” explains David Portalatin, NPD food industry advisor. “The flip in declines this week from quick service restaurants to full service restaurants is a reminder that the world is unpredictable today and we should expect twists and turns on the bumpy road to recovery. Still, the pre-COVID trend that favored quick service restaurants and the segment’s expertise in offering off-premises services, like drive-thru and delivery, has accelerated during the pandemic and will continue to do so in the long-term.”

The estimated percentage of U.S. restaurants permitted to have on-premises dining in the week ending July 12 declined to 82% from 90% in the prior week, according to NPD’s restaurant census ReCount®.  The majority of the change was in California, where the state government rolled back recent reopening to off-premise dining only.

By | July 21st, 2020|Daily Market Highlights|

Cattle Current—July 21-2020

Cattle futures softened some on Monday, likely with some profit taking from last week’s strong performance.

Live Cattle futures closed an average of 39¢ lower (25¢ lower to $1.00 lower in spot Aug). 

Feeder Cattle futures closed an average of $1.31 lower (32¢ to $2.30 lower).

Wholesale beef values edged higher Monday after dropping to the lowest levels last week since December of 2017.

Choice boxed beef cutout value was $1.27 higher Monday afternoon at $201.74/cwt. Select was $1.28 higher at $191.59.

Corn futures closed 2¢ to 4¢ lower through Jly ’21 and then fractionally lower to 1¢ lower.

Soybean futures closed mostly 3¢ to 5¢ higher.

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Major U.S. financial indices closed higher Monday, led by tech stocks, which were paced by Amazon.

The Dow Jones Industrial Average closed 8 points higher. The S&P 500 closed 27 points higher. The NASDAQ closed 263 points higher.

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“Beef production will be higher year over year for the remainder of the year. This may combine with limited demand to keep wholesale beef prices under pressure going forward,” says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his latest weekly market comments.     

The most recent World Agricultural Supply and Demand Estimates project beef production this year at 26.93 billion lbs., which would be just 0.81% less than last year. Heavier carcass weights are making up for lost slaughter earlier in the year.

For seasonal perspective, Peel explains carcass weights typically decline significantly in April, May and June. Last year, for instance, steer carcass weights declined 54 lbs. from January (896 lbs.) to a low of 842 lbs. the first week of June. This year, he notes average steer carcass weights in June of 896 lbs. were 16 lbs. less than in January.

“Longer term, beef demand may be affected by the economic recession,” Peel says. “Impacts have not been obvious thus far but unemployment is still high and some unemployment benefits will end this month. With COVID-19 far from controlled, considerable uncertainty remains regarding how school schedules, sporting activities and business travel could affect beef demand this fall.”

By | July 20th, 2020|Daily Market Highlights|

Cattle Current Daily—July 20, 2020

Negotiated cash fed cattle prices ended the week generally steady.

The weighted average five-area direct fed steer price through Thursday was $96.32/cwt. on a live basis, which was 35¢ higher than the previous week, but $16.70 less than the same week last year. The average steer price in the beef was $157.58, which was 9¢ less than the previous week and $25.39 less than a year earlier.

Cattle futures meandered higher by Friday’s close, supported by the week’s optimism built by cash feeder prices and thoughts that the low may be in the books for fed cattle prices.

Except for unchanged in spot Aug, Live Cattle futures closed an average of 36¢ higher.       

Feeder Cattle futures closed an average of 38¢ higher.

Choice boxed beef cutout value was 33¢ lower Friday afternoon at $200.47/cwt. Select was 99¢ lower at $190.31.

The average dressed steer weight for the week ending July 4 was 896 lbs., according to USDA’s Actual Slaughter Under Federal Inspection report. That was even with the previous week and 35 lbs. heavier than the previous year. The average dressed heifer weight was 826 lbs., on par with the previous week but 34 lbs. heavier than the same week last year.

Estimated total cattle slaughter for the week ending July 18 was 650,000 head, according to USDA’s Agricultural Marketing Service. That would be 7,000 head fewer (-1.07%) than the previous week’s estimate and 5,000 head fewer (-0.76%) than the same week last year. Year to date estimated total cattle slaughter of 17.15 million head is 1.01 million head fewer (-5.56%) than last year.

Corn futures closed mostly 1¢ to 2¢ higher.

Soybean futures closed 4¢ higher through Jly ’21 and then fractionally higher to 3¢ higher.

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Major U.S. financial indices closed narrowly mixed Friday. Pressure included the expanding number of coronavirus cases.

The Dow Jones Industrial Average closed 62 points lower. The S&P 500 closed 9 points higher. The NASDAQ closed 23 points higher.

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U.S. beef exports are typically viewed in terms of tonnage, dollars and the impact on the U.S. beef industry, specifically. Export benefits run deeper, though.

Since 2015, indirect exports of corn and soybeans through beef and pork exports has been the fastest-growing category of corn and soybean use, according to the U.S. Meat Export Federation (USMEF).

For perspective, U.S. beef and pork exports last year used 480 million bushels of corn. Corn revenue generated by beef and pork exports totaled $1.8 billion (480 million bushels x average annual price of $3.75/bushel).

U.S. beef and pork exports also used about 3 million tons of distiller’s dried grains with solubles (DDGS) in 2019 at an annual average price of $137/ton, generating $411.8 million in revenue for ethanol mills’ co-products.

U.S. pork exports last year also used 2.12 million tons of soybean meal, which is the equivalent of 89.2 million bushels of soybeans. Soybean revenue generated by pork exports totaled $751.7 million (89.2 million bushels x average annual price of $8.43/bushel).

Snubbed to a different post, beef and pork exports last year contributed more than 12% of the per-bushel price of corn ($0.46/bushel) of an annual average price of $3.75/bushel.

All of that comes from a recently updated study conducted by World Perspectives, Inc. It helps explain why domestic corn and soybean growers invest a portion of their checkoff dollars in market development efforts conducted by USMEF.

“These are challenging times for everyone in U.S. agriculture, with producers facing difficult choices every day,” says Dan Halstrom, USMEF president and CEO. “USMEF greatly appreciates the foresight and confidence shown by the corn and soybean sectors when they invest in red meat exports. This study provides a detailed analysis of the value delivered by that investment.”

By | July 18th, 2020|Daily Market Highlights|

Cattle Current Daily—July 17, 2020

Cattle futures stepped higher Thursday, supported by firmer cash prices, chatter about the low for fed cattle being established and an increase in weekly exports.

Net beef export sales of 27,800 metric tons for the week ending July 9 were up noticeably from the previous week and up 68% from the prior four-week average, according to the U.S. Export Sales report from USDA’s Foreign Agricultural Service. Increases were primarily for South Korea, Japan, Mexico, Taiwan, and Canada.

Live Cattle futures closed an average of $1.33 higher (67¢ to $2.05 higher).  

Feeder Cattle futures closed an average of $1.92 higher (67¢ to $3.20 higher).

Choice boxed beef cutout value was 4¢ higher Thursday afternoon at $200.80/cwt. Select was 7¢ lower at $191.30.

Corn futures closed mostly 1¢ to 3¢ higher.

Soybean futures closed 7¢ to 8¢ higher through Mar ’21 and then mostly 4¢ higher.

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Major U.S. financial indices closed lower amid mixed economic news.

Although 10,000 fewer than the previous week, initial jobless claims of 1.3 million, reported by the U.S. Department of Labor, were more than traders expected.

On the other hand, U.S. retail sales beat expectations, climbing 7.5% month to month in June, according to the U.S. Census Bureau.

The Dow Jones Industrial Average closed 135 points lower. The S&P 500 closed 10 points lower. The NASDAQ closed 76 points lower.

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Based on the monthly Cattle on Feed report, USDA’s Economic Research Service (ERS) estimated 971,000 head of cattle on feed more than 150 days, as of June 1, which was 42% more than the same time last year.

“With expectations of steadying demand for slaughter cattle and a large number of market-ready cattle in feedlots, price forecasts (fed cattle) for both the third and fourth quarters were lowered by $4 to $100/cwt. and by $3 to $103, respectively,” says ERS analysts, in the latest monthly Livestock, Dairy and Poultry Outlook.

In turn, expected higher fed cattle slaughter and increased feedlot marketings should improve demand for feeder cattle, according to those analysts. 

ERS projects the average feeder steer price (basis Oklahoma City) at $133/cwt. in the third quarter and $131 in the fourth quarter for an annual average of $131.70. Prices are projected at $129 in the first quarter of next year and at $132 in the second.

By | July 16th, 2020|Daily Market Highlights|

Cattle Current Daily—July 16, 2020

Negotiated cash fed cattle trade continued on Wednesday at mainly steady prices, with live sales at $95/cwt. in the Southern Plains and $96 in the Northern Plains, according to the Agricultural Marketing Service. Dressed trade in the western Corn Belt was at $157-$160.

Cattle feeders offered 1,224 head in the weekly Fed Cattle Exchange auction. Of those, 275 head–three Kansas lots–sold for a weighted average price of $95.62/cwt. with delivery of 1-9 days.

Choice 2-4 steers (169 head) weighing an average of 1,379 lbs. brought an average of $101.79 at the fat auction in Tama, IA, which was 50¢ to 75¢ lower than the prior week.

At Sioux Falls Regional in South Dakota, though, slaughter steers and heifers sold steady to $2 higher. There were 459 Choice 2-3 steers weighing an average of 1,451 lbs. and bringing an average of $100.88.

Cattle futures bounced higher, supported by firm cash fed cattle, as well as current cash demand for feeder cattle.

Live Cattle futures closed an average of 85¢ higher (30¢ higher at the back to $2.50 higher in spot Aug).

Feeder Cattle futures closed an average of $1.40 higher (32¢ higher to $2.70 higher in spot Aug).

Choice boxed beef cutout value was 16¢ lower Wednesday afternoon at $200.76/cwt. Select was 52¢ higher at $191.37.

Corn futures closed mostly fractionally higher.

Soybean futures got a boost from Wednesday’s announcement that China bought 389,000 metric tons for delivery in 2020-21.

Soybean futures closed 4¢ to 8¢ higher through Mar ’21 and then mostly 3¢ higher.

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Major U.S. financial indices continued higher Wednesday, with promising trial results for a COVID-19 vaccine (Moderna), as well as quarterly earnings from Goldman Sachs that beat expectations.

The Dow Jones Industrial Average closed 227 points higher. The S&P 500 closed 29 points higher. The NASDAQ closed 61 points higher.

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COVID-19 is accelerating the divergence between full service restaurants (FSRs) and quick service restaurants (QSRs) that began before the pandemic, according to David Portalatin, food industry advisor for The NPD Group (NPD).

“Long before anyone ever heard of social distancing, consumers were showing an increasing preference for off-premise restaurant meals. Then suddenly this March, we entered a reality where the entire restaurant industry was off-premise only,” Portalatin explains. “That harsh reality was far harsher for FSRs, a segment that saw transaction declines near 80% or worse at the depth of the pandemic in the U.S. In contrast, QSR declines were roughly half as severe thanks to their abundance of drive-thru windows, capacity for high volume pick-up, and the ability of large QSR chains to leverage digital apps as an accelerant, as well as provide a contactless experience.”

For current perspective, FSR customer transactions were 30% less than a year earlier for the week ending July 5, representing a week-to-week decline of 5%, according to NPD’s CREST®Performance Alerts. Conversely, QSR customer transactions that same week continued to improve, up 4% week to week to a level that was 13% less year over year.

Since mid-March, when the pandemic closed dine-in services, Portalatin explains QSR chains doubled down on their off-premise prowess with streamlined menus optimized for volume and efficiency and by expanding drive-thru capacity with reconfigured traffic flow and added lanes. These and other changes allow continued improvement in QSR customer transactions, whether or not government regulations allow reopening dining rooms.

In fact, Portalatin says many QSR chain operators are finding the incremental cost of opening a dining room to be greater than any incremental margin dollars they might gain and are remaining closed even when governing bodies allow reopening.  

FSR performance, on the other hand, remains largely at the mercy of governmental regulation and the persistence of the coronavirus. 

Pivoting to off-premise is far more difficult for many FSRs, Portalatin explains. These restaurants can employ similar tactics as QSRs, like streamlined menus, and temporary drive-thrus, but none play to the inherent strengths of FSRs. Moreover, as on-premise dining restrictions ease, he says many FSR operators are forced to dismantle much of their temporary off-premise infrastructure so that guests can park, have a waiting area that allows for social distancing, and labor can be redirected to the front of the house.

By | July 15th, 2020|Daily Market Highlights|

Cattle Current—July 15, 2020

Negotiated cash fed cattle trade got off to a steady start Tuesday with live prices in the Southern Plains at $95/cwt., but a few up to $96.25 in Kansas, according to the Agricultural Marketing Service.

Cattle futures softened with some likely profit taking as traders take stock of the potential upside beyond the backlog of fed cattle.

Live Cattle futures closed an average of 73¢ lower (32¢ lower to $1.22 lower).          

Feeder Cattle futures closed an average of 64¢ lower (30¢ to $1.20 lower).

Choice boxed beef cutout value was $2.34 lower Tuesday afternoon at $200.92/cwt. Select was $1.03 lower at $190.85.

Corn futures closed mostly 2¢ lower.

Soybean futures closed mostly 2¢ higher through Aug ’21 and then fractionally higher to 1¢ higher.

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Major U.S. financial indices bounced higher Tuesday. Support included more positive quarterly earnings than expected from J.P Morgan Chase.

The Dow Jones Industrial Average closed 556 points higher. The S&P 500 closed 42 points higher. The NASDAQ closed 97 points higher.

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“The COVID impacts on cattle and beef markets are not all behind us, but the majority of the disruptions appear to have passed,” says Stephen Koontz, agricultural economist at Colorado State University, in the latest issue of In the Cattle Markets. “Beef cutout prices have returned to normal levels with tenderloins being rather weak. Fed steer and heifer slaughter volumes have returned to strong levels and the Saturday kill is very comparable to last year’s high values. Packer margins remain rather strong, but are well off of record highs, and are being realized as plants are back to operating at or close to full capacity.”

Koontz notes exceptions to normality, which will remain for some time, include the inventory of cattle on feed, the number of long-fed cattle and the resulting heavier carcass weights.

“The supply scenario is usually difficult this time of year with gradual declines in numbers but higher animal weights. And that difficult scenario is usually on the tail of market opportunities in the spring,” Koontz explains. “The disruptions this year eliminated the most persistent opportunity and could not have been worse timed. I, and the futures market, think it will take us through December or into next year for the market outlook to clearly improve.”

Koontz also points to deepening drought conditions as another near-term market factor.

“I expect to see beef cow liquidation be more substantial in the fall and I expect to see stronger western forage prices through the rest of the year; the extent of both, depending on the weather,” Koontz says. “Forecasts are for high and dry through the remainder of this year, with the potential for more normal weather during next year and starting next winter.”

Although beef cow slaughter increased significantly in recent weeks, Koontz notes there is no indication of drought-forced cow liquidation currently, but beef cow feeding is reported in the West.

By | July 14th, 2020|Daily Market Highlights|

Cattle Current Daily—July 14, 2020

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.

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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.

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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.

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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.

By | July 13th, 2020|Daily Market Highlights|

Cattle Current Daily—July 13, 2020

The weighted average five-area direct fed steer price through Thursday was $95.97/cwt. on a live basis and $157.67 in the beef. That was $1.06 and $3.84 higher, week to week, respectively.

Speculation by some that that the low is in for cash fed cattle price, along with normalizing wholesale beef values, helped support Cattle futures to end the week. Lower Corn futures on Friday also supported Feeder Cattle.

Live Cattle futures closed an average of 76¢ higher.

Feeder Cattle futures closed an average of $1.24 higher.

Choice boxed beef cutout value was 91¢ higher Friday afternoon at $204.50/cwt. Select was 54¢ lower at $194.29.

Increased beginning corn and soybean stocks projected in the monthly World Agricultural Supply and Demand Estimates (see below) weighed on futures Friday.

Corn futures closed mostly 10¢ to 11¢ lower through Jul ’21 and then mostly 6¢ lower.

Soybean futures closed 9¢ to 12¢ lower.

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Major U.S. financial indices closed higher Friday, with much of the overall support attributed to promising results for a coronavirus treatment.

The Dow Jones Industrial Average closed 369 points higher. The S&P 500 closed 32 points higher. The NASDAQ closed 69 points higher.

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USDA’s monthly World Agricultural Supply and Demand Estimates increased expectations for 2020 beef production and total red meat and poultry production.

Beef production for this year was projected at 26.93 billion lbs., which was 260 million lbs. more (+0.97%) than the previous month’s estimate, based on higher cattle slaughter and heavier carcass weights. The total would be 221 million lbs. less (-0.81%) than in 2019.

“Cattle price forecasts for 2020 are lowered from last month on prices to date and continued large supplies of fed cattle,” according to analysts with USDA’s Economic Research Service (ERS).

ERS projects the five-area direct weighted average steer price at $100/cwt. in the third quarter and at $103 in the fourth quarter for an annual average price of $106.80. That’s $1.80 less than the June projection. The projected annual price next year is $110, with prices estimated at $104 in the first quarter and $105 in the second.

ERS estimates total red meat and poultry production for this year at 106.54 billion lbs., which is 1.54 billion lbs. more (+1.46%) than the previous month’s estimate. That would be 1.28 billion lbs. more (+1.21%) than last year.

Among other WASDE highlights:

Corn

USDA estimated corn production for this year at 15.0 billion bu., which was 995 million bu. less (-6.22%) than the previous month’s estimate, given 5 million fewer planted acres projected in June’s Acreage report.

Corn production, with projected yield of 178.5 bu./acre, would be 1.38 billion bu. more than last year (+10.16%). Beginning corn stocks were projected 145 million bu. higher, based on lower estimated use forecast for 2019-20.

However, with 2020-2021 supply declining more than use, the forecast season-average corn price received by producers was raised 15¢ to $3.35/bu. 

Soybeans

Soybean production is projected at 4.14 billion bu., up 10 million on increased harvested area (83.0 million acres) in the June 30 Acreage report. The soybean yield forecast was unchanged at 49.8 bu./acre. With higher beginning stocks, 2020-21 soybean supplies were raised 45 million bu.

The U.S. season-average soybean price for 2020-21 is forecast at $8.50/bu., up 30¢, partly reflecting higher price expectations following the June Acreage report. The soybean meal price is projected at $300/short ton, up $10 from the previous month. The soybean oil price forecast is unchanged at 29.0¢/lb. 

Wheat

The outlook for 2020-21 U.S. wheat is for larger supplies, lower domestic use, unchanged exports, and increased stocks. Supplies were raised, with larger beginning stocks more than offset by lower production.

Ending wheat stocks for 2020-21 were projected 17 million bu. higher than the previous month at 942 million. The projected season-average farm wheat price (SAFP) was unchanged at $4.60/bu., compared to the revised 2019-20 SAFP of $4.58.

By | July 12th, 2020|Daily Market Highlights|

Cattle Current Daily—July 10, 2020

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.

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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.

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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.

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“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.”

By | July 9th, 2020|Daily Market Highlights|

Cattle Current Daily—July 9, 2020

Negotiated cash fed cattle trade continued on Wednesday with prices mainly steady to higher, compared to last week. Live prices in the Texas Panhandle were steady to $2 higher at $95/cwt.; steady to $1 lower in Kansas at $94-$95. For the week, live sales are steady in Nebraska at $95-$96 and $3-$5 higher in the beef at $157-$160. In the western Corn Belt, live sales are $3 higher than last week at $99-$100 and $5-$7 higher in the beef at $160.

Cattle feeders offered 1,390 head in the weekly Fed Cattle Exchange auction. Of those, 659 head sold, all from Kansas: 509 head for delivery at 1-9 days for a weighted average price of $95.16; 150 head for delivery at 1-17 days for a weighted average price of $95.

Live Cattle futures closed an average of 41¢ lower.

Feeder Cattle futures closed an average of 69¢ lower.

The monthly five-area direct average steer price in June was $103.82/cwt. on a live basis (FOB), which was $7.71 less than the previous month and $8.10 less than the prior year, according to USDA’s monthly report. The average live weight was 1,441 lbs., which was 21 lbs. lighter month to month, but 61 lbs. heavier year over year. The average dressed steer price (delivered) was $165.69 in June, which was $13.33 less than in May and $16.01 less than the previous year. The average dressed steer weight in June of 926 lbs. was 9 lbs. lighter than the previous month, but 43 lbs. heavier than the same time a year earlier. For January through June, total five-area direct confirmed sales of 1.91 million head were 9.75% less than the same period a year earlier.

Choice boxed beef cutout value was $1.47 lower Wednesday afternoon at $203.83/cwt. Select was $1.32 lower at $195.52.

Corn futures closed mostly 1¢ to 2¢ higher.

Soybean futures closed 1¢ to 5¢ lower through May ’21 and then mostly 1¢ higher.

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The Wall Street seesaw continued Wednesday, to the upside this time, with tech stocks leading Major U.S. financial indices higher.

The Dow Jones Industrial Average closed 177 points higher. The S&P 500 closed 24 points higher. The NASDAQ closed 148 points higher.

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Recovery of U.S. restaurant customer transactions stalled for the second week in a row as COVID-19 cases continue to increase in a number of states, according to The NPD Group (NPD).

For the week ending June 28, total customer transactions at major U.S. restaurant chains were down 14% versus the same week a year ago.  That’s a 1% decline from the previous week, based on NPD’s CREST® Performance Alerts, which provides a rapid weekly view of chain-specific transactions and share trends for 72 quick service, fast casual, midscale, and casual dining chains.

The rise in COVID-19 case counts is causing local and state authorities to delay reopening, and in some cases, reinstating on-premise restaurant dining restrictions. In Texas, for example, restaurants may continue to offer on-premise dining, but capacity was rolled back from 75% to 50%. California announced last week the closing of its nearly 86,000 restaurants to on-premise dining. 

Nationwide, full service restaurant customer transactions were 25% less than a year earlier, for the week ending June 28. That was a 1% weekly decline overall, while transactions fell 6-9% in states where coronavirus is increasing.

Customer transactions at major quick service restaurant chains declined by 13% compared to the same week last year, down 1 point from the previous week’s decline.

“It’s apparent that the road to recovery is going to be a challenging one for the U.S. restaurant industry,” says David Portalatin, NPD food industry advisor. “Consumer demand is there, as is the want for normalcy, but there is nothing normal about this situation.”

By | July 8th, 2020|Daily Market Highlights|

Cattle Current Daily—July 8, 2020

Although too few to trend, there were a few early negotiated cash fed cattle sales in the Texas Panhandle on Tuesday at $95/cwt. on a live basis, and a few in Kansas at $94-$95. There were also a few dressed trades in Nebraska at mostly $157-$160 and a few in the western Corn Belt at $160 (a few live sales at $100).

Cattle futures paused the recent rally, giving back a minority of gains.

Except for 25¢ higher in near Oct and 2¢ higher at the back, Live Cattle futures closed an average of 37¢ lower.

Except for 5¢ higher in Apr, Feeder Cattle futures closed an average of 60¢ lower (25¢ lower at the back to $1.22 lower in spot Aug).

Choice boxed beef cutout value was 16¢ lower Tuesday afternoon at $205.30/cwt. Select was 13¢ lower at $196.84.

Corn futures closed mostly 3¢ lower through Jul ’21 and then mostly fractionally lower.

Soybean futures closed 1¢ to 3¢ lower through Nov ’21 and then fractionally lower to 1¢ higher.

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Major U.S. financial indices closed lower Tuesday, with most pressure apparently tied to surging coronavirus cases in the U.S.

The Dow Jones Industrial Average closed 396 points lower. The S&P 500 closed 34 points lower. The NASDAQ closed 89 points lower.

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Agricultural producer sentiment improved in June for the second month in a row, according to the Purdue University/CME Group Ag Economy Barometer. The index was up 14 points from May to a reading of 117.

The Index of Current Conditions rose 19% from May to a reading of 99, and the Index of Future Expectations climbed 12% from May to a reading of 126.

The Ag Economy Barometer is based on responses from 400 U.S. agricultural producers. The most recent survey was conducted June 22-26.

“This month’s survey was conducted after the USDA announced details regarding the Coronavirus Food Assistance Program (CFAP),” says James Mintert, the barometer’s principal investigator and director of Purdue University’s Center for Commercial Agriculture. “A more favorable spring planting season combined with assistance from CFAP helps explain this month’s improvement in farmer sentiment, yet a majority of producers believe additional economic assistance will be needed in 2020.”

The majority of producers (60%) indicated that CFAP somewhat (53%) or completely (7%) relieved their concerns about the impact of the virus on their 2020 farm income. However, 64% of respondents indicated that they think it will be necessary for Congress to pass another bill to provide more economic assistance to U.S. farmers.

By | July 7th, 2020|Daily Market Highlights|

Cattle Current Daily—July 7, 2020

Early dressed sales in the western Corn Belt on Monday were $5-$7 higher than last week at $160/cwt., according to USDA’s Agricultural Marketing Service. Although too few to trend, there were some live sales in Kansas at $93-$95 (steady to $2 lower) and some dressed sales in Nebraska at $155-$160 ($5-$6 higher).

Cattle futures built on the previous session’s gains, supported by surging outside markets and likely helped along by technicals.

Live Cattle futures closed an average of 96¢ higher (40¢ higher to $1.25 higher).

Feeder Cattle futures closed an average of $1.09 higher (55¢ to $1.37 higher).

Choice boxed beef cutout value was 2¢ higher Monday afternoon at $205.46/cwt. Select was $1.79 lower at $196.97.

Corn futures closed 2¢ to 4¢ higher through Jul ’21 and then fractionally higher to 1¢ higher.

Soybean futures closed mostly 7¢ to 9¢ higher.

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Major U.S. financial indices closed solidly higher Monday, led by tech stocks and despite the continuing escalation in COVID-19 infections.

The Dow Jones Industrial Average closed 459 points higher. The S&P 500 closed 49 points higher. The NASDAQ closed 226 points higher.

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Recent export demand underscores the negative global impact of COVID-19.

U.S. beef exports in May were 33% less in may than a year earlier at 79,280 metric tons (mt)—the lowest monthly total 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.

For January through May, beef exports fell 3% below last year’s pace in volume (512,596 mt) and were 5% lower in value ($3.14 billion).

“As protective measures related to COVID-19 were being implemented, plant disruptions peaked in early May with a corresponding temporary slowdown in exports,” explains USMEF President and CEO Dan Halstrom. “Unfortunately, the impact was quite severe, especially on the beef side. Exports also faced some significant economic headwinds, especially in our Western Hemisphere markets, as stay-at-home orders were implemented in key destinations and several trading partners dealt with slumping currencies.”

Halstrom notes that the recent rebound in beef and pork production will help exports regain momentum in the second half of 2020. The global economic outlook is challenging, but he looks for export volumes to recover quickly in most markets as U.S. red meat remains an important staple, not only in the United States but for many international consumers as well.

“In what has been a remarkably turbulent year, consumer demand for U.S. red meat has proven very resilient,” Halstrom says. “Now that production has substantially recovered, the U.S. industry is better able to meet the needs of both domestic and international customers. 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.”

May U.S. pork exports of 243,823 mt were 12% more than a year earlier but down 13% from the monthly average for the first quarter of 2020. Export value was $620.9 million, up 9% year-over-year but 16% below the first quarter monthly average.

By | July 6th, 2020|Daily Market Highlights|

Cattle Current Daily—July 3-6, 2020

Negotiated cash fed cattle trade ended the holiday-shortened week steady to $2 lower on a live basis in the Southern Plains at $93-$95/cwt.; steady to $1 higher in Nebraska at $95-$96 and unevenly steady in the western Corn Belt at $96-$97. Dressed trade was $1 lower in Nebraska at $154-$155 and steady to $4 lower in the western Corn Belt at $152-$155.

Cattle futures extended gains, though, for no apparent reason.

Live Cattle futures closed an average of $1.08 higher (32¢ higher to $2.10 higher in spot Aug).

Feeder Cattle futures closed an average of $1.78 higher ($1.47 to $2.55 higher).

Choice boxed beef cutout value was 6¢ higher Thursday afternoon at $205.44/cwt. Select was 33¢ higher at $198.76.

The average dressed steer weight for the week ending June 20 was 890 lbs., which was 6 lbs. lighter than the previous week, but 36 lbs. heavier than the previous year, according to USDA’s Actual Slaughter Under Federal Inspection report. The average dressed heifer weight of 823 lbs. was 1 lb. lighter than the previous week, but 33 lbs. heavier than the same week a year earlier.

Grain futures softened Thursday, following strong gains earlier in the week. Pressure likely included week-end positioning and profit taking, as well as the bearish weekly Export Sales report (week ending June 25) from USDA’s Foreign Agricultural Service.

Net export corn sales of 361,100 metric tons (mt) for 2019-2020 were down 22% from the previous week and 32% from the prior four-week average.

Net soybean export sales of 241,700 mt for 2019-2020 were a marketing-year low, down 60% from the previous week and 63% from the prior four-week average.

Corn futures closed mostly 3¢ to 7¢ lower.

Soybean futures closed fractionally lower to 2¢ lower.

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Major U.S. financial indices climbed higher Thursday on the back of a national employment report that shattered expectations to the upside.

Total nonfarm payroll employment rose by 4.8 million in June, according to the Employment Situation Summary from the U.S. Bureau of Labor Statistics. The unemployment rate declined to 11.1%.

“These improvements in the labor market reflected the continued resumption of economic activity that had been curtailed in March and April due to the coronavirus (COVID-19) pandemic and efforts to contain it,” according to the report. “In June, employment in leisure and hospitality rose sharply. Notable job gains also occurred in retail trade, education and health services, other

services, manufacturing, and professional and business services.”

Average hourly earnings for all employees on private nonfarm payrolls in June fell by 35¢ to $29.37.

The Dow Jones Industrial Average closed 92 points higher. The S&P 500 closed 14 points higher. The NASDAQ closed 53 points higher.

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“To further aid in a gentle transition back toward economic normality, federal economic policy will have to shift from sending families money to maintain social distancing to helping businesses maintain employment,” says Jeffrey Dorfman, professor of agricultural and applied economics at the University of Georgia. That’s part of a recent publication from the Council for Agricultural Science and Technology (CAST): Macroeconomic Impacts and Policies in the Face of COVID-19.

Although the government extended forgivable loans to small businesses through the Paycheck Protection Program, Dorfman explains the current unemployment bonus of $600 per week could make it harder for some businesses to reopen.

“Workers are currently making more from unemployment than from working, particularly in the retail, hospitality, and personal services sectors that are home to so many small businesses,” Dorfman says. “With the unemployment bonus, not working can pay the equivalent of about $50,000 per year. Few small businesses can compete with that when roughly half of all workers made less than that just a few months ago.”

Worker challenges aside Dorfman says, economic recovery requires customers feeling safe about returning to restaurants, local shops, movie theaters and all of the rest.

“Until a vaccine and/or effective treatments are widely available, the best confidence restorer will be clearly posted and followed safety protocols that minimize the risk of frequenting public businesses and maximize the amount of economic activity that can safely take place,” Dorfman says. “But a full recovery requires either a vaccine or treatment that convinces people contracting the virus is more a nuisance than a mortal risk.”

By | July 2nd, 2020|Daily Market Highlights|

Cattle Current Daily—July 2, 2020

Negotiated cash fed cattle prices Wednesday were steady to $2 lower in the Southern Plains at $95/cwt. on a live basis; steady to $1 higher in Nebraska at $95-$96. Dressed trade for the week is $1 lower in Nebraska at $154-$155; steady to $4 lower in the western Corn Belt at $152-$155.

Cattle feeders offered 1,814 head in the weekly Fed Cattle Exchange Auction. There were 144 head—one lot of Kansas steers—selling for a weighted average price of $95/cwt., for delivery at 1-9 days. Two other lots were passed out at $93.

Cattle futures wobbled to start the day but picked up steam as the day progressed. Depending on your leanings, Live Cattle seem to be looking past the current backlog of fed cattle, or largely priced it in a ways back.

Live Cattle futures closed an average of $1.31 higher.

Feeder Cattle futures closed an average of 80¢ higher (22¢ higher in spot Aug to $1.42 higher).

Choice boxed beef cutout value was $1.59 lower Wednesday afternoon at $205.38/cwt. Select was $1.47 lower at $198.43.

Grain futures extended gains Wednesday, buoyed by USDA’s recent reports.

Corn futures closed 8¢ to 10¢ higher through Jul ’21 and then 3¢ to 4¢ higher.

Soybean futures closed 16¢ to 19¢ higher.

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Major U.S. financial indices closed mixed on Wednesday, with nervousness about the economy’s start-and-stop reopening countered by positive employment news.

Private sector employment increased by 2.37 million in June, according to the ADP National Employment Report®.

“As the economy slowly continues to recover, we are seeing a significant

rebound in industries that once experienced the greatest job losses. In fact, 70% of the jobs added this month were in the leisure and hospitality, trade and construction industries,” says Ahu Yildirmaz, vice president and co-head of the ADP Research Institute.

The Dow Jones Industrial Average closed 77 points lower. The S&P 500 closed 15 points higher. The NASDAQ closed 95 points higher.

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“Slaughter cow prices have been one of the few bright spots for cattle producers over the past few months. Slaughter cow prices in the Southern Plains averaged $57.84/cwt. over the past six weeks of available data, which is 19.5% above the same period in 2019. Generally, cull cow markets are most directly related with ground beef demand,” says Josh Maples, Extension livestock economist at Mississippi State University, in the latest issue of In the Cattle Markets.

Total cow slaughter so far this year is about par with 2019, with beef cow slaughter up about 2% and dairy cow slaughter down about 2%, according to Maples. He notes the 6.7% increase in beef cow slaughter during the first two weeks of June is likely due in part to delayed marketing by some producers.

“Lower calf prices could drive increased beef cow culling later in the year,” Maples says. “Dairy slaughter is near the seasonal low point and milk prices have rebounded, which may prevent significant dairy cow culling. While the supply picture is becoming a little clearer, ground beef demand will continue to be key for support of beef cow cull prices.”

By | July 1st, 2020|Daily Market Highlights|

Cattle Current Daily—July 1, 2020

There was no Afternoon Slaughter Cattle Review from USDA at press time. However, the Direct Slaughter Cattle Reporting Dashboard from AMS had live cattle on Tuesday bringing an average of just over $97/cwt.; close to $153 in the beef.

Cattle futures started the day in positive territory before USDA’s grain-friendly Acreage and Grain Stocks reports pounded Feeder Cattle futures.

Other than $3.35 lower in expiring spot Jun and 20¢ higher in the back contract, Live Cattle futures closed an average of 20¢ lower.

Feeder Cattle futures closed an average of $1.00 lower (65¢ lower in spot Aug to $1.20 lower).

Choice boxed beef cutout value was $1.39 lower Tuesday afternoon at $206.97/cwt. Select was 81¢ lower at $199.90.

Corn and soybean futures bounced higher Tuesday, buoyed by the aforementioned USDA reports.

Corn futures closed 12¢ to 15¢ higher through Jul ’21 and then 4¢ to 7¢ higher.

Soybean futures closed 16¢ to 20¢ higher through Mar ’21 and then mostly fractionally higher to 12¢ higher.

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Major U.S. financial indices closed higher again Tuesday, led by tech stocks and despite continuing concerns about increasing coronavirus cases.

In remarks to the U.S. House Committee on Financial Services, Federal Reserve Chair, Jerome Powell put it this way: “Output and employment remain far below their pre-pandemic levels. The path forward for the economy is extraordinarily uncertain and will depend in large part on our success in containing the virus. A full recovery is unlikely until people are confident that it is safe to reengage in a broad range of activities.”

The Dow Jones Industrial Average closed 217 points higher. The S&P 500 closed 47 points higher. The NASDAQ closed 184 points higher.

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USDA projects acres of all hay harvested this year at 52.38 million acres, which would be 44,000 fewer acres (-0.08%) than last year, according to the Acreage report from the National Agricultural Statistics Service (NASS).

The decline comes in forecast acres of alfalfa and alfalfa mixtures at 16.35 million acres, which would be 381,000 fewer acres (-2.33%) than last year. All other hay acres of 36.03 million acres would be 347,000 acres more (+0.97%) than the previous year.

Corn acreage is projected at 92.01 million acres, which would be 2.31 million acres more (+2.57%) than last year. However, the projection is about 5 million acres less than the initial outlook in USDA’s Prospective Plantings report that came out at the end of March. Acreage harvested for grain is forecast at 84.02 million acres, which would be 2.70 million acres more (+3.32%) than last year.

Corn stocks in all positions June 1 totaled 5.22 billion bu., according to USDA’s Grain Stocks report. That’s 21.43 million bu. more (+0.41%) than the same time last year.

Of total corn stocks, 3.03 billion bu. are stored on farms, up 3% from a year earlier. Off-farm stocks, at 2.20 billion bu., are down 2% percent from a year ago.

Soybean acres are estimated to be 7.73 million acres more (+3.32%) than last year at 83.83 million acres. That’s about 325,000 acres more than the Prospective Plantings projection. Harvested soybean acres are forecast at 83.02 million acres, which would be 8.07 million acres more (+10.77%) than the previous year.

Soybean stocks in all positions June 1 of 1.39 billion bu. were 397.09 million bu. less (-22.7%) than the same time a year earlier.

On-farm soybean stocks totaled 633 million bu., down 13% from a year ago. Off-farm stocks, at 753 million bu., were 28% less than a year ago.

Acreage for all wheat this year is estimated at 44.25 million acres, which would be 908,000 fewer acres (-2.01%) than last year and the least since records began in 1919. Harvested wheat acres are projected at 36.68 million acres, which would be 484,000 fewer acres (-1.30%) than the prior year.

Wheat stocks stored in all positions June 1 of 1.04 billion bu. were 35.92 million bu. less (-3.32%) than the prior year.

On-farm all wheat stocks were estimated at 232 million bu., up 12% from a year earlier. Off-farm stocks of 812 million bu., are 7% less.

By | June 30th, 2020|Daily Market Highlights|

Cattle Current Daily—June 30, 2020

Packers up north got a head start on the holiday-shortened week Monday, paying steady to $3 less for negotiated cash fed cattle at $153/cwt. on a dressed basis in the western Corn Belt.

The five-area average direct fed steer price last week was $96.21/cwt. on a live basis, which was $4.57 less than the prior week. The average steer price in the beef was $154.78, which was $5.92 less. Prices the same week last year were $110.13 and $179.02, respectively.

Even so, Cattle futures ended Monday higher, helped along by outside markets and despite the bounce in Corn futures. Higher wholesale beef values also helped.

Live Cattle futures closed an average of 64¢ higher.

Except for 20¢ lower in the back contract, Feeder Cattle futures closed an average of 50¢ higher. 

Choice boxed beef cutout value was $1.19 higher Monday afternoon at $208.36/cwt. Select was $1.86 higher at $200.71.

Grain futures traded higher, perhaps buoyed by positioning ahead of Tuesday’s Grain Stocks and Acreage reports due from USDA.

Corn futures closed 7¢ to 9¢ higher through Sep ’21 and then 4¢ to 6¢ higher.

Soybean futures closed mostly 1¢ higher through Jan ’21 and then mostly 5¢ to 6¢ higher.

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Major U.S. financial indices on Monday bounced back from steep losses in the previous session.

Positive news on the day included a record rebound in pending home sales, according to the National Association of Realtors® (NAR).

The Pending Home Sales Index, a forward-looking indicator of home sales based on contract signings, rose 44.3% to 99.6 in May, the stoutest month-over-month gain since NAR started the series in January 2001. However, contract signings were 5.1% less year over year.

“The outlook has significantly improved, as new home sales are expected to be higher this year than last, and annual existing-home sales are now projected to be down by less than 10%, even after missing the spring buying season due to the pandemic lockdown,” says Lawrence Yun, NAR’s chief economist.

The Dow Jones Industrial Average closed 580 points higher. The S&P 500 closed 44 points higher. The NASDAQ closed 116 points higher.

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“After the disappointing shortages and high beef prices during Memorial Day, the improved beef situation for this grilling holiday is a great relief,” says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University.  “Grocery stores should be well stocked in time for July 4 and retail prices are adjusting down rapidly. For individual stores, it may depend on their particular supply arrangements.” 

In his weekly market comments, Peel explains actual slaughter for the week ending June 13 exceeded year-ago levels for the first time since the first week of April.

Of course, supplies of competing meats are growing, too.

Although decreased broiler chick placements in April and May will likely lead to a modest third-quarter decrease in production, Peel says total production for beef, pork and broilers is projected to increase to a new annual record this year.

As for pork, Peel explains, the most recent Quarterly Hogs and Pigs (June) report pegged the total hog inventory at 79.6 million head, up 5.2% year over year and 3.0% more than in March.

According to Peel, beef production this year is projected at 27.41 billion lbs., 0.6% more than last year. Pork production for the year is estimated to be 3.4% more the last year at 28.47 billion lbs. and broiler production is projected 1.7% more at 44.16 billion lbs. Total red meat and poultry production is projected to be 1.9% more than last year at 106.74 billion lbs.

By | June 29th, 2020|Daily Market Highlights|

Cattle Current Daily—June 29, 2020

Negotiated cash fed cattle prices ended the week solidly lower, according to reports from the Agricultural Marketing Service. Regionally, live prices were $5-$7 lower in the Texas Panhandle at $93-$95/cwt., $5 less in Kansas at $95, $3-$7 lower in Nebraska at $95 and $1-$4 less in the western Corn Belt at $98. Dressed trade was $3-$7 less at $155-$156 in Nebraska and at $153-$156 in the western Corn Belt.

The five-area average direct fed steer price through Thursday was $96.24/cwt. on a live basis, which was $4.58 lower than the previous week and $14.34 less than the same period a year earlier. The average dressed steer price was $154.78, which was $5.96 less than the prior week and $24.58 less than a year earlier.

Cattle futures softened to end the week, amid the lower cash fed cattle prices, possible month-end and quarter-end positioning, as well as the picture painted by the monthly Livestock Slaughter report (see below).

Except for 52¢ higher in waning spot Jun, Live Cattle futures closed an average of 62¢ lower (5¢ to 97¢ lower).

Feeder Cattle futures closed an average of $1.08 lower (65¢ lower to $1.75 lower).

Choice boxed beef cutout value was $1.09 lower Friday afternoon at $207.17/cwt. Select was $1.08 lower at $198.85.

USDA estimated total cattle slaughter for the week at 680,000 head, which would be 3.7% more than the previous week and 1.5% more than the same week last year. Total beef production under federal inspection was estimated at 562.3 million lbs., which would be 3.9% more than the previous week and 5.3% more than the same week last year.

Corn futures closed fractionally lower to 1¢ lower.

Soybean futures closed mostly 7¢ to 9¢ lower.

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Major U.S. financial indices closed sharply lower Friday on renewed fears that recent spikes in COVID-19 will further slow nascent economic rebuilding.

The Dow Jones Industrial Average closed 730 points lower. The S&P 500 closed 74 points lower. The NASDAQ closed 259 points lower.

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The latest Livestock Slaughter report from USDA’s National Agricultural Statistics Service (NASS) provides insight to recent packing disruptions, including a reflection of how increased carcass weights are impacting total beef production. Keep in mind, there were two fewer business days in May this year compared to 2019.

Federally inspected beef production in May of 1.83 billion lbs. was 473.3 million lbs. less than the previous year (-20.6%), but 45.6 million lbs. more than the previous month (+2.6%).

Beef production for January through May of 10.50 billion lbs. was 364.7 million lbs. less than the same period a year earlier (-3.4%).

There were 1.70 million fed steers and heifers harvested in January-May, which was just 45,800 head more (+2.8%) than the previous month and 626,100 head fewer (-26.9%) less than May of last year.

For January through May, the 9.8 million steers and heifers slaughtered was 785,600 head fewer (-7.4%) than the same period a year earlier.

The 3.7 million fed heifers harvested in January through May were 199,100 more (+5.0%) than the same time a year earlier.

The 1.3 million beef cows harvested in January through May were 20,100 head more (+1.6%) than the same time a year earlier.

Federally inspected total red meat production of 3.71 billion lbs. in May was 820.3 million lbs. less than the previous May (-18.1%), and 108.2 million lbs. less than in April (-2.8%).

Total red meat production for January through May of 21.81 billion lbs. was 419.7 million lbs. less than the same period a year earlier (-1.9%).

By | June 27th, 2020|Daily Market Highlights|

Cattle Current Daily—June 26, 2020

Negotiated cash fed cattle trade continued at lower money for the week with live sales in the Texas Panhandle on Thursday down $5-$7 at $93-$97/cwt.

Cattle futures closed mainly higher, with support likely including lower corn prices and positive export news.

Weekly net U.S. beef export sales as of June 18 were 24,400 metric tons (mt), which were 21% more than the previous week and 52% more than the prior four-week average, according to the weekly U.S. Export Sales report from USDA’s Foreign Agricultural Service. Increases were primarily for South Korea, Japan, Taiwan, Mexico, and Hong Kong.

Other than unchanged to an average of 15¢ lower in three contracts, Live Cattle futures closed an average of 32¢ higher.

Feeder Cattle futures closed an average of 49¢ higher.

Choice boxed beef cutout value was $1.43 lower Thursday afternoon at $208.26/cwt. Select was $1.76 lower at $199.93.

The average dressed steer weight for the week ending June 13 was 896 lbs., which was 4 lbs. heavier than the previous week and 47 lbs. heavier than the same week a year earlier, according to USDA’s Actual Slaughter Under Federal Inspection report. The average dressed heifer weight was 824 lbs., which was the same as a week earlier, but 37 lbs. heavier than the prior year.

Corn futures closed 4¢ to 7¢ lower through May ’21 and then mostly 3¢ lower.

Soybean futures closed mostly 1¢ to 3¢ lower through Sep ’21 and then 4¢ to 7¢ lower.

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Major U.S. financial indices closed higher Thursday after a volatile session. Primary support seemed to be the rollback of some regulations for big banks, despite the somber outlook from the International Monetary Fund (IMF).

“Consumption growth, in particular, has been downgraded for most economies, reflecting the larger-than-anticipated disruption to domestic activity,” according to that organization’s most recent quarterly World Economic Outlook. “The projections of weaker private consumption reflect a combination of a large adverse aggregate demand shock from social distancing and lockdowns, as well as a rise in precautionary savings. Moreover, investment is expected to be subdued as firms defer capital expenditures amid high uncertainty. Policy support partially offsets the deterioration in private domestic demand.”

The IMF projects global economic growth this year to be -4.9%, which is 1.9% more negative than its April outlook.

Outlook for economic growth in advanced economies is -8.0%, also 1.9% more negative than April projections. IMF also projects growth for the U.S. this year at -8.0%. Next year, GDP in advanced economies is projected at +4.8%.

The Dow Jones Industrial Average closed 299 points higher. The S&P 500 closed 33 points higher. The NASDAQ closed 107 points higher.

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“The calculated number of cattle on feed longer than 120 days is 5.1 million compared to 4.2 million a year ago,” says David Anderson, Extension Livestock Economist at Texas A&M University, referring to last week’s monthly Cattle on Feed report. “Most of that increase in over 120 days on feed are cattle that have been on feed even longer as evidenced by the number of cattle on feed over 150 days. But, cattle on feed between 90 and 120 days totaled about 1.65 million versus 1.79 million last year. So, there remains more adjustments to come to work through the impacts of corona virus in the cattle markets.”

However, in the most recent issue of In the Cattle Markets, Anderson explains the recent report hints at more normalcy returning to the industry.

For instance, he points out marketings in May were 27.5% less than the prior year, but there were two less business days.

“As May progressed, packing constraints loosened and daily slaughter moved closer to year-ago speeds. June 2020 has 22 slaughter days compared to only 20 in June 2019, so the next report’s marketings will likely show the dual impact of improving slaughter speeds and 10% more workdays in the month,” Anderson says.

Likewise, May feedlot placements (feedlots with 1,000 head or more capacity) were 1.3% less year over year, after being more than 20% less the previous two months.

“May is typically a larger month for placements due to cattle coming off wheat pasture and other small winter grains,” Anderson explains. “Feeder cattle sales did start to pick up as May went on, as cattle previously held back had to move. Some drought conditions likely moved some feeders, and some opportunities to favorably place occurred.”

By | June 25th, 2020|Daily Market Highlights|

Cattle Current Daily—June 25, 2020

Except for in the Texas Panhandle, trendable negotiated cash fed cattle trade continued on Wednesday, according to the Agricultural Marketing Service. Live sales were mostly $5 lower in Kansas at mostly $97/cwt. They were $3-$4 lower in Nebraska at $95-$98 and $1-$4 lower in the western Corn Belt at $98. Dressed trade for the week is $3-$6 lower at mostly $156.

Cattle feeders offered 1,221 head in the weekly Fed Cattle Exchange Auction. Of those, 276 head—four lots from Kansas and Nebraska—sold for a weighted average price of $96.43/cwt. for delivery at 1-17 days.

Choice steers and heifers sold $2.75-$3.00 lower at the fat auction in Tama, IA, where 184 Choice 2-4 steers weighed an average of 1,376 lbs. and brought an average price of $100.95.

At Sioux Falls Regional in South Dakota, slaughter steers and heifers sold $4-$6 lower. There were 372 Choice 2-3 steers weighing an average of 1,429 lbs. and bringing an average of $95.86.

Cattle futures tottered on Wednesday as outside markets eroded, but retained the lion’s share of gains made in the previous session.

Live Cattle futures closed an average of 31¢ lower.

Feeder Cattle futures closed narrowly mixed, from an average of 29¢ lower through the front three contracts to an average of 33¢ higher.

Choice boxed beef cutout value was $2.12 lower Wednesday afternoon at $209.69/cwt. Select was $1.88 lower at $201.69.

Corn futures closed mostly 2¢ to 4¢ lower.

Soybean futures closed mostly 3¢ to 4¢ lower. 

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Major U.S. financial indices dove South on Wednesday, with investors apparently spooked by spiking coronavirus cases in some states and what that could mean to reopening the economy.

The Dow Jones Industrial Average closed 710 points lower. The S&P 500 closed 80 points lower. The NASDAQ closed 222 points lower.

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Total pounds of beef in freezers May 31 were down 13% from the previous month but up 2% from last year, according to the most recent USDA Cold Storage report.

Frozen pork supplies were 24% less than the previous month and down 26% from a year earlier. Stocks of pork bellies were down 27% from last month and down 8% from last year.

Total red meat supplies in freezers were 18% less than the previous month and 13% less than a year earlier.

Total frozen poultry supplies were down 5% from the previous month and down 4% from a year ago.

By | June 24th, 2020|Daily Market Highlights|

Cattle Current—June 24, 2020

Negotiated cash fed cattle trade continued lower Tuesday, with dressed trade in Nebraska mostly $3-$7 lower than last week at $155/cwt.

Even so, Cattle futures found some spark, helped along by outside markets.

Except for 87¢ lower in spot Jun and 17¢ lower at the back, Live Cattle futures closed an average of 90¢ higher (37¢ to $2.07 higher).

Feeder Cattle futures closed an average of $1.39 higher.

Choice boxed beef cutout value was $2.25 lower Tuesday afternoon at $211.81/cwt. Select was 73¢ lower at $203.57.

Corn futures closed mostly 3¢ to 4¢ lower

Soybean futures closed mostly 1¢ to 4¢ lower through Sep ’21 and then mostly fractionally higher.

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Major U.S. financial indices closed higher Tuesday, led by by tech stocks once again, and despite the growing number of COVID-19 cases.

The Dow Jones Industrial Average closed 131 points higher. The S&P 500 closed 13 points higher. The NASDAQ closed 74 points higher.

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So far, major restaurant chain transactions continue to improve, despite the recent spikes in COVID-19 cases, according to the NPD Group (NPD).

For the week ending June 14, total major restaurant chain transactions were 12% less than the same week a year earlier, which represented a 1% improvement compared to the previous week.

More specifically, quick service chain transactions were 11% less year over year and 2% more positive than the previous week. Full service chain transactions were 26% less than a year earlier but improved 12% week to week.

“The only major variable in play with a case surge at the moment would be erosion in consumer willingness to dine out,” says David Portalatin, NPD food industry advisor. “There are three main variables that will influence continued restaurant recovery: reopening of on-premise dining and expanding allowed capacity; the willingness of consumers to dine out and feel safe and confident in doing so; and the economic wellbeing of the consumer. Thus far, the evidence in restaurant transactional improvement confirms that dining rooms are opening, and there is consumer demand to fill opened restaurants.”

By | June 23rd, 2020|Daily Market Highlights|

Cattle Current Daily—June 23, 2020

Although too few to trend, there were a few early live sales in the Texas Panhandle on Monday at $95/cwt. There were a few dressed trades in Nebraska at $152-$155.

Cattle futures closed narrowly lower Monday.

Live Cattle futures closed an average of 22¢ lower.

Feeder Cattle futures closed an average of 55¢ lower, (7¢ lower at the back to 80¢ lower at the front).

Choice boxed beef cutout value was 34¢ higher Monday afternoon at $214.06/cwt. Select was 39¢ higher at $204.30.

Corn futures closed 3¢ to 4¢ lower in the front four contracts and then mostly 1¢ lower.

Soybean futures closed fractionally lower to 1¢ lower. 

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Major U.S. financial indices closed higher on Monday, buoyed by tech stocks.

The Dow Jones Industrial Average closed 153 points higher. The S&P 500 closed 20 points higher. The NASDAQ closed 110 points higher.

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“Wholesale boxed beef prices have dropped nearly back to pre-COVID-19 levels and may go lower into mid-summer as abundant third-quarter beef production could highlight potential recessionary demand weakness,” says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University.

In his weekly market comments, Peel explains cattle slaughter continues to recover from disruptions wrought by the pandemic, with estimated slaughter the week ending June 20 being 98.2% of year-earlier levels.

At the same time, the backlog of fed cattle continues to add days on feed and pounds per carcass.

Year to date, Peel notes steer and heifer carcass weights averaged 27.4 lbs. heavier year over year. Carcasses were an average of 20.4 lbs. heavier in the first quarter; 36.7 lbs. heavier for April 1 to June 6.

Beef production was 8.0% more year over year in the first quarter, while second-quarter production is estimated to be 14.0% less year over year, according to Peel. That makes for 3.8% less beef production for the year through June 19.

“The combination of recovered slaughter and higher carcass weights resulted in weekly beef production in mid-June estimated to be above year-earlier levels for the first time in 10 weeks,” Peel says. “Weekly beef production is likely to exceed year-earlier levels for the third quarter and perhaps for the balance of the year.”

More specifically, he explains third-quarter beef production is forecast to be nearly 6% higher than the same time last year. Annual beef production this year is forecast to be slightly more than last year at a record 27.3 billion lbs.

