Cattle Current Weekly Highlights—Week ending Sept. 11, 2020

Cattle Current Weekly Highlights—Week ending Sept. 11, 2020

Nationwide, steers and heifers sold from $2/cwt. lower to $2 higher during the holiday-shortened week, according to the Agricultural Marketing Service (AMS).

“Bunched-up yearlings that have been on summer grazing programs and forced off grass due to drought, especially in the Western regions of the U.S., have dampened feeder cattle prices (e.g., 700-to 800-pound steers). That may spill back into the calf market (e.g., 500-to 600-pound steers),” say analysts with the Livestock Marketing Information Center (LMIC), in the most recent Livestock Monitor.

As for calves, Andrew P. Griffith, agricultural economist at the University of Tennessee points out both the increased volume of fresh-weaned calves and the associated health risk will likely pressure prices.

“The large temperature swings that are typical of late September and October tend to result in increased health issues with highly stressed animals, which means buyers are not willing to bid those animals higher,” Griffith explains, in his weekly market comments.“This means there is likely value in weaning and preconditioning the spring calf crop before marketing them.” He notes Tennessee prices last week suggested an $8-$10/cwt. advantage for weaned calves versus non-weaned peers. Weight gain and cost of gain during weaning and preconditioning typically determine whether that price difference offers producers opportunity.

Cattle futures gained week to week, with support from resurgent Lean Hog futures, which climbed higher after a wild boar carcass in Germany tested positive for African Swine Fever, prompting South Korea to ban German pork imports.

Feeder Cattle futures closed an average of $1.63 higher week to week on Friday (97¢ to $2.35 higher).

Fed Cattle Prices Weaker

Negotiated cash fed cattle prices were mainly $2-$3 lower on a live basis at $101/cwt. in the Southern Plains ($102 in the Texas Panhandle Friday) and Nebraska and at $100-$101 in the western Corn Belt, according to the Agricultural Marketing Service. Dressed trade was $2-3 lower at $160-$161.

“The market has the potential to move as high as $115/cwt., but it will take a few months to get there,” Griffith says.

USDA’s Economic Research Service (ERS) pegged the average fed steer price (five-area direct) at $101/cwt. on a live basis for the third quarter this year, followed by an average of $104 in the fourth quarter and $107 in the first quarter of 2021. In the latest World Agricultural Supply and Demand Estimates (WASDE), ERS increased the forecast annual price next year by $2 to $112.

The monthly five-area direct weighted average fed steer price in August was $104.60/cwt., which was $8.03 higher than the previous month, but $4.78 lower than the same time last year. The average dressed steer price of $167.82 was $10.50 higher than the previous month, but $7.24 less than the previous year.

Live Cattle futures closed an average of $1.47 higher week to week on Friday (37¢ higher at the back to $1.97 higher).

Futures gains came in the face of the outlook for stronger grain prices (see below).

Wholesale Beef Prices Soften

Wholesale beef values continued their seasonal decline last week.

Choice boxed beef cutout value was $5.96 lower week to week on Friday at $219.89/cwt. Select was $2.20 lower at $207.10.

“Boxed beef prices will not find much support until end-of-the-year holiday purchasing begins,” Griffith says. “The seasonal pressure in the beef market is not expected to influence cattle prices as negatively as is typical due to the strong margins already present in the beef packing industry.”

Estimated total cattle slaughter for the holiday-shortened week ending Sept. 12 was 59,000 head fewer than the previous week at 574,000; 62,000 head fewer than the same week last year. USDA estimates year-to-date cattle slaughter at 22.2 million head, which is 1.06 million head fewer (-4.6%) than a year earlier. Estimated beef production for the week of 479.7 million lbs. was 47.6 million lbs. less than the prior week. Year-to-date beef production of 18.37 billion lbs. is 356.6 million lbs. less (-1.9%) than the same time last year.

Net beef export sales of 15,500 metric tons (2020) for the week ending Sept. 3 were 37% more than the previous week and 14% more than the prior four-week average, according to the weekly U.S. Export Sales report from USDA’s Foreign Agricultural Service. Increases were primarily for South Korea, Japan, Mexico, China and Hong Kong.

Grain Prices Strengthen

Improving exports added support to corn and soybean prices in recent weeks. Those prices likely will receive even more support from the latest Crop Production report from the National Agricultural Statistics Service (NASS).

