Weekly Market Highlights

Weekly Market Highlights 2017-06-02T12:10:16-05:00

Weekly Market Highlights

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Cattle Current Weekly Highlights—Week ending Sept. 25, 2020

Pressure in outside markets for much of the week weighed on commodity futures prices. Despite stronger wholesale beef prices and higher negotiated cash fed cattle trade, Cattle futures weakened, especially Feeder Cattle on prescient queasiness about the monthly Cattle on Feed report (see below).

Feeder Cattle futures closed an average of $2.06 lower week to week on Friday (37¢ lower at the back to $2.82 lower). That was with Corn futures closing an average of 12¢ lower through the front six contracts, week to week.

Nationwide, calves and feeder cattle sold steady to $2/cwt. lower, according to the Agricultural Marketing Service (AMS).

“Supply was moderate as yearlings become harder and harder to find,” AMS analysts explain. “Demand was moderate to good with health records and the amount of flesh playing a big part in how strong demand was for new-crop calves.”

For instance, in his neck of the woods, Andrew P. Griffith, agricultural economist at the University of Tennessee says preconditioned cattle continue to sell $9-$11/cwt. higher than higher risk cattle.

“It is difficult to know how low prices will go this fall. Unfortunately, prices appear to be coming under more pressure than was previously expected,” Griffith says, in his weekly market comments. “It is prudent for producers to consider their forage resources and the opportunity of weaning calves at least 45 days and providing a complete health program. There is generally value in this type program every year, but the profit prospects may be even greater this year than in most. From the stocker perspective, there is an opportunity to purchase low cost calves and profit on the weight gain.”

Feedlot Placements Up 9%

If anything, the monthly USDA Cattle on Feed report issued Friday (feedlots with 1,000 head or more capacity) will likely be viewed as bearish, with 2.06 million head placed in August, which was 173,000 head more (+9.2%) than a year earlier. That’s about 3% more than expectations heading into the report. In terms of weights, 36% went on feed weighing 699 lbs. or less, 48% weighing 700-899 lbs. and 16% weighing 900 lbs. or more.

Marketings in August of 1.89 million head were 61,000 head fewer (-3.1%) than last year, in line with expectations.

Cattle on feed Sept. 1 of 11.39 million head were 412,000 head more (+3.8%) than a year earlier, which was the most for the date since the data series began in 1996.

Fed Cattle Prices Creep Higher

Negotiated cash fed cattle prices ended the week generally $2 higher on a live basis at mostly $105/cwt. in the five-area feeding region, according to the Agricultural Marketing Service. Dressed trade was $1-$2 higher at mostly $165.

Through Thursday, the five-area direct weighted average steer price was $105.03/cwt. on a live basis, which was $1.49 higher than the previous week. The average steer price in the beef was $164.87, which was $1.94 higher.

“…most casual observers would not consider these prices to be highly profitable because of how low they are relative to recent history. However, current prices have many cattle feeders in triple digit profits, because the cattle coming off feed were purchased at extremely low prices during the spring,” Griffith explains. “These profits will not immediately result in higher feeder cattle prices, as many cattle feeders are looking for some reserves. If these profits persist for a little while, then it will eventually result in support for the feeder cattle market, and that may not show up until winter.”

Except for 22¢ higher in spot Oct, Live Cattle futures closed an average of $1.05 lower week to week on Friday, from 20¢ lower to $1.62 lower.

Cattle slaughter of 2.80 million head in August was 4% less year over year. Beef production of 2.33 billion lbs., was 2% less than a year earlier; there was one more weekday in August last year.

“Steer and heifer slaughter remain well below year ago levels with year-to-date heifer slaughter down 3.7% compared to the same weeks in 2019; steer slaughter is 4.9% below year-ago levels,” Griffith says. “Despite the lower slaughter rates, federally inspected beef production year-to-date is only down 1.2% because carcass weights have been well above last year’s carcass weights since the beginning of the year.”

Estimated total cattle slaughter last week was 651,000 head, according to AMS. That was 6,000 head more than the previous week and 1,000 head more than the same week last year. Year-to-date estimated total cattle slaughter of 23.51 million head is 1.07 million head fewer (-4.3%) than the same period last year.

Choice Boxed Beef Prices Higher

Wholesale beef value appeared to turn the seasonal corner last week.

Choice boxed beef cutout value was $3.70 higher week to week on Friday at $219.34/cwt. Select was $3.04 higher at $206.98.

Estimated year-to-date beef production of 19.81 billion lbs. is 335.5 million lbs. less (-1.69%) than last year.

