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

Daily Market Highlights

Stay in the Market

Cattle Current Daily—Nov. 30, 2020

Negotiated cash fed cattle prices ended the week generally steady to $1 higher on a live basis and $2 higher in the beef, according to the Agricultural Marketing Service.

Live prices were at $111/cwt. in the Southern Plains, $110-$111 in Nebraska and $109-$110 in the western Corn Belt. Dressed trade was at $174.

Cattle futures mostly drifted lower on Friday, amid extremely light holiday trade.

Live Cattle futures closed an average of 47¢ lower (32¢ to 92¢ lower).

Feeder Cattle futures closed an average of 24¢ lower except for an average of 26¢ higher in two contracts.

Choice boxed beef cutout value was $2.21 lower Friday afternoon at $242.85/cwt. Select was 22¢ lower at $220.68.

Corn futures closed mostly 3¢ to 5¢ higher.

Soybean futures closed mostly 6¢ to 7¢ higher.

******************************

Major U.S. financial indices closed higher Friday, buoyed by the week’s mostly positive news surrounding apparent progress with COVID-19 vaccines.

The Dow Jones Industrial Average closed 37 points higher. The S&P 500 closed 8 points higher. The NASDAQ was up 111 points.

******************************

Total pounds of beef in freezers were up 8% from the previous month and up 7% from the previous year, as of Oct. 31, according to USDA’s latest monthly Cold Storage report.

Frozen pork supplies were down 4% from the previous month and down 27% from last year.

Total red meat supplies in freezers were up 1% from the previous month but down 12% from last year.  

Total frozen poultry supplies were 7% less than the previous month and down 4% from a year earlier.

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

Cattle Current Daily—Nov. 26-27-2020

Negotiated cash fed cattle prices were generally steady to $1 higher on a live basis and $2 higher in the beef, through Wednesday afternoon, according to the Agricultural Marketing Service.

Live prices were at $111/cwt. in the Southern Plains on moderate demand and trade. Live prices were at $110 in the western Corn Belt on slow trade and moderate demand. There were a few in Nebraska at $110. Dressed trade was at $174.

Cattle futures mostly continued gains on Wednesday, buoyed by stronger cash markets, weaker grain futures, stronger wholesale beef values and light pre-holiday trade.

Live Cattle futures closed an average of 27¢ higher.

Feeder Cattle futures closed an average of 92¢ higher (25¢ to $1.57 higher) except for 7¢ lower and 32¢ lower in the back two contracts.

Choice boxed beef cutout value was 76¢ higher Wednesday afternoon at $245.06/cwt. Select was $1.19 higher at $220.90.

Corn futures closed 5¢ lower through Jly ’21 and then mostly unchanged to 1¢ lower.

Soybean futures closed mostly 5¢ to 7¢ lower.

******************************

Major U.S. financial indices closed mixed Wednesday. Pressure included more jobless claims than traders expected.

Initial unemployment insurance claims last week were 778,000, which was 30,000 more than the previous week, according to the U.S. Department of Labor.

The Dow Jones Industrial Average closed 173 points lower. The S&P 500 closed 5 points lower. The NASDAQ was 57 points higher.

******************************

When Jan. 1 cattle inventory numbers come out toward the end of January, analysts with the Livestock Marketing Information Center (LMIC) expect to see more year- over-year contraction of the beef cow herd.

“The beef herd is expected to be down 0.5 to 1.0% based on year-to-date slaughter numbers that are above a year ago by about 2%, and heifer numbers in feedlots,” say LMIC analysts, in the latest Livestock Monitor. “It appears beef cows held for replacement are likely steady to below a year ago, given the uncertainty of 2020. Other heifers, those in the feedlot, are also expected to have pulled back. Those on feed are slightly lower than a year ago, while heifer slaughter is about 4% below last year.”

This year began with 31.31 million head, which was 1.18% less (-374,000 head) than the previous year.

“Bull slaughter is well below a year ago, a reflection of lower volumes of male cattle kept for breeding purposes. This is primarily driven by the cattle cycle and the smaller needs for bulls. LMIC estimates bull inventory Jan. 1 is likely slightly less than last year,” say LMIC analysts. “Steers over 500 lbs. are expected to fall, in line with July 1 calf crop expectations, as well as cattle weighing less than 500 lbs. Both are expected to be down over half a percent.”

Even with expectations for there to be slightly more dairy cows at the beginning of 2021, LMIC expects the total of all cattle and calves to be slightly less year over year. Total inventory at the beginning of this year was 0.41% less than the prior year.

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

Cattle Current Daily—Nov. 25, 2020

Negotiated cash fed cattle trade remained undeveloped through Tuesday afternoon, but the recent surge in Cattle futures and wholesale beef values bolstered hope for higher prices.

Cattle futures extended gains on Tuesday, supported by the previous session’s optimism and the brighter outlook for cash prices.

Live Cattle futures closed an average of 50¢ higher (10¢ to $1.17 higher) except for 55¢ lower in the back contract.

Feeder Cattle futures closed an average of 50¢ higher except for 2¢ lower in May.

Choice boxed beef cutout value was $2.70 higher Tuesday afternoon at $244.30/cwt. Select was $2.23 higher at $219.71.

Corn futures closed narrowly mixed, mostly from 1¢ lower to 1¢ higher.

Soybean futures closed mostly fractionally higher to 1¢ higher.

******************************

Major U.S. financial indices closed higher again Tuesday with follow-through support from the previous session, tied to positive news about COVID-19 vaccines and the outlook toward a bounce in economic recovery in 2021.

The Dow Jones Industrial Average closed 454 points higher. The S&P 500 closed 57 points higher. The NASDAQ was up 156 points.

******************************

U.S. beef exports for 2021 are projected to be $7.1 billion, according to the latest quarterly Outlook for U.S. Agricultural Trade, from USDA’s Economic Research Service (ERS). The projection is $200 million more than the previous report in August, based on increased volume offsetting a decline in unit values.

Overall, ERS projects U.S. agricultural exports in Fiscal Year (FY) 2021 at $152.0 billion, up $11.5 billion from the August forecast, fueled by increased soybean and corn export values.

“The projection for soybean exports is up $5.9 billion to a record $26.3 billion due to higher unit values, strong demand from China, and record volumes,” according to the report. “Corn exports are forecast up $4.2 billion to $13.2 billion as a result of reduced competition, higher unit values and record volumes…Wheat exports are projected at $6.2 billion, up $200 million, on higher unit values and slightly larger volumes.”

The forecast suggests China will become the largest market for U.S. agricultural products next year for the first time since 2017. Exports to that nation are projected at a record high $27.0 billion.

All of that is shrouded by the global economic contraction and ongoing uncertainty borne by the pandemic.

“Expectations of real gross domestic product (GDP) numbers have improved from the initial lockdown contractions, but recovery forecasts are still marked by uncertainty and prone to future setbacks,” say ERS analysts. “Overall, global real GDP growth is expected to fall by about 4.4% in 2020. This is slightly less severe than was previously feared back in June. Global trade volume, which declined 9.2% in FY 2020, is expected to increase 7.2% in FY 2021. The expected economic recovery in 2021 will be shaped by both regional and overall global success in containing the COVID-19 pandemic, in addition to boosting consumer spending.”

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

Cattle Current Daily—Nov. 24, 2020

Negotiated cash fed cattle trade was mostly inactive on very light demand in the western Corn Belt through Monday afternoon. Elsewhere, it was at a standstill, according to data from the Agricultural Marketing Service (AMS). Last week, live prices were at $110/cwt. in the Southern Plains and Nebraska and at $109-$110 in the western Corn Belt. Dressed prices are steady at $172.

Cattle futures closed sharply higher on Monday, shaking off last week’s blues with the help of higher outside markets and an apparently bullish view of Friday’s Cattle on Feed report.

Live Cattle futures closed an average of $1.99 higher.

Feeder Cattle futures closed an average of $2.83 higher.

Choice boxed beef cutout value was $3.25 higher Monday afternoon at $241.60/cwt. Select was $2.50 higher at $217.48.

Corn futures closed mostly 3¢ to 5¢ higher

Soybean futures closed 10¢ to 12¢ higher through Aug ’21 and then mostly 4¢-7¢ higher.

******************************

Major U.S. financial indices closed higher Monday, buoyed by the third COVID-19 vaccine candidate that proved at least 90% effective in trials. Traders also seemed optimistic about Janet Yellen, former Federal Reserve Chair, being named Treasury secretary by president-elect Biden.

The Dow Jones Industrial Average closed 327 points higher. The S&P 500 closed 20 points higher. The NASDAQ was up 25 points.

******************************

“Feeder markets are reflecting a mix of influences including seasonal supplies of calves, wheat pasture forage conditions, higher corn prices and volatility in futures markets,” says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly market comments. “Feeder markets have been very dynamic and it means that both cow-calf and stocker producers must constantly evaluate changing market conditions.”

By way of illustration, Peel graphed (see chart below) Oklahoma calf and feeder steer prices by weight from August through Nov. 20.

After posting lows during the winter storm in late October, he explains prices for steer calves and stockers weighing less than 600 lbs. increased sharply; little change at heavier weights.

“The result is a sharper bend in the price-weight line, with an even steeper price rollback for steers up to 600 pounds,” Peel says. “Using a stocker gain of 250 lbs. from 500 to 750 lbs., the value of gain in August was $1.02/lb. In October, the value of gain was slightly higher at $1.05/lb. based on lower prices for both 500 and 750-lb. steers. In November, the higher prices for the lightweight animals resulted in a lower value of gain of $0.74/lb. Of course, a 500-lb. stocker purchased now will not reach 750 lbs. for some time. However, March Feeder futures price was $134.48 recently. That with an expected early March basis of $1.69/cwt. for 750-lb. steers in Oklahoma suggests a final price of $136.17/cwt., close to the current cash price of $136.03/cwt.”

For cow-calf producers selling calves at weaning, he explains recent prices mean the value of adding 50 lbs. to a 500-lb. steer is about 50¢/lb.

“For producers holding calves after weaning, the low value of gain must be balanced against the value of preconditioning programs and extra weaning time before sale,” Peel says. “The implications of current market conditions depend on the current weight of animals and the amount of additional weight added to animals prior to sale.”

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

Cattle Current Daily—Nov. 23, 2020

Negotiated cash fed cattle prices ended last week steady, according to data from the Agricultural Marketing Service (AMS). Live prices were at $110/cwt. in the Southern Plains and Nebraska and at $109-$110 in the western Corn Belt. Dressed prices are steady at $172.

Estimated cattle slaughter for the week ending Nov. 21 was 665,000 head, according to USDA. That would be 12,000 head more than the prior week, but 3,000 head fewer than the same week last year. Estimated year-to-date total cattle slaughter of 28.73 million head would be 1.07 million fewer (-3.59%) than same period last year.

Estimated beef production for the week of 559.1 million lbs. would be 9.3 million lbs. more than the previous week and 5.4 million lbs. more than the same week last year. Year-to-date estimated beef production of 23.87 billion lbs. would be 245.8 million lbs. less (-1.02%) than the same period last year.

Cattle futures closed mixed on Friday with higher Lean Hog futures helping reverse some early pressure and firm following the previous session’s pullback.

Live Cattle futures closed narrowly mixed, from an average of 33¢ lower to an average of 14¢ higher.

Feeder Cattle futures closed mixed, from an average of 55¢ lower across the front half of the board to an average of 27¢ higher.

Choice boxed beef cutout value was 65¢ higher Friday afternoon at $238.35/cwt. Select was $1.09 higher at $214.98.

Corn futures closed mostly fractionally mixed.

Soybean futures closed 2¢ to 6¢ higher through Sep and then mostly 1¢ lower.

******************************

Major U.S. financial indices closed lower Friday, pressured by the continued rise in COVID-19 infections.

The Dow Jones Industrial Average closed 219 points lower. The S&P 500 closed 24 points lower. The NASDAQ was down 49 points.

******************************

USDA’s monthly Cattle on Feed report issued Friday—for feedlots with 1,000 head or more capacity—will likely be viewed as neutral to slightly friendly.

There were 2.19 million head placed in October which was 270,000 head fewer (-10.97%) than a year earlier. Estimates ahead of the report suggested placements to be about 1.5% more.

In terms of weights, 49% went on feed weighing less than 600 lbs.; 39% weighing 700-899 lbs.; 12% weighing 900 lbs. or more.

Marketings of 1.87 million head in October were just 2,000 fewer (-0.11%) than a year earlier, about in line with pre-report estimates.

Cattle on feed Nov. 1 were 11.97 million head, which was 157,000 head more (+1.33%) than a year earlier. That was slightly less than expectations. The number is the most for the month since the data series began in 1996.

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

Cattle Current Daily—Nov. 20, 2020

Negotiated cash fed cattle trade was limited on moderate demand in Kansas, Nebraska and the western Corn Belt through Thursday afternoon, according to the Agricultural Marketing Service. There were a few live trades at $110/cwt. and a few in the beef at $172, but too few to trend. Established prices for the week are mainly steady with live trade at $110 in the Southern Plains and Nebraska and at $109-$110 in the western Corn Belt. Dressed prices are steady at $172.

Cattle futures closed sharply lower Thursday. Lingering pressures include persistently higher grain prices and languishing cash fed cattle prices. Chatter about fears of more pandemic-driven packing disruptions contributed to the day’s decline.

Live Cattle futures closed an average of $1.85 lower, from 92¢ lower at the back to $2.62 lower.

Feeder Cattle futures closed an average of $2.10 lower, except for 25¢ lower in expiring Nov.

Choice boxed beef cutout value was $1.86 higher Thursday afternoon at $237.70/cwt. Select was 27¢ higher at $213.89.

Net U.S. beef export sales (2020) for the week ending Nov. 12 totaled 46,400 metric tons, up noticeably from the previous week and 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, Mexico, Japan, Hong Kong and Taiwan.

Corn futures closed 1¢ to 3¢ lower.

Soybean futures closed fractionally mixed to 4¢ higher.

******************************

U.S. financial indices closed slightly higher Thursday, amid a volatile session, with pressure from the continued surge in COVID-19 cases and increasing unemployment claims.

Initial unemployment insurance claims were 742,000 for the week ending Nov. 14, according to the U.S. Department of Labor. That was 31,000 more than the previous week and more than traders expected.

The Dow Jones Industrial Average closed 44 points higher. The S&P 500 closed 14 points higher. The NASDAQ was up 103 points.

******************************

The Creighton University Rural Mainstreet Index (RMI) declined in November for the first time since April. The RMI represents a monthly survey of bank CEOs in rural areas of a 10-state region dependent on agriculture and/or energy.

The overall index was down significantly to 46.8 from the previous month’s 53.2. The index ranges between 0 and 100 with a reading of 50.0 representing growth neutral.

“Recent improvements in agriculture commodity prices, federal farm support payments, and the Federal Reserve’s record low interest rates have underpinned the Rural Mainstreet Economy. Still, only 6.5% of bankers reported economic improvements from October, while 12.9% detailed economic pullbacks for the month,” says Ernie Goss, PhD, Jack A. MacAllister Chair in Regional Economics at Creighton University’s Heider College of Business.

However, the farmland-price index advanced above growth neutral for the second consecutive month. The November reading jumped to 55.0 from October’s 50.6. This is first time since 2013 that Creighton’s survey has recorded back-to-back above growth neutral readings in farmland prices.

Also, the November farm equipment-sales index increased to 42.9, its highest level since December 2013, and up from 37.9 in October. But, the reading has been below growth neutral for 86 consecutive months.

By | November 19th, 2020|Daily Market Highlights|

Cattle Current Daily—Nov. 19, 2020

Negotiated cash fed cattle trade and demand were moderate in the Southern Plains through Wednesday afternoon. Live prices were steady with last week at $110/cwt., according to the Agricultural Marketing Service. There were also a few live trades at $110 in Nebraska and a few at $106 in the western Corn Belt but too few to trend in either region. Last week, live prices were at $110 in Nebraska and at $108-$110 in the western Corn Belt. Dressed prices were at $172.

Cattle feeders offered 930 head in the weekly Fed Cattle Exchange Auction—all from Texas. They sold 543 head for a weighted average price of $110.25 for delivery at both 1-9 days and 1-17 days. That price was steady with country trade in the region last week and so far this week.

Cattle futures closed lower Wednesday, pressured by higher grain prices and the steady rather than higher cash prices so far this week. Perhaps there was also some positioning ahead of Friday’s monthly Cattle on Feed report.

Live Cattle futures closed an average of 80¢ lower, from 42¢ to $1.15 lower.

Feeder Cattle futures closed an average of $1.60 lower, from 35¢ lower in spot Nov to $2.42 lower.

Choice boxed beef cutout value was $2.12 higher Wednesday afternoon at $235.84/cwt. Select was 34¢ lower at $213.62.

Corn futures closed 3¢ to 5¢ higher through Sep ’21 and then mostly 1¢ higher.

Soybean futures closed mostly 5¢ to 7¢ higher through Sep ‘22 and then mostly 3¢ higher.

******************************

U.S. financial indices closed lower Wednesday, pressured by the growing renewal of pandemic restrictions as COVID-19 cases continue to surge.

The Dow Jones Industrial Average closed 344 points lower. The S&P 500 closed 41 points lower. The NASDAQ was down 97 points.

******************************

“With the higher grain prices and forage prices, we will see persistent pressure on feeder cattle and calf prices into 2021,” says Stephen Koontz, agricultural economist at Colorado State University, in the latest issue of In the Cattle Markets. “One dollar higher corn costs translate into about $6-$7/cwt. lower feeder cattle prices. This cattle price impact is being exacerbated by dry conditions in the western U.S. and hay prices that are creeping higher. The impact on calf prices will be greater.”

Koontz points out Corn futures (2020-21 crop) are about $1 higher than in August and Soybean futures are about $2 higher, including deferred contracts. He adds that prices for both appear to be at a premium to what underlying fundamentals suggest.

“Stock-to-use ratios imply more reasonably mid-to-high-$3 corn and mid-to-high-$9 soybeans. That is unless the long-term demand picture is also changing. And there is some evidence that is the case,” Koontz says. “Corn export demand has been strong but that for soybeans is considerably more so. Consumption of corn is also picking up from ethanol production. The crop market fundamentals are looking more like they did in the years prior to the trade war. Soybean demand may pull considerable acres to that crop and buoy both soybean and corn prices.”

Along with export strength and iffy production in other parts of the world, some folks suggest speculation about a domestic drought next growing season is adding support.

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

Cattle Current Daily—Nov. 18, 2020

Negotiated cash fed cattle trade was steady in the Texas Panhandle through Tuesday afternoon with live prices at $110/cwt. That was on limited trade and light demand, according to the Agricultural Marketing Service. Trade in other regions ranged from a standstill to mostly inactive on light demand with too few transactions to trend. Last week, live prices were at $110/cwt. in the Southern Plains and Nebraska and at $108-$110 in the western Corn Belt. Dressed prices were at $172.

Cattle futures closed higher Tuesday, apparently fueled by the surge in wholesale beef values, tied in part to chatter about consumers stockpiling again, due to resurgent COVID-19 cases. The lower U.S. dollar is also offering added support to commodities.

Live Cattle futures closed an average of 98¢ higher, from 37¢ to $1.55 higher.

Feeder Cattle futures closed an average of $1.36 higher, from 10¢ higher in

Choice boxed beef cutout value was $6.77 higher Tuesday afternoon at $233.72/cwt., the highest level since June. Select was $1.61 higher at $213.96.

Corn futures closed mostly 1¢ to 4¢ higher through Jly ’21 and then mostly fractionally mixed.

Soybean futures closed 8¢ to 16¢ higher through Sep ‘21 and then fractionally higher to 2¢ higher.

******************************

U.S. financial indices closed lower Tuesday on likely profit taking and mixed economic news.

On one hand, U.S. retail and food services sales for October were 0.3% higher month to month, according to the U.S. Commerce Department. That’s less than the trade expected.

On the other hand, builder confidence in the market for newly-built single-family homes increased five points to 90 in November, shattering the previous all-time high of 85 recorded in October, according to the latest National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index. Builder confidence levels hit successive all-time highs over the past three months.

“Historically low mortgage rates, favorable demographics and an ongoing suburban shift for home buyer preferences have spurred demand and increased new home sales by nearly 17% in 2020 on a year-to-date basis,” says NAHB Chairman Chuck Fowke, a custom home builder from Tampa, FL. “Though builders continue to sign sales contracts at a solid pace, lot and material availability is holding back some building activity. Looking ahead to next year, regulatory policy risk will be a key concern given these supply-side constraints.”

The Dow Jones Industrial Average closed 167 points lower. The S&P 500 closed 17 points lower. The NASDAQ was down 24 points.

******************************

USDA’s Economic Research Service (ERS) lowered the expected fourth-quarter feeder steer price by $6 from the previous month to $137/cwt., in the latest Livestock, Dairy and Poultry Outlook. That’s basis Oklahoma City for Medium #1. The lower revision is based on seasonal price weakness and cash prices in October down more than $9 year over year at $137.55. ERS reduced expected feeder steer prices for next year by $1, based on higher projected feed prices.

Specifically, ERS forecasts feeder steer prices next year at $133 in the first quarter, $136 in the second, $141 in the third; annual average price of $138.

ERS left the expected five-area direct fed steer price unchanged for the fourth quarter ($109) and for next year: $113 in the first quarter, $110 in the second quarter, $114 in the third quarter; annual average price of $114.

“Despite the rising number of cattle on feed, front-end supplies—the number of cattle on feed over 150 days—decreased for the third consecutive month as a percentage and in volume,” say ERS analysts. “This is the result of an improving pace of fed cattle slaughter, which was faster than a year ago for the last three months and above the five-year average. The quickening slaughter pace, combined with an ample supply of fed cattle at heavier weights, led to higher expected beef production in fourth-quarter 2020 relative to 2019. Nevertheless, tighter front-end supplies will likely support continued seasonal movement in fed steer prices.”

ERS increased annual forecast 2020 beef production by 90 million lbs. to 27.2 billion lbs. Forecast beef production increased slightly for 2021, as well (27.4 billion lbs.), on higher expected fed cattle marketings.

“Despite the challenges facing the industry at the beginning of the third quarter, the beef industry processed more fed cattle in third-quarter 2020 than last year. As a result, the industry appears to have worked through the backlog of cattle that resulted from the plant disruptions in the second quarter,” ERS analysts explain. “The combination of delayed cattle marketings and good feeding conditions this year raised average cattle carcass weights nearly 3% for the third quarter, also increasing third-quarter 2020 production nearly 3% year over year. As a result, beef production set a record for the quarter at 7.1 billion lbs.”

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

Cattle Current Daily—Nov. 17, 2020

Negotiated cash fed cattle trade ranged from a standstill to mostly inactive on very light demand with too few transactions to trend, according to the Agricultural Marketing Service. Last week, live prices were at $110/cwt. in the Southern Plains and Nebraska and at $108-$110 in the western Corn Belt. Dressed prices were at $172.

The five-area direct average fed steer price last week was $109.62/cwt. on a live basis, which was $3.29 more than the previous week, but $5.57 less than the previous year. The average steer price in the beef was $171.87, which was $6.52 more than the previous week, but $9.85 less than the same week last year.

Cattle futures firmed Monday, after early pressure on Feeder Cattle, closing mostly higher amid relatively light trade after the previous session’s selloff. Presumably, technical support and higher outside markets helped pave the way.

Live Cattle futures closed an average of 29¢ higher, except for 20¢ lower in near Feb.

Feeder Cattle futures closed an average of 47¢ higher, except for 20¢ lower in spot Nov and unchanged in Sep.

Choice boxed beef cutout value was 97¢ higher Monday afternoon at $226.95/cwt. Select was $2.89 higher at $212.35.

Corn futures closed mostly 2¢ to 4¢ higher.

Soybean futures closed mostly 4¢ to 6¢ higher. 

******************************

U.S. financial indices closed higher Monday, on news that another Covid vaccine candidate, this one from Moderna, proved more than 94% effective in a preliminary, late-stage trial.

The Dow Jones Industrial Average closed 470 points higher. The S&P 500 closed 41 points higher. The NASDAQ was up 94 points.

******************************

By most measures, domestic consumer beef demand remained resilient in the face of multifold challenges posed by the pandemic. Heading into winter, though, Derrell Peel, Extension livestock marketing specialist at Oklahoma State University expects challenges to increase.

“Loss of outdoor dining in cold weather will further aggravate restaurant challenges.  Food service demand is likely to be additionally affected with worsening public health challenges. Macroeconomic concerns will grow as consumers go forward with less unemployment support,” Peel explains, in his weekly market comments.  “Ample supplies of beef, pork and poultry increase market price pressure, though disruptions in supply are a threat as well.”  

By way of review, Peel points out unparalleled beef supply and demand disruptions characterized the first half of 2020. By the end of June, cattle slaughter—packing capacity—was mostly recovered.

“Beef demand, however, continues to be challenged with restricted food service.  Restaurants have recovered somewhat from the initial lockdown with more emphasis on takeout and delivery. Retail grocery demand remains robust and numerous adjustments have helped to shift some food service supply chains to support retail grocery supply chains,” Peel explains. “There are indications that retail grocery demand is being boosted again by consumers stocking up in the face of increased uncertainty. The shift from summer beef demand to winter raises additional concerns. Food service is typically more emphasized in winter months, which may be an additional challenge. The pandemic is resurging and additional restrictions on food service are a growing risk.”

Currently, domestic beef demand is difficult to assess, according to Peel. Although Choice boxed beef cutout values increased sharply the past two weeks, they remain 9.2% less than the same time last year.

“Ribeyes are a key market this time of year with strong demand for Christmas and New Year’s holiday. So far, Ribeyes are following close to a typical seasonal increase with current Ribeye prices close to year-ago levels and up over 9% the last two weeks,” Peel says. “Other food service-dependent beef products are less encouraging. Beef tenderloins are currently averaging 25.6% below year-ago levels and were down 1.5% in the last two weeks. Sirloin Top Butt is up 6.0% the last two weeks but down 18.4% year over year. Other beef products heavily dependent on food service demand include brisket, down 13.9% from one year ago and the Petite Tender, down 20.7% year over year. Strip Loin, more frequently used in retail grocery, is up 7.8% year over year.”

As well, Peel says prices for most chuck and round products are down 5% to 10% compared to last year. Exceptions include Chucks (2-piece), which are up 7.0% the past two weeks and up 13.7% year over year, which may indicate more demand for grinding for retail grocery ground beef.

“In contrast, 50% trimmings are down 55.7% and 90% trimming are down 15.8% year over year, although both are up the past two weeks. 50s and 90s are more commonly used for food service ground beef,” Peel explains.

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

Cattle Current Daily—Nov. 16, 2020

Negotiated cash fed cattle trade ended the week with live prices $3 higher at $110/cwt. in Nebraska and the Southern Plains; $3-$4 higher in the western Corn Belt at $108-$110, according to USDA’s Agricultural Marketing Service (AMS). Dressed prices were at $172, which was $4 higher in Nebraska and $5-$8 higher in the western Corn Belt. Although prices were higher, some thought the market was poised to reap steeper gains.

Through Thursday, the five-area direct weighted negotiated fed steer price was $109.46/cwt. on a live basis, which was $3.11 more than the previous week but $5.69 less than the same week in 2019. The average steer price in the beef was $171.88, which was $6.58 more week to week but $10.07 less year over year.

Cattle futures closed sharply lower Friday, with much of the pressure seemingly tied to overbought conditions, week-end positioning and fears that escalating COVID-19 cases will take another whack at packer production.

Live Cattle futures closed an average of $1.61 lower, from $1.10 lower toward the back to $2.57 lower toward the front.

Feeder Cattle futures closed an average of $2.38 lower.

Choice boxed beef cutout value was 52¢ lower Friday afternoon at $225.98/cwt. Select was $1.22 higher at $209.46.

Corn futures closed mostly 1¢ to 2¢ higher.

Soybean futures closed mostly 4¢ to 9¢ higher through Nov ‘22 and then mostly unchanged. 

******************************

U.S. financial indices closed higher Friday, as investors seemed less worried about the surge in COVID-19 cases and more comfortable that the recently announced vaccine will enable the nation to get back to business, ultimately.

The Dow Jones Industrial Average closed 399 points higher. The S&P 500 closed 48 points higher. The NASDAQ was up 119 points.

******************************

“Agriculture will need to speak up with the new administration on its priorities, and we need to strengthen the bipartisan nature of American agriculture,” explained former assistant U.S. trade representative Sharon Bomer Lauritsen at last week’s virtual U.S. Meat Export Federation (USMEF) Strategic Planning Conference.

“There has never been a more important time to maintain a strong and unified agriculture and agribusiness voice at the state level, and in Washington, D.C., to balance the industrial voices,” Bomer Lauritsen said. “U.S. agriculture will need to defend and advance its interests, make sure they are heard over the non-ag voices, and keep the rules of trade strong and enforced to ensure that American agricultural exports continue to thrive.”

Bomer Lauritsen, who recently retired from the U.S. government after 29 years of service and is now a trade policy consultant at Ag Trade Strategies, LLC, recapped many key trade breakthroughs for U.S. red meat over the years. She noted that while the Trump administration’s approach to tariffs and trade sometimes put agricultural exports in a negative position, it also helped bring key trading partners such as Japan and China to the negotiating table on longstanding market access obstacles for U.S. beef and pork. She also offered a preview of what to expect from a new administration.

“President-elect Biden has stated his priority will be fixing domestic issues first, but that doesn’t mean that the new administration at lower levels can’t lay the groundwork to build constructive relationships and a foundation for trade negotiation,” she said. “Biden also hasn’t rejected engaging on the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), but has stated the U.S. would need to see changes. I think it’s possible to move forward with a Japan negotiation, although automotive issues will be difficult and could have ramifications for agriculture.”

Further, Pat Binger, new USMEF chair, explained that despite facing trade barriers and an uncertain economic climate in many key regions of the world, there are excellent prospects to further expansion of U.S. red meat’s global footprint.

“From a carcass utilization standpoint, we need to continue to find ways to expand our export product mix—that’s a big opportunity going forward,” Binger said. “Additionally, there are items today that our industry is not getting boxed, either due to lack of labor or a combination of labor and complexity, and that’s another opportunity that we need to manage through. But all in all, I am very optimistic about the U.S. red meat industry’s ability to take on challenges and seize the opportunities that lie ahead. I remain excited and highly encouraged about the future of our industry.”

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

Cattle Current Daily—Nov. 13, 2020

Negotiated cash fed cattle trade got off to a strong start in the north Thursday with live prices $3 higher in Nebraska at $110/cwt. and $3-$4  higher in the western Corn Belt at $108-$110. Dressed prices were $4 higher in Nebraska at $172 and $5-$8 higher in the western Corn Belt at $172.

Cattle futures closed narrowly mixed again Thursday with Feeder Cattle receiving some support from softer grain futures.

Live Cattle futures closed an average of 30¢ lower except for 5¢ higher in Aug.

Feeder Cattle futures closed an average of 47¢ higher, except for 52¢ lower in spot Nov.

Choice boxed beef cutout value was $3.66 higher Thursday afternoon at $226.50/cwt. Select was 22¢ lower at $208.24.

Corn futures closed mostly 4¢ to 9¢ lower through Sep ‘21, and then mostly 1¢ lower.

Soybean futures closed mostly 6¢ to 8¢ lower through Aug ‘21 and then mostly fractionally mixed. 

******************************

U.S. financial indices closed lower Thursday, amid the resurgence in COVID-19 cases and renewal of stricter safety precautions that will delay economic recovery. 

The Dow Jones Industrial Average closed 317 points lower. The S&P 500 down 35 points lower. The NASDAQ was down 76 points.

******************************

“Globally, though some recovery has occurred, demand for beef in international destinations continues to be influenced by pandemic responses and safety measures,” says Josh Maples, Extension livestock economist at Mississippi State University. “Beef demand at seated restaurants continues to be impacted, and demand in areas reliant on tourism still faces obstacles. The pace of recovery in international destinations will be key for beef exports moving forward and for the value that beef exports add to cattle production.”

In the latest issue of In the Cattle Markets, Maples explains September U.S. beef exports were stronger year over year to South Korea, Hong Kong, Taiwan and Canada. As well, he points out beef exports to China were the most on record for September, accounting for 5.3% of total U.S. beef export, vastly more than the 1% of exports China accounted for in all of 2019.

But, U.S. beef exports were 5.6% less overall in September, Maples says; down about 6% year to date through September.

“Beef exports to Mexico continued to lag behind the 2019 pace. During September, beef exports to Mexico were about 38% lower than in September 2019 and were 40% lower for the first nine months of 2020 compared to the first 9 months of 2019,” Maples explains. “Exports to Mexico were 14% of total January-September beef exports in 2019; in 2020, that share has dropped to about 9%.”