“With beef supplies increasing in the second half of the year, beef demand will be critical,” Peel says. “Retail grocery will transition from limited beef supplies in recent weeks to ample supplies at the same time that food service demand is slowly building.” 

By | June 22nd, 2020|Daily Market Highlights|

Cattle Current Daily—June 22, 2020

Negotiated cash fed cattle prices were lower to sharply lower last week, with significantly heavier carcasses than a year ago and the continued backlog of market-ready cattle.

Based on reports from the Agricultural Marketing Service, the last established market in the Texas Panhandle was at $98/cwt., which was $6-$10 less than the previous week. Until then, prices were about $5 less at around $100, according to the Texas Cattle Feeders Association. Live prices were $4-$6 lower in Kansas at mostly $100-$102, steady to $10 lower in Nebraska at $98-$102 and $3-$4 lower in the western Corn Belt at $99-$102. Dressed trade was steady to $12 lower at $158-$160.

Through Thursday, the five-area direct weighted average price for steers on a live basis was $100.82/cwt., which was  $4.02 less than the previous week. The average dressed steer price was $160.74, which was $5.91 less. Prices at the same time last year were at $110.43 and $180.56, respectively. Keep in mind that carcass weights are contra-seasonal and significantly heavier than last year.

Cattle futures closed mostly narrowly mixed Friday.

Live Cattle futures closed an average of 63¢ lower through the front five contracts (10¢ lower to $1.37 lower in spot Jun) and then an average of 16¢ higher.

Feeder Cattle futures closed narrowly mixed, from an average of 24¢ lower to an average of 24¢ higher.

Choice boxed beef cutout value was 16¢ higher Friday afternoon at $213.72/cwt. Select was 17¢ lower at $203.91.

The average dressed steer weight for the week ending June 6 was 892 lbs., which was 1 lb. heavier than the prior week and 46 lbs. heavier than the same week a year earlier, according to USDA’s Actual Slaughter Under Federal Inspection report. The average dressed heifer weight of 824 lbs. was 2 lbs. lighter than the previous week, but 42 lbs. heavier than the prior year.

Corn futures closed 1¢ to 2¢ higher. 

Soybean futures closed mostly 3¢ to 4¢ higher. 

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Major U.S. financial indices closed mainly lower on Friday, following a volatile session. Key pressure appeared to stem from the spike in COVID cases in some states, leading to worries about the path of economic reopening.

The Dow Jones Industrial Average closed 208 points lower. The S&P 500 closed 17 points lower. The NASDAQ closed 3 points higher.

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If anything, Friday’s monthly Cattle on Feed report from USDA will likely be viewed as at least a touch bearish, with more cattle placed, fewer cattle marketed and slightly more cattle on feed June 1 than the trade expected. That’s for feedlots with 1,000 head or more capacity.

Placements in May of 2.04 million head were 26,000 head fewer (-1.26%) than the previous year. Average analyst estimates ahead of the report expected placements to be 2.3% less.

In terms of placement weights: 33.38% went on feed weighing 699 lbs. or less; 49.93% weighed 700-899 lbs.; 16.69% weighed 900 lbs. or more.

Marketings in May of 1.5 million head were 570,000 head fewer (-27.54%) than a year earlier. That’s the least marketings for the month since the data series began in 1996. Ahead of the report, on average, analysts expected marketings to be down 26.4%.

There were 11.67 million head on feed June 1, which was 57,000 head fewer (-0.49%) than a year earlier. That’s the second highest June inventory since the data series began in 1996. Average analyst expectations were for a decline of 1%.

By | June 20th, 2020|Daily Market Highlights|

Cattle Current Daily—June 19, 2020

Negotiated cash fed cattle trade continued in Kansas on Thursday with live prices at $96-$102/cwt., but mostly $100-$102, which was $2-$6 lower than the last week.

Cattle futures softened Thursday, with continued light trade, lower cash prices and the ongoing decline in wholesale beef values.

Live Cattle futures closed an average of 59¢ lower.

Feeder Cattle futures closed an average 71¢ lower. 

Beef exports continue to be a bright spot.

Net U.S. beef export sales of 20,100 metric tons for the week ending June 11 were 1% less than the previous week but 67% more than the previous four-week average, according to the U.S. Export Sales report from USDA’s Foreign Agricultural Service. Increased sales were mainly to South Korea, Japan, Hong Kong, Taiwan and Canada.

Choice boxed beef cutout value was $4.37 lower Thursday afternoon at $213.56/cwt. Select was $4.00 lower at $204.08.

The average dressed steer weight for the week ending June 6 was 892 lbs., which was 1 lb. heavier than the prior week and 46 lbs. heavier than the same week a year earlier, according to USDA’s Actual Slaughter Under Federal Inspection report. The average dressed heifer weight of 824 lbs. was 2 lbs. lighter than the previous week, but 42 lbs. heavier than the prior year.

Corn futures closed mostly fractionally higher.

Soybean futures closed mostly 1¢ to 2¢ higher. 

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Major U.S. financial indices closed narrowly mixed Thursday. Pressure included more initial weekly jobless claims than traders expected. Initial claims were 1.51 million according to the U.S. Department of Labor; that was 58,000 fewer than the previous week.

The Dow Jones Industrial Average closed 39 points lower. The S&P 500 closed 1 point higher. The NASDAQ closed 32 points higher.

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“Given a potential months-long economic recession, overall beef demand will likely be down even as sit-down restaurants open across the USA,” says Brenda Boetel, Extension livestock economist at the University of Wisconsin-River Falls, in the latest issue of In the Cattle Markets. “Consumers will likely see a small decrease in beef consumption due to the expected decrease in 2020 beef production quantities, but the respective beef demand will likely be down more as consumers will be less willing to pay high prices for beef. The return to U.S. consumers spending large amounts on highly valued beef cuts will be slow and largely dependent on macroeconomic growth. Sit-down restaurants will find creative ways to entice patrons to return, including menu changes with lower price entrees. As such, overall beef demand will likely be down, while demand for higher-valued primals, typically consumed through foodservice, will be down more than the overall beef demand.”

Keep in mind that demand and consumption, though related, are quite different.

Boetel explains consumption is a function of production. As a perishable product, most all beef produced will be consumed. Calculated beef consumption is simply the sum of beef production and beef imports, minus exports and disappearance. She says beef consumption is projected to be 12.5% less in the second quarter of this this year, compared to the same time last year. That has to do with less beef production, spawned by disruptions to beef packing capacity.

Beef demand, on the other hand, reflects consumers’ perceptions of beef in the marketplace and is representative of consumers’ willingness to pay for beef, according to Boetel.

“Beef demand is impacted by several factors including beef prices, as well as prices of alternative proteins such as pork and chicken,” she explains.  “Additionally, income is another determining factor in beef demand, as well as other factors such as tastes and preferences.

“Even though we eat (i.e., consume) the beef produced, it doesn’t mean that beef demand remains in a consistent relationship with production. Beef consumption can increase without an increase in beef demand because beef demand and beef consumption are not the same thing. For example, beef consumption might increase because more beef is produced, but beef demand decreases because consumers are willing to pay less for each pound of beef they do consume.”

Boetel points out the beef demand index calculated at Kansas State University decreased almost 18% for choice retail beef in April of this year, compared to the same time last year. Driving forces included the substantial loss of food service sales, as well as the economic downturn.

Looking ahead, Boetel says many analysts expect global economic growth this year to contract by nearly 3%, while the U.S. economy is expected to contract by nearly 5.7%.

All of that likely means continued overall pressure on cattle prices.

“Until sit-down restaurants are operating at levels prior to COVID, there will likely be differences in the spread between different primals, no matter the amount of cattle processed,” Boetel says. “It will take months for the U.S. processing sector to work through the backlog of cattle on feed, but as it does so, the spread between wholesale beef and live cattle prices will return to traditional levels, although at likely lower absolute price levels for both live cattle and beef due to the macroeconomic downturn.”

By | June 18th, 2020|Daily Market Highlights|

Cattle Current Daily—June 18, 2020

Negotiated cash fed cattle prices continued $2-$6 lower on a live basis Wednesday at $100-$102/cwt. in the Southern Plains, mostly $102 in Nebraska; $99-$102 in the western Corn Belt on Tuesday. Dressed trade was at $160-$162, which was $5-$10 lower in Nebraska and steady to $10 lower in the western Corn Belt.

Cattle feeders offered 1,220 head in the weekly Fed Cattle Exchange auction; none sold.

Choice steers and heifers sold $2.25-$2.50 lower at the fat auction in Tama, IA. There were 122 Choice 2-4 steers weighing an average of 1,378 lbs., bringing an average of $104.13/cwt.

Slaughter steers and heifers sold $3-$6 lower at Sioux Falls Regional in South Dakota. There were 498 Choice 3-4 steers weighing an average of 1,533 lbs. and bringing an average of $102.76.

Cattle futures mostly tread water Wednesday amid continued light trade.

Live Cattle futures closed an average of 22¢ higher, except for unchanged in Dec.

Except for 32¢ lower in the back two contracts, Feeder Cattle futures closed an average 36¢ higher. 

Choice boxed beef cutout value was $9.96 lower Wednesday afternoon at $217.93/cwt. Select was $5.09 lower at $208.08.

Corn futures closed mostly fractionally lower.

Soybean futures closed 3¢ to 4¢ higher. 

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Major U.S. financial indices lost recent steam Wednesday, with some likely profit taking and continued uncertainty about COVID-19.

The Dow Jones Industrial Average closed 170 points lower. The S&P 500 closed 11 points lower. The NASDAQ closed 14 points higher.

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“With higher anticipated fed cattle slaughter in 2020, feedlot marketings will increase. A faster pace of marketings and higher forecast fed cattle prices than last month will likely improve feedlot demand for feeder cattle,” say analysts with USDA’s Economic Research Service (ERS), in the latest monthly Livestock, Dairy and Poultry Outlook.

Based on recent price data, ERS increased the projected annual feeder steer price (basis Oklahoma City) by almost $7, compared to the previous month, to $131.40/cwt.

The projected second-quarter feeder steer price was raised by $5 to $126. Forecast price for the third quarter increased $9 to $132. The fourth-quarter price projection rose $13 to $131.

“In the second quarter, the capacity of beef packing plants to slaughter fed cattle was reduced by as much as 41%, which prompted lower prices for fed cattle. As beef production declined, wholesale beef prices skyrocketed, which greatly expanded packer margins. However, as packers’ capacity to slaughter began to rebound at the beginning of May, increasing demand for cattle, it likely increased their willingness to pay higher prices for cattle,” say ERS analysts.

The average five-area direct fed steer price in May was $111.53/cwt. on a live basis, which was more than 9% higher than in April, according to ERS. With that in mind, USDA increased its price forecast for fed steers in the second quarter by $3 to $104. Forecast prices for the third and fourth quarters increased by $6 to $105 and $106, respectively.

“Based on USDA, Agricultural Marketing Service estimated weekly slaughter for the week ending June 13, steer and heifer slaughter recovered to 4% below the same week a year ago, and cow and bull slaughter improved to 7% above the same week last year,” say ERS analysts.

By | June 17th, 2020|Daily Market Highlights|

Cattle Current Daily—June 17, 2020

Negotiated cash fed cattle prices continued the early-week’s lower tone through Tuesday afternoon, according to the Direct Slaughter Cattle Dashboard from USDA’s Agricultural Marketing Service. Live steers averaged $102.81/cwt. and live heifers averaged $101.62. In the beef, steers averaged $164.62 and heifers averaged $163.41.

Cattle futures rallied higher on Tuesday, amid relatively light trade, helped along by strength in outside markets, normalizing supply chains and possibly some early positioning ahead of the monthly Cattle on Feed report due out Friday.

Live Cattle futures closed an average of 99¢ higher (25¢ higher in spot Jun to $1.22 higher).

Feeder Cattle futures closed an average $2.03 higher ($1.70 higher in spot Aug to $2.30 higher at the back).

Choice boxed beef cutout value was 72¢ lower Tuesday afternoon at $227.89/cwt. Select was $1.18 lower at $213.17.

Corn futures closed mostly fractionally higher to 1¢ higher.

Soybean futures closed mostly 2¢ lower through Sep ’21 and then mostly unchanged.

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Major U.S. financial indices closed strongly higher Tuesday, buoyed by news of an effective COVID-19 treatment, as well as a record high bounce in domestic retail sales.

Although 6.1% less than a year earlier, retail sales in May of $485.5 billion were a staggering 17.7% more than in April, according to the U.S. Census Bureau.

The Dow Jones Industrial Average closed 526 points higher. The S&P 500 closed 58 points higher. The NASDAQ closed 169 points higher.

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Although consumers moved on from the panic grocery shopping they did in the early stage of COVID-19, they’re keeping up their at-home inventories of foods and beverages. At the end of last month, compared to early April, the estimated number of food and beverage packages on hand in homes declined by only 3%, according to the NPD Group (NPD).

Some consumers are finding it easier to maintain at-home inventories than others.

For the week ending May 28, 68% of U.S. grocery shoppers reported to NPD that they hadn’t encountered any out-of-stock foods and beverages they shopped for during the week. The other 32% of shoppers reported experiencing out-of-stock items that same week, according to NPD’s NET® COVID-19 Pantry & Food Strategy Tracker.

More specifically, 51% of the consumers who reported encountering out of stocks said they weren’t able to purchase the meat or poultry item they were looking for, which was 10% fewer than the previous week.

For perspective, 33% of consumers reported out of stocks of water, coffee, tea, and juice in the week ending May 28 compared to 25% the previous week.

Categories with increased week-to-week out of stocks reported by consumers included fruits, vegetables and potatoes, as well as dairy products.

Still, David Portalatin, NPD food industry advisor says, “Considering the unprecedented situations COVID-19 presented over the last few months, the U.S. food supply chain held up remarkably well.”

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Net cattle feeding returns will be significantly negative through the summer, before improving, according to the latest Historical and Projected Kansas Feedlot Net Returns from Kansas State University.

Keep in mind, the net return projections reflect cash to cash, without any price risk management.

Currently, the net returns projected for steers closed out in May are -$107.72/head with a Feedlot Cost of Gain (FCOG) of $85.38/cwt. Net returns for heifers are projected at -$83.67/head with a FCOG of $91.82.

From there, projected net returns for steers range from -$194.58 per head (Aug.) to -$276.79 (June) with FCOG of $78.30 to $84.16/cwt. For September through February of next year, projected net returns range from -$73.90 (Sept.) to -$13.23 (Feb.) with FCOG ranging from $77.50 (Sept.) to $80.23 (Feb.).

Forecast summer net returns for heifers are similar: -$141.64 (Aug.) to -$240.81 (June) with FCOG of $85.87 (Aug) to $90.54 (June). For September through February of next year, projected net returns range from -$84.71 (Sept.) to -$19.48 (Feb.) with FCOG ranging from $83.54 (Nov.) to $86.29 (Jan.).

By | June 16th, 2020|Daily Market Highlights|

Cattle Current Daily—June 16, 2020

Although too few to trend, negotiated cash fed cattle sales started the week on a mostly lower note, with live trades at $100/cwt. in the Texas Panhandle, $98-$100 in Kansas and at $100-$105 in Nebraska. Early dressed trades in Nebraska were at $159-$167; mostly $167 in the western Corn Belt, according to the Agricultural Marketing Service (AMS).

The weighted five-area direct average price for steers last week, on a live basis, was $104.47/cwt., which was $7.92 less than the previous week. The average dressed steer price was $12.64 less at $166.40. Prices for the same week last year were $113.62 and $184.48, respectively.

Cattle futures followed equity markets on Monday, down early before recovering into the close.

Live Cattle futures closed an average of 61¢ higher, except for unchanged in spot Jun.

Feeder Cattle futures closed an average 56¢ higher (7¢ higher in spot Aug to 77¢ higher at the back).

Choice boxed beef cutout value was $2.03 lower Monday afternoon at $228.61/cwt. Select was $4.92 lower at $214.35.

Corn futures closed mostly 1¢ lower.

Soybean futures closed 2¢ to 3¢ lower through Jan ’21 and then mostly 1¢ lower.

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Major U.S. financial indices closed higher Monday, amid a volatile day of trade. Pressure early, tied to resurgent COVID-19 cases in some states, drove indexes sharply lower. The Fed’s announcement that it would buy individual corporate bonds, expanding its support of credit markets, pulled indexes higher, led by tech stocks.

The Dow Jones Industrial Average closed 157 points higher. The S&P 500 closed 25 points higher. The NASDAQ closed 137 points higher.

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“Feeder cattle prices are expected to hold firm through the summer, while feed costs are expected to decline with larger feedstuffs production,” say analysts with the Livestock Market Information Center (LMIC), in the latest Livestock Monitor. “Drought continues to be an aspect to watch. But, with the improvement of fed cattle prices later this year and lower corn costs, cattle feeding margins could become supportive of feeder cattle prices.”

LMIC analysts point out calf and feeder cattle auction volumes were the least for March since 2002 and the least for April since 2012, mirroring significant year-over-year declines in feedlot placements. Through May, however, they say calf and feeder cattle volume marketed via auction, direct and Internet/video was 9.5% more than the same time last year.

By | June 15th, 2020|Daily Market Highlights|

Cattle Current Daily—June 15, 2020

Through Thursday, the average five-area direct fed steer price (AMS) was $104.84 on a live basis, compared to $112.68 the previous week. The dressed steer price was $166.65, versus $179.17 the prior week.

Regionally, live prices were $3-$4 lower in the Southern Plains at $104/cwt. in the Texas Panhandle and at $103-$107 in Kansas. Live trade was $5-$10 lower in Nebraska at $105-$108; $5-$9 less in the western Corn Belt at $103-$105. Dressed trade was $10-$20 lower in Nebraska at $165; $13-$15 lower in the western Corn Belt at $160-$172.

Cattle futures drifted lower on Friday amid light trade and lower cash prices.

Live Cattle futures closed an average of 72¢ lower.

Feeder Cattle futures closed an average 88¢ lower.

Wholesale beef values closed lower, minus the steep pitch of recent weeks. Choice boxed beef cutout value was $4.92 lower Friday afternoon at $230.64/cwt. Select was 61¢ lower at $219.27.

Corn futures closed mostly fractionally lower to 1¢ lower.

Soybean futures closed mostly 2¢ to 5¢ higher through Jan ’21 and then mostly fractionally lower.

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Major U.S. financial indices closed higher Friday, gaining back a portion of the previous day’s steep selloff, tied to queasiness over escalating COVID-19 cases in some states.

The Dow Jones Industrial Average closed 477 points higher. The S&P 500 closed 39 points higher. The NASDAQ closed 96 points higher.

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“Considerable uncertainty remains in the U.S. and global markets going forward,” says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his latest weekly market comments. “While domestic protein markets continue to sort out the COVID-19 and recessionary impacts, meat trade is generally offering a much needed bright spot across all protein industries.” 

Based on the latest trade data, Peel explains U.S. beef exports in April were 3.4% less year over year, but are 6.9% more for January through April. He adds that beef imports are 3.3% more year to date, compared to 2019. Also, U.S. pork exports are 35.2% more than in 2019 for January through April and U.S. broiler exports are up 7.8%.

“China continues to struggle with the impacts of African Swine Fever (ASF) and the resulting protein shortages. This is supporting U.S. protein exports,” Peel explains. He points out U.S. pork exports to China, year to date, were 458.2% more than last year. Although sparse, U.S. beef exports to China also continue to grow, up 38.7% so far this year.

USDA’s Foreign Agricultural Service (FAS) left its forecast for 2020 U.S. exports of livestock poultry and dairy unchanged at $32.4 billion, in the latest quarterly Outlook for U.S. Agricultural Trade.

“Strengthened demand for pork and dairy products offsets a decline for beef and poultry products,” say FAS analysts. “Strong demand from China continues to drive growth in U.S. pork exports. The beef forecast is lowered nearly $300 million to $7.2 billion as lower volumes are only partially offset by the higher prices associated with tighter domestic supplies.” Beef export last year were about $7.3 billion.

By | June 13th, 2020|Daily Market Highlights|

Cattle Current Daily—June 12, 2020

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. 

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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.

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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:

Corn

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.

Soybeans

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.

Wheat

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.

By | June 11th, 2020|Daily Market Highlights|

Cattle Current Daily—June 11, 2020

Negotiated cash fed cattle trade staggered ahead Wednesday with live sales in the Southern Plains mostly unevenly steady at $108/cwt. A day earlier, dressed trade in Nebraska was $10-$20 lower than last week at $165, according to the Agricultural Marketing Service.

Cattle feeders offered 1,447 head in the weekly Fed Cattle Exchange auction on Wednesday. Just one lot—228 head of Texas heifers—sold for a weighted average price of $105/cwt. for delivery at 1-17 days.

Choice steers and heifers sold $2.50-$3.00 lower at the fat auction in Tama, IA, where 120 head of Choice 2-4 steers weighing an average of 1,375 lbs. brought an average price of $106.59.

At Sioux Falls Regional in South Dakota, slaughter steers and heifers sold steady to $4 lower. There were 206 head of Choice 3-4 steers weighing an average of 1,590 lbs. and bringing an average of $105.27.

Cattle futures closed mostly lower with the softer cash tone and continued decline in wholesale beef values.

Other than 27¢ higher in spot Jun, Live Cattle futures closed an average of $1.09 lower.

Feeder Cattle futures closed an average $1.07 lower (67¢ lower at the back to $1.57 lower in spot Aug).

Choice boxed beef cutout value was $10.94 lower Wednesday afternoon at $236.06/cwt. Select was $5.11 lower at $222.84.

Corn futures closed mostly 1¢ to 2¢ lower.

Other than fractionally higher to 2¢ higher in the front four contracts, Soybean futures closed mostly 2¢ lower. 

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Major U.S. financial indices closed mixed Wednesday, with tech stocks enjoying the most support overall. Pressure likely stemmed from the Federal Open Markets Committee (FOMC) projections that reaffirm the lengthy economic recovery ahead.

The FOMC projects the median real GDP at -6.5 for this year, 5.0 in 2021 and 3.5 in 2022. Median PCE inflation is projected at 0.8 this year, 1.6 next year and 1.7 in 2022.

“The ongoing public health crisis will weigh heavily on economic activity, employment, and inflation in the near term, and poses considerable risks to the economic outlook over the medium term,” according to an FOMC statement. “In light of these developments, the Committee decided to maintain the target range for the federal funds rate at 0.0% to 0.25%. The Committee expects to maintain this target range until it is confident that the economy has weathered recent events and is on track to achieve its maximum employment and price stability goals.”

The Dow Jones Industrial Average closed 282 points lower. The S&P 500 closed 17 points lower. The NASDAQ closed 66 points higher.

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“Current proposals to increase the number of cattle transacted through a particular channel is unlikely to affect beef demand derived from consumers and passed along the supply chain to producers or alter the current supply of fed cattle ready for harvest,” says Elliott Dennis, Extension livestock economist at the University of Nebraska-Lincoln, in the latest issue of In the Cattle Markets.

He’s referring to recent policy proposals to mandate that packers buy a specific percentage of their weekly fed cattle needs each week in the spot cash market. One, referred to as the 50-14 rule, led by Senator Chuck Grassley (R-IA) and Senator Jon Tester (D-MT) would mandate large-scale packers procure a minimum of 50% of total cattle purchased in the cash market each week for delivery within 14 days.

“The hope is that by increasing cash trade transactions it will solve issues with price discovery, effectively increasing negotiated cash prices,” Dennis explains. “Supply of fed cattle and demand for wholesale beef determines the price of fed cattle. In order to increase fed cattle prices, the 50-14 rule would either need to reduce the supply of fed cattle or increase the demand for wholesale beef. While the rule would increase negotiated cash transactions helping in price discovery in a given week, it is unlikely to affect the underlying fed cattle market supply and demand conditions to effectively increase cash price levels.”

In the meantime, during the pandemic, Dennis points out there have been significant shifts in the percentage of cattle traded via formula and those marketed with a negotiated grid.

“In April, formula trade was 74% of total weekly transactions and negotiated grid was 4%,” Dennis explains. “In May, formula trade fell to 48% and negotiated grid was 20%. The past few weeks, cattle sold on formula steadily increased while cattle on the negotiated grid have decreased. There has been little change in the negotiated cash and forward contract trade, on average for the U.S., since January 1, 2020.”

There are regional differences

“Formula trade fell in the Texas-Oklahoma-New Mexico region but not below five-year historical levels. This was offset by trade in the negotiated grid. Formula priced cattle fell from 95% of cattle priced in April to 30% in May. This was replaced entirely by negotiated grid priced cattle,” Dennis explains. “In both the Texas-Oklahoma-New Mexico and Kansas region there was little movement in the negotiated price. Pricing in Nebraska has been somewhat more volatile. Negotiated cash fell to a historic low of 2% of transactions in May and was entirely offset by increased formula trade. Negotiated grid and forward contract transactions were historically constant.”

During this period of time, Dennis notes that heavyweight carcass discounts declined as carcass weights increased contra-seasonally, due to the backlog in market-ready fed cattle. Quality premiums also shifted since the beginning of the year.

“The underlying makeup of cattle transactions the market is seeing is likely more due to a change in the grid premiums and discounts than a fundamental shift in producer preference for the way cattle are transacted,” Dennis says.

By | June 10th, 2020|Daily Market Highlights|

Cattle Current Daily—June 10, 2020

Other than a few dressed trades reported by the Agricultural Marketing Service (AMS) in the western Corn Belt on Tuesday at $166/cwt. and too few to trend, negotiated cash fed cattle trade remained undeveloped.

Cattle futures closed mostly higher with more active trade.

Live Cattle futures closed an average of $1.09 higher through the front five contracts (10¢ higher in Feb to $2.20 higher in spot Jun), and then an average of 12¢ lower. 

Feeder Cattle futures closed an average 73¢ higher (32¢ higher toward the back to $1.17 higher in spot Aug).

Choice boxed beef cutout value was $7.58 lower Tuesday afternoon at $247.00/cwt. Select was $3.17 lower at $227.95.

As of Tuesday morning, beef packing facilities were operating at 98% of their average capacity, compared to the same time last year, according to USDA. Pork facilities were at 95%, and poultry facilities were operating at 98%.

Corn futures closed 3¢ to 6¢ lower through May ’21 and then mostly 1¢ lower.

Soybean futures closed mostly 1¢ to 4¢ lower through Jly ‘21 and then mainly 7¢ to 8¢ lower.

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Major U.S. financial indices gave back some of the recent gains on Tuesday, on likely profit taking.

The Dow Jones Industrial Average closed 300 points lower. The S&P 500 closed 25 points lower. The NASDAQ closed 29 points higher.

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Major restaurant chain customer transactions continue to improve as a growing number of restaurant dine-in services reopen, according to the NPD Group (NPD).

For the week ending May 31, U.S. restaurant chain transactions declined by 18% compared to same period a year ago, which represented a 3% week-over-week improvement, according to NPD’s CREST®Performance Alerts.

That same week, transactions at major full service restaurant chains, which were hardest hit by the dine-in closures, were 37% less than a year ago, a 15% increase from the prior week. Quick service restaurant chain transactions, which represent the bulk of industry transactions, declined by 16% compared to a year ago, versus an 18% decline for the week ending May 24.

More than 68% of all restaurant units are in states, counties, or municipalities where they are permitted to reopen their on-premise dining service, according to NPD’s ReCount®restaurant census. Although that doesn’t mean all restaurants in those areas reopened, it is an indicator of loosening regulations.

“The U.S. foodservice industry today remains solidly in the re-start phase as restaurants begin to reopen their on-premise operations,” says David Portalatin, NPD food industry advisor. “The industry will move to the recovery phase when all states reopen on-premise dining and we can begin to make a detailed assessment of how many permanent restaurant closures there are and how that will affect what the industry will look like as it re-emerges.” 

By | June 9th, 2020|Daily Market Highlights|

Cattle Current—June 9, 2020

Cattle futures softened to start the week, extending losses from the previous session. Pressure included last week’s softer cattle prices, light trade and demand uncertainty.

Other than 7¢ to 22¢ higher in the front three contracts, Live Cattle futures closed an average of 66¢ lower (15¢ lower to $1.10 lower at the back). 

Feeder Cattle futures closed an average $1.17 lower.

Choice boxed beef cutout value was $6.90 lower Monday afternoon at $254.58/cwt. Select was $15.30 lower at $231.12.

Corn futures closed 2¢ higher.

Soybean futures closed mostly 1¢ lower through Aug ‘21 and then mainly 3¢ higher.

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Major U.S. financial indices closed higher on Monday, extending gains from the previous session’s strong performance. Support included carryover optimism from last Friday’s bullish employment report.

The Dow Jones Industrial Average closed 461 points higher. The S&P 500 closed 38 points higher. The NASDAQ closed 110 points higher.

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The weighted average five-area direct live fed steer price was $3.32 lower week to week on Friday at $112.39/cwt. The dressed price was $4.79 lower at $179.04. Prices were $113.76 and $184.21 at the same time last year.

However, the range in negotiated cash fed cattle prices continued across a broad range, with live prices in the Southern Plains at mostly $105-$117/cwt., $110-$118 in Nebraska and $108-$114 in the western Corn Belt. Dressed prices were at $175-$185.

“This wide range in prices is largely due to regional supply and demand. Regions with a large supply of market ready cattle and limited demand are seeing the lowest prices, while regions with strong demand and a relatively smaller supply are seeing higher prices,” explains Andrew P. Griffith, agricultural economist with the University of Tennessee, in his weekly market comments. “This may not be the only reason for the disparity in prices as other factors are at play, but supply and demand are generally what push prices one way or the other. It is difficult to predict what prices will be as the market moves through the glut of cattle, but there is sure to be downward pressure throughout the summer and fall. The market is attempting to align itself with supply and demand.”

On the other hand, Griffith says price expectations for late-summer and early fall feeder cattle continue to improve.

By | June 8th, 2020|Daily Market Highlights|

Cattle Current Daily—June 8, 2020

Negotiated cash fed cattle prices were lower across a broad range last week. The weighted average five-area direct live steer price was $2.97 lower week to week on Thursday at $112.68/cwt. The dressed price was $4.13 lower at $179.17. Prices were $113.51 and $184.16 at the same time last year.

Softer cash prices, declining wholesale beef values and the outlook for continued price erosion weighed on Cattle futures Friday.

Live Cattle futures closed an average of $1.59 lower in the front four contracts, then an average of 52¢ lower (17¢ to 95¢ lower). 

Feeder Cattle futures closed an average $1.15 lower, from 55¢ lower in spot Aug to $1.35 lower at the back.

Choice boxed beef cutout value was $10.78 lower Friday afternoon at $261.48/cwt. Select was $13.99 lower at $246.42.

Corn futures closed mostly 2¢ higher.

Soybean futures closed mostly 2¢ to 4¢ higher across the front half of the board and then mainly fractionally lower to 1¢ lower.

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Major U.S. financial indices closed higher on Friday, buoyed by a surprising surge in employment.

Total nonfarm payroll employment rose by 2.5 million in May, according to the U.S. Bureau of Labor Statistics. The unemployment rate declined by 1.4% to 13.3%.

Average hourly earnings for all employees on private non-farm payrolls fell by 29¢ in May to $29.75, following a gain of $1.35 in April.

“Today’s report shows much higher job creation and lower unemployment than expected, reflecting that the re-opening of the economy in May was earlier, and more robust, than projected,” says U.S. Secretary of Labor Eugene Scalia. “

“Millions of Americans are still out of work, and the Department remains focused on bringing Americans safely back to work and helping States deliver unemployment benefits to those who need them. However, it appears the worst of the coronavirus’s impact on the nation’s job markets is behind us.”

The Dow Jones Industrial Average closed 829 points higher. The S&P 500 closed 81 points higher. The NASDAQ closed 198 points higher.

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“Considering all the challenges the U.S. red meat industry faced in April, export results were encouraging,” says Dan Halstrom, president and CEO of the U.S. Meat Export Federation (USMEF). “Exporters lost several days of slaughter and processing due to COVID-19, and shipments to Mexico and some other Latin American markets declined due to slumping currencies and the imposition of stay-at-home orders. Despite these significant headwinds, global demand for U.S. beef and pork remained strong.”

April beef exports were down 6% from a year ago to 98,613 metric tons (mt), with value falling 11% to $600.9 million, according to data released by USDA and compiled by the USMEF. But, exports achieved outstanding growth in Japan, where U.S. beef is benefiting from reduced tariffs under the U.S.-Japan Trade Agreement. Exports also trended higher to China, following the late-March implementation of the U.S.-China Phase One Economic and Trade Agreement.

For January through April, beef exports totaled 433,316 mt, up 5% from a year ago, valued at $2.66 billion (up 3%).

With lower April slaughter numbers, beef export value per head of fed slaughter climbed to a record $363.35, up 19% from April 2019. For the first four months of the year, per-head export value increased 5% to $326.47.

“International customers are relieved to see U.S. production rebounding, solidifying our position as a reliable supplier,” Halstrom says. “This helps address a major concern for buyers, as COVID-19 has disrupted meat production in many countries, not just the United States. Demand remains robust for U.S. red meat, especially at retail, but USMEF is actively working with our foodservice customers across the globe to help ensure a strong recovery for the restaurant, catering and hospitality sectors. Many are adjusting to an entirely new business climate, and the U.S. industry assisting them in this process can help ensure that U.S. pork, beef and lamb will be featured on their menus.”

U.S. pork exports in April were 264,048 mt, up 22% from a year ago but the lowest since November 2019. Export value of $682.8 million was up 28% year-over-year but the lowest since October 2019. Through the first four months of 2020, pork exports remain on a record pace at 1.1 million mt, up 35% from a year ago, with value up 45% to $2.91 billion.

By | June 7th, 2020|Daily Market Highlights|

Cattle Current Daily—June 5, 2020

Negotiated cash fed cattle prices were sharply lower in the Southern Plains on Thursday at $105/cwt., which was $13 less than the bulk of the previous week’s trade. For the week, established live prices in the North are $3-$4 lower than the previous week at $109-$117 in Nebraska and at mostly $110 in the western Corn Belt. Dressed prices for the week are steady to $10 lower at $175-$185.

Cattle futures faded the softer cash prices, though, with support including the weekly U.S. Export Sales report from USDA’s Foreign Agricultural Service. Net sales of 12,300 metric tons of beef for the week ending May 28 were 7% more than the previous week and 97% more than the prior four-week average. Increased beef export sales were mostly to South Korea, Japan, Canada, Hong Kong, and China.

Live Cattle futures closed an average of 86¢ higher, from 27¢ higher in spot Jun to $1.12 higher.

Feeder Cattle futures closed an average 89¢ higher, from 50¢ higher in spot Aug to $1.17 higher at the back.

Wholesale beef values continue to plunge, adjusting back to more normal fundamentals. Choice boxed beef cutout value was $23.64 lower Thursday afternoon at $272.26/cwt. Select was $16.37 lower at $260.41.

Total fed cattle slaughter for the week ending May 23 was 444,378 head, which was 51,816 head more (+13.2%) than the previous week and the most since the first week of April, according to USDA’s Actual Slaughter Under Federal Inspection report. Total cattle slaughter of 571,506 head was 52,383 head more (+10.1%) than the prior week and the most since the first week of April. Compared to the prior year, though, fed cattle slaughter was still 14.5% less and total cattle slaughter was 11.6% less.

The average dressed steer weight for the week was 894 lbs., which was 6 lbs. lighter than the previous week, but 52 lbs. more than the same week a year earlier. The average dressed heifer weight of 826 lbs. was 5 lbs. less than the previous week, but 41 lbs. heavier than the prior year.

The lowest U.S. Dollar since March supported Grain futures.

Corn futures closed 3¢ to 5¢ higher.

Soybean futures closed mostly 10¢ to 14¢ higher.

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Major U.S. financial indices closed narrowly mixed Thursday. Pressure included more initial jobless claims than the market expected.

Initial unemployment insurance claims for the week ending May 30 were 1.88 million, which was 249,000 fewer than the previous week, according to the U.S Labor Department.

The Dow Jones Industrial Average closed 11 points higher. The S&P 500 closed 10 points lower. The NASDAQ closed 67 points lower.

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Customer transaction declines at major U.S. restaurant chains continued to improve in the week ending May 24, according to The NPD Group (NPD).

With nearly 320,000 restaurant units in the U.S. allowed to offer some level of on-premise dining, total major restaurant chain transactions declined by 18% compared to the same week last year, which represented a week-to-week gain of 25 points. That’s according to NPD’s CREST®Performance Alerts, which provides a weekly view of chain-specific transactions and share trends for 70 quick service, fast casual, midscale, and casual dining chains.

Major full service chain restaurant transactions declined by 42% versus same time last year, a 7-point improvement from the prior week’s decline.

Transactions at quick service restaurant chains were down 17% year over year, improving from the 20% decline a week earlier.

NPD’s CREST®foodservice market research, indicates total industry traffic at chain and independent restaurants was down 35% in April compared to year ago, which aligns with NPD’s weekly restaurant chain transactions tracking.

“Among the most interesting behaviors we’re seeing is the rapid escalation of using technology to engage with restaurants,” says David Portalatin, NPD food industry advisor. “Going forward, we might expect a digital divide that sets apart restaurants with well-executed digital offerings and requires those without to turn to the newfound prowess of third-party platforms.”

By | June 4th, 2020|Daily Market Highlights|

Cattle Current Daily—June 4, 2020

Negotiated cash fed cattle prices continued softer week-to-week on Wednesday. Live prices were $117/cwt. in the Texas Panhandle, $110-$117 in Kansas and mostly $117 in Nebraska. Dressed trades were at $175-$185.

Cattle feeders offered 1,736 head in the weekly Fed Cattle Exchange auction Wednesday. Just one lot–199 steers from Texas–sold at a weighted average price of $110.50/cwt. for delivery at 1-17 days.

Despite softer cash prices, surging outside markets helped support Cattle futures on Wednesday.

Except for 10¢ lower in the back two contracts, Live Cattle futures closed an average of 40¢ higher, from 2¢ higher to $1.15 higher.

Feeder Cattle futures closed an average 84¢ higher.

Wholesale beef values continue to plunge as packing capacity recovers. Choice boxed beef cutout value was $22.83 lower Wednesday afternoon at $295.90/cwt. Select was $13.80 lower at $276.78.

Corn futures closed mostly fractionally higher to 1¢ higher.

Soybean futures closed 5¢ to 7¢ higher through Jan ’21 and then mostly 3¢ to 4¢ higher.

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Major U.S. financial indices closed strongly higher Wednesday.

Positive news included fewer lost jobs than originally anticipated, based on the closely watched ADP National Employment Report®. Still, private sector employment decreased by 2.76 million jobs from April to May, according to the report. 

“The impact of the COVID-19 crisis continues to weigh on businesses of all sizes,” says Ahu Yildirmaz, co-head of the ADP Research Institute. “While the labor market is still reeling from the effects of the pandemic, job loss likely peaked in April, as many states have begun a phased reopening of businesses.”

The Dow Jones Industrial Average closed 527 points higher. The S&P 500 closed 42 points higher. The NASDAQ closed 74 points higher. Those were the highest levels since the first part of March.

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“It’s too soon to talk too much about markets returning to normal, but the steady improvements associated with the packing industry facing fewer obstacles is a relief,” says Stephen Koontz, agricultural economist at Colorado State University, in the latest issue of In the Cattle Markets from the Livestock Marketing Information Center.

Koontz explains recent weekly commercial cattle slaughter under federal inspection is a little more than 71% of the year’s peak weekly volume, before COVID-19 began reducing slaughter capacity. The low point was approximately 60% of the peak.

“These slaughter numbers will determine when the cattle and beef markets return to more normal relationships,” Koontz says. “There are very large supplies and substantial inventory of long-fed cattle on feed. There has been a steady improvement in fed cattle and feeder cattle prices through last month and into the current. Continued improvement hinges on any further disruptions and steady elevation in slaughter numbers.”

From the lows of the year, Koontz points out: the five-area weighted average fed steer price is up about $15 at $115/cwt.; 7 to 8-weight feeder prices are up about $15 to $135; 4 to 5-weight calf prices are up about $8 to $170.

“But let’s not forget those steer and heifer slaughter weights are in a contra- seasonal increase and are no less than 40 lbs. per animal above last year. That’s a 4.8% increase in beef supplies due to carcass weights,” Koontz says. “And there are 4.8 million head of cattle on feed over 120 days, based on the last report. Working through these supplies will easily require the rest of the summer.”

By | June 3rd, 2020|Daily Market Highlights|

Cattle Current Daily—June 2, 2020

Early negotiated cash fed cattle trade on Monday was unevenly steady with the bulk of last week’s trade. Live prices were at $118/cwt. in the Southern Plains and Nebraska. Dresses sales in Nebraska and the western Corn Belt were at $178-$187.

Cattle futures closed mixed but mainly higher Monday as traders weigh short term beef demand against increasing supplies and lower boxed beef values.

Live Cattle futures closed mixed, an average of 70¢ lower through the front three contracts (5¢ to $1.42 lower) and then an average of 88¢ higher.

Feeder Cattle futures closed an average of $2.05 higher.

Choice boxed beef cutout value was $22.19 lower Monday afternoon at $341.15/cwt. Select was $23.24 lower at $316.83.

Corn futures closed mostly 2¢ to 3¢ lower.

Soybean futures closed mostly unchanged to 1¢ higher.

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Major U.S. financial indices closed higher Monday, apparently on increasing optimism about reopening the economy and despite trade-quashing chatter between the U.S. and China, as well as curfews imposed in various cities, aimed at quelling recent violent protests.

The Dow Jones Industrial Average closed 91 points higher. The S&P 500 closed 11 points higher. The NASDAQ closed 62 points higher.

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“Barring a major setback, it appears that beef markets are moving past the worst of the disruptions that have caused upheaval in recent weeks,” says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly market comments. “The last few weeks have revealed much about the nature of specialized beef supply chains and much about the variable demands for the wide variety of beef products. It has also revealed how market prices adjust to wild swings in beef product demand and supply conditions.”

Those disruptions were first spawned by the massive shift in consumer beef demand toward retail purchases and away from food service as the pandemic quarantine began. Then came the disruptions to beef packing and processing.

“Cattle slaughter and beef production decreased on a year-over-year basis for four consecutive weeks. The lowest point occurred the last week of April when total cattle slaughter was down 34.8% year over year. Beef production that same week was down 33.8% compared to the same week one year ago,” Peel says.  “Significant recovery has occurred from that low with estimated cattle slaughter the week ending May 30 down 10.9% year over year. With cattle carcass weights increasing sharply due to delays in marketing fed cattle, estimated beef production last week was down just 7.6% year over year.”

Along the way, wholesale beef values skyrocketed overall, while price impacts varied across the carcass. For example, Peel points to increased demand for the Chuck and Round from March through April. Conversely, he explains prices for beef products dependent on food service demand, including many middle meat cuts, dropped in March before general shortages of products pushed prices higher in April and May. 

“Additional dynamics are expected as food service continues a slow recovery and macroeconomic conditions continue to affect beef demand, but hopefully beef product markets are settling back into a much more stable situation and with typical product price relationships reestablished,” Peel says. 

By | June 1st, 2020|Daily Market Highlights|

Cattle Current Daily—June 1, 2020

Negotiated cash fed cattle prices continued across a broad range last week. On a live basis, prices were steady to $5 lower in the Texas Panhandle at $115-$120/cwt., $5 less in Kansas at $115, steady to $7 less in Nebraska at $112-$120 and steady to $1 higher in the western Corn Belt at $115. Dressed prices were steady to $12 lower in Nebraska at $178-$190 and $5-$15 lower in the western Corn Belt at $175-$185.

Through Thursday, the five-area direct weighted steer price was $115.65/cwt. on a live basis and $183.30 in the beef. Week to week, that was $1.64 less and 45¢ less, respectively.

Cattle futures closed lower Friday, likely influenced by week-end and month-end position squaring. Never mind wonderments about how much packers are currently supporting fed cattle prices, relative to the lower levels suggested by fundamentals.

Live Cattle futures closed an average of $1.30 lower, (7¢ lower at the back to $1.75 lower in spot Jun).

Feeder Cattle futures closed an average of $1.01 lower (15¢ lower in spot Aug to $1.52 lower at the back).

Choice boxed beef cutout value was $6.22 lower Friday afternoon at $363.34/cwt. Select was $4.02 lower at $340.07.

Corn futures closed mostly 1¢ lower.

Soybean futures closed 4¢ to 6¢ lower through Jan ’21 and then mostly fractionally mixed to 1¢ lower.

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Major U.S. financial indices closed mixed Friday, amid volatile trade related to rising political tensions between the U.S. and China.

The Dow Jones Industrial Average closed 17 points lower. The S&P 500 closed 14 points higher. The NASDAQ closed 120 points higher.

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Disruptions in cattle slaughter, due to COVID-19, cloud the picture but analysts with the Livestock Marketing Information Center (LMIC) expect USDA’s July 1 Cattle report to reveal further declines in beef cow numbers.

“A smaller July 1 inventory will imply the same situation for Jan. 1, 2021. This would be the second consecutive year-on-year decline for the beef breeding herd that has only just begun this liquidation phase, which may now be sharper than previously expected,” say LMIC analysts, in the latest Livestock Monitor.

Before the pandemic began disrupting packing plants, LMIC analysts point out weekly beef cow harvest was running well ahead of year-ago levels. Beef cow slaughter was 2% to 20% below year-ago levels for the last seven weeks.

As for heifer slaughter, it’s 4% less so far this year, compared to 2019.

“Smaller heifer slaughter would normally imply, when discussing inventory, the possibility that this liquidation phase of the cattle cycle is over and producers are adding breeding type animals. There may be some individuals that are doing so, but the national picture suggests otherwise,” say LMIC analysts. “The decrease in heifer slaughter is misleading for a couple of reasons, but is not indicative of breeding herd growth. First, slaughter disruptions have caused data patterns that are atypical. The backlog of fed cattle is likely skewed towards more heifers; because of the lighter dressed weight, they can likely stay on feed longer than a heavyweight steer. Second, heifer slaughter should fall below a year ago after last year’s large numbers of heifers on feed and a smaller 2019 calf crop. Lastly, producers are cautious after a couple of years of negative returns for cow-calf operations. Many are not thinking of expanding. Adding worry for many in the West is the expanding drought conditions.”

Along with weather and forage availability, economics will continue to drive decisions about herd liquidation or expansion.

“Calf prices improved in recent weeks, but it remains to be seen what fall-weaned calves will bring. LMIC currently sees fourth-quarter calf prices as similar to a year ago,” explain LMIC analysts. “Expenses and feed costs are expected to be lower, and cull cow values have improved in some areas from last year. Under these assumptions, cow-calf returns should be better than the year before, but the outlook is still full of uncertainty.”

By | May 31st, 2020|Daily Market Highlights|

Cattle Current Daily—May 29, 2020

Negotiated cash fed cattle sales were mixed on a live basis Thursday, compared to last week: steady in Nebraska at $119-$120/cwt., steady to $1 higher in the western Corn Belt at $115; steady to $5 lower in the Southern Plains at $115-$120. Dressed prices were steady to $12 lower at $178-$190.

Cattle futures closed mixed but mainly higher Thursday, bouncing back from early pressure.

Live Cattle futures closed an average of 32¢ higher, except for 5¢ and 67¢ lower in near and away Oct, respectively.

Feeder Cattle futures closed mixed, an average of 99¢ higher across the front half of the board (45¢ higher to $1.47 higher in spot Aug) to an average 12¢ lower across the back half.

Choice boxed beef cutout value was $8.21 lower Thursday afternoon at $369.56/cwt. Select was $6.11 lower at $344.09.

Corn futures closed 5¢ to 7¢ higher through May ’21 and then mostly 4¢ higher.

Soybean futures closed mostly fractionally lower.

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Major U.S. financial indices closed lower Thursday, apparently mostly hamstrung by rising political tensions between the U.S. and China.

The Dow Jones Industrial Average closed 147 points lower. The S&P 500 closed 6 points lower. The NASDAQ closed 43 points lower.

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Recent slaughter data suggest the worst of COVID-19 packing disruptions may be over.

“For beef and pork, the plants are mainly back online, but are running at reduced capacity due to social distancing of workers, etc. Beef and pork are currently running at about 10% to 15% below last year,” says Jayson Lusk, agricultural economist at Purdue University, in his latest comments. “The worst of the disruptions occurred in late April and early May when we were running about 40% below last year, but significant improvements have been made since then.”

For perspective, the week ending May 2 might be the ebb in packing capacity, when USDA estimated cattle slaughter at 425,000 head, which was 36.8% less (-248,000 head) year over year. Actual cattle slaughter under federal inspection that week ended up 438,614 head, which was 34.8% less (-233,836 head).

By the week ending May 23, estimated slaughter of 555,000 head was 14.2% less (-92,000 head) than a year earlier. Actual slaughter data for the week wasn’t yet available.

There’s still an immense and growing backlog of market-ready fed cattle, but gains in packing capacity suggest it may prove to be less than originally anticipated.

In the meantime, longer-fed cattle are racking up the per-head tonnage.

The average dressed steer weight for the week ending May 16 was 901 lbs., which was 5 lbs. heavier than the previous week and 52 lbs. heavier than the same week a year earlier, according to USDA’s Actual Slaughter Under Federal Inspection report. The average dressed heifer weight of 831 lbs. was 2 lbs. heavier than the previous week and 43 lbs. heavier than last year.

By | May 28th, 2020|Daily Market Highlights|

Cattle Current Daily—May 28, 2020

Negotiated cash fed cattle trade continued steady to unevenly steady Wednesday across a broad range: $120/cwt. in the Southern Plains and mostly $115 on a live basis in the western Corn Belt, but lower in Nebraska at $114-$115. Dressed sales so far this week are at $178-$190.

Cattle feeders consigned 1,164 head to Wednesday’s weekly Fed Cattle Exchange auction–all from the Southern Plains. None sold.

Slaughter steers and heifers sold unevenly steady at Sioux Falls Regional in South Dakota, where 262 head of Choice 2-3 steers weighing an average of 1,411 lbs. sold for an average of $110.40/cwt.

Cattle futures closed higher Wednesday, maintaining strong gains from the previous session.

Live Cattle futures closed an average of 70¢ higher (10¢ higher to $1.47 higher toward the front of the board). Spot June closed at $100.80, the highest level since the first part of March.

Feeder Cattle futures closed an average of 66¢ higher.

Choice boxed beef cutout value was $7.72 lower Wednesday afternoon at $377.77/cwt. Select was $9.82 lower at $350.20.

Corn futures closed fractionally higher to 1¢ higher.

Soybean futures closed 1¢ to 2¢ higher.

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Major U.S. financial indices closed higher again Wednesday. Optimism included the fact that all 50 states are now open for business, to varying degrees.

The Dow Jones Industrial Average closed 553 points higher. The S&P 500 closed 44 points higher. The NASDAQ closed 72 points higher.

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Customer transactions at major U.S. restaurant chains continued to improve slightly for the fifth consecutive week, according to the NPD Group.

Specifically, restaurant customer transactions for the week ending May 17 were 21% less than a year earlier, compared to a decline of 23% the previous week.

Transactions at major quick service chain restaurants, which represent the majority of restaurant transactions, improved by 1% week to week, to a decline of 21%, according to NPD’s CREST®Performance Alerts.

Restaurant transactions at major full service chains were 49% less than a year earlier, which was 9% more positive than the previous week. The NPD folks say the lifting of COVID restrictions the previous week added 93,000 restaurant units, which helped bolster transaction improvement.

Transactions at full service restaurants in states where on-premise dining was permitted to reopen as of May 10 improved 13 percentage points in the week ending May 17, down 33% year over year, compared to a decline of 46% the prior week.

“The reopening of restaurant dine-in services across the country will certainly continue to help drive improvements, but it’s important to keep in mind that restaurant on-premise dining operations are not serving to full capacity because of safety protocols,” says David Portalatin, NPD food industry advisor. “Equally important to the industry’s recovery is the consumer’s comfort level with dining in at a restaurant now.”  

As for dining at home, according to NPD’s NET®COVID-19 Pantry & Food Strategy Tracker, consumers reported that 63% of their eating occasions during the COVID-19 outbreak have been atypical, meaning they’re eating foods and beverages that are different from their normal routines.

By | May 27th, 2020|Daily Market Highlights|

Cattle Current Daily—May 27, 2020

The weekly weighted average live steer price (five-area direct) last week was $117.06/cwt., which was $4.75 higher than the previous week. The weekly weighted steer price in the beef was $3.70 higher at $183.35.

Higher outside markets, last week’s friendly Cattle on Feed report and recent cash strength helped lift Cattle futures Tuesday.

Live Cattle futures closed an average of $2.06 higher.

Feeder Cattle futures closed an average of $3.86 higher.

Choice boxed beef cutout value was $11.25 lower Tuesday afternoon at $385.49/cwt. Select was $14.16 lower at $360.02.

Corn futures closed mostly 1¢ higher.

Soybean futures closed 10¢ to 13¢ higher through Jan ’21 and then mostly 5¢ to 8¢ higher. Support included announcement of new export sales to China.

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Major U.S. financial indices closed higher Tuesday, buoyed by positive economic news as the domestic economy continues to reopen.

The closely watched Consumer Confidence Index® held steady in May, following the steep decline in April.

“Following two months of rapid decline, the free-fall in Confidence stopped in May,” says Lynn Franco, Senior Director of Economic Indicators at The Conference Board. “The severe and widespread impact of COVID-19 has been mostly reflected in the Present Situation Index, which has plummeted nearly 100 points since the onset of the pandemic. Short-term expectations moderately increased as the gradual reopening of the economy helped improve consumers’ spirits. However, consumers remain concerned about their financial prospects. In addition, inflation expectations continue to climb, which could lead to a sense of diminished purchasing power and curtail spending. While the decline in confidence appears to have stopped for the moment, the uneven path to recovery and potential second wave are likely to keep a cloud of uncertainty hanging over consumers’ heads.”

Also, sales of new single-family houses in April 2020 beat widespread expectations at a seasonally adjusted annual rate of 623,000, according to estimates released by the U.S. Census Bureau and the Department of Housing and Urban Development. That was 0.6% more than the revised March rate, but 6.2% less than a year earlier. 

The Dow Jones Industrial Average closed 529 points higher. The S&P 500 closed 36 points higher. The NASDAQ closed 15 points higher.

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Feedlot placements for March and April were down a combined 867,000 head from the previous year, suggesting a significant decline in fed marketing, mostly in September and into October, says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his latest market comments.

“The delayed placements from March and April will show up starting in May, and will be heavier, but the delay will help feedlots have a chance to get current,” Peel says. “The feedlot industry will spend much of the summer working through the backlog of fed cattle but the hole from March and April feedlot placements should provide a marketing window to catch up by this fall if not before.”

