Cattle Current Daily—Sept. 4, 2020

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.

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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.

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“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.”

2020-09-03T19:01:03-05:00

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