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.