Cattle futures drifted lower Friday on pre-weekend positioning, sluggish trade and steady to softer cash fed cattle prices.
Feeder Cattle futures closed an average of $1.26 lower, except for $3.30 higher in newly minted away Aug.
Live Cattle futures closed an average of 41¢ lower, except for $1.00 higher in new away Feb.
Negotiated cash fed cattle trade was limited on light to moderate demand in all regions through Friday afternoon with too few transactions to trend, according to the Agricultural Marketing Service.
Based on the latest established trade for the week, FOB live prices were steady to $1 higher in the Texas Panhandle at $179/cwt., steady to $1 lower in Kansas at $178-$179, $3 lower in Nebraska at $182 and $1-$2 lower in the western Corn Belt at $183-$185.
The five-area direct weighted average fed steer price through Thursday of last week was $182.69/cwt. on a live basis, which was $2.64 less than the previous week. The weighted average steer price in the beef was $2.03 lower at $290.62.
Choice boxed beef cutout value was 70¢ higher Friday afternoon at $314.49/cwt. Select was $1.04 higher at $290.29/cwt.
Estimated total cattle slaughter last week was 629,000 head, which was 3,000 head more than the previous week but 13,000 head fewer than the same week last year. Year-to-date estimated total cattle slaughter of 21.8 million head was 940,000 head fewer (-4.1%) than the same time last year. Estimated year-to-date beef production of 17.8 billion pounds was 925.6 million pounds less (-4.9%) year over year.
Turning to row crops, Grain and Soybean futures closed narrowly mixed Friday with some defensive positioning ahead of the long weekend.
Corn futures closed mostly 1¢ to 2¢ higher.
KC HRW Wheat closed mostly 5¢ lower.
Soybean futures closed mixed but mostly unchanged to 2¢ higher.
Major U.S. financial indices closed mixed Friday as investors closed the books on August.
The nation’s unemployment rate increased 0.3% in August to 3.8%, according to the U.S. Bureau of Labor Statistics, in the monthly Employment Situation Summary. That was higher than expected ahead of the report.
Total nonfarm payroll employment increased by 187,000 in August.
Average hourly earnings in August for all employees on private non-farm payrolls rose by 8¢ (0.2%) to $33.82. Over the past 12 months, average hourly earnings increased by 4.3%.
The Dow Jones Industrial Average closed 115 points higher. The S&P 500 closed 8 points higher. The NASDAQ was down 3 points.
West Texas Intermediate Crude Oil futures (CME) closed $1.37 to $1.92 higher through the front six contracts with follow through support from tighter supply expectations.
USDA’s Economic Research Service (ERS) forecasts cash receipts for farm commodities this year to be $41.4 billion less (-7.5%) than last year at $513.6 billion. This includes forecasted declines of $13.9 billion (-23.6%) in milk receipts and $11.6 billion (-12.6%) in corn receipts.
“In addition, production expenses are expected to increase by $14.8 billion (3.3%) to $458.0 billion in 2023,” ERS analysts explain. “Finally, direct Government payments to farmers are projected to fall by $3.5 billion (-21.6%) from 2022 to $12.6 billion in 2023, because of lower supplemental and ad hoc disaster assistance.
ERS forecasts inflation-adjusted U.S. net cash farm income (NCFI) — calculated as gross cash income minus cash expenses — to decrease by $60.5 billion (-28.9%) from 2022 to $148.6 billion in 2023.
More broadly, U.S. net farm income (NFI) — calculated as gross cash income minus cash expenses — is forecast to fall by $48.0 billion (-25.4%) from 2022 to $141.3 billion in 2023.
“NFI is a broader measure of farm sector profitability that incorporates noncash items including changes in inventories, economic depreciation, and gross imputed rental income,” ERS analysts explain. They note the projected decreases in 2023 come after both NCFI and NFI reached all-time highs in 2022.