“Given strong beef production and relatively strong boxed beef prices, it would appear that beef demand remains strong despite many consumers having reduced incomes during the coronavirus pandemic,” Griffith says.

Friday to Friday Change

Weekly Auction Receipts

 

Sept. 25 Auction Direct

Video/net

Total
 

195,500

(-5,700)

29,700

(-17,000)

42,300

(+2,500)

267,500

(-20,200)

 

 

CME Feeder Index

CME Feeder Index* Sept. 24 Change
  $142.33 +  $1.14

*Thursday-to Thursday for CME Feeder Index

 

Cash Stocker and Feeder

North Central

Steers-Cash Sept. 15 Change
600-700 lbs. $152.59 –   $0.37
700-800 lbs. $150.08 +  $4.00
800-900 lbs. $144.36 +  $1.30

 

South Central

Steers-Cash Sept. 25 Change
500-600 lbs. $148.03 –  $1.65
600-700 lbs. $142.35 –  $1.80
700-800 lbs. $141.04 –  $0.34

 

Southeast

Steers-Cash Sept. 25 Change
400-500 lbs. $149.65 + $0.31
500-600 lbs. $135.10 –  $4.63
600-700 lbs. $130.81 –  $0.24

(AMS National Weekly Feeder & Stocker Cattle Summary)

 

Wholesale Beef Value

Boxed Beef  (p.m.) Sept. 25 ($/cwt) Change
Choice $219.34 + $3.70
Select $206.98 + $3.04
Ch-Se Spread $12.36 + $0.66

 

Futures

Feeder Cattle  Sept. 25 Change
Oct $140.325 –  $2.100
Nov $140.150 –  $2.375
Jan ’21 $138.525 –  $2.825
Mar $138.350 –  $2.600
Apr $139.750 –  $2.325
May $140.550 –  $1.850
Aug $145.275 –  $0.375
Sep $145.275 n/a

 

Live Cattle   Sept. 25 Change
Oct $107.575 + $0.225
Dec $111.400 – $0.450
Feb ’21 $114.600 – $1.475
Apr $116.525 – $1.625
Jun $110.100 – $1.500
Aug $108.550 – $1.325
Oct $110.850 – $1.000
Dec $114.225 – $0.825
Oct $117.175 – $0.200

 

Corn  Sept. 25 Change
Dec $3.652 –  $0.132
Mar ’21 $3.732 –  $0.142
May $3.786 –  $0.140
Jly $3.824 –  $0.130
Sep $3.786 –  $0.096
Oct $3.840 –  $0.092

 

Oil CME-WTI Sept. 25 Change
Nov $40.25 –  $1.07
Dec $40.51 –  $1.10
Jan ’21 $40.81 –  $1.12
Feb $41.13 –  $1.11
Mar $41.45 –  $1.09
Apr $41.74 –  $1.07

Equities

Equity Indexes Sept. 25 Change
Dow Industrial Average  27173.96 –  483.46
NASDAQ  10913.56 +  120.28
S&P 500   3298.46 –     21.01
Dollar (DXY)       94.58 +       1.58
September 27th, 2020|Weekly Market Highlights|

Cattle Current Weekly Highlights—Week ending Sept. 18, 2020

Calf and feeder cattle prices diverged last week as wide temperature swings become the seasonal norm, adding cattle stress.

“Calves are split into two groups: the long-time weaned calves with vaccination programs selling mostly steady to firm with some sales up to $5/cwt. higher,” explain analysts with the Agricultural Marketing Service (AMS). “The other side of the coin are the un-weaned calves, fleshy bawlers in many cases, reported trading $3-$8 lower or with a sharply lower undertone. Discounts on these un-weaned calves will more than likely increase as we head into fall or until we get a good hard freeze.”

“Calf prices seasonally soften in the fall with the calf run, but the feeder cattle market has done very little to support calf prices,” says Andrew P. Griffith, agricultural economist at the University of Tennessee, in his weekly market comments. “Based on Tennessee weekly auction price averages, a 525-lb. steer was worth $727 per head while the same weight heifer was worth $643 per head this week. These are not highly profitable prices that make a producer want to purchase bred heifers or keep back more heifers for breeding. Nor are these prices low enough to result in cow culling, because a 525-lb. steer this time last year was valued about $20 less than this week’s price and few producers culled very hard a year ago.”

Long yearlings coming off grass continued to command the most buyer attention, according to AMS, selling steady to $5 higher at mostly 850-1,000 lbs., with instances of $8 higher.