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

Cattle Current Daily—Nov. 12, 2020

Negotiated cash fed cattle trade was at a standstill in the Southern Plains and Nebraska through Wednesday afternoon, according to the Agricultural Marketing Service (AMS). Elsewhere, it was mostly inactive on very light demand.

If the weekly Fed Cattle Exchange Auction is any indication, prices could end up significantly higher this week. There were 1,119 head offered (six lots) and none sold. However, three lots from the Southern Plains were passed on at $110/cwt., which was $3 higher than last week’s country trade in the region.

As well, slaughter steers sold $3-$6 higher and fat heifers traded $2 higher at Sioux Falls Regional in South Dakota. There were 502 head of Choice 3-4 steers weighing an average of 1,627 lbs. that brought an average of $107.23, which was $1-$2 higher than the previous week’s country trade.

Cattle futures closed narrowly mixed Wednesday.

Live Cattle futures closed an average of 35¢ higher, from 12¢ to 80¢ higher, except for 2¢ lower toward the back.

Feeder Cattle futures closed narrowly mixed, from an average of 22¢ lower to an average of 38¢ higher.

Choice boxed beef cutout value was 59¢ higher Wednesday afternoon at $222.84/cwt. Select was 9¢ lower at $208.46.

Corn futures closed mostly 2¢ to 5¢ lower through Sept ‘21, and then fractionally lower to 1¢ lower.

Soybean futures closed mostly 6¢ to 10¢ higher.

******************************

U.S. financial indices closed narrowly mixed Wednesday, as investors appeared to take a breather, although major tech stocks bounced back from the previous session’s selloff.

The Dow Jones Industrial Average closed 23 points lower. The S&P 500 closed 27 points higher. The NASDAQ closed 232 points higher.

******************************

Customer transactions at major U.S. restaurant chains continue lower year over year but stabilized in October, according to The NPD Group (NPD).

Specifically, overall transactions held steady each week in October at 9% less year over year, according to NPD’s CREST® Performance Alerts. Quick service restaurant chains, able to leverage off-premises operations during the pandemic, also stabilized at -9% throughout the month.

On the other hand, transactions fluctuated from -16% in the first week of October to  -14% in the last full week of the month at full service restaurant chains, which depend more on dine-in services.

Digital and off-premises orders underpinned gains in stability.

With dine-in operations limited and consumers in search of contactless foodservice, the NPD folks say digital restaurant orders from mobile apps, text messages, and the internet grew by 138% in the July, August, and September quarter compared to a year earlier. Off-premises orders from carry-out, delivery, and drive-thru increased by 22% year over year in the quarter, while on-premises/dine-in declined by 62% year over year. 

“While some of the steep transaction and traffic declines experienced at the height of the mandated shelter-at-home and dine-in closures have been recovered, many uncertainties lie ahead for the industry,” says David Portalatin, NPD food industry advisor. “The continuing pandemic, governmental restrictions, and relief funding are just a few of the uncertainties. But, what we do know for certain is that consumers continue to rely on restaurants and other foodservice outlets to prepare their meals, and there is pent-up demand while we wait for a return to normalcy.”

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

Cattle Current Daily—Nov. 11, 2020

Negotiated cash fed cattle trade was at a standstill in the five-area direct regions through Tuesday afternoon, according to the Agricultural Marketing Service (AMS). However, the recent bounce in Cattle futures and spiking wholesale beef prices have plenty of folks optimistic cash prices will rise when trade finally gets underway this week.

Cattle futures closed narrowly mixed Tuesday. Despite a massive rally in Corn and Soybean futures, surging wholesale beef values helped Live Cattle maintain ground, but pressured Feeder Cattle.

Live Cattle futures closed an average of 33¢ higher, from 2¢ to 95¢ higher, except for 10¢ lower in near Apr.

Feeder Cattle futures closed an average of 37¢ lower, except for an average of 10¢ higher in two contracts.

Choice boxed beef cutout value was $4.86 higher Tuesday afternoon at $222.25/cwt. Select was $6.18 higher at $208.55.

Corn and soybean futures spiked higher Tuesday with the crop-friendly WASDE report (see below).

Corn futures closed mostly 11¢ to 15¢ higher through Sept ‘21, and then 3¢ to 8¢ higher.

Soybean futures closed 21¢ to 33¢ higher through Sep ‘21, and then mostly from 11¢ to 17¢ higher.

******************************

U.S. financial indices closed mixed Tuesday, with it appearing investors were trading some stay-at-home stocks for those that could benefit from further reopening of the domestic economy, given the previous day’s announcement of a vaccine candidate from Pfizer and BioNTech proving to be more than 90% effective in preventing COVID-19.

The Dow Jones Industrial Average closed 262 points higher. The S&P 500 down 5 points lower. The NASDAQ was down 159 points.

******************************

In the latest World Agricultural Supply and Demand Estimates (WASDE), USDA’s Economic Research Service (ERS) left the forecast five-area direct fed steer price unchanged from the previous month at $109/cwt. in the fourth quarter, $113 in the first quarter next year and at $114 for the average annual price in 2021.

Compared to the previous month, projected beef production for this year increased by 85 million lbs. to 27.22 billion lbs. Estimated beef production next year of 27.36 billion lbs. would be 142 million lbs. more than this year (+0.50%).

Estimated total red meat and poultry production this year increased by 216 million lbs. from the previous month’s projection to 106.61 billion lbs. Projected total red meat and poultry production next year of 107.47 billion lbs. would be 865 million lbs. more than this year (+0.81%).

Among other WASDE highlights:

Corn Corn production was forecast at 14.51 billion bu., down 215 million with a reduction in yield to 175.8 bu./acre. Corn exports were raised by 325 million bu. to 2.65 billion, which would be record high. Projected feed and residual use was lowered by 75 million bu. based on a smaller crop and higher expected prices.

With supply falling and use increasing, corn ending stocks for 2020-21 were projected 465 million bu. less at 1.7 billion. If realized, that would be the lowest ending stocks level since 2013-14. The season-average corn price was raised by 40¢ to $4.00/bu.

Soybeans The U.S. soybean outlook for 2020-21 is for lower production and ending stocks. Soybean production is forecast at 4.17 billion bu., down 98 million on lower yields. With reduced production, soybean ending stocks were projected at 190 million bu., down 100 million from last month. If realized, soybean ending stocks would be at the lowest level in the past seven years.

The U.S. season-average soybean price for 2020-21 was forecast 60¢ higher at $10.40/bu. The soybean meal price was forecast $20 higher at $355/short ton. The soybean oil price was forecast 2¢ higher at 34.5¢/lb.

Wheat The outlook for 2020-21 U.S. wheat this month is for stable supplies, higher domestic use, unchanged exports, and reduced ending stocks.

Projected 2020-21 ending stocks were reduced 6 million bu. to 877 million, down 15% from last year. The season-average farm price was unchanged at $4.70/bu.

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

Cattle Current Daily—Nov. 10, 2020

Negotiated cash fed cattle prices last week were $1 higher than the previous week in the Southern Plains at $107/cwt. on a live basis, $4-$6 higher in Nebraska at $107/cwt., and $3-$4 higher in the western Corn Belt at $105-$106. Dressed trade was $2-$9 higher at mostly $167, according to the Agricultural Marketing Service.

Last week’s five-area weighted average fed steer price was $106.33/cwt. on a live basis, which was $1.26 higher than the previous week, but $8.27 less than the same time a year earlier. The average steer price in the beef was $165.35, which was $1.40 more than the prior week, but $15.69 less than the previous year.

Cattle futures roared higher Monday, buoyed by significant gains in wholesale beef prices and last week’s stronger cash fed cattle prices. There was also likely plenty of help from surging outside markets, tied to the reported efficacy of a coronavirus vaccine (more below).

Live Cattle futures closed an average of $2.19 higher, from $1.20 higher toward the back to $3.17 higher in spot Dec.

Feeder Cattle futures closed an average of $3.71 higher, from $1.90 higher at the back to $4.80 higher.

Choice boxed beef cutout value was $3.07 higher Monday afternoon at $217.39/cwt. Select was $3.88 higher at $202.37. Week to week, Choice was $8.74 higher and Select was up $9.75. 

Corn futures closed mostly 1¢ to 3¢ higher.

Soybean futures closed 6¢ to 9¢ higher through Aug ‘21, and then mostly from 1¢ lower to 1¢ higher.

*******************************

Except for tech stocks, major U.S. financial indices rallied Monday on news that a vaccine candidate from Pfizer and BioNTech proved to be more than 90% effective in preventing COVID-19.

Specifically, according to those companies, the vaccine candidate,  “…was found to be more than 90% effective in preventing COVID-19 in participants without evidence of prior SARS-CoV-2 infection in the first interim efficacy analysis.”

The companies continue accumulating safety data and currently estimate that a median of two months of safety data following the second (and final) dose of the vaccine candidate—the amount of safety data specified by the FDA in its guidance for potential Emergency Use Authorization—will be available by the third week of November. Based on current projections those companies expect to produce globally up to 50 million vaccine doses this year and up to 1.3 billion doses in 2021.

The Dow Jones Industrial closed 834 points higher. The S&P 500 closed 41 points higher. The NASDAQ down 181 points.

*******************************

Calf and feeder markets appear to be moving higher in the Southern Plains with wheat pasture prospects improved by recent moisture.

For instance, in Oklahoma, Derrell Peel, Extension livestock marketing specialist at Oklahoma State University says prices last week for steers weighing 450-600 lbs. were the highest since late August and early September. As an example, he notes the combined state auction price for Medium and Large #1 steers at 450-500 lbs. last week was $166.89/cwt. compared to $147.34 a week earlier, when storm severity helped damper markets.

Peel provided a price chart (below) in his weekly market comments published Monday.

“For animals below 600 lbs., the price drops sharply with additional weight (i.e. a bigger price rollback). Above 600 lbs., the price changes little with additional weight. A bigger price rollback reduces the value of gain. For example, the value of gain for 200 lbs. of gain from 450 to 650 lbs. is $0.62/lb. but for 650 to 850 lbs., the value of gain is $1.36/lb.,” Peel explains. 

Consequently, Peel says stocker producers should consider several factors, including beginning weight, how long the animals will be owned and how much gain will be added to the animals.

“With a possibly shortened winter grazing period, a heavier beginning weight currently offers a higher value of gain and may make sense,” Peel says. “The next few weeks may result in additional demand for stockers but will likely also see larger supplies of feeder cattle in Oklahoma auctions. Combined Oklahoma auction volume the past six weeks was down nearly 33%, in part due to the impacts of the winter storm. It appears there are significant numbers of calves and feeders yet to be marketed this fall. Stocker and feeder prices could move either higher or lower in the next month depending on the balance of increased demand and increased supply in auctions.”

Peel adds that the recent surge in Feeder Cattle futures is adding support to calf and feeder cattle prices.

“Winter grazing typically keys off the March Feeder futures contract,” he says. “March contract prices increased to over $135/cwt. at the end of last week, up from lows below $126/cwt. less than two weeks ago. Feeder markets are also closely watching feed grain markets as strong export demand has pushed grain prices higher.”

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

Cattle Current Daily—Nov. 9, 2020

Negotiated cash fed cattle prices for the week were $1 higher than the previous week in the Southern Plains at $107/cwt. on a live basis, $4-$6 higher in Nebraska at $107/cwt., and $3-$4 higher in the western Corn Belt at $105-$106. Dressed trade was $2-$9 higher at $167, according to the Agricultural Marketing Service.

Through Thursday, the five-area weighted average fed steer price was $106.35/cwt., $2.19 higher than the previous week, but $7.81 less than the same time a year earlier. The average steer price in the beef was $165.30, which was $5.60 less than the prior week and $16.11 less than the previous year.

Estimated total cattle slaughter for the week ending Nov. 7 of 647,000 would be 9,000 more than the previous week, but 10,000 head fewer than the same week last year. Year-to-date estimated total cattle slaughter of 27.4 million head is 1.06 million head fewer (-3.73%) than the same period last year. Year-to-date estimated beef production of 22.76 billion lbs. is 252.7 million lbs. less (-1.11%) than a year earlier.

Cattle futures closed mixed Friday, with Live Cattle edging higher and Feeder Cattle trading narrowly mixed. Support included the week’s higher cash prices and stronger wholesale beef values.

Cattle futures closed mixed Friday, with Live Cattle edging higher and Feeder Cattle trading narrowly mixed. Support included the week’s higher cash prices and stronger wholesale beef values.

Live Cattle futures closed an average of 41¢ higher.

Feeder Cattle futures closed mixed, from an average of 52¢ lower in the back three contracts to an average of 31¢ higher, except for unchanged in May.

Choice boxed beef cutout value was $1.77 higher Friday afternoon at $214.32/cwt. Select was 48¢ lower at $198.49.

Corn futures closed mostly fractionally lower to 1¢ lower.

Soybean futures closed mostly 2¢ to 3¢ higher, except for 2¢ to 3¢ lower in the front two contracts.

******************************

Major U.S. financial indices tread water Friday with likely profit taking from the week’s broad step higher, as well as a national jobs report that was more positive than the trade expected.

Total non-farm payroll employment rose by 638,000 in October, and the unemployment rate declined to 6.9%, according to the U.S. Bureau of Labor Statistics. Average hourly earnings for all employees on private non-farm payrolls increased by 4¢ in October to $29.50.

The Dow Jones Industrial Average down 66 points lower. The S&P 500 closed 1 point lower. The NASDAQ closed 4 points lower.

******************************

“Daily Choice boxed beef started climbing again in the first week of November. Rib, chuck, and round all inched higher throughout the week, giving hope to some seasonal demand for cuts born from those primals,” say analysts with the Livestock Marketing Information Center (LMIC), in the latest issue of Livestock Monitor. “Last year, Choice boxed beef was setting a new record and at that time was the highest value for the cutout. This year, that cutout value was eclipsed in April, but values have been unable to climb over a year ago since about mid-October.”

The decline in the cutout is about 10% below a year ago, ribs down about 4%, chuck down 9%, loins down 12%, and flanks down 10% year-over-year in Friday’s data, according to LMIC.

Similarly, those analysts explain, thus far in the fourth quarter, brisket value is down about 22-30% compared to the same time last year; short plates down 5-20%; round down 5-9%.

“Beef demand in the fourth quarter in recent years has been supportive for cattle prices,” say LMIC analysts. “This number is one we will have to continue to watch this year for signs the U.S. economy is recovering, though all primals are not considered equal in this timeframe. Rib primal values have been the primary benefactor of increased consumer demand in other years, while chuck and rounds seem to have more staying power through the first quarter.”

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

Cattle Current Daily—Nov. 6, 2020

Negotiated cash fed cattle prices were $4-$6 higher than last week on a live basis in Nebraska through Thursday afternoon at $107/cwt., and $3-$4 higher in the western Corn Belt at $105-$106. Dressed trade was $2-$9 higher at $167, according to the Agricultural Marketing Service. Trade in the Southern Plains earlier in the week was $1 higher at $106.

Cattle futures closed mixed though, with Live Cattle edging higher and Feeder Cattle trading narrowly mixed, under continued pressure from higher grain prices.

Live Cattle futures closed an average of 46¢ higher, except for unchanged in the back contract.

Feeder Cattle futures closed mixed, from an average of 26¢ lower to an average of 43¢ higher.

Choice boxed beef cutout value was $2.36 higher Thursday afternoon at $215.55/cwt. Select was $1.92 higher at $198.97.

The average dressed steer weight of 931 lbs. for the week ending Oct. 24 was 2 lbs. heavier than the previous week and 25 lbs. heavier than the previous year, according to USDA’s Actual Slaughter Under Federal Inspection report. The average dressed heifer weight of 847 lbs. was 3 lbs. lighter than the previous week but 12 lbs. heavier year over year.

Grain futures, especially soybeans continued higher on mainly positive exports and adverse weather in South America.

Corn futures closed mostly 3¢ to 4¢ higher through Jly ‘21 and then mostly 1¢ to 2¢ higher.

Soybean futures closed 17¢ to 22¢ higher through Aug ‘21 and then mostly 10¢ to 13¢ higher. The spot month breeched the $11 mark for the first time in recent memory.

******************************

Major U.S. financial indices extended the post-election rally Thursday. Although widely expected, support included the Fed’s decision to maintain interest rates at current levels.

“The ongoing public health crisis will continue to weigh on economic activity, employment, and inflation in the near term, and poses considerable risks to the economic outlook over the medium term,” (the Committee). “The Committee decided to keep the target range for the federal funds rate at 0 to 0.25% and expects it will be appropriate to maintain this target range until labor market conditions have reached levels consistent with the Committee’s assessments of maximum employment and inflation has risen to 2% and is on track to moderately exceed 2% for some time.”

The Dow Jones Industrial Average closed 542 points higher. The S&P 500 closed 67 points higher. The NASDAQ was up 300 points.

******************************

U.S. Beef exports to major Asian markets were about steady with the prior year in September but trended lower overall, according to data released by USDA and compiled by the U.S. Meat Export Federation (USMEF).

September beef exports were down 6% from a year ago to 103,277 metric tons (mt), valued at $600.9 million (down 9%). Coming off record performances in August, exports to South Korea and Taiwan remained strong, while setting another new record in China. However, COVID-19 related obstacles continued to negatively impact demand for U.S. beef in several key markets, especially Mexico, Central America and the Caribbean.

“Although restaurant traffic and foodservice activity are not back to normal in most Asian markets, USMEF is very encouraged by the recovery in Asia and this was especially evident in the strong August and September exports of U.S. beef to Korea, Taiwan and China,” according to Dan Halstrom, USMEF president and CEO. “As we close out the year, U.S. beef has a great opportunity to capture greater market share in Asia due to tightening supplies from Australia. While it will require more time, we also expect U.S. beef to regain momentum in regions where beef demand depends more heavily on travel and tourism, and where e-commerce channels are not as well-developed.”

For January through September, beef exports trailed last year’s pace by 8% in volume (911,936 mt) and 9% in value ($5.55 billion).

U.S. pork exports remained on a record pace, however. They were 10% more in September year over year in volume at 222,475 mt and 6% more in value at $563.2 million.

Through the first three quarters of this year, pork exports were 16% more than last year’s record pace in both volume (2.22 million mt) and value ($5.69 billion).

“Exporting countries are watching the hog production recovery in China very closely, because we know its demand for imported pork is moderating,” Halstrom explains. “While USMEF is pleased to see U.S. pork exports to China/Hong Kong maintaining a strong pace, it is vitally important that our export destinations remain diversified. The U.S. industry continues to pursue this goal aggressively, both in the Asia Pacific region and the Western Hemisphere.”

You can find a detailed summary of U.S. beef and pork exports at the USMEF website.

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

Cattle Current—Nov. 5, 2020

Negotiated cash fed cattle prices were $1 higher on a live basis in the Southern Plains Wednesday at $107/cwt., with moderate demand, according to the Agricultural Marketing Service.

That matched the price paid for Southern Plains cattle in the weekly Fed Cattle Exchange auction. Cattle feeders offered 634 head and sold 296 head with delivery of 1-17 days.

Similarly, slaughter steers sold steady to $1 higher in the slaughter auction at Sioux Falls Regional in South Dakota: $105.34 for 281 Choice 2-3 steers weighing an average of 1,454 lbs.; $103.80 for 679 Choice 2-4 steers weighing an average of 1,556 lbs.

Cattle futures closed higher Wednesday, with support from recently stronger wholesale beef values, the brighter seasonal price outlook and the prospect for higher weekly cash trade.

Live Cattle futures closed an average of 72¢ higher, from 5¢ higher in spot Dec to $1.10 higher at the back.

Feeder Cattle futures closed average of $1.40 higher, from 82¢ higher at the back to $1.97 higher toward the front

Choice boxed beef cutout value was 75¢ higher Wednesday afternoon at $210.19/cwt. Select was $1.60 higher at $197.05.

Corn futures closed mostly 2¢ to 5¢ higher.

Soybean futures closed 17¢ to 22¢ higher through Aug ‘21 and then mostly 13¢ higher.

******************************

Major U.S. financial indices continued to rally Wednesday, led by tech stocks and despite the undecided U.S. presidential election.

The Dow Jones Industrial Average closed 367 points higher. The S&P 500 closed 74 points higher. The NASDAQ was up 430 points.

******************************

The International Monetary Fund (IMF) is more optimistic about global economic recovery than it was in June, although improvement is likely to continue on the sluggish side, according to the most recent quarterly World Economic Outlook (WEO).

“We are projecting a somewhat less severe, though still deep recession in 2020, relative to our June forecast,” according to IMF analysts. “The revision is driven by second quarter GDP outturns in large advanced economies, which were not as negative as we had projected; China’s return to growth, which was stronger than expected; and signs of a more rapid recovery in the third quarter. Outturns would have been much weaker if it weren’t for sizable, swift, and unprecedented fiscal, monetary, and regulatory responses that maintained disposable income for households, protected cash flow for firms, and supported credit provision. Collectively these actions have so far prevented a recurrence of the financial catastrophe of 2008-09.”

Currently, IMF projects real global GDP this year to be 4.4% less than last year, when year-to-year GDP grew by 2.8%. Projected GDP for advanced economies this year is -5.8% compared to -3.3% for emerging and developing economies. IMF forecasts U.S. GDP this year at -4.3%.

Looking ahead, IMF projects global GDP at 5.2% next year; 3.0% for advanced economies, 6.0% for emerging economies and 3.1% for the United States.

“After the rebound in 2021, global growth is expected to gradually slow to about 3.5% into the medium term,” say IMF analysts. “This implies only limited progress toward catching up to the path of economic activity for 2020–25 projected before the pandemic for both advanced and emerging market and developing economies. It is also a severe setback to the projected improvement in average living standards across all country groups. The pandemic will reverse the progress made since the 1990s in reducing global poverty and will increase inequality.”

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

Cattle Current Daily—Nov. 4, 2020

Negotiated cash fed cattle trade was mostly inactive on light demand in the western Corn Belt through Tuesday afternoon, according to the Agricultural Marketing Service. Elsewhere, it was at a standstill.

Cattle futures closed mostly lower in light trade Tuesday, despite higher boxed beef prices and thoughts that last week’s shallower packer buy may elevate cash prices this week. Higher grain futures and election uncertainty likely provided some of the pressure.

Live Cattle futures closed an average of 26¢ lower, except for an average of 27¢ higher in the back three contracts.

Feeder Cattle futures closed an average of 57¢ lower.

Choice boxed beef cutout value was 79¢ higher Tuesday afternoon at $209.44/cwt. Select was $2.83 higher at $195.45.

Corn futures closed 3¢ to 4¢ higher through Sep ‘21 and then mostly 1¢ higher.

Soybean futures closed 8¢ to 12¢ higher through Sep ‘21 and then 4¢ to 6¢ higher.

******************************

Major U.S. financial indices closed higher Tuesday, apparently buoyed by thoughts that economic stimulus talks will gain traction after the election, no matter who wins. 

The Dow Jones Industrial Average closed 554 points higher. The S&P 500 closed 58 points higher. The NASDAQ was up 202 points.

******************************

The Purdue University/CME Group Ag Economy Barometer rose 27 points in October to 183, the highest level in the history of the barometer. The Current Conditions Index rose 36 points to a reading of 178 and the Future Expectations Index rose 23 points to a reading of 186.

The Ag Economy Barometer is based on survey responses from 400 U.S. agricultural producers and was conducted Oct. 19-23.

“The combination of good yields, a rally in crop prices and Coronavirus Food Assistance Program payments (CFAP 2) set the stage for an all-time high in the barometer and farmer sentiment,” says James Mintert, the barometer’s principal investigator and director of Purdue University’s Center for Commercial Agriculture. “Since bottoming out this summer, the ag economy has rebounded sharply, and the dramatic improvement in sentiment reflects the turnaround in the farm income picture.”

Mintert refers to a late summer/early fall rally in commodity prices combined with government program payments arising from the second round of the Coronavirus Food Assistance Program, which provided a boost to many producers’ farm income. Corn and soybean prices continued to rally, even though U.S. corn yields are expected to set a record high and USDA projects soybean yields to be the fourth highest on record.

Comparing their farm’s current financial condition to a year earlier, 25% of survey respondents said their operation was better off. That was the most positive response from producers to the question in the history of the barometer survey.

The Farm Capital Investment Index also hit an all-time high in October, up 9 points from September to a reading of 82. The percentage of producers expecting to increase their purchases of machinery in the upcoming year rose to 14% from 11% a month earlier, up from 4% in May. The percentage of respondents who plan to reduce their purchases in the next year was 33%, down from 40% in September.

Meanwhile, 4% more producers (27%) than in September expect land values to increase over the next 12 months. Similarly, 38% said they expect cash rental rates to increase in 2021, compared to 8% a month earlier.

Producer optimism about trade with China also increased, with 59% of respondents expecting China to fulfill the food and agricultural import requirements outlined in the Phase One trade agreement with the U.S.; 12% more than a month earlier.

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

Cattle Current Daily—Nov. 3, 2020

Negotiated cash fed cattle trade was mostly inactive in the western Corn Belt through Monday afternoon, according to the Agricultural Marketing Service. Elsewhere, it was at a standstill.

Last week, live prices were at $106/cwt. in the Southern Plains, $103-$105 in Nebraska and $101-$103 in the western Corn Belt. Dressed prices, in a light test, were at $158-$163 in Nebraska and at $158-$165 in the western Corn Belt.

Cattle futures managed to close mostly higher Monday after early pressure and skittishness surrounding Tuesday’s election. 

Live Cattle futures closed an average of 26¢ higher.

Feeder Cattle futures closed narrowly mixed from an average of 25¢ lower in the front two contracts to an average of 70¢ higher.

Choice boxed beef cutout value was 55¢ higher Monday afternoon at $208.65/cwt. Select was $1.38 higher at $192.62.

Corn futures closed 1¢ lower in the front four contracts and then mostly fractionally higher

Soybean futures closed 1¢ to 5¢ lower through the front five contracts and then 1¢ to 3¢ higher.

*******************************

Major U.S. financial indices closed higher Monday, buoyed by positive economic news and despite election uneasiness.

Economic activity in the manufacturing sector grew in October, with the overall economy notching a sixth consecutive month of growth, according to the latest Manufacturing ISM® Report On Business®. The October Purchasing Managers Index was 3.9 points higher to 59.3%, the highest since September 2018.

The Dow Jones Industrial Average closed 423 points higher. The S&P 500 closed 40 points higher. The NASDAQ was up 46 points.

******************************

“Improved stocker prospects, combined with a sharp recovery in the Feeder Cattle futures markets last week, may mean that the seasonal low in calf and stocker prices is past,” says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly market comments. “March Feeder futures, the reference for winter grazing programs, increased by roughly $8/cwt. last week, making stocker budgets look more attractive again.”

Besides the rally in futures prices, Peel points out last week’s winter storms and widespread moisture across the Southern Plains, could increase the odds for wheat pasture. Hopes for grazing wheat continued to dwindle amid expanding drought ahead of the storms.

“The wheat crop is generally poised to respond quickly to the timely precipitation. Stocker demand may pick back up somewhat in the coming weeks with improvement in the wheat crop. Seasonally large runs of feeder cattle are expected in the coming weeks and numerous value-added preconditioned calf sales are scheduled in the next five weeks (Oklahoma),” Peel says.

As well, logic suggests last week’s storms depressed feedlot performance in the region, which should also support the market.

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

Cattle Current Daily—Nov. 2, 2020

Negotiated cash fed cattle prices looked more promising through Friday afternoon, but remained mainly steady to lower than the previous week, according to the Agricultural Marketing Service.

There were a few live trades in Nebraska at $106/cwt., but too few to trend. On Thursday, the market was established at $103, which was $2 less than the previous week. Dressed trade the prior week was at $162-$166.

In the western Corn Belt, live sales for the week were at $101-$103, which was steady to $4 lower than the previous week. Dressed prices the pervious week were at $162-$165.

Live trade in the Southern Plains was steady week to week at $106.

The average five-area direct steer price through Thursday was $104.16/cwt. on a live basis, which was 14¢ more than the previous week, but $7.75 less than the same week last year. The average dressed steer price of $159.70 was $4.27 less than the prior week and $17.89 less than the previous year.

Choice boxed beef cutout value was 78¢ higher Friday afternoon at $208.10/cwt. Select was 1¢ higher at $191.24.

Total estimated cattle slaughter for the week of 638,000 head was 5,000 head fewer than the previous week and 21,000 head fewer (-3.2%) than the same time last year. Year-to-date estimated total cattle slaughter of 26.7 million head is 1.1 million head fewer (-3.8%) than a year earlier. Beef production of 537.3 million lbs. for the week was 4.1 million lbs. less than the previous week and 4.7 million lbs. less than a year earlier. Year-to-date estimated beef production of 22.2 billion pounds is 256.7 million lbs. less (-1.1%) than a year earlier.

Cattle futures continued higher Friday, especially Feeder Cattle with support from seasonal expectations for higher cash fed cattle prices and wholesale beef values. 

Live Cattle futures closed an average of 32¢ higher, from 2¢ higher to 70¢ higher, except for 30¢ lower in expiring spot Oct.

Feeder Cattle futures closed an average of $2.08 higher, from $1.67 higher to $2.77 higher.

Corn futures closed unchanged to 3¢ higher.

Soybean futures closed 5¢ to 8¢ higher.

******************************

Major U.S. financial indices closed lower Friday, ending a volatile and bearish week. Pressure on the day included record high domestic coronavirus cases for the week, renewed pandemic restrictions in Europe and positioning ahead of next week’s elections.

The Dow Jones Industrial Average closed 157 points lower. The S&P 500 closed 40 points lower. The NASDAQ was down 274 points.

******************************

Even before the pandemic, the 49 rural U.S. counties dependent on meatpacking faced a comparatively high prevalence of poverty, according to USDA’s Economic Research Service (ERS).

“Just over 500,000 people work in the meatpacking industry in the United States. Many plants are in cities such as Sioux Falls, SD, where meatpacking is just one of many major employers. However, several other plants are in much smaller municipalities such as Dakota City, NE, and Worthington, MN, where meatpacking is the primary employer in the county,” according to ERS analysts, in The Meatpacking Industry in Rural America During the COVID-19 Pandemic. “There are 56 counties in the United States—49 in rural (non-metro) counties and seven in urban (metro) counties—where meatpacking is estimated to account for more than 20% of all county employment. While these counties make up 2.5% of all rural counties and 0.6% of urban counties, they represent 19.0% and 2.9%, respectively, of all meatpacking employment in the United States.”

By ERS definition, high-poverty counties have poverty rates of 20% or higher, using the 2014–18 five-year estimates of the American Community Survey. By that measure, 34.7% of meatpacking-dependent counties were defined as high-poverty counties, compared with 26.2% in all other rural counties.

Then came COVID-19.

Starting in the middle of April, the two-week moving average of new coronavirus cases in meatpacking-dependent counties were significantly higher than in other rural counties, according to ERS.

“Meatpacking-dependent counties are currently maintaining around 1.25 times the two-week moving average number of new daily cases per 100,000 compared to other rural counties for a third straight month,” explain ERS analysts.

By | October 31st, 2020|Daily Market Highlights|

Cattle Current Daily—Oct. 30, 2020

Negotiated cash fed cattle trade got off to a sluggish start for the week on Thursday with a few live trades in the Southern Plains steady with last week at $106/cwt. There were a few live trades in Nebraska at $103. However, there were too few transactions to trend in any region, according to the Agricultural Marketing Service.

The average dressed steer weight for the week ending Oct. 17 was 929 lbs., which was 1 lb. heavier than the prior week and 29 lbs. heavier than the previous year, according to USDA’s Actual Slaughter Under Federal Inspection report. The average dressed heifer weight of 850 lbs. was 4 lbs. heavier than the prior week and 19 lbs. heavier than the previous year.

Cattle futures continued higher Thursday, with the outlook for seasonally higher cash prices, as well as technical support.

Live Cattle futures closed an average of $1.64 higher, from 42¢ higher in almost spent spot Oct. to $3.30 higher.

Feeder Cattle futures closed an average of $1.32 higher, from 27¢ higher at the back to $1.82 higher toward the front.

Choice boxed beef cutout value was $1.53 higher Thursday afternoon at $207.32/cwt. Select was $1.65 higher at $191.23.

Net U.S. beef export sales for 2020 totaled 18,900 metric tons for the week ending Oct. 22, according to the weekly U.S. Export Sales report from USDA’s Foreign Agricultural Service. That was 13% less than the previous week and 6% less than the prior four-week average. Increases were primarily for China, Japan, South Korea, Mexico and Taiwan.

Nearby Corn and Soybean futures contracts softened a bit more, while the remainder of the board firmed after the previous session’s steep selloff.

