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.”