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.