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

Soybean futures closed 1¢ to 5¢ lower through Mar ’21 and then mainly fractionally mixed.

******************************

Major U.S. financial indices rebounded Thursday from the previous session’s selloff, buoyed by positive economic news.

Real gross domestic product (GDP) increased at an annual rate of 33.1% in the third quarter, according to the U.S. Bureau of Economic Analysis. It decreased 31.4% in the second quarter.

As well, weekly initial unemployment insurance claims of 751,000 were 40,000 fewer than the prior week, according to the U.S. Department of Labor. That was more positive than the trade expected.

The Dow Jones Industrial Average closed 139 points higher. The S&P 500 closed 39 points higher. The NASDAQ was up 180 points. 

******************************

Each year, for more than three decades, the NPD Group publishes the Eating Patterns in America report—top-line trends based on a year’s worth of data from its daily tracking. As you’d expect, the pandemic shoved this year’s numbers and trends around.

“With mandated shelter-at-home and restaurant dine-in restrictions across most of the country during the pandemic, we have had few options other than to prepare most of our meals at home,” says David Portalatin, NPD food industry advisor and author of Eating Patterns in America. “Working from home, schooling at home, and preparing more meals means more of our meal times are a departure from the norm, with most consumers describing their meals as atypical.”

Examples of how America’s eating patterns changed as a result of the pandemic include:

For several years, 80% of meals have been sourced from home and 20% from restaurants and other foodservice outlets. During the pandemic, the gap widened to as much as 87% of meals sourced from home.

The use of online and digital orders for groceries and restaurant foods leapt years ahead in their growth trend trajectory. By May 2020, 40% of shoppers ordered edible groceries online compared to 28% a year earlier. Consumers more than tripled their share of restaurant meals ordered digitally during the April-May-June 2020 quarter. Digital restaurant carryout made up the larger share of restaurant digital orders.

Visits to full service restaurants, which are primarily on-premises operations, declined nearly 80% during the height of the mandated dine-in closures. Quick service restaurants, already set up for drive-thru, carryout, and delivery, realized double-digit declines as well but not as steep as full service restaurants.

“What a year it will be moving forward as we evolve our perspective and the effects of a global pandemic that has caused such tumultuous change,” Portalatin says. “It is my profound hope that next year when we’re compiling the 36th annual Eating Patterns in America, we’re telling the story of recovery.”

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

Cattle Current Daily—Oct. 29, 2020

Negotiated cash fed cattle trade was mostly inactive on light demand in all cattle feeding regions through Wednesday afternoon, according to the Agricultural Marketing Service. There were too few transactions to trend in any region.

Live prices last week were at $106/cwt. in the Southern Plains, $105 in Nebraska and $103-$105 in the western Corn Belt. Dressed prices were $162-$166 in Nebraska and $163-$165 in the western Corn Belt.

Cattle feeders offered 2,012 head in the weekly Fed Cattle Exchange. Of those, 1,257 head sold: 766 head at an average of $106.04/cwt. for delivery at 1-9 days; 630 head for an average of $105.80 for delivery at 1-17 days.

Choice steers and heifers sold $2.50-$2.75 lower at the fat auction in Tama, IA. There were 219 Choice 2-4 steers weighing an average of 1,488 lbs. bringing an average price of $102.97.

At Sioux Falls Regional in South Dakota, slaughter steers and heifers sold steady to $1 higher. There were 171 Choice 2-3 steers weighing an average of 1,464 lbs. bringing an average of $103.62.

Cattle futures, especially Feeder Cattle, continued to gain Wednesday, helped along by lower grain futures.

Live Cattle futures closed an average of 47¢ higher, from 10¢ higher to $1.00 higher in spot Oct.

Feeder Cattle futures closed an average of $1.06 higher, from 45¢ higher toward the back to $1.65 higher toward the front.

Choice boxed beef cutout value was 91¢ lower Wednesday afternoon at $205.79/cwt. Select was 91¢ higher at $189.58.

Grain futures closed sharply lower Wednesday, likely pressured by anemic outside markets, profit taking, positioning ahead of next week’s election and improved growing conditions and Russia and South America.

Corn futures closed 10¢ to 14¢ lower through Sep ’21 and then mostly 5¢ to 7¢ lower.

Soybean futures closed 15¢ to 25¢ lower through Aug ’21 and then mostly 10¢ to 13¢ lower.

******************************

Major U.S. financial indices crumbled Wednesday as daily domestic coronavirus cases continued to set records and as Germany and France renewed strict pandemic restrictions amid increasing cases in those countries.

The Dow Jones Industrial Average closed 943 points lower. The S&P 500 closed 119 points lower. The NASDAQ was down 426 points.

WTI Crude Oil futures on the CME closed $1.90 to $2.18 lower through the front six contracts.

******************************

Even as the pandemic threatens to further hamstring the economy, recent economic data suggests improvement before the latest upswing in cases was sluggish.

“Throughout the pandemic we have looked at the advanced estimates of monthly retail sales for clues as to the depth of the recession as well as the recovery.  September data was released last week and showed that improvements are slow,” according to analysts with the Livestock Marketing Information Center (LMIC), in the latest Livestock Monitor. “The retail sector continues to be one of the hardest hit sectors of the economy. Clothing and accessory stores are down 32.6% in the first nine months of 2020 compared to a year ago. Department stores are still off 17.8%, and electric and appliance stores are still down 15.8%. Gas stations are off 16.4% and food service and bars are down 20.1%.”

More specifically, with food in mind, the LMIC folks explain sales at food service and drinking establishments were 14% less year over year, while grocery store sales were 10% higher. Although total retail and food service sales were 10% higher in September year over year, they are 0.8% less for the year to date.

“With the holiday season upon us, there is considerable question as to what this year’s spending will look like, and how much another round of stimulus could affect it,” say LMIC analysts. “December is the highest total retail sales month in every single year back to 1992, with the only exception being 2008. The fourth quarter of the year is routinely more than 25% of where total annual retail sales are spent. Last year the fourth quarter represented 26.6% of the annual figure, up from 26.4% the prior year. The 7% year-over-year increase in September looks promising and is easily the highest September on record.” 

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

Cattle Current Daily—Oct. 28, 2020

Negotiated cash fed cattle trade was mostly inactive on very light demand in Nebraska and the Texas Panhandle through Tuesday afternoon. Elsewhere, it was at a standstill, according to the Agricultural Marketing Service. There were too few transactions to trend in any region.

Cattle futures rallied Tuesday, likely helped along by the performance-depressing winter storm, as well as apparent fund positioning.

Live Cattle futures closed an average of $1.01 higher, from 65¢ higher toward the front of the board to $1.30 higher toward the back.

Feeder Cattle futures closed an average of $1.41 higher, from 60¢ higher in spot Oct to $1.72 higher.

Choice was $1.13 lower at $206.70. Select was 18¢ higher at $188.67.

Corn futures closed 1¢ to 2¢ lower across the front half of the board and then fractionally higher to 1¢ higher.

Soybean futures closed 4¢ to 8¢ lower through Jan ’22 and then fractionally lower to 3¢ lower.

*******************************

Except for the tech sector, Major U.S. financial indices closed lower again Tuesday as COVID cases continued to spike higher.

The Dow Jones Industrial Average 222 points lower. The S&P 500 closed 10 points lower. The NASDAQ was up 72 points.

******************************

“Drought conditions will likely play an important part of placements this year,” says David Anderson, Extension livestock economist at Texas A&M University, in the latest issue of In the Cattle Markets.

Reflecting on the recent Cattle on Feed report, Anderson explains “Difficult wheat pasture establishment and development may force more to feedlots. Drought in the West and Texas may force some more placements. More feeder cattle continue to come from Mexico adding to available supplies for placement.”

As it is, in his weekly market comments, Derrell Peel, Extension livestock marketing specialist at Oklahoma State University says total feedlot placements during the third quarter (July-September) were 8.5% more year over year. More specifically, during that same period, he explains year-over-year feedlot placements were 17.0% higher in Kansas, 14.5% more in Nebraska, 13.4% higher in Oklahoma, up 9.3% in Colorado, 2% higher in Texas and 1.9% higher in Iowa.

“The Kansas Focus on Feedlots data shows that feedlot average daily gains have been above year-ago levels all year with improved feed conversions, as well,” Peel says. “Improved gains and feed efficiency have pulled feedlot cost of gain below year-ago levels. Excellent feedlot performance has contributed to heavy cattle weights thus far this year.” He expects steer carcass weights to average more than 900 lbs. this year for the first time in history.

On a related note, analysts with the Livestock Marketing Information Center (LMIC) point out that heifers as a percentage of cattle on feed climbed last year but remained steady so far this year.

“Evidence of the slaughter plant disruptions were evident in quarter-three figures, where heifers on feed climbed to 38.5%, up from 37.3% in the prior quarter. Heifers, because of smaller carcass weights, were likely held longer to allow for very heavy steers to have slaughter priority,” say LMIC analysts, in the latest Livestock Monitor. “The heifer count as of Oct. 1 moved a full percent lower, even as cattle numbers on feed increased significantly. The fourth quarter proportion is 37.6% of steers and heifers on feed.”

The LMIC folks also point out beef cow slaughter since July 1 is higher year over year in the Pacific Northwest, West Coast and Southern Plains.

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

Cattle Current Daily—Oct. 27, 2020

Negotiated cash fed cattle trade was at a standstill in the Southern Plains through Monday afternoon, according to the Agricultural Marketing Service. Elsewhere, it was mostly inactive on very light demand.

In regional negotiated cash trade last week, live prices were at $106/cwt. in the Southern Plains; $105 in Nebraska and at $103-$105 in the western Corn Belt. Dressed prices were at $162-$166 in Nebraska and at $163-$165 in the western Corn Belt.

The five-area direct average steer price last week was $2.45 less than the previous week on a live basis at $105.07/cwt., with the average weight 14 lbs. lighter at 1,467 lbs. The average steer price in the beef was $163.95, which was $4.40 less week to week. The average carcass weight was 7 lbs. lighter at 977 lbs.

Cattle futures rebounded Monday, despite sharply lower outside markets and the bearish nature of Friday’s Cattle on Feed report. Potential rationale includes oversold conditions, adequate positioning ahead of the report and thoughts that a near-term bottom is in the books.

Live Cattle futures closed an average of 69¢ higher, from an average of 22¢ to $1.12 higher, except for an average of 20¢ lower in two nearby contracts.

Feeder Cattle futures closed an average of 76¢ higher, from 17¢ higher in spot Oct to $1.22 higher.

Choice boxed beef cutout value was 34¢ higher Monday afternoon at $207.83/cwt. Select was $1.91 lower at $188.49.

Corn futures closed 1¢ to 2¢ lower.

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

******************************

Major U.S. financial indices closed sharply lower on Monday, with spiking coronavirus cases and a more bearish tone to economic stimulus talks.

The Dow Jones Industrial Average closed 650 points lower. The S&P 500 closed 64 points lower. The NASDAQ was down 189 points.

******************************

So far, China purchased more than $23 billion worth of agricultural products, approximately 71% of its target under the Phase One Agreement, according to a recent progress report from the U.S. Trade Representative (USTR) and USDA.

“Since the Agreement entered into force eight months ago, we have seen remarkable improvements in our agricultural trade relationship with China, which will benefit our farmers and ranchers for years to come,” says U.S. Trade Representative Robert Lighthizer.

Highlights of the report include:

Beef: U.S. beef and beef product exports to China through August 2020 were more than triple the total for 2017.

Pork: U.S. pork exports to China hit an all-time record in the first five months of 2020.

Corn: Outstanding sales of U.S. corn to China are at an all-time high of 8.7 million tons.

Soybeans: U.S. soybeans sales for marketing year 2021 are off to the strongest start in history, with outstanding sales to China double 2017 levels.

Sorghum: U.S. exports of sorghum to China from January to August 2020 totaled $617 million, up from $561 million for the same period in 2017.

Additionally, USDA expects 2020 sales to China to hit record or near-record levels for numerous other U.S. agricultural products including pet food, alfalfa hay, pecans, peanuts, and prepared foods.

“This agreement finally levels the playing field for U.S. agriculture and is a bonanza for America’s farmers, ranchers, and producers,” says U.S. Secretary of Agriculture Sonny Perdue. “Being able to participate in this market in a more fair and equitable way has generated more sales that are supporting higher prices and strengthening the rural economy.”

By | October 26th, 2020|Daily Market Highlights|

Cattle Current Daily—Oct. 26, 2020

Negotiated cash fed cattle demand and trade through Friday afternoon ranged from a standstill to inactive and light, according to the Agricultural Marketing Service.

For the week live prices were $2 lower in the Southern Plains at $106/cwt.; $3-$4 lower in Nebraska at $104-$105 and $2 lower in the western Corn Belt at $103-$105. Dressed prices were $4-$7 lower in Nebraska at $162-$165 and $3-$4 lower in the western Corn Belt at $163-$165.

Through Thursday, the five-area direct weighted average steer price was $105.11/cwt. on a live basis, which was $2.50 less than the same period last week and $4.74 less than a year earlier. The average dressed steer price of $163.97 was $4.43 less than the previous week and $10.91 less than last year.

Cattle futures continued mostly lower on Friday beneath the weight of the week’s gloom and higher grain prices. Friday’s Cattle on Feed report will likely offer no support on Monday (see below).

Live Cattle futures closed narrowly mixed, from an average of 37¢ lower to an average of 7¢ higher.

Feeder Cattle futures closed an average of 49¢ lower, except for 7¢ higher in the back contract.

Choice boxed beef cutout value was $1.37 lower Friday afternoon at $207.49/cwt. Select was 32¢ higher at $191.40.

Estimated cattle slaughter of 643,000 head for the week was 11,000 few than the previous week but 3,000 head more than the previous year. Year-to-date total cattle slaughter of 26.11 million head is 1.04 million head fewer (-3.82%) than last year. Estimated year-to-date beef production of 21.67 billion lbs. is 257.6 million lbs. less (-1.18%) than the same period last year.

Corn futures closed 1¢ to 3¢ higher through Jly ’21 and then 1¢ to 2¢ lower.

Soybean futures closed 3¢ to 10¢ higher through Aug ’21 and then mostly fractionally mixed.

******************************

Major U.S. financial indices closed narrowly mixed on Friday, amid surging coronavirus cases and wonderments about economic stimulus.

The Dow Jones Industrial Average closed 28 points lower. The S&P 500 closed 11 points higher. The NASDAQ was up 42 points. 

******************************

Unless the trade already counted on the bearishness of the monthly Cattle on Feed report issued Friday, there will likely be more pressure on futures and cash prices to start the week. Keep in mind the report accounts for feedlots with 1,000 head or more capacity.

Placements of 2.23 million head in September were 124,000 head more (+5.9%) than the same time last year. That was about 3% more than expectations ahead of the report. In terms of weights 36% went on feed weighing 699 lbs. or less, 46% weighing 700-899 lbs. and 18% weighing 900 lbs. or more.

Marketings of 1.85 million head in September were 108,000 head more (+6.2%) year over year, a touch more positive than expectations.

Cattle on feed Oct. 1 of 11.72 million head were 429,000 head more (+3.8%) than the previous year. That’s the most for the date since the data series began in 1996 and a little more than what the trade anticipated.

******************************

The 461.99 million lbs. of beef in cold storage Sept. 30, was 3% more than the previous month but 6.99 million lbs. less (-1.5%) than the same time last year, according to USDA’s latest Cold Storage report.

Frozen pork supplies were up slightly from the previous month but down 22% from last year.

Total red meat supplies in freezers were up 1% from the previous month but down 13% from last year.

Total frozen poultry supplies were down 2% from the previous month and down 3% from a year ago.

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

Cattle Current Daily—Oct. 23, 2020

Negotiated cash fed cattle trade was mostly inactive on light demand in all feeding regions through Thursday afternoon, according to the Agricultural Marketing Service.

For the week so far live prices are $2 lower in the Southern Plains at $106/cwt.; $3-$4 lower in Nebraska at $104-$105 and $2 lower in the western Corn Belt at $103-$105. Dressed prices are $4-$7 lower in Nebraska at $162-$165 and $3-$4 lower in the western Corn Belt at $163-$165.

Total cattle slaughter the week ending Oct. 10 was 637,073 head, according to USDA’s Actual Slaughter Under Federal Inspection report. That was 26,074 head fewer (-4.02%) than the previous week and 11,205 head fewer (-1.73%) than the previous year. Total fed cattle slaughter of 502,345 head was 22,199 head fewer than the prior week (-4.23%) and 7,117 head fewer (-1.40%)than the same week last year.

The average dressed steer weight for that week of 928 lbs. was 4 lbs. more than the previous week and 27 lbs. more than the prior year. The average dressed heifer weight of 846 lbs. was 3 lbs. more than the previous week and 18 lbs. more than a year earlier.

Cattle futures continued to erode amid light trade on Thursday as grain prices hold their ground and cash fed cattle prices soften. As well, there was likely skittishness over the monthly Cattle on Feed report due to be published Friday afternoon.

Live Cattle futures closed an average of 70¢ lower, 30¢ to $1.30 lower

Feeder Cattle futures closed an average of 82¢ lower, from 57¢ lower in spot Oct to $1.05 lower.

On a positive note, wholesale beef values edged higher. Choice boxed beef up 39¢ at 208.86. Select up 17¢ at 191.08.

As well, U.S. net 2020 beef export sales of 21,700 metric tons (mt) for the week ending Oct. 15 were 62% more than the previous week and 13% 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, China, Japan, Mexico, and Hong Kong.

Corn futures closed 1¢ to 2¢ higher through Sep ’21 and then fractionally lower to 3¢ lower.

Net export sales of 2020-21 corn for the week ending Oct. 15 was 1.83 million metric tons, up noticeably from the previous week and 21% more than the prior four-week average.

Soybean futures closed mostly unchanged to fractionally mixed.

*******************************

Major U.S. financial indices closed higher on Thursday, supported by increased optimism surrounding economic stimulus talks and FDA approval of a drug for treating coronavirus.

The Dow Jones Industrial Average closed 152 points higher. The S&P 500 closed 17 points higher and the NASDAQ was up 21 points.

*******************************

The Creighton University Rural Mainstreet Index (RMI) rose for the sixth consecutive month in October to its highest level since January, before the onset of the pandemic. The RMI is based on a monthly survey of bank CEOs in rural areas of a 10-state region dependent on agriculture and/or energy.

The overall index for October climbed above growth neutral (50.0) to 53.2 from  46.9 in September. The farmland price index advanced above growth neutral to 50.6 in October; only the third time in the last 82 months.

“Recent improvements in agriculture commodity prices, federal farm support, and the Federal Reserve’s record low interest rates have underpinned the Rural Mainstreet Economy. Still, 35.5%, of bank CEOs reported their local economies were experiencing recessionary economic conditions,” says Ernie Goss, Jack A. MacAllister Chair in Regional Economics at Creighton University’s Heider College of Business.

Bankers were asked in the latest survey to identify the industry in their area most harmed by the pandemic. More than eight of 10 (80.6%) named restaurants/bars as experiencing the greatest negative impacts. Others areas identified by bankers as economically impacted were: farmers (3%), medical care (3.4%), retailers (6.3%) and hourly workers (6.7%).

“Our worst problem right now is that so much anti-COVID-19 vaccine information has been spread for political reasons that about half the people I talk to say they won’t take the vaccine when it is available. That will hurt our hopes for an economic recovery looking forward,” says Lonnie Clark, president of the State Bank of Chandler, in Chandler, MN.

“It will take many months of above growth neutral readings to get back to pre-COVID-19 employment levels for the region,” Goss says.

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

Cattle Current—Oct. 22, 2020

Negotiated cash fed cattle trade and demand were moderate in Nebraska through Wednesday afternoon, according to the Agricultural Marketing Service. Live sales were $3 lower than last week at $104-$105/cwt. Dressed sales were $4-$7 lower at $162-$165. Earlier in the week, live sales in the Southern Plains were $2 lower at $106.

Cattle feeders offered 1,096 head in the weekly Fed Cattle Exchange auction. Of those, 702 head—four lots from the Southern Plains—sold: 558 head for a weighted average price of $106.50/cwt. on delivery at 1-9 days; 144 head for a weighted average price of $106.25 on delivery of 1-17 days.

Choice steers and heifers sold $1.00-$1.50 lower at the fat auction in Tama, IA. There were 159 Choice 2-4 steers weighing an average of 1,410 lbs. selling for an average price of $105.23. That was steady to $2 lower than country trade in the region last week.

Cattle futures continued to stabilize Wednesday, closing narrowly mixed, with continued pressure from grain prices, as well as demand uncertainty and wonderments about the monthly Cattle on Feed report due out on Friday.

Live Cattle futures closed an average of 40¢ lower, except for unchanged and 30¢ higher in the back two contracts.

Feeder Cattle futures closed from an average of 27¢ higher in five contracts to an average of 33¢ lower.

Choice boxed beef cutout value was $2.13 lower Wednesday afternoon at $208.47/cwt. Select was 76¢ lower at $190.91.

Corn futures closed 1¢ to 5¢ higher through Sep ’21 and then mostly 1¢ to 3¢ lower.

Soybean futures closed 4¢ to 8¢ higher through Sep ’21 and then mostly 2¢ higher.

******************************

Major U.S. financial indices closed lower Wednesday, with pressure from unresolved economic stimulus talks and election uncertainty.

The Dow Jones Industrial Average closed 97 points lower. The S&P 500 7 points lower. The NASDAQ down 31 points.

******************************

Current markets offer promising value of gain across a wide range of weights, according to Brenda Boetel, agricultural marketing specialist at the University of Wisconsin-River Falls.

“Relative weights are the largest driving factor for the relationship between feeder cattle prices,” Boetel explains, in the latest issue of In the Cattle Markets. “The normal relationship between different cattle prices is for prices per hundredweight to decline when cattle weights increase. This price slide is because the prices reflect what it costs to add weight to the animal. The price slide is a big indicator for gross margin, or value of gain, for stocker production.

“Currently, the value of gain is a bit stronger for gains towards the heavy end of feeder weights. A 650-lb. beginning weight has a value of gain of $1.19/lb. for 300 lbs. of gain up to 950 lbs., whereas a 450-lb. beginning weight has a value of gain of $1.11/lb. for 300 lbs. of gain up to 750 lbs. These values suggest that stocker producers have considerable flexibility about what weight to buy and how much weight to put on stocker cattle at this time.”

She notes the above analysis does not indicate profit potential. It assumes the same prices for all weights at completion of the stocker period as when purchased. So, the question is what prices levels could be early next year.

“June to September 2020 saw larger feedlot placements compared to 2019, indicating larger fed cattle supply for early 2021 than previously anticipated. Feedlots looking to fill lots in early 2021, coupled with two consecutive years of declining calf crops provides the potential for heavyweight feeder cattle prices to remain steady to slightly higher than fall 2020 prices,” Boetel says. “Given the drought in the West, the forage availability is the biggest challenge for southern and western stocker cattle. Many of these operations will likely not have adequate forage this winter, indicating that heavyweight feeder cattle supply for spring may be tighter than anticipated as lightweight animals are placed directly on feed this winter. If heavyweight feeder cattle prices remain stable and if the producer has adequate forage available, there is some potential for profit from stocker cattle this winter.”

Boetel emphasizes producers need to analyze their own costs and revenue potential. Wisconsin Extension has some decision tools available here.

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

Cattle Current Daily—Oct. 21, 2020

Negotiated cash fed cattle trade was limited on light demand in all major cattle feeding regions through Tuesday afternoon, according to the Agricultural Marketing Service (AMS). There were a few live trades in the Southern Plains at $106/cwt., which was steady with the previous day and $2 lower than last week.

Cattle futures firmed Tuesday, regaining a portion of what was lost in the previous session’s selloff. Other than being oversold, there was no compelling explanation.

Live Cattle futures closed an average of 74¢ higher, from 12¢ higher in spot Oct to $1.07 higher toward the back.

Feeder Cattle futures closed an average of $1.87 higher, (70¢ to $2.40 higher) except for 10¢ lower in spot Oct.

Choice boxed beef cutout value was 86¢ higher Tuesday afternoon at $210.60/cwt. Select was 17¢ lower at $191.67.

Corn futures closed mostly 1¢ to 3¢ higher.

Soybean futures closed 8¢ to 11¢ higher through Sep ’21 and then 5¢ to 6¢ higher.

******************************

Major U.S. financial indices closed higher Tuesday, buoyed by promising chatter about Congress getting closer to agreement concerning an economic stimulus deal.

The Dow Jones Industrial Average 113 points higher. The S&P 500 closed 16 points higher. The NASDAQ was up 37 points. 

******************************

Late last week, the National Cattlemen’s Beef Association (NCBA) released its widely anticipated framework for voluntarily enhancing negotiated cash fed cattle trade volume. In broad terms, it calls for minimum levels of cash trade in each of four designated cattle feeding regions, as well as weekly participation by the four largest beef packers.

“The framework explains in detail what we are calling the 75% Plan, which is designed to provide negotiated trade and packer participation benchmarks for the industry to strive toward,” explains, Marty Smith, NCBA president, in a letter to that organization’s members.

To avoid tripping triggers, in any given quarter, each region will have to:

  • Achieve no less than 75% of the weekly negotiated trade volume that current academic literature indicates is necessary for robust price discovery in that specific region.
  • Achieve this negotiated trade threshold no less than 75% of the reporting weeks in a quarter.
  • Achieve no less than 75% of the weekly packer participation requirements, to be determined in short order, and assigned to each specific region (more later).
  • Achieve this packer participation threshold no less than 75% of the reporting weeks in a quarter.

That’s outlined in A Voluntary Framework to Achieve Robust Price Discovery in the Fed Cattle Market. It was developed by NCBA’s Regional Triggers Subgroup. The NCBA Live Cattle Marketing Work Group tasked that group to develop a voluntary framework, including triggers, to increase frequent and transparent regional trade to a regionally sufficient level.

Levels of weekly trade volume are based on previous and ongoing cash price discovery research conducted by Stephen Koontz, agricultural economist at Colorado State University.

“For instance, in Kansas, the robust number that Dr. Koontz identified was 21,000 head of negotiated trade on a weekly basis, so 75% of that is 15,750 head per week,” explained Jerry Bohn, chairman of the Regional Triggers Subgroup, during last Friday’s Beltway Beef podcast. “We did that for every region of the country. From there, we put together this trigger plan of 75% of the required volume each week, 75% of the time.”

The framework defines four cattle feeding regions: 1) Texas, Oklahoma and New Mexico; 2) Kansas; 3) Nebraska and Colorado; 4) Iowa and Minnesota. Weekly robust cash trade levels for the regions range from 5,000 head (Colorado) to 31,000 head (Nebraska).

As for the packer side of the equation, according to the framework:

“Each of the four major packers shall be responsible to participate in negotiated trade, at appropriate and adequate levels, within each of the regions from which they predominantly procure fed cattle. At this time, there is insufficient data published under LMR (Livestock Mandatory Reporting) to measure the participation of the major packers in negotiated trade within each region. NCBA is currently involved in conversations with U.S. Department of Agriculture’s Agricultural Marketing Service (USDA-AMS) to determine what packer participation information can be shared under the current LMR statutes and USDA’s rules of confidentiality. The subgroup has drafted a potential framework for the packer participation silo, but will await additional information from USDA-AMS before finalizing.”

Trigger Tripping

The framework defines eight minor triggers, each having to do with whether or not threshold-level negotiated trade volume and threshold-level packer participation were achieved in various regions.

The subgroup will evaluate, on a quarterly basis in arrears, the weekly negotiated trade volume and packer participation information for each reporting region, using LMR data from USDA-AMS.

To avoid tripping a minor trigger, each region must:

  • Weekly trade 75% or more of its “robust” price discovery threshold via negotiated means, no less than 75% of the reporting weeks, and
  • Weekly fulfill its packer participation obligations (to be determined as outlined above) no less than 75% of the reporting weeks.

In any given quarter, the tripping of three or more minor triggers equals a major trigger.

“In the event that a major trigger is tripped during any two out of four rolling quarters, the subgroup shall recommend NCBA pursue legislative or regulatory measures to compel adequate negotiated trade for robust price discovery,” according to the report.

“While certainly not a silver-bullet solution, I truly believe that this approach provides the industry a goal to strive towards and, perhaps more importantly, a path forward if progress is not demonstrated toward that goal,” wrote Smith.

“It’s not intended to be the ultimate fix to the marketplace, but ultimately what we wanted is to have the industry in the driver’s seat until such a time that it was determined that we can’t achieve what we need to on a voluntary basis,” explained Tanner Beymer, NCBA director of government affairs and market regulatory policy, during the podcast.

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

Cattle Current Daily—Oct. 20, 2020

Negotiated cash fed cattle trade was $2 lower at $106/cwt. on a live basis in the Southern Plains through Monday afternoon on light demand, according to the Agricultural Marketing Service (AMS). There were a few live sales in Nebraska $3 lower at $105, but too few to trend.

Prices last week:

Southern Plains: $108 on a live basis.

Nebraska: mostly $108 live and at $169 in the beef.

Western Corn Belt: $105-$107 on a live basis and $167-$168 dressed.

Last week’s five-area direct fed steer prices was 74¢ less than the previous week at $107.52/cwt. on a live basis, according to AMS. The average price in the beef of $168.35 was $1.32 lower.

Cattle futures closed sharply lower Monday, with follow-through pressure from the last session, softer outside markets, declining open interest and what appeared to be algorithmic piling on. Recently expanded CME limits offered extra rein.

Live Cattle futures closed an average of $2.90 lower.

Feeder Cattle futures closed an average of $3.67 lower.

Choice boxed beef cutout value was 29¢ lower Monday afternoon at $209.74/cwt. Select was $1.68 lower at $191.84.

Corn futures closed mostly 1¢ to 3¢ higher.

Soybean futures closed mostly 3¢ to 4¢ higher across the front half of the board and then mostly fractionally higher to 1¢ higher.

******************************

Major U.S. financial indices dropped Monday, beneath the weight of increasing coronavirus cases and continued uncertainty about the government’s ability to come to terms on another round of economic stimulus.

The Dow Jones Industrial Average closed 410 points lower. The S&P 500 closed 56 points lower. The NASDAQ was down 192 points.

******************************

“Despite the rising number of cattle on feed, front-end supplies—the number of cattle on feed over 150 days—diminished for the third consecutive month,” according to analysts with USDA’s Economic Research Service, in the monthly Livestock, Dairy and Poultry Outlook. “This is the result of an improving pace of fed cattle slaughter, which was faster than a year ago for the last two months and above the five-year average. The improving pace, combined with an ample supply of fed cattle at heavier weights, has led to higher expected beef production in third-quarter 2020, relative to 2019. Nonetheless, firm demand and higher than year-ago wholesale prices are likely supporting packer margins, as the recent uptick in steer prices remains in line with year-ago prices.”

ERS increased the expected five-area direct fed steer price for the fourth quarter by $5 to $109/cwt. Projections for the first quarter next year increased by $6 to $113; by $3 to $110 in the fourth quarter.

As for feeder steers (basis Oklahoma City), ERS increased expectations for the fourth quarter by $3 to $143. The annual average price for next year increased by $2 to $139.

By | October 19th, 2020|Daily Market Highlights|

Cattle Current Daily—Oct. 19, 2020

Negotiated cash fed cattle trade on Friday ranged from a standstill to mostly inactive on light demand, according to the Agricultural Marketing Service.

For the week, prices were $1 lower on a live basis in the Southern Plains at $108/cwt.; steady to $1 lower in Nebraska at $107-$108/cwt.; steady to $3 lower in the western Corn Belt at $105-$107. Dressed prices were $1 lower in Nebraska at $169 and $1-$3 lower in the western Corn Belt at $167-$168.

The five-area direct weighted average steer price through Thursday was $107.61/cwt., which was 2¢ more than the previous week, but $3.35 less than the same week last year. The average steer price in the beef of $168.40 was 89¢ less than the prior week and $8.86 less than the same time last year.

Cattle futures took another step lower on Friday, pressured by lower cash prices, weaker wholesale beef values and increasing demand uncertainty.

Live Cattle futures closed an average of 93¢ lower.

Feeder Cattle futures closed an average of $2.25 lower (82¢ lower at the front to $2.77 lower).

Choice boxed beef cutout value was 45¢ lower Friday afternoon at $210.03/cwt. Select was $2.98 lower at $193.52.

Corn futures closed mixed, from 1¢ lower to 1¢ higher.

Soybean futures closed 6¢ to 12¢ lower through May ’21 and then mostly 1¢ to 5¢ lower.

******************************

Major U.S. financial indices closed mixed Friday. Pressure included resurgent COVID cases. Support included stronger retail sales than expected in September.

U.S. retail sales were up 1.9% more than the previous month and 8.2% more year over year, according to the U.S. Census Bureau. Sales by non-store retailers were up 23.8% year over year.