Although average year-over-year fed cattle marketings declined an average of 6.4% for March and April combined, Peel notes, “The slowdown in April marketings and resulting backlog of fed cattle in feedlots would have been more severe without the strong March marketings that pulled some cattle ahead.”

By | May 26th, 2020|Daily Market Highlights|

Cattle Current Daily—May 25-26, 2020

Negotiated cash fed cattle trade ended up mainly $5-$10 higher on a live basis last week at mostly $120/cwt. in the Southern Plains and at $119-$120 in Nebraska. Dressed trade was mostly $10 higher at mainly $190.

Cattle futures hovered Friday, amid light trade.

Live Cattle futures closed mostly narrowly mixed, from an average of 54¢ lower (5¢ to $1.10 lower in spot Jun) to an average of 16¢ higher.

Except for 7¢ lower in new spot Aug, Feeder Cattle futures closed unchanged to 7¢ higher.

Choice boxed beef cutout value was $5.07 lower Friday afternoon at $396.74/cwt. Select was $8.35 lower at $374.18.

USDA estimated total cattle slaughter for the week at 555,000 head, which would be 56,000 head more (+11.2%) than the previous week, but 92,000 head fewer (-14.2%) than the same week a year earlier. Year to date, cattle slaughter of 12.11 million head is 893,000 head fewer (-6.9%) than the same period least year.

Corn futures closed fractionally lower to 1¢ lower.

Soybean futures closed mostly 1¢ lower through Jan ’21 and then mostly fractionally higher to 1¢ higher.

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Major U.S. financial indices basically tread water on Friday.

The Dow Jones Industrial Average closed 8 points lower. The S&P 500 closed 6 points higher. The NASDAQ closed 39 points higher.

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Markets will likely view Friday’s monthly USDA Cattle on Feed report as neutral, with numbers about mirroring pre-report estimates.

For feedlots with 1,000 head or more capacity, there were 1.43 million head placed in April, which was 410,000 head fewer (-22.26%) than the previous year. In terms of weights, 33.17% went on feed weighing 699 lbs. or less, 49.37% weighed 700-899 lbs. and 17.46% weighing 900 lbs. or more.

There were 1.46 million head marketed in April, which was 469,000 head fewer (-24.32%) than the previous year. That was about 1% more positive than pre-report estimates. April marketings were the least for the month since the data series began in 1996, according to AMS.

There were 11.20 million head on feed May 1, which was 607,000 head fewer (-5.14%) than the previous year.

By | May 23rd, 2020|Daily Market Highlights|

Cattle Current Daily—May 22, 2020

In light trade on Thursday, negotiated cash fed cattle prices were mostly steady with the previous day’s higher prices: mainly around $120/cwt. on a live basis and at $180-$190 in the beef.

Recent strength in cash prices added firmness to Cattle futures Thursday, amid light trade.

Live Cattle futures closed an average of 46¢ higher (7¢ to 92¢ higher).

Except for 2¢ higher in two contracts, Feeder Cattle futures closed unchanged to 37¢ lower.

On average, analysts surveyed by Urner Barry and reported by the Daily Livestock Report, expect April placements to be 22.9% less than a year earlier, April marketings to be 25.4% less and cattle on feed to be 5% less, for feedlots with 1,000 head or more capacity. The monthly Cattle on Feed report is due out Friday afternoon.

Wholesale beef values continue to decline as packing capacity continues to return (see below).

Choice boxed beef cutout value was $2.23 lower Thursday afternoon at $401.81/cwt. Select was $8.65 lower at $382.53.

The average dressed steer weight was 896 lbs. the week ending May 9, according to USDA’s weekly Actual Slaughter Under Federal Inspection report. That was 3 lbs. heavier than the previous week and 44 lbs. heavier than the same week last year. The average dressed heifer weight was 829 lbs., which was 3 lbs. heavier than the prior week and 35 lbs. heavier than the previous year.

Corn futures closed fractionally lower to 1¢ lower.

Soybean futures closed 7¢ to 11¢ lower through Jan ’21 and then mostly 1¢ to 3¢ lower.

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Major U.S. financial indices closed lower Thursday, with pressure including more political saber rattling between the U.S. and China, as well as continued massive unemployment claims.

The advance figure for seasonally adjusted initial unemployment insurance claims for the week ending May 16 was 2.44 million, according to the U.S. Department of Labor. That was a decrease of 249,000 from the previous week’s revised level.

The Dow Jones Industrial Average closed 101 points lower. The S&P 500 closed 23 points lower. The NASDAQ closed 90 points lower.

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“The recent declines in the boxed beef cutout value coincide with continued improvement in processing totals,” says Josh Maples, Extension livestock economist at Mississippi State University, in the May 18 issue of In the Cattle Markets. “The Estimated Daily Slaughter report showed an estimate for last week at 499,000 head. While still 25% lower than a year ago, this would be a 10% improvement over the week prior. Perhaps more importantly, it would mark the second consecutive weekly increase after five straight weeks of declines. A continuing loosening of the logjam at the processing sector is critical to the cattle and meat sector and would support increased cattle slaughter and increased beef availability.”

Total cattle slaughter under federal inspection in April was 2.19 million head, which was 599,700 head fewer (-21.50%) than the previous year, according to USDA’s monthly Livestock Slaughter report (LSR). Of those, total fed steer and heifer slaughter of 1.65 million head was 552,500 head fewer (-25.04%).

On the other end of the trade, Maples notes the significant decline in boxed beef sales for delivery beyond 22 days.

Based on the weekly USDA National Comprehensive Boxed Beef Cutout report, Maples explains the average weekly number of loads sold during the past five weeks was 4,675, which was 32% less than the same time period last year. Negotiated sales for delivery within 21 days were 18% less, while negotiated sales for delivery at 22 days or more declined 64% and forward contract sales declined 65%.

Federally inspected beef production in April was 1.78 billion lbs., which was 452 million pounds less (-20.23%) than a year earlier, according to the LSR. Total federally inspected red meat production for the month of 3.81 billion lbs. was 696 million lbs. less (-15.42% ) than last year.

“Given the uncertainty about both available supply and expected demand, it is likely not surprising that sales for delivery further into the future have shown the biggest decline,” Maples says.

By | May 21st, 2020|Daily Market Highlights|

Cattle Current Daily—May 21, 2020

Negotiated cash fed cattle trade picked up steam Wednesday in both volume and price. Live sales were steady to $10 higher at $120/cwt. in the Southern Plains and mainly $120 in Nebraska. Dressed sales were steady to $10 higher at mostly $180-$190 in Nebraska and at mostly $190 in the western Corn Belt.

Cattle feeders offered 2,782 head in the weekly Fed Cattle Exchange auction, but there were no sales.

Cattle futures ended lower, though, amid recently declining wholesale beef values and perhaps with some positioning ahead of the long weekend and Friday’s monthly Cattle on Feed report.

Live Cattle futures closed an average of $1.20 lower (37¢ lower in spot Jun to $1.50 lower).

Feeder Cattle futures closed an average of $2.42 lower ($1.42 lower in spot May to $2.92 lower).

Choice boxed beef cutout value was $5.43 lower Wednesday afternoon at $404.04/cwt. Select was $2.31 higher at $391.18.

After 1¢ lower in the front two contracts, Corn futures closed mostly fractionally higher.

Soybean futures closed mostly 3¢ to 4¢ higher through Aug ’21 and then mostly 1¢ higher.

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Major U.S. financial indices closed higher Wednesday, led by tech stocks, the recent resurgence in oil prices and, apparently, optimism as more states continues to ease COVID-19 restrictions.

The Dow Jones Industrial Average closed 369 points higher. The S&P 500 closed 48 points higher. The NASDAQ closed 190 points higher.

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U.S. restaurant chain transaction declines continued to improve for the fourth consecutive week (ending May 10) amid Mother’ Day and more states reopening.

Large chain restaurant customer transactions were down 23% compared to a year ago, improving from a 26% decline the prior week, according to The NPD Group (NPD). Large full service restaurant chain transactions were 39% more than the previous week, but still 58% less than a year earlier. Transactions at large quick service chain restaurants were 21% less than a year earlier; they were down 24% the previous week, according to NPD’s CREST® Performance Alerts.

As well, NPD’s ReCount® restaurant census estimates 19 states allowed some level of on-premise dining the week ending May 10. Some of these states never imposed restrictions, while some reopened in the past couple of weeks.

Tennessee and Texas are among the largest states for restaurant unit counts that lifted restrictions to on-premise dining in recent weeks. Customer transactions improved by 7 percentage points week to week in both states for the week ending May 10. Tennessee restaurant transactions are down 14% and Texas is down 18% compared to year ago.

“Permanent restaurant closures, economically distressed consumers, and the possibility of a second wave of virus cases still bring uncertainty; but at least for now, the recent run of weekly gains is encouraging,” says David Portalatin, NPD food industry advisor and author of Eating Patterns in America.  “The road back will be challenging and slow, but we’re headed in the right direction.”

By | May 20th, 2020|Daily Market Highlights|

Cattle Current Daily—May 20, 2020

Negotiated cash fed cattle trade continued to be light on Tuesday. The only established trend reported by AMS so far this week is mostly $180/cwt. on a dressed basis in the western Corn Belt. Although too few to trend, early live and dressed sales in Nebraska so far this week are at the top of last week’s range.

Cattle futures closed narrowly mixed Tuesday, amid sparse interest and direction.

Live Cattle futures closed from 30¢ lower to 22¢ higher, with open interest continuing to decline.

Except for 82¢ higher in spot May, Feeder Cattle futures closed an average of 39¢ lower, in light trade.

The most recent CME Feeder Cattle Index of $126.84 was the highest since the end of March.

Choice boxed beef cutout value was $5.48 lower Tuesday afternoon at $409.47/cwt. Select was $6.00 lower at $388.87.

Corn futures closed mostly 1¢ higher.

Soybean futures closed mostly 2¢ lower through Mar ’21 and then fractionally higher to 1¢ higher.

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Major U.S. financial indices closed lower Tuesday. Reportedly, pressure included a negative report about a potential COVID-19 vaccine, which helped lift stocks the previous day when initial test results were announced.

Investors also were assessing the latest economic projections from the Congressional Budget Office (CBO).

“After falling by 1.2% in the first quarter of 2020, real GDP is projected to contract even more sharply—by 11.2%—in the second quarter. At annual rates, those declines are equivalent to 4.8% and 37.7%, respectively,” according to the CBO’s Interim Economic Projections for 2020 and 2021. “Although the drop in output is acute, it has been partially blunted by past investments in information technologies (such as computers, software, and communications equipment), which have made it possible for a significant portion of economic activity to continue remotely. Before the pandemic began, almost 30% of workers reported that they could work from home…”

The report suggests the domestic economy will begin recovering during the second half of this year as concerns about the pandemic wane, state and local governments loosen stay-at-home orders, etc.

“The labor market is projected to materially improve after the third quarter; hiring will rebound and job losses will drop significantly as the degree of social distancing diminishes,” according to the report. “However, those improvements will not be large enough to make up for earlier losses. Compared with their values two years earlier, by the fourth quarter of 2021 real GDP is projected to be 1.6% lower, the unemployment rate 5.1 percentage points higher, and the employment-to-population ratio 4.8 percentage points lower. Inflation and interest rates on federal borrowing will remain relatively low because of subdued economic activity and weak labor market conditions through 2021.”

The Dow Jones Industrial Average closed 390 points lower. The S&P 500 closed 30 points lower. The NASDAQ closed 49 points lower.

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“It appears that the overall feed situation will be favorable and provide more flexibility for feeder and feedlot cattle operations,” says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his latest weekly market comments.

USDA projects corn production from the new crop at a record large 16 billion bu., in the latest World Agricultural Supply and Demand Estimates (WASDE). USDA projects ending stocks to be 1.2 billion bu. more than last year, which would be the most since 1987-88. The WASDE 2020-21 season average corn price forecast is $3.20/bu., the lowest since 2006-07.

Hay stocks on farms as of May 1 were also 5.52 million tons more (+37.03%) than the previous year at 20.43 million tons, according to the most recent USDA Crop Production report.

“The Livestock Marketing Information Center (LMIC) projects 2020 alfalfa hay production to increase 4.0%, resulting in larger ending stocks and season average prices down nearly 17% year over year to $150/ton,” Peel says. “Total other (non-alfalfa) hay production may decrease 1-2% in 2020 but a slight buildup of ending stocks is projected to push season average prices down fractionally to $132.50/ton…Regionally, the biggest concern is the Southeast with total May 1 hay stocks down 22.8% year over year (collectively) in Alabama, Georgia, Florida, North and South Carolina and Tennessee.” 

As always, drought could change the outlook.

“A large area of low-level drought is building in the west from western Kansas to northern California and the Pacific Northwest. Some of the worst drought areas are in Colorado and surrounding regions and in Oregon. Drought in south Texas has improved somewhat in recent weeks but some drought continues along the gulf coast from Texas to Florida,” Peel says. “This is a critical growth period and any expansion of drought conditions may have significant implications for pasture and hay production in the West.”

More specifically, according to the most recent U.S. Drought Monitofor the week ending May 12, Peel explains 17.42% of the country is in some level of drought (D1-D4). Another 16.89% of the country is abnormally dry (D0). So, 34.31% was abnormally dry or worse, compared to 30.78% a week earlier and 24.15% three months earlier.

By | May 19th, 2020|Daily Market Highlights|

Cattle Current Daily—May 19, 2020

Although too few to trend, early negotiated cash fed cattle prices on Monday continued at the higher levels paid in the north toward the end of last week. Live sales in Nebraska were at $119-$120/cwt. Dressed sales there and in the western Corn Belt were at $190.

Cattle futures closed higher Monday, extending the previous session’s minimal gains, helped along by continued cash price strength and significantly higher outside markets.

Live Cattle futures closed an average of 87¢ higher (25¢ higher to $1.72 higher in spot Jun).

Feeder Cattle futures closed an average of 94¢ higher (57¢ higher to $1.87 higher in spot May).

Wholesale beef values continued their expected, precipitous decline as packing capacity continues to expand ever so slowly.

Choice boxed beef cutout value was $19.37 lower Monday afternoon at $414.95/cwt. Select was $24.19 lower at $394.87.

Corn futures closed mainly fractionally mixed.

Soybean futures closed mostly 7¢ to 8¢ higher.

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Major U.S. financial indices closed sharply higher Monday, buoyed by promising early test results of a potential COVID-19 vaccine.

That was despite Federal Reserve Chair Jerome Powell’s sobering comments made to the U.S. Senate Committee on Banking, Housing, and Urban Affairs.

“Available economic data for the current quarter show a sharp drop in output and an equally sharp rise in unemployment. By these measures and many others, the scope and speed of this downturn are without modern precedent and are significantly worse than any recession since World War II,” Powell explained. “Since the pandemic arrived in force just two months ago, more than 20 million people have lost their jobs, reversing nearly 10 years of job gains. This precipitous drop in economic activity has caused a level of pain that is hard to capture in words, as lives are upended amid great uncertainty about the future. In addition to the economic disruptions, the virus has created tremendous strains in some essential financial markets and impaired the flow of credit in the economy.”

The Dow Jones Industrial Average closed 911 points higher. The S&P 500 closed 90 points higher. The NASDAQ closed 220 points higher.

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“The buildup in fed cattle supplies that are market ready is expected to have a substantial and lasting effect on fed cattle prices,” say analysts with USDA’s Economic Research Service (ERS). “Prices will remain low as the supply of market-ready cattle remains above the sector’s ability to process them, and the supply issue is expected to linger through 2021.”

Consequently, in the most recent monthly Livestock, Dairy and Poultry Outlook, ERS lowered this year’s average price forecast for fed steers (five-area direct) to $104.08/cwt.: $118.32 in the first quarter; $99 in the second and third quarters; $100 in the fourth quarter. The projected annual average price for next year is $109.

Keep in mind the forecast runs counter to current cash prices, which appear to be supported by packers’ willingness to give back some of their margins.

For perspective on packing capacity, ERS estimated 40% of U.S. packing capacity went by the wayside since Mar. 28, as plants struggled with COVID-19 infections and new safety precautions to protect workers.

“The current situation does not allow for plants to easily make up for lost slaughter capacity given workforce challenges,” say ERS analysts. “Based on recent maximum slaughter levels for the second quarter, there is likely a significant shortfall in slaughter since it peaked the last week of March. As a result, feedlots are having to continue to feed their cattle longer, and this is likely to be an issue into 2021 as the industry works through the feeder cattle that are awaiting placement in feedlots.”

ERS estimated there were 20.54 million head of cattle outside feedlots Apr. 1. That was 657,000 head more (+3.30%) than the same time a year earlier.

As the backlog of market-ready fed cattle continues to grow and feedlot margins are squeezed, ERS expects feeder cattle prices to remain under pressure.

“Based on recent price data, the second-quarter 2020 feeder steer price was lowered by $2 to $121/cwt. The third-quarter 2020 price forecast was lowered $5 to $123 and the fourth-quarter 2020 price was lowered $17 to $118,” say ERS analysts. “As a result, this month’s annual price forecast for 2020 was $124.50/cwt., close to last month’s forecast. The price forecast for first-quarter 2021 is expected to remain relatively low at $125. Feeder steer prices are expected to improve in the second half of 2021 on increased demand. The 2021 annual feeder steer price is forecast at $131.50, more than 5% higher than 2020.”

By | May 18th, 2020|Daily Market Highlights|

Cattle Current Daily—May 18, 2020

Although too few to trend, negotiated cash fed cattle prices bounced higher on Friday at $120/cwt. on a live basis in the Southern Plains and at $119-$120 in Nebraska. Also too few to trend, dressed prices in Nebraska were at $190.

The five-area direct weighted average steer price through Thursday was $11.36 higher than the previous week at $111.40/cwt. The average price in the beef was $19.90 higher at $179.30.

Cash price strength helped lift Cattle futures.

Live Cattle futures closed an average of 62¢ higher, (15¢ higher to $2.87 higher in spot Jun).

Feeder Cattle futures closed an average of 41¢ higher.

Choice boxed beef cutout value was $16.60 lower Friday afternoon at $434.32/cwt. Select was $18.34 lower at $419.06.

Corn futures closed mainly fractionally mixed.

Soybean futures closed 1¢ to 2¢ higher.

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Major U.S. financial indices closed higher Friday, after a volatile trading session, amid mixed economic data.

On the one hand, U.S. retail and food services sales plummeted 16.4% in April, compared to the previous month, according to the U.S. Census Bureau. Sales were 21.6% less than the previous April and worse than traders expected.

On the other, the closely watched Index of Consumer Sentiment from the University of Michigan edged higher month to month in May, up 2.6% to 73.7, but 26.3% below the previous year.

Pressure also included more political sabre rattling between the U.S. and China.

The Dow Jones Industrial Average closed 60 points higher. The S&P 500 closed 11 points higher. The NASDAQ closed 70 points higher.

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Beware kneejerk reactions.

That comes to mind as rhetoric grows for the government to mandate that beef packers buy a minimum percentage of their weekly needs in the spot cash market. Keep in mind that’s also equivalent to mandating that cattle feeders, collectively, sell a certain percentage of cattle in the cash market each week.

First, it was something called the 30-14 movement, advocating that packers be forced by the government to buy at least 30% in the cash market each week and that those cattle be delivered within 14 days.

Last week, Sen. Chuck Grassley (R-IA) and Sen. Jon Tester (D-MT) introduced a bill that would require packers buy at least 50% in the cash market each week, for delivery within 14 days.

Few would argue the value of deeper cash trade for the purposes of price discovery, especially in some regions, some weeks. Cash prices are rarely reported in Colorado, for instance, due to confidentiality rules attached to Livestock Mandatory Reporting (more later).

For perspective, over time, on average and nationally, figure 20-25% of all fed cattle trade in the spot cash market. Again, the percentage is miniscule in some regions some weeks.

Debate continues over just how much sustained cash trade in a particular region is required for effective price discovery. According to pioneering research conducted by Stephen Koontz, agricultural economist at Colorado State University a few years back–Price Discovery Research Project (PDRP)–the percentage varies by region.

The primary reason cash trade thinned over time is the increased use of what are termed alternative marketing arrangements (AMAs) for fed cattle. Think here of things like formulas and forward contracts.

In turn, there are several practical reasons more cattle feeders favored marketing more fed cattle via AMAs over time. Chiefly, it has to do with reducing transaction costs and the ability to differentiate cattle–and be rewarded or discounted–relative to specific packer demands. 

AMAs enabled the price incentives to differentiate beef products. In fact, some would say this ability to pull more beef through the system, more in line with consumer demand, was the cornerstone for turning the corner on consumer beef demand in the U.S. That was in about 1998. Before then, domestic consumer beef demand declined an average of 1% per year for two consecutive decades.

Add it all up, and Koontz says, “The use of forward contracts benefits those that use them $15 to $25 per animal. The use of formula arrangements benefits those that use them $25 to $40 per animal. Mandating the use of the negotiated cash market will have negative economic consequences commensurate with these amounts and to the extent of the mandate.”

That’s from a recent letter Koontz wrote to the National Cattlemen’s Beef Association (NCBA). He clarified his position and research after some in the pro-mandate movement tried using his research to defend their stance.

“My research does examine the impact of declining negotiated cash trade on price discovery in regional and national fed cattle markets. And, it also attempts to make recommendations as to the needed volumes of cash trade for minimal and robust price discovery. But, my work does not recommend, and I do not support,

a mandate of a given percentage cash trade,” Koontz says. “The main issue I have with the policy proposal is that it would cost the cattle and beef industry millions and possibly billions of dollars per year. This is known from research in which I participated.”

The research Koontz refers to is the aforementioned PDRP, as well as the congressionally mandated USDA-GIPSA Livestock and Meat Marketing Study (2007), which examines price discovery and AMAs. He was lead economist for that study.

Bottom line, Koontz says, there are many ways to increase the volume of cash trade and cash trade data without government mandates. He outlined some of those in his PDRP. Some state organizations are exploring these alternatives and variations of them.

“While the Texas Cattle Feeders Association (TCFA) believes and supports increasing price discovery through this greater volume of negotiated trade, we cannot support a government mandate,” explained Paul Defoor, TCFA chairman, in a recent letter to Congress. “Conversely, we are actively working to achieve a similar outcome through free market mechanisms.

“One such concept is a new marketing cooperative that puts small and large producers on equal footing to achieve the common goal of robust negotiated price discovery each week. Secondly, we have examined the viability of a ‘bid the grid’ concept on the transparent Fed Cattle Exchange Platform. Additionally, we are exploring options with an existing marketing cooperative that was created by TCFA in 2000, Consolidated Beef Producers, to increase negotiated trade.”

Likewise, Koontz explains some state associations are looking at ways to pay market makers for providing cash trade, which is a public good. Those who trade in the cash market enable price discovery. Those who trade cattle outside of the cash market benefit from the discovered cash prices–it’s typically the root of AMAs–but do nothing to help discover the price or reward those who do.

“Many asset markets do this (market makers),” Koontz says. “Industry participants work together to create and compensate a pool of cash market traders that are discovering price, are good at this service, and willing

to do it within their business model and for the benefit of the industry. It is one means to solve the public good problem of not enough quality price discovery. It would be less costly than a mandate and open to changes in how the industry does business in the future.”

Far as that goes, adjusting the rules of the Livestock Mandatory Reporting Act–up for reauthorization this fall–would provide more cash trade data. If interested, you can read the specifics of those guidelines below.

“Joint research by Kansas State and Iowa State Universities shows that expanding the reporting regions would reduce the incidence of non-reporting, due to confidentiality,” Koontz explains. “…many of our price reporting problems are due to the confidentiality requirements that were not part of the original act.”

“Any solution must not restrict an individual producer’s freedom to pursue marketing avenues that they determine best suit their business’ unique needs,” said Todd Wilkinson, in response to the bill introduced by Grassley and Tester. He ranches in South Dakota and serves as Policy Division Chair for NCBA.

“Government mandates, like that being proposed by Senator Grassley, would arbitrarily force many cattle producers to change the way they do business,” Wilkinson explained. “We will continue to work toward a more equitable solution and invite Senator Grassley, and other lawmakers interested in this conversation, to join us in the search for an industry-led solution based in free market principles.”

By | May 17th, 2020|Daily Market Highlights|

Cattle Current Daily—May 15, 2020

Cattle futures closed lower on Thursday for the second consecutive session.

Live Cattle futures closed an average of $1.51 lower, except for 25¢ higher in spot Jun,

Feeder Cattle futures closed an average of $1.77 lower.

Choice boxed beef cutout value was $15.07 lower Thursday afternoon at $450.92/cwt. Select was 16¢ higher at $437.40.

Corn futures closed fractionally lower across the front half of the board, and then mostly unchanged to fractionally higher.

Soybean futures closed mostly fractionally lower to 1¢ lower.

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Major U.S. financial indices closed higher Thursday, helped long by higher crude oil prices, and despite another 2.98 million initial jobless claims, according to the U.S. Labor Department.

The Dow Jones Industrial Average closed 377 points higher. The S&P 500 closed 32 points higher. The NASDAQ closed 80 points higher.

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Lingering tailwinds from government relief payments and the lifting of dine-in restrictions in states like Georgia, Florida, and Texas helped to improve U.S. restaurant chain transactions the week ending May 3, according to The NPD Group (NPD).

Total restaurant transactions were 26% less than a year earlier, compared to declines of 32% and 43% the previous two weeks. That’s from NPD’s CREST® Performance Alerts, which provides a rapid weekly view of chain-specific transactions and share trends for 70 quick service, fast casual, midscale, and casual dining chains.

More specifically, transactions at quick service restaurant chains were down 24% in the week ending May 3 versus a year earlier; they were down 30% the previous week. For the same two weeks, full service restaurants transactions declined 67% a 71%, respectively.

Restaurant dine-in restrictions were lifted for nearly 192,000 restaurant units or about 29% of all units since May 1, based on an analysis using NPD’s ReCount® restaurant census. Keep in mind that required social distancing limits can reduce dining room capacity by as much as 75% in some areas.

“Many restaurant operators have weighed the value of limited operations versus the cost of opening, health risks, or other factors, and chose to remain closed or continue with a takeout-only model,” says David Portalatin, NPD food industry advisor. “The most recent week’s performance suggests we’ve achieved about 30% of the potential volume in states where restrictions were lifted. Looking ahead to next week, another 46,000 restaurants could come back online.”

By | May 14th, 2020|Daily Market Highlights|

Cattle Current Daily—May 14, 2020

Negotiated cash fed cattle prices continued higher across a broad range Wednesday. Live sales in Nebraska were $15 higher than last week at $110/cwt. on a live basis and $20-$30 higher in the beef at $170-$180. Live sales in the western Corn Belt were mostly $12 higher than last week at mainly $115. Dressed trade was steady to $5 higher at $170-$185.

In the Southern Plains so far this week, live prices in Kansas are at $115, steady with the top of the previous week’s wide range. The price in the Texas Panhandle is at $110, compared to $95-$115 last week.

Similar gains were seen at Wednesday fed cattle auctions.

Choice steers and heifers sold $10 higher in the fat auction at Tama, IA, where 95 Ch 2-4 steers weighing an average of 1,466 lbs. brought an average price of $117.55/cwt.

At Sioux Falls in South Dakota, slaughter steers sold $17-$22 higher and fed heifers sold $10-$18 higher. There were 215 Ch 2-3 steers weighing an average of 1,446 lbs., bringing an average price of $111.78. “More packer buyers were present and willing to chase the market to get cattle bought after buying cattle in

the country at sharply higher prices on Monday and Tuesday,” according to the AMS reporter.

Cattle feeders also offered 4,601 head in the weekly Fed Cattle Exchange auction, selling 1,272 head for a weighted average price of $110. Money was the same on 450 head sold for delivery at 1-9 days and for 822 head sold for delivery at 1-17 days. Sold lots were from Texas and Nebraska.

Cattle futures continued the week’s volatile rollercoaster, though, giving back most of what was gained in the previous session.

Live Cattle futures closed an average of $2.24 lower (60¢ lower at the back to $3.30 lower in spot Jun).

Feeder Cattle futures closed an average of $2.49 lower.

Wholesale beef values declined sharply Wednesday, perhaps suggesting the Covid-skewed top is at least near.

Choice boxed beef cutout value was $9.40 lower Wednesday afternoon at $465.99/cwt. Select was $13.73 lower at $437.24

Grain futures lost some ground, with pressure from the previous day’s monthly World Agricultural Supply and Demand Estimates.

Corn futures closed mostly 3¢ lower through May ‘21, and then 1¢ lower to fractionally higher.

Soybean futures closed 11¢ to 13¢ lower through Jan ‘21 and then 5¢ to 7¢ lower.

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Major U.S. financial indices closed sharply lower Wednesday, for the second consecutive session. At least part of the pressure seemed to stem from remarks made by Federal Reserve Chair Jerome Powell, via webcast, to the Peterson Institute for International Economics. Investors were apparently hoping for a more optimistic outlook, relative to economic recovery, in the wake of COVID-19.

“While the economic response has been both timely and appropriately large, it may not be the final chapter, given that the path ahead is both highly uncertain and subject to significant downside risks,” Powell said. “Economic forecasts are uncertain in the best of times, and today the virus raises a new set of questions: How quickly and sustainably will it be brought under control? Can new outbreaks be avoided as social-distancing measures lapse? How long will it take for confidence to return and normal spending to resume? And what will be the scope and timing of new therapies, testing, or a vaccine? The answers to these questions will go a long way toward setting the timing and pace of the economic recovery. Since the answers are currently unknowable, policies will need to be ready to address a range of possible outcomes.”

The Dow Jones Industrial Average closed 516 points lower. The S&P 500 closed 50 points lower. The NASDAQ closed 139 points lower.

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Although fed cattle prices continue lower than pre-COVID projections, forecast feed costs are also lower, providing some cow-calf producers with potential opportunity to retain ownership through the feedlot.

More specifically, analysts with the Livestock Marketing Information Center point out feedlot cost of gain is declining.

“As reported by the monthly Kansas State University survey (Focus on Feedlots), the average steer cost of gain for March was $83.41/cwt. Kansas feedlot projections for mid-April averaged $74, the lowest since August 2018. If grain and hay costs continue to slip, as expected, that number is headed even lower,” say LMIC analysts, in the latest Livestock Monitor.

Since February, the LMIC folks explain corn prices declined counter-seasonally. For the week ending May 8, they say prices in the Texas Triangle and Omaha were the lowest since late November of 2016.

For perspective, LMIC calculates the breakeven price for a steer placed in a Southern Plains feedlot and sold in April was $115-$117. For one placed in April and sold in September, breakeven is $97-$98.

The organization calculates monthly projected breakeven sale prices with feedstuff costs when a 750-lb. steer is placed, assuming typical feeding conditions (including weather) in a commercial Southern Plains feedlot. LMIC also calculates adjusted monthly breakevens based on changes in feedstuff costs.

“As this summer unfolds, producers running summer stockers and even cow-calf operations may want to carefully evaluate retained ownership,” says LMIC analysts. “Some pre-planning and attention to projected cost of gain may pay off.”

By | May 13th, 2020|Daily Market Highlights|

Cattle Current Daily—May 13, 2020

Cattle futures closed sharply higher Tuesday, regaining much of what was lost in the previous session. Support included stronger cash fed cattle prices, the ongoing heft of wholesale beef values and perhaps USDA’s latest projections of less total red meat and poultry production this year (see below).

Other than 25¢ lower in the back contract, Live Cattle futures closed an average of $2.66 higher ($1.32 to $4.50 higher).

Feeder Cattle futures closed an average of $2.93 higher ($2.22 higher at the back to $3.65 higher in spot May).

Choice boxed beef cutout value was $6.81 higher Tuesday afternoon at $475.39/cwt. Select was $2.00 lower at $450.97; the first day-to-day decline since Apr. 8.

Corn futures closed fractionally higher to 1¢ higher, except for 2¢ to 5¢ higher in the front three contracts.

Soybean futures closed 2¢ to 3¢ higher in the front four contracts and then mostly fractionally higher to 1¢ higher.

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Major U.S. financial indices closed lower Tuesday, with continued jitters about how reopening the economy will impact the spread of COVID-19.

The Dow Jones Industrial Average closed 457 points lower. The S&P 500 closed 60 points lower. The NASDAQ closed 189 points lower.

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USDA projects beef production at 25.76 billion lbs. this year, according to the latest monthly World Agricultural Supply and Demand Estimates (WASDE). That’s 1.68 billion lbs. less (-6.12%) than the April forecast and would be 1.39 billion lbs. less (-5.12%) than last year.

Even so, WASDE estimates the annual fed steer price (five-area direct) at $104.10/cwt., which is $6.90 less than the April projection. That would be $12.68 less than last year’s average of $116.78. By quarter, USDA pegs the average price in the first quarter at $118.32, at $99 in the second and third quarters and at $100 in the fourth quarter.

Forecast total red meat and poultry production this year of 103.57 billion lbs. is 4.73 billion lbs. less (-4.36%) than the April projection and would be 1.69 billion lbs. less (-1.61%) than in 2019.

Next year, though, USDA projects total beef production (27.49 billion lbs.) and total red meat and poultry production (107.34 billion lbs.) to be higher than in 2019.

By | May 12th, 2020|Daily Market Highlights|

Cattle Current Daily—May 12, 2020

Cattle futures closed sharply lower Monday with pressure likely including the significant decline in open interest at the end of last week and disappointment that week-to-week gains in estimated cattle slaughter were not more significant (see below).

Live Cattle futures closed an average of $2.31 lower (97¢ lower at the back to $3.00 lower).

Feeder Cattle futures closed an average of $3.61 lower ($2.45 to $4.27 lower)

Choice boxed beef cutout value was $7.70 higher Monday afternoon at $468.58/cwt. Select was $3.98 higher at $452.97.

Corn futures closed fractionally lower to 1¢ lower.

Soybean futures closed 2¢ to 3¢ higher.

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Major U.S. financial indices closed mixed on Monday, with strength in tech stocks counterbalanced by jitters about how reopening the economy will impact the spread of COVID-19.

The Dow Jones Industrial Average closed 109 points lower. The S&P 500 closed fractionally higher. The NASDAQ closed 71 points higher.

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“It will likely take many weeks for slaughter rates to catch up with the growing backlog of fed cattle and get the industry current once again,” says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his latest market comments. “Meantime, all sectors of the industry are responding to the need to slow cattle down and hold them longer in a variety of production settings before proceeding to finish in feedlots. Fed cattle weights are increasing and pushing carcass weights higher counter-seasonally.”

With that said, Peel sees a glimmer of hope in last week’s estimated cattle slaughter. Although still 32.2% less than the same week the previous year, estimated slaughter of 425,000 head was 6.4% more than the previous week.

“This hopefully indicates the beginning of recovery of packing capacity in the coming weeks,” Peel says. “Risks remain, however, and it is not clear how fast packing plant capacity will recover. New safety measures and work protocols likely mean that effective maximum capacity in beef packing plants will be reduced compared to pre-COVID-19 levels.” 

In a webinar last week, Glynn Tonsor, agricultural economist at Kansas State University suggested that 85% of pre-COVID 19 packing capacity might be a reasonable ballpark for where it lands in a post-pandemic world.

“The timing during the year is drastically altered with second-quarter beef production forecast down 13.3% year over year. Beef production will be pushed into the third quarter, which is forecast to be up 5.4% compared to last year. Fourth-quarter beef production is currently forecast to be just slightly higher year over year,” Peel says.

By | May 11th, 2020|Daily Market Highlights|

Cattle Current Daily—May 8, 2020

Cattle futures took another strong step higher on Thursday, lifting front months to the highest levels since early-to-mid March. Ongoing indications that the bottom in packing capacity and beef production may have been established continued to provide support, as did the week’s mostly stronger cash prices.

Except for 17¢ lower in the back contract, Live Cattle futures closed an average of $3.46 higher ($2.07 higher toward the back to $4.50 higher in the front three contracts). That’s an average of $6.39 higher in the last two sessions.

Feeder Cattle futures closed an average of $4.49 higher ($3.45 higher at the back to $6.17 higher in spot May). That’s an average increase of $8.82 in the last two sessions.

Wholesale beef values continued higher Thursday, but at a more moderate pace. Choice boxed beef cutout value was $9.36 higher Thursday afternoon at a $458.54/cwt. Select was $16.61 higher at $448.57.

The average dressed steer weight for the week ending Apr. 25 was 891 lbs., which was 2 lbs. heavier than the previous week and 37 lbs. heavier than the previous year, according to USDA’s weekly Actual Slaughter Under Federal Inspection report. The average dressed heifer weight of 818 lbs. was 5 lbs. lighter week to week but 24 lbs. heavier year over year. Fed cattle slaughter of 350,563 head was 161,914 head fewer (-31.59%). Beef production of 381.1 million lbs. was 131.7 million lbs. less (-25.68%).

Corn futures closed 2¢ to 4¢ higher through Mar ’21 and then unchanged to 1¢ higher.

Soybean futures closed 7¢ to 11¢ higher through Jan ’21 and then fractionally higher to 1¢ higher.

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Major U.S. financial indices closed higher Thursday, led by tech stocks.

The Dow Jones Industrial Average closed 211 points higher. The S&P 500 closed 32 points higher. The NASDAQ closed 125 points higher.

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As scarcer beef supplies spawn more retail and food service outlets to limit customer purchases, some consumers wonder why the U.S. continues to export beef. Similarly, as cattle prices sag and run opposite of wholesale beef values, some producers question why the U.S. continues to import beef.

“Closing off or limiting beef exports does not necessarily mean greater amounts of beef in U.S. retail grocery stores, nor does limiting imports mean greater cattle prices,” says Brenda Boetel, livestock economist at the University of Wisconsin-River Falls. “The reason is because beef exported is not the same as beef imported. Even with beef production down, the importance of keeping export markets (and import markets) open is vital to the long- term health of the cattle industry.”

More specifically, in the latest issue of In the Cattle Markets, Boetel explains the mix of U.S. beef exports add value to domestic cattle prices as international customers place a higher value on some beef products than U.S. consumers. As mentioned in Wednesday’s Cattle Current, beef export value per head of fed slaughter was $308.21 in March, according to  the most recent data released by USDA and compiled by the U.S. Meat Export Federation. For the first quarter, per-head export value was $317.06.

Likewise, importing beef–mostly lean trim–helps bolster U.S. ground beef demand and keep it more price competitive than using higher value parts of the domestic carcasses.

“Ground beef in the U.S. is typically a combination of two different products: 50% lean trimmings from grain fed cattle and 90% lean trimmings from grass fed cattle or cull cows. These two products are blended together to provide lean ground beef options for restaurants and retail grocery stores. Without these lean ground beef options, many consumers would likely turn to other leaner protein products,” Boetel says.

By | May 7th, 2020|Daily Market Highlights|

Cattle Current Daily—May 7, 2020

Negotiated cash fed cattle prices bounced higher in some areas Wednesday, although the wide spread continues.

Live prices in the Southern Plains were mostly $5 higher than the previous week at mainly $110/cwt.

Dressed sales in the western Corn Belt were mainly $20-$30 higher than the previous week at mostly $180.

Prices in Nebraska were mostly steady at $95 on a live basis and at mostly $150 in the beef.

Cattle feeders offered 5,119 head in the weekly Fed Cattle Exchange auction on Wednesday. Of those, 679 head sold for a weighted average price of $95.05/cwt.; all from the Southern Plains and for delivery at 1-17 days.

Higher cash prices and growing optimism about packing capacity moving beyond an established low point lifted Cattle futures mostly limit higher on Wednesday.

Live Cattle futures closed an average of $2.93 higher, limit up through the front six contracts.

Feeder Cattle futures closed from an average of $4.33 higher, limit up $4.50 in the front five contracts.

Wholesale beef values took yet another step higher. Choice boxed beef cutout value was $20.19 higher Wednesday afternoon at a $449.18/cwt. Select was $21.25 higher at $431.96.

Corn futures closed 1¢ to 3¢ lower.

Soybean futures closed mostly 7¢ to 10¢ lower.

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Major U.S. financial indices closed mainly lower Wednesday, except for tech stocks, as more data quantifies the labor misery dealt by the pandemic.

Private sector employment decreased by 20.24 million jobs from March to April, according to the April ADP National Employment Report® (NER).

“Job losses of this scale are unprecedented. The total number of job losses for the month of April alone was more than double the total jobs lost during the Great Recession,” says Ahu Yildirmaz, co-head of the ADP Research Institute.  “Additionally, it is important to note that the report is based on the total number of payroll records for employees who were active on a company’s payroll through the 12th of the month.” As such, she explains the latest NER doesn’t reflect the full impact of COVID-19 on the overall employment situation.

The Dow Jones Industrial Average closed 218 points lower. The S&P 500 closed 20 points lower. The NASDAQ closed 45 points higher.

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U.S. beef exports were record high for the first quarter, according to data released by USDA and compiled by the U.S. Meat Export Federation (USMEF).

U.S. beef exports in March totaled 115,308 metric tons (mt), up 7% from a year earlier. Value was 4% more at $702.2 million. Japan, South Korea, Mexico, Canada and Taiwan drove export growth for the month.

First-quarter beef exports climbed 9% from a year earlier to 334,703 mt; valued at $2.06 billion, which was 8% higher.

“March export results were very solid, especially given the COVID-19 related headwinds facing customers in many international markets at that time,” says USMEF President and CEO Dan Halstrom. “Stay-at-home orders created enormous challenges for many countries’ foodservice sectors, several key currencies slumped against the U.S. dollar and logistical obstacles surfaced in some key markets; yet demand for U.S. red meat proved very resilient…The U.S. meat industry has spent decades developing a loyal and well-informed customer base throughout the world, which has embraced the quality and value delivered by U.S. red meat. Their commitment to U.S. products during this crisis is much-appreciated.”

Beef export value per head of fed slaughter was $308.21 in March, down 8% from the very high March 2019 average. For the first quarter, per-head export value increased 2% to $317.06.

U.S. pork export volume of 291,459 mt was 38% more than a year earlier. Pork export value was 47% more at $764.2 million. Through the first quarter, pork exports increased 40% from a year ago to 838,118 mt, valued at $2.23 billion (up 52%).

USMEF points out some recent events, including temporary closures of several U.S. processing plants, are not reflected in the first quarter export data. Halstrom cautions that April and May exports could slow as a result, but his outlook for 2020 remains positive.

By | May 6th, 2020|Daily Market Highlights|

Cattle Current Daily—May 6, 2020

The week’s negotiated cash fed cattle trade was off to a slow start through Tuesday afternoon. Although too few transactions to trend, AMS reported sales in Nebraska and the western Corn Belt across a broad range at $95/cwt. on a live basis and at $145-$170 in the beef.

On the other end of the trade, wholesale beef values continued higher with temporary beef scarcity seen in reports of some retailers limiting beef purchases per customer and some burger joints plumb running out.

Choice boxed beef cutout value was $18.77 higher Tuesday afternoon at a $428.82/cwt. Select was $33.88 higher at $410.54.

Cattle futures closed narrowly mixed Tuesday, as traders try to make sense of all the above, relative to a few weeks and a few months down the road.

After $1.60 lower in spot Jun, Live Cattle futures closed from 65¢ lower to 50¢ higher.

Feeder Cattle futures closed from an average of 36¢ lower to an average of 21¢ higher.  

Corn futures closed fractionally higher to 2¢ higher through the front four contracts and then fractionally lower to 1¢ lower.

Soybean futures closed fractionally higher to 4¢ higher through the front five contracts and then 2¢ to 6¢ lower.

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Major U.S. financial indices extended gains Tuesday, with investors apparently more optimistic about the U.S. economy starting to crank up again, albeit ever so slowly.

Crude oil prices also suggested more confidence with West Texas Intermediate on the CME closing $2.76 to $4.17 higher through the front six contracts.

The Dow Jones Industrial Average closed 133 points higher. The S&P 500 closed 25 points higher. The NASDAQ closed 98 points higher.

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U.S. restaurant chain transactions for the week ending Apr. 26 improved for the second consecutive week with total industry customer transactions down 32% year over year, compared to a 36% decline the prior week. That’s according to The NPD Group (NPD).

More specifically, transactions at quick service restaurants that week were 30% less year over year. Full service restaurant transactions were 71% less, improving by 1% week to week, according to CREST Performance Alerts, which provides a rapid weekly view of chain-specific transactions and share trends for 70 quick service, fast casual, midscale, and casual dining chains. 

“Government relief payments and overall improvement in consumer spending most likely contributed to the easing of transaction declines,” says David Portalatin, NPD food industry advisor. “Looking to next week, we might anticipate the upward trend continuing as restaurants begin to reopen their dining rooms.”

Georgia’s 20,000 restaurants were allowed to reopen on April 27.  From May 1-3, several other states followed suit, most notably Texas with almost 60,000 restaurants.  Over the next two weeks there are over 300,000 restaurants that may potentially reopen for on-premise dining.  These openings will improve industry volume but won’t return it to full capacity. In Texas, for example, reopening comes with strict social distancing guidelines, and dining rooms may not exceed 25% of their standard occupancy. 

“As states and localities reopen, many restaurants are ready to open on the first day, while others need more time to prepare. Still unknown is the number of restaurants that may never reopen,” says Portalatin. “Other considerations are that many consumers may be cautious about returning to dining rooms; and a significant percentage of the population would remain in quarantine even if restrictions were lifted.”

By | May 5th, 2020|Daily Market Highlights|

Cattle Current Daily—May 5, 2020

Cattle futures continued to edge higher to start the week, but with plenty of continued uncertainty surrounding supply chain disruptions (see below).

Live Cattle futures closed an average of 65¢ higher.

Feeder Cattle futures closed an average of 98¢ higher, (70¢ higher at the back to $1.32 higher).

Wholesale beef values took another giant leap higher Monday as buyers chase decreased supplies.

Choice boxed beef cutout value was $32.60 higher Monday afternoon at a $410.05/cwt. Select was $19.53 higher at $376.66. That made the Choice-Select spread $33.39.

Corn futures closed mostly 2¢ to 3¢ lower.

Soybean futures closed 11¢ to 13¢ lower through near Sep and then 4¢ to 9¢ lower.

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Major U.S. financial indices bounced back from early follow-through pressure Monday, buoyed by tech stocks.

The Dow Jones Industrial Average closed 26 points higher. The S&P 500 closed 12 points higher. The NASDAQ closed 105 points higher.

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Cattle futures in recent days suggest increasing confidence that last week’s Executive Order mandating meat and processing facilities remain open will help normalize supply chain, eventually.

In the meantime, cattle slaughter and beef production continue significantly lower year over year, while the backlog of fed cattle continues to build.

Estimated cattle slaughter for the week ending May 2 was 425,000 head, which was 38% less year over year, according to Derrell Peel, Extension livestock marketing specialist at Oklahoma State University. For the past four weeks, he says total cattle slaughter averaged 26.4% less than the same weeks last year–down 689,000 head, or a little more than a week’s worth of cattle slaughter.

Similarly, in his weekly market comments, Peel explains beef production was down 35% last week, compared to a year earlier; an average of 25% less for the past four weeks. Relative to the first 14 weeks of the year, before current COVID-19 production declines began, he says the combined 520 million lbs. of reduced beef production over the last four weeks equates to losing a week’s worth of production.

“Given when packing plant workers began to be impacted and the additional attention now focused on protecting worker health, it is likely that we are currently at or very near the worst point of packing plant disruptions,” Peel says. “However, it is unclear how fast plants will resume production levels in the coming weeks. It is likely that the effective capacity will be reduced permanently or certainly for the foreseeable future because of the safety changes needed at packing plants. The impacts on cattle markets will linger for many weeks before backlogs are cleaned up and markets are current again.”

For consumers, Peel emphasizes there is no shortage of beef in the country. Any shortages encountered will be temporary.

By | May 4th, 2020|Daily Market Highlights|

Cattle Current Daily—May 4, 2020

Negotiated cash fed cattle prices ended the week across a wide range but generally steady with the previous week with live prices at $95-$100/cwt. in the Texas Panhandle, $95-$105 in Kansas and Nebraska and at $93-$100 in the western Corn Belt. Dressed sales were at $150-$160.

Through Thursday, the negotiated five-area daily weighted average direct live steer price was $1.03 less than the previous week at $95.92/cwt. It was 23¢ more in the beef at $154.50.

Cattle futures firmed further, supported by the week’s Executive Order to keep packing and processing plants open, sky-high boxed beef prices and some states beginning to ease stay-at-home orders. Resurgent Lean Hog futures also provided support.

Live Cattle futures closed an average of 80¢ higher, (45¢ to $1.50 higher).

Except for $1.30 lower in Mar, Feeder Cattle futures closed an average of 70¢ higher, (5¢ higher at the back to $1.15 higher toward the front).

Demand continues to run well ahead of wholesale beef supplies.

Choice boxed beef cutout value was $9.89 higher Friday afternoon at a $377.45/cwt. Select was $6.97 higher at $357.13.

Corn futures closed from 1¢ lower to 2¢ higher.

Soybean futures closed 2¢ to 5¢ lower through Nov ’20 and then mostly 1¢ to 2¢ higher.

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Major U.S. financial indices closed sharply lower Friday, extending losses from the previous session. Pressure included renewed political sabre rattling between the U.S. and China.

The Dow Jones Industrial Average closed 622 points lower. The S&P 500 closed 81 points lower. The NASDAQ closed 284 points lower.

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“With boxed beef prices running wildly to records every day and live cattle prices moving lower, there is a lot of talk about packers colluding to take advantage of the market situation,” says Andrew P. Griffith, agricultural economist at the University of Tennessee, in his weekly market comments. “It is nearly impossible for any outsider to know if collusion is occurring or not. However, it is easy for an outsider to see the current situation and know he or she would be trying to slaughter as many cattle as possible and market beef at record prices to fulfill the objective of being profitable. Slaughter facilities have a number of reasons to stay open and operate at as full of a capacity as possible; making money is not the least of these. Slaughter facilities are paying double time and giving bonuses to entice employees to work and produce meat while also attempting to address health concerns of employees. This is a delicate balancing act on the part of slaughter facilities, but this gets overlooked because boxed beef prices are 75% higher than where they were at the end of January. Is the packer in the wrong? Maybe or maybe not, but there must be at least two entities willing to bid the price this high.”

In the meantime, various groups are lobbying for all kinds of changes, everything from the trite and WTO-illegal mandatory Country of Origin Labeling, to calls for legislation mandating some level of weekly cash fed cattle trade to improve market transparency and price discovery. That’s while USDA investigations continue into market reactions following last summer’s beef packing plant fire in Kansas, and current market reaction in the wake of beef packing capacity reduced by COVID-19.

“Never before has the industry faced so many challenges that threaten the operation of multiple processing facilities simultaneously, along with massive disruptions to the food service supply chain severely limiting nearly half of the total beef market,” says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly market comments.

Peel points out current industry structure and business practices evolved in response to economic forces driving the beef industry to be ever more competitive.

“The cost efficiencies of large-scale cattle feeding and meatpacking operations are undeniable. Some current proposals will add cost and risk to the industry and will further increase the differences between cattle and wholesale beef prices,” Peel explains. “A less efficient, higher cost beef industry will ultimately result in higher beef prices for consumers and make beef a less competitive protein industry. Simultaneously, cattle producers will face lower cattle prices and, as the industry downsizes, more will be forced out of the industry.”

Peel isn’t advocating for or against any particular change or policy prescription.

“My job is to make sure that the industry understands the implications and consequences of alternatives that are being considered,” Peel says. “Some of the proposals being promoted today will have unintended consequences that are negative for the entire industry. This industry consists of many diverse sectors and perspectives. In the end, the entire cattle and beef industry will thrive or not as a single industry. Be careful what you ask for.”

By | May 2nd, 2020|Daily Market Highlights|

Cattle Current Daily—May 1, 2020

Although too few to trend, negotiated cash fed cattle trade continued Thursday across a broad range, according to the Agricultural Marketing Service (AMS). Live sales were reported in the Southern Plains at $95-$96/cwt., $95-$100 in the western Corn Belt and $93.75-$95.00 in Nebraska. Dressed prices ranged from $147 to $160.

Live Cattle futures continued to firm, though, perhaps with hopes that capacity returns to beef packing sooner rather than later (see below), given the previous day’s Executive Order mandating that meat packing and processing facilities remain open.

Other than $4.40 higher in expiring spot Apr, Live Cattle futures closed an average of 70¢ higher, (15¢ higher at the back to $1.67 higher in new spot Jun), except for 2¢ lower in away Apr.

Feeder Cattle futures closed an average of $1.56 lower, (37¢ lower in expiring spot Apr to $1.95 lower). 

Wholesale beef values climbed by double digits again.

Choice boxed beef cutout value was $10.18 higher Thursday afternoon at a $367.56/cwt. Select was $10.25 higher at $350.16.

The average dressed steer weight for the week ending Apr. 18 was 889 lbs., which was 3 lbs. heavier than the previous week and 32 lbs. heavier than the previous year, according to USDA’s Actual Slaughter Under Federal Inspection report. The average dressed heifer weight was 823 lbs., which was 3 lbs. less than the prior week but 24 lbs. heavier than the same week a year earlier.

Beef production for the week was 395.6 million lbs., which was 36 million lbs. fewer than the prior week (-8.34%) and 118 million lbs. less (-22.98%) than the same week last year.

Weekly export sales added support to grain markets Thursday. Net corn export sales were 87% more than the previous week, led by Mexico, and 19% more than the prior four-week average, according to the U.S. Weekly Export Salesreport from UADA’s Foreign Agricultural Service. Net soybean export sales were noticeably higher than the previous week, led by China, and noticeably higher than the prior four-week average.

Corn futures closed 4¢ to 7¢ higher in the front three contracts and then 2¢ to 3¢ higher.

Soybean futures closed 12¢ to 18¢ higher through Jan ’21 and then mostly 5¢ to 8¢ higher.

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Major U.S. financial indices closed lower Thursday, with another round of massive initial jobless claims of 3.84 million, according to the U.S. Labor Department.

“Looking ahead, as workplaces reopen, we must ensure that individuals transition from unemployment back into the workforce,” says Secretary of Labor Eugene Scalia. “Key to this process will be workplace safety.”

Although still mired at the bottom, crude oil prices continued recent nascent recovery Thursday. The front six contracts for West Texas Intermediate futures on the CME were up $1.71 to $3.78. Spot Jun closed at $18.84, which was $6.50 higher than on Wednesday.

The Dow Jones Industrial Average closed 288 points lower. The S&P 500 closed 27 points lower. The NASDAQ closed 25 points lower.

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Depending on how fast packing plant production normalizes, there could be in excess of 1 million head of long-fed cattle come June 1, according to recent calculations by agricultural economists Glynn Tonsor at Kansas State University and Lee Shulz at Iowa State University.

