Live sales ended up $3 lower in the Southern Plains last week at $100/cwt., $4-$6 lower in Nebraska at mostly $100 and $2-$5 lower in the western Corn Belt at $102-$107. Dressed sales were $9-$10 lower in Nebraska at $160-$166; $7-$9 lower in the western Corn Belt at $163-$166.
Cattle futures, especially Live Cattle closed sharply lower Friday, with pressure including the softer fed cattle prices, declining wholesale beef values and mounting technical pressure.
Live Cattle futures closed an average of $2.12 lower in the front four contracts (including limit down in spot Oct) and then an average of 68¢ lower.
Feeder Cattle futures closed an average of 94¢ lower.
Wholesale beef values were lower on light demand and heavy offerings, according to the Agricultural Marketing Service.
Choice boxed beef cutout value was $2.11 lower Friday afternoon at $227.31/cwt. Select was $2.53 lower at $201.94.
Corn futures closed 2¢ to 3¢ lower through Dec ’20 and then mostly 1¢ lower.
Soybean futures closed 2¢ to 4¢ lower through May ’20 and then mostly 1¢ lower.
Major U.S. financial indices closed little changed Friday, fading a weaker than expected outlook for national employment.
Total nonfarm payroll employment increased by 130,000 in August, according to the Employment Situation Summary from the U.S. Bureau of Labor Statistics. The unemployment rate remained unchanged at 3.7%.
Average hourly earnings for all employees on private nonfarm payrolls increased 11¢ to $28.11. Average hourly earnings are up 3.2% over the last 12 months.
The Dow Jones Industrial Average closed 69 points higher. The S&P 500 closed 2 points higher. The NASDAQ was down 13 points.
All else being equal, cattle producers face more price pressure for at least another year before cyclical transition offers support, according to the U.S. Baseline Outlook Report Update issued by the Food and Agricultural Policy Institute (FAPRI) at the University of Missouri (MU).
For price perspective between FAPRI’s annual U.S. Baseline Outlook released in the spring and the recent update, see the tables below.
“Though pasture and range conditions have been much improved this spring and summer relative to previous years, cow-calf returns have reached the lowest level in a decade as feeder steer prices decline with cattle on feed numbers continuing to exceed year-ago levels,” say MU agricultural economists, Scott Brown and Daniel Madison, in the companion update for livestock and dairy markets. “Fed steer prices had been steady for most of the first half of the year, with recent weakness noted, due to the Aug. 9 fire at a Tyson cattle processing plant in Kansas. This has strained already tight beef packing capacity, resulting in higher beef prices along with depressed demand for cattle. Cattle and beef prices will remain under pressure as beef production grows through 2020. Good domestic demand for beef, particularly higher-quality product, continues to prevent even larger price declines.”
In the FAPRI Update, the projected 5-area direct average fed steer price for this year is $116.58/cwt. It drops to $113.64 next year, then begins to gain traction in 2022.
As for feeder prices, basis OKC and 600-650 lbs. FAPRI projects this year’s average price at $153.61 this year, $145.28 next year and $149.66 in 2021.