The Dow Jones Industrial Average closed 112 points higher. The S&P 500 closed fractionally higher. The NASDAQ was up 42 points.

******************************

A recent Cargill study found consumer recognition of the challenges and expectations farmers face grew amid the COVID-19 pandemic, as processing and transportation bottlenecks, especially in the protein industry, stretched the global food supply.

More specifically, the latest Feed4Thought survey conducted by Cargill found nearly one-third of consumers in the U.S., Brazil, Vietnam and Norway have a renewed appreciation for animal agriculture.

“Farmers and ranchers have faced tremendous pressures caused by COVID-19 supply chain disruptions. And those pressures came on top of the multitude of challenges farmers already faced as they worked to feed the world in a safe, responsible and sustainable way,” says David Webster, president of Cargill Animal Nutrition & Health. “When consumers experienced bare shelves at grocery stores, they were reminded of the critical role livestock and aquaculture farmers play in global food security.”

In the study, 71% of consumers express concern about the pandemic’s disruption of the food system; two in three consumers acknowledge increased pressure on animal farmers to supply safe, affordable protein since COVID-19’s onset.

These new challenges have not, however, deterred consumers’ faith in farmers: an overwhelming majority of consumers (84%) indicated they were generally confident in farmers to meet demand and feed growing populations. More than half of consumers indicate they feel positively toward/appreciative of farmers, with one-third saying that their perceptions have improved as compared to pre-pandemic. This high confidence and increased appreciation toward farmers suggest that COVID-19 may be acting as a catalyst in strengthening the relationship between consumers and farmers.

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

Cattle Current Daily—Oct. 16, 2020

So far this week, negotiated cash fed cattle trade is steady to $1 lower on a live basis in Nebraska and the western Corn Belt at $107-$108/cwt., according to the Agricultural Marketing Service. Dressed sales are $1 lower in Nebraska at $169. Live sales in the Southern Plains are $1 lower at $108.

Cattle futures continued to weaken on Thursday, especially Feeder Cattle, as grain prices continued to strengthen.

Live Cattle futures closed an average of 58¢ lower.

Feeder Cattle futures closed an average of $1.17 lower (82¢ to $1.52 lower), except for 55¢ and 15¢ higher in the front two contracts.

Choice boxed beef cutout value was 60¢ lower Thursday afternoon at $210.54/cwt. Select was $2.38 lower at $196.89.

Corn futures closed 3¢ to 7¢ higher through the front four contracts and then mostly fractionally higher to 1¢ higher.

Soybean futures closed 3¢ to 6¢ higher through Mar ’21 and then mostly 1¢ to 2¢ lower.

******************************

Major U.S. financial indices softened Thursday. Pressure included resurgent COVID cases in Europe prompting renewed pandemic restrictions in some countries.

Also, weekly initial unemployment insurance claims of 898,000 reported by the U.S. Department of Labor was 53,000 more than the previous week and less robust than the trade expected.

The Dow Jones Industrial Average closed 19 points lower. The S&P 500 closed 5 points lower. The NASDAQ was down 54 points.

******************************

“The current concern surrounding Alternative Marketing Arrangements (AMA e.g. formula/grid pricing) has more to do with lower cash prices received by producers due to market reactions to major market disruptions than the role of AMA’s role in thinly traded markets,” says Elliott Dennis, Extension livestock economist at the University of Nebraska-Lincoln, in the latest issue of In the Cattle Markets.

Dennis discusses the motivation behind recent legislative proposals that would mandate minimum levels of weekly cash trade.

“While both bills would bring increased negotiated cash price discovery and transparency in the feedlot-packer market interface, neither are likely to increase the cash price received by producers since they do not fundamentally change the supply of fed cattle nor the demand for wholesale beef,” Dennis explains. “Further, it is unlikely that if these bills were implemented prior to either the Holcomb Fire or COVID-19 it would have prevented the backlog in cattle, nor affected the demand for wholesale beef. If implemented, these policies would create additional transparency but potentially create increased costs and reduce profitability for the entire beef complex. Consistent with the economic theory of derived demand, the additional costs of these policies are likely to predominately be carried by the cow-calf industry.”

Although there are regional differences and periods when bid-the-grid selling increased, Dennis says there has been little overall average change in the percentage of negotiated cash sales since the beginning of the year.

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

Cattle Current Daily—Oct. 15, 2020

Negotiated cash fed cattle trade was slow on light to moderate demand in the Southern Plains and Nebraska through Wednesday afternoon, according to the Agricultural Marketing Service.

Live trade in the Southern Plains was $1 lower at $108/cwt. Dressed trades were $1 lower in Nebraska at $169. Elsewhere, trade was limited on light demand.

Cattle feeders offered 774 head in the weekly Fed Cattle Exchange auction. Of those, 671 head (four lots) from the Southern Plains sold: 304 head for a weighted average price of $108/cwt. for delivery at 1-9 days; 367 head at $108.25 for delivery at 1-17 days. That was $1 lower than country trade in the region last week.

Similarly, Choice steers and heifers sold 50¢ to $1.00 lower at the fat auction in Tama, IA. There were 171 head of Choice 2-4 steers weighing an average of 1,423 lbs. selling for an average price of $107.40. That was a touch softer than the top of last week’s negotiated range.

Slaughter steers and heifers sold mainly $2-$3 lower at Sioux Falls Regional in South Dakota. There were 330 head of Choice 2-3 steers weighing an average of 1,472 lbs. bringing an average price of $104.71/cwt.

Cattle futures tottered back lower on Wednesday with pressure including the softer cash price outlook and stagnant wholesale beef values.

Live Cattle futures closed an average of 47¢ lower.

Feeder Cattle futures closed an average of 43¢ lower (2¢ to 90¢ lower), except for 25¢ higher in spot Oct.

Choice boxed beef cutout value was $1.30 lower Wednesday afternoon at $211.14/cwt. Select was 81¢ lower at $199.27.

Exports to China continue adding heft to grain markets. Yesterday, for instance, USDA’s Foreign Agricultural Service reported sales of another 420,000 metric tons of corn and 264,000 metric tons of soybeans to China for delivery in the 2020-21 marketing year that began Sept. 1.

Corn futures closed 2¢ to 5¢ higher through the front three contracts and then mostly 1¢ lower.

Soybean futures closed mostly 3¢ to 12¢ higher through Aug ’21 and then mostly fractionally lower to 1¢ lower.

******************************

Major U.S. financial indices closed lower again Wednesday, pressured by the lack of a deal for another round of COVID economic stimulus and despite positive corporate quarterly earnings reports.

The Dow Jones Industrial Average closed 165 points lower. The S&P 500 closed 23 points lower. The NASDAQ was down 95 points.

******************************

Nationwide, other hay prices increased more than those for alfalfa in July and August, climbing $9 to $137 per ton, compared to $128 in June. Other hay price is 6% above a year ago, while the national alfalfa hay price in August was 4% less than a year earlier at $172 per ton, according to the Livestock Marketing Information Center (LMIC).

“Typically, alfalfa prices are higher than other hay prices, however, the reverse of that trend has been evident in certain states,” say LMIC analysts, in the latest Livestock Monitor. “Colorado other hay prices are over $200 per ton this year and in the last two months went for $5 per ton more than alfalfa in the state. Arizona other hay prices outpaced alfalfa by $15 per ton in July and in August. Montana and Nevada each reported $10 premiums for other hay, and Washington $20. Washington is one of the few states that regularly has other hay commanding a higher value than alfalfa.”

Besides demand from the horse industry, the folks at LMIC explain high quality grasses produced in the Northwest, such as timothy and orchard grass, are in demand internationally.

“As large exporters of grasses to the rest of the world, the export market can have incredible influence on those values,” say LMIC analysts. “According to USDA FAS, other hay exports year to date are up 2%, with China nearly doubling its purchases from last year. Japan, the largest destination for U.S. other hay is up 7%.”  

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

Cattle Current Daily—Oct. 14, 2020

Negotiated cash fed cattle trade was limited on very light demand in Nebraska and the western Corn Belt through Tuesday afternoon, according to the Agricultural Marketing Service. Although too few to trend, there were a few live sales in Nebraska at $107-$108/cwt.

Cattle futures on Tuesday gained back a fair portion of what was lost in the previous session, although it was tough to see a concrete reason, given the 6,000-contract decline in Live Cattle open interest a day earlier. 

Live Cattle futures closed an average of 84¢ higher (40¢ to $1.50 higher).

Feeder Cattle futures closed an average of 79¢ higher (57¢ to $1.27 higher).

Choice boxed beef cutout value was $2.18 lower Tuesday afternoon at $212.44/cwt. Select was 26¢ lower at $200.08.

*******************************

Major U.S. financial indices closed lower Tuesday amid mixed economic news. Pressure included resurgent COVID cases and two major pharmaceutical companies suspending late-stage vaccine trials on health concerns.

The Dow Jones Industrial Average 157 points lower. The S&P 500 closed 22 points lower. The NASDAQ was down 12 points.

******************************

AGR Partners LLC (AGR), along with existing co-investor StepStone Group, completed the purchase of Green Plains Inc.’s remaining 50% ownership in their joint venture in Green Plains Cattle Company LLC (GPCC), the fourth largest cattle feeder in the United States. Investment funds managed by AGR will become the majority owners of GPCC, with completion of the transaction.

GPCC has a total one-time capacity of more than 355,000 head, according to company sources. The company began in 2014 with the acquisition of Supreme Cattle Feeders in Kismet, KS. In 2017, the company added a 30,000 head operation in Hereford, TX, a 50,000 head operation in Eckley, CO, and a 105,000 head operation in Leoti, KS. A year later they acquired a combined 100,000 head operation in Tulia, TX and Sublette, KS.

AGR and StepStone Group originally completed the purchase of a 50% ownership stake of GPCC in September 2019.

“We are excited to increase our ownership in Green Plains Cattle Company,” says Daniel Masters, managing director of AGR Partners. “GPCC and the management team have a proven operational model delivering strong long-term economic, environmental and social outcomes. We look forward to continuing to build the company.”

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

Cattle Current Daily—Oct. 13, 2020

Negotiated cash fed cattle trade was limited on very light demand in the Texas Panhandle and western Corn Belt through Monday afternoon. Although too few to trend, there were a few live sales in the Texas Panhandle at $109/cwt. and a few in the western Corn Belt at $107.

Last week’s five-area direct negotiated weighted average fed steer price was $107.12/cwt. on a live basis, which was $1.14 higher than the previous week, but 95¢ less than the same time last year. The average price in the beef of $169.67 was $1.97 more than the prior week but $2.10 less than the previous year.

Cattle futures dropped Monday, with follow through pressure from last week and perhaps some fund selling.

Live Cattle futures closed an average of $1.19 lower.

Feeder Cattle futures closed an average of 81¢ lower (35¢ to $1.00 lower), except for an average of 23¢ higher in three contracts.

Choice boxed beef cutout value was 56¢ higher Monday afternoon at $214.62/cwt. Select was 52¢ higher at $200.34.

Corn futures closed mostly 3¢ to 5¢ lower.

Soybean futures closed down 11¢ to 31¢ lower through Jan ’22 and then 1¢ to 6¢ lower.

******************************

Major U.S. financial indices climbed higher Monday, led by big tech stocks and despite uncertainty regarding additional federal economic stimulus.

The Dow Jones Industrial Average closed 250 points higher. The S&P 500 closed 57 points higher. The NASDAQ was up 296 points.

******************************

“The COVID impacts on the fed cattle market continue to almost have entirely run their course. Marketings have been reasonably strong. The number of long-fed cattle are down off their peaks in June and high inventories in the surrounding months of May and July,” says Stephen Koontz, agricultural economist at Colorado State University. 

In the latest issue of In the Cattle Markets, Koontz says fall feeder cattle prices could be among the highest of the year. While less than the recent peak of $150/cwt. in August, he points out current price levels of near $145 are significantly higher than the $120 seen in April.

“However, cash prices for 4-5-weight animals remain comparable to this spring. Prices are in the high $160s and that is similar to the mid-$160s of April and May,” Koontz says. “Basis for these lightweight animals is soft and the market is rather clearly communicating, for producers who can feed calves for another month or two, that delaying marketing should be considered.”

Although beef cow slaughter has yet to increase much, Koontz expects to see acceleration.

“Beef cow slaughter is up 2.7% for the year to date as of late September,” says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly market comments. “At the end of the first quarter, cumulative beef cow slaughter was nearly 11% higher year over year. By the end of the second quarter, cumulative beef cow slaughter had decreased to roughly 3.5% higher than the previous year…Beef cow slaughter is projected to be roughly 2% above year ago levels in the fourth quarter, leading to an annual total beef cow slaughter roughly 2.5% higher year over year.”

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

Cattle Current Daily—Oct. 12, 2020

Through Friday afternoon, negotiated cash fed cattle prices for the week were generally $2 higher in the Southern Plains at $109/cwt. on a live basis; $1-$2 higher in Nebraska and at $108-$109 and steady to $3 higher in the western Corn Belt at $107-$110. Dressed trade was $2-$3 higher at $170.

Through Thursday, the five-area direct negotiated weighted average fed steer price was $107.59/cwt. on a live basis, which was 48¢ higher than the previous week, but $1.49 less than the same time last year. The average price in the beef of $169.29 was $1.61 more than the prior week but 79¢ less than the previous year.

Live Cattle futures closed an average of 55¢ lower except for 17¢ higher in spot Oct.

Feeder Cattle futures closed an average of 90¢ lower (5¢ to $1.22 lower), except for 20¢ higher in spot Oct.

Choice boxed beef cutout value was $1.94 lower Friday afternoon at $214.06/cwt. Select was $3.28 lower at $199.82.

Total estimated cattle slaughter for the week ending Oct. 10 was 637,000 head, which was 28,000 head fewer (-4.2%) than the previous week and 1.7% less than the same time last year. That’s according to USDA’s Estimated Weekly Meat Production Under Federal Inspection report. Year to date total cattle slaughter 24.81 million head is 1.05 million head fewer (-4.1%) than the same time last year.

Estimated beef production was 535.3 million lbs., which was 4.1% less than the previous week, but a tick higher than the same week last year. Year-to-date beef production of 20.57 billion lbs. is 1.4% less than last year.

Corn and soybean futures found another gear Friday, fueled by the monthly World Agricultural Supply and Demand Estimates (see below).

Corn  futures closed mostly 6¢ to 8¢ higher through Jly ’21 and then mostly 3¢ to 4¢ higher.

Soybean futures closed mostly 15¢ and 26¢ higher.

*******************************

Major U.S. financial indices posted another day of gains Friday, with continued optimism regarding additional federal economic stimulus.

The Dow Jones Industrial Average closed 161 points higher. The S&P 500 closed 30 points higher. The NASDAQ was up 158 points.

*******************************

USDA’s Economic Research Service (ERS) increased projected fed cattle prices for this year and next, in the latest monthly World Agricultural Supply and Demand Estimates (WASDE). Specifically, ERS increased the 2020 annual average price (five-area direct) by $1.41 to $108.71/cwt., compared to the previous month, with a fourth-quarter price projection of $109. That’s based on current price strength and robust beef demand.

The forecast annual average fed steer price for 2021 increased by $2 to $114. Prices are projected to be $113 in the first quarter, $110 in the second quarter and $114 in the third quarter.

That’s with a projected increase in beef production both this year and next.

ERS projects beef production for this year at 27.14 billion lbs., which was 90 million lbs. more than the previous month’s estimate. That’s based on expectations for increased slaughter in the second half of the year. The total would be 17 million lbs. less than last year. Projections for beef production in 2021 increased 10 million lbs. to 27.37 billion lbs., which would be 227 million lbs. more than this year.

Estimated total red meat and poultry production this year of 106.39 billion lbs. would be 1.13 billion lbs. more than last year. ERS projects total red meat and poultry production next year at 107.46 billion lbs.

Apparently, feed prices will be less supportive to cattle markets than previously thought, according to from USDA’s Economic Research Service (ERS).

Corn

Corn production is forecast 178 million bu. less than the previous month at 14.72 billion bu., based on reduced harvested area and a slight decline in yield to 178.4 bu./acre. Corn supplies are forecast down sharply from last month, on a smaller crop and lower beginning stocks. Corn ending stocks for 2020-21 were lowered 336 million bu. The season average corn price received by producers was increased 10¢ to $3.60/bu.

Soybeans

Soybean production is projected at 4.3 billion bu., down 45 million on lower harvested area. Soybean yield is projected at 51.9 bu./acre, unchanged from the September forecast. Soybean supplies for 2020-21 are forecast 96 million bu. less at 4.8 billion bu. on lower production and beginning stocks. Despite reduced supplies, soybean exports were raised 75 million bu. on record early-season sales. With smaller supplies and increased exports, ending stocks are projected at 290 million bu., down 170 million from last month.

The U.S. season-average soybean price for 2020-21 is forecast at $9.80/bu., up 55¢. The soybean meal price is forecast at $335.00/short ton, up $20.00. The soybean oil price forecast is raised 0.5¢ to 32.5¢/lb. 

Wheat

The 2020-21 U.S. wheat supply and demand outlook was unchanged. The projected season-average farm price for wheat was unchanged at $4.50/bu.

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

Cattle Current Daily—Oct. 9, 2020

Negotiated cash fed cattle prices in Kansas on Thursday were steady to $2 higher at $107-$108/cwt., according to the Agricultural Marketing Service. Although there were too few transactions to trend, there was some live trade in Nebraska at $108, which was mainly $1 higher than last week. A day earlier, dressed trade started the week $1-$2 higher at $169, but too few to trend.

Cattle futures, especially Feeder Cattle softened Thursday, perhaps with some defensiveness ahead of Friday’s monthly World Agricultural Supply and Demand Estimates.

Live Cattle futures closed an average of 74¢ lower (37¢ to $1.00 lower).

Feeder Cattle futures closed an average of $1.40 lower, from 45¢ lower in spot Oct to $1.75 lower at the back.

Choice boxed beef cutout value was 88¢ lower Thursday afternoon at $216.00/cwt. Select was $2.48 lower at $203.10.

Corn  futures closed mostly 2¢ lower.

Soybean futures closed mostly 3¢ and 6¢ lower.

******************************

Major U.S. financial indices extended gains Thursday, buoyed by continued optimism about another round of economic stimulus sooner than later.

The Dow Jones Industrial Average closed 122 points higher. The S&P 500 closed 27 points higher. The NASDAQ was up 56 points.

******************************

The Livestock Marketing Information Center (LMIC) projects cattle prices to rebound next year and in 2022, based in part on expectations that beef production will peak this year.

Glynn Tonsor, agricultural economist at Kansas State University (KSU) offered LMIC price projections as part of his Market Outlook at the recent KSU Beef Stocker Field Day. Prices that follow are basis the Southern Plains.

500-600 pound steer calves: $156-$158/cwt. (fourth quarter); $163-$168 (first-quarter 2021); $169-$175 (second quarter); $167-$171 for the year. For 2022, the annual estimate is $175-$185.

700-800 pound feeder steer: $141-$144/cwt. (fourth quarter); $141-$145 (first-quarter 2021); $142-$148 (second quarter); $148-$152 for the year. For 2022, the annual estimate is $152-$162.

Five-area fed steer: $108-$110/cwt. (fourth quarter); $113-$118 (first-quarter 2021); $116-$122 (second quarter); $117-$120 for the year. For 2022, the annual estimate is $119-$129.

“In the event the macroeconomic environment improves beyond what’s built into these forecasts, I could build an argument for better prices yet,” Tonsor says. “I think there are reasons for optimism that global demand will rebound, but that will hinge on global economic conditions and geopolitical relations.”

You can watch Tonsor’s presentation Here.

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

Cattle Current Daily—Oct. 8, 2020

Although there were too few transactions to trend, there were some early dressed trades in Nebraska and the western Corn Belt on Wednesday at $169/cwt, according to the Agricultural Marketing Service (AMS). That’s was $1-$2 higher than last week.

Cattle feeders offered 470 head (three lots) in the weekly Fed Cattle Exchange auction. Of those, 367 head (two lots from Texas) sold for delivery at 1-17 days for a weighted average price of $108.50, which was mostly $1.50 higher than last week’s country trade in the region.

Slaughter steers and heifers sold $2-$3 higher at Sioux Falls Regional in South Dakota. There were 406 head of Choice 3-4 steers weighing an average of 1,562 lbs. and bringing an average price of $106.35.

At the fat auction in Tama, IA, Choice steers and heifers sold $2 higher, with 194 head of Choice 2-4 steers weighing an average of 1,421 lbs. and bringing an average price of $108.07.

Cattle futures firmed with the outlook for steady to higher cash fed cattle prices this week.

Live Cattle futures closed mostly higher across a wide range. Except for unchanged and 7¢ lower in the back two contracts, they closed an average of 48¢ higher (12¢ to $1.15 higher).

Feeder Cattle futures closed mostly narrowly higher. Except for 15¢ and 40¢ lower in two contracts, they were an average of 18¢ higher.

Choice boxed beef cutout value was 68¢ higher Wednesday afternoon at $216.88/cwt. Select was $1.26 lower at $205.58.

Corn  futures closed 2¢ to 3¢ higher through Jly ’21 and then mostly fractionally mixed.

Soybean futures closed 7¢ and 6¢ higher in the front two contracts and then mostly 3¢ to 5¢ lower.

******************************

Major U.S. financial indices closed higher Wednesday, supported by indications the White House will entertain renewed economic stimulus talks ahead of the election.

The Dow Jones Industrial closed 530 points higher. The S&P 500 closed 58 points higher. The NASDAQ was up 209 points,

******************************

U.S. exports of beef muscle cuts turned the COVID corner in August, according to data compiled by the U.S. Meat Export Federation (USMEF). Exports of beef variety meats continued lower year over year, though, due in part to the lack of available labor required to harvest and export some items.

Led by record-large demand in South Korea and Taiwan, beef muscle cut exports were the largest in more than a year at 89,148 metric tons (mt), up 3.5% year-over-year, while export value increased slightly from a year ago to $611 million. August muscle cut exports also set new records in China and Indonesia and beef exports to Canada continued to gain momentum. Combined beef/beef variety meat exports were 109,752 mt in August, down 4.5% from a year ago. Export value was $673.8 million, down 2% from a year ago but the highest since March.

For January through August, beef muscle cut exports were 6% below last year’s pace in volume (627,248 mt) and 9% lower in value ($4.38 billion). Beef/beef variety meat exports were down 8% to 808,659 mt, valued at $4.95 billion (down 9%).

“Record beef shipments to Korea, Taiwan and China show the kind of rebound U.S. beef can achieve as the foodservice sector gradually recovers and adapts, and we are excited to see demand strengthen further entering the fourth quarter,” says Dan Halstrom, USMEF President and CEO.

U.S. pork exports remain on a record pace in 2020, with January-August muscle cut exports up 22% from a year ago to 1.68 million mt, valued at $4.45 billion (up 20%). Pork/pork variety meat exports were up 17% in volume at just under 2 million mt, with value up 18% to $5.13 billion.

“The upward trend in muscle cut exports is very encouraging and especially critical as beef and pork production continue to rebound from the interruptions earlier in the year,” Halstrom says. “Maintaining variety meat volumes has been especially challenging this year but we continue to expand and develop destinations for these items, which are essential to maximizing carcass value.”

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

Cattle Current Daily—Oct. 7, 2020

Feeder Cattle futures closed $1.72 lower Tuesday, pressured by grain futures.

Live Cattle futures closed, though, closed an average 23¢. in the front three contracts to down an average of 30¢the rest of the way, with support from cash prices and wholesale beef values.

Choice boxed beef cutout value was down 74¢Tuesday afternoon at $216.24/cwt. Select was $1.17 lower at $206.84.

Grain futures rallied with support from crop conditions overseas and potential positioning ahead of Friday’s USDA World Agricultural Supply and Demand Estimates.

Corn futures closed mostly 3¢to 5¢higher.

Soybean futures closed mostly 12¢ to 22¢ higher through May ’21 and then fractionally higher to 9¢ higher. 

******************************

Major U.S. financial closed lower Tuesday on the announcement President Trump is halting economic stimulus talks until after the November election.

The Dow Jones Industrial Average closed 375 points lower. The S&P 500 closed 47 points lower. The NASDAQ was 177 points lower.

******************************

Agricultural producer sentiment rose to its highest level in September since the start of the pandemic, according to the Purdue University/CME Group Ag Economy Barometer. The index increased 12 points to 156, compared to August… the low for the year was 60 in April. The Current Conditions Index jumped 18 points to 142 in September. The Future Expectations Index rose 9 points to 163.

The Ag Economy Barometer is based on survey responses from 400 U.S. agricultural producers and was conducted Sept. 21-25.

According to James Mintert, the barometer’s principal investigator and director of Purdue University’s Center for Commercial Agriculture, “In September, producers were more optimistic about both current conditions and the future for agriculture than they’ve been since the pandemic began. He explains “A continued crop price rally and the announcement of the USDA’s Coronavirus Food Assistance Program payments appear to be fueling much of their optimism.”

However, there was less optimism concerning the future of U.S. agriculture’s trade prospects. In September, 58% of respondents said they expect agriculture exports to increase over the next five years, down from 67% in August. The shift was primarily due to more producers indicating they expect exports to remain about the same in the future, rather than increase.

In a related question, producers were asked whether they expect China to fulfill the food and agricultural import requirements established in the Phase One trade agreement signed earlier this year. Farmers’ opinions were split, with less than half (47%) of respondents indicating they expect China to fulfill its commitment to import food and ag products from the U.S.

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

Cattle Current Daily—Oct. 6, 2020

Negotiated cash fed cattle trade was at a standstill in the Southern Plains through Monday afternoon, according to the Agricultural Marketing Service. Elsewhere, it was mostly inactive on very light demand.

Live sales last week were at mostly $107/cwt. in the five-area feeding regions. Dressed prices were at $168 in Nebraska and at $167-$168 in the western Corn Belt.

The average five-area direct steer price was last week was $107.12/cwt. on a live basis, which was $2.07 higher than the previous week. The average price in the beef was $2.81 higher at $167.70.

Cattle futures firmed with last week’s stronger cash prices, as well as an increase in slaughter.

Live Cattle futures closed up an average 42¢ higher.

Feeder Cattle futures closed an average 47¢ higher (5¢ to 85¢ higher).

Choice boxed beef cutout value was $1.90 lower Monday afternoon at $216.98/cwt. Select was 40¢ higher at $208.01.

******************************

Major U.S. financial rallied Monday. Most attributed the lift to President Trump able to leave the hospital and renewed hopes for another round of federal economic stimulus.

The Dow Jones Industrial Average closed 465 points higher. The S&P 500 closed 60 points higher. The NASDAQ was up 257 points.

CME WTI Crude Oil futures also rallied on the day, up $2.06 to $2.17 through the front six contracts.

*******************************

“The current feeder price patterns mean that producers should consider the implications of current animal weight, short-term weight gain and timing as they evaluate fall marketing alternatives,” says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University. For example, he explains, in his weekly market comments, “In the current market, the value of 50 to 100 lbs. of gain will be significantly lower for steers less than 600 lbs. compared to steers over 600 lbs.”

Peel is referring to Oklahoma price patterns, specifically, which he says are developing along typical lines.

“The price slides across steer weights are very different for feeder cattle below 600 lbs. compared to cattle over 600 lbs. A larger price slide for the lightweight cattle means that the value of gain is lower,” Peel explains.

By way of illustration, using current combined Oklahoma auction prices, he calculated the value of gain at 60¢/lb. to add 50 lbs. to a steer weighing 500 lbs., versus $1.37 for adding the same weight to a steer weighing 600 lbs.

In the meantime, Peel points out La Niña conditions, expanding drought in the Southern Plains and the impact on wheat pasture could pressure stocker cattle prices this fall.

“On average, Oklahoma calf prices are at or near the seasonal low in the late September/early October period. With larger fall runs of calves expected in October and November, the lack of wheat pasture demand may add additional seasonal pressure to calf markets this fall.

Moreover, he says the lack of wheat pasture and other forages may change the timing of calf and feeder cattle sales this fall. 

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

Cattle Current Daily—Oct. 5, 2020

Through Thursday, the average five-area direct steer price was $107.11/cwt. on a live basis, which was $2.08 higher than the previous week. The average price in the beef was $2.81 higher at $167.68.

Negotiated cash fed cattle trade was very limited on light demand in all cattle feeding regions through Friday afternoon, according to the Agricultural Marketing Service.

For the week, live sales in the Southern Plains were mostly $2 higher at $107/cwt., with a few up to $108 in the Texas Panhandle. Live prices were $2 higher in Nebraska at $107 and $2-$3 higher in the western Corn Belt at $107-$108. Dressed trade was $2-$3 higher at $167-$168.

According to Andrew P. Griffith, agricultural economist at the University of Tennessee, “Prices are still a long way from the fourth quarter target high of $115 to $120, but he says a $7 to $8 price improvement over the next two months is obtainable.

Moreover, in his weekly market comments, Griffith says “Reaching those fed cattle price levels will likely result in strong competition for feeder cattle moving forward.”

In the meantime, Derrell Peel, Extension livestock marketing specialist at Oklahoma State University explains, “The July-August bulge in placements suggests higher feedlot marketings in the first quarter of 2021. He adds that July placements were skewed to the lighter weight cattle, while August placements included more heavyweight placements, which further implies that cattle could be somewhat bunched up. However, Peel says, winter weather typically spreads cattle out a bit, so the exact timing is uncertain.

Estimated total cattle slaughter last week of 665,000 head was 14,000 head more than the previous week and 20,000 head more than the previous year. Year-to-date estimated total cattle slaughter of 24.17 million head is 1.04 million head less than the same time last (-4.14%) year.

Cattle futures softened, with pressure from outside markets.

Live Cattle down an average 61¢.

Except for an average of 39¢ lower in two contracts, Live Cattle futures closed an average of 48¢ higher week to week on Friday.

*******************************

Nationwide, calves and feeder cattle sold from $2/cwt. lower to $2 higher, according to the Agricultural Marketing Service.

“Demand remains good for yearling cattle, with light to moderate demand for fresh calves,” say AMS analysts. They explain, “Bawling and un-weaned calves continue to see discounts, while Buyers are quite willing to pay premiums for cattle if producers invest time in them and provide a documented health program.”

Feeder Cattle futures took the brunt of the pressure from last week’s crop-friendly quarterly Grain Stocks report. They were down an average $1.04 on Friday. Week to week they closed an average of 72¢ lower. 

Old crop corn stocks in all positions on Sept. 1 of 2.00 billion bu., were 10% less than a year earlier and significantly less than the trade expected, according to the aforementioned grain stocks report.

Week to week on Friday, Corn futures closed an average of 13¢ higher through the front six contracts.

Similarly, old crop soybeans stored in all positions were 42% less than a year earlier at 523 million bu., significantly less than the trade expected.

Week to week on Friday, Soybean futures closed an average of 18¢ higher through the front six contracts.

“As we work through 2020 and into 2021, feeder cattle supplies should continue to tighten modestly,” Peel says. In his weekly market comments, he points out total feedlots placements are 4.2% less than last year for the year to date, despite significant increases the last two months.

*******************************

Wholesale beef values hovered on either side of steady last week. Choice boxed beef cutout value was 46¢ lower week to week on Friday at $218.88/cwt. Select was 63¢ higher at $207.61.

The average dressed steer weight for the week ending Sept. 19 was 919 lbs., according to USDA’s Actual Slaughter Under Federal Inspection report. Although 23 lbs. heavier than the previous year, the average weight was 1 lb. lighter than the previous week. That was the first week-to-week decline since mid July, according to AMS.

“There are several factors that may influence the beef market moving through the last quarter of the year, Griffith says. “The first would be more stimulus money being deposited in the bank accounts of American consumers. If Congress passes another substantial stimulus package, then this could result in more beef purchases as discretionary income inevitably increases… A second major factor will continue to be the export market.”

*******************************

Major U.S. financial indices closed lower amid volatile trade Friday.

Pressure included increased uncertainty with announcements that President Trump tested positive for COVID-19.

As well, the monthly national Employment Situation Summary was less robust than traders expected. Total non-farm payroll increased 661,000 from August to September. The nation’s unemployment rate declined to 7.9%, according to the U.S. Bureau of Labor Statistics. Average hourly earnings for all employees on private non-farm payrolls increased 2¢ to $29.47.

The Dow Jones Industrial Average was down 134 points. The S&P 500 was down 32 points. The NASDAQ closed 251 points lower.

West Texas Intermediate Crude Oil on the CME was $1.56 to $1.67 lower through the front six contracts.