For purposes here, long-fed refers to cattle on feed for more than 120 days and more than 150 days–the carryover of market-ready fed cattle.

“Cattle on feed for over 120 days and over 150 days is useful when evaluating the currentness of cattle supplies in feedlots,” Tonsor and Shulz explain. “Currentness refers to whether cattle are being marketed on a timely basis, or kept on feed longer. Keeping marketings current is generally positive to market prices. Currentness has implications, some short-run and some longer lasting, for price rebounds. Too many producers being forced to delay feedlot marketings can quickly cause an oversupply of both market-ready cattle and over-fed, over-finished cattle and lead to an eventual market purge of heavy cattle at some point, which can drive prices down. It is important to remember that overall feedlot numbers are not burdensome; it is the supply of market-ready or near market-ready cattle that is burdensome relative to current slaughter capacity.”

In, Fed Cattle Flows: Demonstrative Scenario Examples, Tonsor and Shulz estimate the number of cattle on feed for more than 120 days and more than 150 days, as of Apr. 1, utilizing monthly Cattle on Feed reports, which account for feedlots with 1,000 head or more capacity.

Next they present four possible scenarios, which consider various levels of reduced estimated weekly fed cattle slaughter through May 30, relative to last year, due to current disruptions wrought by COVID-19. Then they calculate accompanying fed cattle overflow for May 1 and June 1, relative to each scenario.

For recent slaughter perspective, they say cattle slaughter for the week of Apr. 25 was estimated at 469,000 head. That was down 33,000 head fewer (6.6% less) than the previous week and 173,000 head fewer (26.9% less) than the same week a year earlier. The USDA chart below offers a similar perspective in terms of weekly beef production.

Keeping the outline described above in mind, Tonsor and Shulz estimate fed cattle carryover May 1 ranges from 485,000 to 510,000 head. For June 1, it’s 1.07 million to 1.34 million head.

Rather than necessarily projecting specific numbers, this work from Tonsor and Schulz provides valuable context and insight to how quickly and far behind marketing currentness can become.

“We have no concrete ability to project fed cattle marketings given challenges presented by COVID-19,” say Tonsor and Shulz. “It should immediately be appreciated that any positive developments that lead to increased and persistent operation of packing plants will reduce cattle carryover, backup, and related impacts―which is a scenario the entire industry would welcome!”

By | April 30th, 2020|Daily Market Highlights|

Cattle Current Daily—Apr. 30, 2020

Negotiated cash fed cattle trade so far this week is steady to mixed with live sales in the Texas Panhandle at $95-$100/cwt. and at $90-$100 in Kansas, where there were too few transactions to trend. Up north, live prices are steady in Nebraska at $95 and up to $5 higher in the western Corn Belt at mostly $100. Dressed sales are steady to $10 lower in Nebraska at $150; steady in the western Corn Belt at $150-$160.

Cattle feeders offered 4,484 head in the weekly Fed Cattle Exchange auction, selling 818 head. Of those, 174 head sold for a weighted average price of $100/cwt. for delivery at 1-9 days. Another 644 head for delivery at 1-17 days sold for a weighted average price of $96.57.

President Trump signed an executive order late Tuesday, using the Defense Production Act, to mandate that meat packing and processing facilities remain open during the COVID-19 pandemic.

“To ensure worker safety, these processors will continue to follow the latest guidelines from the Centers for Disease Control and Prevention and the Occupational Safety and Health Administration,” according to a White House Fact Sheet (see below).

Cattle futures closed narrowly mixed Wednesday, as traders weigh short-term pressure, due to current disruptions in packing and processing, against a hopeful surge in demand as the economy reopens.

Live Cattle futures closed 42¢ lower to 25¢ higher, with sluggish trade.

Except for an average of 31¢ lower in three contracts, Feeder Cattle futures closed an average of 24¢ higher, in extremely light trade.

Wholesale beef values continued to climb Wednesday.

Choice boxed beef cutout value was $26.56 higher Wednesday afternoon at a $357.38/cwt. Select was $19.03 higher at $339.91.

Corn futures closed mostly 3¢ to 4¢ higher.

Soybean futures closed mostly 5¢ to 8¢ higher.

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Major U.S. financial indices closed higher Wednesday amid reports of promising test results from a potential coronavirus treatment drug. Although expected, support also included the Federal Reserve leaving interest rates unchanged.

“The ongoing public health crisis will weigh heavily on economic activity, employment, and inflation in the near term, and poses considerable risks to the economic outlook over the medium term. In light of these developments, the Committee decided to maintain the target range for the federal funds rate at 0.0% to 0.25%,” according to a statement from the Fed. “The Committee expects to maintain this target range until it is confident that the economy has weathered recent events and is on track to achieve its maximum employment and price stability goals.”

Gains came despite early quantification of domestic economic damage wrought by COVID-19.

Real gross domestic product (GDP) decreased at an annual rate of 4.8% in the first quarter of 2020, according to the advance estimate released by the Bureau of Economic Analysis. In the fourth quarter of 2019, real GDP increased 2.1%.

The Dow Jones Industrial Average closed 532 points higher. The S&P 500 closed 76 points higher. The NASDAQ closed 206 points higher.

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The Executive Order signed by President Trump, mandating meat packing and processing facilities remain open during the COVID-19 pandemic should offer some stability to beef markets. It also bolsters hopes the number of delayed fed cattle marketings can ease sooner rather than later, realizing the timeline is likely counted in months rather than weeks.

“Under the order, the Department of Agriculture is directed to ensure America’s meat and poultry processors continue operations uninterrupted to the maximum extent possible,” according to a White House Fact Sheet.

“Our nation’s meat and poultry processing facilities play an integral role in the continuity of our food supply chain,” says U.S. Agriculture Secretary, Sonny Perdue. “Maintaining the health and safety of these heroic employees in order to ensure that these critical facilities can continue operating is paramount. I also want to thank the companies who are doing their best to keep their workforce safe as well as keeping our food supply sustained. USDA will continue to work with its partners across the federal government to ensure employee safety to maintain this essential industry.”

Estimated daily hog and cattle slaughter are both down about 40% compared to this time last year, according to Jayson Lusk, noted Purdue University food and agricultural economist, in his blog.

“Plant closures and slow-downs from COVID-19 have reached such levels that it will be impossible for consumers not to notice effects on meat prices or availability in the coming weeks,” Lusk says.

“While there are currently no widespread shortages of beef, we are seeing supply chain disruptions because of plant closures and reductions in the processing speed at many, if not most, beef processing plants in the United States. We thank President Trump for his recognition of the problem and the action he has taken today to begin correcting it,” says Colin Woodall chief executive officer of the National Cattlemen’s Beef Association. “American consumers rely on a safe, steady supply of food, and President Trump understands the importance of keeping cattle and beef moving to ensure agriculture continues to operate at a time when the nation needs it most.”

Likewise, Robert McKnight, Jr., president of the Texas and Southwestern Cattle Raisers Association explains the Executive Order should go a long way toward easing consumer fear, as well as preventing additional economic strain on the cattle producers who supply the beef processors.   

“The executive order will help ensure a steady, reliable supply of high-quality U.S. protein-not only for customers in the United States, but across the globe,” says Dan Halstrom, president and CEO of the U.S. Meat Export Federation (USMEF). “The U.S. meat industry is already taking extraordinary steps to ensure worker safety, including COVID-19 testing, temperature checks, use of personal protective equipment and social distancing of employees. But further action is needed to stabilize our meat supply chain, and USMEF greatly appreciates the Trump administration’s prioritization of safe and consistent meat production and processing during this difficult time.”

Under the Executive Order and the authority of the Defense Production Act, USDA will work with meat processing to affirm they will operate in accordance with the CDC and OSHA guidance, and then work with state and local officials to ensure that these plants are allowed to operate, according to Secretary Perdue.

“We understand and appreciate the difficulties facing processing plant workers during this crisis, says Woodall. “Processing plant employees play a role that is critical to the security of this nation and America’s cattle producers offer their sincere gratitude for the work they are doing to keep food shortages from compounding the complex issues we’re facing.”

By | April 29th, 2020|Daily Market Highlights|

Cattle Current Daily—Apr. 29, 2020

Volatility in negotiated cash fed cattle trade continues so far this week. Dressed prices were at $160/cwt. in the western Corn Belt Monday, then $150 on Tuesday with too few transactions to trend. Likewise, with too few transactions to trend early dressed sales in Nebraska were at $150, compared to $150-$160 the previous week.

Cattle futures edged higher Tuesday, making for a third consecutive session of mostly higher prices, underpinned by runaway wholesale beef values, while offering a glimmer of stability.

Live Cattle futures closed an average of 45¢ higher.

Except for 77¢ lower in spot Apr, Feeder Cattle futures closed an average of 67¢ higher.

Wholesale beef values continued to shatter records Tuesday.

Choice boxed beef cutout value was $18.98 higher Tuesday afternoon at a $330.82/cwt. Select was $22.10 higher at $320.88.

According to various news reports, President Trump was close to signing an executive order, utilizing the Defense Production Act to mandate packing plants remain open, in order to protect the nation’s food supply (see below).

Other than 2¢ lower and 1¢ lower in the front two contracts, Corn futures closed mainly fractionally higher to 2¢ higher.

Soybean futures closed 1¢ to 4¢ lower through Nov ’20 and then 3¢ to 8¢ higher.

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Major U.S. financial indices softened Tuesday. Pressure appeared to include skittishness over the Fed meeting Wednesday, as well as declining consumer confidence.

The Conference Board Consumer Confidence Index® declined 31.9 points from March to April to 86.9, according to The Conference Board (TCB). Although the Present Situation Index–based on consumers’ assessment of current business and labor market conditions–declined from 166.7 to 76.4, the Expectations Index–based on consumers’ short-term outlook for income, business and labor market conditions–improved from 86.8 in March to 93.8 in April.

“The 90-point drop in the Present Situation Index, the largest on record, reflects the sharp contraction in economic activity and surge in unemployment claims brought about by the COVID-19 crisis,” explains Lynn Franco, TCB Senior Director of Economic Indicators. “Short-term expectations for the economy and labor market improved, likely prompted by the possibility that stay-at-home restrictions will loosen soon, along with a re-opening of the economy. However, consumers were less optimistic about their financial prospects and this could have repercussions for spending as the recovery takes hold.”

The Dow Jones Industrial Average closed 32 points lower. The S&P 500 closed 15 points lower. The NASDAQ closed 122 points lower.

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“In small communities around the country where we employ over 100,000 hard-working men and women, we’re being forced to shutter our doors. This means one thing–the food supply chain is vulnerable,” says John Tyson, Chairman of the Board for Tyson Foods, in a letter published as an ad in Sunday’s New York Times and other newspapers. “As pork, beef and chicken plants are being forced to close, even for short periods of time, millions of pounds of meat will disappear from the supply chain. As a result, there will be limited supply of our products available in grocery stores until we are able to reopen our facilities that are currently closed.”

The United Food and Commercial Workers International Union (UFCW) estimates 22 meat packing plants closed–including union and non-union plants–at some point in the past two months. Closures reduced pork slaughter by 25% and beef slaughter by 10%, according to the organization.

“UFCW estimates have confirmed 20 worker deaths in meatpacking and food processing. In addition, at least 5,000 meatpacking workers and 1,500 food processing workers have been directly impacted by the virus,” according to a UFCW news release published Monday. “Those directly impacted include individuals who have tested positive for COVID-19, missed work due to self-quarantine, are awaiting test results, or have been hospitalized, and/or are symptomatic.”

“Tyson and every company across this vital industry, must immediately join with UFCW in calling for federal and state elected leaders to designate these frontline workers as first responders,” said UFCW International President Marc Perrone, in a Tuesday statement. “Temporary first responder status ensures these workers have priority access to the COVID-19 testing and protective equipment they need to continue doing these essential jobs. Our federal leaders must enforce clear guidelines to ensure every employer lives up to the high safety standards these workers deserve and the American people expect.”

“We have a responsibility to feed our country. It is as essential as healthcare. This is a challenge that should not be ignored,” explained Tyson, in his letter. “Our plants must remain operational so that we can supply food to our families in America. This is a delicate balance because Tyson Foods places team member safety as our top priority…The government bodies at the national, state, county and city levels must unite in a comprehensive, thoughtful and productive way to allow our team members to work in safety without fear, panic or worry.”

By | April 28th, 2020|Daily Market Highlights|

Cattle Current Daily—Apr. 28, 2020

Cattle futures started the week with modest gains, amid sluggish trade and supported by outside markets, as well as Friday’s bullish Cattle on Feed report.

Except for 17¢ lower in spot Apr, Live Cattle futures closed an average of $1.01 higher.

Feeder Cattle futures closed an average of 67¢ higher.

Wholesale beef values continued to rocket higher with the bottleneck in packer capacity disrupting the supply chain.

Choice boxed beef cutout value was $18.47 higher Monday afternoon at a record high of $311.84/cwt. Select was $19.76 higher at $298.78.

Corn futures closed 6¢ to 10¢ lower through Mar ’21 and then mostly 3¢ to 5¢ lower.

Soybean futures closed mostly 1¢ to 3¢ lower.

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Major U.S. financial indices closed higher again on Monday, with optimism that some states are nearing at least partial reopening. Gains came despite another rugged day for oil prices: West Texas Intermediate on the CME closed $1.20 to $4.16 lower through the front six contracts; spot Jun closed at $12.78.

The Dow Jones Industrial Average closed 358 points higher. The S&P 500 closed 41 points higher. The NASDAQ closed 95 points higher.

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“There will be at least several more months of this economic environment, and it could easily stretch into 2021,” say analysts with the Livestock Marketing Information Center (LMIC), in the latest Livestock Monitor.

With volatile and uncertain markets in mind, those analysts offer four suggestions to cow-calf producers.

First, LMIC analysts say to monitor forage availability on the operation, as always, but also keep track of it locally and regionally.

“Pasture conditions this year will be critical to regional and national marketing flows of calves and yearlings,” according to LMIC analysts. “Many more animals are headed to spring and summer grazing programs than in recent years because of the drop in the number of animals being placed into feedlots, a trend that may continue for several months. Poor pasture and range conditions could cause bunches of cattle to move into the markets quickly. Further, more winter feed will be required if producers who typically don’t hold over calves into the new calendar year, did so in 2020.”

As mentioned in Cattle Current last week, the start to growing season is off to a drier start than last year. According to the U.S. Drought Monitor, 26.92% of the nation was classified from D0 (abnormally dry) to D4 (exceptional drought), for the week of Apr. 21. That’s 14.57% more than the same week last year.

Next, LMIC analysts suggest keeping an eye on feedlot placements provided by the National Agricultural Service (NASS), in the monthly Cattle on Feed report. They explain the data provides some insight to how aggressive feedlots are replacing cattle and at what weights. Conversely, it offers a notion of the number of cattle left to be placed.

Third, monitor feedstuff availability and prices, especially corn.

“Be aware of trends in soybean meal and in hay prices. The two major drivers of calf and yearling prices are fed animal prices and the cost of gain in a feedlot,” LMIC analysts explain. “Critical will be the number of corn acres planted in the Midwestern states. Beginning with planting season, the markets will focus on spring and early summer growing conditions. Low feedstuff costs can become a supportive market factor for late summer and early fall yearling and calf prices. Drought will do the opposite.”

Finally, they say to pay attention to the dairy business. One option available to hard-pressed producers in that sector is cow culling, which could pressure prices further, depending on the level and timing.

“Prepare for price volatility,” say LMIC analysts. “As conditions change, be ready to adjust marketing plans. It is especially important to communicate with family, partners, and financial institutions.”

By | April 27th, 2020|Daily Market Highlights|

Cattle Current Daily—Apr. 27, 2020

Reduced beef packing production, due to COVID-19, continues to boost uncertainty and wreak havoc on market fundamentals as cattle feeders compete for slaughter access. Consider last week’s fluctuating cash prices for fed cattle.

Through Friday afternoon, negotiated cash fed cattle trade for the week was $5-$10 lower on a live basis in the Southern Plains at $100/cwt. in Kansas and $95-$100 in the Texas Panhandle. It was up to $10 lower in Nebraska and the western Corn Belt at $95. Dressed trade was from $8 lower to $10 higher at mostly $160, compared to the previous week’s light test.

For all of the gyrations, five-area daily weighted average direct negotiated prices through Thursday were mainly steady week to week with live steers at $96.95 and dressed steers at $154.27.

So far, the packing bottleneck appears nowhere near as dire as that faced by pork producers in 1998, when the fat hog price plummeted to about $8/cwt. toward the end of the year, due to sudden and significantly reduced packing capacity. But, it’s understandable why some are recalling the memory.

Wholesale beef values are running the opposite direction, fueled by declining supplies and what seems to be at least constant demand.

Choice boxed beef cutout value was $9.08 higher Friday afternoon at a record high of $293.37/cwt. Select was $6.13 higher at $279.02.

Cattle futures mainly consolidated and hovered, other than front-month Live Cattle.

Except for 97¢ and 30¢ lower in the front two contracts, and 10¢ lower in away Apr, Live Cattle futures closed an average of 43¢ higher.

Feeder Cattle futures closed an average of 47¢ higher.

Logic suggests the market should view Friday’s monthly Cattle on Feed report as bullish to at least neutral, given the plunge in placements and spike in marketings (see below). That may not be the case, though, as it also underscores how many more cattle than normal need to be placed at some point.

Corn futures closed mostly 1¢ to 3¢ lower.

Soybean futures closed mostly 7¢ to 10¢ lower.

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Major U.S. financial indices closed higher Friday, as crude oil prices continued to maintain stability.

The Dow Jones Industrial Average closed 260 points higher. The S&P 500 closed 38 points higher. The NASDAQ closed 139 points higher.

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Even fewer cattle were placed and even more cattle were marketed in March than expected, according to the monthly Cattle on Feed report issued Friday.

Between depressed prices keeping more cattle outside of feedlots and the slower turnover in feedyards, plenty of folks suspected feedlot placements would be significantly fewer year over year. In fact, the 1.56 million head placed in feedlots with 1,000 head or more capacity was 22.69% less (457,000 head fewer). That was the least for the month since the data series began in 1996, according to AMS. The decline was about 4.8% more than average analyst estimates ahead of the report.

In terms of placement weights, 34.04% went on feed weighing 699 lbs. or less; 52.15% weighing 700-899 lbs. and 13.81% weighing 900 lbs. or more.

Marketings in March of 2.01 million head were 13.11% more (+233,000 head) than the previous year. That was the second most for the month since the data series began. Heading into the report, analysts expected, on average, marketings to increase 12.3%.

Cattle on feed Apr. 1 of 11.30 million head were 5.49% less (656,000 head fewer) than the previous year. That was about 0.7% less than pre-report estimates.

By | April 26th, 2020|Daily Market Highlights|

Cattle Current Daily—Apr. 24, 2020

Although still $7-$8 lower than last week, dressed trade in the north rebounded from the previous day to mostly $160/cwt. on Thursday.

Cattle futures continued to be pressured by uncertainty regarding slowing beef production and how soon some sense of normalcy can return.

Except for 10¢ and 7¢ higher in two contracts, Live Cattle futures closed an average of 96¢ lower (20¢ lower to $3.00 lower in spot Apr).

Except for 95¢ and 60¢ higher in the front two contracts, Feeder Cattle futures closed an average of $1.09 lower.

Wholesale beef values took another broad step higher Thursday, as demand continues to outpace declining supplies.

Choice boxed beef cutout value was $8.54 higher Thursday afternoon at a record high of $284.29/cwt. Select was $11.87 higher at $272.89.

Corn futures closed mostly 1¢ lower to 1¢ higher.

Soybean futures closed 2¢ to 4¢ higher through Sep ‘20, and then mostly 2¢ to 3¢ lower.

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Major U.S. financial indices closed little changed Thursday, following wide gyrations during the session. Support included more recovery in crude oil prices, while pressure included another expected surge (4.43 million) in weekly initial jobless claims, according to the U.S. Labor Department.

The Dow Jones Industrial Average closed 39 points higher. The S&P 500 closed 1 point lower. The NASDAQ closed fractionally lower.

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How long beef packing plant production remains constrained by COVID-19 is the next unknown markets are pricing, says Stephen Koontz, agricultural economist at Colorado State University. He adds, “Some certainty to the course of the CORVID-19 pandemic will be needed to mitigate this risk.”

Although the inventory of long-fed cattle is climbing, in the most recent issue of In the Cattle Markets, Koontz says the uncertainty of pricing short-term needs and availability will be unclear for at least another month, given the fact that Friday’s Cattle on Feed report accounts for inventory at the first of April, with flows from March.

Incidentally, heading into the monthly Cattle on Feed report, analysts surveyed by Urner Barry, with data shared by the Daily Livestock Report see March placements down about 18%, March marketings 12% higher and the Apr. 1 on-feed inventory 5% less year over year.

“Fed cattle prices continue to soften and the impact of delayed marketings will weigh on the market until summer,” Koontz says.

In the meantime, carcass weights continue to be significantly heavier than last year’s depressed levels.

The average dressed steer weight for the week ending Apr. 11 was 886 lbs., according to USDA’s weekly Livestock Slaughter report. That was 3 lbs. lighter than the previous week, but 22 lbs. heavier than the previous year. The average dressed heifer weight was 826 lbs., which was 1 lb. heavier than the prior week and 24 lbs. heavier than the same week last year.

By | April 23rd, 2020|Daily Market Highlights|

Cattle Current—Apr. 23, 2020

Cattle feeders offered 4,671 head in the weekly Fed Cattle Exchange auction on Wednesday. Of those, 860 head sold: 726 head for delivery at 1-9 days for a weighted average price of $100/cwt.; 174 head for delivery at 1-17 days for a weighted average price of $92.67. That was mainly on par with country trade so far this week.

Similarly, Choice 2-3 steers at Sioux Falls Regional (114 head) in South Dakota weighing an average of 1,453 lbs. sold for an average price of $100.15/cwt. across a range of $93.50-$102.00.

Wholesale beef values rocketed higher again Wednesday, as demand outpaces declining supplies.

Choice boxed beef cutout value was $15.90 higher Wednesday afternoon to a presumed record high of $275.75/cwt. Select was $12.20 higher at $261.02.

All of that seemed to have Cattle futures stuck in a wait-and-see mode, with light support and two-sided trade, other than a sharp drop in spot Live Cattle, given the likely continuation of near-term pressure on cash prices as the supply chain tries to sort its COVID-19 worker challenges.

Except for $2.65 lower in waning spot Apr, Live Cattle futures closed from 30¢ lower to 32¢ higher.

Except for 7¢ lower in May and 25¢ lower in the back contract, Feeder Cattle futures closed an average of 27¢ higher.

Corn futures closed mostly 4¢ to 8¢ higher through Mar ’21 and then mostly 2¢ to 3¢ higher.

Soybean futures closed 5¢ lower to 4¢ higher through Mar ‘21, and then mostly 8¢ to 10¢ lower.

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Major U.S. financial indices closed higher Wednesday, buoyed by resurgent oil prices. Although spot Jun West Texas Intermediate crude oil futures on the CME closed at an anemic $13.78, it was $2.21 higher than the previous day; the front six months closed $2.00-$2.34 higher.

The Dow Jones Industrial Average closed 456 points higher. The S&P 500 closed 62 points higher. The NASDAQ closed 232 points higher.

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Disruptions in beef production and consumption, due to COVID-19, began showing up in freezers last month, according to USDA’s Cold Storage report.

There were 502.42 million lbs. of beef in freezers Mar. 31, which was 2% more than the previous month and 11% more than the previous year. Of that, boneless beef cuts (466.87 million lbs.) was record large for the month–the data series began in 1972.

Incidentally, USDA’s annual Livestock Slaughter report also was published on Wednesday.

Commercial cattle slaughter last year of 33.6 million head was 2% more than the previous year, with federal inspection (FI) comprising 98.6% of the total. The average live weight was 1,344 lbs., down 6 lbs. from the previous year. Steers comprised 49.3% of the total FI cattle slaughter, heifers 29.7%, dairy cows 9.7%, other cows 9.6%, and bulls 1.6%. Non-dairy cows (other) numbered 3.19 million head, which was 5.5% (+165,700) more than in 2018.

Beef production last year was record high at 27.2 billion lbs., which was 1% more than the previous year.

Back to Cold Storage, frozen pork supplies in freezers Mar. 31 (621.93 million lbs.) were down 4% from the previous month, but 2% higher than last year. Pork belly stocks (78.82 million lbs.) were 6% higher month to month and 34% higher year over year.

Total red meat supplies in cold storage totaled 1.17 billion lbs., down 2% from the previous month, but 7% more than the previous year.

Total frozen poultry supplies (1.31 billion lbs.) were 4% higher than the previous month, but 2% less than a year earlier. However, total chicken supplies in cold storage of 921.42 million lbs. was record large for the month; 6% (+53.06 million lbs.) more than the same month last year. It included record-large supplies of breast and breast meat, legs and thigh meat.

By | April 22nd, 2020|Daily Market Highlights|

Cattle Current Daily—Apr. 22, 2020

COVID-19 infections at packing plants, as well as precautionary measures, continue to hamper production speed and volume, while cleaving a wider divide between fed cattle prices and wholesale beef values.

Early negotiated cash fed cattle trade stumbled from the blocks Tuesday with dressed prices up north $5-$18 lower at $150/cwt. Live sales in Nebraska were mainly sharply lower at mostly $95. Early live sales in the Texas Panhandle were $5 lower at $100.

Wholesale beef values continued to scream higher, though, as buyers scramble to procure the declining supplies.

Choice boxed beef cutout value was $11.47 higher Tuesday afternoon at $259.85/cwt. Select was $10.83 higher at $248.82. Week to week, that’s $33.18 higher for Choice and $33.05 higher for Select. For perspective, the highest price for Choice following the Tyson plant fire last summer was $241.74.

Cattle futures, especially Live Cattle sagged lower, helped along by another down day in equity markets. 

Live Cattle futures closed an average of $1.23 lower (82¢ to $1.92 lower).

Except for 37¢ higher in the back contract, Feeder Cattle futures closed an average of 50¢ lower.

Corn futures closed mostly 3¢ to 6¢ lower.

Soybean futures closed mostly 4¢ to 7¢ higher.

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Major U.S. financial indices closed sharply lower again Tuesday. Along with anemic quarterly earnings reports, investors seemed to continue their focus on unraveling crude oil prices as a bellwether of economic misery to come.

A day after the expiring May contract for West Texas Intermediate futures closed at -$37.63, new spot month Jun closed $8.86 lower at $11.57.

The Dow Jones Industrial Average closed 631 points lower. The S&P 500 closed 86 points lower. The NASDAQ closed 297 points lower.

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The U.S. Senate approved $484 billion emergency relief legislation Tuesday evening, which would provide an additional $321 billion in funding for the Paycheck Protection Program (PPP). Of this amount, $60 billion is set aside for small lenders and community-based financial institutions that serve the needs of unbanked/underserved small businesses, according to the National Cattlemen’s Beef Association (NCBA).

Authorizing language was included to allow agricultural enterprises as defined by section 18(b) of the Small Business Act (15 U.S.C. 647(b)) with not more than 500 employees to receive Economic Injury Disaster Loan (EIDL) grants and loans.

“We are pleased to see the reaffirmation of Congress’s intent that cattle producers be granted access to the EIDL program administered by the Small Business Administration,” says Ethan Lane, NCBA vice president of government affairs. “We urge the House of Representatives to move swiftly to approve this package and deliver these funds to producers across the country who are continuing to keep grocery store shelves full during this economic disaster.” 

The proposed legislation comes just days after USDA announced the Coronavirus Food Assistance Program (CFAP). The program includes $16 billion in direct payments to farmers and ranchers including $9.5 billion of emergency funding from the CARES Act and $6.5 billion of funding from the Commodity Credit Corporation (CCC). Additionally, CFAP includes $3 billion in purchases of meat, dairy and produce to support producers and provide food assistance to those in need.  CFAP is funded from the Coronavirus Aid, Relief and Economic Security Act (CARES), the Families First Coronavirus Response Act (FFCRA) and other USDA programs.

More specifically, in his weekly market comments, Derrell Peel, Extension livestock marketing specialist at Oklahoma State University explains, “The beef cattle industry will receive $5.1 billion of CFAP funding to partially offset 2020 losses due to COVID-19. Cattle producers will receive a single direct payment determined by two calculations, including 85% of price losses from Jan. 1 to Apr. 15, 2020 and 30% of expected losses for two quarters after April 15. In order to qualify, commodities must have experienced at least a 5% price decrease between January and April. USDA expects to begin sign-up in early May and distribute payments by late May or early June.”

By | April 21st, 2020|Daily Market Highlights|

Cattle Current Daily—Apr. 21, 2020

Slowing beef production took a toll on cash fed cattle prices last week, while putting the fire beneath wholesale beef values.

There were only 16,520 head confirmed fed steer and heifer trades last week, compared to 112,499 the same week last year, according to the Agricultural Marketing Service (AMS).

The AMS five-area direct average weekly weighted price for steers was $102.28/cwt. on a live basis, which was $2.72 less than the prior week. In the beef, steers traded $10.82 less at $157.18.

On the other end, Choice boxed beef cutout value was $9.39 higher Monday afternoon at $248.38/cwt. Select was $10.79 higher at $237.99 (see below).

Cattle futures softened Monday with pressure from slowing beef production and outside markets. 

Live Cattle futures closed an average of 68¢ lower (30¢ to $1.20 lower).

Feeder Cattle futures closed an average of 77¢ lower (7¢ lower toward the back to $2.00 lower toward the front).

Corn futures closed 5¢ to 6¢ lower, except for 8¢ and 7¢ lower in the front two contracts.

Soybean futures closed 4¢ to 6¢ lower through Jan ’21 and then mostly 2¢ to 3¢ lower. 

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Major U.S. financial indices closed lower Monday, rattled by a historic spot-month rout of crude oil futures.

May WTI Crude Oil futures, which expires Tuesday, closed at -$37.63. That’s not a misprint. It closed at -$37.63. The next spot month, Jun, closed $58.06 higher at $20.43, but $4.60 lower than the previous session. Plentiful supplies, anemic demand and storage costs all contribute to the lack of overall buyer incentive.

The Dow Jones Industrial Average closed 592 points lower. The S&P 500 closed 51 points lower. The NASDAQ closed 89 points lower.

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“At this time, plant reductions are mostly resulting in some product disruptions and perhaps temporary shortages of fresh meat,” says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly comments. “Barring a catastrophic combination of plant closures or extended periods of plant disruptions, significant shortages of meat are not expected.  However, the combination of processing disruptions and the continuing challenges of supply chain disruptions means that consumers will likely experience limited meat supplies and selection in grocery stores in the coming weeks.”

For perspective, Peel explains estimated cattle slaughter last week was 502,000 head, which was 6.3% less than the prior week and 21.8% less than the same week a year earlier. The previous week’s slaughter of 536,000 head was also significantly lower. Until then, for the first 14 weeks of the year, he notes cattle slaughter averaged 634,300 head per week, which was 4.3% more year over year.

“Total beef production in 2020 is still projected at a record level over 27 billion lbs., but the timing during the year is more volatile and somewhat choppy,” Peel says.

By | April 20th, 2020|Daily Market Highlights|

Cattle Current Daily—Apr. 20, 2020

As expected, slowing beef production ended up hammering fed cattle prices.

Keeping in mind it was a light test, negotiated cash fed cattle trade ended last week steady to sharply lower. Live trades were mostly steady in the Southern Plains at mainly $105/cwt. They were steady to $11 lower in the north at $94-$105 in Nebraska and at $95-$105 in the western Corn Belt. Dressed sales were steady to $18 lower at $155-$165 in Nebraska and at $150-$168 in the western Corn Belt.

Cattle feeders offered 5,778 head in the weekly Fed Cattle Exchange auction held Friday. Just six lots–898 head–sold for a weighted average price of $105/cwt. for delivery at 1-17 days. Except for one lot from Nebraska, all cattle sold came from the Southern Plains.

Even so, cattle futures closed mostly higher Friday, supported by recent stability. 

Except for 85¢ and 17¢ lower in the front two contracts, Live Cattle futures closed an average of 95¢ higher (45¢ higher to $1.27 higher).

Except for 22¢ lower in Aug, Feeder Cattle futures closed an average of 68¢ higher.

Wholesale beef values continued higher to end the week.

Choice boxed beef cutout value was $3.12 higher Friday afternoon at $238.99/cwt. Select was $1.22 higher at $227.20.

Corn futures closed mostly 1¢ to 2¢ higher.

Soybean futures closed mostly 2¢ to 3¢ lower. 

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Major U.S. financial indices closed higher Friday, supported by continued indications at least part of the economy might be on the cusp of reopening.

“Our experts say the curve has flattened and the peak in new cases is behind us. Nationwide, more than 850 counties, or nearly 30% of our country, have reported no new cases in the last seven days,” said President Donald Trump, in a Thursday evening press briefing. “…my administration is issuing new federal guidelines that will allow governors to take a phased and deliberate approach to reopening their individual states.”

The Dow Jones Industrial Average closed 704 points higher. The S&P 500 closed 75 points higher. The NASDAQ closed 117 points higher.

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U.S. restaurant customer transactions declined by 41% the week ending Apr. 5, compared to a year earlier, according to The NPD Group (NPD). That follows a decline of 42% the previous week.

“The 41% decline in restaurant transactions is similar to last week and may indicate a bottom. We also need to be aware that further erosion could occur if consumers’ economic situations worsen,” says David Portalatin, NPD food industry advisor. “To date, many consumers have continued to buy restaurant meals through delivery, takeout, and drive-thru to the degree allowed by the restrictive environment; but with rising unemployment, payroll reductions, and temporary furloughs, consumers may begin to think differently about their food budgets overall.”

More specifically, quick service restaurant transaction declines were 38% for the week ending Apr. 5, according to NPD’s CREST® Performance Alerts, which provides a rapid weekly view of chain-specific transactions and share trends for 70 quick service, fast casual, midscale, and casual dining chains. 

Customer transactions at full service restaurants–already challenged prior to COVID-19–were down 79%.

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A new USDA program–the Coronavirus Food Assistance Program (CFAP)–will provide $16 billion in immediate, direct support to farmers and ranchers, where prices and market supply chains have been impacted and will assist producers with additional adjustment and marketing costs resulting from lost demand and short-term oversupply for the 2020 marketing year caused by COVID-19. 

That’s according to U.S. Agriculture Secretary Sonny Perdue, in a late Friday afternoon announcement

“During this time of national crisis, President Trump and USDA are standing with our farmers, ranchers, and all citizens to make sure they are taken care of,” explained Secretary Perdue, when making the announcement. “The American food supply chain had to adapt, and it remains safe, secure, and strong, and we all know that starts with America’s farmers and ranchers.”

For what it’s worth, between the announcement and a press briefing late Friday evening, I was unable to figure out if portions of the $16 billion are part of the previously announced $9.5 billion allocated for direct support to farmers and ranchers in the Coronavirus Aid, Relief, and Economic Security (CARES) Act. Either way, Secretary Perdue emphasized this was not an end to COVID-19 assistance from USDA. He said USDA will make the money available as quickly and efficiently as possible, but not how, exactly. Details will be forthcoming no doubt.

CFAP also includes $3 billion, in addition to the $16 billion, to purchase fresh produce, dairy, and meat. USDA will partner with regional and local distributors, whose workforce has been significantly impacted by the closure of many restaurants, hotels, and other food service entities, to make the purchases. USDA will begin with procurement of an estimated $100 million per month in fresh fruits and vegetables, $100 million per month in a variety of dairy products, and $100 million per month in meat products. The distributors and wholesalers will then provide a pre-approved box of fresh produce, dairy, and meat products to food banks, community and faith based organizations, and other non-profits serving Americans in need.

By | April 19th, 2020|Daily Market Highlights|

Cattle Current Daily—Apr. 17, 2020

Negotiated cash fed cattle trade remained undeveloped through Thursday afternoon, according to the Agricultural Marketing Service (AMS). There were a few dressed trades reported in Nebraska and the western Corn Belt at $155/cwt., but too few to trend. The price there last week was at $168. Given the surge in wholesale beef prices this week, some are betting on at least steady money.

Choice boxed beef cutout value was $5.34 higher Thursday afternoon at $235.87/cwt. Select was $3.76 higher at $225.98. That’s $10.01 more for Choice since Monday and $14.58 more for Select.

The average steer dressed weight for the week ending Apr. 4 was 889 lbs., which was 2 lbs. lighter than the previous week, but 24 lbs. heavier than the prior year, according to USDA’s Actual Slaughter Under Federal Inspection report. The average dressed heifer weight was 825 lbs., the same as the prior week but 21 lbs. heavier than the same week last year.

Cattle futures closed higher Thursday, building on stability from the previous session. Trade and open interest continued to creep higher. 

Weekly beef export Sales (Apr. 3-9) reported by USDA’s Foreign Agricultural Service were also supportive. Net sales of 20,200 metric tons (mt) reported for 2020 were up 28% from the previous week and 16% from the prior four-week average. Increases came primarily from Japan, South Korea, Hong Kong, China and Taiwan.

Live Cattle futures closed an average of 92¢ higher (70¢ higher to $1.65 higher).

Feeder Cattle futures closed an average of $1.97 higher ($1.42 higher at the back to $2.90 higher toward the front).

Corn futures closed mostly 1¢ to 2¢ lower.

Soybean futures closed 5¢ to 6¢ lower through Mar ’21 and then 3¢ to 4¢ lower.

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Major U.S. financial indices wobbled higher Thursday as investors balanced negative economic impact from COVID-19 with hopefulness that plans are forthcoming for the nation to get back to work.

The Dow Jones Industrial Average closed 33 points higher. The S&P 500 closed 16 points higher. The NASDAQ closed 139 points higher.

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“As fed cattle prices fall and feedlot margins decline, feedlot operations will likely reduce placements and reduce bids for feeder calves,” say analysts with USDA’s Economic Research Service (ERS), in the monthly Livestock, Dairy and Poultry Outlook. “Relatively good pasture conditions might allow producers to keep cattle on grass and other pasture until prices begin to recover. To that end, these calves will likely be placed in feedlots at heavier weights, and expected average slaughter weights will be higher. Recent price data and expectations of weaker feedlot demand underpins a decrease in this year’s expected feeder calf prices.”

ERS projects the annual average feeder steer price (basis Oklahoma City) at $130.50/cwt., which would be $11.73 less (-8.25%) than in 2019. Average price in the first quarter of this year was $136.42. Prices are forecast at $123 in the second quarter, $128 in the third quarter and $135 in the fourth quarter.

“Slower demand and potentially slower rates of slaughter are expected to pressure cattle prices. However, prices are expected to improve through the rest of the year but remain well below year-ago levels,” say ERS analysts.

ERS projects the annual fed steer price (five-area direct) at $111/cwt. this year, which would be $5.78 less (-4.95%) than last year. Average fed steer price in the first quarter of this year was $118.32. Prices are forecast at $105 in the second quarter, $109 in the third quarter and $112 in the fourth quarter.

With decreased cattle feeding returns, uncertainty and feedlot placements in mind, ERS reduced projections for beef production in the third and fourth quarters. However, ERS analysts also say increased non-fed cattle slaughter and higher average dressed weights will partly offset the reduction in fed cattle.

By | April 16th, 2020|Daily Market Highlights|

Cattle Current Daily—Apr. 16, 2020

Cattle futures closed mixed on Wednesday, mostly higher for Feeder Cattle. Support included higher wholesale beef values, tied to slowing beef production, due to COVID-19. Based on futures prices the last couple of days, much of that appears to have been priced into the market previously.

Other than unchanged to 50¢ lower in three contracts, Live Cattle futures closed an average of 54¢ higher (7¢ higher at the back to $1.02 higher in the front two contracts).

Other than 60¢ lower in spot Apr, Feeder Cattle futures closed an average of 95¢ higher (37¢ to $1.50 higher).

Wholesale beef values were sharply higher on good demand and light offerings, according to the Agricultural Marketing Service.

Choice boxed beef cutout value was $3.86 higher Wednesday afternoon at $230.53/cwt. Select was $6.45 higher at $222.22.

Corn futures closed 3¢ to 6¢ lower through Jly ’21 and then 2¢ lower.

Soybean futures closed mostly 5¢ to 9¢ lower.

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Major U.S. financial indices closed lower Wednesday with early quantification of domestic COVID-19 economic impact.

Advance estimates of U.S. retail and food services sales for March 2020, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, declined 8.7% from February to March at $483.1 billion, according to the U.S. Commerce Department. That was 6.2% less compared to March of last year.

Crude oil prices also continued lower, with West Texas Intermediate on the CME closing $1.36 to $2.30 lower across the front six months starting in Jun. Spot May closed at $19.87.

The Dow Jones Industrial Average closed 445 points lower. The S&P 500 closed 62 points lower. The NASDAQ closed 122 points lower.

More broadly, the International Monetary Fund, in the latest World Economic Outlook, projects global economic growth at -3% this year. That’s 6.3% less than the January outlook and assumes the pandemic and containment requirements peak in the second quarter for most countries.

“This makes the Great Lockdown the worst recession since the Great Depression, and far worse than the Global Financial Crisis,” according to IMF. “…activity is projected to remain below the level we had projected for 2021, before the virus hit. The cumulative loss to global GDP over 2020 and 2021 from the pandemic crisis could be around $9 trillion, greater than the economies of Japan and Germany, combined.”

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Economic losses in the cattle industry, stemming from COVID-19, will reach $13.6 billion, according to a study–Economic Damages to the U.S. Beef Cattle Industry Due to COVID-19–conducted by a team of industry-leading agricultural economists led by Derrell Peel, Breedlove Professor of Agribusiness and Extension livestock marketing specialist at Oklahoma State University. It was commissioned by the National Cattlemen’s Beef Association (NCBA) to assist USDA in determining how best to allocate CARES Act relief funds to cattle producers.

“This study confirms that cattle producers have suffered massive economic damage as a result of the COVID-19 outbreak and those losses will continue to mount for years to come, driving many producers to the brink of collapse and beyond if relief funds aren’t made available soon,” says NCBA CEO Colin Woodall. “This study also clearly illustrates the fact that while the relief funds provided by Congress were a good first step, there remains a massive need for more funding to be allocated as soon as members of Congress reconvene.”

Woodall pointed out that relief funds that were meant to provide aid directly to cattle producers were divided among multiple commodities, many of which already have government programs in place to support production. However, cattle producers have always maintained their independence from government programs, and most operate today without the safety net others enjoy.

“It’s only because of the extraordinary circumstances we face today that cattle producers need relief. While we appreciate the many members of Congress who supported the cattle industry and ensured cattle producers were eligible for relief funds, we need these same members to do more to make certain every cattle producer who needs relief can access funding. That’s why we’re calling today for additional funds to be made available specifically for cattlemen and women,” said Woodall.

Cow-calf producers will be impacted the most, with COVID-19-related losses estimated at $3.7 billion, or $111.91 per head for each mature breeding animal in the United States. Without offsetting relief payments, those losses could increase by $135.24 per mature breeding animal, for an additional impact totaling $4.45 billion in the coming years.

Economic losses for stockers and backgrounders were estimated at $159.98 per head, for a total economic impact of $2.5 billion in 2020.

Losses in the cattle feeding sector were estimated at $3.0 billion or $205.96 per head.

Researchers included: Derrell S. Peel, Oklahoma State University; Dustin Aherin, Rabobank; Randy Blach, CattleFax; Kenneth Burdine, University of Kentucky; Don Close, Rabobank; Amy Hagerman, Oklahoma State University; Josh Maples, Mississippi State University; James Robb, Livestock Marketing Information Center; and Glynn Tonsor, Kansas State University.

By | April 15th, 2020|Daily Market Highlights|

Cattle Current Daily—Apr. 15, 2020

Cattle futures closed higher Wednesday, recovering some ground lost in the previous session’s limit losses. Increased trade activity and higher outside markets provided support.

Live Cattle futures closed an average of $1.77 higher ($1.17 higher to $2.70 higher in spot Apr).

Feeder Cattle futures closed an average of $2.01 higher (40¢ to $2.80 higher).

Wholesale beef values were higher on Choice and sharply higher on Select with moderate to good demand and moderate to heavy offerings, according to the Agricultural Marketing Service.

Choice boxed beef cutout value was 81¢ higher Tuesday afternoon at $226.67/cwt. Select was $4.37 higher at $215.77.

Corn futures closed 3¢ to 5¢ lower through Dec ’20 and then mostly 1¢ to 2¢ lower.

Soybean futures closed 5¢ to 7¢ lower through Jan ’21 and then mostly 4¢ lower.

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Major U.S. financial indices closed higher on Tuesday, with various data pointing to signs that coronavirus is stabilizing in this country.

The Dow Jones Industrial Average closed 558 points higher. The broader S&P 500 closed 84 points higher. The NASDAQ closed 323 points higher.

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“The red ink projected for cattle feeders, with few risk management opportunities ahead, is likely to significantly dampen placements in March and through summer,” say analysts with the Livestock Marketing Information Center (LMIC), in the latest Livestock Monitor. “The fall-out of fed cattle prices are expected to result in negative margins, even though feed costs are expected to be lower. This pessimism in cattle feeding has led to reluctance in buying cattle to fill pens.  Coronavirus has also limited auctions, with some suspending auction sales or instituting more restrictions on day of sale.”

March auction receipts were 43% less than a year earlier, according to LMIC. Combined video auction and direct receipts were 47% less. Feeder cattle imports from Canada and Mexico were also fewer.

“March placements are expected to decrease significantly, flattening the seasonal increase. Placements through the rest of the summer are likely to be below a year ago as the trends above are unlikely to change without significant improvements on the public health front,” say LMIC analysts. “One of the key factors moving forward will be pasture and range conditions. Good forage conditions will allow cattle to gain weight outside the feedlot and buy time, which at this point looks like a pivotal hedge/risk management option. If drought becomes an issue, it will force placements into feedlots even if economic conditions for feeding animals is weak. Cattle feeding returns are expected to be negative until fall 2020. Producers selling feeder animals in a drought market will likely face prices sharply below a year ago.”

By | April 14th, 2020|Daily Market Highlights|

Cattle Current Daily—Apr. 14, 2020

Cattle futures closed limit-lower amid light trade and declining open interest and pressured by mounting concerns about beef packing production amid COVID-19 (see below).

Live Cattle futures closed limit-down $3.00

Feeder Cattle futures closed limit-down $4.50.

Wholesale beef values were higher on good demand and moderate to heavy offerings, according to AMS.

Choice boxed beef cutout value was $1.93 higher Monday afternoon at $225.86/cwt. Select was $3.07 higher at $211.40.

Corn futures closed mostly fractionally lower.

Soybean futures closed 5¢ to 9¢ lower through Mar ’21 and then mostly 2¢ to 3¢ lower.

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Major U.S. financial indices closed mixed on Monday, amid another volatile day of trade. On the one hand, investors continued to show optimism concerning COVID-19 progress. On the other, there’s plenty of wariness as quarterly corporate earnings season ramps up.

The Dow Jones Industrial Average closed 328 points lower. The broader S&P 500 closed 28 points lower. The NASDAQ closed 38 points higher.

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JBS closed its Greeley, CO plant on Friday for a deep cleaning, and will be closed for two weeks, according to the Colorado governor’s office. With the information available at the time, Cattle Current reported yesterday JBS intended to be closed for two days this week.

According to a statement, “The Colorado Department of Public Health and Environment (CDPHE) and Weld County Public health are working with JBS to design an aggressive testing and containment strategy, so they can continue their critical work which ranchers and consumers rely on. Gov. Polis has prioritized the Colorado National Guard to provide logistical support for testing so the plant can safely start up again.”

“The U.S. meat industry faces unprecedented threats as COVID-19 sweeps through labor forces at meat processing facilities nationwide,” says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly market comments. “Production of beef, pork and poultry are simultaneously threatened as COVID-19 infections affect labor availability and processing capacity in multiple facilities across all meat industries. Reduced processing capacity could cause backups in live animal supplies if animals cannot be processed in a timely fashion. The severity of impacts will depend on specific situations and locations but could include costly delays in holding animals until slaughter, backlogs in production facilities, or even disposal of animals.”

Peel points to last week’s estimated cattle slaughter as an indication that production was already beginning to slow. USDA estimated slaughter for the week ending Apr. 11 at 536,000 head, which was more than 14% less than the previous week and almost 16% less than the same week last year, according to Peel. Fed cattle slaughter was down, as was cow and bull slaughter.

“This predicament could result in a situation not previously seen in the beef industry,” Peel says. “It may simply not be possible to slaughter animals in a timely manner. Last summer, the loss of a single packing plant in Kansas resulted in relatively little decrease in overall cattle slaughter as production was shifted to other plants; increased Saturday slaughter largely offset the loss of the fire-damaged plant. In the current situation, closure or reduced chain speeds across multiple plants may make it impossible to keep up with slaughter.”

By | April 13th, 2020|Daily Market Highlights|

Cattle Current Daily—Apr. 13, 2020

Negotiated cash fed cattle prices ended up $7 lower on a live basis last week at $105/cwt. in the Southern Plains, according to the Agricultural Marketing Service. Dressed trade in Nebraska and the western Corn Belt was $7-$12 lower at $168. A light test was noted in all regions. At least part of the pressure likely stems from slowing packing plant production, due to COVID-19 (see below).

Futures and equities markets were closed in observance of Good Friday.

Week to week on Thursday, Live Cattle futures closed an average of $6.33 higher, from $1.17 higher in spot Apr to $8.82 higher.

Week to week on Thursday, Feeder Cattle futures closed an average of $9.98 higher, from $8.85 to $11.75 higher.

Wholesale beef values were higher on moderate to fairly good demand and light offerings on Friday, according to AMS.

Choice boxed beef cutout value was $1.26 higher Friday afternoon at $223.93/cwt. Select was 76¢ higher at $208.33. Week to week, Choice was $6.51 lower and Select was $7.51 lower.

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Major U.S. financial indices were closed in observance of Good Friday.

Week to week on Thursday, the Dow Jones Industrial Average was 2,305 points higher, the broader S&P 500 was 262 points higher and the NASDAQ was up 666 points.

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Supply chain disruptions, due to COVID-19, are mounting in the packing sector.

Smithfield Foods, Inc. announced Sunday that its Sioux Falls, SD facility will remain closed until further notice. The plant is one of the largest pork processing facilities in the U.S., representing 4-5% of U.S. pork production. It employs 3,700 people. More than 550 independent family farmers supply the plant.

“The closure of this facility, combined with a growing list of other protein plants that have shuttered across our industry, is pushing our country perilously close to the edge in terms of our meat supply. It is impossible to keep our grocery stores stocked if our plants are not running. These facility closures will also have severe, perhaps disastrous, repercussions for many in the supply chain, first and foremost our nation’s livestock farmers. These farmers have nowhere to send their animals,” said Kenneth M. Sullivan, president and chief executive officer, for Smithfield.

Likewise, Noel White, Tyson Foods, Inc. CEO explained last week, “Our meat and poultry plants are experiencing varying levels of production impact, due to the planned implementation of additional worker safety precautions and worker absenteeism.

“For example, out of an abundance of caution, we have suspended operations at our Columbus Junction, Iowa, pork plant due to more than two dozen cases of COVID-19 involving team members at the facility. In an effort to minimize the impact on our overall production, we’re diverting the livestock supply originally scheduled for delivery to Columbus Junction to some of our other pork plants in the region.”

According to various news sources, JBS is closing its beef packing plant in Greeley, CO through Tuesday of this week, for deep cleaning facilities and screening new workers. Reportedly, 36 JBS workers tested positive for COVID-19 infections through the end of last week.

“Unfortunately, COVID-19 cases are now ubiquitous across our country. The virus is afflicting communities everywhere. The agriculture and food sectors have not been immune,” Sullivan explained. “Numerous plants across the country have COVID-19 positive employees. We have continued to run our facilities for one reason: to sustain our nation’s food supply during this pandemic. We believe it is our obligation to help feed the country, now more than ever. We have a stark choice as a nation: we are either going to produce food or not, even in the face of COVID-19.”

By | April 12th, 2020|Daily Market Highlights|

Cattle Current Daily—Apr. 10, 2020

Cattle futures closed mixed to lower Thursday with pressure from Lean Hogs, as well as likely profit taking and position squaring heading into the long weekend; futures and equities markets are closed in observance of Good Friday.

Except for $1.17 higher in spot Apr and 20¢ lower in the back contract, Live Cattle futures closed an average of $1.42 lower.

Feeder Cattle futures closed mixed, from an average of 33¢ lower in four contracts to an average of 77¢ higher.

Wholesale beef values were firm on Choice and lower on Select with light to moderate demand and heavy offerings, according to the Agricultural Marketing Service.

Choice boxed beef cutout value was 33¢ higher Thursday afternoon at $222.67/cwt. Select was $4.20 lower at $207.57.

The average dressed steer weight for the week ending Mar. 28 was 891 lbs., according to USDA’s Actual Slaughter Under Federal Inspection report. That was 7 lbs. lighter than the previous week, but 26 lbs. heavier than a year earlier. The average dressed heifer weight was 825 lbs., which was 11 lbs. lighter than the previous week, but 19 lbs. heavier than the prior year.

Corn futures closed 1¢ to 3¢ higher.

Soybean futures closed mostly 7¢ to 9¢ higher.

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Major U.S. financial indices closed higher Thursday with the Federal Reserve announcing it will provide up to $2.3 trillion in loans to support the economy.

“Our country’s highest priority must be to address this public health crisis, providing care for the ill and limiting the further spread of the virus,” explained Federal Reserve Board Chair Jerome H. Powell. “The Fed’s role is to provide as much relief and stability as we can during this period of constrained economic activity, and our actions today will help ensure that the eventual recovery is as vigorous as possible.”

According to the Fed, funding will assist households and employers of all sizes and bolster the ability of state and local governments to deliver critical services during the coronavirus pandemic.

The Dow Jones Industrial Average closed 285 points higher. The S&P 500 closed 39 points higher. The NASDAQ was up 62 points.

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USDA reduced expected commercial beef production for this year to 27.4 billion lbs., in the latest monthly World Agricultural Supply and Demand Estimates (WASDE).That was 255 million lbs. less than the previous month’s estimate but would be 294 million lbs. more than the prior year.

“The beef production forecast is reduced as lower expected steer and heifer slaughter more than offsets higher cow slaughter. However, beef production declines are partially offset by heavier carcass weights,” say analysts with USDA’s Economic Research Service (ERS). “Total red meat and poultry production for 2020 is reduced from last month as sectors at all levels adjust to COVID-19 and economic uncertainty.”

Total red meat and poultry production for this year is estimated at 108.3 billion lbs., which is 1.1 billion lbs. less than the prior month’s projection, but would be 3.0 billion lbs. more than last year.

