Negotiated cash fed cattle trade was yet to fully develop through Friday afternoon but was shaping up lower. Live prices in the Southern Plains were $1 lower than the previous week at $121/cwt. Although too few to trend, early live sales in Nebraska were also $1 lower at $121, while early dressed sales were $1-$2 lower at $193-$195.
The lack of firm cash direction and weaker outside markets helped cap Live Cattle futures and pressure Feeder Cattle as Lean Hogs continued to extend gains.
Except for 5¢ lower in away Feb, Live Cattle futures closed an average of 14¢ higher.
Feeder Cattle futures closed an average of 55¢ lower (7¢ to 92¢ lower).
Wholesale beef values were lower on Choice and sharply lower on Select with light to moderate demand and offerings, according to the Agricultural Marketing Service.
Choice boxed beef cutout value was 81¢ lower Friday afternoon at $210.12/cwt. Select was $2.07 lower at $203.89.
Corn futures closed 3¢ to 4¢ higher through May ’21 and then mostly 1¢ higher.
Soybean futures closed unchanged to 1¢ higher through near Jly and then mostly 4¢ lower.
Despite stronger U.S. employment numbers than expected, estimates of declining GDP growth in China, due to novel coronavirus, weighed on major U.S. financial indices Friday.
Total non-farm payroll employment rose by 225,000 in January, according to the U.S. Bureau of Labor Statistics. That left the unemployment rate little changed at 3.6%.
Average hourly earnings for all employees on private non-farm payrolls rose by 7¢ to $28.44. Over the past 12 months, average hourly earnings increased by 3.1%.
The Dow Jones Industrial Average closed 277 points lower. The S&P 500 closed 18 points lower. The NASDAQ was down 51 points.
Beef demand is strong and with U.S. cattle numbers plateauing, prices are likely to be stronger in the year ahead as consumers at home and abroad support industry profitability, according to CattleFax, at their 2020 Industry Outlook in San Antonio last week.
“With strong demand for U.S. beef at home and rising demand overseas, the modest increases in supply will be more than offset by a growing consumer appetite for our product,” says Kevin Good, CattleFax Vice President of Industry Relations and Analysis.
Specifically, CattleFax projects the all-fresh retail price 5¢ higher than last year at an average of $5.87/lb. and composite cutout prices $3 higher $222/cwt.
In terms of cattle prices, Good says CattleFax projects fed steer prices to average $120/cwt. during 2020, which would $3 more than last year. He notes there is downside risk at $108 and resistance at $130.
CattleFax forecasts steer calf prices (550 lbs.) this year $6 higher than last year at an average of $170/cwt., across a range of $155-$180.
As for feeder steer prices (750 lbs.), CattleFax projects an average increase of $6, compared to last year, at an average of $150/cwt., across a range of $140-$160.
Good notes additional supplies of utility cows, the product of several years of aggressive expansion, are likely to challenge the cull cow market. However, he explains, “Increased demand for lean trim and a decline in the availability of imported grass-fed trim from Australia and New Zealand will be supportive of cow prices.” He projects utility cow prices at an average of $65/cwt., ranging from the low $70s to a fall low near $55.
CattleFax anticipates the average bred cow price steady with last year at $1,500.
On the input side of the equation, Mike Murphy, CattleFax Vice President of Research and Risk Management Services predicts acres planted to corn will increase 4 million acres to 94 million acres this year and that soybean acres will increase 7 million acres to reach 83 million acres. He pegs spot corn prices at $3.50-$4.00/bu., which would be 15¢ to 20¢/bu. less than last year, notwithstanding significant weather pressure.
“There is strong demand for our product, but that’s the result of the fact that our business has paid attention to market signals and we’ve been producing a consistent, quality product that has gained a greater piece of that retail dollar. We need to protect that,” says Randy Blach, CattleFax CEO. “We must pay attention to what the consumer is telling us. That means conversations about topics like traceability and sustainability only become more important as time goes on. We have to listen to the consumer and respond with action to meet their needs and demands if we’re going to continue to be successful in a hypercompetitive global protein market.”