*******************************

Rep. Dusty Johnson (R-SD) and bipartisan cosponsors, introduced the Price Reform in Cattle Economics (PRICE) Act last week, aimed at improving cattle markets for producers. It includes existing legislative proposals to open new markets for state-inspected beef products, such as the Direct Interstate Retail Exemption for Certain Transactions (DIRECT) Act, and new provisions to aid producer-owned beef processing facilities and increase transparency in fed cattle transactions.

“The Tyson fire in Holcomb, KS and the supply chain disruptions caused by the COVID-19 pandemic have brought the issues of price transparency in the cattle markets and beef processing capacity to a boiling point within our industry,” says Ethan Lane, Vice President of Government Affairs for the National Cattlemen’s Beef Association (NCBA). “This legislation is a significant step in the right direction as we continue to explore ways to support producers who have been impacted by two major black swan events, in an already volatile cattle market. We are grateful to Rep. Johnson and all the cosponsors for their bipartisan leadership in this space, and will continue working alongside them to see these reforms enacted.”

Provisions of the legislation include (section by section explanation from Rep. Johnson’s office in italics):

Feasibility study on implementing requirements with respect to reported negotiated cash sales of cattle to individual packing plants…This section directs the USDA office of the Chief Economist to conduct a feasibility study and cost-benefit analysis for various proposals to increase price discovery through Mandatory Price Reporting.

Cattle Contract Library…This section amends the Packers and Stockyards act to include beef contracts in USDA’s existing reporting on swine contracts. This section directs requires the Secretary of Agriculture to establish and maintain a library or catalog of the types of contracts offered by packers to beef producers for the purchase of cattle.

Research on meat and poultry processing facilities…This section directs the National Institute of Food and Agriculture to commission a feasibility study or studies to determine if and where there are new opportunities for new or expanding packing plants, what challenges there are to entry and implications for compliance with federal inspection requirements.

Assistance for new and expanded livestock or meat processors…This section establishes a stand-alone direct and guarantee loan program at USDA Rural Development for new and expanding meat processors capacity.

Improving farm management knowledge and skills for livestock producers…This section creates a NIFA grant program to allow land-grant universities to establish livestock marketing tools to help producers utilize the futures market to manage risk by partnering with trade association and other outreach groups.

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

Cattle Current Daily—Oct. 2, 2020

Although there were too few transactions to trend, negotiated cash fed cattle prices on Thursday continued steady to $1 higher than the week’s higher prices of $2 higher on a live basis at $107/cwt., except for in the Texas Panhandle, where prices are $2-$3 higher at $107-$108. Dressed trade is $2 higher at $167.

Live Cattle futures closed narrowly mixed, from an average of 26¢ lower to an average of 18¢ higher.

Feeder Cattle futures closed an average of 51¢ lower, except for an average of 17¢ higher in the back three contracts.

Choice boxed beef cutout value was $1.24 higher Thursday afternoon at $218.98/cwt. Select was 8¢ higher at $207.62.

The average dressed steer weight for the week ending Sept. 19 was 919 lbs., according to USDA’s Actual Slaughter Under Federal Inspection report. That was 1 lb. lighter than the previous week, but 23 lbs. heavier than the previous year. The actual dressed heifer weight of 836 lbs. was the same as a week earlier, but 13 lbs. heaver than the same week last year.

Actual total fed cattle slaughter of 513,153 was 7,154 head fewer than the prior year. Total cattle slaughter of 648,427 head was 12,430 head fewer (-1.88%). Beef production for the week of 543.3 million lbs. was just 600,000 lbs. less (-0.11%) than a year earlier.

Net U.S. beef export sales the week ending Sept. 24 totaled 24,700 metric tons for 2020, according to the U.S. Export Sales report from USDA’s Foreign Agricultural Service. That was 37% more than the previous week and 67% more than the prior 4-week average. Increases were primarily for Japan, Hong Kong, and Mexico.

Corn futures closed mostly 2¢ to 3¢ higher through Mar ’22 and then fractionally lower to 1¢ higher.

Soybean futures closed unchanged to fractionally mixed through Jan ’22 and then mostly 3¢ to 5¢ lower.

******************************

Major U.S. financial indices mostly edged higher Thursday amid mixed economic news and shadowed by the inability of lawmakers to come to terms on another round of economic stimulus.

Weekly initial jobless claims for the week ending Sept 26 decreased by 36,000 from the previous week to 837,000, according to the U.S. Department of Labor. That was more positive than traders expected.

On the other hand, although economic activity in the manufacturing sector grew for the fifth consecutive month, it declined month to month, according to the Institute for Supply Management®(ISM) manufacturing report on business®. The September Purchasing Managers Index (PMI®) registered 55.4%, down 0.6% from the August reading of 56%.

“After the coronavirus (COVID-19) pandemic brought manufacturing activity to historic lows, the sector continued its recovery in September. Survey Committee members reported that their companies and suppliers continue to operate in reconfigured factories and are becoming more proficient at maintaining output,” says Timothy R. Fiore, Chair of the ISM Manufacturing Business Survey Committee.

The Dow Jones Industrial Average closed 35 points higher. The S&P 500 closed 17 points higher. The NASDAQ closed 159 points higher.

*******************************

Restaurant traffic in August was 9% less than the previous year, while revenue was 10% less, according to the NPD Group (NPD). That was with slightly fewer than 25% restaurants nationwide operating with COVID-19 restrictions for on-premises dining.

“As the summer progressed and mandated restrictions were lifted, an increasing number of consumers became more comfortable dining out based on the safety protocols restaurants put in place,” says David Portalatin, NPD food industry advisor “After months of staying at home and cooking their own meals or ordering in, they were ready for the restaurant experience again.”

Since April, at the height of the stay-at-home and mandated dine-in closures, several areas of the restaurant industry improved or returned closer to pre-pandemic levels over the last months, according to NPD’s CREST® foodservice market research.

For example:

On-premises visits improved every month since April as the mandated dine-in closures lifted and restaurants were able to offer varying levels of dine-in capacity.

Digital orders accounted for more than 20% of all restaurant occasions in April, but declined to 17% of occasions in August.

A buy-one-get-one-free or other type of deal, was utilized in 30% of occasions in April but slowed every month since, and represented 27% of occasions in August.

In August, adult-only parties represented 63% of all restaurant occasions and parties with kids (families in most cases) represented 37%. In April, adult-only parties represented 59% of visit share and parties with kids 41% share.

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

Cattle Current Daily—Oct. 1, 2020

Negotiated cash fed cattle trade was limited on light to moderate demand in Nebraska and the western Corn Belt through Wednesday afternoon. Although too few transactions to trend, there were some early live sales in both regions at $107/cwt. and some in the beef at $167. That’s $2 higher than prices in the regions last week.

Similarly, slaughter steers and heifers sold $2-$3 higher at the fat auction in Sioux Falls, SD, where 245 head of Choice 2-3 steers weighing an average of 1,479 lbs. brought an average price of $104.60.

Cattle feeders offered 901 head in the weekly Fed Cattle Exchange auction on Wednesday. Of those, 358 sold for delivery at 1-17 days for a weighted average price of $106/cwt., which was $1 higher than last week’s country trade.

However, Cattle futures closed lower, especially Feeder Cattle, in the wake of USDA’s quarterly Grain Stocks report.

Old crop corn stocks in all positions on Sept. 1 totaled 2.00 billion bu., according to the report. That’s 10% less than the same time last year and significantly lower than the trade expected.

Corn futures closed 10¢ to 14¢ higher through Sep ’21 and then mostly 7 to 8¢ higher.

Similarly, old crop soybeans stored in all positions were 42% less than a year earlier at 523 million bu., significantly less than the trade expected.

Soybean futures closed 21¢ to 30¢ higher through Sep ’21 and then mostly 11¢ to 19¢ higher.

All wheat stored in all positions of 2.16 billion bu., was 8% less than a year earlier, also less than expected.

Hard Red Kansas City Winter Wheat futures closed 26¢ to 33¢ higher through May ’22.

Live Cattle futures closed an average of 33¢ lower, except for an average of 21¢ higher in the back three contracts.

Feeder Cattle futures closed an average of $1.33 lower, giving back most of what was gained in the previous session.

Choice boxed beef cutout value was 58¢ higher Wednesday afternoon at $217.74/cwt. Select was 55¢ higher at $207.54.

******************************

Major U.S. financial indices closed higher Wednesday with hopes that lawmakers can reach agreement on another round of economic stimulus, as well as more promising news regarding candidate COVID-19 vaccines and treatments

The Dow Jones Industrial Average closed 329 points higher. The S&P 500 closed 27 points higher. The NASDAQ closed 82 points higher.

*******************************

John R. Tunheim, Chief Judge for the U.S. District Court in Minnesota ordered dismissal of the consolidated antitrust lawsuit brought against the nation’s four largest beef packers in 2019.

The suit alleged conspiracy to fix and suppress fed cattle prices between 2005 and 2019 by means including, according to the order: 1) periodically restraining or reducing slaughter numbers to reduce demand for fed cattle; 2) curtailing purchases of cash cattle during these periods; 3) coordinating procurement practices with respect to the cash cattle they did purchase; 4) importing foreign cattle to depress demand for cheaper domestic cattle; and 5) closing or idling slaughter plants while refraining from expanding their remaining slaughtering capacity.

Plaintiffs included R-CALF and the Farmers Union, as well as individuals, businesses and consumers.

Bottom line, according to the order, “Because Plaintiffs have not pleaded their direct evidence with sufficient detail and because they have not pleaded parallel conduct sufficient to support an inference of a price-fixing conspiracy, the Court will grant Defendants’ Motions to Dismiss. The Court will also grant Plaintiffs leave to amend their Complaints.”

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

Cattle Current Daily—Sept. 30, 2020

Cattle futures took a strong step higher Tuesday, buoyed by the outlook for steady to higher cash prices, as well as strong exports indicated in the weekly boxed beef report.

Live Cattle futures closed an average of 89¢ higher, from 12¢ higher at the back to $1.47 higher toward the front.

Feeder Cattle futures closed an average of $1.70 higher, from 80¢ higher at the back to $2.67 higher toward the front.

Choice boxed beef cutout value was 56¢ lower Tuesday afternoon at $217.16/cwt. Select was 57¢ higher at $206.99.

Corn futures closed 1¢ to 2¢ lower.

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

******************************

Major U.S. financial indices closed lower with most of the pressure appearing to stem from worries about resurgent coronavirus and prolonged impact on the economy. Potentially, there was also some positioning ahead of Tuesday night’s presidential debate.

The Dow Jones Industrial Average closed 131 points lower. The S&P 500 closed 16 points lower. The NASDAQ closed 32 points lower.

*******************************

Last week, Sen. Deb Fischer (R-Neb.), a member of the Senate Agriculture Committee, introduced the Cattle Market Transparency Act of 2020.

Among other things, according to Sen. Fischer’s office, the legislation would:

“Establish regional mandatory minimum thresholds of negotiated cash trades to enable price discovery in cattle marketing regions.

“Require USDA to create and maintain a library of marketing contracts between packers and producers, and require packers to supply this information to USDA.

“Make clear that all information should be reported in a manner that ensures confidentiality…

“Mandate that a packer report the number of cattle scheduled to be delivered for slaughter each day for the next 14 days. This requirement already exists for the swine industry.”

Many of those mirror suggestions made in USDA’s Boxed Beef and Fed Cattle Price Spread Investigation Report, published July 22. That report was the result of USDA’s investigation into cattle market volatility in the wake of the pandemic and last summer’s Tyson plant fire in Kansas.

“Sen. Fischer’s bill explores many avenues to improve transparency in the cattle markets,” according to a statement from the National Cattlemens Beef Association (NCBA). “The creation of a cattle contracts library and clarification of confidentiality rules will provide crucial data to cattle producers as they seek to make informed marketing decisions. However, our policy dictates that the voluntary framework we are developing be allowed the opportunity to succeed or fail before we can lend our support to regional mandatory minimums for negotiated trade.”

NCBA’s 46 state affiliate organizations unanimously adopted a fed cattle price discovery policy at their 2020 Summer Business Meeting, directing NCBA to pursue a voluntary approach to price discovery that includes triggers established by a working group of producer members which, if tripped due to a lack of regionally sufficient negotiated trade, would prompt NCBA to seek legislative or regulatory solutions—such as those outlined in Sen. Fischer’s bill.

Similarly, striving for voluntary solutions to increased cash cattle trade is supported by the recent report from the American Farm Bureau Federation’s (AFBF) Cattle Market Working Group, which also examines cattle market volatility in the wake of the pandemic and last summer’s Tyson plant fire in Kansas.

“A key point to remember when discussing the optimal level of negotiated transactions is that PRICE DISCOVERY is not the same as PRICE DETERMINATION,” according to the AFBF report. “While enhanced price discovery is a good thing, it does not necessarily mean it will result in higher prices (as many proponents of minimum thresholds contend). Mandatory minimum negotiated trade could potentially inhibit a producer’s ability to enter into AMAs (alternative marketing arrangements), which are typically a premium paid above market value. Current AFBF policy does not endorse a mandatory minimum negotiated trade.”

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

Cattle Current Daily—Sept. 20, 2020

The five-area direct weighted average steer price last week was $105.05/cwt. on a live basis, which was $1.51 higher week to week. The average price in the beef was $1.64 higher at $164.89.

After apparent positioning ahead of Friday’s monthly Cattle on Feed report, traders seemed to take increased placements in stride (see below), as Cattle futures closed narrowly mixed to higher Monday, likely buoyed by cash cattle and wholesale beef prices.

Other than an average of 21¢ lower in the back three contracts, Live Cattle futures closed an average of 36¢ higher.

Other than an average of 19¢ lower in three contracts, Feeder Cattle futures closed an average of 43¢ higher, from 15¢ higher at the back to 95¢ higher toward the front.

Choice boxed beef cutout value was $1.62 lower Monday afternoon at $217.72/cwt. Select was 56¢ lower at $206.42.

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

Soybean futures closed mostly 3¢ to 6¢ lower.

******************************

Major U.S. financial indices extended gains from the previous session Monday, with support from tech stocks, as well as renewed optimism about Congress striking a deal for another round of economic stimulus.

The Dow Jones Industrial Average closed 410 points higher. The S&P 500 closed 53 points higher. The NASDAQ closed 203 points higher.

*******************************

Although the latest Cattle on Feed report appears to be bearish, with August placements higher than expected and the most cattle on feed September 1 since the data series began, Derrell Peel says perspective is required to understand the current feedlot situation.

“Despite large placements the past two months, total feedlots placements are down 4.2% for the year to date (down 4.3% in the last six months),” says Peel, Extension livestock marketing specialist at Oklahoma State University. “Two months of large placements does not mean that we suddenly have more cattle. Over the course of the year, the total number of feeder cattle in the pipeline has not changed from what was indicated early in the year. Cattle inventories peaked in 2019 and Jan. 1 estimated feeder supplies were down 0.4% year over year. As we work through 2020 and into 2021, feeder cattle supplies should continue to tighten modestly. The indications are that September placements will not follow the pattern of July and August.” As mentioned, placements in August were 9% higher year over year; they were 11% higher in July.

In his weekly market comments, Peel explains the 12-month moving average (12MA) of feedlot inventory, placements and marketings offers valid month-to-month comparison and a longer-term view of feedlot production, due to seasonality.

“The 12MA of feedlot inventories peaked in March and, despite increasing the past two months, is currently 0.6% below the peak,” Peel says. “The 12MA of marketings peaked cyclically in March 2020 as well. The 12MA of placements peaked recently in December 2019 and is currently 2.7% below the peak. The cyclical peak in 12MA placements was in Feb 2018. All of these highlight the fact that the industry has moved past the cyclical peak in cattle numbers and will see modestly tighter supplies going forward.”

Even so, he points out atypical fluctuations in recent placements imply altered short-term dynamics.

“The July-August bulge in placements suggests higher feedlot marketings in the first quarter of 2021. July placements were skewed to the lighter weight cattle,  while August placements included more heavyweight placements, which further implies that cattle could be somewhat bunched up,” Peel says. “However, winter weather typically spreads cattle out a bit, so the exact timing is uncertain. The ripples from the first half of 2020 will extend into early 2021.”

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

Cattle Current Daily—Sept. 28, 2020

Negotiated cash fed cattle prices ended the week generally $2 higher on a live basis at mostly $105/cwt. in the five-area feeding region, according to the Agricultural Marketing Service. Dressed trade was $1-$2 higher at mostly $165.

Through Thursday, the five-area direct weighted average steer price was $105.03/cwt. on a live basis, which was $1.49 higher than the previous week. The average steer price in the beef was $164.87, which was $1.94 higher.

Even so, Feeder Cattle futures closed lower on Friday, likely based mostly on expectations of a bearish Cattle on Feed report, which came to fruition (see below). Live Cattle followed along, to a lesser degree.

Live Cattle futures closed an average of 72¢ lower, from 7¢ lower at the back to $1.05 lower.

Feeder Cattle futures closed an average of $1.70 lower, from 97¢ lower at the back to $2.20 lower.

Choice boxed beef cutout value was $1.86 higher Friday afternoon at $219.34/cwt. Select was 76¢ lower at $206.98.

Corn futures closed fractionally higher to 1¢ higher.

Soybean futures closed 2¢ to 5¢ higher through Nov ’21 and then mostly higher to 1¢ to 4¢ lower.

******************************

Major U.S. financial indices closed higher Friday, buoyed by tech stocks, and despite ongoing wonderments about domestic and international economic recovery.

The Dow Jones Industrial Average closed 358 points higher. The S&P 500 closed 51 points higher. The NASDAQ closed 241 points higher.

*******************************

If anything, the monthly USDA Cattle on Feed report issued Friday (feedlots with 1,000 head or more capacity) will likely be viewed as bearish, with 2.06 million head placed in August, which was 173,000 head more (+9.2%) than a year earlier. That’s about 3% more than expectations heading into the report. In terms of weights, 36% went on feed weighing 699 lbs. or less, 48% weighing 700-899 lbs. and 16% weighing 900 lbs. or more.

Marketings in August of 1.89 million head were 61,000 head fewer (-3.1%) than last year, in line with expectations.

Cattle on feed Sept. 1 of 11.39 million head were 412,000 head more (+3.8%) than a year earlier, which was the most for the date since the data series began in 1996.

By | September 26th, 2020|Daily Market Highlights|

Cattle Current Daily—Sept. 25, 2020

Although there were too few transactions to trend in any region, early negotiated cash fed cattle sales were at mostly higher prices week to week on Thursday.

There were a few live trades in Kansas at $105/cwt. and a few in the western Corn Belt at $104-$105. Early dressed trades were at $165 in Nebraska and the western Corn Belt.

Cash optimism and another day of higher wholesale beef prices helped Cattle futures extend gains on Thursday.

Live Cattle futures closed an average of 83¢ higher.

Feeder Cattle futures closed an average of 93¢ higher, from 45¢ higher in expiring Sep to $1.20 higher at the back.

Wholesale beef values gained for another day. Choice boxed beef cutout value was $1.61 higher Thursday afternoon at $217.48/cwt. Select was 14¢ higher at $207.74.

The average dressed steer weight of 920 lbs. for the week ending Sept. 12, was 2 lbs. heavier than the previous week and 29 lbs. heavier than the same week last year, according to USDA’s Actual Slaughter Under Federal Inspection report. The average dressed heifer weight of 836 lbs. was 4 lbs. heavier than the prior week and 14 lbs. heavier than a year earlier.

Net U.S. beef export sales for 2020 of 18,000 metric tons were up 26% from the previous week and 36% from the prior four-week average, according to the Weekly U.S. Export Sales report from USDA’s Foreign Agricultural Service, for the week ending Sept. 17. Increases were primarily for Japan, South Korea, China, Taiwan, and Hong Kong.

Corn futures closed mostly 3¢ to 5¢ lower.

Soybean futures closed 12¢ to 16¢ lower through Sep ’21 and then fractionally higher to 9¢ lower.

******************************

Major U.S. financial indices edged higher Thursday, following the previous session’s selloff.

On the one hand, initial weekly job insurance claims increased by 4,000 week to week to 870,000, according to the U.S. Census Bureau and the U.S. Department of Housing and Urban Development.

On the other, new and existing home sales continue at a blistering pace.

Existing-home sales increased in August for the third consecutive month, according to the National Association of Realtors®. For the month, total existing-home completed transactions rose 2.4% from July. Through July, existing home sales were 10.5% higher year over year.

“Home sales continue to amaze, and there are plenty of buyers in the pipeline ready to enter the market,” says Lawrence Yun, NAR’s chief economist. “Further gains in sales are likely for the remainder of the year, with mortgage rates hovering around 3% and with continued job recovery.”

As for new home sales, they were 4.8% higher from July to August and 43.2% higher year over year.

The Dow Jones Industrial Average closed 52 points higher. The S&P 500 closed 9 points higher. The NASDAQ closed 39 points higher.

*******************************

Income growth, reduced trade barriers and technological advancements are driving the increase in global value chains, transforming markets and trade processes, linking farmers to traders and consumers across regions and countries. That’s according to a new report from the Food and Agriculture Organization of the United Nations (FAO).

The State of Agricultural Commodity Markets, 2020 (SOCO 2020) argues that global trade and well-functioning markets lie at the heart of the development process as they can spur inclusive economic growth and sustainable development, and strengthen resilience to shocks.

Global agri-food trade more than doubled since 1995, amounting to $1.5 trillion in 2018, with emerging and developing countries’ exports on the rise and accounting for over one-third of the world’s total, according to the report.

Technological progress, urbanization, population and income growth, lower transport costs, trade policies and a decline in average import tariffs are driving the growth.

“We need to rely on markets as an integral part of the global food system. This is all the more important in the face of major disruptions, whether they come from COVID-19, locust outbreaks or climate change,” according to FAO Director-General QU Dongyu in his introduction to the report.

The report estimates that about one-third of global agricultural and food exports are traded within a global value chain and cross borders at least twice.

Among the report highlights:

Upper and lower middle income countries, together, increased their share in global agri-food exports from about 25% in 2001 to 36% in 2018.

Although global agri-food trade doubled since 1995 in real value, its growth rate slowed since the 2008 financial crisis. This is expected to be further impacted by the COVID-19 pandemic.

Digital technologies are transforming all stages of the food value chain from farm to table. They improve efficiency, create jobs and save resources. But it is difficult to foresee all the impacts technological innovation can have on how food is grown, processed, traded and consumed.  

While countries in Europe and Central Asia, and East Asia and the Pacific tend to trade within the same regions, countries in South Asia, Latin America and the Caribbean, sub-Saharan Africa, North America, and the Middle East and North Africa trade more globally.

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

Cattle Current Daily—Sept. 24, 2020

Cattle feeders offered 683 head in the weekly Fed Cattle Exchange Auction, all from the Southern Plains. They sold 219 head (two lots) for an average of $104.16/cwt., for delivery at 1-17 days. That was higher than last week’s country trade of $103.00-$103.50.

Similarly, Choice steers and heifers sold 75¢ to $1 higher at the fat auction in Tama, IA. Choice 2-4 steers (217 head) weighing an average of 1,450 lbs. sold for an average price of $105.55/cwt., at the top of last week’s price range for country trade.

On the other hand, slaughter steers sold $2-$3 lower at Sioux Falls Regional in South Dakota, where 332 Choice 2-3 steers weighing an average of 1,490 lbs. brought an average price of $102.92.

The notion of firm to higher cash prices helped support Cattle futures Wednesday, although trade was sluggish.

Live Cattle futures closed an average of 51¢ higher (10¢ to $1.02 higher).

Feeder Cattle futures closed an average of 55¢ higher.

Choice boxed beef cutout value was 43¢ higher Wednesday afternoon at $215.87/cwt. Select was $1.30 higher at $207.60.

Corn futures closed fractionally lower to 1¢ lower.

Soybean futures closed 3¢ to 5¢ lower through Nov ’21 and then mostly fractionally higher.

******************************

Major U.S. financial indices closed lower Wednesday, hamstrung by big tech stocks and wariness over the pace of economic recovery.

The Dow Jones Industrial Average closed 525 points lower. The S&P 500 closed 78 points lower. The NASDAQ closed 330 points lower.

*******************************

As the COVID-19 pandemic continues to unfold, some researchers are getting their arms wrapped around the resulting economic damage so far, and into the future.

For instance, a recent Texas A&M AgriLife coordinated study suggests the pandemic will reduce U.S. gross domestic product (GDP), by $2.5 trillion and employment by 19 million full-time equivalent jobs over the next year.

The study includes researchers from Texas A&M’s Department of Homeland Security (DHS) Center of Excellence Cross-Border Threat Screening and Supply Chain Defense (CBTS), Arizona State University’s DHS Center of Excellence, the Center for Accelerating Operational Efficiency, and researchers at the Victoria University in Australia.

Researchers utilized a model of the U.S. economy with a special emphasis on major food and agriculture sectors.

Compared to most other sectors–tourism, air transport, education, restaurants and lodging–the report concludes U.S. food and agricultural sectors will experience smaller economic impacts because they were not subject to shutdowns and reductions in aggregate consumer spending brought on by job losses.

Researchers also suggests livestock operations will suffer economically more than crop operations. They explain USDA’s latest figures show that animal product receipts in 2020 are down just over 8.1%, while cash receipts for crops are expected to increase 6.9%.

“This analysis gives us a critical and realistic evaluation of how the pandemic has and will continue to impact our nation’s and the world’s food supply,” says Patrick J. Stover, vice chancellor of Texas A&M AgriLife, dean of the College of Agriculture and Life Sciences and director of Texas A&M AgriLife Research. “It will be critical that we work together to elevate food system concerns and develop solutions that address the economic consequences to serve as a foundation for lasting recovery.”

Here you can read the full article by Kay Ledbetter, associate editor/communication specialist for Texas A&M AgriLife Research.

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

Cattle Current Daily—Sept. 23, 2020

Cattle futures closed lower Tuesday, especially Feeder Cattle, with the lack of cash direction, demand wonderments and perhaps queasiness over the next Cattle on Feed report due out Friday.

Live Cattle futures closed an average of 64¢ lower (20¢ to $1.02 lower).

Except for 62¢ higher in spot Sep, Feeder Cattle futures closed an average of $1.33 lower (47¢ to $1.67 lower).

Choice boxed beef cutout value was 78¢ lower Tuesday afternoon at $215.44/cwt. Select was 48¢ higher at $206.30.

Corn futures closed unchanged to fractionally mixed.

Soybean futures closed 1¢ to 3¢ lower through Sep ’21 and then 5¢ to 8¢ lower.

******************************

Major U.S. financial indices closed higher Tuesday, with technical buying the apparent driver.

The Dow Jones Industrial Average closed 140 points higher. The S&P 500 closed 34 points higher. The NASDAQ closed 184 points higher.

*******************************

Total pounds of beef in freezers as of Aug. 31 were 5% more than the previous month but 2% less than last year, according to the latest Cold Storage report from USDA.

Frozen pork supplies were up 2% from the previous month but down 23% from last year.

Total red meat supplies in freezers were 3% more than the previous month but 13% less than last year.

Total frozen poultry supplies were up 1% from the previous month but down 2% from a year earlier.

*******************************

Projected cattle feeding returns improve significantly in September, compared to recent months, according to the latest monthly Historical and Projected Kansas Feedlot Net Returns from Kansas State University.

Net returns for closeouts in August were estimated at -$162.33/head for steers and -$101.76 for heifers. Keep in mind, estimates are on a cash basis and do not include price risk management.

Starting in September, though, net returns for steers are projected to be positive for the next seven months (September through March), ranging from $20.56/head in September to $101.52 in October, with feedlot cost of gain ranging from $80.01/cwt. in September to $84.71 in February.

Projected net returns are positive for heifers during the same period of time, ranging from $8.41/head in January to $66.18 in October, with feedlot cost of gain of $87.67/cwt. in September to $91.42 in March.

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

Cattle Current Daily—Sept. 22, 2020

The five-area direct average fed steer price last week was $103.54/cwt. on a live basis, which was $2.33 more than the previous week. The average steer price in the beef was $163.25, which was $2.59 higher.

However, sharply lower outside markets and likely profit taking pressured Cattle futures Monday.

Live Cattle futures closed an average of 89¢ lower (65¢ to $1.25 lower).

Except for 20¢ higher in spot Sep and Nov, Feeder Cattle futures closed an average of 58¢ lower.

Wholesale beef prices found some traction, though.

Choice boxed beef cutout value was 58¢ higher Monday afternoon at $216.22/cwt. Select was $1.88 higher at $205.82.

Lower outside markets and harvest pressure pushed grain futures lower Monday.

Corn futures closed 8¢ lower through May ’21 and then mostly 4¢ to 5¢ lower.

Soybean futures closed 17¢ to 21¢ lower through Mar ’21 and then mostly 10¢ to 12¢ lower.

******************************

Major U.S. financial indices closed sharply lower on Monday, but well off of session lows. Pressure included worries about another surge of COVID-19 leading to renewed shutdowns in different parts of the world, as well as the inability of Congress to come to terms on more economic stimulus for businesses and individuals.

The Dow Jones Industrial Average closed 509 points lower. The S&P 500 closed 38 points lower. The NASDAQ closed 14 points lower.

*******************************

Analysts with the Livestock Marketing Information Center (LMIC) expect fourth-quarter beef production to be more than in 2019, but note cattle flows will also contend with smaller placements in March and April.

“The supply situation for beef is still unfolding,” say LMIC analysts, in the latest Livestock Monitor. “Dressed weights have not followed the normal seasonal pattern through the summer but look to be closing the gap between last year and 2020. In the latest week of data, steer dressed weights are only 25 lbs. heavier than a year ago. This is a significant decrease compared to summer increases of 40 lbs. or more in June. Slaughter levels in August were below a year ago, but the last two weeks of actual slaughter data has picked up.”

USDA estimated total cattle slaughter last week at 645,000 head, which was 71,000 head more than the previous week, but 16,000 head fewer than the same week last year. Estimated total cattle slaughter year to date of 22.85 million head is still 1.07 million fewer (-4.49%) than the same time last year.

On the other side of the trade, LMIC points to the odds of a weaker economy pressuring beef demand.

“Corporate holiday parties and other holiday gatherings had been a boost to beef demand in recent years; the frequency of those events will likely decrease significantly in 2020,” LMIC analysts explain. “Retail featuring high-end meat cuts is expected this holiday season as the Restaurant Expectation and Performance Index remains in contraction territory and those cuts have struggled to move quantities. But, it seems unlikely the retail all fresh beef demand index will take out the record set in 2019. First and second quarter indexes have been above a year ago in 2020, but none were record highs. Third quarter data is still pending.”

USDA estimated beef production last week of 540.1 million lbs., which was 60.4 million lbs. more than the previous week and just 3.8 million lbs. less than the same week last year.

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

Cattle Current Daily—Sept. 21, 2020

Negotiated cash fed cattle trade continued higher on Friday with dressed trade in Nebraska at $165/cwt., which was $2 higher than earlier in the week and $4-$5 higher than the prior week. Dressed trade was $2-$3 higher in the western Corn Belt at $163.

Live sales for the week ended up $1.50-$2.00 higher in the Southern Plains at $103.00-$103.50, $2.50 higher in Nebraska at $103.50 and $2-$4 higher in the western Corn Belt at $104-$105.

Stronger cash prices to end the week helped lift Cattle futures on Friday.

Live Cattle futures closed an average of 37¢ higher.

Except for 25¢ lower in the back contract, Feeder Cattle futures closed an average of 64¢ higher.

Choice boxed beef cutout value was 59¢ higher Friday afternoon at $215.64/cwt. Select was 55¢ higher at $203.94.

Corn futures closed 2¢ to 3¢ higher.

Soybean futures closed 9¢ to 15¢ higher through Aug ’21 and then mostly 1¢ to 4¢ higher.

******************************

Major U.S. financial indices closed lower on Friday, pressured once again by big tech stocks, uncertainty over federal pandemic stimulus and political sabre rattling between the U.S. and China.

The Dow Jones Industrial Average closed 244 points lower. The S&P 500 closed 37 points lower. The NASDAQ closed 117 points lower.

*******************************

“As consumers continue to eat at home, and the longer sit-down restaurants are closed or at limited capacity, the longer lean beef imports will remain strong,” says Andrew P. Griffith, agricultural economist at the University of Tennessee, in his weekly market comments.

Griffith explains most beef imported to the U.S. is lean beef meant for grinding to produce ground beef, hot dogs, taco meat and the like. He notes that U.S. beef imports in July of 376.8 million lbs. represented the largest monthly total in 15 years.

The July total was 41.1% more than a year earlier, pushing imports for the first seven months of the year 8.5% higher year over year, according to Derrell Peel, Extension livestock marketing specialist at Oklahoma State University.