USDA reduced the estimated annual fed steer price by $3.50 to $111/cwt. It was $116.78 last year. The average fed steer price is projected to be $105 in the second quarter, $109 in the third quarter and $112 in the fourth quarter.

By | April 9th, 2020|Daily Market Highlights|

Cattle Current Daily—Apr. 9, 2020

Cattle feeders offered 7,561 head in the weekly Fed Cattle Exchange Auction Wednesday and sold 1,443 head for a weighted average price of $105/cwt.–746 head for delivery at 1-9 days and 697 head for delivery at 1-17 days. Except for one lot from Iowa, sales were from the Southern Plains, where last week’s negotiated price was mostly $112. Country trade in the region so far this week is also at $105.

Even so, Cattle futures continued higher in active trade, following outside markets, despite growing concerns about the potential of COVID-19 to reduce harvest capacity utilization. If that happens to any degree, then logic and last summer’s packing plant fire suggest higher beef prices and lower fed cattle prices.

Live Cattle futures closed an average of $2.21 higher, (40¢ higher in the back contract to $4.50 higher in spot Apr).

Feeder Cattle futures closed an average of $4.72 higher, ($1.22 higher at the back to $6.55 higher).

Wholesale beef values were sharply lower on light demand and light to moderate offerings, according to the Agricultural Marketing Service.

Choice boxed beef cutout value was $5.54 lower Wednesday afternoon at $222.34/cwt. Select was $5.98 lower at $211.77.

Corn futures closed fractionally lower to 1¢ lower.

After fractionally higher to 4¢ higher through May ’21, Soybean futures closed mostly 6¢ to 7¢ higher.

The monthly World Agricultural Supply and Demand Estimates are scheduled to be released Thursday.

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Major U.S. financial indices closed sharply higher Wednesday. Support included increasing optimism that COVID-19 may be near a positive turning point, as well as announcement that Bernie Sanders dropped out of the 2020 race for the U.S. presidency. Minutes from the most recent meeting of the Federal Open Markets Committee (FOMC) also indicated intentions to maintain interest rates at current levels for the foreseeable future.

“With regard to monetary policy beyond this meeting, these participants judged that it would be appropriate to maintain the target range for the federal funds rate at 0.0% to 0.25% until policymakers were confident that the economy had weathered recent events and was on track to achieve the Committee’s maximum employment and price stability goals,” according to the FOMC minutes.

The Dow Jones Industrial Average closed 779 points higher. The S&P 500 closed 90 points higher. The NASDAQ was up 203 points.

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Quick service restaurant transactions were 40% less year over year for the week ending Mar. 29, according to the NPD Group (NPD). Transactions at full service restaurants were 79% less. Total restaurant customer transactions were down 42%.

“The transaction declines partially reflect the struggle of on-premise restaurants to pivot to off-premise models,” says David Portalatin, NPD food industry advisor and author of Eating Patterns in America. “Many restaurants that are attempting to make the move are doing so with limited menu offerings and without the benefit of drive-thru lanes. Anecdotally, some operators are giving up the cause and closing altogether.” 

About 97% of U.S. restaurants are now under some level of restrictions, with most prohibiting dine-in service, according to NPD’s restaurant census, ReCount®. Prior to the COVID-19 outbreak, on-premise dining represented 52% of restaurant industry dollars, and off-premise, like carryout, drive thru, and delivery, represented 48% of dollars. Carryout represented the largest dollar share at 53% of off-premise modes, drive-thru 38%, and delivery 9% of dollars. As of year ending February 2020, digital orders represented 13% of all off-premise dollars.

“Wholesale and retail beef markets have endured enormous upheaval since mid-March,” says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly market comments. “Starting Mar. 16, the surge in retail grocery buying put huge demands on retail supply chains resulting in dramatic and immediate spikes in wholesale beef prices. The overall cutout price jumped by nearly 19% in a matter of three days. Wholesale prices continued to push higher until Mar. 23, peaking at $257.32 cwt., up 23.6% from Mar. 13 levels. Since then, the cutout dropped over 10% to $230.44/cwt. on Apr. 3. It is not clear exactly where the boxed beef cutout will settle out in the coming days.”

All of that shifting also impacts demand for various wholesale beef cuts.

From the beginning of March to the early part of April, Peel says prices for most steak items declined: down 29% for the tenderloin, for example and down 7.7% for the ribeye.

“Prices for loin strips, a popular summer grilling steak that is normally increasing seasonally at this time, is up over 22%. Top sirloin, a multi-purpose steak used in both restaurants and at retail grocery is priced nearly 13% higher,” Peel explains. 

“At the same time, end meat prices, which are typically declining into the summer, are higher, driven by grocery demand for value cuts and ground beef.” 

By | April 8th, 2020|Daily Market Highlights|

Cattle Current Daily—Apr. 8, 2020

Negotiated cash fed cattle trade was undeveloped through Tuesday afternoon. USDA’s Agricultural Marketing Service did report a few early trades in Kansas at $105/cwt., but too few to trend. Prices in the region last week were at $112.

Live Cattle and Feeder Cattle futures were limit-up across the board Tuesday, building on what was mostly modest to strong gains in the previous session. Higher outside markets (for most of the session), tied to hopefulness about peak coronavirus infections coming sooner rather than later, provided support. However, declining wholesale beef values, iffy demand patterns going forward, relative to supplies, and early indications of lower cash fed cattle prices this week make it hard to square the move with anything fundamental.

Live Cattle futures closed expanded limit-up $4.50 higher, in light trade.

Feeder Cattle futures closed limit-up $4.50 higher, also amid light trade.

Wholesale beef values were lower on Choice and higher on Select with light to moderate demand and moderate to heavy offerings, according to the Agricultural Marketing Service.

Choice boxed beef cutout value was $2.17 lower Tuesday afternoon at $227.88/cwt. Select was $2.72 higher at $217.75.

Corn futures closed 2¢ to 3¢ higher.

After fractionally mixed to 2¢ higher through Jan ’21, Soybean futures closed mostly 4¢ to 5¢ higher.

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Major U.S. financial indices gyrated wildly Tuesday: sharply higher for much of the session amid continued positive signs that the spread of COVID-19 is slowing; selling off toward the end as investors took money back off the table.

The Dow Jones Industrial Average closed 26 points lower. The S&P 500 closed 4 points lower. The NASDAQ was down 25 points.

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Concerns about the impact of the global coronavirus pandemic on the agricultural economy drove the Purdue University/CME Group Ag Economy Barometer 47 points lower to 121 in March–the steepest month-to-month decline since the barometer began.

The Ag Economy Barometer is based on a midmonth survey of 400 U.S. agricultural producers and was conducted March 16-20, as the coronavirus crisis escalated in the U.S. and around the world.

“While originally it was thought that the coronavirus effect would be limited to trade with China, now it appears producers are bracing for challenging financial times leading into the 2020 planting season,” says James Mintert, the barometer’s principal investigator and director of Purdue University’s Center for Commercial Agriculture.

Both sub-indices of the Ag Economy Barometer also recorded their largest one-month declines since the data series began in 2015. The Index of Current Conditions fell 43 points to 111. The Index of Future Expectations dropped 49 points to 126. That’s the lowest since September 2019, when weak commodity prices and an unresolved trade dispute left many farmers concerned over their financial futures.

Among the highlights:

  • 74% of respondents said they were either fairly worried (34%) or very worried (40%) about the impact of the virus on their farm’s profitability this year. That sentiment also spilled over into their perceptions of financial performance, with 40% of respondents expecting a worse year compared with 2019.
  • 47% of respondents expected the soybean trade dispute with China to be resolved soon, down from a January peak of 69%.
  • 68% of respondents expected the trade dispute with China to be resolved in a way that’s ultimately beneficial to U.S. agriculture. An average of 80% of respondents thought so in January and February.
  • 62% of survey respondents anticipated USDA providing Market Facilitation Program payments to U.S. farmers for the 2020 crop year, compared to 45% in February.
By | April 7th, 2020|Daily Market Highlights|

Cattle Current Daily—Apr. 7, 2020

The weekly five-area direct fed steer price last week was $8.23 less than the prior week on a live basis at $111.08/cwt. It was $11.95 less in the beef at $176.93.

Chatter to start the week included wonderment about reduced slaughter this week, given last week’s decline in volume, scheduled maintenance at packing plants and further indications that labor issues could intensify (see below).

Perhaps that was one reason behind the limit down move in spot Live Cattle futures (closing at $83.82), while buying interest picked up across most other contracts.

After $4.50 lower and 55¢ lower in the front two contracts, Live Cattle futures closed an average of $1.74 higher, (52¢ higher to $2.30 higher toward the back.

Feeder Cattle futures closed an average of $2.26 higher, ($1.20 to $2.90 higher).

Wholesale beef values were weak to lower on light to moderate demand and heavy offerings, according to the Agricultural Marketing Service.

Choice boxed beef cutout value was 39¢ lower Monday afternoon at $230.05/cwt. Select was 81¢ lower at $215.03.

Corn futures closed mostly 2¢ to 3¢ lower.

Soybean futures closed 3¢ to 4¢ higher.

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Major U.S. financial indices surged sharply higher Monday, with various data suggesting stable to slower spread of COVID-19 here and abroad. The bounce came despite renewed pressure on front-month Crude Oil futures (WTI-CME).

The Dow Jones Industrial Average closed 1,627 points higher. The S&P 500 closed 175 points higher. The NASDAQ was up 540 points.

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Potential for COVID-19 disrupting packing plant production—or any other key components of the supply chain—is a growing concern with reports of confirmed cases at specific plants, reduced production schedules, slower production and labor absenteeism.

Agricultural economists, Glynn Tonsor at Kansas State University and Lee Schulz at Iowa State University offer insight to potential impact on fed cattle prices.

Relative to the supply of slaughter cattle—the same number of cattle or increasing cattle numbers—cash fed cattle prices decline as beef packing plant capacity utilization increases, according to Assessing Impact of Packing Plant Utilization on Livestock Prices.

Said another way, cash prices decline as competition for hook space increases.

“It should be noted that packer capacity is not an average annual concept, it’s how close the industry is to capacity at peak harvest times. Peak fed cattle slaughter typically occurs in the summer,” say Tonsor and Schulz.

With their specific modeling, Tonsor and Shulz found that 1% more national beef packing plant utilization corresponded to a 1.32% reduction in cash fed cattle prices. Their report details the model development they utilized to estimate capacity utilization and price impacts.

“Accordingly, for demonstration purposes, if the industry operates at 20% lower capacity rates (increased capacity utilization), then we may anticipate fed cattle prices to decline by 26.49%. The extent to which these effects are already priced into the market are beyond the scope of this report, but regardless this clearly demonstrates the economic importance of packing plant utilization on cattle prices.”

Fed cattle price declines in the wake of last summer’s Tyson packing plant fire offers a real-world example of the concept.

As logic suggests, pork packing plant utilization impacts finished hog prices similarly.

“The model indicates that a 1% increase in national pork packing plant utilization corresponds with a 1.82% reduction in hog prices. Using the hypothetical scenario of pork slaughter operating at 20% lower capacity (increased capacity utilization), based on our model, we may anticipate hog prices to decline by 36.35%,” according to Tonsor and Shulz. “Again, the degree to which this may be already priced into the market is unknown.”

Moreover, Tonsor and Shulz emphasize their approach offers a broad context, considering aggregate effects at the national level.

“Regional effects on markets more closely aligned with any specific plants altering operation would likely differ,” they explain. “The impact of a particular plant closure would likely have a lot to do with its location and its size. For example, in 2018, cattle slaughter plants under federal inspection (FI), with 1 million head or more annual capacity slaughtered over 56% of the FI cattle slaughter. FI hog slaughter plants with 3 million head or more annual capacity slaughtered over 62% of the FI hog slaughter. This reflects the leveraged, aggregate economic impact that would occur from decreases in capacity of larger plants.”

By | April 6th, 2020|Daily Market Highlights|

Cattle Current Daily—Apr. 6, 2020

Cattle futures closed mixed amid a volatile trading session, with fairly active trade in Live Cattle and the previous session’s increased open interest.

Live Cattle futures closed an average of $2.34 lower in the front three contract, (30¢ lower to $4.50 lower in spot Apr), but then an average of $1.04 higher (55¢ higher to $1.70 higher), except for unchanged in the back contract.

Except for 75¢ higher in the back contract, Feeder Cattle futures closed an average of $2.07 lower, (90¢ lower to $3.55 lower).

Wholesale beef values were lower to sharply lower on light demand and offerings, according to the Agricultural Marketing Service.

Choice boxed beef cutout value was $2.20 lower Friday afternoon at $230.44/cwt. Select was $6.28 lower at $215.84.

After 1¢ to 2¢ lower in the front two contracts, Corn futures closed mostly fractionally higher.

Soybean futures closed 2¢ to 4¢ lower.

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Major U.S. financial indices closed lower Friday, despite further gains in energy markets.

West Texas Intermediate Crude Oil futures on the CME closed $1.62 to $3.02 higher through the front six contracts. That was $3.10 to $8.03 higher over the last two sessions.

Although expected, the bearish monthly employment report weighed on markets. Total non-farm payroll employment fell by 701,000 month to month in March, according to the U.S. Bureau of Labor Statistics. The unemployment rate rose to 4.4%. Average hourly earnings for all employees on private non-farm payrolls increased by 11¢ to $28.62. Over the past 12 months, average hourly earnings increased 3.1%. 

The Dow Jones Industrial Average closed 360 points lower. The S&P 500 closed 38 points lower. The NASDAQ was down 114 points.

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Despite global challenges stemming from COVID-19, U.S. beef exports in February were 18% more year over year in volume at 112,021 metric tons (mt) and 17% more in value at $681 million, according to data released by USDA and compiled by the U.S. Meat Export Federation (USMEF). Beef exports are on a record pace through the first two months of 2020, up 10% in volume and 11% in value at $1.35 billion.

Beef export value per head of fed slaughter was $343.03 in February, up 11% from a year earlier and the highest since December 2018. The January-February average was 7% higher at $321.86.

Export results confirmed that global demand for high-quality protein remains strong and resilient, according to Dan Halstrom, USMEF President and CEO.

“By February, COVID-19 had emerged as a major health concern in several key Asian markets and was certainly impacting consumer and business activity, so it is great to see U.S. pork and beef exports achieve such strong growth,” Halstrom says. “Obviously these are uncertain economic times and the road ahead remains very challenging, but these results are really a great testament to our international customer base. In the face of unprecedented obstacles, importers, retailers and restaurateurs are finding creative ways to meet consumer needs, and with record production the U.S. industry is well-positioned as a supplier. While we are in an unusual business climate that requires a lot of flexibility and innovation, there are excellent opportunities for red meat exports to continue to build momentum.”

U.S. pork exports are also off to a record pace this year. They were 46% higher for volume in February at 273,056 mt, the third largest on record for the month. U.S. pork export value was 59% more than a year earlier at $726.6 million. For the first two months of the year, pork exports exceeded last year’s pace by 41% in volume and 54% in value at $1.47 billion.

February Beef Export Highlights

Mainstay Asian markets Japan, South Korea and Taiwan fueled beef export growth in February, but shipments also increased to key destinations in the Western Hemisphere, Africa and the Middle East.

February beef exports to leading market Japan increased 24% in volume from a year ago to 27,099 mt and climbed 20% in value to $171.4 million. Through February, exports exceeded last year’s pace by 10% in volume and 7% in value at $329.5 million.

Demand for U.S. beef continued to build momentum in Korea, where February exports were 33% more than last year in volume at 23,532 mt and 32% more in value at $167.7 million. Volume through the first two months of the year is 16% ahead of last year’s record; 14% higher in value at $298.4 million.

U.S. beef exports in February to Mexico were 5% more last year for volume at 41,862 mt, and 10% more in value at $217 million. Mexico is the largest volume market for U.S. beef variety meat, and January-February variety meat exports climbed 16% from a year ago in both volume (18,182 mt) and value ($49.3 million).

February U.S. beef export to China were 12% more year over year at 1,408 mt. Value was 4% more at $10.4 million. USMEF expects momentum to build for U.S. beef in the world’s largest import market, due to expanded market access.

By | April 4th, 2020|Daily Market Highlights|

Cattle Current Daily—Mar. 3, 2020

Negotiated cash fed cattle trade remained largely undeveloped through Thursday afternoon. However, according to the Agricultural Marketing Service (AMS), there was a light test of live sales in all regions Wednesday at mostly $112/cwt. and at $175-$180 in the beef. That was $6-$8 less than last week on a live basis and $10-$15 less dressed.

Cattle future tumbled further Thursday, pressured by beef demand uncertainty, declining wholesale beef values and softer cash prices.

Live Cattle futures closed an average of $4.28 lower, expanded limit-down in the front four contracts.

Feeder Cattle futures closed an average of $6.31 lower, expanded limit-down in the front five contracts.

Wholesale beef values were sharply lower on light demand and offerings, according to the Agricultural Marketing Service.

Choice boxed beef cutout value was $2.53 lower Thursday afternoon at $232.64/cwt. Select was $3.01 lower at $222.12.

The average dressed steer weight for the week ending Mar. 21 was 3 lbs. lighter than the previous week at 898 lbs., but 32 lbs. heavier than the same time a year earlier, according to USDA’s Actual Slaughter Under Federal Inspection report. The average dressed heifer weight was 836 lbs., which was 1 lb. heavier than the prior week and 32 lbs. heavier than the previous year.

Corn futures closed mostly fractionally higher to 2¢ higher.

Soybean futures closed 2¢ to 4¢ lower through Sep ‘20 and then mostly 2¢ to 4¢ higher.

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Major U.S. financial indices closed higher Thursday. Support included a surge in crude oil prices, tied to reports that Saudi Arabia and Russia agreed to end their price war.

West Texas Intermediate Crude Oil futures on the CME closed $1.48 to $5.01 higher through the front six contracts.

The Dow Jones Industrial Average closed 469 points higher. The S&P 500 closed 56 points higher. The NASDAQ was up 126 points.

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The AMS reporter on hand for this week’s sale at Green City Livestock Auction in Missouri aptly summed up the current market situation: “It’s really a different world since the last sale in early March as the economy as a whole and the beef sector in particular has absorbed hit after hit. Volatile doesn’t seem a strong enough word to describe the situation anymore, as daily limit up and down moves at the CME are almost expected; even harder to swallow is that it’s driven by funds and not fundamentals. Those big moves take all the confidence out of a cash market and make it difficult for producers to decide when to turn loose as well as for buyers to figure what one is worth. Locally, lots of cattlemen have already held their stock longer than they normally would, waiting for the market to stabilize.”

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U.S. beef exports are projected to be $100 million less than last year at $7.5 billion, according to the latest quarterly Outlook for U.S. Agricultural Trade from USDA’s Economic Research Service and Foreign Agricultural Service. At the same time, analysts with those agencies project total livestock, poultry and dairy exports to be $500 million more at $32.4 billion, led by gains in poultry. Expectations for pork exports remained unchanged.

Global GDP) for this year remained unchanged from the November forecast at 1.5%. Expected U.S. GDP was reduced 0.2% to 1.1% on diminished business prospects.

“A slowdown across the Eurozone, declining growth rates in China and the recent damaging global impact of the Covid-19 outbreak is expected to dampen growth prospects worldwide,” say USDA and FAS analysts.

By | April 2nd, 2020|Daily Market Highlights|

Cattle Current Daily—Apr. 2, 2020

Cash fed cattle trade took on a decidedly bearish tone Wednesday.

Slaughter steers and heifers sold $17-$20 lower at Sioux Falls Regional in South Dakota. Choice 2-3 steers weighing an average of 1,411 lbs. brought an average price of $100.45/cwt. Country trade in the western Corn Belt last week was at mostly $120.

Cattle feeders offered 4,696 head in the weekly Fed Cattle Exchange auction Wednesday. Just 832 head sold: 662 head at a weighted average price of $113/cwt. for delivery at 1-9 days; 170 head at a weighted average of $112.06 for delivery at 1-17 days. Most of the sales were from the Sothern Plains where last week’s negotiated cash price was $118-$120.

Cattle future fell hard Wednesday, limit down across the board, except one Live Cattle contract. Pressure included the softer cash outlook and diving wholesale beef values, as well as lower outside markets. News that a significant number of workers at JBS facilities in Greeley, CO stayed home Tuesday, due to confirmed cases of COVID-19, also weighed.

Except for 85¢ lower in the back contract, Live Cattle futures closed an average of $4.50 lower.

Feeder Cattle futures closed limit-down $4.50.

Wholesale beef values were sharply lower on light demand and moderate offerings, according to the Agricultural Marketing Service.

Choice boxed beef cutout value was $7.98 lower Wednesday afternoon at $235.17/cwt. Select was $3.83 lower at $225.13. Over the last two days, Choice was down $15.80 and Select was $13.01 lower. Also, drop value sank to a new multi-year low of $7.92/cwt.

Corn futures closed mostly 7¢ to 9¢ lower.

Soybean futures closed 10¢ to 23¢ lower through Mar ’21 and then mostly 4¢ to 7¢ lower.

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Major U.S. financial indices extended losses Wednesday, as investors grew more pessimistic about how quickly the U.S. can get back to business. Specific negative news included quantification of decreased U.S. manufacturing last month.

Economic activity in the manufacturing sector was 1% less in March than the previous month, with the Institute for Supply Management® (ISM) Purchasing Managers Index® (PMI) at 49.1.

“The coronavirus pandemic and shocks in global energy markets have impacted all manufacturing sectors,” says Timothy Fiore, Chair of the ISM Manufacturing Business Survey Committee. “Comments from the panel were negative regarding the near-term outlook, with sentiment clearly impacted by the coronavirus pandemic and energy market volatility. The PMI returned to contraction territory, and with a negative trajectory.”

The Dow Jones Industrial Average closed 973 points lower. The S&P 500 closed 114 points lower. The NASDAQ was down 339 points.

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Tough markets for the leather industry will likely continue this year, according to the Leather and Hide Council of America (LHCA).

Part of the challenge has to do with plentiful supply, on the heels of U.S. cowherd expansion. Part has to do with trade issues before COVID-19. More important in the eyes of many U.S. hides and skins suppliers, though, is the global leather demand situation, and the rise of synthetic products as alternatives to leather.

Plastic synthetic alternatives that look like leather have taken significant market share away from leather in consumer product areas such as footwear and automobile upholstery, according to the LHCA. In fact, organization representatives say the situation is so dire that some lower-quality hides and skins are being composted and destroyed rather than processed into leather, a trend that will continue this year.

Based on USDA data, the United States exported more than $1.17 billion worth of cattle hides, pig skins and semi-processed leather products last year. That was $450 million less than the previous year.      

China was the largest buyer of salted cattle hides, with imports valued at more than $400 million last year, according to the LHCA. Italy was the single largest destination for wet blue cattle hides, with imports valued at more than $122 million. Other large export markets included South Korea, Mexico, Thailand and Vietnam.

On a positive note, U.S. hide exports continue to move overseas, despite COVID-19, although that could change if ports are forced to shut down, or if container availability challenges and congestion issues accelerate.

“It is difficult to predict the exact economic impact of the virus, but it is likely to be significant, considering labor shortages recorded at ports and in manufacturing facilities abroad, compounded by an observed decline in retail traffic both globally and in the U.S.,” according to the LCHA.

By | April 1st, 2020|Daily Market Highlights|

Cattle Current Daily—Apr. 1, 2020

Cattle futures started weak and finished stronger Tuesday. Fundamental reasons were hard to come by, especially given the sharp decrease in wholesale beef values. Potential support could have stemmed from the rally in Lean Hogs (after the front two contracts) and pressure on Corn.

Live Cattle futures closed an average of $2.34 higher (from 87¢ higher at the back to $3.00 higher toward the front).

Feeder Cattle futures closed an average of $1.92 higher ($1.55 to $2.20 higher).

Wholesale beef values were sharply lower on light demand and light to moderate offerings, according to the Agricultural Marketing Service.

Choice boxed beef cutout value was $7.82 lower Tuesday afternoon at $243.15/cwt. Select was $9.18 lower at $228.96.

Corn futures closed mostly fractionally lower to 2¢ lower through Mar ‘21 and then mostly fractionally higher to 1¢ higher. Pressure included Tuesday’s USDA reports (see below).

Soybean futures closed 1¢ to 3¢ higher through Aug ’21 and then fractionally lower to 2¢ lower.

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Major U.S. financial indices closed lower Tuesday, with continued pressure in the energy market, overall uncertainty related to COVID-19 and month-end and quarter-end book balancing.

The Dow Jones Industrial Average closed 410 points lower. The S&P 500 closed 42 points lower. The NASDAQ was down 74 points.

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Corn and soybean stocks were less than anticipated, but expected planting intentions were higher, especially for corn, according to the Grain Stockand Prospective Plantings reports issued by USDA on Tuesday. The National Agricultural Statistics Service (NASS) noted that Mar. 1 on-farm stock estimates included 2019 production from acres that were still standing and expected to be harvested when the survey was conducted in early March.

Corn

Corn planted area for all purposes in 2020 is estimated at 97.0 million acres, which would be 8% more or 7.29 million acres more than last year. If realized, this will be the highest planted acreage since 2012, according to NASS. Acreage increases from last year of 800,000 or more are expected in Indiana, Illinois, Ohio, and South Dakota.

Corn stocks in all positions Mar. 1 totaled 7.95 billion bu., down 8% from the same time a year earlier. Of the total stocks, 4.45 billion bu. were stored on farms, down 13% from a year earlier. Off-farm stocks of 3.50 billion bu. are up slightly from a year ago.

Soybeans

Soybean planted area for 2020 is estimated at 83.5 million acres, up 10% from last year. Increases of 250,000 acres or more are anticipated in Arkansas, Illinois, Kansas, Michigan, Minnesota, Missouri, North Dakota, Ohio, and South Dakota.

Soybeans stored in all positions Mar. 1 totaled 2.25 billion bu., down 17% from the previous year. Soybean stocks stored on farms are estimated at 1.01 billion bu., down 20% from a year ago. Off-farm stocks of 1.24 billion bu. are down 15%.

Wheat

All wheat planted area for 2020 is estimated at 44.7 million acres, down 1% from last year. This represents the lowest all wheat planted area since records began in 1919. The 2020 winter wheat planted area of 30.8 million acres is 1% less than last year and down slightly from the previous estimate. This represents the second lowest planted acreage on record for the United States.

All wheat stored in all positions Mar. 1 totaled 1.41 billion bu., down 11% from a year earlier. On-farm stocks are estimated at 339 million bu., down 8% from last March. Off-farm stocks of 1.07 billion bu. are down 12% from a year ago.

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“A lot more market volatility is likely to come as the effects of COVID-19 ripple through our economy,” says David Anderson, Extension livestock economist at Texas A&M University, in the latest issue of In the Cattle Markets. “While we come to grips with all the demand implications it’s worth recognizing that it is occurring in the time of cyclically peak beef supplies.”

With two days left in the first quarter, Anderson explained, year over year: fed steer and heifer slaughter was up 5.4%; cow and bull slaughter was 4.5% higher; average steer dressed weights were 22.5 lbs. heavier; average heifer dressed weights were 13.7 lbs. heavier; cow weights were up 2.6 lbs. 

At the time, Anderson says increased slaughter numbers and heavier weights resulted in 6.7% more first-quarter beef production.

By | March 31st, 2020|Daily Market Highlights|

Cattle Current Daily—Mar. 31, 2020

Cattle futures showed signs of support early but ended mostly lower on Monday.

After $1.75 lower in spot Apr, Live Cattle futures closed narrowly mixed , from 52¢ lower to 17¢ higher.

Feeder Cattle futures closed an average of 74¢ lower (2¢ lower toward the front to $2.27 lower at the back).

Wholesale beef values were lower on light demand and heavy offerings, according to the Agricultural Marketing Service.

Choice boxed beef cutout value was $1.87 lower Monday afternoon at $250.97/cwt. Select was $4.24 lower at $238.14.

Corn futures closed mostly 3¢ to 4¢ lower.

After fractionally higher to 1¢ higher in the front three contracts, Soybean futures closed mostly 5¢ to 8¢ lower.

The USDA Grain Stocks and Prospective Plantings reports are scheduled to be released Tuesday morning.

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The equities whipsaw continued Monday, to the upside this time, with major U.S. financial indices gaining back most of what was lost in the previous session.

Support included an announcement from Johnson & Johnson (J&J) that the company selected a lead COVID-19 vaccine candidate from constructs it has been working on since January. The company expects to initiate human clinical studies of its lead vaccine candidate by September 2020 at the latest. According to a statement, J&J anticipates the first batches of a COVID-19 vaccine could be available for emergency use authorization in early 2021, a substantially accelerated timeframe in comparison to the typical vaccine development process.

The Dow Jones Industrial Average closed 690 points higher. The S&P 500 closed 85 points higher. The NASDAQ was up 271 points.

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In his weekly market comments, Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, provides some perspective on recent extreme market volatility, as well as underscoring the distinct dynamics of various cattle and beef markets.

Peel points out the Dow Jones Industrial Average dropped from more than 29,000 points in the third week of February to less than 19,000 a month later. During the same time, he says the Jun Live Cattle contract fell from about $112/cwt. to $86, reflecting ongoing concern about weakening U.S. and global macroeconomic conditions resulting from COVID-19, as well the risk of labor disruptions at packing plants.

Also from mid-February to mid-March, Peel explains, “Cash fed cattle prices declined from nearly $120/cwt. to a low around $106 on broader concerns reflected in the Live futures as well as the supply pressure of increased beef production.” He adds that year-to-date beef production is up 6.3% through mid-March, but cash fed cattle prices increased the last couple of weeks, due to the sharp demand increase for retail beef.

Similarly, macroeconomic uncertainty pressured Feeder Cattle futures from more than $143 in mid-February to about $109 a month later.

“Cash feeder cattle prices followed futures with the Oklahoma combined auction prices for 500-550 lb. No. 1 steer prices dropping from about $184/cwt. in the third week of February to a low near $152 one month later,” Peel says. “Prices for 750-800 lb. No. 1 steers declined from about $139/cwt. to $117 over the same period…The squeeze on available feeder supplies pushed feeder prices sharply higher last week by 10-12% over the previous week. Ripple effects will likely impact feeder cattle markets in the coming weeks.”

At the same time, as of Monday, the Choice boxed beef cutout value was 11% higher than the same time a year earlier and Select was about 9% higher.

“The different patterns of boxed beef, fed and feeder cattle prices in the past six weeks illustrates vividly the fact that these markets operate with very distinct dynamics,” Peel says, explaining “These dynamics have become very apparent as the distinction between the current market situation and expectations for future supply and demand conditions has widened.”

By | March 30th, 2020|Daily Market Highlights|

Cattle Current Daily—Mar. 30, 2020

Cattle futures, fell hard again Friday as traders continue to exit contracts and beef demand uncertainty grows.

Live Cattle futures closed an average of $3.52 lower ($2.55 to limit-down $4.50 in spot April).

Feeder Cattle futures closed limit-down $4.50.

Wholesale beef values were steady to weak on light to moderate demand and moderate to heavy offerings, according to the Agricultural Marketing Service.

Choice boxed beef cutout value was 73¢ lower Friday afternoon at $252.84/cwt. Select was 21¢ higher at $242.38.

Corn futures closed mostly 2¢ to 3¢ lower.

After unchanged to 1¢ higher in the front three contracts, Soybean futures closed mostly 6¢ to 9¢ lower.

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Major U.S. financial indices closed sharply lower Friday, as investors seemed to focus more on COVID-19 and its ultimate impact than the massive stimulus bill passed by Congress.

The Dow Jones Industrial Average closed 915 points lower. The S&P 500 closed 88 points lower. The NASDAQ was down 295 points.

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“As tough as today is for cattle producers, the longer the coronavirus lasts, the more damage will be done. In response to the unprecedented and devastating impact of this pandemic on our industry, Congress enacted Coronavirus Aid, Relief, and Economic Security (CARES) Act. The CARES Act provides USDA’s Office of the Secretary with an additional $9.5 billion ‘to prevent, prepare for, and respond to coronavirus’,” according to a letter sent to U.S. Agriculture Secretary Sonny Perdue on Friday, from the National Cattlemen’s Beef Association (NCBA) and 46 state affiliates.

The letter encourages Perdue to consider several principles as USDA develops vehicles to deliver this assistance to cattle producers. Among them:

  • “As the largest segment of the U.S. agriculture industry, U.S. cattle production accounts for $67 billion (18%) of the $371 billion in total cash receipts from agricultural commodities in 2018. We are present in all fifty states on 729,000 farm operations that are the lifeblood of our rural economies. While coronavirus has undoubtedly impacted all segments of American agriculture, the impact of this crisis is uniquely acute for cattle producers who are not eligible for traditional safety net programs offered by USDA and the Small Business Administration.
  • “While there are multiple preliminary economic assessments relative to the impact of coronavirus on cattle markets, we believe that no single entity is better equipped than USDA to lead this effort. We encourage USDA to implement this effort by utilizing its unique expertise and available resources, while also working directly with the academic community and livestock industry experts to determine the full extent of need and most equitable measures of response.
  • “Marketing cattle in the United States is, by nature, highly volatile and complex with multiple links in the cattle supply chain. Cow-calf producers, seedstock producers, stockers and backgrounding operations, and cattle feeders have all been impacted by this pandemic. We believe assistance must be delivered equitably across all producer segments of the cattle supply chain based on need. Further, business size and structure are not reliable determinants of financial need or viability during this unprecedented occurrence and should not be a prohibiting factor for eligibility.
  • “We firmly believe that economic assistance for cattle producers should not only prioritize financial loss due to COVID-19, but also be market-oriented, not disrupt or mask market signals, and not be a permanent subsidy program.
By | March 29th, 2020|Daily Market Highlights|

Cattle Current Daily—Mar. 27, 2020

Cattle futures, continued to lose ground Thursday amid light demand, continued declines in open interest and concerns about beef demand relative to growing supplies.

For the week ending Mar. 14, the average dressed steer weight was 2 lbs. lighter than the previous week at 901 lbs., but 36 lbs. heavier than the a year earlier, according to USDA’s Actual Slaughter Under Federal Inspection report. The average dressed heifer weight of 835 lbs. was 5 lbs. heavier than the previous week and 30 lbs. heavier than the prior year.

Live Cattle futures closed an average of $2.56 lower ($1.92 lower at the back to $3.00 in spot April).

Feeder Cattle futures closed an average of $3.45 lower ($1.27 lower in expiring Mar to $4.50 lower at the back of the board).

Wholesale beef values were lower on light demand and moderate offerings, according to the Agricultural Marketing Service.

Choice boxed beef cutout value was $1.73 lower Thursday afternoon at $253.57/cwt. Select was 92¢ lower at $242.17.

Corn futures closed mostly fractionally higher to 1¢ higher.

After mostly fractionally higher to 2¢ higher through Jan ‘21, Soybean futures closed 4¢ to 5¢ higher.

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Major U.S. financial indices closed sharply higher Thursday, on the heels of the U.S. Senate passing a $2 trillion COVID-19 relief package and despite the fact that weekly jobless claims were far and away the most in U.S. history.

For the week ending Mar. 21, the advance figure for seasonally adjusted initial jobless claims was 3,283,000, an increase of 3,001,000 from the previous week’s revised level, according to the U.S. Department of Labor. The previous high was 695,000 in October of 1982.

The Dow Jones Industrial Average closed 1,351 points higher. The S&P 500 closed 154 points higher. The NASDAQ was up 413 points.

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You already know that agriculture is one of this nation’s critical infrastructures, with its essential nature magnified by the COVID-19 fallout. A new economic impact study released yesterday puts numbers to it, indicating one-fifth of the nation’s economy and one-fourth of American jobs are linked to the food and agriculture sectors, either directly or indirectly, accounting for a total economic impact of $7.63 trillion.

“This research helps shore up something we already knew: food and agriculture is critical to all Americans and the economic prosperity of our country,” says Dr. Barb Glenn, CEO of the National Association of State Departments of Agriculture. She adds that recent events are testing the resiliency of our agriculture and food system.

An example of that resilience and creativity beyond the ranch gate can be seen in helping retailers restock in the wake of the surge in consumer demand for food, water and cleaning products in recent weeks.

An ad-hoc partnership between the International Foodservice Distributors Association and FMI-Food Industry Association connects foodservice distributors with excess capacity (products, transportation services, warehousing services) to assist food retailers and wholesalers requiring additional resources.

The study was commissioned by 21 food and agriculture groups and can be found at feedingtheeconomy.com.

By | March 26th, 2020|Daily Market Highlights|

Cattle Current Daily—Mar. 26, 2020

Negotiated cash fed cattle prices roared higher Wednesday with moderate trade and good demand in all regions. Live prices were $8-$10 higher than last week at $119-$120/cwt. Dressed sales were $15-$20 higher at $190.

Likewise, fed cattle prices were significantly higher in the weekly Fed Cattle Exchange auction Wednesday, with 1,614 head for current delivery (1-9 days) selling for a weighted average price of $119.77/cwt. Most of those were from the Southern Plains. Another 837 head sold for delivery at 1-17 days for a weighted average price of $117.73. There were 5,886 head offered.

Cattle futures, though, closed mixed but mostly lower on likely profit taking and squeamishness about what happens with beef demand after the initial flood of consumer stockpiling runs its course (see below).

Except for $2.30 higher in spot Apr, Live Cattle futures closed an average of $1.46 lower (87¢ to $2.52 lower).

Except for $1.85 higher in spot Mar and 5¢ higher in Aug, Feeder Cattle futures closed an average of $1.02 lower (40¢ to $1.60 lower).

Wholesale beef values were lower to sharply lower on light to moderate demand and offerings, according to the Agricultural Marketing Service.

Choice boxed beef cutout value was $1.01 lower Wednesday afternoon at $255.30/cwt. Select was $2.39 lower at $243.09.

Corn futures closed mostly 1¢ to 2¢ higher.

After 1¢ to 5¢ lower in the front three contracts, Soybean futures closed mostly 5¢ to 8¢ higher.

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Major U.S. financial indices closed mixed Wednesday, higher on expectations the massive government economic stimulus package was close at hand, but soured by the fact that Congress was still at the wrestling stage.

The Dow Jones Industrial Average closed 495 points higher. The S&P 500 closed 28 points higher. The NASDAQ was down 33 points.

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Although the recent surge in boxed beef prices could continue this week, as retailers restock shelves, Brenda Boetel, livestock economist at the University of Wisconsin—River Falls says, “There is no evidence that consumers are eating more beef currently, and as such the demand will likely decrease significantly once the supply system catches up with the rush demand of the last few weeks.”

Further, in the latest issue of In the Cattle Markets, Boetel explains significant long-term value comes from consumers eating high-quality beef cuts at restaurants. Restaurant traffic continues to lag, of course, in the wake of COVID-19.

“Luckily, the grilling season is right around the corner and that should help alleviate some of the expected drop in prices,” Boetel says.

By | March 25th, 2020|Daily Market Highlights|

Cattle Current Daily—Mar. 25, 2020

Although there was too little negotiated cash fed cattle trade through Tuesday afternoon for AMS to report a trend, signs point to higher prices this week.

For instance, the five-area direct dressed steer and heifer price on Monday was $10 more than Friday at $185/cwt. Wholesale beef values remain elevated. Plus Cattle futures were limit-up again Tuesday, with expanded limits.

Live Cattle futures closed limit-up $4.50.

Except for $5.00 higher in spot, Apr, Feeder Cattle futures closed limit-up $6.75.

Choice boxed beef cutout values were lower on Choice and firm on Select with light to moderate demand and moderate offerings, according to the Agricultural Marketing Service.

Choice boxed beef cutout value was $1.01 lower Tuesday afternoon at $256.31/cwt.; it was $229 at the same time last year. Select was 34¢ higher at $245.48.

Corn futures closed mostly 1¢ to 2¢ higher.

Soybean futures closed mostly 2¢ to 4¢ higher through Aug ‘21, and then mostly unchanged to fractionally higher.

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Major U.S. financial indices rebounded Tuesday, fueled by expectations that Congress was close to passing a massive economic stimulus package.

The Dow Jones Industrial Average closed 2,112 points higher. The S&P 500 closed 209 points higher. The NASDAQ was up 557 points.

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“Disruptions in normal activities due to COVID-19 have produced a surge in at-home food demand. Recent reports indicate a 77% year-over-year increase in grocery meat sales in mid-March,” says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly market comments. “The spike in grocery demand has overwhelmed the retail meat supply chain, resulting in temporary shortages of meat in many grocery stores.  The shortages are due to the tremendous logistical challenges of shifting meat supplies from food service channels to retail grocery channels.”

There is no shortage of meat, of course. Peel points out beef, pork and poultry production was record large in the first quarter and is projected to be record large this year at 109.3 billion lbs., 4.3% more than last year.

“Beef production is projected to be 1.9% higher year over year in 2020, totaling 27.7 billion lbs.,” according to Peel. “Increased beef production is concentrated in the first half of the year. Total steer and heifer slaughter is up 3.9% year over year for the year to date. Steer carcass weights for the year to date are up over 21 lbs. year over year with heifer carcass weights up over 12 lbs. First-quarter beef production is estimated to increase 6.6% over last year.”

Beef in freezers is also 5% more than last year, as of Feb. 29, according to the most recent USDA monthly Cold Storage report. It was 3% more than the previous month.

Frozen pork supplies were up 6% from the previous month and up 7% from last year.

Total red meat supplies in freezers were up 3% from the prior month and up 5% from last year.

Total frozen poultry supplies were slightly more than the previous month, but down 4% from a year earlier.

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Progress continues in implementing the agriculture-related provisions of the U.S.-China Phase One Economic and Trade Agreement, according to Tuesday’s announcement from the U.S. Department of Agriculture (USDA) and the Office of the U.S. Trade Representative (USTR).

Among the recent actions:

*China notified the United States of proposed maximum residue levels for three hormones commonly used in U.S. beef production. This recognition by China of safe and science-based U.S. production methods particularly benefits trade with China in beef, a fast-growing market that imported $8.4 billion worth of beef products in 2019. China also removed all references to age restrictions on the beef and beef products list. For the first time since 2003, U.S. beef producers will have access for nearly all beef products into China. USDA estimates American cattlemen could export up to $1 billion per year under this improved trading environment.

*Both countries signed a regionalization agreement that will allow U.S. poultry exports from unaffected regions of the country to continue, in the event of a detection of highly pathogenic avian influenza or virulent Newcastle disease in a particular region of the United States. This action will help protect the increased access American farmers have gained in China’s poultry market. U.S. poultry exports have the potential to exceed $1 billion per year.

*China updated its list of U.S. facilities eligible to export distillers dried grains with solubles (DDGS). In 2015, U.S. producers exported $1.6 billion worth of DDGS to China. This action, if coupled with the removal of other trade barriers, will allow U.S. exporters to recapture this market.

“These steps show that China is moving in the right direction to implement the Phase One agreement,” says Agriculture Secretary, Sonny Perdue. “We will continue to work with China to ensure full implementation of its commitments and look forward to seeing further improvement and progress as we continue our ongoing bilateral discussions.”

By | March 24th, 2020|Daily Market Highlights|

Cattle Current Daily—Mar. 24, 2020

Although trade was light, Cattle futures closed limit up Monday, higher for the third consecutive session— higher in four of the last five sessions. Support included sky-rocketing wholesale beef values, Tyson’s announcement last week of a one-time support payment for cattle it harvests this week—$5/cwt. on a live basis and $7.94/cwt. in the beef—as well as the friendly Cattle on Feed report. China buying U.S. grain last week also helped.

Live Cattle futures closed limit-up $3.00. At $101.60, spot Live Cattle remains hugely discounted to cash.

Feeder Cattle futures closed limit-up $4.50.

Choice boxed beef cutout values were sharply higher on good demand and heavy offerings.

Choice boxed beef cutout value was $3.57 higher Monday afternoon at $257.32/cwt. Select was $4.97 higher at $245.14.

Corn futures closed mostly fractionally higher to 1¢ higher.

Soybean futures closed 10¢ to 21¢ higher through Jan ‘21, and then 1¢ higher to mostly 2¢ lower.

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Major U.S. financial indices closed lower Monday as the U.S. Senate failed for a second time to agree to legislation for massive economic stimulus, in the wake of COVID-19.

The Dow Jones Industrial Average closed 582 points lower. The S&P 500 closed 67 points lower. The NASDAQ was down 18 points.

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Glynn Tonsor, agricultural economist at Kansas State University estimates economic losses in the cattle industry, due to COVID-19, at $7.98 billion to $9.44 billion, representing two broad approaches for approximating damages for the U.S. cattle sector.

Up front, Tonsor emphasizes the estimates are not to be taken as final, precision estimates, but as a timely broad approximation to offer the industry context.

Tonsor arrived at the $7.98 billion estimate by considering recent price estimates and cattle inventory.

For prices, Tonsor utilized estimates updated last week by the Livestock Marketing Information Center (LMIC).

Compared to January:

LMIC reduced the first-quarter price estimate for fed cattle (1,400 lbs.) by $7 to $117/cwt.; $18 less in the second quarter to $103.50.

LMIC reduced the first-quarter price estimate for feeder cattle (750 lbs.) by $5 to $140.50/cwt.; $23.50 less in the second quarter to $124.50.

LMIC increased the first-quarter price estimate for calves (550 lbs.) by $4 to $170/cwt., but reduced second-quarter expectations by $20 to $149.50.

You can find price estimates for the other quarters in Tonsor’s factsheet.

Bottom line, Tonsor estimates per-head damage for the year at $126 for fed cattle, $98 for feeder cattle, and $58 for calves.

“Moving from damages per head to an economic impact estimate requires an inventory-impacted number,” Tonsor explains. “USDA NASS estimated the total beef cow inventory to be 31.32 million head in their January Cattle report. If we approximate that for every 100 cows we ultimately have 92 offspring sold, this would suggest, for a full calendar year, 28.81 million calves will be sold by the cow-calf sector. Proceeding forward, presuming 2% death loss rates for subsequent sectors, results in 28.24 million feeder cattle and 27.67 million fed cattle being sold, subsequently.”

The other approach Tonsor took, which arrives at $9.44 billion in losses, considers declining Feeder Cattle and Live Cattle futures prices. Again, you can see Tonsor’s path to the calculation in the factsheet.

By | March 23rd, 2020|Daily Market Highlights|

Cattle Current Daily—Mar. 23, 2020

When all was said and done, negotiated cash fed cattle trade last week was steady to $2 higher on a live basis at $110-$112/cwt. and fully steady in the beef at $175.

According to the Texas Cattle Feeders Association on Friday, “Tyson announced this afternoon that for all fed cattle harvested next week, they will make a one-time assistance payment to cattle feeders of $5/cwt. live and $7.94/cwt. dressed.”

Firmer cash prices and wholesale beef values helped Cattle futures extend gains Friday, following the previous session’s limit-up move, despite lower outside markets.

Live Cattle futures closed an average of $1.82 higher, from 60¢ higher to $3.55 higher in spot Apr. Thursday to Thursday, Open Interest declined 46,267 contracts to 285,018, the lowest level since September of 2018.

Feeder Cattle futures closed and average 0f $4.56 higher.

Choice wholesale boxed beef values were sharply higher and Select was lower with light to moderate demand and moderate to heavy offerings.

Choice boxed beef cutout value was $3.88 higher Friday afternoon at $253.75/cwt. Select was 89¢ lower at $240.17.

Corn futures closed 1¢ lower to 1¢ higher.

Soybean futures closed mostly 11¢ to 19¢ higher through Sep ‘21, and then 6¢ to 8¢ higher.

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Coronavirus fears continued to roil equity markets Friday amid another day of volatile trade that left major U.S. financial indices sharply lower. Specific pressure included, the stay-home order issued in New York and softer crude oil prices, as well as CME auctioning the portfolios of Ronin, LLC., a direct clearing firm.

“The firm was unable to meet its capital requirements going forward,” according to a statement from the CME. “Though Ronin is a direct clearing member, it does not handle customer business; and no clients were impacted by the auction.”

The Dow Jones Industrial Average closed 913 points lower. The S&P 500 closed 104 points lower. The NASDAQ was down 271 points.

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The monthly Cattle on Feed report published Friday should be supportive. Numbers came in about even with pre-report expectations.

February placements for feedlots with 1,000 head or more capacity were 1.71 million head, which was 7.91% less (-147,000 head) than the previous year. In terms of placement weights, 38.28% went on feed weighing 699 lbs. or less, 51.49% weighing 700-899 lbs. and 10.23% weighing 900 lbs. or more.

Marketings in February of 1.77 million head were 5.47% more (+92,000 head) than the previous year.

The on-feed inventory Mar. 1 of 11.81 million head was 0.18% more (+21,000 head), compared to a year earlier.

By | March 21st, 2020|Daily Market Highlights|

Cattle Current Daily—Mar. 20, 2020

Cattle futures closed limit-up Thursday, supported by higher outside markets, the dramatic rise in wholesale beef values for the week, as well as firming cash fed cattle prices.

Live Cattle futures closed limit-up $3.00 across the board.

Feeder Cattle futures closed limit-up $4.50 across the board.

Incidentally, analysts surveyed by Urner Barry and reported in the Daily Livestock Report estimate feedlot placements in February to be 7.6% less than a year earlier, marketings in February to be 5.6% more and cattle on feed Mar. 1 to be 0.2% more. The monthly USDA Cattle on Feed report is scheduled for release Friday afternoon.

Wholesale beef values continued higher Thursday as retailers continue to re-stock.

Choice boxed beef cutout value was $2.63 higher Thursday afternoon at $249.87/cwt. Select was $2.56 higher at $241.06. Week to week, Choice was up $43.86 and Select was up $43.18.

Corn futures closed 7¢ to 10¢ higher through Sep ‘20 and then mostly fractionally higher to 4¢ higher.

Soybean futures closed 13¢ to 17¢ higher through near Aug, 3¢ to 9¢ higher through the next three contracts and then mostly 4¢ lower.

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Major U.S. financial indices closed higher Thursday, amid another day of volatile swings. Support included a COVID-19 stimulus package announced by the European Central Bank, as well as reports the U.S. Senate would soon release a third domestic relief package. Energy stocks also rebounded some.

West Texas Intermediate Crude Oil futures on the CME closed $4.33 to $4.85 higher through the front six contracts.

The Dow Jones Industrial Average closed 188 points higher. The S&P 500 closed 11 points higher. The NASDAQ was up 160 points.

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The outlook for the U.S. farm economy depends on the implementation of new trade agreements and the evolution of animal and human disease outbreaks, according to the latest analysis of national and global agricultural trends from the University of Missouri (MU).

Economists with MU’s Food and Agricultural Policy Research Institute (FAPRI) and the MU Agricultural Markets and Policy (AMAP) team release the annual U.S. Agricultural Market Outlook (USAMO) report each spring. The baseline projections for agricultural and biofuel markets were prepared using market information available in January.

“Macroeconomic assumptions are based on January forecasts by IHS Markit, which suggested moderate growth in the U.S. and global economies at that time,” says Patrick Westhoff, FAPRI director. “Those forecasts were prepared before much was known about the severity of the coronavirus (COVID-19) outbreak and before recent declines in stock market prices and interest rates.”

This year’s USAMO baseline assumes that China’s retaliatory tariffs on U.S. farm products remain in place and limit bilateral trade. FAPRI economists also explored one possible outcome of the phase-one trade deal, which assumes U.S. exports are exempt from those retaliatory tariffs and that China takes other steps to facilitate trade between the two countries.

Highlights of a baseline assuming continued trade friction with China

Cattle prices increase beginning in 2020, as exports increase and cattle inventories decline after five years of expansion.

African swine fever (ASF) continues to have large impacts on global commodity markets. China’s pork production has declined sharply and only rebounds after 2021. This provides some opportunity for increased meat imports by China, but reduces global demand for soybean meal and other feeds.

Projected 2020 corn area planted is 92.9 million acres. With trend yields, 2020 corn production increases to 15 billion bu., putting downward pressure on corn prices, which are projected to average $3.57/bu. in 2020-21.

Projected soybean area increases by more than 10 million acres to 86.5 million acres in 2020. The increase in production drops projected soybean prices to $8.48/bu. for the 2020-21 crop.

By | March 19th, 2020|Daily Market Highlights|

Cattle Current Daily—Mar. 19, 2020

Negotiated cash fed cattle trade continued Wednesday. Live trade in the western Corn Belt was $2-$5 higher than last week at $110-$112/cwt. Dressed trade was steady at $175. Although too few to trend through the afternoon, live trade in the Southern Plains was mostly steady to $3 lower at $110-$113. In Nebraska, live prices were steady at $110; steady to $5 lower in the beef at $170-$175.

Cattle feeders offered 4,680 head in the weekly Fed Cattle Exchange auction Wednesday. Of those, 1,813 head sold: 1,415 head for delivery at 1-9 days brought an average weighted price of $112.76/cwt.; 398 head for delivery at 1-17 days brought an average weighted price of $111.00. Offerings were from the Southern Plains, Nebraska and Colorado.

Cattle futures started strong Wednesday and then turned sharply lower as equity markets tanked, basically losing what was gained in the previous session.

Live Cattle futures closed an average of $3.78 lower, from $2.55 lower at the back to $4.40 lower.

Feeder Cattle futures closed an average of $3.49 lower, from 97¢ lower in spot Mar to limit-down $4.50.

Wholesale beef values were sharply higher again, with good demand and heavy offerings.

Choice boxed beef cutout value was $7.31 higher Wednesday afternoon at $247.24/cwt. Select was $9.18 higher at $238.50.

Corn futures closed 5¢ to 8¢ lower through Jly ‘21 and then mostly fractionally lower to 1¢ lower.

Soybean futures closed fractionally higher to 1¢ higher through Sep ’20 and then fractionally lower to 3¢ lower.

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Major U.S. financial indices closed sharply lower Wednesday, giving back most of the gains from the previous session, as investors fretted over the lack of clarity regarding the COVID-19 stimulus package being prepared by Congress.

West Texas Intermediate Crude Oil futures collapsed $5.14 to $6.58 lower through the front six contracts. Spot Apr closed at $20.37. That’s the lowest level in nearly two decades, according to various sources.

The Dow Jones Industrial Average closed 1,338 points lower. The S&P 500 closed 131 points lower. The NASDAQ was down 344 points.

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“Faltering fed cattle prices, due to coronavirus developments, have ratcheted down profitability prospects for non-hedged animals to be closed out in the coming months. Feeder cattle prices may come under increased pressure. The lack of projected profitability for fed cattle to be sold this summer (breakeven sale prices above what summer Live Cattle futures are offering), is likely to be a factor dampening placements of animals into feedlots,” say analysts with the Livestock Marketing Information Center (LMIC), in the latest Livestock Monitor.

