Negotiated cash fed cattle trade ranged from mostly inactive on light demand to a standstill through Friday afternoon, according to the Agricultural Marketing Service. There were too few transactions to trend.
Live prices last week were steady in the Southern Plains on a live basis at $124/cwt. and steady to $2 higher at $124 in Nebraska and the western Corn Belt. Dressed prices were at $196, which was steady in Nebraska but steady to $3 higher in the western Corn Belt.
Estimated total cattle slaughter last week of 646,000 head was 11,000 head fewer than the previous week. Year-to-date estimated total cattle slaughter of 26.3 million head is 806,000 head more than last year (3.2%). Year-to-date estimated total beef production of 21.72 billion lbs. is 588.9 million lbs. more than a year earlier (+2.8%).
Live Cattle futures closed an average of 50¢ higher with follow-through support from the previous session tied to firmer cash prices and higher outside markets.
Feeder Cattle futures closed an average of 71¢ lower, pressured by a surge in Corn futures and week-end positioning.
Corn futures closed mostly 7¢ to 9¢ higher.
Soybean futures closed mostly 9¢ to 11¢ higher.
Choice boxed beef cutout value was 8¢ lower Friday afternoon at $280.24/cwt. Select was 6¢ lower at $260.62.
The average dressed steer weight for the week ending Oct. 2 was 916 lbs., according to USDA’s Actual Slaughter Under Federal Inspection report. That was 2 lbs. heavier than the previous week but 8 lbs. lighter than a year earlier. The average dressed heifer weight of 836 lbs. was 3 lbs. heavier than the previous week but 7 lbs. lighter than the same week last year.
Major U.S. financial indices closed higher again Friday, boosted by follow-through support and another day of strong corporate quarterly earnings reports. U.S. food service and retail sales also grew more than expected in September — up 0.7%, according to the U.S. Census Bureau.
The Dow Jones Industrial Average closed 382 points higher. The S&P 500 closed 33 points higher. The NASDAQ was up 73 points.
Due to increasing natural gas prices, nitrogen fertilizer prices are relatively high compared to recent years and are expected to remain high and possibly increase through next spring, says Dave Franzen, Extension soil science specialist at North Dakota State University.
“China has supplied about a third of the world’s phosphate, and it has essentially banned exports through 2022,” Franzen explains. “That puts the burden of supply on other countries, including the United States.”
According to Franzen, the U.S. is not in a great position for mine and production expansion due to serious environmental concerns. This means that phosphate prices, which are already high, will continue to increase at least through 2022.
As for the Nitrogen side of the equation, the price for taking winter delivery of natural gas is now trading at a seven-year high as global scarcity concerns and a more measured return to domestic production growth have fueled early buying, according to the latest quarterly report from CoBank’s Knowledge Exchange Division (CKE).
“The market appears to be concerned that the demand for U.S. natural gas exports is so strong that there may be little flexibility in meeting domestic demand, should another cold winter unfold. Exports have risen significantly, with the U.S. now exporting about 10% of its dry gas production, a 30% increase compared to year ago levels,” say CoBank analysts.
As mentioned in Cattle Current last week, the CKE report explains rapidly rising input costs and product shortages are hitting agriculture particularly hard, as agricultural commodity prices have flattened and inflation compresses margins. In part, input shortages and increasing input costs stem from ongoing supply chain disruptions spun by the pandemic.
“Supply chain snarls are likely to persist well into 2022, and so will elevated inflation,” says Dan Kowalski, CKE vice president. “The latest producer price index data for August was up 20% year-over-year, while the consumer price index increased just 5.2%. So it’s clear that many businesses are passing only a small portion of those cost increases on to the final consumer. We expect that will change in the months ahead and many businesses will raise prices.”
Noting recent volatility in grain markets, Andrew P. Griffith, agricultural economist at the University says, “At the end of the day, most of this volatility stems from a broader uncertainty in the U.S. economy and abroad as fertilizer prices continue to skyrocket and as energy prices do the same.”
“This means cattle producers need to put an increased focus on managing input prices,” Griffith says, in his weekly market comments. “Producers do not control the price of an input, but a producer does control how much of each input they utilize. High input prices will likely mean cattle producers will be forced to pick and choose the most important inputs for their operation and look for alternative solutions for the other inputs.”