“Beef imports were up from each of the four largest beef import sources,” Peel explains, in his weekly market comments. “Canada, the largest source of beef imports, was up 12.7% in July but was down 5.8% for the year to date. Mexico was up 34.3% in July compared to last year and was up 25.5% so far this year.  Mexico now exceeds Australia as the number two source of U.S. beef imports.  Australia was up 17.1% year over year in July but was down 2.7% for the year to date. New Zealand was up 94.2% in July and was 13.3% higher for the year to date. So far in 2020, Canada and Mexico account for 44.3% of total beef imports. Combined with Australia and New Zealand, the top four source represent 82.4% of total beef imports.”

On the other side of the trade ledger, Griffith points out U.S. beef exports began to recover in July, compared to year-over-year weakness the previous three months.

“Currency exchange rates are important factors affecting international beef trade,” Peel explains. “Since the COVID-19 impacts began in mid-March, the U.S. dollar has been significantly stronger compared to the Argentinian, Brazilian and Mexican currencies and somewhat stronger against the Canadian, Australian and New Zealand dollars. A strong U.S. dollar is a headwind for beef exports and favors beef imports. The U.S. dollar has weakened slightly against the Japanese Yen, and the Hong Kong dollar, which does help support beef exports to those two major markets.”

By | September 19th, 2020|Daily Market Highlights|

Cattle Current Daily—Sept. 18, 2020

Negotiated cash fed cattle trade continued on Thursday. For the week, live sales are $2-$4 higher than last week at $103.00-$103.50/cwt. in the Southern Plains, $103 in Nebraska and $104-$105 in the western Corn Belt. Dressed trade is $1-$3 higher at $162-$163.

Even so, Cattle futures closed mostly lower Thursday, with pressure from the grain side of the ledger, as well as demand wonderments.

Except for 5¢ higher to 82¢ higher in three contracts, Live Cattle futures closed an average of 38¢ lower.

Feeder Cattle futures closed an average of 77¢ lower (32¢ to $1.32 lower).

Choice boxed beef cutout value was 33¢ lower Thursday afternoon at $215.05/cwt. Select was $1.12 lower at $203.39.

Actual fed cattle slaughter for the week ending Sept. 5 of 508,955 head was 18,484 head fewer than the prior week, but 58,883 head more than the previous year, according to USDA’s Actual Slaughter Under Federal Inspection report.

Total cattle slaughter for the week of 635,387 head was 18,353 head fewer than the prior week, but 64,324 head more than the previous year.

The average dressed steer weight of 918 lbs. was 2 lbs. heavier than the previous week, but 25 lbs. more than the same week a year earlier. The average dressed heifer weight of 832 lbs. was 2 lbs. lighter than the previous week, but 17 lbs. more than a year earlier.

Net U.S. beef export sales for 2020 of 14,300 metric tons (mt) were 8% less than the previous week and 2% less than the prior four-week average, according to the Weekly Export Sales report from USDA’s Foreign Agricultural Service, for the week ending Sept. 10. Increases were primarily for South Korea, Japan, China, Mexico and Canada. 

Net U.S. pork sales for 2020 of 50,600 mt were 68% more than the previous week and 41% more than the prior four-week average. Increases were primarily for China, Mexico, Japan, Canada and Australia.

Corn futures closed 2¢ to 3¢ higher through Jly ’21 and then mostly fractionally higher. 

Soybean futures closed 9¢ to 17¢ higher through Mar ’21 and then mostly 1¢ to 4¢ higher.

******************************

Major U.S. financial indices closed lower on Thursday, pressured by big tech stocks, as well as uncertainty over the next round of federal pandemic economic stimulus.

The Dow Jones Industrial Average closed 130 points lower. The S&P 500 closed 28 points lower. The NASDAQ closed 140 points lower.

*******************************

“The reduction in slaughter capacity in the second quarter continues to show up in the year-over-year higher number of cattle on feed over 150 days (although diminishing since June) and in the carcass weights of steers and heifers,” say analysts with USDA’s Economic Research Service (ERS), in the latest monthly Livestock, Dairy and Poultry Outlook. “The improved pace of slaughter, combined with an ample supply of fed cattle at heavier weights, led to higher expected beef production in third-quarter 2020 relative to 2019, which is likely putting pressure on cattle prices.”

ERS projects the average five-area direct Choice fed steer price at $101/cwt. for the third quarter, $104 for the fourth quarter and at $107.30 for the annual average, the same as the previous month.

Heading into 2021, however, ERS forecast average Choice steer prices $2 higher than the previous month’s estimate at $107 in the first and second quarters of next year with an annual average price of $112.

That’s based on expectations that a larger proportion of available feeder cattle supplies available July 1 were placed on feed, which will limit supplies available for placement in the first half of next year.

“This pulls feedlot marketings, and consequently steer and heifer slaughter, forward from the latter quarters of 2021,” say ERS analysts. “With fewer steers and heifers in the slaughter mix and higher forecast feed costs affecting the length of time on feed, carcass weight gains next year will be limited. Because of this, anticipated average carcass weights were reduced in 2021. Based on these factors combined, the forecast for 2021 beef production was reduced by 265 million lbs. from last month to 27.4 billion lbs.”

ERS left projected feeder cattle prices unchanged from the previous month as higher feed costs and the slower expected pace of marketing outweigh declining supplies.

The average feeder steer price (basis Oklahoma City) is projected at $140/cwt. in the third and fourth quarters for an annual average of $135.70. The projected feeder steer price is $131 for the first quarter of next year, $134 for the second quarter and at $137 for the 2021 average.

“The result of greater placements in second-half 2020 without increased marketings in the second half will likely keep cattle in feedlots above year-ago levels through the remainder of 2020,” say ERS analysts. “Because of this, anticipated feeder cattle supplies will diminish in 2021. However, the increase in fed cattle prices will likely offset higher corn prices forecast for next year.”

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

Cattle Current Daily—Sept. 17, 2020

Negotiated cash fed cattle trade began to develop in the Southern Plains on Wednesday, according to the Agricultural Marketing Service. Live prices were $2 higher in Kansas at $103/cwt. and $1.50-$2.00 higher in the Texas Panhandle at $103.00-$103.50.

That helps explain why there were no sales in the weekly Fed Cattle Exchange Auction, where 613 were offered—all from the Southern Plains. Two lots in that sale were passed on at $102.25.

At the fat auction in Tama, IA, though, 221 head of Choice 2-4 steers weighing an average of 1,379 lbs. brought an average of $104.63, which was more than the $100-$103 country trade in the region last week.

Similarly, slaughter steers sold steady to $2 higher in the fat auction at Sioux Falls Regional in South Dakota, where 250 head of Choice 2-3 steers weighed an average of 1,431 lbs. and brought an average of $105.20.

Cattle futures closed mixed again, with Feeder Cattle receiving some pressure from grains.

Live Cattle futures closed mixed but mostly marginally higher (an average of 15¢ lower to an average of 20¢ higher).

Feeder Cattle futures closed an average of 71¢ lower (27¢ to $1.27 higher).

Choice boxed beef cutout value was 71¢ lower Wednesday afternoon at $215.38/cwt. Select was $1.77 lower at $204.51.

Corn futures closed 4¢ to 5¢ higher through Jly ’21 and then mostly 2¢ to 3¢ higher. 

Soybean futures closed 13¢ to 19¢ higher through Aug ’21 and then mostly 3¢ to 8¢ higher, helped along by recent export sales.

******************************

Major U.S. financial indices closed mixed on Wednesday, pressured by big tech stocks, while some other sectors received support from the FOMC announcement it was maintaining the current interest rate levels.

“The Committee decided to keep the target range for the federal funds rate at 0% to 0.25% and expects it will be appropriate to maintain this target range until labor market conditions have reached levels consistent with the Committee’s assessments of maximum employment and inflation has risen to 2% and is on track to moderately exceed 2% for some time,” according to the FOMC statement.

In other words, it will likely be a good while before they entertain an increase in interest rates.

The Dow Jones Industrial Average closed 36 points higher. The S&P 500 closed 15 points lower. The NASDAQ closed 139 points lower.

*******************************

“Farm commodity prices are down by 10.4% over the last 12 months. As a result, and despite the initiation of $32 billion in USDA farm support payments in 2020, only 8% of bankers reported their area economy had improved compared to July, while 18.4% said economic conditions had worsened,” says Ernie Goss, Jack A. MacAllister Chair in Regional Economics at Creighton University’s Heider College of Business.

Goss is referring to the Creighton University Rural Mainstreet Index (RMI) and monthly survey of bankers in 10 regional states, dependent on agriculture and/or energy. It focuses on approximately 200 rural communities with an average population of 1,300, and offers the most current real-time analysis of the rural economy.

The RMI increased slightly in August to 44.7, compared to 44.1 in July. The index ranges between 0 and 100; a reading of 50.0 represents growth neutral.

Bank CEOs included in the survey note that August’s index represented the sixth straight month with a reading in a recessionary economic zone.

For only the second time in the last 81 months, the farmland price index moved above growth neutral with an August reading of 50.1, up from July’s 45.6.

Economic COVID-19 impacts vary among state economies, depending on government enforced shutdowns. For instance, Todd Douglas, CEO of the First National Bank in Pierre, South Dakota, says, “We were a state that did not shut down. Western parts of the state have seen a significant boost to the economy due to tourism from shut down states.”

Goss and Bill McQuillan, former chairman of the Independent Community Banks of America, created the monthly economic survey in 2005.

Bankers estimated that farm loan defaults would rise by 5.3% over the next 12- month period. That’s slightly higher than the 5% recorded the previous month, and the 4.8% a year earlier.

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

Cattle Current Daily—Sept. 16, 2020

Cattle futures closed narrowly mixed Tuesday, awaiting cash direction.

Live Cattle futures closed mixed but mostly marginally lower (an average of 17¢ lower to an average of 25¢ higher).

Feeder Cattle futures closed an average of 72¢ higher (17¢ higher in spot Sep to $1.10 higher).

Choice boxed beef cutout value was $1.12 lower Tuesday afternoon at $216.09/cwt. Select was $1.48 lower at $206.28.

Corn futures closed mostly 3¢ lower. 

Soybean futures closed 4¢ to 8¢ lower through May ’21 and then 2¢ higher to 2¢ lower.

******************************

Major U.S. financial indices edged higher Tuesday, with support from tech stocks and ahead of the FOMC meeting scheduled for Wednesday and Thursday. 

The Dow Jones Industrial Average closed 2 points higher. The S&P 500 closed 17 points higher. The NASDAQ closed 133 points higher.

*******************************

“La Niña conditions were present in August, and there’s a 75% chance they’ll hang around through the winter,” according to the latest update from the National Oceanic and Atmospheric Administration (NOAA), which issued a La Niña Advisory in recent days.

While every El Niño Southern Oscillation is different, the NOAA folks say it makes certain outcomes more likely. In this case, La Niña winters tend to be warmer and drier in the Southern tier of the United States and tend to be colder in the Northern tier.

*******************************

“Drive-thru and other off-premises operations will be a major part of the U.S. restaurant industry’s recovery and future,” says David Portalatin, food industry advisor for The NPD Group (NPD). “Drive-thru operations are delivering a high ROI during the pandemic, offering convenience, speed, and the comfort of social distance to consumers using them. Fast casual and traditional quick service chains have already announced expansion plans for their drive-thru operations, and we will hear about more chains doing the same.”

Compared to pandemic lows, drive-thru restaurant visits increased by 26% in the April, May, and June quarter and represented 42% of all restaurant visits, according to NPD. Although more restaurants reopened in July, drive-thru visits still increased by 13%.

For perspective, according to NPD, drive-thru visits declined 17% year over year in the second quarter, but they fared significantly more positively than other restaurant categories and segments.

Visits to fast casual chains were down 26% year over year in the second quarter. Prior to the pandemic, and for the last several years, they outpaced the U.S. restaurant industry in visits and unit growth. Many of them don’t have drive-thru operations.

Likewise, most full service restaurants don’t have drive-thrus. They were most impacted by the mandated dine-in closure, with year-over-year declines of 48% in April, May and June, before improving to a year-over-decline of 32% in July.

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

Cattle Current Daily—Sept. 15, 2020

The five-area direct average steer price last week was $101.21/cwt. on a live basis, according to the Agricultural Marketing Service. That was $1.91 less than the prior week. The average steer price in the beef of $160.66 was $2.41 less.

Cattle futures took a step higher Monday, building on last week’s gains, tied to the outlook for slightly snugger supplies and support from lean hog prices, which appear ready to advance, on South Korea and China banning pork exports from Germany, due to African Swine Fever discovered in that nation.

Live Cattle futures closed an average of $1.20 higher (77¢ to $1.80 higher).

Feeder Cattle futures closed an average of $1.75 higher ($1.50 to $2.02 higher).

Choice boxed beef cutout value was $2.68 lower Monday afternoon at $217.21/cwt. Select was 66¢ higher at $207.76.

After 7¢ higher in spot Sep, Corn futures closed mostly fractionally mixed to 1¢ lower. 

After 13¢ higher in spot Sep, Soybean futures closed 4¢ to 8¢ higher.

******************************

Major U.S. financial indices closed higher Monday, buoyed by merger and acquisition news, as well as increasing optimism about a COVID-19 vaccine being developed by the end of the year.

The Dow Jones Industrial Average closed 327 points higher. The S&P 500 closed 42 points higher. The NASDAQ closed 203 points higher.

*******************************

Although food and meat supplies continue to strengthen, following the worst of pandemic disruptions, returning to a balanced marketplace requires an economic recovery that reduces unemployment and revives household incomes, according to Greg Pompelli, director of the Texas A&M AgriLife-led Center of Excellence for Cross-Border Threat Screening and Supply Chain Defense Center. He adds that, given the importance of global markets to U.S. agriculture, the focus will be on returning to pre-pandemic trade levels.

In the meantime, David Anderson, Extension livestock economist at Texas A&M University says the pandemic may prompt a new normal in consumer purchasing practices.

For instance, Anderson points to more delivery services, boxed meals and curbside grocery pickup options as consumers maintain some of their habits from when store shelves and meat cases were bare and people were asked to stay home.

“Another adjustment I think we are going to continue to see over time is more delivery services of groceries and food. More and more of the shoppers in the grocery aisles are employees putting together grocery orders, either for curbside pickup or for companies that bring the order to your home,” Anderson explains.

“Where we see changes at the retail level boils down to human behavior,” Pompelli says. “In the early days of the pandemic, with paper towels or toilet paper, people assumed they wouldn’t be able to find these products for a year, so they stocked up.” Now, he says, consumers are adapting and moving away from their initial reactions as their concerns about food availability diminish.

Prior to the COVID-19 shutdowns, consumers typically purchased about 50% of their food from grocery stores for home consumption and 50% from food services, such as restaurants and schools.

With restaurants continuing to operate at limited capacity and with students recently returning to schools, Anderson explains the food supply chain is still adjusting to the changing markets.

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

Cattle Current Daily—Sept. 14, 2020

Negotiated cash fed cattle prices in the Texas Panhandle through Friday afternoon were mostly $1 higher than earlier in the week at $102/cwt., which was $1 lower than last week, according to the Agricultural Marketing Service.

Cattle futures edged higher Friday, supported by resurgent Lean Hog futures, tied to South Korea banning pork exports from Germany after a wild boar carcass in that European nation tested positive for African Swine Fever.

Live Cattle futures closed an average of 34¢ higher (7¢ to 47¢ higher).

Feeder Cattle futures closed an average of 47¢ higher (7¢ to 97¢ higher).

Choice boxed beef cutout value was 94¢ lower Friday afternoon at $219.89/cwt. Select was 22¢ lower at $207.10.

Corn and soybean futures gained some lift from the monthly World Agricultural Supply and Demand Estimates (see below), with soybeans receiving added support from recently strong export sales.

Corn futures closed 3¢ to 7¢ higher through May ’21 and then mostly 1¢ to 2¢ higher. Week to week on Friday, they closed an average of 11¢ higher through the front six contracts.

Soybean futures closed 16¢ to 20¢ higher through the front four contracts and then 6¢ to 12¢ higher across the next three; mostly 1¢ to 2¢ lower the rest of the way. Week to week on Friday, they closed an average of 25¢ higher through the front six contracts.

******************************

Major U.S. financial indices closed mixed Friday, with continued pressure from the selloff in big tech stocks.

The Dow Jones Industrial Average closed 131 points higher. The S&P 500 closed 1 point higher. The NASDAQ closed 66 points lower.

*******************************

USDA increased expected beef production for this year by 20 million lbs. to 27.05 billion lbs., in September’s World Agricultural Supply and Demand Estimates (WASDE), compared to the previous month’s estimate. That’s based on increased expected slaughter in the second half of 2019. The total would be 107 million lbs. less than last year. Estimated beef production is forecast at 27.36 billion lbs. next year, which would be 307 million lbs. more (+1.14%) than this year.

The projected annual average fed steer price (five-area direct) for this year is $107.30/cwt., which would be $9.48 less than last year. ERS analysts increased the forecast annual price next year by $2 to $112, compared to the previous month’s projection, based on expected lower production. More immediately, the WASDE pegs the average third-quarter price this year at $101, followed by an average of $104 in the fourth quarter and $107 in the first quarter of 2021.

Estimated total red meat and poultry production for this year was lowered from the previous month, with lower forecast pork and broiler production more than offsetting higher beef and turkey production.

Total red meat and poultry production is estimated at 106.30 billion lbs. this year, which would be 1.03 billion lbs. more (+0.98%) than in 2019. Next year’s total red meat and poultry production is forecast at 107.35 billion lbs., which would be 1.05 billion lbs. more than this year.

Corn

Corn production for grain is projected 2% less than the previous month at 14.9 billion bu. That’s 378 million bu. less, based on reducing harvested corn acres by 550,000 acres, due to the late-summer derecho, according to the latest Crop Production report from the National Agricultural Statistics Service (NASS). Estimated production would still be 9% more than last year.

Although 3.3 bu./acre less than the previous moth’s projection, forecast yield of 178.5 bu./harvested acre would be record large and 11.1 bu./acre more than last year. That’s based on conditions as of Sept. 1

With a smaller crop more than offsetting increased beginning stocks–mostly due to lower estimated exports for 2019-20–WASDE reduced projected ending stocks by 253 million bu. and increased the season-average corn price by 40¢ to $3.50/bu.

Soybeans

Soybean production for beans was forecast at 4.31 billion bu., down 3% from the previous forecast, but up 21% from last year, according to the Crop Production report. Expected average yield is a record high 51.9 bu./harvested acre, down 1.4 bu. from the previous forecast but 4.5 bu. more than in 2019. Area harvested for beans in the United States is forecast at 83.0 million acres, unchanged from the previous forecast and 11% more than last year.

The U.S. season-average soybean price is forecast at $9.25/bu., up 90¢ from last month. The soybean meal price is projected at $315 per short ton, up $25 dollars. The soybean oil price forecast is 32.0¢/lb., up 2¢.

Wheat

The 2020-21 U.S. wheat supply and demand outlook was unchanged in the latest WASDE. The projected season-average farm price remains at $4.50/bu.

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

Cattle Current Daily—Sept. 11, 2020

So far this week, negotiated cash fed cattle prices are mainly $2-$3 lower on a live basis at $101/cwt. in the Southern Plains and Nebraska and at $100-$101 in the western Corn Belt, according to the Agricultural Marketing Service. Dressed trade is $2-3 lower at $160-$161.

Cattle futures reversed course again on Thursday, regaining most of what was lost in the previous session and despite the surge in Corn futures. At least part of the support came from limit-up moves in nearby Lean Hog futures, after news that a wild boar carcass in Germany tested positive for African Swine Fever. In turn, South Korea banned pork imports from Germany, which was the second largest European pork exporter last year.

Except for 17¢ lower in away Feb, Live Cattle futures closed an average of 72¢ higher (27¢ to $1.00 higher).

Feeder Cattle futures closed an average of $1.59 higher (77¢ higher in spot Sep to $1.95 higher).

Choice boxed beef cutout value was $2.12 lower Thursday afternoon at $220.83/cwt. Select was 19¢ lower at $207.32.

Actual total fed cattle slaughter for the week ending Aug. 29 was 527,439 head, according to USDA’s Actual Slaughter Under Federal Inspection report. That was 4,100 more than the previous week and 6,872 head more than the prior year. The average dressed steer weight of 916 lbs. was 6 lbs. heavier than the previous week and 32 lbs. heavier than a year earlier. The average dressed heifer weight of 834 lbs. was 1 lb. heavier than a week earlier and 23 lbs. heavier than the same week last year.

After 7¢ higher in spot Sep, Corn futures closed 3¢ to 4¢ higher through Sep ’21 and then fractionally mixed to 2¢ higher. Support included reports of successive typhoons impacting China’s main corn-growing region.

After 5¢ higher in spot Sep, Soybean futures closed mostly 1¢ to 3¢ lower

USDA’s monthly World Agricultural Supply and Demand Estimates are due out Friday morning.

******************************

Major U.S. financial indices closed strongly lower Thursday, amid a resumed selloff in big Tech stocks.

Also negative, initial weekly unemployment insurance claims last week were 884,000, more than traders expected. The number was on par with the previous week’s revised figure, according to the U.S. Department of Labor.

The Dow Jones Industrial Average closed 405 points lower. The S&P 500 closed 59 points lower. The NASDAQ closed 221 points lower.

*******************************

“With the large cow slaughter levels of recent years, there has been a lack of harvest capacity, especially in some regions of the U.S. That will become a less critical factor depressing prices if culling rates begin to subside as expected,” say analysts with the Livestock Marketing Information Center (LMIC), in the latest Livestock Monitor. Plus, LMIC forecasts some strength in fed cattle prices, which tends to be supportive of cull cow prices.

As it is, AMS pegged the national live cull cow price (packer direct) at $57.65/cwt. the last week of August, according to LMIC. That was about $2 more than a year earlier, but more than $15 less than the five-year average (2014-18). 

“Generally, year-over-year increases in cull cow prices are expected for the balance of this year and throughout next year,” say LMIC analysts. That runs counter to typical seasonal expectations, when cull cow prices usually begin dropping in late September through November.

However, the LMIC folks say it’s essential to also consider non-typical changes within seasonal cull cow slaughter patterns. For instance, they point to beef imports. Most non-fed, lean beef imported to the U.S. comes from South America and Australia. Long-term, widespread Australian drought increased cow slaughter and non-fed beef exports in recent years. Easing drought in that country suggests a reduction in U.S. imports.

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

Cattle Current Daily—Sept. 10, 2020

Negotiated cash fed cattle prices were $1-$2 lower than last week in Nebraska on a live basis Wednesday at $101/cwt., according to the Agricultural Marketing Service. Dressed sales were $2-$3 lower at $160-$161. Although too few to trend, there were a few live sales in Kansas at $101 and a few dressed sales in the western Corn Belt at $160-$161.

At Sioux Falls Regional in South Dakota, though, slaughter steers and heifers sold steady to $1 higher. There were 200 head of Choice 2-3 steers weighing an average of 1,468 lbs. that brought an average of $102.02/cwt.

The weekly Fed Cattle Exchange auction was postponed Wednesday, due to technical difficulties.

With packer inventory apparently abundant and wholesale beef values continuing to erode, lower cash prices pressured Cattle futures Wednesday, amid active trade.

Live Cattle futures closed an average of 63¢ lower (35¢ lower to $1.07 lower in spot Oct).

Feeder Cattle futures closed an average of $1.39 lower (55¢ lower in spot Sep to $2.00 lower).

Choice boxed beef cutout value was $1.87 lower Wednesday afternoon at $222.95/cwt. Select was 95¢ lower at $207.51.

Corn futures closed fractionally lower to 1¢ lower.

Soybean futures closed 3¢ to 6¢ higher through Aug ’21 and then mostly 1¢ higher.

******************************

Major U.S. financial indices rebounded Wednesday, led by the big tech stocks that applied pressure in the previous session.

West Texas Intermediate Crude Oil futures on the CME pared losses from the previous session, up $1.07 to $1.29 through the front six contracts.

The Dow Jones Industrial Average closed 439 points higher. The S&P 500 closed 67 points higher. The NASDAQ closed 293 points higher.

*******************************

“Bunched-up yearlings that have been on summer grazing programs and forced off grass due to drought, especially in the Western regions of the U.S., have dampened feeder cattle prices (e.g., 700-to 800-pound steers). That may spill back into the calf market (e.g., 500-to 600-pound steers),” say analysts with the Livestock Marketing Information Center (LMIC), in the most recent Livestock Monitor.

From January through August, steer calf prices (500-600 lbs., Southern Plains) averaged $159.41/cwt., according to LMIC. Prices reached their highest level since before the pandemic in August at an average $161.78. 

“Weather conditions may continue to play a significant role in how calves are priced in the coming months,” say LMIC analysts. “For example, in the Southern Plains, small grain (e.g., wheat) pasture prospects used for grazing recently received some beneficial rain, and there is some optimism about grazing availability. However, it is still early in the planting season for those crops/pastures. That forage will not be available for cattle to graze until October, and in some situations until even later in the year. Steer calf prices in the Southern Plains may falter slightly in September and finish the quarter between $157-158.”

LMIC expects steer calf prices in the fourth quarter to remain a little below $160. The average price in the fourth quarter last year was $158.18, when markets were still dealing with the fallout from the Tyson plant fire.

Further ahead, the LMIC folks say smaller calf crops the last couple of years should provide price support. Plus, they point out lower year-over-year corn prices that helped underpin calf prices through most of the summer should remain lower well into next year.

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

Cattle Current Daily—Sept. 9, 2020

The five-area direct weighted average steer price was $103.12/cwt. on a live basis last week, which was $1.97 less than the prior week. The weighted average dressed price of $163.07 was $3.46 lower.

Cattle futures extended gains, though, with apparent correction from recently oversold conditions.

Live Cattle futures closed an average of $1.14 higher (75¢ to $1.65 higher).

Feeder Cattle futures closed an average of 96¢ higher (60¢ to $1.35 higher).

Choice boxed beef cutout value was $1.03 lower Tuesday afternoon at $224.82/cwt. Select was 84¢ lower at $208.46.

Corn futures closed 3¢ higher through Jly ’21 and then mostly fractionally higher to 1¢ higher.

Soybean futures closed 3¢ to 5¢ higher through Mar ’21 and then 1¢ to 2¢ higher.

******************************

Major U.S. financial indices closed sharply lower Tuesday, with continued correction and readjustment in big tech stocks.

West Texas Intermediate Crude Oil futures on the CME were $2.72 to $3.01 lower through the front six contracts, with the front month closing at the lowest level since the first part of June.

The Dow Jones Industrial Average closed 632 points lower. The S&P 500 closed 95 points lower. The NASDAQ closed 465 points lower.

*******************************

According to the weekly U.S. Drought Monitor (Sept. 1) 57.46% of the continental United States was classified as abnormally dry to extreme drought. That was 27.9% more than the same time last year, but 0.2% less than the prior week, with help from Hurricane Laura. 

Those rains also helped pasture and range conditions hold their ground week to week, according to the latest USDA Crop Progress report for the week ending Sept. 6.

22% of pasture and range was rated in Good (20%) or Excellent (2%) condition, which was 29% less than last year. 46% was rated in Poor (27%) or Very Poor (19%) condition, compared to 20% at the same time last year.

*******************************

In his weekly market comments, Derrell Peel, Extension livestock marketing specialist at Oklahoma State University points out drought is primarily in the western half of the nation.

“There is no doubt that lack of pasture is creating management challenges in the worst drought areas and likely leading to some regional destocking and relocation of cows,” Peel says. “However, it is not clear that drought has resulted in significant net herd liquidation thus far. Beef cow slaughter for the year to date is up 3.3% but is down fractionally for the past four weeks.”

But, Peel says poor pasture conditions magnify the importance of hay supplies heading into the fall and winter. USDA estimated alfalfa hay production 5.9% less year over year, in the August Crop Production report, and other hay production 0.5% less.

“The reduction in alfalfa hay production is generally more important in the northern half of the country and affects both beef and dairy cows,” Peel explains.

“In the western region, both alfalfa and other hay production are down year over year, and combined with the poor pasture conditions, suggest the biggest regional challenges in the coming months.”

Compared to the west, Peel explains pasture conditions are significantly more positive in the Corn Belt, which represents about 15% of U.S. cowherd, and where crop aftermath likely comprises a more significant component of total forage supplies.

“USDA reported July alfalfa hay prices of $174/ton, down from $179/ton in June and from $183/ton one year ago,” Peel says. “Only six states reported year-over- year higher prices in July. Other hay prices in July were $137/ton, up from $128/ton in June and higher than $134/ton last year.”

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

Cattle Current Daily—Sept. 7-8, 2020

Negotiated cash fed cattle prices ended the week $2-$3 lower in the Southern Plains and Nebraska on a live basis at $102-$103/cwt. Live trade was steady to $3 lower in the western Corn Belt at $103-$104. Dressed sales were $3-$5 lower at $162-$164.

Through Thursday, the five-area direct weighted average fed steer price was $103.18/cwt. on a live basis, which was $1.94 less than the previous week. The average dressed steer price of $163.11 was $3.41 less than the previous week.

Cattle futures firmed by the end of Friday’s session after pressure earlier.

Live Cattle futures closed an average of 62¢ higher.

Except for 10¢ lower at the back, Feeder Cattle futures closed an average of 31¢ higher.

Choice boxed beef cutout value was $1.39 lower Friday afternoon at $225.85/cwt. Select was $3.20 lower at $209.30.

Corn futures closed mostly 2¢ to 3¢ higher.

Soybean futures closed mostly 1¢ higher.

******************************

Major U.S. financial indices extended losses on Friday, despite a more positive national employment report than traders expected.

Total non-farm payroll employment increased by 1.4 million in August and the U.S. unemployment rate declined to 8.4%, according to the Employment Situation Summary from the Bureau of Labor Statistics. Average hourly earnings for all employees on private nonfarm payrolls rose by 11¢ to $29.47.

The Dow Jones Industrial Average closed 159 points lower. The S&P 500 closed 28 points lower. The NASDAQ closed 144 points lower.

*******************************

July exports of U.S. beef rebounded from recent lows but remained below 2019 levels, according to data released by USDA and compiled by the U.S. Meat Export Federation (USMEF).

July beef exports totaled 107,298 metric tons (mt), up 36% from June but still 9% below last year. Export value was $647.8 million, the highest since March but down 10% from a year ago. For January through July, beef exports were also 9% below last year’s pace in volume (698,907 mt) and 10% lower in value ($4.28 billion).

Beef export value per head of fed slaughter averaged $280.40 in July, down 9% from a year ago. The January-July average was $297.21 per head, down 5%.

July beef exports to China increased sharply year-over-year and shipments trended higher to Taiwan, Canada and Hong Kong. July exports were lower than a year ago to Japan and South Korea and declined significantly to Mexico.

“With production returning to near-normal levels, we definitely saw an improvement in beef exports, though the recovery was not quite as strong as expected,” said USMEF President and CEO Dan Halstrom. “It is also important to remember that the monthly export data is in the rearview mirror and that weekly export sales data, along with observations from our USMEF-China team, suggest that China’s demand for both U.S. pork and beef will be strong through the balance of the year, including purchases for Chinese New Year. When combined with the rebound in other main markets, growth in emerging markets and the return of the U.S. supply advantage, USMEF remains optimistic about a strong finish for U.S. red meat exports in 2020, despite many challenges related to COVID-19.”

July pork exports totaled 222,035 mt, down 5% from a year ago, while export value fell 12% to $548.3 million. For January through July, pork exports remained 20% ahead of last year’s record pace in volume (1.78 million mt) and 22% higher in value ($4.6 billion).

“China’s pork demand has moderated and we are also entering a time when year-over-year gains are not nearly as dramatic, as exports to China began gaining momentum in mid-2019,” Halstrom says. “But, pork exports to Mexico showed encouraging signs of recovery in July and we also saw promising growth in several emerging markets, including Vietnam and the Philippines.”

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

Cattle Current Daily—Sept. 4, 2020

Negotiated cash fed cattle trade declined another $2 in the Texas Panhandle on Thursday to $102/cwt., according to the Agricultural Marketing Service. For the week, across all regions, live sales are generally $2-$3 lower than last week at $102-$104. Dressed trade is $3-$5 lower at $162-$164.

Cattle futures were lower again Thursday, following cash prices and wholesale beef values. Outside markets also pressured.

Live Cattle futures closed an average of 54¢ lower.

Feeder Cattle futures closed an average of $1.06 lower, except for unchanged in the back contract.

Choice boxed beef cutout value was 34¢ lower Thursday afternoon at $227.24/cwt. Select was $1.32 lower at $212.50.