LMIC has estimated monthly cattle feeding returns since the mid-1970s. Those estimates assume feeding-out a 750-lb. steer in a commercial Southern Plains feedlot and include all costs of production. The estimates are not survey-based and presume normal weather conditions. Cash prices are used, meaning that fed cattle prices and feedstuff costs are not hedged.

“In 2019, monthly returns averaged about $9.50 per steer, ranging from $180.92 for an animal sold in December down to -$152.85 for September. Over the prior five years (2014-18), the annual average was about $23.00 per steer. The 10-year per animal average was about -$7.00,” say LMIC analysts. “For steers sold during January, the LMIC estimated profitability at $150.00 to $151.00 per head. Just over a month ago, the LMIC projected that the February number would come in at $136.00 to $140.00 per steer. If the cattle were not hedged, that turned out to be optimistic. Hedged animals will return excellent profits through June sale dates…For steers (750 lbs.) placed on feed in February, which will have a sale date of August, the breakeven price based on current feedstuff costs is $109 to 111/cwt.”

By | March 18th, 2020|Daily Market Highlights|

Cattle Current Daily—Mar. 18, 2020

Although too few transactions to trend, there were some live negotiated cash fed cattle sales in Nebraska on Tuesday at $110/cwt. on a live basis and at $170-$175 in the beef. That was $5 higher than Monday on a live basis and steady with last week’s trade. Dressed sales were steady to $5 higher than on Monday; dressed sales last week were at mostly $175.

Elsewhere, established trends so far this week occurred on Monday, with live sales in the Texas Panhandle steady to $5 lower than last week at $105-$110 and $10 lower in Kansas at $100.

But, Cattle futures rallied Tuesday, finally. Whether a technical gasp or a step toward a turning point, harsh volatility will likely continue. Support included brighter cash prospects, soaring wholesale beef values and the bounce in equity markets, following the steep losses in the previous session.

Live Cattle futures closed an average of $3.44 higher, from $1.77 higher at the back to $4.50 higher in the front three contracts.

Feeder Cattle futures closed an average of $3.37 higher.

Wholesale beef values rocketed higher again Tuesday, with good demand and heavy offerings.

Choice boxed beef cutout value was $15.77 higher Tuesday afternoon at $239.93/cwt. Select was $12.61 higher at $229.32. Over the last two days, Choice increased $31.99 and Select was up $27.34.

Corn futures closed 6¢ to 10¢ lower in the front three contracts and then mostly 2¢ to 3¢ lower.

Other than fractionally higher to 2¢ higher in the front three contracts, Soybean futures closed mostly 5¢ lower.

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At least for a day, major U.S. financial indices closed higher, recovering a portion of the previous day’s washout, as the Federal government pledged more financial support to citizens and businesses, in the wake of coronavirus.

The Dow Jones Industrial Average closed 1,048 points higher. The S&P 500 closed 143 points higher. The NASDAQ was up 430 points.

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Response to COVID-19 continues to force everyone in the cattle and beef business to ponder potential impacts on how they operate.

For instance, according to the Livestock Marketing Association (LMA) Tuesday, “With respect to public attendance at livestock auction markets, LMA is aware that many states and areas are enforcing varied crowd size limits and have mandated restrictions on operation of cafés or other food services. LMA is working with markets on a case-by-case basis to evaluate all parameters and impacts on their sales and strongly suggests markets develop contingency plans accordingly.”

Strategies LMA provided auction market members include:

  • Familiarize yourself with and follow rapidly changing local and state rules regarding assembly of crowds.
  • Work with café operators to follow location-specific guidance, which may include closure or offering to-go service only.
  • If you are in a situation where you need to limit crowd size, then request that consignors deliver livestock and return home rather than remaining at the facility.
  • Offer consignors flexibility in picking up their checks, such as delivery or pickup from their vehicle in the parking lot.
  • Instruct any employee or visitor exhibiting symptoms of illness to remain home and request that any employee or visitor who is a member of a population of heightened vulnerability to consider avoiding areas where people are gathering.
  • Evaluate all options to utilize web broadcast or phone bidding.

As for USDA services, according to a statement Tuesday from the Food Safety and Inspection Service, Animal and Plant Health Inspection Service and Agricultural Marketing Service:

“In this time of much uncertainty, we know that many of you have questions about how the department will continue to ensure that grading and inspection personnel are available. We have all seen how consumers have reacted to the evolving coronavirus situation and how important access to food is to a sense of safety and wellbeing. It is more important than ever that we assure the American public that government and industry will take all steps necessary to ensure continued access to safe and wholesome USDA-inspected products.

“These agencies are prepared to utilize their authority and all administrative means and flexibilities to address staffing considerations. Field personnel will be working closely with establishment management and state and local health authorities to handle situations as they arise in your community. As always, communication between industry and government will be key. We are all relying on early and frequent communication with one another to overcome challenges as they arise.”

By | March 17th, 2020|Daily Market Highlights|

Cattle Current Daily—Mar. 17, 2020

Markets remain firmly entrenched in the COVID-19 panic that is forcing widespread disruptions to how people go about their business, while slowing economic wheels.

Live Cattle futures showed signs of life Monday, with surging wholesale beef values, but sank hard again, as did Feeder Cattle.

Live Cattle futures closed an average of $3.73 lower.

Feeder Cattle futures closed an average of $4.47 lower, limit-down in all but one contract.

Wholesale beef values rocketed higher Monday, with heavy offerings, as retailers replenished supplies windrowed by consumers stocking up.  There was also likely some defensive buying against potential challenges in the supply chain.

Choice boxed beef cutout value was $16.22 higher Monday afternoon at $224.36/cwt. Select was $14.73 higher at $216.71.

Corn futures closed 11¢ and 10¢ lower in the front two contracts and then mostly 4¢ to 6¢ lower.

Soybean futures closed 18¢ to 27¢ lower through Jly ’21 and then mostly 14¢ to 16¢ lower.

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Major U.S. financial indices on Monday gave back everything recovered in the previous session, despite aggressive action by the Fed over the weekend and the economic support previously announced by the White House.

West Texas Intermediate Crude Oil futures on the CME closed $2.76 to $3.03 lower through the front six contracts, down to $28.70 in spot Apr.

The Dow Jones Industrial Average closed 2,997 points lower. The S&P 500 closed 324 points lower. The NASDAQ was down 970 points.

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“The cattle and beef industry, along with the rest of the U.S. and global economy is in uncharted waters with the coronavirus pandemic. There are many unknowns about the timing, severity and aftermath of the disease,” says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly market comments. “For the beef industry, there are longer term questions about overall impact on domestic and international beef demand, with questions about a U.S. and global recession looming large. In the short run, the actions needed to manage the epidemiology of COVID-19 is having significant impacts on beef supply chains.”

Peel explains beef products flow through three primary market channels: retail (grocery), food service and exports; each using separate supply chains. Domestically, based on USDA data, he says food at home, which approximately matches retail grocery, represents about 46% of total food expenditures in the U.S. Food away from home represents about 54% of total food expenditures. 

“The immediate response to COVID-19 is to limit travel, gatherings and public activities. Reduced travel, fewer restaurant visits and school closures all impact the HRI sector (hotels, restaurants, institutions),” Peel explains. “This implies a dramatic shift of food from the food service (HRI) sector into retail grocery sales. This represents huge demands on grocery store sales and the logistics of supplying retail stores. For beef, there is immediate demand for more processing, packaging and shipping of beef for retail sale and less processing and shipping of meat through food service distribution channels.”

Moreover, Peel notes each marketing channel utilizes a different mix of beef products.

“There will be a variety of impacts on markets for specific beef products,” Peel explains. “For example, increased demand for ground beef has resulted in local shortages of product at grocery stores, while reduced restaurant demand may result in weaker middle meat sales. We can expect significant disruptions and stress on beef supply chains given the consumption changes associated with requirements to control COVID-19.”

Should the labor forces of beef packing, processing, or shipping be directly impacted by COVID-19, Peel says supply chain disruptions could be more significant.

By | March 16th, 2020|Daily Market Highlights|

Cattle Current Daily—Mar. 16, 2020

Note: Cattle Current is dependent on a couple other businesses to house the Cattle Current website, edit the podcast and the like. If Cattle Current goes missing in the days/weeks ahead, it will likely be due to COVID-19 disrupting one of those businesses. If such a disruption occurs, we’ll get back on schedule as quickly as possible.

Negotiated cash fed cattle trade was established at $110/cwt. on a live basis last week, which was $3 lower in the Southern Plains and Nebraska; $2-$5 lower in the western Corn Belt. Dressed sales were $5-$7 lower at $175-$176. There were trades at lower money later in the week, but too few to trend.

Cattle futures attempted to follow equity markets higher early on Friday, but ended mostly expanded limit-down, amid chatter about the potential of coronavirus to disrupt packing plant operations. I could find no confirmed reports of closures or reduced schedules for the major packers, but the vulnerability is a logical concern, given cattle numbers and strained packing capacity. 

Live Cattle futures closed an average of $4.38 lower. That’s an average of $7.37 lower in the last two sessions.

Feeder Cattle futures closed an average of $6.51 lower. That’s an average of $11.01 lower in the previous two sessions.

Wholesale beef values were sharply higher on good demand and heavy offerings, according to the Agricultural Marketing Service.

Choice boxed beef cutout value was $2.13 higher Friday afternoon at $2018.14/cwt. Select was $4.10 higher at $201.98. Although food service demand will likely suffer for a time as more consumers stay at home, retail demand is likely benefiting from those same consumers stocking up.

Corn futures closed mostly 1¢ higher.

Soybean futures closed 8¢ to 10¢ lower through Jan ’21 and then mostly 3¢ lower.

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Major U.S. financial indices on Friday grappled back a major chunk of the previous session’s steep losses. Optimism was fueled by a number of moves by the Federal government to battle COVID-19 and its economic impact:

  • President Trump instructed the Energy Department to purchase oil for the U.S. strategic petroleum reserve, to help stabilize and boost energy prices.
  • The White House announced more coronavirus tests would be available this week.
  • The U.S. House of Representatives was on its way to passing the Families First Coronavirus Response Act (H.R. 6201), a legislative package supported by President Trump. Among other things, it includes free coronavirus testing, an emergency paid sick days program, senior nutritional assistance and SNAP flexibility for low-income jobless workers. The legislation passed Saturday morning.

The Dow Jones Industrial Average closed 1,985 points higher. The S&P 500 closed 230 points higher. The NASDAQ was up 673 points.

On Sunday, the Federal Open Market Committee (FOMC) lowered the target range for the federal funds rate to 0.00% to 0.25%.

“The effects of the coronavirus will weigh on economic activity in the near term and pose risks to the economic outlook,” according to an FOMC statement. “The Committee expects to maintain this target range until it is confident that the economy has weathered recent events and is on track to achieve its maximum employment and price stability goals. This action will help support economic activity, strong labor market conditions, and inflation returning to the Committee’s symmetric 2% objective.”

The FOMC statement also notes, based on available economic data, the U.S. economy enters the days of COVID-19 on solid footing with strong job gains, low unemployment and increasing economic activity.

“To support the smooth functioning of markets for Treasury securities and agency mortgage-backed securities that are central to the flow of credit to households and businesses, over coming months the Committee will increase its holdings of Treasury securities by at least $500 billion and its holdings of agency mortgage-backed securities by at least $200 billion,” according to the statement.

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Gauging the ultimate impact of COVID-19 on the cattle business, much less the U.S. and global economies is impossible at this stage. While you can find some similarities, there appears to be no direct parallel between this market shock and black swan events impacting cattle markets in the past.

Best as anyone can tell, COVID-19 should be temporary, at least for this year. As the director general of the World Health Organization pointed out earlier in the week, more than 90% of reported global coronavirus cases were in four countries at the time. The epidemic was declining significantly in two of those, including in China, the epicenter of the pandemic.

It seems unlikely that overall economic impact on the U.S. economy will be as severe or as long lasting as what followed the financial and liquidity mess that spawned the Great Recession.

For one thing, this isn’t a financial problem, but a biologic one impacting supply chains and demand. For another, the U.S. and many central banks around the world are aggressively taking action to minimize the economic impact, in concert, in some cases. Besides which, the nation’s finances are much stronger by about any measure, compared to those days heading into the Great Recession.

At some stage, when it appears the worst is over, it’s easy to imagine a sharp market bounce in response to less uncertainty and pent up demand. For instance, even before the epidemic slows in the U.S., international demand for U.S. beef could be on the rise as recovering countries get back to what will then be a new form of business as usual.

In the meantime, wholesale beef values continue to hold together domestically, as consumers shift toward eating more meals at home.

“Most markets in the cattle and beef complex are moving contra-seasonally, due to world heath issues and the economic slowdown that comes with it,” says Andrew P. Griffith, agricultural economist at the University of Tennessee, in his weekly market comments. “When relief finally comes is anyone’s guess, but there should be just as strong of profits on the other side of this market as there are losses in the current environment.”

By | March 15th, 2020|Daily Market Highlights|

Cattle Current Daily—Mar. 13, 2020

Equities and futures markets plunged deeper Thursday amid a growing list of event cancellations, altered business schedules and continued widespread panic related to coronavirus and its impact on the domestic and global economies.

Except for $2.97 lower in the back two contracts, Live Cattle futures closed limit-down $3.00.

Feeder Cattle futures closed limit-down $4.50 across the board. 

Wholesale beef values were lower on Choice and higher on Select with light to moderate demand and moderate to heavy offerings, according to the Agricultural Marketing Service.

Choice boxed beef cutout value was $1.16 lower Thursday afternoon at $206.01/cwt. Select was $1.39 higher at $197.88.

Corn futures closed mostly 3¢ to 6¢ lower.

Soybean futures closed mostly 10¢ to 14¢ lower.

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Major U.S. financial indices had their worst day since 1987, according to market pundits.

The Dow Jones Industrial Average closed 2,352 points lower. The S&P 500 closed 260 points lower. The NASDAQ was down 750 points. So, over the last two sessions, the Dow Jones Industrial Average is down 3,816 points, the S&P 500 is down 400 points and the NASDAQ is 1,142 points lower.

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Although COVID-19 and the ensuing panic are upending markets, Stephen Koontz, agricultural economist at Colorado State University, noted earlier in the week that signs of slowing domestic and global economic growth were already increasing.

The broader U.S. macro economy entered the current debacle in reasonably good shape, with healthy levels of employment and consumer spending. At the same time, in the most recent issue of In the Cattle Markets, Koontz points out business investment was relatively weak and had been since it became clear that trade issues and their impact on the global economy would continue to linger.

Koontz also notes government spending stimulus was due to run its course this year, while any economic growth from tax cuts appeared focused in subsectors rather than the economy as a whole.

Globally, Koontz explains macroeconomics were much weaker than in the U.S. For instance, he says economic growth for European and Asian economies was modestly to substantially weaker year over year.

Cattle market headwinds were also swirling ahead of coronavirus.

“Protein balance sheets have clearly shown and continue to show a problem for the first quarter of 2020 for beef, and for much of the year for pork and poultry. Numbers of animals and carcass weights are higher through the first quarter and have the potential to be higher for the rest of the year for the competing meats,” Koontz explains. “Downward pressures on protein prices required substantial exports to not have much weaker prices than the prior year. Supplies have materialized and exports have not. Global economic uncertainty adds to this. For cattle markets, price pressure will persist through April and possibly into May. Placements through the last half of 2019 were delayed by the slaughter plant fire. October and November placements were strong. On-feed numbers and marketings will be relatively heavy until the summer. And slaughter weights are substantially above last year…

“These factors, and the broader macroeconomic concerns, suggest persistent weakness in cattle prices through the spring. And, until the dynamics of the health crisis are more certain, there will be considerable volatility.”

By | March 12th, 2020|Daily Market Highlights|

Cattle Current Daily—Mar. 12, 2020

Negotiated cash fed cattle traded in the Southern Plains and Nebraska at $110/cwt. on a live basis Monday, which was $3 lower; $2-$5 lower in the western Corn Belt at the same money. Early dressed sales were $5-$7 lower at $175-$176.

Three lots—460 head—were offered in the weekly Fed Cattle Exchange auction. All sold for an average weighted price of $110/cwt., with delivery of 1-9 days for 384 head; 1-17 days for the remainder.

Cattle futures reversed directions again Wednesday, closing mostly limit-down and subsumed once again by coronavirus fears and sharply lower outside markets.

Live Cattle futures closed an average of $2.84 lower.

Feeder Cattle futures closed an average of $4.48 lower. 

Wholesale beef values were steady on Choice and lower on Select with light to moderate demand and moderate offerings, according to the Agricultural Marketing Service.

Choice boxed beef cutout value was 8¢ higher Wednesday afternoon at $207.17/cwt. Select was $2.22 lower at $196.49.

Corn futures closed mostly 2¢ to 4¢ lower.

Soybean futures closed 3¢ to 5¢ lower.

Incidentally, CME Group announced Wednesday evening that it will close its Chicago trading floor as of the close of business this Friday the 13th, as a precaution to reduce large gatherings that can contribute to the spread of coronavirus, in line with the advice of medical professionals. All products will continue to trade on CME Globex as they do today.

That organization joins an expanding list of companies, groups and sports leagues cancelling, suspending and altering. You may have heard the Houston Stock Show and Rodeo cancelled the remainder of this year’s run Wednesday afternoon, with 11 days left; the NCAA also announced attendance at the upcoming March Madness basketball tournaments for both women and men will be limited to players, families and essential staff…the list goes on.

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Major U.S. financial indices tanked on Wednesday after the World Health Organization (WHO) declared COVID-19 a global pandemic.

In a Wednesday press briefing, Dr. Tedros Adhanom Ghebreyesus, WHO director general said, “We’re deeply concerned, both by the alarming level and spread, and by the alarming levels of inaction. We have, therefore, made the assessment that COVID-19 can be characterized as a pandemic. Pandemic is not a word to be used lightly or carelessly. It’s a word, if misused, can cause unreasonable fear or unjustifiable acceptance that the fight is over, leading to unnecessary suffering and death.”

At the time, there were 118,000 cases of COVID-19 in 114 countries and 4,291 fatalities.

According to Dr. Tedros more than 90% of current COVID-19 cases are in four countries, with the epidemic declining significantly in two of those: China and Korea. As of noon Wednesday, the Center for Disease Control and Prevention cited 938 U.S. cases, in 38 states and the District of Columbia; 29 deaths.

The Dow Jones Industrial Average closed 1,464 points lower. The S&P 500 closed 140 points lower. The NASDAQ was down 392 points.

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USDA lowered expected fed steer prices (five-area direct) for this year by $2.50 from the previous month to $114.50/cwt., in the latest World Agricultural Supply and Demand Estimates (WASDE). That’s based on current price weakness, as well as increased expected beef production.

Compared to the previous month, analysts with USDA’s Economic Research Service (ERS) increased anticipated beef production this year by 220 million lbs. to 27.7 billion lbs., which would be 549 million lbs. more (+2.02%) than last year.

Total red meat and poultry production for 2020 was estimated 647 million lbs. more than the previous month at 109.43 billion lbs. That would be 4.17 billion lbs. more (+3.96%) than in 2019.

ERS pegs fed steer prices at $118 in the first quarter, $114 in the second quarter, $111 in the third quarter and $114 in the fourth quarter.

“The 2020 beef import forecast is raised from last month on higher expected imports of processing grade beef, while the export forecast is reduced on weaker anticipated demand in several markets,” say ERS analysts.

Among other WASDE highlights:

U.S. corn supply and use outlook for 2019-20 was unchanged. The season-average corn price received by producers was lowered 5¢ to $3.80/bu. based on observed prices to date.

U.S. soybean supply and use projections for 2019-20 were mostly unchanged. The U.S. season-average soybean price is projected at $8.70/bu., down 5¢. The soybean oil price is projected at 31.5¢/lb., down 2¢. Soybean meal prices are unchanged at $305/short ton.

U.S. wheat supply and demand outlook was unchanged. The projected season-average farm price is also unchanged at $4.55/bu.

By | March 11th, 2020|Daily Market Highlights|

Cattle Current—Mar. 11, 2020

Cattle futures finally found some traction Tuesday, gaining back a little better than half of the previous day’s sharp losses, once gain following the same trajectory as equity markets.

Live Cattle futures closed an average of $1.79 higher ($1.10 higher to $2.60 higher in spot Apr). 

Feeder Cattle futures closed an average of $2.51 higher ($1.55 higher in spot Mar to $3.10 higher). 

Wholesale beef values were weak on Choice and sharply lower on Select with light to moderate demand and offerings, according to the Agricultural Marketing Service.

Choice boxed beef cutout value was 27¢ lower Tuesday afternoon at $207.09/cwt. Select was $3.61 lower at $198.71.

Corn futures closed mostly 3¢ to 4¢ higher through Jly ’21 and then 1¢ to 2¢ higher.

Soybean futures closed mostly 4¢ to 7¢ higher.

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Major U.S. financial indices closed sharply higher Tuesday after a whipsaw ride and buoyed by chatter out of the White House about economic stimulus to bolster the domestic economy in the wake of coronavirus.

It also helped that crude oil recovered some of the previous day’s sharp selloff.

West Texas Intermediate Crude Oil futures on the CME closed $2.90 to $3.23 higher through the front six contracts.

The Dow Jones Industrial Average closed 1,167 points higher. The S&P 500 closed 135 points higher. The NASDAQ was up 393 points.

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U.S. beef exports in January were 2.5% more than a year earlier at 107,347 metric tons (mt) and export value was 5% more at $672.7 million according to data released by USDA and compiled by the U.S. Meat Export Federation (USMEF).

In fact, beef muscle cut exports were the highest ever for the month of January at 81,342 mt, up 4% from a year ago, while muscle cut value increased 5% to $589.2 million.

Export value per head of fed slaughter was $302.93, up 3% from a year ago.

USMEF President and CEO Dan Halstrom notes coronavirus had an impact on red meat exports, which will likely be more evident in February and March data. At the same time, he says a number of supply and demand fundamentals and market access improvements underpinned continued strong export volumes.

“The first quarantine actions in China were taken in late January and the calendar had turned to February before coronavirus became a major health concern in countries such as South Korea and Japan,” Halstrom explains. “But despite logistical challenges, a severe decline in tourism and a notable impact on sit-down dining, overall demand for red meat in these markets is quite resilient. Retail meat sales remained strong and both retailers and restaurateurs are utilizing e-commerce and delivery services at unprecedented levels. While it’s definitely a challenging situation, the Asian food industry is adapting to these conditions and finding creative ways to accommodate consumers.”

Also positive for beef is the fact that U.S. pork exports in January were 36% higher year over year at 273,603 mt, while pork export value was 50% higher at $738.7 million—the second highest levels on record for both volume and value.

Pork exports to China/Hong Kong led the way: 263% more for volume and 361% more for value at $245.3 million.

Pork exports to Mexico, which were hampered by retaliatory duties in the first five months of 2019, increased 6% in volume and jumped 40% in value to $134.7 million.

“The January data really underscore the difficult situation U.S. pork was facing in Mexico a year ago,” Halstrom explains. “Exporters kept much of the volume moving, but the U.S. industry absorbed most of the 20% duty in the form of lower prices. With duty-free access restored and the U.S.-Mexico-Canada Agreement moving toward implementation, we look forward to a continued rebound in Mexico’s demand for U.S. pork.”

By | March 10th, 2020|Daily Market Highlights|

Cattle Current Daily—Mar. 10, 2020

The weekly weighted average five-area direct price for fed steers was $1.68 lower on a live basis last week at $113.17/cwt. Steer prices in the beef were $3.98 lower at $180.80.

There were too few transactions to trend negotiated cash fed cattle in any region on Monday, but early sales were decidedly pessimistic with some live trade in Nebraska and the western Corn Belt at $110/cwt.; early dressed sales at $175.

Cattle futures started the week limit down and near limit-down as equity markets plunged amid continued uncertainty about COVID-19, coupled with the outbreak of an oil price war over the weekend that sent crude oil prices into free-fall.

Live Cattle futures closed an average of $2.89 lower.

Feeder Cattle futures closed limit-down $4.50 across the board.

Wholesale beef values were generally steady on light demand and offerings, according to the Agricultural Marketing Service.

Choice boxed beef cutout value was 11¢ lower Monday afternoon at $207.36/cwt. Select was 25¢ lower at $202.32.

Corn futures closed 2¢ to 5¢ lower.

Soybean futures closed mostly 15¢ to 21¢ lower.

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Major U.S. financial indices plunged Monday, to their lowest levels since early 2019, fueled by the continued spread of COVID-19 and the panic it spawns, as well as an oil price war.

The simple version goes something like this: Saudi Arabia and most of its OPEC allies wanted to cut oil production in an effort to stabilize oil prices, which were losing significant ground due to the COVID-19-slowed global economy. Russia said no, so Saudi Arabia set about offering oil at lower prices. As oil prices plummet, so does the economic health of companies tied to the energy sector.

Crude Oil futures—West Texas Intermediate on the CME—closed $8.98 to $10.15 lower through the front six contracts. Spot Apr closed $10.15 lower (-24.59%) than the previous session and $15.62 lower (-33.4%) week to week.

The Dow Jones Industrial Average closed 2,013 points lower. The S&P 500 closed 225 points lower. The NASDAQ was down 624 points.

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Although it’s too soon to tell if COVID-19 is impacting beef demand, or to what degree, Derrell Peel, Extension livestock marketing specialist at Oklahoma State University says it’s certainly possible there are negative impacts, especially where exports are concerned.

“There are a multitude of market factors to sort out including: new trade agreements, macroeconomic changes (stock market, interest rates, etc.), exchange rates, African Swine Fever, and others that will make it more difficult to determine the more direct impacts of COVID-19 on international and domestic beef markets,” Peel says. 

In the meantime, there has been little seasonal improvement to wholesale beef prices.

Compared to the prior year, for Choice, Peel says rib primal prices last week were 10.4% less, loin values were 10.8% less, brisket values were 13.8% less, chuck values were down 7% and rounds were 1.3% less. He adds Select primal values are also lower year over year.

“Weakness in boxed beef prices does not necessarily mean that beef demand is lower,” Peel says. “Beef production is up 5.1% year over year for the first eight weeks of 2020. Beef prices would normally be pressured with higher beef production even with stable demand.” 

By | March 9th, 2020|Daily Market Highlights|

Cattle Current Daily—Mar. 9, 2020

Negotiated cash fed cattle trade ended up $2 lower on a live basis last week in Nebraska and the Southern Plains at $113/cwt. It was $1 higher to $2 lower in the western Corn Belt at $113-$115. Dressed trade was $5 lower in Nebraska at $180-$182; steady to $5 lower at the same money in the western Corn Belt.

Cattle futures dropped like a rock again Friday.

Live Cattle futures closed an average of $2.42 lower ($1.82 lower at the back to $2.90 lower in spot Apr).

Spot Apr Live Cattle closed at $105.75 on Friday. That’s $22.20 less (-17.35%) than the recent high of $127.95 Jan. 10 and lower than the $110.17 shortly after the Tyson plant fire.

Feeder Cattle futures closed an average of $3.36 lower.

Spot Mar Feeder Cattle closed at $130.70 on Friday, which was $16.75 less (-11.36%) than the recent high Jan. 10, but still slightly higher than the first week of September.

Wholesale beef values were steady on Choice and higher on Select with moderate to fairly good demand and light to moderate offerings, according to the Agricultural Marketing Service.

Choice boxed beef cutout value was 22¢ higher Friday afternoon at $207.47/cwt. Select was $1.51 higher at $202.57.

Corn futures closed 1¢ to 7¢ lower through May ’21 and then fractionally higher to 1¢ higher.

Soybean futures closed 2¢ to 5¢ lower through Jan ’21 and then mostly 2¢ to 3¢ higher.

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Major U.S. financial indices continued to extend losses Friday as the number of COVID-19 cases and deaths escalated in the U.S. and around the world.

That was despite a U.S. employment report that was significantly more positive than the trade expected.

Total nonfarm payroll employment rose by 273,000 in February, according to the U.S. Bureau of Labor Statistics. The unemployment rate was little changed at 3.5%. Average hourly earnings for all employees on private nonfarm payrolls in February increased by 9¢ to $28.52. Over the past 12 months, average hourly earnings increased by 3.0%.

The Dow Jones Industrial Average closed 256 points lower. The S&P 500 closed 51 points lower. The NASDAQ was down 162 points.

Crude Oil futures—West Texas Intermediate on the CME—closed $3.90 to $4.62 lower through the front six contracts. Those contracts were an average of $11.48 lower over the past two weeks.

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Although there’s no way to estimate the eventual long-term economic implications of COVID-19, Aaron Smith, crop marketing specialist at the University of Tennessee suggests a couple of areas that bear watching.

“First, the disruption to global markets and consequently exports of agricultural products may be substantial and could get worse,” says Smith, in his weekly market comments. “For agricultural commodities and products, both logistical issues and economic activity are at the forefront of trade issues. Getting vessels loaded or unloaded at ports can be problematic (both domestically and internationally). For example, there can be challenges with refrigeration units as a limited number of places to “plug in” large containers are available at importing ports. This could create issues with unloading ships and may result in perishable cargos being rendered unusable. From an economic activity standpoint, the restrictions to travel and the quarantining of some cities/regions reduces consumer spending (affecting economic growth/GDP) as dollars are not circulated in economies and thus impact demand for agricultural products. This is an oversimplification of very complex economic systems, but it is worthwhile to consider the short and long-term implications on US agricultural exports.”

Further, Smith says securing agricultural inputs produced in China could become a challenge for the upcoming planting season.

“The longer logistical disruptions continue, the greater the strain could be on domestic supplies of certain agricultural (and non-agricultural) inputs. This also may have longer term consequences as large multinational companies evaluate supply chains and risks,” Smith says.

By | March 8th, 2020|Daily Market Highlights|

Cattle Current Daily—March 6, 2020

Negotiated cash fed cattle trade continued $2 less than last week on Thursday at $113/cwt. in the Southern Plains and Nebraska. Although too few to trend there were some early dressed sales in Nebraska at $182, which was $3-$5 less than the previous week.

Cattle futures followed outside markets lower.

Live Cattle futures closed an average of 93¢ lower (40¢ lower to $2.62 lower in spot Apr).

Feeder Cattle futures closed an average of $1.87 lower ($1.70 to $2.77 lower).

Wholesale beef values were firm on Choice and weak on Select with light to moderate demand and offerings, according to the Agricultural Marketing Service.

Choice boxed beef cutout value was 43¢ higher Thursday afternoon at $207.25/cwt. Select was 45¢ lower at $201.06.

Carcass weights continue heavier year over year, according to USDA’s latest Actual Slaughter Under Federal Inspection report for the week ending Feb. 22.

The average dressed steer weight was 900 lbs., which was 26 lbs. more the same week a year earlier. The average dressed heifer weight was 13 lbs. more than a year earlier at 831 lbs. Week to week, dressed steer and heifer weights were 5 lbs. and 2 lbs. lighter, respectively.

Corn futures closed mostly 2¢ lower.

Soybean futures closed mostly 8¢ to 10¢ lower.

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Major U.S. financial indices dove South Thursday, driven once again by fears about coronavirus.

The Dow Jones Industrial Average closed 969 points lower. The S&P 500 closed 106 points lower. The NASDAQ was down 279 points.

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The U.S. inventory of all cattle and calves started the year 391,400 head fewer (-0.41%) than a year earlier at 94.41 million head. There were 374,000 fewer beef cows (-1.18%) at 31.32 million, according to the Jan. 1 Cattle report.

Herd contraction north of the border was more significant, according to USDA’s United States and Canadian Cattle and Sheep report published Thursday.

All cattle and calves in Canada Jan. 1 were 11.22 million head, which was 220,000 head fewer (-1.92%) than a year earlier. Beef cows of 3.56 million head were 94,600 head fewer (-2.59%).

Combined, the number of cattle and calves in the U.S. and Canada Jan. 1 were 105.63 million head, which was 611,400 head fewer (-0.58%) than the previous year. There were 34.88 million beef cows, which were 468,600 fewer (-1.33%).

By | March 5th, 2020|Daily Market Highlights|

Cattle Current Daily—March 5, 2020

Negotiated cash fed cattle trade developed in the Southern Plains Wednesday at $113/cwt., which was $2 lower than last week. Trade was light to moderate on moderate demand.

There were 566 head (three lots) offered in the weekly Fed Cattle Exchange auction at an offer price of $114; with no takers.

Cattle futures continued joined at the hip to equity markets on Wednesday, surging higher on the day.

Live Cattle futures closed an average of 92¢ higher (50¢ to $1.17 higher).

Feeder Cattle futures closed an average of $1.92 higher ($1.32 to $2.72 higher).

Wholesale beef values were steady on Choice and lower on Select with moderate demand and offerings, according to the Agricultural Marketing Service.

Choice boxed beef cutout value was 20¢ higher Wednesday afternoon at $206.82/cwt. Select was $1.19 lower at $201.51.

Corn futures closed 1¢ to 5¢ higher through Mar ’21 and then mostly unchanged to fractionally mixed.

Soybean futures closed 1¢ to 5¢ higher through the front three contracts and then mostly 6¢ lower.

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Major U.S. financial indices soared, Monday, amid positive economic news that included a steeper increase in private payrolls than expected.

Private sector employment rose by 183,000 last month, according to the ADP National Employment Report®.

“COVID-19 will need to break through the job market firewall if it is to do significant damage to the economy,” says Mark Zandi, chief economist of Moody’s Analytics. “The firewall has some cracks, but judging by the February employment gain it should be strong enough to weather most scenarios.”

Presumably, investors also were responding to the Super Tuesday Democratic Primary won by former vice-president, Joe Biden, who is seen as the more business friendly option on that side of the ticket.

The Dow Jones Industrial Average closed 1,175 points higher. The S&P 500 closed 126 points higher. The NASDAQ was up 334 points.

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Agricultural producer sentiment was record high in February, according to the Purdue/CME Group Ag Economy Barometer, which was up 1 point from the previous month to 168. Optimism stemmed from producer sentiment regarding current conditions.

“Almost across the board, producers indicated they were more optimistic about current conditions on their farms and in U.S. agriculture, and retained most of the improvement in future expectations exhibited in January,” says James Mintert, the barometer’s principal investigator and director of Purdue University’s Center for Commercial Agriculture. “Optimism about the agricultural trade outlook was underpinned by recent trade agreements and appeared to be the primary driver behind the improvement in sentiment.”

The Index of Current Conditions increased 12 points from January to a reading of 154. Meanwhile, the Index of Future Expectations fell 4 points below the record high set in January to a reading of 175.

The Ag Economy Barometer is based on a mid-month survey of 400 U.S. agricultural producers.

Over three-fourths (76%) of respondents said the USMCA and the China Phase One agreements either relieved their concerns about the effect of tariffs on their farms’ income “somewhat” (69%) or “completely” (7%); 17% said, “not at all”.

Although some voiced concerns about the possible impact of the COVID-19 virus on agricultural trade in mid-February, when the survey was conducted, producers remained relatively optimistic about the resumption of trade with China.

“As the COVID-19 virus footprint continues to expand, it remains to be seen whether it will impact farmer sentiment at home,” Mintert says.

Expectations for an improvement in farmland values also rose to an all-time high in February. When asked to look ahead five years, 59% of producers said they expect farmland values to rise, up from 50% in January. This was the most positive response to the question since data collection began in 2015.

By | March 4th, 2020|Daily Market Highlights|

Cattle Current Daily—March 4, 2020

Equities climbed early Tuesday, helping to drag Cattle futures along, but late pressure took them lower.

Other than 5¢ lower in spot Apr, Live Cattle futures closed an average of $1.03 lower (60¢ to $1.47 lower). 

Except for 2¢ lower in spot Mar, Feeder Cattle futures closed an average of $1.96 lower ($1.17 to $2.50 lower).

Wholesale beef values were steady on Choice and higher on Select with moderate demand and light to moderate offerings, according to the Agricultural Marketing Service.

Choice boxed beef cutout value was 9¢ higher Tuesday afternoon at $206.62/cwt. Select was $1.54 higher at $202.70.

Corn futures closed 3¢ to 7¢ higher.

Soybean futures closed 1¢ to 2¢ higher through Jan ’21 and then mostly fractionally lower.

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Equities started Tuesday’s Wall Street session extending the previous day’s gains, helped along by the Federal Reserve announcing a 0.50% rate cute, ahead of its regular meeting.

“The fundamentals of the U.S. economy remain strong. However, the coronavirus poses evolving risks to economic activity. In light of these risks and in support of achieving its maximum employment and price stability goals, the Federal Open Market Committee decided today to lower the target range for the federal funds rate by 0.50% to 1.0% to 1.25%,” according to the Fed statement. “The Committee is closely monitoring developments and their implications for the economic outlook and will use its tools and act as appropriate to support the economy.”

Investor attitudes soured later in the session, though, pushing major U.S. financial indices lower. One theory is that investors took the early rate cut by the Fed to mean that worse economic data than expected is in the wings.

The Dow Jones Industrial Average closed 785 points lower. The S&P 500 closed 86 points lower. The NASDAQ was down 268 points.

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Demand for meat is accelerating with $50.5 billion in sales for 2019, according to The Power of Meat 2020—the 15th-annual in-depth study of meat and poultry through shoppers’ eyes—from the Food Industry Association (FMI), the Foundation for Meat and Poultry Research and Education and the foundation for the North American Meat Institute (Meat Institute).

Meat department sales are strong in dollars and volume, driven by beef and chicken, and spending per household increased. When it comes to meat consumption, moderation is far more popular than elimination, with flexitarians (12%) looking to reduce their animal protein through smaller portion sizes and/or a day without meat/poultry.

“One of the most compelling storylines in the analysis is that 83% of shoppers purchase specific cuts of meat and they are eating smaller portions, but with total volume sales up slightly, that means they are eating less more often,” says Rick Stein, FMI Vice President, Fresh Foods.

Among the top 10 findings of the Power of Meat 2020:

Plant-based meat alternatives are a small but growing market. Total store plant-based meat alternative sales were $760 million in 2019 and grew 11.8%. They are mostly an occasional choice driven by perceived health benefits, being a good source of protein, just something different and for environmental reasons. Blended vegetable/meat items, such as mushroom burgers, have a higher and greater cross-population appeal, and can be a bridge to the societal and health benefits people look for, while keeping meat on the plate.

Time-saving solutions drive meat and cooking appliance choices.  While the number of weekly home-cooked meals dropped to 4.5 over 2019, dinners containing animal protein increased to 3.9. Newer cooking appliances, including the Instant Pot and air fryer, continue to make inroads in both ownership and being used to prepare meat and poultry.

Production claims remain popular. Organic, grass-fed and no-antibiotics-ever offerings saw robust sales gains, but overall trust in such claims is only moderate. Building trust in and understanding of claims is key to continued growth.

Supermarkets remain meat powerhouses with some gains in online meat sales. More than half of shoppers primarily buy meat and poultry at supermarkets. Forty percent of shoppers ordered groceries and 19% ordered meat and poultry online, up from 14% last year.

Brands continued to benefit from being a preferred purchase among younger shoppers. 2019 was a strong year for private brands (+12.3%). Shoppers want to hear from brands about nutrition (58%), food safety practices (57%), animal care practices (46%) and the brand’s environmental impact (40%).

Sixty-eight percent of shoppers feel it is important for grocery stores to provide transparency into how and where livestock was raised.

Sustainability concerns impact meat and poultry choices, but 49% believe, if done properly, animal agriculture does not have negative impacts on the planet. Environmental sustainability is affecting protein choices. While 34% of consumers believe raising livestock has some or a lot of negative impact on the planet, this belief is much stronger among younger generations. The industry has an opportunity to improve the availability of unbiased environmental impact information to educate on steps taken to protect the planet.

By | March 3rd, 2020|Daily Market Highlights|

Cattle Current Daily—March 3, 2020

Feeder Cattle futures led Live Cattle higher Monday. New-month positioning was likely a contributor. As well, the declining number of new coronavirus cases in China suggest the worst may be over in that nation, paving the way toward a resumption toward normal levels of commerce.

Other than 75¢ lower in recently minted away Aug, Live Cattle futures closed an average of $1.82 higher (62¢ higher toward the back to $2.77 higher toward the front). 

Feeder Cattle futures closed an average of $2.09 higher ($1.32 to $2.45 higher).

Wholesale beef values were higher on good demand and light to moderate offerings, according to the Agricultural Marketing Service.

Choice boxed beef cutout value was $1.23 higher Monday afternoon at $206.53/cwt. Select was $2.25 higher at $201.16.

Corn futures closed 3¢ to 8¢ higher through Mar ’21 and then mostly fractionally higher to 1¢ higher.

Soybean futures closed 7¢ to 9¢ higher.

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Major U.S. financial indices charged higher Monday, despite key indicators of slowing manufacturing growth in the U.S. and China.

Although manufacturing in the U.S. continued to grow in February, based on the Institute for Supply Management® (ISM) Purchasing Managers Index® (PMI), growth was slower than expected, down 0.8 percentage points in February to 50.1.

“Comments from the panel were generally positive, with sentiment cautious compared to January,” says Timothy R. Fiore, Chair of the ISM Manufacturing Business Survey Committee. “Global supply chains are impacting most, if not all, of the manufacturing industry sectors.”

A respondent to the survey from the computer and electronic products sector noted: “There are always supply chain challenges with Lunar New Year shutdowns, and this year is no different. Coronavirus is wreaking havoc on the electronics industry. Companies are delayed in starting up production, which is resulting in longer lead times, constraints and increased pricing. It’s a mad dash to dual source stateside in case China isn’t back online soon.”

The closely watched Caixin China General Manufacturing PMI™—a composite indicator designed to provide a single-figure snapshot of operating conditions in the manufacturing economy—dropped 10.8 points month to month to 40.3 in February, the lowest reading since it began in 2004.

“Production, new work and staffing levels all fell at the quickest rates since the survey began nearly 16 years ago as companies extended their usual Lunar New Year shutdowns to help stem the spread of the virus,” according to the report from Caixin and IHS Markit. “Supply chains were also hit heavily, with average delivery times increasing at the quickest pace on record, leading firms to increase their use of current stocks. However, firms anticipate a recovery in production over the next year due to expectations that production will be ramped up once any coronavirus-related restrictions are lifted. Notably, the degree of positive sentiment was the strongest seen for five years.”

Chatter late in the session about the potential of coordinated rate cuts among the world’s major central banks, in response to the economic impact of coronavirus, added optimism.

The Dow Jones Industrial Average closed 1,293 points higher. The S&P 500 closed 136 points higher. The NASDAQ was up 384 points.

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Higher markets Monday were more than welcome, but likely speak more to the volatility ahead, due to unknowns associated with COVID-19, rather than a market bottom being established.

“Clearly, the uncertainty has not peaked yet and the best we can hope for, from a market perspective, is that there will come a time when it appears the worst is over and we can see a path to a lengthy recovery in markets,” says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly market comments. “It seems unlikely that any definitive news is forthcoming, certainly not in the next few weeks, which would allow markets to bounce back with any confidence.”

Near term, at least the next 30-60 days, Peel believes producers should expect markets to remain weak, if not weaker.

“Obviously, the news about COVID-19 is changing constantly and may support brief short-lived market bounces,” Peel says. “Longer term, I don’t think we are ready yet to change the overall outlook for the year, but the prospect is growing that we might have to trim back our expectations for 2020.

“Producers probably should not make dramatic changes to production and marketing plans just yet, but it would be a good idea to think about how you will adjust things if we have to shift from offense to defense for the entire year.”

By | March 2nd, 2020|Daily Market Highlights|

Cattle Current Daily—March 2, 2020

Through Friday afternoon, negotiated cash fed cattle prices for the week were $4-$5 less on a live basis at $115/cwt. in the Southern Plains and Nebraska. Dressed trade was $3-$5 less in Nebraska at $185-$187 and mostly $7 lower in the western Corn Belt at mainly $183.

Through Thursday, the average five-area direct steer price was $115.07/cwt. on a live basis, which was $4.70 less than a week earlier. The average dressed steer price of $185.45 was $4.65lower.

Cattle futures took another strong step lower Friday, with ongoing pressure in outside markets from novel coronavirus fears, as well as week-end and month-end position squaring. 

Other than 7¢ higher in expiring Feb, Live Cattle futures closed and average of $2.04 lower ($1.45 lower toward the back to $2.90 lower at the front).

Feeder Cattle futures closed an average of $1.62 lower.

Wholesale beef values were steady on Choice and lower on Select with light to moderate demand and moderate offerings, according to the Agricultural Marketing Service.

Choice boxed beef cutout value was 24¢ lower Friday afternoon at $205.30/cwt. Select was 78¢ lower at $198.91.

Corn futures closed mostly fractionally mixed to 1¢ lower.

Soybean futures closed mostly 2¢ to 4¢ lower.

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Major U.S. financial indices mostly fell hard again Friday but closed off of session lows. Fears about novel coronavirus and its potential impact on the domestic and global economies continued to fuel the pressure. Federal Reserve Chair Jerome H. Powell, quelled some fears with this statement late Friday:

“The fundamentals of the U.S. economy remain strong. However, the coronavirus poses evolving risks to economic activity. The Federal Reserve is closely monitoring developments and their implications for the economic outlook. We will use our tools and act as appropriate to support the economy.”

The Dow Jones Industrial Average closed 357 points lower. The S&P 500 closed 24 points lower. The NASDAQ was fractionally higher.

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Increasing market uncertainty last week, tied to the global spread of novel coronavirus, (COVID-19) took Cattle futures down as steeply as last summer’s plunge following the packinghouse fire in Kansas.

Week to week on Friday, Feeder Cattle futures closed an average of $7.74 lower, while Live Cattle futures closed an average of $6.34 lower. The week following the Tyson fire, Feeder Cattle were down an average of $5.48 and Live Cattle were down an average of $6.53.

Managed money—lots of it—and electronic, algo trading at lightening speeds is likely magnifying market volatility and momentum.

COVID-19 is nothing new, making headlines since the first case was identified in China last December. But fears ratcheted higher last week as economic impact appeared more pronounced in countries like China and South Korea as the likelihood of a pandemic grew.

For instance, the USDA Foreign Agricultural Service (FAS) issued an assessment last week about the current economic impact of COVID-19 in South Korea. “The local economy is slowing down due to weak retail sales and reduced economic activity. Many companies have temporarily closed their offices and processing facilities for the week of Feb. 23 to prevent spread of the virus,” according to the report. “The Korea Economic Research Institute (KERI) reported Feb. 24 that its Business Survey Index (BSI) for February 2020 fell to 78.9, down 7.6 points from January, the lowest level since February 2009.”

As of Feb. 26, 1,146 people in South Korea tested positive for the virus; 11 deaths. A week earlier, the number of cases in Korea was 51.

Meanwhile, according to the World Health Organization, there were 79,394 confirmed COVID-19 cases in China as of Feb. 29. Estimates of current and future economic impact vary widely. Already, companies like Apple are telling investors that previous revenue guidance for the next quarter is likely overstated as COVID-19 in China slows production, constrains supply chains and dampens demand in that nation.

Here at Home

As of Saturday, according to WHO, there were 62 COVID-19 cases in the U.S. The first death, due to the disease, was confirmed over the weekend.

“For the general American public, who are unlikely to be exposed to this virus at this time, the immediate health risk from COVID-19 is considered low. However, it’s important to note that current global circumstances suggest it is likely that this virus will cause a pandemic…,” according to last Tuesday’s situation summary from the Centers for Disease Control and Prevention (CDC).

Wednesday evening, CDC confirmed an infection with the virus that causes COVID-19 in California, in a person who reportedly did not have relevant travel history or exposure to another known patient with COVID-19.

“It’s possible this could be an instance of community spread of COVID-19, which would be the first time this has happened in the United States,” according to the CDC statement. “Community spread means spread of an illness for which the source of infection is unknown. It’s also possible, however, that the patient may have been exposed to a returned traveler who was infected.” So far there are 15 confirmed COVID-19 cases in the U.S.

By | March 2nd, 2020|Daily Market Highlights|

Cattle Current Daily—Feb. 28, 2019

Negotiated cash fed cattle trade continued lower Thursday with dressed trade in the western Corn Belt losing another $2-$4 at $180-$183/cwt., mostly $183. For the week, dressed prices there are $7-$10 lower than last week.

Although too few to trend, there were also some live trades in Nebraska at $112-$114, another $1-$3 lower than the market established earlier in the week, which was $4-$5 lower than last week.

Lower cash prices are, of course, tied to fears about the potential impact of novel coronavirus on the global economy. Those fears continued to drive equity markets and many futures markets sharply lower again Thursday.

Cattle futures closed off of session lows, but lost plenty of ground, especially in nearby contracts.

Live Cattle futures closed and average of $1.47 lower through the front three contracts and then an average of 34¢ lower to an average of 13¢ higher, with the heaviest volume of trade since last September.

Feeder Cattle futures closed an average of $1.57 lower through the front three contracts and then an average of 15¢ lower to an average of 40¢ higher.

Wholesale beef values were lower on Choice and higher on Select with light to moderate demand and moderate to heavy offerings, according to the Agricultural Marketing Service.

Choice boxed beef cutout value was 80¢ lower Thursday afternoon at $205.54/cwt. Select was $1.09 higher at $199.69.

Carcass weights continue significantly higher year over year, according to the latest USDA Actual Slaughter Under Federal Inspection report. The average dressed steer weight for the week ending Feb. 15 was 905 lbs., which was 2 lbs. heavier than the prior week and 26 lbs. heavier than the same week a year earlier. The average dressed heifer weight of 833 lbs. was 1 lb. lighter than the previous week but 14 lbs. heavier than a year earlier.

Corn futures closed 4¢ to 6¢ lower through Mar ’21 and then mostly 2¢ lower.

Soybean futures closed fractionally higher to 5¢ higher through Nov ’20 and then mostly 1¢ lower.

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Major U.S. financial indices plunged Thursday as fears about novel coronavirus ratcheted higher.

The latest fuel to the panic came with a report from the Centers for Disease Control and Prevention (CDC) Wednesday night, confirming an infection with the virus that causes COVID-19 in California, in a person who reportedly did not have relevant travel history or exposure to another known patient with COVID-19.

“It’s possible this could be an instance of community spread of COVID-19, which would be the first time this has happened in the United States,” according to the CDC statement. “Community spread means spread of an illness for which the source of infection is unknown. It’s also possible, however, that the patient may have been exposed to a returned traveler who was infected.” So far there are 15 confirmed COVID-19 cases in the U.S.

The Dow Jones Industrial Average closed 1,190 points lower. The S&P 500 closed 137 points lower. The NASDAQ was down 414 points.

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Total pounds of beef in freezers Jan. 31 were 2% more than the previous month but 4% less than a year earlier, according to the latest USDA Cold Storage report.

Frozen pork supplies were up 8% from the previous month and up 11% from last year.

Total red meat supplies in freezers were 5% more than the previous month and 3% more than the previous year.

Total frozen poultry supplies were up 4% from the previous month and up 1% from a year ago. Total frozen chicken supplies were record high for the month.

By | February 27th, 2020|Daily Market Highlights|

Cattle Current Daily—Feb. 27, 2020

Negotiated cash fed cattle trade continued with a lower undertone, Wednesday, although there were too few transactions to trend. A day earlier, live trade was $4-$5 lower week to week in the Southern Plains and Nebraska at $115/cwt. Dressed trade was $3-$5 lower at $185-$187.

There were 755 head offered in the weekly Fed Cattle Exchange auction—five lots from the Southern Plains. Four lots—627 head—sold for a weighted average price of $115.25/cwt.; 483 head for delivery at 1-9 days and 272 head for delivery at 1-17 days.

Choice steers and heifers sold $1.00-$1.50 lower at the fat auction in Tama, IA. There were 82 head of Choice 2-4 steers weighing an average of 1,457 lbs. and bringing an average price of $120.51. Country trade in the region last week was at $119-$120.

At Sioux Falls Regional in South Dakota, though, fat cattle sold $2-$4 lower with 176 Choice 2-3 steers weighing an average of 1,438 lbs., bringing an average of $116.84.

Cattle futures, especially Feeder Cattle, found some footing Wednesday, likely helped along by short covering.

Live Cattle futures closed mixed, from an average of 69¢ lower through the front four contracts to an average of 28¢ higher.

Except for 12¢ lower in Oct, Feeder Cattle futures closed an average of 80¢ higher (10¢ higher to $1.85 higher in Apr).

Wholesale beef values were lower on light demand and heavy offerings, according to the Agricultural Marketing Service.

Choice boxed beef cutout value was $1.13 lower Wednesday afternoon at $206.34/cwt. Select was $1.30 lower at $198.60.

Corn futures closed mostly fractionally lower to 2¢ lower.

Soybean futures closed mostly fractionally higher to 3¢ higher.

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Despite an attempt at stability early on, major U.S. financial indices continued mainly lower again Wednesday, with persistent coronavirus fears.

The Dow Jones Industrial Average closed 123 points lower. The S&P 500 closed 11 points lower. The NASDAQ was up 15 points.

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Hide prices and subsequent beef byproduct values continue under long-term pressure. Part of it has to do with sheer volume, but another part has to do with consumers choosing synthetics in the place of leather, sometimes with the mistaken belief that fake leather is more environmentally friendly.

“There is no better, more environmentally-friendly alternative to using hides from animals processed for food than to make real leather,” says Stephen Sothmann, president of the Leather and Hide Council of America (LHCA). “Without the leather industry, nearly 2 billion lbs. of unused cattle hides would be diverted to landfills, placing tremendous pressure on the environment that would be further compounded by the shift to synthetic imitations produced from plastic and other non-renewable sources.”

As it is, based on USDA data, Sothmann explains the U.S. processed more than 33 million head of cattle for food last year, but U.S. export data and industry estimates suggest approximately 27.5 million U.S. cattle hides were used in domestic and global leather production. So, about 17% of U.S. cattle hides last year were destroyed or discarded in landfills.

Those discarded or destroyed hides could have been used to produce leather for approximately 99 million pairs of shoes, 110 million footballs or two million sofas, according to the LHCA.

Whereas cattle hides are naturally biodegradable, and may decompose in less than 50 years, Sothmann explains synthetics derived from petrochemicals could take as many as 500 years to break down.

Moreover LHCA suggests the annual percentage of discarded and destroyed cattle hides will likely increase if trends continue in the use of synthetics to produce finished goods in place of real leather.

“As consumers, retailers and brands weigh the versatility, beauty, durability and sustainability of leather compared to its imitations, it’s clear: there’s simply no substitute for real leather,” Sothmann says.

By | February 26th, 2020|Daily Market Highlights|

Cattle Current Daily—Feb. 26, 2020

Although Cattle futures tested stability early in yesterday’s session, they crumbled again, beneath overall market panic about novel coronavirus and its potential economic impact. Losses, however, were less than the previous day.