Corn production for grain was projected 2% less at 14.9 billion bu. That’s 378 million bu. less than the previous estimate, based on reducing harvested corn acres by 550,000 acres, due to the late-summer derecho. Estimated production would still be 9% more than last year.

Although 3.3 bu./acre less than the previous moth’s projection, forecast yield of 178.5 bu./harvested acre would be record large and 11.1 bu./acre more than last year. That’s based on conditions as of Sept. 1

With a smaller crop more than offsetting increased beginning stocks–mostly due to lower estimated exports for 2019-20–the September WASDE reduced projected ending stocks by 253 million bu. and increased the season-average corn price by 40¢ to $3.50/bu.

As for soybeans, production for beans is forecast at 4.31 billion bu., down 3% from the previous forecast, but up 21% percent from last year, according to the Crop Production report. Expected average yield is a record high 51.9 bu./harvested acre, down 1.4 bu. from the previous forecast but 4.5 bu. more than in 2019. Area harvested for beans in the United States is forecast at 83.0 million acres, unchanged from the previous forecast and 11% more than last year.

WASDE forecasts the U.S. season-average soybean price at $9.25/bu., up 90¢ cents from last month. The soybean meal price is projected at $315 per short ton, up $25 dollars. The soybean oil price forecast is 32.0¢/lb., up 2¢.

 

Friday to Friday Change

Weekly Auction Receipts

 

Sept. 11 Auction Direct

Video/net

Total
 

119,800

(-41,000)

24,000

(-3,900)

68,200

(+63,000)

212,000

(+18,100)

 

 

CME Feeder Index

CME Feeder Index* Sept. 10 Change
  $140.99 +  $0.79

*Thursday-to Thursday for CME Feeder Index

 

Cash Stocker and Feeder

North Central

Steers-Cash Sept. 11 Change
600-700 lbs. $154.56 +  $1.32
700-800 lbs. $147.67 +  $0.40
800-900 lbs. $142.33 +  $0.65

 

South Central

Steers-Cash Sept. 11 Change
500-600 lbs. $148.72 –  $2.19
600-700 lbs. $142.38 –  $4.04
700-800 lbs. $137.73 –  $1.97

 

Southeast

Steers-Cash Sept. 11 Change
400-500 lbs. $148.73 –  $0.04
500-600 lbs. $136.79 –  $0.81
600-700 lbs. $133.58 + $2.36

(AMS National Weekly Feeder & Stocker Cattle Summary)

 

Wholesale Beef Value

Boxed Beef  (p.m.) Sept. 11 ($/cwt) Change
Choice $219.89 –  $5.96
Select $207.10 –  $2.20
Ch-Se Spread $12.79 –  $3.76

 

Futures

Feeder Cattle  Sept. 11 Change
Sep $140.000 + $2.350
Oct $140.575 + $2.075
Nov $141.325 + $1.800
Jan ’21 $139.125 + $1.050
Mar $138.700 + $0.975
Apr $140.100 + $1.125
May $140.675 + $1.275
Aug $145.500 + $2.350

 

Live Cattle   Sept. 11 Change
Oct $105.525 + $1.075
Dec $109.900 + $1.425
Feb ’21 $114.325 + $1.875
Apr $116.950 + $1.825
Jun $110.425 + $1.975
Aug $108.625 + $1.700
Oct $110.675 + $1.675
Dec $113.900 + $1.300
Oct $115.625 + $0.375

 

Corn  Sept. 11 Change
Sep $3.650 + $0.078
Dec $3.684 + $0.104
Mar ’21 $3.782 + $0.098
May $3.844 + $0.098
Jly $3.880 + $0.088
Sep $3.842 + $0.070

 

Oil CME-WTI Sept. 11 Change
Oct $37.33 –  $2.44
Nov $37.65 –  $2.50
Dec $38.08 –  $2.51
Jan ’21 $38.56 –  $2.46
Feb $39.02 –  $2.42
Mar $39.45 –  $2.38

 

Equities

Equity Indexes Sept. 11 Change
Dow Industrial Average  27665.64 –   467.67
NASDAQ  10853.54 –   459.59
S&P 500   3340.97 –      85.99
Dollar (DXY)       93.27 +       0.30
2020-09-13T13:20:45-06:00

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