Actual total cattle slaughter for the week ending Aug. 22 of 650,018 head was 6,937 head more (+1.1%) than the previous week, but 6,402 head fewer than the same week a year earlier. The average dressed steer weight was 1 lb. heavier than the previous week at 910 lbs., which was 26 lbs. heavier than the prior year. The average dressed heifer weight of 833 lbs. was the same as a week earlier but 21 lbs. more than a year earlier. Beef production for the week of 542.5 million lbs. was 6.6 million lbs. more (+1.2%) than a year earlier.

Corn futures closed 3¢ to 5¢ lower through Jly ’21 and then mostly 1¢ lower.

Soybean futures closed mostly 3¢ to 6¢ higher.

******************************

Major U.S. financial indices closed sharply lower on Thursday. There appeared to be no key reason, other than some widespread profit taking–especially from tech stocks–ahead of the long weekend.

Initial weekly jobless claims came in lower than the trade expected at 881,000, which was 130,000 fewer than the previous week, according to the U.S. Department of Labor.

The Dow Jones Industrial Average closed 807 points lower. The S&P 500 closed 125 points lower. The NASDAQ closed 598 points lower.

*******************************

“The response to COVID-19 has induced market disruptions and a sharp, but indeterminate, economic contraction that has affected the agricultural sector in disparate ways depending on the commodity,” say analysts with the Food and Agricultural Policy Institute (FAPRI) at the University of Missouri. “However, large carryout stocks and sizable 2020-21 production for many commodities, uncertainty regarding fulfillment of the Phase 1 trade agreement with China and the timing of the rebound of the size of the Chinese hog herd have also significantly contributed to market conditions.”

FAPRI released Updates for U.S. Agricultural Markets last week, which provides revised five-year price projections, reflecting coronavirus market impacts, with information available through the middle of August.

As alluded to in Wednesday’s Cattle Current, FAPRI projects the five-area direct average fed steer price at $113.15/cwt. next year, compared to an estimated $109.84 this year. After 2021, projected prices increase steadily from $119.94 in 2022 to $130.91 in 2025.

For feeder steers (600-650 lbs., Oklahoma City), the forecast price for next year is $150.54, compared to an estimated $144.46 for this year. After 2021, projected prices increase steadily from $164.43 in 2022 to $179.03 in 2025.

That’s with the forecast beef cow inventory declining from 31.3 million head on Jan. 1 of this year to 30.0 million head in 2025.

Throughout the timeline, projected beef production hovers between 27.3 and 27.6 billion lbs.

“Supply chain disruptions due to COVID-19 have increased the cost of processing livestock and dairy products. These impacts should moderate in 2021 but will still pressure the producer’s share of consumer expenditures,” say FAPRI analysts.

Among other highlights:

“The total amount of beef, pork and poultry meat supplies to the domestic market in per-capita terms is projected to contract in 2021 and 2022 for the first time since 2014. Economic uncertainty will impede consumer spending for meat and dairy products.

“Consumer food price inflation is projected at 3.2% in 2020, the highest since 2011. As increased processing and marketing costs, due to COVID-19 ease in 2021, food inflation moderates to 1.4%.

“Corn planted acres for 2020 is projected at 92.0 million acres, in line with USDA estimates and a sharp decline from March intended acres. A modest downward adjustment in Iowa corn yields–given the derecho that occurred subsequent to the gathering of data for USDA’s estimate–pushes the production estimate 203 million bu. lower than USDA’s estimate to 15.075 billion bu., a record production volume. Carryout stocks sharply increase and farm corn prices are projected to fall to $3.24/bu., growing modestly in subsequent years as area remains flat to modestly lower.”

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

Cattle Current Daily—Sept. 3, 2020

Negotiated cash fed cattle trade was mostly light on light to moderate demand through Wednesday afternoon, according to the Agricultural Marketing Service.

So far this week, prices are $1 lower in the Southern Plains on a live basis at mostly $104/cwt., $2 lower in Nebraska at $103 and $1-$4 lower in the western Corn Belt at $103. Dressed sales are $3-$5 lower at $162-$164.

Cattle feeders offered 436 head in the weekly Fed Cattle Exchange Auction on Wednesday, three lots from the Southern Plains. Of those, 365 head–two lots–sold for a weighted average price of $103/cwt.–218 head for 1-9 day delivery and 147 head for delivery at 1-17 days.

Cattle futures sagged lower, pressured by softer cash prices and the beginning of seasonally lower wholesale beef values.

Live Cattle futures closed an average of 65¢ lower.

Except for 50¢ higher in the back contract, Feeder Cattle futures closed an average of $1 lower, from 55¢ lower to $1.42 lower in spot Sep.

Choice boxed beef cutout value was 76¢ lower Wednesday afternoon at $227.58/cwt. Select was 93¢ lower at $213.82.

Corn futures closed mostly 1¢ higher.

Soybean futures closed mostly 7¢ to 8¢ higher.

******************************

Major U.S. financial indices closed higher on Wednesday, despite less job growth than expected in the closely watched ADP National Employment Report®. According to that report, private sector employment increased by 428,000 jobs from July to August. 

“The August job postings demonstrate a slow recovery,” says Ahu Yildirmaz, vice president and co-head of the ADP Research Institute. “Job gains are minimal, and businesses across all sizes and sectors have yet to come close to their pre-COVID-19 employment levels.”

The Dow Jones Industrial Average closed 454 points higher. The S&P 500 closed 54 points higher. The NASDAQ closed 116 points higher.

*******************************

The latest Cattle on Feed report suggests that feedlots continue to make progress in working through the backlog of fed cattle that was created by COVID-19 packing disruptions, according to Elliot Dennis, Extension livestock economist at the University of Nebraska-Lincoln.

“For example, the number of cattle on feed over 90 days has dipped below 2019 levels for the first time since April. However, cattle on feed over 120 days is still about 10% higher than 2019,” Dennis explains, in the latest issue of In the Cattle Markets. “The result of cattle being on feed longer is sustained record level dressed weights for both steers and heifers. Heavier carcasses have led to higher beef production in recent months, relative to 2019, putting downward pressure on cattle prices.”

With net feedlot placements higher year over year and compared to the five-year average, Dennis says feedlots appear to be reloading with cattle weighing less than 700 lbs. In turn, he explains that means record beef production could continue for a longer period of time.

“With lower, but growing domestic demand and concerns about what a second government shutdown might do to domestic demand, beef export demand is likely to play a larger and more prominent role in sustaining domestic cattle prices,” Dennis says.

In the meantime, Dennis points to the baseline projections updated last week by the Food and Agricultural Policy Research Institute (FAPRI) at the University of Missouri.

“Their estimates continue to support the idea the U.S. cattle cycle peaked and will continue to contract over the next five years. Despite declining beef cows, total beef production is forecasted to be relatively stable at 27 billion pounds per year,” Dennis explains. “Smaller cow numbers will reduce the size of future calf crops, reducing the number of feeder and fed cattle marketed and ultimately boxes of beef available to be sold. Combined, this has the effect of raising prices along the supply chain. Planning prices in 2021 were estimated as follows: boxed beef at $221/cwt. five-area steers at $113/cwt. and Oklahoma City feeder steers at $151/cwt.

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

Cattle Current Daily—Sept. 2, 2020

Negotiated cash fed cattle trade was $1 lower Tuesday, at $104/cwt. on a live basis in the Texas Panhandle, according to the Agricultural Marketing Service. Although too few transactions to trend, early prices also were lower in other regions: $103-$104 in Kansas, $103 in Nebraska and $102.50-$103.00 in the western Corn Belt. Early dressed sales in Nebraska were at $163-$164.

Even so, Cattle futures continued to mostly edge higher.

Other than 2¢ lower in away-Dec and $2.70 higher in recently minted away-Feb, Live Cattle futures closed an average of 31¢ higher.

Except for 17¢ lower in spot Sep, Feeder Cattle futures closed an average of 39¢ higher. 

Choice boxed beef cutout value was 39¢ higher Tuesday afternoon at $228.34/cwt. Select was 57¢ lower at $214.75.

Corn futures closed fractionally higher to 1¢ higher.

Soybean futures closed mostly 3¢ to 5¢ higher.

******************************

Major U.S. financial indices closed higher on Tuesday. Along with continued support from big tech stocks, positive manufacturing data boosted optimism.

“After the coronavirus (COVID-19) brought manufacturing activity to historic lows, the sector continued its recovery in August, the first full month of operations after supply chains restarted and adjustments were made for employees to return to work,” says Timothy R. Fiore, CPSM, C.P.M., Chair of the Institute for Supply Management®(ISM®) Manufacturing Business Survey Committee. “The August PMI®registered 56%, up 1.8 percentage points from the July reading of 54.2%. This figure indicates expansion in the overall economy for the fourth month in a row after a contraction in April, which ended a period of 131 consecutive months of growth.”

The Dow Jones Industrial Average closed 215 points higher. The S&P 500 closed 26 points higher. The NASDAQ closed 164 points higher.

*******************************

Agricultural producer sentiment increased significantly from July to August, according to the Purdue University/CME Group Ag Economy Barometer. The index rose to a reading of 144, up 26 points, to the highest level since February of this year, when record highs were established before the pandemic began.

The Ag Economy Barometer is based on survey responses from 400 U.S. agricultural producers and was conducted Aug. 17-21.

Both of the barometer’s sub-indices also recorded substantial increases. The Index of Current Conditions improved to a reading of 124, up 13 points from July, while the Index of Future Expectations increased 33 points to a reading of 154.

“With a positive crop production outlook, rebounding commodity prices, and news of additional export sales to China, producers were much more optimistic about the future for the U.S. agricultural economy,” says James Mintert, the barometer’s principal investigator and director of Purdue University’s Center for Commercial Agriculture.

Producers also were more optimistic about U.S. agriculture’s trade prospects compared to the past several months. In August, 67% of respondents said they expect exports to rise over the next five years, compared to 57% during the spring and summer months of this year. In part, Mintert attributes this change in perspective to rising export sales to China that began over the summer and now appear likely to continue into fall.

Producer perspectives toward land values also improved in August. Those expecting land values to increase over the next 12 months rose to 20% in August, up from 16% in July and 7% back in April. The percentage of producers expecting values to increase in the next five years rose to 59%, up from 48% in July and just 40% in May.

The percentage of respondents who expect their equity position to decline in the upcoming 12 months was 38% in August, the second lowest percentage since the survey question was first asked in 2016 and well below 48% a year earlier.

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

Cattle Current Daily—Sept. 1, 2020

Last week, the five-area direct weighted average steer price was $105.09/cwt. on a live basis, which was $1.50 lower than the previous week. The weighted average dressed steer price of $166.53 was $2.88 less.

Cattle futures closed higher for the first time in four sessions on Monday, despite softer wholesale beef values and the outlook for cash prices to continue lower this week; perhaps helped along by month-end position squaring.

Live Cattle futures closed an average of 61¢ higher, from 35¢ higher at the back to $1.27 higher in expiring Aug.

Feeder Cattle futures closed an average of 45¢ higher. 

Choice boxed beef cutout value was $1.45 lower Monday afternoon at $227.95/cwt. Select was 46¢ higher at $215.32.

Corn futures closed mostly 1¢ to 2¢ lower.

Soybean futures closed mostly 3¢ to 5¢ higher.

******************************

Major U.S. financial indices closed mixed on Monday, with most of the support continuing to come from tech stocks.

The Dow Jones Industrial Average closed 223 points lower. The S&P 500 closed 7 points lower. The NASDAQ closed 79 points higher.

*******************************

Early on, Derrell Peel, Extension livestock marketing specialist at Oklahoma State University says winter grazing prospects appear promising in the Southern Plains. In Oklahoma, for instance, he says conditions range from very dry to adequate moisture with generally favorable soil temperatures.

“Current feeder cattle prices provide an indication of the economic prospects for fall and winter grazing. In the last week of August, the Oklahoma average auction price for 475-lb. steers was $165.25/cwt. with 750 lb. steers at $140.40/cwt. This calculates to a value of gain of $0.975/lb. for 275 lbs. of gain,” Peel explains. “Across beginning weights of 450-600 lbs., the value of gain ranges from $0.90 to $1.00/lb., using current auction prices. Cost of production is likely less than $0.90/lb. in many cases, suggesting potential positive returns for stocker production.”

According to Peel, a common wheat pasture grazing budget is based on October stocker purchases with feeders marketed in early March, including roughly 120 days of winter grazing. Based on current market conditions, he projects the October price at $160-$165/cwt. for steers weighing 475 lbs. Across various budgets using a range of purchase prices, feed costs, and average daily gain, March breakeven prices are projected at $129-$139/cwt., most likely $132-$136. That’s for steers weighing about 750 lbs. Current Feeder Cattle futures for March, adjusted for Oklahoma basis, suggest a March price of about $140/cwt. at 750 lbs. So, he says, current market conditions suggest some potential for winter grazing returns above production costs.

“General economic uncertainty and volatility will continue to be particularly important in cattle markets and risk management should be carefully considered,” Peel says. “Futures markets may offer an opportunity to lock in a margin on winter grazing. However, risk management requires deliberate action to implement a plan. Market opportunities are often fleeting and producers may have to act quickly to take advantage of changing market conditions.”

By | August 31st, 2020|Daily Market Highlights|

Cattle Current Daily—Aug. 31, 2020

Negotiated cash fed cattle prices ended the week $1 lower in the Southern Plains at $105/cwt. on a live basis, $1.50 lower in Nebraska at $105 and $2 lower in the western Corn Belt at $104-$107. Dressed trade was $2-$3 lower at mostly $167.

Through Thursday, the five-area direct weighted average steer price was $105.12/cwt. on a live basis, which was $1.50 lower than the previous week. The weighted average dressed steer price of $166.52 was $2.59 less.

Cattle futures continued to soften Friday, with follow-through pressure from the week’s lower cash prices and outlook for declining wholesale beef values.

Other than 25¢ higher in almost spent spot Aug, Live Cattle futures closed an average of 72¢ lower.

Feeder Cattle futures closed an average of $1.02 lower from 22¢ lower at the back to $1.30 lower.

Choice boxed beef cutout value was $2.14 lower Friday afternoon at $229.40/cwt. Select was 60¢ higher at $214.86.

Estimated total cattle slaughter for the week ending Aug. 29 of 654,000 head was 2,000 more than the previous week’s estimate and 1,000 head more than the same time a year earlier. Year-to-date cattle slaughter is estimated at 20.99 million head, which would be 1.06 million fewer (-4.80%) than the same time last year. Estimated beef production so far this year is 17.36 billion lbs., which is 381.2 million lbs. less (-2.1%) than last year.

Corn futures closed mostly fractionally lower.

After 13¢ higher in spot Sep, Soybean futures closed mostly 6¢ to 8¢ higher

******************************

Major U.S. financial indices closed higher on Friday. Support included the previous day’s FOMC policy change allowing inflation to run above its 2% target rate without increasing interest rates. As well, U.S. consumer spending and income in July beat trade expectations.

Personal consumption expenditures increased 1.9% in July to $267.6 billion, according to the U.S. Bureau of Economic Analysis. Personal income increased 0.4% to $70.5 billion.

The Dow Jones Industrial Average closed 161 points higher. The S&P 500 closed 23 points higher. The NASDAQ closed 70 points higher.

*******************************

Although sales by food-at-home retailers increased year over year since the pandemic began, total food sales remain lower, due to the decline in away-from-home food purchases, according to USDA’s Economic Research Service (ERS).

“In 2019, before the COVID-19 pandemic, U.S. consumers, businesses, and government entities spent an average of $137.4 billion per month on food,” explain ERS analysts. “Normal seasonal variations were present, with total food spending being lowest in January and February and highest in May, August, and December. Early 2020 followed the same pattern, with lower-than-average total food spending in January and February, but this trend continued into the spring with spending on food falling to $105 billion in April 2020, as spending at food-away-from-home establishments—restaurants, school cafeterias, sports venues, and other eating places—dropped to $36 billion. Spending on food-away-from-home rebounded in May and June but remained below 2019 spending in those months. Total food sales rose in May and June 2020 but were still lower than a year ago.”

For perspective, total food sales were $123 billion in May and $128 billion in June. For the same months last year, total food sales were $144 billion and $140 billion, respectively.

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

Cattle Current Daily—Aug. 28, 2020

Cattle futures sagged lower Thursday, pressured by softer cash prices. Also, net 2020 beef export sales for the week ending Aug. 20 were 11,800 metric tons, down 40% from the previous week and 36% from the prior four-week average, according to the weekly U.S. Export Sales report from USDA’s Foreign Agricultural Service.

Live Cattle futures closed an average of 54¢ lower, from 10¢ lower in the back contract to $1.17 lower.

Feeder Cattle futures closed an average of 55¢ lower. 

Choice boxed beef cutout value was 9¢ higher Thursday afternoon at $231.54/cwt. Select was 15¢ higher at $214.26.

Total cattle slaughter the week ending Aug. 15 was 643,681, according to USDA’s Actual Slaughter Under Federal Inspection report. That was 10,713 head more than the previous week, but 9,601 fewer (-1.47%) than the same week a year earlier.

Fed cattle slaughter for the week of 519,567 head was 7,312 head more than the previous week, and just 1,140 head fewer than the previous year.

The average dressed steer weight was 909 lbs., which was 3 lbs. heavier than the previous week and 28 lbs. heaver than the same week last year. The average dressed heifer weight of 833 lbs. was 1 lb. heavier than the prior week and 24 lbs. heavier than the previous year.

Heavier carcass weights continue to increase year-over-year beef production with less slaughter. Total beef production of 536.7 million lbs. was 10.5 million lbs. more than the previous week  and 6.4 million lbs. more than the previous year. 

Corn futures closed mostly 1¢ to 3¢ higher.

Soybean futures closed 12¢ to 17¢ higher through Jly ’21 and then mostly 5¢ to 8¢ higher.

******************************

Major U.S. financial indices closed mixed on Thursday.

Support included approved updates to the Federal Open Market Committee’s (FOMC) Statement on Longer-Run Goals and Monetary Policy Strategy.

Among other things, according to an FOMC statement, “The FOMC adjusted its strategy for achieving its longer-run inflation goal of 2% by noting that it, ‘seeks to achieve inflation that averages 2% over time.’ To this end, the revised statement states that, ‘following periods when inflation has been running persistently below 2%, appropriate monetary policy will likely aim to achieve inflation moderately above 2% for some time.’”

In other words, it seems the FOMC will be more hesitant about increasing interest rates when inflation accelerates.

“The economy is always evolving, and the FOMC’s strategy for achieving its goals must adapt to meet the new challenges that arise,” says Federal Reserve Chair Jerome H. Powell. “Our revised statement reflects our appreciation for the benefits of a strong labor market, particularly for many in low- and moderate-income communities, and that a robust job market can be sustained without causing an unwelcome increase in inflation.”

The Dow Jones Industrial Average closed 160 points higher. The S&P 500 closed 5 points higher. The NASDAQ closed 39 points lower.

*******************************

Customer transaction declines at major restaurant chains improved into the single-digits after 21 weeks of double-digit declines, according to The NPD Group (NPD). Customer transactions were 9% less than a year earlier for the week ending Aug. 16. That represents a 35-point gain from the steepest decline of 44% for the week ending April 12, according to NPD’s CREST®Performance Alerts.

Customer transactions at major quick service restaurant chains, which represent the bulk of industry transactions, were down 8% compared to year ago. Full service chain restaurants, which were most impacted by the mandated dine-in closures that are slowly being lifted, realized customer transactions declines of  19% versus a year earlier for a 57-point gain from the steepest year-over-year decline of  76% in week ending April 12.

“Although transactions are still down, the move into the single-digits is a positive sign for the U.S. restaurant industry,” says David Portalatin, NPD food industry advisor. “Although we’re stuck in neutral for now, I firmly believe there is still a lot of upside recovery for restaurants. My belief is rooted in one reality: consumers are not willing to give up on the convenience and experience a restaurant meal brings to them and their families regardless of the barriers.”

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

Cattle Current Daily—Aug. 27, 2020

Negotiated cash fed cattle trade continued up north on Wednesday, with live sales in Nebraska $1.50 lower than last week at $105/cwt., and $2-$4 lower in the western Corn Belt at $104-$105. Dressed trade in both regions was $2 lower at mostly $167, according to the Agricultural Marketing Service. Live trade in the Southern Plains so far this week is $1 lower at $105.

After attempted support early in the session, softer cash prices and wonderments about demand pressured Cattle futures lower on Wednesday.

Live Cattle futures closed an average of $1.18 lower.

Except for 22¢ higher in spot Aug, Feeder Cattle futures closed an average of $1.36 lower. 

Wholesale beef values continued to gain on Labor Day buying.

Choice boxed beef cutout value was $1.77 higher Wednesday afternoon at $231.45/cwt. Select was $1.85 higher at $214.11.

Corn futures closed mostly fractionally lower.

Soybean futures closed 1¢ to 5¢ higher through Aug ’21 and then mostly 4¢ lower

******************************

Major U.S. financial indices closed higher Wednesday, led by tech stocks and positive economic news that included further promising trial results from Moderna, a coronavirus vaccine.

The Dow Jones Industrial Average closed 83 points higher. The S&P 500 closed 35 points higher. The NASDAQ closed 198 points higher.

*******************************

Get through 2020, and beef exports should increase, according to the new quarterly Outlook for U.S. Agricultural Trade from USDA’s Economic Research Service (ERS).

Beef exports for 2021 are forecast $200 million more than the previous Outlook, with higher volumes more than offsetting a decline in unit values. For this year, ERS pegs U.S. beef exports $500 million less than the previous estimate, on lower volumes and lower prices.

“The outbreak of the global COVID-19 pandemic is forecast to cause the world’s real gross domestic product (GDP) to decline in 2020 for the first time since 2009. While some economists believe the worst of the economic and public health shock has already been observed, with the GDP of many advanced economies falling at annualized nominal rates of greater than 30% during the second quarter of this year, there remains significant uncertainty as to the length and speed of the recovery,” say ERS analysts. “Despite an anticipated recovery in the growth rate for most economies in 2021, real GDP is  expected to remain below levels seen before the global pandemic. The economic recovery will depend on public and private efforts to mitigate and contain the pandemic and to efficiently adapt economies to changing conditions.”

Total U.S. agricultural exports in Fiscal Year (FY) 2021 are projected at $140.5 billion, up $5.5 billion from the revised forecast for FY 2020, driven mostly by higher exports of soybeans and corn.

By | August 26th, 2020|Daily Market Highlights|

Cattle Current Daily—Aug. 26, 2020

Live Cattle futures edged higher Tuesday, as Feeder Cattle firmed, despite a bounce higher in Corn futures.

Except for 7¢ lower in spot Aug, Live Cattle futures closed an average of 68¢ higher, recovering what was lost in the previous session.

Except for 10¢ lower in Apr, Feeder Cattle futures closed an average of 16¢  higher. 

Choice boxed beef cutout value was $2.21 higher Tuesday afternoon at $229.68/cwt. Select was $1.01 higher at $212.26.

Corn and Soybean futures jumped Tuesday with the heat and dryness across the Midwest.

Corn futures closed mostly 8¢ to 9¢ higher through Jly ’21 and then mostly 4¢ to 5¢ higher.

Soybean futures closed mostly 10¢ to 14¢ higher through Sep ’21 and then mostly 8¢ higher.

******************************

Major U.S. financial indices closed mixed Tuesday.

Support included a surge in new home sales.

New residential sales in July totaled 901,000, according to the U.S. Census Bureau. That was 13.9% more than in June and 36.3% more than a year earlier.

On the other hand, pressure included declining consumer sentiment.

Month to month, the Conference Board Consumer Confidence Index® decreased 6.9 points to 84.8 in August.

“Consumer Confidence declined in August for the second consecutive month,” says Lynn Franco, Senior Director of Economic Indicators at The Conference Board. “The Present Situation Index decreased sharply, with consumers stating that both business and employment conditions had deteriorated over the past month. Consumers’ optimism about the short-term outlook, and their financial prospects, also declined and continues on a downward path. Consumer spending has rebounded in recent months but increasing concerns amongst consumers about the economic outlook and their financial well-being will likely cause spending to cool in the months ahead.”

The Dow Jones Industrial Average closed 60 points lower. The S&P 500 closed 12 points higher. The NASDAQ closed 86 points higher.

*******************************

“Commercial cattle slaughter was 2.918 million head for the month of July, a 0.7% decrease from last year but the second largest monthly slaughter for 2020 behind March (2.922 million head),” according to the Livestock Marketing Information Center (LMIC), in the latest Livestock Monitor. “Although cattle slaughter declined marginally from last year, commercial beef production reached its highest level for the year at over 2.4 billion lbs. produced in July, a 2.6% increase over 2019. The growth in beef production is attributable to cattle dressed weights. In July, federally inspected dressed weights were 834 lbs., a 3.5% (28 lb.) increase from a year ago. The backlog of cattle created by the pandemic has led to higher than normal dressed weights which has bolstered beef production.”

On a related note, total pounds of beef in freezers July 31 were 3% more than the previous month but 3% less than the prior year, according to the most recent USDA Cold Storage report.

Frozen pork supplies were slightly less than the previous month, but were 25% less year over year.

Total red meat supplies in cold storage were 1% more than the previous month, but 15% less than a year earlier.

Total frozen poultry supplies were up 4% from the previous month, but were slightly less than a year earlier.

By | August 26th, 2020|Daily Market Highlights|

Cattle Current Daily—Aug. 25, 2020

The five-area direct weighted average steer price last week was $1.53 higher at $106.59/cwt. on a live basis, according to the Agricultural Marketing Service. The dressed steer price was $1.37 higher at $169.41.

Cattle futures closed lower on Monday, especially Feeder Cattle, pressured by Friday’s Cattle on Feed (see below and note the correction).

Live Cattle futures closed an average of 64¢ lower (22¢ to $1.15 lower).

Feeder Cattle futures closed an average of $1.32 lower (62¢ to $2.45 lower).

Choice boxed beef cutout value was $1.53 higher Monday afternoon at $227.47/cwt. Select was $2.26 higher at $211.25.

Corn futures closed mostly 2¢ to 4¢ higher.

Soybean futures closed mostly 1¢ to 3¢ higher. 

******************************

Major U.S. financial indices closed higher on Monday. Primary support seemed centered around more optimism about the pandemic, with the number of new COVID-19 cases continuing to decline. As well, the Food and Drug Administration approved use of a new plasma treatment for those hospitalized with the virus.

The Dow Jones Industrial Average closed 378 points higher. The S&P 500 closed 34 points higher. The NASDAQ closed 67 points higher.

*******************************

Correction As many of you likely noticed, yesterday’s Cattle Current carried a review of the July Cattle on Feed report, rather than for the most recent August report. Sorry about that. Here’s the August report.

Placements in feedlots (feedlots with 1,000 head or more capacity) during July of 1.89 million head were 188,000 more (+11.03%) than a year earlier, according to the monthly Cattle on Feed report. That was significantly more than pre-report expectations of a 6% increase. In terms of placement weight, 38.83% went on feed weighing less than 699 lbs., 47.17% went on feed weighing 700-899 lbs. and 14.0% weighed more than 900 lbs.

For broader perspective, in his weekly market comments, Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, explains, “Placements were down 17.7% year over year in February, March and April. Despite the 11% increase in July, placements are down 7.1% year over year for the last six months.”

Marketings in July of 1.99 million head were 12,000 head fewer than last year (-0.60%), about in line with average analyst estimates ahead of the report.

“Marketings dropped dramatically in April and May (down 25.6% year over year in those two months) and are down 6.0% in the six months from February to July,” according to Peel.

Total cattle on feed Aug. 1 numbered 11.28 million head, which was 172,000 head more (+1.5%) than the same time a year earlier, a little more than expectations and the largest inventory for the month since the data series began in 1996.

“One of the biggest concerns in fed cattle markets is the extent to which the backlog of fed cattle created in April and May still remains,” Peel says. “Although June and July marketings were about equal to one year ago, a significant portion of those marketings were likely fed cattle that were carried over from April and May. Reductions in placements as far back as February have reduced the number of cattle finishing starting as early as June. Not only were total placements down in the February to July period, but more of the reduction was in heavyweight placements, further reducing the number of cattle finishing now. In the last six months, feedlot placements under 700 lbs. have made up a larger percentage of total placements, which further reduces the number of cattle finishing at this time.” 

Add it all up and Peel says data and anecdotal indications suggest the backlog of fed cattle is rapidly diminishing and may be nearly cleaned up. 

“Going forward, the 1 million head decrease in feedlot placements in February, March and April suggests that front-end feedlot supplies will be relatively tight at least through September,” Peel says.

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

Cattle Current Daily—Aug. 24, 2020

Based on reports from the Agricultural Marketing Service, negotiated cash fed cattle prices ended the week $2 higher in the Southern Plains at $106/cwt. on a live basis, steady to 50¢ higher in the Northern Plains at $106.00-$106.50 and $2 higher in the western Corn Belt at $107-$109. Dressed trade was unevenly steady at $169.

Through Thursday, the five-area direct weighted average steer price was $106.62/cwt. on a live basis, which was $2.13 more than the previous week and $2.19 less than the same time last year, keeping in mind the market was dealing with the aftermath of the Tyson plant fire in 2019. The dressed steer price of $169.11 was $1.05 higher than the prior week, but $5.91 less the same time a year earlier.

Cattle futures closed lower on Friday as traders awaited the monthly Cattle on Feed report (see below).

Live Cattle futures closed an average of 85¢ lower, (30¢ lower at the back to $1.22 lower at the front).

Feeder Cattle futures closed an average of $1.07 lower (50¢ lower at the front to $1.55 lower at the back).

Choice boxed beef cutout value was 56¢ higher Friday afternoon at $225.94/cwt. Select was $2.68 higher at $208.99.

Total estimated cattle slaughter for the week ending Aug. 22 was 652,000 head, according to USDA. That was 8,000 head more than the previous week’s estimate, but 17,000 head fewer than the same week last year. Estimated beef production for the week of 542.9 million lbs. was 10.5 million lbs. more than the previous week and 7 million lbs. more than the prior year.

Corn futures closed mostly fractionally mixed to 1¢ higher.

Soybean futures closed fractionally lower to 1¢ higher. 

******************************

Major U.S. financial indices closed higher on Friday, buoyed by positive economic news.

For instance, existing home sales in July continued upward for the second consecutive month, according to the National Association of Realtors®.

Total existing-home sales completed transactions that include single-family homes, townhomes, condominiums and co-ops, jumped 24.7% from June to a seasonally adjusted annual rate of 5.86 million in July.

“The housing market is well past the recovery phase and is now booming with higher home sales compared to the pre-pandemic days,” said Lawrence Yun, NAR’s chief economist. “With the sizable shift in remote work, current homeowners are looking for larger homes and this will lead to a secondary level of demand even into 2021.”

The Dow Jones Industrial Average closed 190 points higher. The S&P 500 closed 11 points higher. The NASDAQ closed 46 points higher.

*******************************

If anything, the market will likely view Friday’s monthly Cattle on Feed report as at least a little bullish, with fewer placements than expected, as well as slightly more marketings and slightly fewer cattle on feed for feedlots with 1,000 head or more capacity.

Placements in June of 1.80 million head were 37,000 head more (+2.1%) than a year earlier, compared to average expectations for an increase of 6%.

In terms of placement weight, 41% went on feed weighing less than 699 lbs., 43% went on feed weighing 700-899 lbs. and 16% weighed more than 900 lbs.

Marketings in June of 1.97 million head were 26,000 head more (+1.34%) than last year, about 1% more than average expectations.

Cattle on feed July 1 of 11.44 million head were 42,000 head fewer (-0.37%) than last year. Ahead of the report average analyst estimates were for the number to be unchanged. Inventory was the second largest to start the month since the data series began in 1996.

******************************

“The controversy surrounding wholesale and farm-level price movements following a packing plant fire in Kansas was but mere prelude to the unprecedented COVID-19-related disruptions and historic rise in the spread between livestock and wholesale meat prices. Concerns about concentration and allegations of anticompetitive behavior have led to several civil suits and inquiries by the U.S. Department of Agriculture and the U.S. Department of Justice, with increases in price differentials serving as a focal point.”

That’s from the introduction to Beef and Pork Marketing Margins and Price Spreadduring COVID-19, by agricultural economists Jayson Lusk at Purdue University, Glynn Tonsor at Kansas State University and Lee Schulz at Iowa State University. The stated goal of the effort is to provide data-driven, economic-guided insights to the situation. Along the way, they shatter a popular myth or two.

For instance, these economists document how little concentration has changed since 1998, when considering the largest federally inspected (FI) beef packing plants—those harvesting 1 million head or more of cattle annually.