Live Cattle futures closed an average of $1.70 lower through the front four contracts and then an average of 56¢ lower.

Feeder Cattle futures closed an average of $2.06 lower (85¢ to $3.47 lower). That’s an average of $6.32 lower in the last two sessions.

Wholesale beef values were firm on Choice and sharply lower on Select, with light to moderate demand and offerings, according to the Agricultural Marketing Service.

Choice boxed beef cutout value was 40¢ higher Tuesday afternoon at $207.47/cwt. Select was $2.47 lower at $199.90.

Grain futures rebounded, perhaps with the help of the lower U.S. dollar.

Corn futures closed mostly fractionally higher to 2¢ higher.

Soybean futures closed mostly 4¢ to 5¢ higher.

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Major U.S. financial indices plunged lower for the second consecutive session Tuesday, again plagued by escalating fears about novel coronavirus—dubbed Coronavirus Disease 2019 (COVID-19)—and how it will impact global economic growth. The virus causing COVID-19 is named SARS-CoV-2.

A key driver in Tuesday’s decline appeared to be the latest Coronavirus Disease 2019 Situation Summary issued by the Centers for Disease Control and Prevention (CDC).

“For the general American public, who are unlikely to be exposed to this virus at this time, the immediate health risk from COVID-19 is considered low,” according to the CDC summary. “However, it’s important to note that current global circumstances suggest it is likely that this virus will cause a pandemic. In that case, the risk assessment would be different.”

CDC defines a pandemic as: “A global outbreak of a new influenza A virus. Pandemics happen when new (novel) influenza A viruses emerge which are able to infect people easily and spread from person to person in an efficient and sustained way.” There were four pandemics in the last 100 years, according to CDC.

The Dow Jones Industrial Average closed 879 points lower. The S&P 500 closed 97 points lower. The NASDAQ was down 255 points. In the last two sessions, those indices are down 1,910 points, 208 points and 610 points, respectively.

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So far, there is little visible impact, positive or negative, from the U.S.-China Phase One Economic and Trade Agreement, including before novel coronavirus began disrupting some supply chains. But, China has taken numerous actions to begin implementing its agriculture-related commitments under the agreement, on schedule, according to U.S. Secretary of Agriculture Sonny Perdue and United States Trade Representative Robert Lighthizer on Tuesday.

Among the actions Perdue and Lighthizer cite:

Lifting the ban on imports of U.S. poultry and poultry products, including pet food containing poultry products.

Lifting restrictions on imports of U.S. pet food containing ruminant material.

Updating lists of facilities approved for exporting animal protein, pet food, dairy, infant formula, and tallow for industry use to China.

Updating the lists of products that can be exported to China as feed additives.

Additionally, China began announcing tariff exclusions for imports of U.S. agricultural products subject to its retaliatory tariffs, and it announced a reduction in retaliatory tariff rates on certain U.S. agricultural goods.

“President Trump and this Administration negotiated a strong trade agreement with China that promises significant benefits for American agriculture,” explains Secretary Perdue. “We look forward to realizing these benefits this year and are encouraged by progress made last week. We fully expect compliance with all elements of the deal.”

By | February 25th, 2020|Daily Market Highlights|

Cattle Futures Daily—Feb. 25, 2020

Weekend reports of a spike in novel coronavirus cases outside of China sent major U.S. financial indices and futures markets tumbling as investors and traders try to assess the current and potential impact on global economic growth.

Cattle futures plummeted mostly limit-down in Feeder Cattle and near limit-down in Live Cattle. Friday’s announcement that USDA is restoring access to the U.S. for Brazilian beef likely added to the weight.

Live Cattle futures closed an average of $2.72 lower.

Feeder Cattle futures closed an average of $4.26 lower.

Growing pessimism prompted some early negotiated cash fed cattle trade in Nebraska and the western Corn Belt at $187/cwt. in the beef, which was $3 less than last week, but there were too few transactions to establish a trend.

Wholesale beef values were higher on Choice and firm on Select, according to the Agricultural Marketing Service.

Choice boxed beef cutout value was $1.98 higher Monday afternoon at $207.07/cwt. Select was 67¢ higher at $202.37.

Corn futures closed 3¢ to 4¢ lower through Jly ’21 and then mostly fractionally lower to 1¢ lower.

Soybean futures closed 11¢ to 16¢ lower through Jan ’21 and then 5¢ to 9¢ lower.

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Major U.S. financial indices plunged lower Monday, with surging coronavirus cases reported outside China over the weekend and some analysts shaving a full 1% from expected first-quarter GDP growth.

The Dow Jones Industrial Average closed 1,031 points lower. The S&P 500 closed 111 points lower. The NASDAQ was down 355 points.

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With trade negotiations set to begin between the United States and the United Kingdom, the North American Meat Institute (Meat Institute) and the British Meat Processors Association (BMPA) signed a memorandum of understanding (MOU) to benefit members of each organization and to support and promote mutually beneficial regulations, standards and policies to enhance bilateral trade in meat and poultry products.

“Members of the Meat Institute and the British Meat Processors Association share many common goals, especially regarding food safety, sustainability, nutrition and worker safety,” says Bill Westman, Meat Institute Senior Vice President for International Affairs. “As our governments begin trade talks, it is important to members in both organizations to formalize an already beneficial relationship. We look forward to working with the Administration and our British counterparts to improve access to significant trade opportunities between our nations.”

Both organizations will share with the other, and disseminate to their members, information that is not subject to a confidentiality and non-disclosure agreement with their respective governments concerning regulatory, scientific, legislative and international developments that affect the other organization’s members. Each organization also will discuss periodically, and as needed, other mechanisms that would mutually benefit each organization’s members.

By | February 24th, 2020|Daily Market Highlights|

Cattle Current Daily—Feb. 24, 2020

Negotiated cash fed cattle trade ended the week steady to $1 higher on a live basis at $120/cwt. in the Southern Plains and $119-$120 in the north. Dressed trade was steady at $190.

Weaker outside markets and ample supplies continued to pressure Cattle futures Friday, although they closed off of session lows.

Live Cattle futures closed an average of 40¢ lower, amid active trade.

Feeder Cattle futures closed an average of $1.03 lower (42¢ to $1.37 lower).

Wholesale beef values were firm on Choice and steady on Select with light to moderate demand and offerings, according to the Agricultural Marketing Service.

Choice boxed beef cutout value was 59¢ higher Friday afternoon at $205.09/cwt. Select was 10¢ higher at $201.70.

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USDA projections shared at last week’s 2020 Agricultural Outlook Forum are plumb bullish for corn production this year with expectations for 94.0 million corn acres, which would be about 5 million more than last year.

“The U.S. corn outlook for 2020-21 is for record production and domestic use, increased exports, and higher ending stocks,” according to USDA’s Grains and Oilseeds Outlook. “The corn crop is projected at 15.5 billion bu., 13% above a year ago with an increase in area from last year’s weather-reduced plantings and a return to trend yields. The yield projection of 178.5 bu./acre is based on a weather-adjusted trend assuming normal planting progress and summer growing season weather. Despite beginning stocks forecast down from a year ago,

total corn supplies at 17.4 billion bu. are forecast to be record high.”

“One of the major concerns heading into planting season is if the soil, and infrastructure can handle this year’s snow melt,” say analysts with the Livestock marketing Information Center (LMIC), in the latest Livestock Monitor. “From the Mississippi Delta through the upper Midwest and Missouri river basin, hydrological conditions are currently showing heavy saturation levels. Additionally, un-harvested acres in North Dakota and South Dakota could become problematic for spring planting.”

Moreover, LMIC analysts say there appears to be a mismatch between futures prices and the level of plantings USDA is suggesting. 

“Even though greater numbers of swine and poultry are expected in 2020, corn export demand has been dismal so far in the 2019-20 marketing year,” LMIC analysts say. “The risk of recession and spread of coronavirus all point to potentially shaky demand moving forward this year. Already, the 2019-20 crop is approaching a 2 billion bu. carryout because of the lack of export demand. That could weigh on corn prices and will likely allow soybeans to bid acres away from corn.”

Corn futures closed fractionally lower to 2¢ lower.

Soybean futures closed mostly 2¢ to 3¢ lower.

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Major U.S. financial indices closed strongly lower Friday as fears about novel coronavirus picked up steam again with reports from China suggesting a deep economic toll in that country.

The Dow Jones Industrial Average closed 222 points lower. The S&P 500 closed 35 points lower. The NASDAQ was down 174 points.

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Feedlots placed fewer cattle year over year in January, according to the monthly USDA Cattle on Feed report released Friday. The report is for feedlots with 1,000 head or more capacity.

Cattle feeders placed 1.96 million head in January, which was 0.61% less (-12,000 head) than the previous year. Ahead of the report, estimates were for placements to be up about 2%.

In terms of placement weights, 43.22% went on feed weighing 699 lbs. or less, 47.82% weighed 700-899 lbs. and 8.95% weighed 900 lbs. or more.

Marketings in January of 1.93 million head were 1.10% more (+21,000 head) than a year earlier.

Cattle on feed Feb. 1 of 11.93 million head were 2.16% (+252,000 head) more than a year earlier.

Both marketings and the on-feed inventory were close to pre-report estimates.

Cattle and calves on feed for slaughter in the United States, for feedlots with capacity of 1,000 or more head, represented 81.5% of all cattle and calves on feed in the United States Jan. 1, 2020, according to USDA’s National agricultural Statistics Service (NASS). That’s comparable to 81.3% a year earlier.

Further, NASS analysts say feedlots with capacity of 1,000 or more head during 2019 represented 87.0% of total cattle marketed from all feedlots in the United States, down slightly from 87.1% during 2018.

By | February 22nd, 2020|Daily Market Highlights|

Cattle Current Daily—Feb. 21, 2020

Negotiated cash fed cattle trade on Thursday continued $1 higher than last week in the Southern Plains at $120/cwt. Live prices were steady to $1 higher in Nebraska at $119-$120 and steady in the beef at $190.

Near term, increased slaughter numbers and heavier carcass weights year over year, magnified by the mostly open winter so far are keeping a firmer seasonal lid on wholesale beef prices. The average steer carcass weight the week ending Feb. 8 was 903 lbs., according to USDA’s Actual Slaughter Under Federal Inspection report. That was 6 lbs. more than the previous week and 18 lbs. more than the same week a year earlier. The average dressed heifer weight of 834 lbs. was 1 lbs. more than the previous week and 12 lbs. more than the same week last year.

Weaker outside markets amid the daily up and down tied to novel coronavirus also helped pressure Cattle futures Thursday.

Live Cattle futures closed an average of $1.03 lower (70¢ to $1.65 lower), but still higher week to week.

Except for 2¢ higher in spot Mar, Feeder Cattle futures closed an average of 78¢ lower. 

Analysts surveyed by Urner Barry and reported by the Daily Livestock Report expect to see January feedlot placements 1.9% more than the previous year, in Friday’s monthly Cattle on Feed report. They anticipate January marketings to be 1% more and the Feb. 1 on-feed inventory to be 2.4%  more.

Wholesale beef values were lower on Choice and steady on Select with light to moderate demand and heavy offerings, according to the Agricultural Marketing Service.

Choice boxed beef cutout value was $1.07 lower Thursday afternoon at $204.50/cwt. Select was 16¢ lower at $201.60.

Corn futures closed mostly 1¢ to 2¢ lower.

Soybean futures closed 4¢ to 7¢ lower.

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Major U.S. financial indices closed lower Thursday, presumably on profit taking and vacillating concerns about novel coronavirus..

The Dow Jones Industrial Average closed 128 points lower. The S&P 500 closed 12 points lower. The NASDAQ was down 66 points.

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USDA projects U.S. beef and veal export value for the current fiscal year (FY) 2020 at $7.5 billion, in the quarterly Outlook for U.S. Agricultural Trade—released Thursday—from the Economic Research Service (ERS) and the Foreign Agricultural Service (FAS). That’s $100 million less than the November estimate but would be $200 million more than FY 2019. Analysts explain the reduced quarter-to-quarter estimate is based on slightly higher expected prices unable to offset what’s expected to be a slight reduction in volume.

“Livestock, poultry, and dairy exports are forecast up $500 million from the November projection to $32.4 billion as stronger demand for poultry and products, dairy, and variety meats more than offsets declines for beef,” say ERS-FAS analysts.

Overall, U.S. agricultural exports are projected $500 million more for FY 2020, compared to the November forecast, with increased soybean, wheat, and poultry export forecasts more than offsetting reductions in corn and soybean meal. The estimated $139.5 billion this fiscal year would be $4 billion more than last year, when trade wars and issues disrupted export flows.

“Exports for China are raised $3.0 billion from the November forecast to $14.0 billion, largely based on higher projected volumes for soybeans,” say ERS-FAS analysts. “The current outlook for exports to China is tempered by significant uncertainties surrounding the Covid-19 outbreak (novel coronavirus), which may affect the timing of China’s purchases under the Phase One Agreement during the calendar year.”

Despite novel coronavirus, ERS and FAS left expectations for world per capita gross domestic product (GDP) growth little changed. However, those analysts explain, a slowdown across the Eurozone, declining growth rates in China and the damaging global impact of novel coronavirus is expected to dampen growth prospects worldwide.

By | February 20th, 2020|Daily Market Highlights|

Cattle Current Daily—Feb. 20, 2020

Negotiated cash fed cattle trade remained largely undeveloped through Wednesday afternoon, based on USDA reports, but had a firm to higher feel.

For one thing, there were some early live trades in the Texas Panhandle at $120/cwt., which was $1 higher than last week.

Earlier in the day, there were three Southern Plains lots (422 head) offered in the weekly Fed Cattle Exchange auction, and no takers. One lot was passed out at $119.75/cwt.

Up North, Choice steers and heifers sold $1.75-$2.25 higher at the fat auction in Tama, IA Wednesday. There were 91 Choice 2-4 steers weighing an average of 1,434 lbs. and bringing an average of $123.15/cwt. Country trade in the western Corn Belt was $119 last week.

Similarly, slaughter steers also sold $2-$3 higher at Sioux Falls Regional in South Dakota, where 184 Choice 2-3 steers weighing an average of 1,447 lbs. brought an average of $120.74.

Feeder Cattle futures gained more ground Wednesday on strong fundamentals, and perhaps positioning ahead of the monthly Cattle on Feed report due out Friday. That helped underpin Live Cattle. 

Live Cattle futures closed narrowly mixed and mostly higher, from unchanged to an average of 11¢ lower in three contracts to an average of 20¢ higher.

Feeder Cattle futures closed an average of 75¢ higher (47¢ to $1.47 higher in spot Mar). That makes for an average of $5.87 higher over the last five sessions.

Wholesale beef values were weak on Choice and lower on Select with light to moderate demand and moderate to heavy offerings, according to the Agricultural Marketing Service.

Choice boxed beef cutout value was 56¢ lower Wednesday afternoon at $205.57/cwt. Select was $1.97 lower at $201.76.

Corn futures closed mostly 1¢ to 2¢ lower.

Except for 5¢ and 3¢ higher in the front two contracts, Soybean futures closed 1¢ to 2¢ higher.

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Major U.S. financial indices closed higher Wednesday, buoyed in part by various reports suggesting China is containing novel coronavirus.

The Dow Jones Industrial Average closed 115 points higher. The S&P 500 closed 15 points higher. The NASDAQ was up 84 points.

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America’s ranchers and farmers took another step toward collectively telling agriculture’s positive sustainability story to consumers and policy makers Wednesday with announcement of Farmers for a Sustainable Future (FSF), a coalition of agricultural organizations committed to environmental and economic sustainability.

“Today’s launch of the Farmers for a Sustainable Future is a defining moment,” said Ethan Lane, Vice President of Government Affairs for the National Cattlemen’s Beef Association (NCBA), who spoke at the FSF rollout event in Washington. “Twenty-one agricultural groups—which represent the vast majority of the agricultural industry in our country—are standing side by side in unity to correct a false narrative that has haunted us for as long as I can remember. We’re here because we support incentivizing innovation, science-based research, resilient infrastructure, and focusing on outcomes.”

Along with NCBA, other founding FSF members include the American Farm Bureau Federation, USA Rice, American Sugar Alliance, the National Corn Growers Association, and the National Pork Producers Council.

“We know that consumers care how beef is produced, and they want to know that it’s done in a way that’s environmentally and socially sustainable,” Lane explains. “In fact, the U.S. is the leader in sustainable beef production, with a carbon footprint 10 to 50 times lower than the rest of the world. And while we’ve already made a lot of progress, American cattle farmers and ranchers are committed to continuous improvement by producing high-quality beef even more sustainably for generations to come.”

NCBA is also a founding member of the U.S. Roundtable for Sustainable Beef, a multi-stakeholder organization composed of more than 220 ranchers, feed yard operators, packers, food service companies, research institutions, and NGOs that share a mission to advance, support, and communicate about beef’s sustainability.

The coalition will share with elected officials, media and the public U.S. agriculture’s commitment to sustainability and the incredible strides already made to reduce agriculture’s environmental footprint. As policy proposals are developed and considered, the goal is for the coalition and its guiding principles to serve as a foundation to ensure the adoption of meaningful and constructive policies and programs affecting agriculture.

FSF’s guiding principles call for policies that support science-based research, voluntary incentive-based conservation programs, investment in infrastructure, and solutions that ensure vibrant rural communities and a healthy planet.

By | February 19th, 2020|Daily Market Highlights|

Cattle Current Daily—Feb. 19, 2020

Cattle futures on Tuesday picked up where they left off last week, gaining more ground, albeit with light and two-sided trade.

Live Cattle futures closed an average of 31¢ higher.

Feeder Cattle futures closed an average of 74¢ higher (30¢ to $1.10 higher).

Wholesale beef values were lower on Choice and sharply lower on Select with light demand and moderate offerings, according to the Agricultural Marketing Service.

Choice boxed beef cutout value was $1.13 lower Tuesday afternoon at $206.13/cwt. Select was $2.45 lower at $203.73.

Corn futures closed 4¢ to 5¢ higher through Jly ’21 and then 1¢ to 2¢ higher.

Soybean futures closed 1¢ to 2¢ lower.

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Major U.S. financial indices mainly softened Tuesday, with most of the pressure attributed to continued worries about the impact of novel coronavirus on global economic growth.

The Dow Jones Industrial Average closed 165 points lower. The S&P 500 closed 9 points lower. The NASDAQ was up 1 point.

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“The lower year-over-year 2019 calf crop will reduce the number of steers and heifers available for slaughter in the second half of the year and place upward pressure on feeder steer prices,” say analysts, with USDA’s Economic Research Service (ERS), in the latest monthly USDA Livestock, Dairy and Poultry Outlook.

Based on current prices, ERS increased the annual expected feeder cattle price (basis Oklahoma City) by $1 to $146/cwt. By quarter, feeder steers prices are projected at $145 in the first and second quarters, at $148 in the third quarter and at $146 in the fourth quarter.

ERS increased anticipated U.S. beef production for the first half of 2020, reflecting a faster pace of slaughter, but lowered second-half expectations on the anticipation of fewer steers and heifers available for slaughter, due to a slower pace of placements during 2020.

ERS lowered its expected first-quarter fed steer price to $123/cwt. on recent price weakness.

By | February 18th, 2020|Daily Market Highlights|

Cattle Current Daily—Feb. 18, 2020

Through Friday, the five-area direct price for steers was $118.90/cwt. on a live basis and $190.27 in the beef. Week to week, that was $2.15 lower and $2.91 lower, respectively.

Futures and equity markets were closed Monday, in observance of Presidents Day, so it will be another day before finding out if the late-week momentum in Cattle futures carries ahead.

Wholesale beef values were lower on Choice and firm on Select with light to moderate demand and offerings, according to the Agricultural Marketing Service.

Choice boxed beef cutout value was 83¢ lower Monday afternoon at $207.26/cwt. Select was 47¢ higher at $206.18.

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“Heavier carcass weights in 2020 are expected to keep total beef production at or near record levels even as cattle slaughter decreases slightly,” says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his latest weekly market comments. “Moreover, steer and heifer carcass weights in 2020 may indicate whether the industry is resuming the long-term trend of ever-larger carcasses.”

Steer carcass weights averaged 879.0 lbs. last year, according to Peel. That was 1.5 lbs. less than the previous year. Heifer carcass weights last year averaged 813.1 lbs., down 3.4 lbs. from the prior year. 

“Monthly steer carcass weights were lower year over year for the first nine months of 2019 before moving sharply higher at the end of the year. In fact, monthly steer carcass weights were lower year over year for 31 of 41 months from May 2016 through September 2019,” Peel says. “Heifer carcass weights were lower 26 of 38 months from August 2016 through September 2019. However, steer and heifer carcass weights jumped sharply higher in November and December compared to the previous year and appear to have resumed the long-term trend of higher carcass weights.”

For longer term perspective, Peel explains annual steer carcass weights peaked in 2015 at 892.0 lbs. but averaged lower since then. Heifer carcass weights peaked in 2016 at 821.5 lbs. and have averaged lower through 2019.

“The moderation of carcass weights since 2016 has raised the question of whether the long trend of higher carcass weight was over,” Peel says. “Since 1960, steer carcass weights have averaged 3.8 lbs. larger each year, increasing from 656.3 lbs. in 1960 to 879 lbs. in 2019. Heifer carcass weights have increased an annual average of 4.5 lbs. per year from 545.6 lbs. in 1960 to 813.1 lbs. in 2019.”

As an aside, although economic incentive suggests a continuation of increasing carcass weights, you can find some cattle feeders who believe cattle physiology will cap future carcass growth. Said differently, there are some who think cattle weights are growing beyond the ability of cattle skeletal structure and internal organs to support them.

Moreover, Peel points out, “Multiple research studies have shown that bigger carcasses and the larger beef cuts (bigger steaks) that result have some negative demand implications. If the larger carcass trend resumes, these issues will continue to grow resulting in increased product fabrication needs and alternative product marketing.”

By | February 17th, 2020|Daily Market Highlights|

Cattle Current Daily—Feb. 17, 2020

Negotiated cash fed cattle trade ended the week $2-$3 lower at $119/cwt. on a live basis and $3 lower in the beef at $190.

Recent oversold conditions continued to help lift Cattle futures higher Friday as traders positioned for the three-day weekend.

Live Cattle futures closed an average of $1.17 higher, from 77¢ higher to $1.80 higher toward the front of the board.

Feeder Cattle futures closed an average of $2.36 higher. That’s an average of $3.62 higher in the last two sessions.

Wholesale beef values were higher on good demand and moderate offerings, according to the Agricultural Marketing Service.

Choice boxed beef cutout value was $1.64 higher Friday afternoon at $208.09/cwt. Select was $1.92 higher at $205.71.

Corn futures closed mostly 2¢ to 3¢ lower.

Soybean futures closed 2¢ lower to 2¢ higher.

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Major U.S. financial indices closed little changed Friday, amid mixed economic news and as investors positioned for the holiday weekend.

The Dow Jones Industrial Average closed 25 points lower. The S&P 500 closed 6 points higher. The NASDAQ was up 19 points.

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“The cattle herd is expected to decline cyclically in the early part of the projection as producers respond to lower returns,” say USDA analysts, in the Agricultural Projections to 2029, released Friday. “A decline in cattle numbers early in the period will likely contribute to higher cattle prices, although a modest herd expansion the rest of the period pressures cattle prices lower. Rising slaughter weights, due to efficiencies from nutrition and genetics, will further support gains in beef production. Overall, beef production levels are expected to rise to 29.5 billion lbs. by 2029.”

The five-area direct fed steer price is projected to be $116/cwt. this year, then range from $116.37 (2024) to $121.39 (2023) over the next five years. From there, through 2029, the estimated range is $110.58 (2028) to $114.70 (2026).

USDA projects this year’s feeder steer price (basis Oklahoma City) to be $141/cwt. It ranges from $138.13 (2028) to $151.27 (2023) for the remainder of the projection period.

This year’s projected farm calf price of $160/cwt. is the lowest of the projection period, which ranges from $165.17 (2028) to $180.88 (2023).

Keep in mind short-term projections in the report began with the October 2019 USDA World Agricultural Supply and Demand Estimates report. Projections don’t include recent trade deals, such as the Japan-U.S. free trade agreement, phase-one China trade deal or the U.S.-Mexico-Canada trade agreement.

“Robust demand provides incentives for the continued growth of the U.S. livestock sector over the next 10 years,” say USDA analysts. “In the beef cattle industry, the feed price ratio (cattle price/feed price) is expected to decline over the projection period, reflecting both modestly lower cattle prices and slowly rising feed prices, suggesting lower returns to production.”

Macroeconomic assumptions to the projections (completed in August last year) include:

Global macroeconomic conditions reflect real economic growth that is lower than in the 2010-2019 period, a relatively strong but declining U.S. dollar, and rising oil prices, which are expected to reach $91 per barrel by 2029.

Global real economic growth is projected to average 2.7% annually over the next decade, 2020-29. The United States is expected to average 1.8% growth annually, while developed countries, as a group, are expected to experience an average of 1.5% percent annual growth. Meanwhile, growth in the developing countries remains faster than the global average, but declines from 4.8% annual average growth during 2010-19, to 4.3% during 2020-29.

Steady global economic growth supports longer-term gains in world food demand, global agricultural trade, and U.S. agricultural exports. Economic growth in developing countries is especially important because food consumption and feed use are particularly responsive to income growth in those countries.

By | February 16th, 2020|Daily Market Highlights|

Cattle Current Daily—Feb. 14, 2020

Lower prices for negotiated cash fed cattle continued in Nebraska and the western Corn Belt late Wednesday and Thursday with live sales $2-$3 lower at $119/cwt. and dressed sales $3 lower at $190.

Cattle futures continued to regain some footing amid more active trade and expanding open interest for the first time in a spell.

Live Cattle futures closed an average of 79¢ higher, from 40¢ higher to $1.40 higher in the back contract.

Feeder Cattle futures closed an average of $1.26 higher, from 60¢ higher to $1.77 higher toward the front of the board.

Wholesale beef values were steady on Choice and lower on Select with light to moderate demand and offerings, according to the Agricultural Marketing Service.

Choice boxed beef cutout value was 14¢ higher Thursday afternoon at $206.45/cwt. Select was $1.51 lower at $203.79.

Corn futures closed mostly fractionally lower to 1¢ lower.

Soybean futures closed 2¢ to 3¢ higher.

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Major U.S. financial indices softened Thursday, amid reports of a jump in Chinese coronavirus cases and questions about how China is counting diagnosed and confirmed cases.

The Dow Jones Industrial Average closed 128 points lower. The S&P 500 closed 5 points lower. The NASDAQ was down 13 points.

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“There are a number of factors that indicate that the land market will continue to be steady in 2020,” says Randy Dickhut, senior vice president of real estate operations for Farmers National Company (FNC). “Interest rates are low and are poised to remain so during the foreseeable future and government support through MFP payments will likely continue if Chinese trade issues are not fully resolved. Overall, agriculture is in adequate financial shape, but there are individual and regional concerns.”

FNC analysts add that buyer demand, relative to the supply, needs to continue for prices to maintain the plateau trend of the past few years. In 2019, for instance, they say prices held steady with less than the average supply of agricultural land for sale. 

“Investor interest in cropland increased somewhat in 2019 with several new entities entering the market and also from an increase in purchasing activity by existing institutional investors,” Dickhut says.

With buyers generally more cautious last year, some markets saw a move to private treaty listings or bid sales instead of the traditional public land auction, according to FNC.

By | February 13th, 2020|Daily Market Highlights|

Cattle Current Daily—Feb. 13, 2020

Negotiated cash fed cattle trade developed in the Southern Plains Wednesday with live sales at $118-$119/cwt., but mostly $119, which was mostly $2 less than last week.

Southern Plains cattle selling in the weekly Fed Cattle Exchange auction also brought $119. There were 413 head offered; 315 head sold for delivery at 1-9 days.

Even so, Cattle futures finally clawed back some losses amid oversold conditions.

Except for 12¢ and 2¢ lower on either end of the board, Live Cattle futures closed an average of 56¢ higher.

Feeder Cattle futures closed an average of 76¢ higher.

Wholesale beef values were lower on Choice and higher on Select with light to moderate demand and moderate offerings, according to the Agricultural Marketing Service.

Choice boxed beef cutout value was $1.52 lower Wednesday afternoon at $206.31/cwt. Select was 77¢ higher at $205.30.

Corn futures closed 1¢ to 3¢ higher through Jly ’21 and then mainly unchanged.

Soybean futures closed 2¢ to 7¢ higher through Nov ’20 and then mostly 1¢ to 3¢ lower.

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Major U.S. financial indices bounced higher Wednesday, buoyed by more reports that the spread of coronavirus is slowing

The Dow Jones Industrial Average closed 275 points higher. The S&P 500 closed 21 points higher. The NASDAQ was up 87 points.

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Customer transactions at U.S. restaurant chains were up in January, a benefit of milder weather compared to a year ago when extreme weather conditions and above average precipitation hit many areas of the U.S.

For the retail weeks ending January 6 through February 2, total restaurant transactions increased by 2% over same time last year and quick service restaurant (QSR) chains were the primary contributor, according to NPD’s CREST® Performance Alerts, which provides a weekly view of chain-specific transactions and share trends for 73 quick service, fast casual, midscale, and casual dining chains.

“January is historically one of the toughest months for U.S. restaurants and bad weather is usually a contributor,” says David Portalatin, NPD food industry advisor and author of Eating Patterns in America.

QSR chains, which represent the bulk of industry transactions, grew transactions by 2% in January following four consecutive weeks of gains compared to the declines experienced last January. However, the full service restaurant segment, which includes casual dining and midscale/family dining chains, experienced transaction declines throughout the month. Customer transactions at casual dining restaurants declined by 4% and midscale/family dining transactions decreased by 2%, according to NPD.

By | February 12th, 2020|Daily Market Highlights|

Cattle Current Daily—Feb. 12, 2020

Although too few to trend, negotiated cash fed cattle trade took on a lower feel Tuesday with early live trades in Kansas and Nebraska at $119-$120/cwt., compared to $121 last week.

Cattle futures continued lower, pressured by the softer tone of the cash market.

Live Cattle futures closed an average of $1.11 lower (67¢ to $1.50 lower).

Feeder Cattle futures closed an average of $1.10 lower.

Wholesale beef values were lower on Choice and higher on Select with light to moderate demand and offerings, according to the Agricultural Marketing Service.

Choice boxed beef cutout value was $1.08 lower Tuesday afternoon at $207.83/cwt. Select was 83¢ higher at $204.53.

Corn futures closed mostly 1¢ lower.

Soybean futures closed unchanged to fractionally higher.

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Major U.S. financial indices paddled in place Tuesday with various reports suggesting the spread of novel coronavirus is slowing.

The Dow Jones Industrial Average closed fractionally lower. The S&P 500 closed 5 points higher. The NASDAQ was up 10 points.

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The latest World Agricultural Supply and Demand Estimates (WASDE) increased projected beef production for this year by 40 million lbs. compared to the January estimate at 27.48 billion lbs.

“The beef production forecast is raised from the previous month on higher cattle slaughter and heavier cattle weights in the first half of the year. However, the forecasts for second-half beef production is reduced on lower anticipated steer and heifer slaughter in the second half of the year,” explain USDA analysts. “This reflects a smaller number of cattle outside feedlots implied by the Jan. 1 Cattle report which results in lower placements during 2020.”

Total red meat and poultry production was projected 634 million lbs. more at 108.79 billion lbs.

The annual fed steer price (five-area direct) was projected at $117/cwt: $123 for the first quarter; $118 for the second; $112 for the third; $114 for the fourth quarter.

Among other WASDE highlights:

Corn

U.S. corn ending stocks were unchanged from the previous month. The season-average corn price received by producers was also unchanged at $3.85/bu. 

Soybeans

This month’s 2019-20 U.S. soybean outlook is for increased exports and lower ending stocks.

Soybean ending stocks were reduced 50 million bu. to 425 million, partly reflecting increased imports for China.

The U.S. season-average soybean price for 2019-20 was forecast at $8.75/bu., down 25¢, reflecting reported prices to date. The soybean oil price forecast was lowered 0.5¢ to 33.5¢/lb. The soybean meal price forecast was unchanged at $305/short ton.

By | February 11th, 2020|Daily Market Highlights|

Cattle Current Daily—Feb. 11, 2020

Negotiated cash fed cattle prices ended last week $1 lower on a live basis at $121/cwt. in the Southern Plains and Nebraska; $121-$122 in the western Corn Belt. Dressed trade was $1-$2 lower at mostly $193.

Softer cash prices, declining wholesale beef values and queasiness over demand from a potentially slowing global economy weighed on Cattle futures to start the week.

Live Cattle futures closed an average of 76¢ lower.

Except for 5¢ and 2¢ higher in the front two contracts, Feeder Cattle futures closed an average of 97¢ lower (12¢ to $1.22 lower).

Wholesale beef values were lower on Choice and steady on Select with light to moderate demand and moderate to heavy offerings, according to the Agricultural Marketing Service.

Choice boxed beef cutout value was $1.21 lower Monday afternoon at $208.91/cwt. Select was 19¢ lower at $203.70.

Corn futures closed narrowly mixed but mostly 1¢ lower.

Soybean futures closed mostly unchanged to fractionally higher.

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Major U.S. financial indices on Monday regained most or all of what was lost in the previous session, led by tech stocks.

The Dow Jones Industrial Average closed 174 points higher. The S&P 500 closed 24 points higher. The NASDAQ was up 107 points.

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Folks in the cattle and beef business have plenty of work ahead to correct the consumer misinformation surrounding fake meat.

In an online survey of more than 1,800 consumers, less than half of the respondents understood the labeling term “plant-based beef” was intended to describe an entirely vegetarian or vegan food product.

Approximately one third of surveyed consumers believed that plant-based fake meat products contained at least some real beef in them.

The National Cattlemen’s Beef Association (NCBA) commissioned the survey. Results were released last week.

When asked to evaluate specific product labels and marketing materials from some of the leading plant-based fake beef products currently on the market:

Nearly two-thirds of respondents believed the fake meat products produced by Beyond Meat, Impossible Foods and LightLife contained real beef or some form of animal byproduct.

32% of consumers who were shown a package of Beyond Meat’s “Beyond Burger” plant-based patties (which features a cow icon) told researchers that they thought the patties contained at least small amounts of real meat. It contains no beef.

37% of consumers who were shown a package of Lightlife’s “Gimme Lean”, which features the word “Beef” highlighted in a red box, said the product contained at least some real beef. It contains no beef.

“The fact that so many consumers look at these labels and think that the products include meat or other animal byproducts is a clear sign that the misleading labeling and deceptive marketing practices of plant-based fake meat companies has caused real consumer confusion,” says NCBA past president Jennifer Houston. “Many of these fake-meat products purposely use graphics and words that trade on beef’s good name, and it needs to stop immediately. Consumers rely on names and product packaging to inform their purchasing decisions, and they have a right to know that this information is accurate and not misleading.”

When asked to rank plant-based fake meat versus beef on a host of food attributes:

44% of consumers believed plant-based products were lower in sodium, when leading plant-based fake beef is anywhere between 220 to 620% higher in sodium than the same size serving of real ground beef. Just 24% of respondents correctly identified beef as being lower in sodium.

34% of respondents believed plant-based fake meat to be less processed than genuine beef and another 34% believed fake and real beef products were equivalent on the food processing scale. Scientifically speaking, beef is considered to be an unprocessed or minimally processed food, whereas plant-based fake meat products are classified as an ultra-processed food product.

On the broad category of healthfulness, more than half of consumers believed plant-based meat was better.

“This research is a wake-up call for our industry, the news media, and for federal regulators,” Houston says. “We in the beef industry need to do a better job educating consumers about the fact that beef is a nutrient-rich source of high-quality protein and essential nutrients that can play a key role in any healthy lifestyle. We also need reporters and regulators to understand how many consumers are confused and/or misinformed about exactly what’s in these new plant-based alternatives.”

The Food and Drug Administration (FDA) has the power to prevent this sort of consumer confusion.

By | February 10th, 2020|Daily Market Highlights|

Cattle Current—Feb. 10, 2020

Negotiated cash fed cattle trade was yet to fully develop through Friday afternoon but was shaping up lower. Live prices in the Southern Plains were $1 lower than the previous week at $121/cwt. Although too few to trend, early live sales in Nebraska were also $1 lower at $121, while early dressed sales were $1-$2 lower at $193-$195.

The lack of firm cash direction and weaker outside markets helped cap Live Cattle futures and pressure Feeder Cattle as Lean Hogs continued to extend gains.

Except for 5¢ lower in away Feb, Live Cattle futures closed an average of 14¢ higher.

Feeder Cattle futures closed an average of 55¢ lower (7¢ to 92¢ lower).

Wholesale beef values were lower on Choice and sharply lower on Select with light to moderate demand and offerings, according to the Agricultural Marketing Service.

Choice boxed beef cutout value was 81¢ lower Friday afternoon at $210.12/cwt. Select was $2.07 lower at $203.89.

Corn futures closed 3¢ to 4¢ higher through May ’21 and then mostly 1¢ higher.

Soybean futures closed unchanged to 1¢ higher through near Jly and then mostly 4¢ lower.

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Despite stronger U.S. employment numbers than expected, estimates of declining GDP growth in China, due to novel coronavirus, weighed on major U.S. financial indices Friday.

Total non-farm payroll employment rose by 225,000 in January, according to the U.S. Bureau of Labor Statistics. That left the unemployment rate little changed at 3.6%. 

Average hourly earnings for all employees on private non-farm payrolls rose by 7¢ to $28.44. Over the past 12 months, average hourly earnings increased by 3.1%.

The Dow Jones Industrial Average closed 277 points lower. The S&P 500 closed 18 points lower. The NASDAQ was down 51 points.

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Beef demand is strong and with U.S. cattle numbers plateauing, prices are likely to be stronger in the year ahead as consumers at home and abroad support industry profitability, according to CattleFax, at their 2020 Industry Outlook in San Antonio last week.

“With strong demand for U.S. beef at home and rising demand overseas, the modest increases in supply will be more than offset by a growing consumer appetite for our product,” says Kevin Good, CattleFax Vice President of Industry Relations and Analysis.

Specifically, CattleFax projects the all-fresh retail price 5¢ higher than last year at an average of $5.87/lb. and composite cutout prices $3 higher $222/cwt. 

In terms of cattle prices, Good says CattleFax projects fed steer prices to average $120/cwt. during 2020, which would $3 more than last year. He notes there is downside risk at $108 and resistance at $130.

CattleFax forecasts steer calf prices (550 lbs.) this year $6 higher than last year at an average of $170/cwt., across a range of $155-$180.

As for feeder steer prices (750 lbs.), CattleFax projects an average increase of $6, compared to last year, at an average of $150/cwt., across a range of $140-$160.

Good notes additional supplies of utility cows, the product of several years of aggressive expansion, are likely to challenge the cull cow market. However, he explains, “Increased demand for lean trim and a decline in the availability of imported grass-fed trim from Australia and New Zealand will be supportive of cow prices.” He projects utility cow prices at an average of $65/cwt., ranging from the low $70s to a fall low near $55.

CattleFax anticipates the average bred cow price steady with last year at $1,500.

On the input side of the equation, Mike Murphy, CattleFax Vice President of Research and Risk Management Services predicts acres planted to corn will increase 4 million acres to 94 million acres this year and that soybean acres will increase 7 million acres to reach 83 million acres. He pegs spot corn prices at $3.50-$4.00/bu., which would be 15¢ to 20¢/bu. less than last year, notwithstanding significant weather pressure.

“There is strong demand for our product, but that’s the result of the fact that our business has paid attention to market signals and we’ve been producing a consistent, quality product that has gained a greater piece of that retail dollar. We need to protect that,” says Randy Blach, CattleFax CEO. “We must pay attention to what the consumer is telling us. That means conversations about topics like traceability and sustainability only become more important as time goes on. We have to listen to the consumer and respond with action to meet their needs and demands if we’re going to continue to be successful in a hypercompetitive global protein market.”

By | February 9th, 2020|Daily Market Highlights|

Cattle Current Daily—Feb. 7, 2020

Negotiated cash fed cattle trade remained undeveloped through Thursday afternoon.

Despite the lack of cash direction and recent softness, limit-up moves across most Lean Hog contracts helped buoy Cattle futures.

Live Cattle futures closed an average of 48¢ higher. Open interest continued its recent steep decline with 61,318 fewer contracts (-15.3%) between Jan. 21 and Feb. 5.

Feeder Cattle futures closed an average of 93¢ higher (22¢ to $1.52. higher).

Wholesale beef values were steady on Choice and lower on Select with light to moderate demand and moderate offerings, according to the Agricultural Marketing Service.

Choice boxed beef cutout value was 21¢ higher Thursday afternoon at $210.93/cwt. Select was $1.98 lower at $205.96.

Corn futures closed mostly 1¢ to 3¢ lower.

Soybean futures closed 1¢ to 2¢ lower.

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Major U.S. financial indices extended gains on Thursday, buoyed by cooling fears about the impact of novel coronavirus and reports of China’s announcement it will halve tariffs on $75 billion worth of U.S. imports, as part of the phase-one trade agreement.

The Dow Jones Industrial Average closed 88 points higher. The S&P 500 closed 11 points higher. The NASDAQ was up 63 points.

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U.S. beef exports last year totaled 1.32 million metric tons (mt), 2.5% below the previous year’s record volume, according to data released by USDA and compiled by the U.S. Meat Export Federation (USMEF). Beef export value was 3% less at $8.1 billion. Beef export value per head of fed slaughter last year was $309.75, down 4%.

USMEF attributes part of the decline to decreased exports to Japan, borne by the tariff disadvantage of the U.S., compared to its competitors. U.S. beef exports to Japan were 6% less in both volume (311,146 mt) and value ($1.95 billion). Recent ratification of a new trade agreement by the Japanese Parliament should offer some relief. As of Jan. 1, the tariff rate declined from 38.5% to 26.6%, the same as other major competitors, according to USMEF. There will be another rate cut April 1.

“It was gratifying to see beef exports to Japan perform so well in December, given that the first tariff rate cut was pending,” Halstrom says. “Buyers in Japan have been waiting a very long time for tariff relief and have already responded enthusiastically. We look forward to solid growth in 2020 and beyond.”

South Korea made a strong push to become the leading value market for U.S. beef in 2019, finishing a close second to Japan at a record $1.84 billion (up 5% from a year earlier). Korea was also the second largest volume market for U.S. beef at 255,758 mt (up 7%, also a new record). The United States captured a larger share of Korea’s chilled beef imports in 2019 at 62%, up from 58% the previous year. U.S. beef accounted for 51.5% of Korea’s total beef and beef variety meat imports and more than one-third of Korea’s total beef consumption.

“U.S. beef is achieving remarkable success in Korea’s traditional retail and foodservice sectors and is well-positioned to capitalize on growth in e-commerce, the institutional sector and other emerging sales channels,” Halstrom explains. “As U.S. beef moves steadily toward duty-free status in Korea, it becomes accessible and affordable for a wider range of customers whose appetite for U.S. beef continues to grow. We are seeing many new menu concepts in this dynamic market and continued excitement about U.S. beef.”

Pork Exports Record Large

U.S. pork exports posted new volume and value records in 2019, 10% more than the previous year in volume (2.67 million mt) and 9% higher in value ($6.95 billion).

“Despite retaliatory duties and the other barriers U.S. pork faces in China, exports to the China/Hong Kong region closed 2019 with tremendous momentum,” Halstrom says. “We look forward to continued success in 2020, especially if U.S.-China trade relations continue to trend in a positive direction. The coronavirus situation is certainly concerning and disruptive, but it hasn’t dampened our enthusiasm for the potential this market holds for U.S. red meat.”

By | February 6th, 2020|Daily Market Highlights|

Cattle Current Daily—Feb. 6, 2020

Negotiated cash fed cattle trade remained undeveloped through Wednesday afternoon.

There were 627 head offered in the weekly Fed Cattle Exchange auction and no takers.

After hints of early support, Cattle futures trailed lower Wednesday, pressured by the ongoing retreat of open interest in Live Cattle, softer wholesale beef values and the lack of cash direction.

Live Cattle futures closed an average of 69¢ lower.

Feeder Cattle futures closed an average of $1.59 lower.

Wholesale beef values were steady to firm on light to moderate demand and offerings, according to the Agricultural Marketing Service.

Choice boxed beef cutout value was 21¢ lower Wednesday afternoon at $210.72/cwt. Select was 43¢ higher at $207.94.

Corn futures closed mostly 1¢ lower.

Soybean futures closed mostly fractionally higher to 1¢ higher

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Major U.S. financial indices charged higher Wednesday. Runaway fears over novel coronavirus continued to subside with chatter about development of an effective vaccine. Investors also took heart in positive economic news.

For instance, private-sector, non-farm employment increased by 291,000 jobs from December to January according to the ADP National Employment Report®. That was more than the trade expected.

The Dow Jones Industrial Average closed 483 points higher. The S&P 500 closed 37 points higher. The NASDAQ was up 40 points.

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Today’s Cattle Current is abbreviated, as I’m at the Cattle Industry Convention in San Antonio where the Cattlemen’s College was held Wednesday. Based on sessions I attended, there was lots of focus on sustainability and part of that being the continued evolution of the cattle and beef industries away from commodity production toward specification, value-added production…more tomorrow.

By | February 6th, 2020|Daily Market Highlights|

Cattle Current Daily—Feb. 5, 2020

Feeder Cattle futures extended gains on Tuesday, while Live Cattle closed a touch softer as open interest continues to decline, but retained most of the previous session’s gain.

Except for 5¢ higher in away Feb, Live Cattle futures closed an average of 21¢ lower.

Feeder Cattle futures closed an average of 68¢ higher.

Wholesale beef values were steady to weak on light to moderate demand and moderate offerings, according to the Agricultural Marketing Service.

Choice boxed beef cutout value was 63¢ lower Tuesday afternoon at $210.93/cwt. Select was 9¢ higher at $207.51.

Corn futures closed mostly 1¢ to 3¢ higher.

Soybean futures closed mostly 2¢ to 3¢ higher.

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Major U.S. financial indices jumped Tuesday, with support including news of China taking efforts to stimulate economic growth in the wake of novel coronavirus.

The Dow Jones Industrial Average closed 407 points higher. The S&P 500 closed 48 points higher. The NASDAQ was up 194 points.

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Agricultural producer sentiment rose sharply in January, according to the Purdue University/CME Group Ag Economy Barometer. It increased 17 points from December to a reading of 167, led by a significant jump of 24 points in the Index of Future Expectation, one of two sub-indexes that comprise the barometer. The other, the Index of Current Conditions increased 1 point.

Keep in mind the monthly survey of 400 agricultural producers took place around the time that the U.S. and China signed the phase-one trade deal.

“The Phase One Trade Agreement has largely been considered a win for U.S. exporters, although few details are available regarding how the additional $200 billion in purchases by China will be distributed over the next two years and how much impact it will have on the U.S. farm sector,” says James Mintert, the barometer’s principal investigator and director of Purdue University’s Center for Commercial Agriculture.

Even so, producer expectations continue to improve for increased U.S. agricultural exports over the next five years. As recent as October, only 55% of producers surveyed expected agricultural exports to increase. From November through January, about 70% of those surveyed expect to see an increase in U.S. agricultural exports in the next five years.

Consistently, a small percentage of respondents queried each winter plan to grow rapidly, while a relatively large group has no plans to grow or plans to exit or retire from farming. Those saying they have no growth plans and/or expect to exit/retire has been rising steadily since 2018. In January this year, a combined 56% of respondents said they have no plans to grow or plan to exit/retire, up from 50% in 2019, and up from 39% in 2018.

“The tremendous volatility the ag sector has experienced the last couple of years could be interpreted as a signal to producers to be more cautious regarding future expansion plans,” Mintert says.

By | February 4th, 2020|Daily Market Highlights|

Cattle Current Daily—Feb. 4, 2020

After early support, then pressure, then support again, Cattle futures continued to rebound from the recent selloff. Friday’s Cattle inventory report likely offered some support, with less estimated year-over-year feeder cattle supply outside feedlots Jan. 1: 26.45 million head, which was is 0.40% less (-105,300 head). 

Live Cattle futures closed an average of 57¢ higher, from 30¢ to $1.05 higher. 

Except for $1.25 lower in away-Jan, Feeder Cattle futures closed an average of 98¢ higher (57¢ to $1.12 higher).

Wholesale beef values were lower on Choice and sharply lower on Select with light to moderate demand and moderate to heavy offerings, according to the Agricultural Marketing Service.

Choice boxed beef cutout value was $1.44 lower Monday afternoon at $211.56/cwt. Select was $3.24 lower at $207.42.

Corn futures closed mostly 1¢ lower.

Soybean futures closed mostly 3¢ to 4¢ higher through Mar ’21 and then mostly 1¢ higher.

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Major U.S. financial indices rebounded some on Monday. Although fears about the potential economic impact of novel coronavirus continued, positive economic news took the spotlight.

For instance, contrary to trader expectations, the manufacturing sector expanded last month.

“The January PMI® (Purchasing Managers Index) registered 50.9%, an increase of 3.1 percentage points from the seasonally adjusted December reading of 47.8%,” according to Timothy R. Fiore, CPSM, C.P.M., Chair of the Institute for Supply Management® (ISM®) Manufacturing Business Survey Committee. “Global trade remains a cross-industry issue, but many respondents were positive for the first time in several months.”

The Dow Jones Industrial Average closed 143 points higher. The S&P 500 closed 23 points higher. The NASDAQ was up 122 points.

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“The inventory of beef replacement heifers is 18.4% of the beef cow inventory, a level that historically has not indicated significant liquidation” says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, providing more perspective to Friday’s USDA Cattle report, in his weekly market comments. “However, in 2019, replacement heifers were 18.6% of the beef cow inventory, but sharply higher beef cow slaughter at the end of the year pushed the culling rate fractionally over 10% and resulted in modest reduction in the herd inventory. The number of beef heifers expected to calve in 2020 is 3.5 million head, 0.8% lower year over year.”

The USDA report pegged beef cows Jan. 1 at 31.31 million head, which was 1.18% less (-374,000 head) than the previous year.

“The peak beef cow inventory for 2019 was 31.7 million (revised down by 75,000 head from the previous report). This means that the total herd expansion in this cycle was an increase of 2.73 million head from the 2014 low of 29.0 million cows,” Peel says. “That is a total cyclical expansion of 9.4% or an average of 1.9% per year for the five years of expansion.”

Of course, there could be renewed expansion.

“Modestly higher prices projected in 2020, combined with improved international market potential, could restart herd expansion,” Peel says.  “Alternatively, continued political and economic turbulence or shocks, such as coronavirus, could drag markets down and hold cattle inventories flat or fall into more liquidation.”

By | February 3rd, 2020|Daily Market Highlights|

Cattle Current Daily—Feb. 3, 2020

Negotiated cash fed cattle trade ended the week generally $2-$3 lower on a live basis at $122/cwt. in the Southern Plains and Nebraska; $122-$123 in the western Corn Belt. Dressed sales were $3-$4 lower at $195.

Although increasing worries about the economic impact of coronavirus weighed on equity markets Friday, Cattle futures—especially Feeder Cattle—continued to emerge from the week’s doldrums, likely helped along by short covering, month-end positioning and bullish expectations for Jan. 1 cattle numbers (see below).

Live Cattle futures closed narrowly mixed, from an average of 32¢ lower to an average of 14¢ higher.

Except for 37¢ lower in newly minted away-Jan, Feeder Cattle futures closed an average of 68¢ higher (40¢ to $1.30 higher)

Wholesale beef values were weak to lower on light to demand and offerings, according to the Agricultural Marketing Service.

Choice boxed beef cutout value was 35¢ lower Friday afternoon at $213.00/cwt. Select was 82¢ lower at $210.66.

Corn futures closed mostly fractionally higher to 1¢ higher.

Soybean futures closed mostly 2¢ to 3¢ lower. 

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Major U.S. financial indices dove lower Friday, fueled by growing fears about novel coronavirus and its potential impact on the global economy.

A day after the World Health Organization declared novel coronavirus a public health emergency of international concern, but made no recommendation for travel restrictions to China, major U.S. airlines suspended flights between the U.S. and China.

As well, U.S. Health and Human Services (HHS) declared the virus a public health emergency in this country.

“While this virus poses a serious public health threat, the risk to the American public remains low at this time, and we are working to keep this risk low,” according to Health and Human Services Secretary Alex M. Azar II.  “We are committed to protecting the health and safety of all Americans, and this public health emergency declaration is the latest in the series of steps the Trump Administration has taken to protect our country.”

The Dow Jones Industrial Average closed 603 points lower. The S&P 500 closed 58 points lower. The NASDAQ was down 148 points.

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USDA’s Cattle report issued Friday provides markets ample food for thought. There were fewer beef cows and dairy cows than pre-report estimates but more beef replacement heifers and slightly more total cattle and calves.

USDA pegs the Jan. 1 inventory of all cattle and calves at 94.41 million head, which is 0.41% less (-391,400 head) than a year earlier. Analysts surveyed by Urner Barry and reported by the Daily Livestock Report estimated a decline of 0.5% less.

Beef cows Jan. 1 were 31.31 million head, which was 1.18% less (-374,000 head) than the previous year. Analysts responding to the Urner Barry survey looked for a decline of 0.6%.

Beef replacement heifers Jan 1 of 5.77 million head were 1.92% fewer (-113,000 head) than the previous year. Ahead of the report, analysts surveyed by Urner Barry projected a 3.5% decline.

Milk cows Jan. 1 of 9.33 million head were 2.10% less (-113,000 head) than the same time a year earlier, compared to pre-report estimates of 1.2% less.

The 2019 calf crop was estimated at 36.06 million head, which was 0.70% less (-253,100 head) than in 2018

Cattle on feed Jan. 1—for all feedlots—of 14.68 million head was 2.16% more (309,800 head) than the previous year.

The estimated feeder cattle supply outside feedlots Jan. 1 of 26.45 million head is 0.40% less (-105,300 head) than a year earlier.

There were 1.61 million head grazing small grain pastures in Kansas, Oklahoma and Texas on Jan. 1. That was 15.26% less (-290,000 head) than a year earlier.

Cow Inventory Down In Most Leading Cow States

States with 1 million or more beef cows at the beginning of the year, and the ranking by size, were the same as a year earlier. In order of size, with Jan. 1 cow numbers in parenthesis: Texas (4.57 million); Oklahoma (2.09 million); Missouri (2.08 million); Nebraska (1.92 million); South Dakota (1.73 million); Kansas (1.43 million); Montana (1.43 million); Kentucky (1.01 million).

Of those eight states, beef cow numbers increased year over year in Missouri (+24,000 head or 1.17%) and Kentucky (+4,000 head or 0.39%).

For the other six states, year-over-year declines in beef cow numbers ranged from -19,000 head in Nebraska (-0.98%) to -96,000 head in Kansas (-6.28%).

By | February 1st, 2020|Daily Market Highlights|

Cattle Current Daily—Jan. 31, 2020

Negotiated cash fed cattle trade was slow with moderate demand in the Southern Plains through Thursday afternoon. Based on USDA reports, live prices were steady with the previous day at $122/cwt., which was $2 less than last week.

Cattle futures finally firmed on Thursday after taking their lumps for the previous five sessions, and in the face of another limit and near limit-down day for Lean Hogs.

Except for 2¢ lower in near Apr, Live Cattle futures close an average of 29¢ higher (2¢ to 62¢ higher).

Except for unchanged in the back contract, Feeder Cattle futures closed an average of 25¢ higher (5¢ to 67¢ higher).

Wholesale beef values were steady to weak on light to moderate demand and offerings, according to the Agricultural Marketing Service.

Choice boxed beef cutout value was 17¢ lower Thursday afternoon at $213.35/cwt. Select was 45¢ lower at $211.48.

Corn futures closed 4¢ to 5¢ lower through Jly ’21 and then mostly 1¢ lower.

Soybean futures closed 12¢ to 16¢ lower through Jan ’21 and then 5¢ to 10¢ lower.

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Major U.S. financial indices closed higher Thursday, after being sharply lower for most of the session. Various chatter assigned the late-day turnaround to comments from the World Health Organization (WHO), which declared novel coronavirus a public health emergency of international concern (PHEIC) but made no recommendation for travel restrictions to China.

According to a statement from WHO’s Emergency Committee: “The Committee believes that it is still possible to interrupt virus spread, provided that countries put in place strong measures to detect disease early, isolate and treat cases, trace contacts, and promote social distancing measures commensurate with the risk…”

The Dow Jones Industrial Average closed 124 points higher. The S&P 500 closed 10 points higher. The NASDAQ was up 23 points.

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“Despite the perceived ‘health halo,’ synthetic meats are a long way off from being a magical mixture of vegetables. If you’re looking for a healthy snack, you can do better than these industrial food-like substances,” says Will Coggin, managing director of the nonprofit Center for Consumer Freedom (CCF).

Unbeknownst to many consumers, the folks at CCF point out plant-based meats are ultra-processed foods, which the National Institute of Health says may cause overeating and weight gain. According to the NOVA food classification system, ultra-processed foods are created by a series of industrial techniques and processes. Ingredients in synthetic meats include methylcellulose, which is commonly used in laxatives and lubricant, titanium dioxide, often used in paint, and propylene glycol, used in antifreeze.

That’s the gist of an ad CCF will air during this weekend’s Super Bowl. It features a spelling bee, where children are asked to spell some of the chemical ingredients in synthetic meats. You can see it here.

“In addition to ads CCF has run, the campaign has also been featured in articles by The New York Times, The Washington Post, and The Wall Street Journal,” Coggin says. You can see previous ads in the campaign here.

By | January 30th, 2020|Daily Market Highlights|

Cattle Current—Jan. 30, 2020

Negotiated cash fed cattle trade remained undeveloped through Wednesday afternoon, based on USDA reports.

There were 477 head offered in the weekly Fed Cattle Exchange auction and no takers.

Slaughter steers and heifers sold $1-$2 lower at Sioux Falls in South Dakota with 105 Ch 2-3 steers brought an average price of $120.43/cwt. at an average weight of 1,441 lbs. Country trade in the western Corn Belt last week was at mostly $124-$125.

After glimmers of support early on, Cattle futures continued to trek lower with the overall lack of commodity support, no cash direction and longs fleeing the market.

 Live Cattle futures closed an average of 48¢lower. Between Jan. 21 and 28, open interest declined by 30,377 contracts (down 7.6%)

 Except for 5¢higher in soon-to-expire Jan, Feeder Cattle futures closed an average of 71¢lower.

Wholesale beef values were firm on Choice and steady on Select with light to moderate demand and moderate offerings, according to the Agricultural Marketing Service.

Choice boxed beef cutout value was 67¢ higherWednesday afternoon at $213.52/cwt. Select was 23¢ lower at $211.93.

Corn futures closed mostly 1¢ to 2¢ lower.

Soybean futures closed mostly 1¢ lower.

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Major U.S. financial indices closed narrowly mixed Wednesday, with little additional news regarding the spread of coronavirus balanced by positive quarterly earnings reports from bellwethers, such as Apple, and by the Fed’s decision to leave lending rates unchanged.

“Information received since the Federal Open Market Committee (FOMC) met in December indicates that the labor market remains strong and that economic activity has been rising at a moderate rate. Job gains have been solid, on average, in recent months, and the unemployment rate has remained low,” according to the FOMC statement. “Although household spending has been rising at a moderate pace, business fixed investment and exports remain weak. On a 12‑month basis, overall inflation and inflation for items other than food and energy are running below 2%.”

The Dow Jones Industrial Average closed 11 points higher. The S&P 500 closed 2 points lower. The NASDAQ was up 5 points.

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President Trump signed the U.S.-Mexico-Canada Agreement (USMCA) Wednesday, paving the way for the three nations to begin hashing out uniform regulations for the new agreement that replaces the North American Free Trade Agreement (NAFTA). And, the Canadian Parliament must ratify the pact but is expected to do so.

“This agreement shows the rest of the world the United States is open for business,” says U.S. Secretary of Agriculture, Sonny Perdue. “USMCA is critical for America’s farmers and ranchers, who will now have even more market access to our neighbors to the north and the south.”

Canada and Mexico are the first and second largest export markets for United States food and agricultural products, totaling more than $39.7 billion food and agricultural exports in 2018.

With USMCA, all food and agricultural products that have zero tariffs under NAFTA will remain at zero tariffs. Since the original NAFTA did not eliminate all tariffs on agricultural trade between the United States and Canada, the USMCA will create new market access opportunities for United States exports to Canada of dairy, poultry, and eggs, and in exchange the United States will provide new access to Canada for some dairy, peanut, and a limited amount of sugar and sugar-containing products.

U.S. red meat exports to Mexico and Canada in 2019 totaled about 1.25 million metric tons valued at $3.8 billion, according to the U.S. Meat Export Federation.

By | January 29th, 2020|Daily Market Highlights|

Cattle Current Daily—Jan. 29, 2020

Futures and equity markets recovered some ground on Tuesday from the previous day’s steep selloff tied to growing fears about the global spread of novel coronavirus. 

Although mainly lower, the decline in Cattle futures was soft rather than the limit and near limit-down moves in the previous session.

Live Cattle futures close an average of 38¢ lower, as open interest continued to dwindle.

Except for 15¢ and 22¢ higher in the front two contracts, Feeder Cattle futures closed an average of 29¢ lower.

Wholesale beef values were weak on Choice and higher on Select with moderate to good demand and heavy offerings, according to the Agricultural Marketing Service.

Choice boxed beef cutout value was 74¢ lower Tuesday afternoon at $212.85/cwt. Select was $1.66 higher at $212.16.

Corn futures closed mostly 2¢ to 5¢ higher through Jul ’21 and then mostly 1¢ higher.

Soybean futures closed mostly 2¢ lower.

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Investors seemed to take a more measured view of the global spread of coronavirus, pushing major U.S. financial indices higher Tuesday, led by tech and financial stocks.

The Dow Jones Industrial Average closed 187 points higher. The S&P 500 closed 32 points higher. The NASDAQ was up 130 points.

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Consumer appetite for Prime beef continues strong, based on year-over-year increases for Prime premiums, relative to the increased percentage of carcasses hitting the grade for the first few weeks of the year.

For the first four weeks of 2020, according to USDA reports, the Prime premium was $12.63 to $13.19/cwt., compared to $9.42-$9.44 a year earlier, or about 34-40% higher. At the same time, through the first three weeks, the percentage of fed cattle grading Prime was 9.39% to 9.85% compared to 9.16% to 9.31% at the same time last year.

“Heavier cattle weights could be a contributing factor, but within the last three years, there seems to be a clear push from cattle feeders to achieve the higher Prime grade,” say analysts with the Livestock Marketing Information Center (LMIC), in the latest Livestock Monitor. “Spreads between Prime and Choice have not been as low as they were in 2018 but have not been maintaining historical premiums either.”

For perspective, the premium for Prime was $20-$24 in September and October.

LMIC analysts note Prime supplies seemed to outpace the market as recently as 2018, when the Prime-Choice spread dropped as the percentage of carcasses grading Prime increased from 6.0% to 7.95% year over year. It averaged 8.60% last year.

The Prime market remains potentially fragile, though.

“Interest from retailers, such as Costco and Walmart to offer Prime cuts may be short-lived,” say LMIC analysts. “A U.S. recession and/or contraction in the cattle industry could put pressure on future demand for Prime-graded beef moving forward, if it no longer is price competitive or consumers are watching their wallets.”

By | January 28th, 2020|Daily Market Highlights|

Cattle Current Daily—Jan. 28, 2020

Growing fears about the global spread of novel coronavirus hammered equity and futures markets Monday.

Live Cattle futures close an average of $2.29 lower, from $1.35 lower at the back to limit-down $3.00 toward the front.

Other than 5¢ higher in waning spot Jan, Feeder Cattle futures closed an average of $3.84 lower, from $3.17 lower toward the back to limit-down $4.50 toward the front.

Wholesale beef values were lower on Choice and steady on Select with light to moderate demand and moderate offerings, according to the Agricultural Marketing Service.

Choice boxed beef cutout value was 90¢ lower Monday afternoon at $213.59/cwt. Select was 20¢ lower at $210.50.

Corn futures closed mostly 2¢ to 6¢ lower.

Soybean futures closed 4¢ to 5¢ lower through Jan ‘21 and then mostly 1¢ higher. 

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As alluded to earlier, equity markets sank Monday beneath the weight of increasing fears about the global spread of coronavirus and its potential economic impact, especially given that the epicenter is in China, a driver of the world’s economic growth.

The Dow Jones Industrial Average closed 453 points lower. The S&P 500 closed 51 points lower. The NASDAQ was down 175 points.

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“With total cattle inventories at or just past a cyclical peak, feedlot inventories will likely peak in the next few months,” says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly market comments. “However, average feedlot inventories are currently record large. After peaking last August then declining for two months, the 12-month moving average of feedlot inventories moved higher the last three months and is currently at 11.639 million head, record large for the current data series back to 1996.” He explains the 12-month moving average removes seasonality, allowing month-to-month comparisons of annual average feedlot inventories.

In reviewing Friday’s monthly Cattle on Feed report, Peel points out the 11.96 million head of cattle on Feed Jan. 1 (feedlots with 1,000 head or more capacity) were the most for the month since 2008. December placements of 1.83 million head were the most for the month since 2011 and December marketings of 1.83 million head represented the highest total for the month since 2010.

“Cattle slaughter is expected to decrease in 2020, including a slight year-over-year decline in steer and heifer slaughter and lower cow slaughter,” Peel says.  “However, large current feedlot inventories confirm that slaughter will be higher early in the year before decreasing in the second half of 2020. Total annual beef production is expected to be slightly higher year over year as heavier carcass weights offset lower slaughter. Beef production in the first half of the year will be higher on increased slaughter and larger carcass weights before lower slaughter pulls beef production down late in the year.”

By | January 27th, 2020|Daily Market Highlights|

Cattle Current Daily—Jan. 27., 2020

Negotiated cash fed cattle trade ended up generally steady to firm last week, with live prices in the Southern Plains and Nebraska at $124/cwt. and at $124-$126 in the western Corn Belt. Dressed prices were at $199 in Nebraska and mostly $198-$199 in the western Corn Belt.

Cattle futures continued lower, to a lesser degree than the previous session, helped along by weaker outside markets.

Other than an average of 13¢ higher in three contracts, Live Cattle futures close an average of 24¢ lower.

Feeder Cattle futures closed an average of 69¢ lower. 

Wholesale beef values were weak to lower on light to moderate demand and moderate offerings, according to the Agricultural Marketing Service.

Choice boxed beef cutout value was 83¢ lower Friday afternoon at $214.49/cwt. Select was 50¢ lower at $210.70.

Corn futures closed mostly 3¢ to 5¢ lower.

Soybean futures closed mostly 5¢ to 8¢ lower through Nov ‘21 and then mostly 1¢ higher. 

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Growing fears about coronavirus and its potential impact on the fragile global economy pressured equity markets Friday.

The Dow Jones Industrial Average closed 170 points lower. The S&P 500 closed 30 points lower. The NASDAQ was down 87 points.

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Traders will likely view Friday’s monthly USDA Cattle on Feed report as neutral, given the fact that estimates basically mirrored pre-report expectations.

December placements in feedlots with 1,000 head or more capacity were 1.83 million head, which was 3.45% (+61,000 head) more year over year. That was 0.15% more than average estimates ahead of the report.

Marketings in December of 1.83 million head were 5.34% (+93,000 head) more than a year earlier. In terms of placement weights, 50.32% went on feed weighing 699 lbs. or less, 38.73% weighed 700-899 lbs. and 10.94% weighed more than 900 lbs.

Cattle on feed Jan. 1 of 11.96 million head were 2.29% (+268,000 head) more than the same date a year earlier. That was 0.19% more than average estimates ahead of the report.

By | January 25th, 2020|Daily Market Highlights|

Cattle Current Daily—Jan.24, 2020

Negotiated cash fed cattle trade continued steady to firm Thursday with live sales at $124/cwt. in Nebraska and at $125 in the western Corn Belt. Dressed sales were at $199 in Nebraska and at $198.00-$199.50 in the western Corn Belt. For the week, live sales in the Southern Plains also were steady at $124.

Cattle futures weakened, though, closing down triple digits, amid active trade. Pressure could have included the bounce higher in nearby Corn futures, demand wonderments related to the global spread of the coronavirus, as well as positioning ahead of the monthly Cattle on Feed report (see below) that will be released Friday afternoon. Definitive explanations were elusive, though.

Live Cattle futures close an average of $1.88 lower.

Feeder Cattle futures closed an average of $2.40 lower for an average of $3.47 lower in the last two sessions.

Wholesale beef values were firm on Choice and lower on Select, with light to moderate demand and offerings, according to the Agricultural Marketing Service.

Choice boxed beef cutout value was 36¢ higher Thursday afternoon at $215.32/cwt. Select was 82¢ lower at $211.20.

Corn futures closed 4¢ to 5¢ higher through the front three contracts and then mostly 1¢ to 2¢ higher.

Soybean futures closed 3¢ to 4¢ lower in the front six contracts and then mostly 1¢ to 4¢ higher. 

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Major U.S. financial indices closed narrowly mixed Thursday. Most of the unease seemed to continue to stem from the spread of novel coronavirus. However, the World Health Organization (WHO) offered some optimism in a statement.

“On 22 January, the members of the Emergency Committee expressed divergent views on whether this event constitutes a Public Health Emergency of International Concern (PHEIC) or not,” according to the statement. “At that time, the advice was that the event did not constitute a PHEIC, but the Committee members agreed on the urgency of the situation and suggested that the Committee should be reconvened in a matter of days to examine the situation further.”

The Dow Jones Industrial Average closed 26 points lower. The S&P 500 closed 3 points higher. The NASDAQ was up 18 points.

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Heading into Friday’s monthly Cattle on Feed report, analysts surveyed by Urner Barry expected, on average, December feedlot placements to be 3.3% higher year over year, according to the Daily Livestock Report.

Those analysts expect to see December marketings up 5.3% and total cattle on feed Jan. 1—in feedlots with 1,000 head or more capacity—to be up 2.1%.

In the meantime, cattle feeding economics grow more positive, according to the most recent Historical and Projected Kansas Feedlot Net Returns, from Kansas State University.

Net returns projected for closeouts in December are +$51.13 per head for steers and +$40.44 per head for heifers, according to the report. That’s with estimated feedlot cost of gain (FCOG) of $89.49/cwt. for steers and $95.78 for heifers.

Moreover, the report projects positive net returns for steers in six of the next eight months, counting January with a range of -$12.44 (June) to +$122.26 (January) with FCOG of $85.75 (July) to $94.77 (February).

KSU projects positive net returns for heifers in the next eight months, ranging from +$3.60 (August) to +$146.75 (January) with FCOG of $93.01 (August) to $99.88 (February).

Keep in mind that these estimates are cash to cash and do not account for price risk management.

By | January 23rd, 2020|Daily Market Highlights|

Cattle Current Daily—Jan. 23, 2020

Negotiated cash fed cattle trade and demand was moderate in the Southern Plains through Wednesday afternoon, with live prices steady with the prior week at $124/cwt.

That matched the weighted average price of $124 for the single lot (112 head) of Kansas heifers that sold in the weekly Fed Cattle Exchange auction. The total offering was 561 head (four lots).

Likewise, Choice steers and heifers sold steady at the fat auction in Tama, IA with 123 head of Ch 2-3 steers bringing an average price of $125.84 at an average weight of 1,472 lbs.

At Sioux Falls Regional in South Dakota, though, slaughter steers sold steady to $1 lower: 223 head of Ch 2-3 steers weighing an average of 1,569 lbs. and bringing an average price of $120.06.

Cattle futures softened Wednesday, led by Feeder Cattle, as the lack of detail and purchases associated with the phase-one trade deal between the U.S. and China continues to create unease in commodity markets.

Other than 2¢ higher in away Apr, Live Cattle futures close an average of 36¢ lower.

Feeder Cattle futures closed an average of $1.07 lower (45¢ to $1.62 lower).

Wholesale beef values were firm on Choice and lower on Select, with light to moderate demand and offerings, according to the Agricultural Marketing Service.

Choice boxed beef cutout value was 45¢ higher Wednesday afternoon at $214.96/cwt. Select was $1.45 lower at $212.02.

Corn futures closed mostly unchanged to 1¢ lower.

Soybean futures closed fractionally lower to 2¢ lower.

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Major U.S. financial indices closed mixed and little changed Wednesday. Competing news included more positive quarterly earnings than expected from IBM and the previous day’s confirmation of coronavirus in a Chinese traveler in Seattle.

The Dow Jones Industrial Average closed 9 points lower. The S&P 500 closed fractionally higher. The NASDAQ was up 12 points.

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Total pounds of beef in freezers as of Dec. 31 were 1% more than the previous month at 481.01 million lbs., but down 3% from the previous year, according to USDA’s monthly Cold Storage report released Wednesday.

Frozen pork supplies were up 1% from the previous month at 580.1 million lbs., which was 15% more than a year earlier.

Total red meat supplies in freezers were 1.01 billion lbs., up 1% from the previous month and up 5% from the prior year.

Total frozen poultry supplies were down 1% from the previous month but up 1% from a year earlier at 1.20 billion lbs.

By | January 22nd, 2020|Daily Market Highlights|

Cattle Current—Jan. 22, 2020

Cattle futures closed narrowly mixed on Tuesday, amid lackluster trade and little direction.

Other than 2¢ higher in spot Feb, Live Cattle futures close an average of 9¢ lower.

Feeder Cattle futures closed narrowly mixed, from an average of 26¢ lower across the front half of the board to an average of 20¢ higher across the back half.  

Wholesale beef values were steady on moderate demand and moderate to heavy offerings, according to the Agricultural Marketing Service.

Choice boxed beef cutout value was 13¢ lower Tuesday afternoon at $214.51/cwt. Select was 1¢ lower at $213.47. Other than a single day last February, the Choice-Select spread the past four days ($1.04 to $1.43) is the narrowest since September of 2017.

Corn futures closed 1¢ lower across the front half of the board and then fractionally lower.

Soybean futures closed 10¢ to 13¢ lower through Sep ’20 and then mostly 6¢ to 7¢ lower.

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Major U.S. financial indices closed lower Tuesday, with some of the pressure reportedly stemming from confirmation of coronavirus in a Chinese traveler in Seattle and the potential impact on international travel and tourism.

The Dow Jones Industrial Average closed 152 points lower. The S&P 500 closed 8 points lower. The NASDAQ was down 18 points.

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USDA adjusted forecast fourth-quarter 2019 beef production 15 million lbs. higher than the previous month to 7.0 billion lbs., based on the increased pace of non-fed cattle slaughter in December, especially beef cow slaughter.

In the latest monthly Livestock, Dairy and Poultry Outlook, analysts with USDA’s Economic Research Service (ERS) say beef cow slaughter is significantly higher since the third quarter last year—13% to 25% more than the same period a year earlier, for the first four weeks of December. That’s based on weekly Actual Slaughter Under Federal Inspection reports.

“Since the week ending Nov. 15, prices for live cutter cows have remained more than 10% above prices for the same period a year ago. This, coupled with tight forage supplies for some producers, has likely encouraged higher culling rates” ERS analysts explain.

As for fed cattle, more feedlot placements than expected last month point toward increased fed cattle marketing and beef production in the second quarter this year than originally anticipated, according to ERS.

“However, because those calves were likely placed in feedlots rather than remaining on winter wheat pastures as expected, the placement forecast for first-half 2020 was reduced,” say ERS analysts. “As a result, fewer fed cattle marketings are anticipated in second-half 2020, contributing to less expected beef production during that time.”

By | January 21st, 2020|Daily Market Highlights|

Cattle Current Daily—Jan. 21, 2020

Cattle futures and equity markets were closed Monday, in observance of Martin Luther King, Jr. Day.

Wholesale beef values were firm on moderate demand and light offerings, according to the Agricultural Marketing Service.

Choice boxed beef cutout value was 47¢ higher Monday afternoon at $214.64/cwt. Select was 73¢ higher at $213.48.

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Despite last year’s many weather challenges, Derrell Peel, Extension livestock marketing specialist at Oklahoma State University notes that total Dec. 1 hay stocks were 6.9% more year over year at 84.488 million tons. However, he adds the total is 5.4% less than the average for 2014-18.

“Hay stocks were generally up year over year in the Western, Mountain and Plains states, and the Corn Belt, but down in the Great Lakes, Appalachian and Eastern regions,” Peel explains, in his weekly market comments. “Missouri had the largest hay stocks and showed the most increase year over year with stocks up 64.3%, the highest level for the state since 2009. Among the top 10 states for hay stocks, Kentucky, Nebraska, Oklahoma and Tennessee had year over year declines.

According to recent USDA data, Peel says total production of all hay was 128.864 million tons, which was 4.3% more year over year—consisting of 42.6% alfalfa hay and 57.4% other hay. Total hay production was 2.4% below the 2014-2018 average.

“Total hay supplies appear to be generally adequate, although quality may be an issue in some instances,” Peel says. “However, average hay prices are projected to increase 2-4% over the previous crop year. Regionally, the tightest supplies appear to be in the Southeast, Appalachian and Great Lakes regions. Nebraska stands out as a major hay state with decreased production and stocks but surrounded on all sides by states with increased year over year hay production.”

By | January 20th, 2020|Daily Market Highlights|

Cattle Current Daily—Jan. 20, 2020

Negotiated cash fed cattle trade through Friday afternoon was steady on a live basis in the Southern Plains and Nebraska at $124/cwt., but $1 lower in the western Corn Belt at $123-$125. Dressed sales were steady to $2 lower at $198-$200.

Cattle futures closed mixed on Friday, but with a firmer feel in Live Cattle as traders positioned ahead of the three-day weekend.

Other than unchanged and 5¢ lower in the back three contracts, Live Cattle futures close an average of 33¢ higher.

Other than 17¢ and 7¢ higher in two nearby contracts, Feeder Cattle futures closed an average of 43¢ lower amid light trade.

Wholesale beef values were higher on moderate to good demand and moderate offerings, according to the Agricultural Marketing Service.

Choice boxed beef cutout value was $1.27 higher Friday afternoon at $214.17/cwt. Select was $1.28 higher at $212.75.

Corn futures closed 12¢ to 13¢ higher in the front three contracts and then mostly 5¢ to 8¢ higher, basically recovering what was lost in the previous session.

Soybean futures closed 2¢ to 5¢ higher. 

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Major U.S. financial indices closed higher Friday, amid positive quarterly corporate earnings and economic news that included a surge in housing starts.

Privately-owned housing starts in December were at a seasonally adjusted annual rate of 1,608,000, which was 16.9% more than the revised November estimate, according to the U.S. Census Bureau and the U.S. Department of Housing and Urban Development.

The Dow Jones Industrial Average closed 50 points higher. The S&P 500 closed 12 points higher. The NASDAQ was up 31 points.

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“Wholesale beef prices are below year-ago levels, but packers continue to pay slightly higher prices than a year ago to bid cattle out of the feedlots, despite weaker margins,” says analysts with USDA’s Economic Research Service (ERS), in the monthly Livestock, Dairy and Poultry Outlook, describing factors for updated first-quarter price forecasts.

“This strength was carried into first-quarter 2020, and that price forecast was raised by $3 to $125/cwt. (fed steer). However, larger numbers of cattle are expected to be available for marketing during the second quarter, which is expected to moderate prices. The 2020 average price for fed steers is forecast at $117.50.”

ERS also increased expectations for first-quarter feeder steer prices (750-800 lbs., basis Oklahoma City).

“Based on recent price data and fewer expected cattle overwintering on pasture, the price forecast for first-quarter 2020 feeder steers was raised by $4 to $144/cwt. The second-quarter 2020 price forecast was raised $2 to $144.00. The fourth-quarter 2020 price forecast was raised by $1 to $145 on expected feedlot demand. The 2020 annual price forecast for feeder steers was raised by $2 to $145.”

By | January 18th, 2020|Daily Market Highlights|

Cattle Current Daily—Jan. 17, 2020

Negotiated cash fed cattle prices began to take shape through Thursday afternoon. Live prices in the Southern Plains were steady at $124/cwt. Although too few to trend, early dressed prices up north were steady to $2 lower at $198-$200, based on USDA reports.

Although backing away from session lows, reduced momentum in the cash market helped push Cattle futures lower, as did likely selling and profit taking by those who provided fuel ahead of the phase-one trade agreement between the U.S. and China. That and Senate ratification of the U.S.-Mexico-Canada Agreement (USMCA), which replaces the North American Free Trade Agreement (see below) hold plenty of promise, but plenty of questions remain.

Live Cattle futures close an average of 51¢ lower.

Feeder Cattle futures closed unchanged to an average of 27¢ lower through the front five contracts and then an average of 6¢ higher.

Wholesale beef values were firm to higher on moderate to fairly good demand and moderate offerings, according to the Agricultural Marketing Service.

Choice boxed beef cutout value was 37¢ higher Thursday afternoon at $212.90/cwt. Select was $1.80 higher at $211.47.

Corn futures closed 11¢ to 12¢ lower in the front three contracts and then mostly 5¢ to 7¢ lower.

Soybean futures closed 1¢ to 4¢ lower through Sep ’21 and then mostly 1¢ higher.

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Major U.S. financial indices closed strongly higher Thursday, buoyed by positive economic news and quarterly earnings reports.

The Dow Jones Industrial Average closed 267 points higher. The S&P 500 closed 27 points higher. The NASDAQ was up 98 points.

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The U.S. Senate, on Thursday, approved the U.S.-Mexico-Canada Agreement (USMCA), which replaces the North American Free Trade Agreement (NAFTA).

“We’ve long waited for this day and now USMCA will finally head to the President’s desk,” said U.S. Secretary of Agriculture Sonny Perdue. “The passage of USMCA is great news for America’s farmers and ranchers. With Congressional consideration now complete, our farmers and ranchers are eager to see the President sign this legislation and begin reaping the benefits of this critical agreement.”

Canada and Mexico are the first and second largest export markets for United States food and agricultural products, totaling more than $39.7 billion food and agricultural exports in 2018, according to USDA.

All food and agricultural products that have zero tariffs under the North American Free Trade Agreement (NAFTA) will remain at zero tariffs. Since the original NAFTA did not eliminate all tariffs on agricultural trade between the United States and Canada, the USMCA will create new market access opportunities for United States exports to Canada of dairy, poultry, and eggs. In exchange, the U.S. will provide new access to Canada for some dairy, peanut, and a limited amount of sugar and sugar-containing products.

“This year, we’ve secured new agreements with Japan, China, Canada and Mexico—four of our largest trading partners—which gives producers greater market access for their products and a renewed sense of optimism heading into the 2020 growing season,” explained Iowa Secretary of Agriculture Mike Naig.

According to the U.S. International Trade Commission, Naig explained full implementation of USMCA could increase U.S. agricultural exports by $2.2 billion.

“The U.S. Senate moving quickly to approve USMCA reaffirms the United States’ commitment to two key trading partners, both of which are very important destinations for U.S. pork, beef and lamb,” says Dan Halstrom, president and CEO of the U.S. Meat Export Federation (USMEF).

Mexico and Canada account for about one-third of all U.S. red meat exports, according to USMEF. Shipments to Mexico and Canada in 2019 totaled about 1.25 million metric tons valued at $3.8 billion.

By | January 16th, 2020|Daily Market Highlights|

Cattle Current Daily—Jan. 16, 2020

Cash fed cattle trade remained undeveloped through Wednesday afternoon, but early indicators were for at least steady prices.

For instance, Choice steers and heifers sold $2 higher at the fat auction in Tama, IA. Ch 2-4 steers (144 head) weighing an average of 1,416 lbs. sold for an average of $126.26/cwt.

Similarly, slaughter steers and heifers sold $2-$3 higher at Sioux Falls Regional in South Dakota. There were 201 Ch 2-3 steers weighing an average of 1,440 lbs. and bringing an average of $122.41.

Country trade in the western Corn Belt last week was at $124-$126.

There were 734 head offered in Wednesday’s Fed Cattle Exchange auction, with 435 head—two lots of steers in the Southern Plains—selling for a weighted average price of $124.22 for delivery at 1-9 days. The price was a tick higher than last week’s country trade in the region.

Futures market reaction to signing of the phase-one trade deal between the U.S. and China (see below) was largely muted Wednesday, likely a combination of some betting on the come ahead of the deal and the fact that details remain sketchy.

Live Cattle futures close an average of 19¢ lower.

Feeder Cattle futures closed an average of 35¢ lower through the front five contracts and then an average of 44¢ higher.

Wholesale beef values were steady to weak on light to moderate demand and moderate to heavy offerings, according to the Agricultural Marketing Service.

Choice boxed beef cutout value was 23¢ lower Wednesday afternoon at $212.53/cwt. Select was 63¢ lower at $209.67.

Corn futures closed mostly 1¢ lower.

Soybean futures closed 10¢-13¢ lower through Sep ’21 and then 8¢ lower.

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Major U.S. financial indices edged higher Wednesday. While there appeared to be optimism for the signed phase-one trade deal between the U.S. and China, as mentioned earlier, details were scant.

The Dow Jones Industrial Average closed 90 points higher. The S&P 500 closed 6 points higher. The NASDAQ was up 7 points.

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There are plenty of questions to be answered, but Wednesday’s signing of the phase-one trade agreement between the U.S. and China appears to be a massive win for U.S. agriculture, as well as the nation as a whole.

“China will purchase and import on average at least $40 billion of U.S. food, agricultural, and seafood products annually for a total of at least $80 billion over the next two years,” according to a factsheet from the U.S. Trade Representative (USTR). “Products will cover the full range of U.S. food, agricultural, and seafood products.”

In 2017, before the trade war, U.S. agricultural exports to China were $23.8 billion, representing more than 17% of total U.S. agricultural exports, according to the Minnesota Department of Agriculture.

Although there are no details about the specific allocation of China’s agricultural purchases, the agreement paves the way to historic access for U.S. beef, via the removal of non-tariff trade barriers that hamstrung U.S. beef exports for years. Arguably, these were the primary ones:

**China continued to restrict U.S. beef imports from cattle 30 months of age or older. That restriction was imposed when bovine spongiform encephalopathy was discovered in this nation in 2003, but it remained in place, despite the “Negligible” risk status assigned to the U.S. by the World Organization for Animal Health.

**China banned beef from cattle grown with commonly used and safe-proven growth hormones (implants) and beta agonists.

**China demanded a bookend traceability system, knowing where cattle were born and where they were slaughtered.

The new agreement lifts those barriers, according to Kent Bacus, senior director of international trade and market access for the National Cattlemen’s Beef Association (NCBA), in a media call Wednesday afternoon.

“China will expand the scope of beef products allowed to be imported, eliminate age restrictions on cattle slaughtered for export to China, and recognize the U.S. beef and beef products’ traceability system,” according to the USTR factsheet. “China will establish maximum residue levels for three synthetic hormones legally used for decades in the United States, consistent with Codex Alimentarius Commission (Codex) standards and guidelines. Where Codex standards do not exist, China will use MRLs (maximum residue limits) established by other countries that have performed science-based risk assessments.”

Presumably, the latter ultimately could open the door to U.S. beef grown with use of beta agonists.

Further, according to USTR, “The Parties agreed to not implement food safety regulations that are not science-and risk-based and shall only apply such regulations to the extent necessary to protect human life or health…” 

USDA estimates U.S. beef and beef product exports to China could reach $1 billion annually. According to Bacus, U.S. beef exports to China totaled $60 million in 2018 and $70 million through the first 11 months of last year.

NCBA president, Jennifer Houston calls the agreement a game changer for U.S. beef.

“When you’ve got a country (China) with 1.4 billion people, and their middle class is larger than the U.S. population, I’m not sure that there is any other event in the past that has more potential to grow our markets like this does,” Houston explained, during the media call.

By | January 15th, 2020|Daily Market Highlights|

Cattle Current Daily—Jan. 15, 2020

Wholesale beef values bounced higher Tuesday on good demand and light to moderate offerings, according to the Agricultural Marketing Service.

Choice boxed beef cutout value was $2.21 higher in the afternoon at $212.76/cwt. Select was $2.07 higher at $210.30.

That and stronger Lean Hog futures helped Live Cattle futures close an average of 22¢ higher.

Other than unchanged and 10¢ higher in the back two contracts, Feeder Cattle futures closed an average of 12¢ lower.

Corn futures closed fractionally lower to 1¢ lower.

Soybean futures closed fractionally lower to 1¢ lower.

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Major U.S. financial indices closed mixed and little changed Tuesday, with better than expected quarterly earnings from the likes of J.P Morgan Chase, but skittishness over Wednesday’s scheduled signing of the phase-one trade deal between the U.S. and China.

The Dow Jones Industrial Average closed 32 points higher. The S&P 500 closed 4 points lower. The NASDAQ was down 22 points.

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“Beef exports are generally expected to be strong in 2020,” says Josh Maples, Extension livestock economist at Mississippi State University. “The latest World Agricultural Supply and Demand Estimates (WASDE) projection for 2020 beef exports is 3.3 billion lbs., which would be a new record and about 9% above 2019 levels.”

Although U.S. beef exports in 2019 look to be less year over year—4.6% less for January through November—in the latest issue of In the Cattle Markets, Maples emphasizes it was not a weak year.

“The 3.02 billion lbs. of 2019 beef exports projected by WASDE would trail only the 3.16 billion lbs. exported in 2018,” Maples says.

Heading into 2020, Maples notes the bevy of trade deals, either recently signed or in progress and ultimately signed, will add support.

As well, both African Swine Fever and the horrendous fires in Australia promise to impact the global flow of animal proteins. 

With respect to the latter, in his weekly market comments, Derrell Peel, Extension livestock marketing specialist at Oklahoma State University says, “Wildfires (in Australia) have burned over 15 million acres, an area the size of West Virginia, and are not yet under control as of Jan. 10. Roughly 9% of the Australian cattle herd is in areas significantly impacted by the fires; another 11% are in regions partially impacted by the fires.”

Drought-forced herd liquidation pushed last year’s Australian beef production and exports higher than previously projected, with female slaughter reaching record proportions of total cattle slaughter, according to Peel. This year, he says Australian beef production is forecast to decrease nearly 15% year over year to the lowest level since 2010. Australian exports are projected to decline by more than 19%, compared to 2019.

“It is mid-summer in Australia and the drought continues unabated with severe rainfall deficits and above average temperatures,” Peel explains. “Additional herd liquidation is likely if conditions do not improve. In any event, Australian cattle and beef production will be reduced for the foreseeable future and rebuilding, whenever it can begin, will take several years.”

By | January 14th, 2020|Daily Market Highlights|

Cattle Current Daily—Jan.14, 2020

Negotiated cash fed cattle prices ended last week mainly steady on a live basis at mostly $124/cwt. and mostly $1-$2 higher in the beef at mainly $200.

Cattle futures basically gave back gains from the previous session on Monday, likely pressured by nearby Lean Hogs, as well as the mostly steady, rather than higher cash fed cattle prices.

Live Cattle futures closed an average of 30¢ lower (2¢ lower to 87¢ lower in spot Feb).

Feeder Cattle futures closed an average of 99¢ lower (45¢ lower at the back to $1.60 lower toward the front).

Wholesale beef values were firm to higher on moderate to good demand and moderate offerings, according to the Agricultural Marketing Service.

Choice boxed beef cutout value was 51¢ higher Monday afternoon at $210.55/cwt. Select was $1.68 higher at $208.23.

Corn futures closed 2¢ to 3¢ higher through Mar ’21 and then mostly 1¢ higher.

Soybean futures closed mostly 3¢ to 6¢ lower

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Major U.S. financial indices closed higher Monday, helped along by news that the U.S. will remove China from its list of currency-manipulating countries, buoying optimism for the phase-one trade deal between the two nations, which is scheduled to be signed Wednesday.

The Dow Jones Industrial Average closed 83 points higher. The S&P 500 closed 22 points higher. The NASDAQ was up 95 points.

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More crossbreeding by dairy farms—dairy cows bred to beef bulls—may shift fewer calves going into veal production and more back toward beef, according to the Livestock Marketing Information Center (LMIC).

“So far, the crossbreeding trend has been rather short-term and modest; on an annualized basis removing 35,000 to 40,000 head from calf slaughter and adding those animals to feedlots,” say LMIC analysts, in the latest Livestock Monitor. “But it may gain momentum. Currently, the LMIC forecasts record small annual calf slaughter levels by 2022.”

LMIC points to the number of calves being harvested for veal production, compared to that in prior years, given that virtually all veal in the U.S. comes from dairy calves.

For the first 14 weeks of 2019, LMIC analysts explain Federally Inspected (FI) calf slaughter was above the same weeks a year earlier. Year-over-year calf slaughter levels fluctuated over the next 28-weeks and then declined the last 10 weeks.

“Some of that 10-week period of declines was due to fewer dairy cows in the U.S….it would represent only a 2,000 to 3,000 head drop in calf slaughter,” LMIC analysts say.

Although it’s unlikely there will be a wholesale shift by dairy producers to churn out Beef X Dairy crossbred steers, LMIC analysts say, “Some regions of the U.S. could see stronger preferences for this strategy than others. Overall, the amount of interest by dairy producers is mounting, because it pencils out nicely for those with the reproductive management skills to capitalize on higher crossbred calf prices.”

By | January 13th, 2020|Daily Market Highlights|

Cattle Current Daily—Jan. 13, 2020

Negotiated cash fed cattle trade was light to moderate on moderate demand in Nebraska and the western Corn Belt through Friday afternoon, but there were too few transactions to trend. Early dressed sales in both regions were at $200/cwt. Early live sales in the western Corn Belt were at $124-$126.

Hints of steady to higher cash pries and strong fundamentals helped lift Cattle futures Friday.

Live Cattle futures closed an average of 32¢ higher.

Feeder Cattle futures closed an average of 96¢ higher.

Wholesale beef values were steady on moderate demand and heavy offerings, according to the Agricultural Marketing Service.

Choice boxed beef cutout value was 8¢ higher Friday afternoon at $210.04/cwt. Select was 13¢ lower at $206.55.

Corn futures closed mostly 2¢ higher.

Soybean futures closed 1¢ to 3¢ higher through Jul ’21 and then fractionally higher.

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Major U.S. financial indices closed lower Friday, amid less robust job and wage growth than the trade expected.

Total nonfarm payroll employment rose by 145,000 in December, according to the U.S. Bureau of Labor Statistics. That left the unemployment rate unchanged at 3.5%.

Average hourly earnings for all employees on private nonfarm payrolls in December rose by 3¢ to $28.32. Over the last 12 months, average hourly earnings increased by 2.9%.

The Dow Jones Industrial Average closed 133 points lower. The S&P 500 closed 9 points lower. The NASDAQ was down 24 points.

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The latest World Agricultural Supply and Demand Estimates (WASDE) reduced forecast 2020 beef production on lighter expected carcass weights. However, quarterly beef production was increased in the first half of the year and reduced in the second half of the year due to higher-than-expected cattle placements in late 2019 and a reduced placement forecast for early 2020.

WASDE estimates 2020 beef production at 27.44 billion lbs., which is 75 million lbs. less (-0.27%) than the December forecast. That would be 289 million lbs. more (+1.06%) than in 2019.

Anticipated first-quarter cattle prices were raised, reflecting current early-year price strength. Anticipated average cash fed steer prices (five-area direct) for 2020 are forecast at $125/cwt. in the first quarter, $118 in the second, $112 in the third and $114 in the fourth. The annual average price for 2020 is projected at $117.50, which is 50¢ more than the previous month’s estimate and 72¢ more than the estimated average in 2019.

Total red meat and poultry production for 2020 was estimated at 108.15 billion lbs., which would be 2.94 billion lbs. more (+2.79%) than in 2019.

By | January 12th, 2020|Daily Market Highlights|

Cattle Current Daily—Jan. 10, 2020

Cattle futures closed narrowly mixed on Thursday, capped by pressure from Lean Hogs and the lack of cash direction. Perhaps there was also some hesitation over what Friday’s monthly World Agricultural Supply and Demand Estimates could say about feed prices.

Live Cattle futures closed an average of 26¢ higher.

Feeder Cattle futures closed narrowly mixed, from an average of 9¢ higher across the front half of the board to an average of 19¢ lower.

Wholesale beef values were steady to firm on moderate to fairly good demand and heavy offerings, according to the Agricultural Marketing Service.

Choice boxed beef cutout value was 46¢ higher Thursday afternoon at $209.96/cwt. Select was 15¢ higher at $206.68.

Corn futures closed mostly fractionally mixed to 1¢ lower.

Soybean futures closed mostly 4¢ lower.

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Major U.S. financial indices posted another day of strong gains Thursday, led by tech stocks.

The Dow Jones Industrial Average closed 211 points higher. The S&P 500 closed 21 points higher. The NASDAQ was up 74 points.

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Agricultural producer sentiment declined in December, driven by the outlook for current economic conditions, according to the Purdue University/CME Group Ag Economy Barometer.

Specifically, the overall index declined 3 points from November to a reading of 150, while the Index of Current Conditions—one of the sub-indexes—declined 12 points to a reading of 141. Conversely, the index of Future Expectations increased 2 points to a reading of 155.

“These results are indicative of the variability in economic conditions on U.S. farm operations, with some farms performing better than expected and others worse than expected,” says James Mintert, the barometer’s principal investigator and director of Purdue University’s Center for Commercial Agriculture.

The Ag Economy Barometer is based on a mid-month survey of 400 U.S. crop and livestock producers.

Producers were asked whether their farm’s 2019 financial performance was better than expected, as expected, or worse than their initial budget projections. Just over half (52% percent) said their initial projections matched their farm’s financial performance; 30% said it was worse; and 19% said it was better than expected.

To better assess the level of financial stress among U.S. farms, November and December surveys asked producers whether they expected their farm’s 2020 operating loan to be larger, about the same, or smaller than in 2019.

Approximately one out of five respondents in the two surveys expected to have a larger operating loan in 2020 compared to 2019. Of those, three out of 10 indicated the reason was unpaid operating debt from 2019. Carrying over unpaid operating debt from year to year is an indicator of financial stress, and these results suggest that about 6% of farms surveyed for the Ag Barometer in late 2019 were experiencing financial stress.

Producers remained relatively optimistic about the ongoing trade dispute between the U.S. and China being resolved soon and to the benefit of U.S. agriculture.

In December, 54% of respondents stated they expect a resolution soon, which was 3% less than the previous month, but the second most positive response since last March.

The percentage of producers who expect a favorable outcome to U.S. agriculture declined 8 points to 72%. Since the question was first posed in March 2019, more than 70% of respondents have, on average, indicated they expect a favorable outcome to the trade dispute for U.S. agriculture.

By | January 9th, 2020|Daily Market Highlights|

Cattle Current Daily—Jan. 9, 2020

Negotiated cash fed cattle trade remained undeveloped through Wednesday afternoon, based on USDA reports. Early indications are for steady to higher prices again this week, with the expectation of a bit snugger harvest-ready supplies.

There were 525 head offered in the year’s first weekly Fed Cattle Exchange auction, and no takers. Two lots of steers from Texas and Kansas were passed on at $123.00/cwt. and $124.25, respectively.

Cattle futures mostly rebounded from the previous session’s softer tones, led by Feeder Cattle.

Except for 17¢ and 32¢ lower in the front two contracts, Live Cattle futures closed an average of 32¢ higher.

Feeder Cattle futures closed an average of 91¢ higher (40¢ to $1.40 higher).

Wholesale beef values were steady to weak on light to moderate demand and moderate to heavy offerings, according to the Agricultural Marketing Service.

Choice boxed beef cutout value was 6¢ lower Wednesday afternoon at $209.50/cwt. Select was 29¢ lower at $206.53.

Corn futures closed mostly unchanged to fractionally higher.

Soybean futures closed 1¢ to 3¢ higher through Mar ’21 and then mostly fractionally higher.

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Major U.S. financial indices closed higher Wednesday, amid increasing confidence that the tensions between the U.S. and Iran are easing. For instance, West Texas Intermediate crude oil futures (CME) closed $2.71 to $3.09 lower through the front six contracts.

The Dow Jones Industrial Average closed 161 points higher. The S&P 500 closed 15 points higher. The NASDAQ was up 60 points.

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Although trailing the previous year’s record pace, U.S. beef export value through November was the second highest on record, according to data released by USDA and compiled by the U.S. Meat Export Federation (USMEF).

For January through November, beef exports were 3% less in both volume of 1.21 million metric tons (mt) and value of $7.4 billion. Year over year, November beef exports were 4% less in volume (108,662 mt) and 7% less in value ($658.1 million).

Among highlights, U.S. beef exports to Korea were on a record pace, up 6% in volume through November and up 6% in value at $1.69 billion. U.S. share of Korea’s chilled beef imports reached 62%, up from 58% in 2018. U.S. beef accounted for 51% of Korea’s total beef and beef variety meat imports and more than one-third of Korea’s total beef consumption.

Beef exports to Taiwan were also on a record pace, for the fourth consecutive year. Through November, U.S. exports to that nation were 8% more than the previous year for volume and value was 4% higher at $513.3 million.

However, reduced exports to Japan—the largest destination for U.S. beef exports—offset gains made in Korea and Taiwan.

Through November, exports to Japan were 6% less year over year in volume and 7% less in value at $1.8 billion. Tariff relief, beginning Jan. 1 provides more optimism for 2020.

“The Japanese market performed extremely well for U.S. beef in 2018, even though we were already facing a tariff rate disadvantage versus Australia,” says Dan Halstrom, USMEF president and CEO. “More competitors saw tariff rate cuts in 2019 under the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), which further tilted the playing field against U.S. beef. For example, Canada’s beef exports to Japan increased 57% last year. So the rate cuts Japan recently implemented for U.S. beef are long overdue, and USMEF is working aggressively with U.S. exporters and the Japanese trade to capitalize.”

Beef export value per head of fed slaughter was $307.55 in November, down 15% from a year earlier. Through November, per-head U.S. export value averaged $308.74, down 4%.

By | January 8th, 2020|Daily Market Highlights|

Cattle Current—Jan. 8, 2020

Cattle futures retraced some ground from the previous session’s strong and somewhat surprising rally, but kept the lion’s share of gains.

Live Cattle futures closed an average of 57¢ lower.

Feeder Cattle futures closed an average of 80¢ lower (40¢ lower to $1.52 lower in spot Jan).

Wholesale beef values were steady on moderate demand and heavy offerings, according to the Agricultural Marketing Service.

Choice boxed beef cutout value was 9¢ lower Monday afternoon at $209.56/cwt. Select was 2¢ higher at $206.82.

Corn futures closed unchanged to fractionally mixed.

Soybean futures closed mostly unchanged to 1¢ lower through Mar ’21 and then fractionally higher to 2¢ higher.

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Major U.S. financial indices closed lower Tuesday, with most of the investor unease seeming to stem from uncertainty around recently escalated tensions with Iran.

The Dow Jones Industrial Average closed 119 points lower. The S&P 500 closed 9 points lower. The NASDAQ was down 2 points.

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The weighted 5-area average live steer (FOB) price in December was $120/cwt., which was $4.65 more than the previous month and 64¢ more than the same time a year earlier, according to USDA. In the beef (delivered), the average weighted price was $191.18, which was $9.27 more than the previous month and $2.81 more than a year earlier.

“Fed cattle prices tend to increase seasonally from late summer lows to the end of the year. It’s also not uncommon for prices to weaken between Thanksgiving and Christmas, and again in February, before the spring rally,” says David Anderson, Extension livestock economist at Texas A&M University.

In the latest issue of In the Cattle Markets, Anderson explains the five-year (2013-17) average price increase during the fall rally was $11/cwt. or 8.8%. It was $15 in 2018 for an increase of 14%. In 2019, though, fed cattle prices increased by $22 or 22.6%.

What’s more, Anderson points out, “Fed cattle movement ramped up in December with total steer and heifer slaughter up about 5%. It’s worth noting the reopening of the fed cattle plant (Tyson) in early December. That has contributed to packer demand for fed cattle, helping to boost fed cattle prices and slaughter….All cow slaughter was up almost 7%. All of the increase in cow slaughter during the quarter came from beef cows, as dairy slaughter declined from a year ago.”

By | January 7th, 2020|Daily Market Highlights|

Cattle Current Daily—Jan. 7, 2020

The five-area direct weighted average fed steer price last week was $124.21/cwt., which was $1.93 more than the previous week. The weighted average price of $198.60 in the beef was $3.38 higher.

Stronger cash prices, the promise of improving wholesale beef values and a return to full trade following the holidays all helped underpin the significant rally in Cattle futures Monday. Stabilizing outside markets were also positive.

Except for $1.70 lower in the back contract, Live Cattle futures closed an average of $1.66 higher (95¢ to $2.55 higher in spot Feb).

Feeder Cattle futures closed an average of $2.92 higher ($2.02 higher at the back to $4.07 higher in spot Jan).

Wholesale beef values were higher on good demand and heavy offerings, according to the Agricultural Marketing Service.

Choice boxed beef cutout value was $1.16 higher Monday afternoon at $209.65/cwt. Select was $1.41 higher at $206.80.

Corn futures closed fractionally lower to 1¢ lower through Sep ’21 and then mostly fractionally higher to 1¢ higher.

Soybean futures closed 2¢ to 3¢ higher.

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Major U.S. financial indices closed higher Monday, regaining some of the previous session’s selloff as reports indicated the U.S. military action in Iran was unlikely to hamper oil production or trade flows.

The Dow Jones Industrial Average closed 68 points higher. The S&P 500 closed 11 points higher. The NASDAQ was up 50 points.

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“The beef supply situation is expected to be more supportive in the coming year, with cyclical herd expansion over and beef production peaking,” says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly market comments. “The current status of the cattle cycle will be confirmed in the Cattle inventory report to be released at the end of January. “In general, cattle numbers are expected to be down slightly year over year. Beef production is expected to peak fractionally higher in 2020, with heavier carcass weights offsetting a slight decline in cattle slaughter. Carcass weights finished 2019 above year-earlier levels and will bear watching in the coming year.”

Overall, Peel explains the anticipated increase in U.S. beef exports and reduction in U.S. beef imports should offset a significant portion of increased domestic production.

“The international market situation is somewhat clearer now after trade disruptions and uncertainty strangled many agricultural markets for much of the past two years,” Peel says. “The likely completion of the revised NAFTA agreement (USMCA) in the coming weeks removes a significant source of uncertainty for agricultural markets. A new bilateral trade agreement with Japan will restore a more competitive position for beef and should stop the erosion of U.S. market share, which became very apparent in that important beef export market in the second half of 2019. Though details are currently lacking, the anticipated phase-one trade agreement with China is expected to significantly improve the trade situation for numerous agricultural markets and may allow beef to begin building a meaningful market position in the rapidly growing beef market in China.”

As for challenges that could add market uncertainty and volatility, Peel cites ongoing geopolitical tensions, African Swine Fever, energy prices, currency values and the presidential election.

“In summary, 2020 offers better opportunities for cattle and beef markets, but producers are advised to keep an eye on a host of macro-economic and global factors, as well as evolving cattle market conditions, and proceed with caution,” Peel says.

By | January 6th, 2020|Daily Market Highlights|

Cattle Current Daily—Jan. 6, 2020

Negotiated cash fed cattle trade developed on Friday with live sales $2 higher at $124/cwt. in the Southern Plains and Nebraska; $2-$4 higher in the western Corn Belt at $125. Dressed sales were mostly $4 higher in Nebraska at mainly $199 and $3-$4 higher in the western Corn Belt at $198-$199.

Cattle futures softened though, amid lower outside markets fueled by heightened geopolitical tensions (the U.S. military strike in Iran), as well as what appeared to be some liquidation by non-commercial traders in the previous session. There was also some question about how the military action in Iran might affect the scheduled signing of the phase-one trade deal between the U.S. and China. Lean Hogs closed limit-down in spot Feb and near limit-down in the next two contracts.

Except for 35¢ higher in away Apr, Live Cattle futures closed an average of 65¢ lower (7¢ lower to $1.05 lower in spot Feb).

Except for 7¢ higher in in the back contract, Feeder Cattle futures closed an average of 96¢ lower.

Wholesale beef values were steady on Choice and higher on Select with moderate to fairly good demand and heavy offerings, according to the Agricultural Marketing Service.

Choice boxed beef cutout value was 24¢ higher Friday afternoon at $208.49/cwt. Select was $2.76 higher at $205.39.

Grain futures lost ground on the day, between anemic weekly export data, as well as wonderments about the potential fallout from the U.S. defensive action in Iran.

Corn futures closed 3¢ to 5¢ lower through Dec ’20 and then mostly 2¢ lower.

Soybean futures closed 10¢ to 14¢ lower through Sep ’20 and then mostly 3¢ to 5¢ lower.

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Major U.S. financial indices closed strongly lower Friday, pressured by the U.S. air strike in Iran and the subsequent spike in oil prices.

West Texas Intermediate Crude Oil futures on the CME closed $1.58 to $1.87 higher through the front six contracts, but well off of session highs.

Weaker than expected manufacturing data also weighed on markets.

Although the overall economy grew for the 128th consecutive month, economic activity in the manufacturing sector contracted in December, according to the latest Manufacturing ISM® Report On Business®.

“The December PMI® registered 47.2%, a decrease of 0.9 percentag