“In 1998, FI packing plants that slaughtered more than 1 million cattle per year slaughtered 17.9 million head, or 51.7%, of the FI cattle slaughter. More than 20 years later, in 2019, plants with over 1 million head per year capacity slaughtered 17.3 million head, or 52.4%, of the FI slaughter. The total volume slaughtered by the largest plants is down, and it is a stretch to characterize a 0.7 percentage point rise in slaughter market share over 22 years as a takeover,” say the authors. “This suggests that smaller FI slaughter facilities, in aggregate, are maintaining market share. In 2019, packing plants that slaughtered between 1 and 9,999 head slaughtered 424,700 head, or 1.3%, of the FI cattle slaughter annually, 3.3% for plants slaughtering between 10,000 and 99,999 head, and 43.1% for plants slaughtering between 100,000 and 999,999 head. This compares to 1.5%, 4.7% and 42.1%, respectively, in 1998.”

The trio of economists points out the number of FI beef packing plants is the most since 2004, albeit fewer than two decades ago.

Further, these economists define the difference between marketing margins, gross margins and related price spreads, what they can and can’t say about suggested profitability. They also define and demonstrate primary demand versus derived demand and how it is that wholesale beef prices can run counter to fed cattle prices.

“Even though we cannot observe an individual packers’ costs, we can observe the market’s perception of their profitability―at least for publicly traded firms,” according to the economists. “On balance, changes in the stock prices of companies with significant packing operations do not suggest substantial windfalls corresponding with COVID-19 driven developments, and indeed the performance of publicly traded packing companies has lagged that of the overall market since the first of the year. Perhaps market developments are rationale responses to massive shocks from a common enemy to society, COVID-19.”

Bottom line, the study suggests price reactions in the wake of packing disruptions following last summer’s packing plant fire and during the pandemic are in keeping with the expectations of economic theory.

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

Cattle Current Daily—Aug. 21, 2020

Negotiated cash fed cattle trade developed in the North on Thursday. Dressed sales were unevenly steady with last week at mostly $169/cwt. Live sales in the western Corn Belt were $2 higher at $107-$109.

Cattle futures closed mostly narrowly lower on Thursday.

Live Cattle futures closed an average of 43¢ lower, except for 10¢ higher in away Oct.

Feeder Cattle futures closed an average of 25¢ lower through the front five contracts, and then 27¢ to $1.10 higher the rest of the way.

Choice boxed beef cutout value was $2.34 higher Thursday afternoon at $225.38/cwt. Select was 66¢ higher at $206.31.

Net U.S. beef export sales of 20,000 metric tons for the week ending Aug. 13 were 69% more than the previous week and 13% more than the previous four-week average, according to the U.S. Export Sales report from USDA’s Foreign Agricultural Service.

Corn futures closed mostly fractionally lower.

Soybean futures closed 8¢ to 9¢ lower through Mar ‘21, and then mostly 3¢ to 6¢ lower.

******************************

Major U.S. financial indices closed higher on Thursday, supported by tech stocks and despite higher weekly unemployment claims than the trade expected. Initial unemployment insurance claims for the week ending Aug. 15 were 1.11 million, up from 963,000 the previous week.

The Dow Jones Industrial Average closed 46 points higher. The S&P 500 closed 10 points higher. The NASDAQ closed 118 points higher.

*******************************

Heavier carcass weights boosted year-over-year beef production in July, despite less cattle slaughter than in 2019, according to USDA’s monthly Livestock Slaughter report. There were the same number of weekdays and Saturdays this year and last.

Beef production of 2.42 billion lbs. was 60.5 million lbs. more than last year (+2.56%). Total cattle slaughter under federal inspection (FI) in July was 2.87 million head, which was 37,200 head fewer (-1.28%). Fed cattle slaughter of 2.31 million head was 25,000 head fewer than last July (-1.1%).

For January through July, beef production of 15.40 billion lbs. was 187.4 million lbs. less than last year (-1.20%). Total FI cattle slaughter for that same time period was 18.37 million head, which was 806,000 head fewer (-4.20%) than last year. Total fed cattle slaughter for January through July of 14.39 million head was 797,500 head fewer (-5.25%).

Total commercial red meat production in July was 4.81 billion lbs., which was 220.9 million lbs. more than in 2019 (+4.81%). For January through July, total commercial red meat production of 31.63 billion lbs. was 247 million lbs. more than in 2019 (+0.79%).

The average dressed steer weight in July was 902 lbs., which was 36 lbs. more than last year. The average dressed heifer weight for the month of 829 lbs. was 33 lbs. heavier. For January through July, the average dressed steer weight was 34 lbs. heavier year over year at 898 lbs. The average dressed heifer weight for the same period of time was 829 lbs., which was 26 lbs. heavier year over year.

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

Cattle Current Daily—Aug. 20, 2020

Negotiated cash fed cattle trade on Wednesday continued steady with the previous day in the Southern Plains at $106/cwt. That’s $2 higher than last week.

Cattle futures drifted mostly higher, with continued support from the positive cash outlook and climbing wholesale beef values.

Live Cattle futures closed an average of 50¢ higher, except for an average of 19¢ lower in two contracts.Feeder Cattle futures closed mixed but mostly higher, from an average of 37¢ higher across the front five contracts, to an average of 22¢ lower.

The monthly Cattle on Feed report is due out Friday. Early estimates run about even for year over year marketings in July and the Aug. 1 on-feed inventory, with expectations for July placements to be up about 6%.

Choice boxed beef cutout value was $2.18 higher Wednesday afternoon to $223.04/cwt. Select was $1.00 higher at $205.65.

Corn futures closed mostly 1¢ lower.

Soybean futures closed fractionally mixed through Mar ‘22, and then 1¢ to 3¢ lower.

******************************

Major U.S. financial indices closed lower on Wednesday.

Pressure included the somber economic outlook in the Federal Open Markets Committee minutes from late July and published Wednesday. According to the minutes, participants noted, “…the path of the economy would depend significantly on the course of the virus and that the on-going public health crisis  would weigh heavily on economic activity, employment, and inflation in the near  term and posed considerable risks to the economic outlook over the medium term.”

Further, “The staff still judged that a more pessimistic projection was no less plausible than the baseline forecast. In this alternative scenario, an acceleration of the coronavirus outbreak, with another round of strict limitations on social interactions and business operations, was assumed to begin later this year, leading to a decrease in real GDP, a jump in the unemployment rate, and renewed downward pressure on inflation next year. Compared with the baseline, the disruption to economic activity was more severe and protracted in this scenario, with real GDP and inflation lower and the unemployment rate higher by the end of the medium-term projection.”

The Dow Jones Industrial Average closed 85 points lower. The S&P 500 closed 14 points lower. The NASDAQ closed 64 points lower.

*******************************

Domestic beef demand recovered significantly in June from pandemic disruptions, according to the most recent domestic demand indexes maintained by Kansas State University.

The Choice retail beef demand index was 98.87 in June, which was 34.85% more than the previous month and 29.23% more than the previous year. The all fresh retail beef demand index was 40.98% higher month to month and 34.22% more than the previous year.

By way of comparison, the retail pork demand index was 84% higher than previous month and 18% more year over year. The retail chicken demand index was 12.7% more than in May and 9.7% more than in 2019.

By | August 19th, 2020|Daily Market Highlights|

Cattle Current Daily—Aug. 19, 2020

Negotiated cash fed cattle trade developed in Kansas on Tuesday at $106-$107/cwt., according to the Agricultural Marketing Service. That was $2-$3 higher than last week with moderate trade and moderate to good demand.

Cattle futures closed mainly higher, buoyed by the positive cash outlook and climbing wholesale beef values.

Other than unchanged to an average of 9¢ lower in four contracts, Live Cattle futures closed an average of 41¢ higher.

Feeder Cattle futures closed an average of 84¢ higher (50¢ to $1.20 higher).

Choice boxed beef cutout value pressed $3.60 higher Tuesday afternoon to $220.86/cwt. Select was $2.71 higher at $204.65.

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

Soybean futures closed narrowly mixed, from unchanged to 1¢ lower to 1¢ higher.

******************************

Major U.S. financial indices closed mixed again on Tuesday, with much of the optimism in big tech stocks.

The Dow Jones Industrial Average closed 66 points lower. The S&P 500 closed 7 points higher. The NASDAQ closed 81 points higher.

*******************************

“Based on improved feeding margins, a smaller estimated calf crop in 2020 than a year ago, and fewer cattle outside feedlots than expected, the third-quarter 2020 feeder steer price was raised by $7 to $140/cwt., and the fourth-quarter 2020 forecast was increased $9 from the previous month to $140 per cwt.,” say analysts with USDA’s Economic Research Service (ERS), in the latest monthly Livestock, Dairy and Poultry Outlook.

Cash fed cattle prices were higher week to week for five consecutive weeks through Aug. 7, according to ERS. Analysts there recently increased the third-quarter fed steer price forecast $1 to $101/cwt. and by $1 for the fourth quarter to $105.

“Typically, fed cattle prices decline seasonally to a bottom level in late third quarter or early fourth quarter,” say ERS analysts. “As prices appear to have reached a seasonal bottom in the third-quarter, price strength may be further affected by economic uncertainty weighing on beef demand in the fourth quarter, at a time when average carcass weights are more than 3% above last year and rising seasonally.”

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

Cattle Current Daily—Aug. 18, 2020

The five-area direct weighted average steer price last week was $105.06/cwt. on a live basis, which was $3.72 more than the previous week. The average steer price in the beef was $4.84 more week to week at $168.04.

Cattle futures closed lower, following early lift, with higher Corn futures helping pressure Feeder Cattle the most.

Live Cattle futures closed an average of 66¢ lower.

Feeder Cattle futures closed an average of $1.54 lower (30¢ at the back to $2.22 lower).

Choice boxed beef cutout value was $3.02 higher Monday afternoon at $217.26/cwt. Select was $2.65 higher at $201.94.

Corn and soybean futures closed higher Monday with support from the weather outlook and thoughts last week’s derecho will reduce production. Week-to-week condition ratings also declined slightly for both crops.

Corn futures closed 4¢ to 7¢ higher.

Soybean futures closed 11¢ to 17¢ higher through Jan ’22 and then mostly 9¢ higher.

******************************

Major U.S. financial indices closed mixed on Monday. Uncertainty about the next round of coronavirus economic aid added pressure. Positive news came from the housing sector.

Builder confidence in the market for newly-built single-family homes increased six points to 78 in August, according to the latest National Home Builders Association (NAHB)/Wells Fargo Housing Market Index (HMI) released Monday. That’s the highest index level in the 35-year history of the series, matching the record set in December 1998.

“Housing has clearly been a bright spot during the pandemic and the sharp rebound in builder confidence over the summer has led NAHB to upgrade its forecast for single-family starts, which are now projected to show only a slight decline for 2020,” says NAHB Chief Economist Robert Dietz. “Single-family construction is benefiting from low interest rates and a noticeable suburban shift in housing demand to suburbs, exurbs and rural markets as renters and buyers seek out more affordable, lower density markets.”

The Dow Jones Industrial Average closed 86 points lower. The S&P 500 closed 9 points higher. The NASDAQ closed 110 points higher.

*******************************

“With a weaker global economic situation, meat trade forecasts have been revised. Total pork and broiler exports are still projected higher year over year, but beef exports are now projected to be lower year over year,” says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly market comments.

Peel points out that even with pandemic disruptions earlier this year, the U.S. is on track for record production of beef, pork and broilers.

“Before COVID-19, it was recognized that meat trade would be critical for markets in 2020 and that certainly remains true at this point,” Peel says. 

According to Peel, year-to-date beef exports for January through June were down 7.6%, following a year-over-year decrease in June of 33.0% and a similar decline in May.

In terms of specific markets, Peel says Japan remains the largest U.S. beef export market, up 5.6% year over year in the first half of 2020. However, U.S. beef exports to that nation were 20.7% less year over year in June and 23.6% less in May.

South Korea is the second largest export market for U.S. beef. Exports to that nation are 7.4% less year over year through June, following double-digit monthly decreases in April, May and June. 

Second-quarter beef exports to Mexico, the third largest export market in recent years, were 66.9% less year over year, according to Peel. Year-to-date exports to the nation are 37.7% less than a year earlier.

“Four of the five largest beef exports markets dropped sharply in the second quarter and will be watched closely for recovery in the second half of the year,” Peel says. “China will continue to be a major driver of global protein trade, especially pork. China will remain a minor beef export market in 2020 but is likely to continue growing, barring major geopolitical disruptions. Mexico remains a major concern with dramatic economic weakness expected to continue.”

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

Cattle Current Daily—Aug. 17, 2020

Negotiated cash fed cattle prices last week were mostly $4 higher on a live basis in the Southern Plains at $104/cwt., $3 higher in the Northern Plains at $106 and $2.50-$4.00 higher in the western Corn Belt at $106.50-$107.00. Dressed trade was $2 higher in Nebraska at $165 and $2-$7 higher in the western Corn Belt at $165-$170.

Through Thursday, the five-area direct weighted average steer price was $104.49/cwt. on a live basis, which was $3.21 more than the previous week, and just 91¢ less than the prior year, keeping in mind that the Aug. 9 Tyson fire last year slammed cattle markets. In the beef, the weighted average steer price was $168.06, which was $4.87 more than the previous week, and $2.40 less than the prior year.

Cattle futures closed mixed to end the week, with Feeder Cattle pressured the most.

Live Cattle futures closed unchanged to narrowly mixed (17¢ lower to 55¢ higher in spot Aug).

Feeder Cattle futures closed an average of 71¢ lower (40¢ to $1.05 lower).

Choice boxed beef cutout value was $3.29 higher Friday afternoon at $214.24/cwt. Select was $1.88 higher at $199.29.

Estimated total cattle slaughter last week of 640,000 was 7,000 head more than the previous week’s estimate, but 13,000 fewer than the same week a year earlier. Year-to-date estimated total cattle slaughter is 5.1% less than the same period last year at 19.69 million head. Estimated year-to-date total beef production is 2.4% less at 16.27 billion lbs.

Corn and soybean futures closed slightly lower Friday on likely profit taking from the previous session’s spike higher.

Corn futures closed fractionally mixed.

Soybean futures closed mostly 1¢ to 3¢ lower.

******************************

Major U.S. financial indices closed narrowly mixed on Friday. Positive news included retail sales increasing 1.2% month to month in July, according to the U.S. Census Bureau. On the other hand, Congressional stalemate over additional coronavirus economic aid applied pressure.

The Dow Jones Industrial Average closed 34 points higher. The S&P 500 closed fractionally lower. The NASDAQ closed 23 points lower.

*******************************

Stronger Cattle futures the past couple of weeks are offering profitable hedging opportunities for many cow-calf producers, says Andrew P. Griffith, agricultural economist at the University of Tennessee, in his weekly market comments.

Although still lower than the contract higher of $156, Griffith points out the August Feeder Cattle contract is $28 higher since the first week of April, at levels last seen toward the end of February.

“It is always a positive thing to hedge a profit on cattle. It is even more positive to be presented with an opportunity to hedge a profit when prices have been extremely volatile and at large losses for several months,” Griffith explains. “The reason many people will not use price risk management in this environment is because they hold out hope that prices will go higher. Prices could continue to increase, but they could also decrease. There is nothing wrong with hedging a profit, and there are methods available to set a price floor and leaving the top side of the market open.”

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

Cattle Current Daily—Aug. 14, 2020

Negotiated cash fed cattle prices so far this week are mostly $4 higher on a live basis in the Southern Plains at $104/cwt. Live prices are $2.50-$4.00 higher in the western Corn Belt at $106.50-$107.00, where dressed trade is $2-$7 higher at $165-$170. In Nebraska, dressed trade is $2 higher at $165.

Except for the front months, Live Cattle futures edged lower Thursday, while higher corn prices helped pressure Feeder Cattle. The weekly U.S. Export Sales report (week ending Aug. 6) from the Foreign Agricultural Service offered no support. Net beef export sales of 11,600 metric tons for 2020 were down 13% from the previous week and down 46% from the prior four-week average.

Live Cattle futures closed an average of 43¢ higher in four contracts (mostly front months) and then an average of 18¢ lower.

Except for 5¢ higher in Apr, Feeder Cattle futures closed an average of 44¢ lower.

Choice boxed beef cutout value was $1.86 higher Thursday afternoon at $210.95/cwt. Select was $1.42 higher at $197.41.

Actual fed cattle slaughter for the week ending Aug. 1 was 515,150 head, which was 10,353 head more than the same week last year, according to USDA’s Actual Slaughter Under Federal Inspection report. Total cattle slaughter of 636,304 head was 3,520 head more. The average steer carcass weight that week was 905 lbs., which was 2 lbs. heavier than the previous week and 33 lbs. heavier than the prior year. The average heifer carcass weight of 828 lbs. was 1 lb. lighter than the prior week, but 23 lbs. heavier than the previous year. Beef production for the week of 530.0 million lbs. was 19.3 million lbs. more than last year.

Corn and Soybean futures bounced sharply higher Thursday, likely helped along by wonderments about crop damage in Iowa from the recent widespread storm, and mostly from the positive weekly export sales.

Net corn export sales of 377,200 metric tons (MT) for 2019-2020 were up noticeably from the previous week and up 18% from the prior four-week average.

Net soybean export sales of 570,100 MT for 2019-2020 were up 65% from the previous week and 96% from the prior four-week average, led by sales to China.

Corn futures closed 7¢ to 11¢ higher.

Soybean futures closed mostly 10¢ to 16¢ higher.

******************************

Major U.S. financial indices closed mixed on Thursday. Positive news included weekly initial jobless claims of 963,000,which was 228,000 less than the previous week and the first time the number was less than 1 million since March.

The Dow Jones Industrial Average closed 80 points lower. The S&P 500 closed 6 points lower. The NASDAQ closed 30 points higher.

*******************************

USDA’s recent Crop Production report projects lower overall hay production for this year, compared to 2019.

The National Agricultural Statistics Service (NASS) estimated 16.35 million acres of alfalfa and alfalfa mixes harvested this year, which would be 391,000 fewer acres (-2.3%) than last year. Yield is estimated 5.2% less at 2.73 tons/acre. Production of 51.66 million tons would be 3.2 million tons less (-5.9%) than last year.

NASS estimates 347,000 more acres than last year harvested for all other hay at 36.03 million acres, but projected yield is slightly less than last year at 2.04 tons/acre. Production of other hay is projected at 73.59 million tons, which would be 399,000 tons less than last year (-0.5%).

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

Cattle Current Daily—Aug. 13, 2020

Negotiated cash fed cattle prices continued to bounce higher Wednesday, with live prices mostly $4 higher on a live basis in the Southern Plains at $104/cwt. So far this week, live prices are $2 higher in the western Corn Belt at $105, where dressed trade is $2-$7 higher at $165-$170. In Nebraska, dressed trade is $2 higher at $165.

Cattle feeders offered 890 head—all from the Southern Plains—in the weekly Fed Cattle Exchange auction. Of those, 348 head sold for 1-9 day delivery at a weighted average price of $104.50/cwt. Another 254 head sold for delivery at 1-17 days for a weighted average price of $104.27.

Cash optimism helped lift Cattle futures Wednesday.

Live Cattle futures closed an average of 84¢ higher (15¢ higher at the back to $1.70 higher in spot Aug), except for 5¢ lower in the back contract.

Feeder Cattle futures closed an average of 81¢ higher (17¢ higher at the back to $1.47 higher toward the front).

Choice boxed beef cutout value was $1.01 higher Wednesday afternoon at $209.09/cwt. Select was 97¢ higher at $195.99.

Despite higher estimated yield and production in the monthly World Agricultural Supply and Demand Estimates (see below) forecast ending stocks, lower than expected,  boosted Corn futures, while recent Chinese buying helped Soybean futures.

Corn futures closed 3¢ higher through Jly ’21 and then mostly 1¢ higher.        

Soybean futures closed 8¢ to 12¢ higher through Jan ’21 and then mostly 5¢-7¢ higher.

******************************

Major U.S. financial indices closed higher on Wednesday, led by tech stocks.

The Dow Jones Industrial Average closed 289 points higher. The S&P 500 closed 46 points higher. The NASDAQ closed 229 points higher.

*******************************

USDA’s Economic Research Service (ERS), in the monthly World Agricultural Supply and Demand Estimates (WASDE) increased the expected annual fed steer price for this year 50¢ from the previous month’s projection to $107.30/cwt. Forecast prices are $101 in the third quarter, $104 in the fourth quarter and $105 in the first two quarters next year.

Beef production for this year is forecast at 27.03 billion lbs. That’s 94 million lbs. more than the previous month’s forecast, based on the faster pace of steer and heifer slaughter. Beef production for next year was projected at 27.62 billion lbs., which was 100 million lbs. less than the previous month, as forecast slaughter in the second half of 2021 will reflect lower expected placements in the first half of the year.

Forecast total red meat and poultry production for this year was projected 59 million lbs. less than the previous month at 106.48 billion lbs., as decreases in pork production more than offset higher beef and poultry production. Total red meat and poultry production for 2021 was unchanged at 107.99 billion lbs., which would be 1.5 billion lbs. more than this year.

Among other WASDE highlights:

Corn production for this year was forecast 278 million bu. more than the previous month at 15.3 billion bu., with the season’s first survey-based yield forecast at a record 181.8 bu./acre. With the outlook for larger supplies, greater feed and residual use, increased exports, and higher ending stocks, the season-average corn price received by producers was lowered 25¢ to $3.10/bu. 

As for soybeans, U.S. supply and use changes for 2020-21 include lower beginning stocks and higher production, crush, exports, and ending stocks. Soybean production was forecast at 4.425 billion bu., up 290 million bu. on higher forecast yields of 53.3 bu./acre, which would be 5.9 bu. more than last year.

The U.S. season-average soybean price for 2020-21 was forecast at $8.35/bu., down 15¢ from last month. The soybean meal price was forecast at $290 per short ton, down $10. The soybean oil price was forecast at 30.0¢/lb., up 1¢.

The outlook for 2020-21 U.S. wheat is for increased production offset by lower imports, higher exports, and lower ending stocks. Projected U.S. wheat production was raised 14 million bu. to 1,838 million with increased Hard Red Spring (HRS) and Durum production more than offsetting lower winter wheat production.

With offsetting supply changes and increased use, ending stocks were lowered 17 million bu. to 925 million. If realized, these would be the lowest wheat ending stocks in six years. However, the season-average farm wheat price was decreased 10¢ per bushel to $4.50, on lower U.S. corn prices and reduced wheat price expectations for the remainder of the market year. 

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

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.

******************************

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.

*******************************

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.

******************************

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.

*******************************

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.

******************************

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.

*******************************

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.

******************************

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.

*******************************

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.

******************************

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.

*******************************

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

******************************

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.

*******************************

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.

******************************

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.

*******************************

“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.

******************************

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.

*******************************

“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.

******************************

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.

*******************************

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.

******************************

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.

*******************************

“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.

******************************

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.

*******************************

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.

******************************

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.

*******************************

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.

******************************

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.

*******************************

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.

*******************************

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.

******************************

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.

*******************************

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.

******************************

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.

*******************************

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.

******************************

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.

*******************************

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.

******************************

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.

*******************************

“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.

******************************

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.

*******************************

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.

******************************

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.

*******************************

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.

******************************

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.

*******************************

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.

******************************

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.

*******************************

“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.

******************************

Major U.S. financial indices roared higher early Monday, buoyed by positive coronavirus vaccine progress. Investor sentiment turned bearish, though, after California announced it was closing indoor restaurants, bars and movie theatres, in order to slow recently escalating COVID-19 cases.

The Dow Jones Industrial Average closed 10 points higher. The S&P 500 closed 29 points lower. The NASDAQ closed 226 points lower.

*******************************

Nationwide, pasture and range conditions continue to erode, according to the latest USDA Crop Progress report for the week ending July 12.

36% of pasture and range was rated in Good (31%) or Excellent (5%) condition, which was 32% less than last year. 30% was rated in Poor (19%) or Very Poor (11%) condition, compared to 8% at the same time last year.

Cattle states with 30% or more of the pasture and range in Poor and Very Poor condition include: Arizona (31%); California (55%); Colorado (44%); New Mexico (58%); Oregon (54%); Texas (39%); Wyoming (36%).

According to the U.S. Drought Monitor (July 7) 48.51% of the Continental U.S. was rated from abnormally dry to extreme drought. That was 3.09% more than the previous week and 37.68% more than the same time last year.

29% of corn was silking, which was 3% less than last year but 15% more than the five-year average. 3% was at the dough stage, which was 1% more than last year, but on par with the average. 69% is rated as Good (52%) or Excellent (17%), which is 11% more than last year. 8% was rated as Poor (6%) or Very Poor (2%), which was 4% less than a year earlier.

48% of soybeans were blooming, which was 29% more than last year and 8% more than the average. 11% were setting pods, compared to 3% last year and 10% for average. 68% was rated as Good (54%) or Excellent (14%), which was 14% more than last year. 7% was rated as Poor (5%) or Very Poor (2%), compared to 12% the previous year.

*******************************

Beef production played a role in the precipitous decline in May U.S. beef exports, but higher prices and economic turmoil wrought by COVID-19 were likely factors, too.

As mentioned in Cattle Current last week, U.S. beef exports in May were 33% less than a year earlier, and the least in 10 years, according to data released by USDA and compiled by the U.S. Meat Export Federation (USMEF). Value was 34% less than the same time last year at $480.1 million.

“It is not clear how much of the drop in May beef exports was due to reduced supply and how much was due to reduced demand because of global recession,” says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly market comments. “Beef production dropped 19.7% in April followed by a 19.9% drop in May. There is little doubt that May beef exports were curtailed in part simply due to a lack of available product. No doubt, some export orders were simply unable to be filled in May. It is likely, however, that part of the decrease in beef exports was due to macroeconomic weakness in some countries, combined with higher U.S. beef prices. Choice boxed beef prices increased to a monthly average of $263.35/cwt. in April, up from the March level of $228.05/cwt. May Choice boxed beef prices increased to $420.00/cwt., up 84.2% over the March levels.”

In terms of specific markets, Peel explains May exports to Japan, the leading U.S. market, were 26.3% less year over year. Beef exports to Korea, the second leading U.S. market were 21.7% less. They were 78.0% less to Mexico, which recently occupied the position as third largest importer of U.S. beef.

“The drop in beef exports to Mexico, in particular, is very concerning,” Peel says. “It is doubtful that reduced supply alone explains the 78.0% drop. Mexico is experiencing a sharp recession, compounded by a weaker Mexican Peso in April and May (with some recovery in June). In 2019, Mexico accounted for 14.0% of total U.S. beef exports for the year, but in May only amounted to 4.4% of total monthly exports. May exports of pork to Mexico were down 21.9% and broiler exports were down 27.6%, highlighting the overall demand weakness in Mexico.”

Looking ahead, Peel notes U.S. beef production in June recovered to about 97% of year-ago levels. Choice boxed beef prices declined to an average of $242.30/cwt.

 “Now that production has substantially recovered, the U.S. industry is better able to meet the needs of both domestic and international customers,” explains Dan Halstrom, USMEF president and CEO. “While the foodservice and hospitality sectors face enormous challenges, they are on the path to recovery in some markets while retail demand remains strong. Retail sales have also been bolstered by a surge in e-commerce and innovations in home meal replacement, as convenience remains paramount.”

“June beef exports will likely bounce back significantly from the May drop but it will be important going forward to monitor both the residual impact of April-May processing disruptions and the ongoing global economic weakness to see how beef export prospects develop in the second half of the year,” Peel says.

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.

******************************

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.

*******************************

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.

******************************

Grain futures continued to firm and gain Thursday, helped along by weather and harvest, in the case of wheat. There was also likely some positioning ahead of the monthly World Agricultural Supply and Demand Estimates, due out Friday.

The aforementioned Export Sales report was also supportive.

Net corn export sales of 599,200 mt for 2019-2020 were up 66% from the prior week and up 30% from the prior four-week average. Increases were primarily for China, Colombia, Mexico, Honduras and Nicaragua.

Net soybean export sales of 952,200 mt for 2019-2020 were up noticeably from the previous week and up 60% from the prior four-week average. Increases were primarily for China, Indonesia, Pakistan, Bangladesh and Mexico.

Corn futures closed mostly 1¢ to 2¢ higher.

Soybean futures closed 1¢ to 4¢ higher.

******************************

Major U.S. financial indices closed mixed on Thursday. While tech stocks continued to surge higher, climbing coronavirus infections in the U.S. cast a pall.

The Dow Jones Industrial Average closed 361 points lower. The S&P 500 closed 17 points lower. The NASDAQ closed 55 points higher.

*******************************

“The COVID-19 pandemic continues to have devastating impacts on public health and the economies of the U.S. and many other countries. There is much uncertainty about the future impacts of COVID-19, but even in the best of circumstances, the economic impacts are enormous,” says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his latest market comments.

He points to the sobering GDP projections made by a host of organizations.

The U.S. Federal reserves estimates U.S. GDP this year at -6.5%. The Organization for Economic Cooperation and Development projects -7.3%, but -8.5% if there’s a secondary coronavirus outbreak. The International Monetary Fund (IMF) sees GDP at -8.0%.

Further, Peel says the Federal Reserve’s most recent forecast is for the U.S. unemployment rate this year to be 9.3%.

Peel shared this observation from the IMF:

“The COVID-19 pandemic has had a more negative impact on activity in the first half of 2020 than anticipated, and the recovery is projected to be more gradual than previously forecast. In 2021 global growth is projected at 5.4%. Overall, this would leave 2021 GDP some 6.5 percentage points lower than in the pre-COVID-19 projections of January 2020.”

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.

******************************

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.

*******************************

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.

******************************

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.

*******************************

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.

******************************

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.

*******************************

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.

******************************

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.

*******************************

“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.

******************************

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.

*******************************

“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.

******************************

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.

*******************************

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.

******************************

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.

*******************************

“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.

******************************

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.

*******************************

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.

******************************

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.

*******************************

“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. 

******************************

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.

*******************************

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.

******************************

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.

*******************************

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. 

******************************

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.

*******************************

“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. 

******************************

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.

*******************************

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. 

******************************

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.

*******************************

“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. 

******************************

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.

*******************************

“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.

******************************

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.

*******************************

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.”

*******************************

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.

******************************

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.

*******************************

“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.

******************************

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.

*******************************

“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. 

*******************************

Major U.S. financial indices closed sharply lower Thursday, pressured by the recent increase in COVID-19 cases and investor worry that reopening the nation’s economy could stall.

The Dow Jones Industrial Average closed 1,861 points lower. The S&P 500 closed 188 points lower. The NASDAQ closed 527 points lower.

*******************************

USDA’s Economic Research Service (ERS) estimates this year’s beef production at 26.67 billion lbs., which is 910 million lbs. more (+3.53%) than the previous month’s estimate. That would be 481 million lbs. less (-1.77%) than in 2019. In the latest monthly World and Agricultural Supply and Demand Estimates, ERS analysts say the increase reflects slaughter levels recovering quicker than anticipated a month earlier.

“Cattle price forecasts are raised, reflecting current price strength and increased packer demand,” say ERS analysts. “For 2021, cattle prices are also raised on expected continued strength of packer demand in the first part of the year.”

The annual fed steer price for this year is projected at $108.60/cwt., which is $4.50 more than the previous month’s expectation. By quarter, USDA pegs the average fed steer price at $118.32 in the first quarter, $106 in the second quarter, $104 in the third quarter and $106 in the fourth quarter. The projected price for the first quarter next year is $104.

ERS estimates total red meat and poultry production 1.43 billion lbs. more (+1.38%) than the previous month at 105.00 billion lbs. That would be 261 million lbs. less (-0.25%) than in 2019.

Among other WASDE highlights:

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. 

*******************************

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.

*******************************

“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.

*******************************

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.

*******************************

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.

*******************************

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.

*******************************

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.

*******************************

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.

*******************************

“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.

*******************************

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.

*******************************

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.

*******************************

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.

*******************************

“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.

*******************************

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.

*******************************

“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.

*******************************

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.

*******************************

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.

*******************************

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.

*******************************

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.

*******************************

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.

*******************************

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.

*******************************

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.

*******************************

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.

*******************************

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.

*******************************

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.

*******************************

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.

*******************************

“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.

*******************************

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.

*******************************

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.

*******************************

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.

*******************************

“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.

*******************************

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.

*******************************

“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.

*******************************

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.

*******************************

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.

*******************************

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.

*******************************

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.

*******************************

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.

*******************************

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.

*******************************

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.

*******************************

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.

*******************************

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.

*******************************

“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.

*******************************

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.

*******************************

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.

*******************************

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.

*******************************

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.

*******************************

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.

*******************************

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.

*******************************

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.

*******************************

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.

*******************************

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.

*******************************

“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.

*******************************

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.

*******************************

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.

*******************************

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.

*******************************

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.

*******************************

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.

*******************************

“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.

*******************************

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.

*******************************

“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.

*******************************

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.

*******************************

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.

*******************************

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.

*******************************

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.

*******************************

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.

*******************************

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.

*******************************

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.