Feeder Cattle futures closed an average of $1.53 higher week to week on Friday (15¢ higher at the back to $2.25 higher).

Looking further ahead, USDA’s Economic Research Service (ERS) left projected feeder cattle prices unchanged from the previous month—Livestock, Dairy and Poultry Outlook (LDPO)–as higher feed costs and the slower expected pace of marketing outweigh declining supplies.

The average feeder steer price (basis Oklahoma City) is projected at $140/cwt. in the third and fourth quarters for an annual average of $135.70. The projected feeder steer price is $131 for the first quarter of next year, $134 for the second quarter and at $137 for the 2021 average.

“The result of greater placements in second-half 2020 without increased marketings in the second half will likely keep cattle in feedlots above year-ago levels through the remainder of 2020,” say ERS analysts. “Because of this, anticipated feeder cattle supplies will diminish in 2021. However, the increase in fed cattle prices will likely offset higher corn prices forecast for next year.”

Week to week on Friday, Corn futures closed an average of 7¢ higher through the front six contracts. That’s an average of 18¢ higher in the last two weeks.

Fed Cattle Prices Increase

Negotiated cash fed cattle trade ended the week $4-$5 higher on a dressed basis in Nebraska at $165/cwt. and $2-$3 higher in the western Corn Belt at $163. On a live basis, prices were $1.50-$2.00 higher in the Southern Plains at $103.00-$103.50, $2.50 higher in Nebraska at $103.50 and $2-$4 higher in the western Corn Belt at $104-$105.

Live Cattle futures closed an average of $1.47 higher week to week on Friday ($1.15 to $1.95 higher).

“Cattle feeders will be looking for the finished cattle market to slowly gain some steam heading toward the holiday marketing timeframe, but this will be a slow process, as prices are expected to be stagnant the next couple of weeks,” Griffith says.

For broader perspective, in the latest LDPO, ERS projects the average five-area direct Choice fed steer price at $101/cwt. for the third quarter, $104 for the fourth quarter and at $107.30 for the annual average, the same as the previous month.

“The reduction in slaughter capacity in the second quarter continues to show up in the year-over-year higher number of cattle on feed over 150 days (although diminishing since June) and in the carcass weights of steers and heifers,” say ERS analysts. “The improved pace of slaughter, combined with an ample supply of fed cattle at heavier weights, led to higher expected beef production in third-quarter 2020 relative to 2019, which is likely putting pressure on cattle prices.”

Heading into 2021, however, ERS forecast average Choice steer prices $2 higher than the previous month’s estimate at $107 in the first and second quarters with an annual average price of $112.

That’s based on expectations that a larger proportion of available feeder cattle supplies available July 1 were placed on feed, which will limit supplies available for placement in the first half of next year.

“This pulls feedlot marketings, and consequently steer and heifer slaughter, forward from the latter quarters of 2021,” say ERS analysts. “With fewer steers and heifers in the slaughter mix and higher forecast feed costs affecting the length of time on feed, carcass weight gains next year will be limited.”

In the meantime, wholesale beef values continued their seasonal decline.

Choice boxed beef cutout value was $4.25 lower week to week on Friday at $215.64/cwt. Select was $3.16 lower at $203.94.

“The main determinant of how fed cattle prices move will be associated with consumers’ willingness to pay for beef moving forward,” Griffith explains. “Has the pandemic changed consumption patterns? It is doubtful that it has, but discretionary spending may continue to be altered.”

 

Friday to Friday Change

Weekly Auction Receipts

 

Sept. 18 Auction Direct

Video/net

Total
 

201,200

(+81,400)

46,700

(+22,700)

39,800

(+28,400)

287,700

(+75,700)

 

 

CME Feeder Index

CME Feeder Index* Sept. 17 Change
  $142.19 +  $1.20

*Thursday-to Thursday for CME Feeder Index

 

Cash Stocker and Feeder

North Central

Steers-Cash Sept. 18 Change
600-700 lbs. $152.96 –   $1.60
700-800 lbs. $146.08 –   $1.59
800-900 lbs. $143.06 +  $0.73

 

South Central

Steers-Cash Sept. 18 Change
500-600 lbs. $149.68 + $0.96
600-700 lbs. $144.15 + $1.77
700-800 lbs. $141.35 + $3.62

 

Southeast

Steers-Cash Sept. 18 Change
400-500 lbs. $149.34 + $0.61
500-600 lbs. $139.73 + $2.94
600-700 lbs. $131.05 –  $2.53

(AMS National Weekly Feeder & Stocker Cattle Summary)

 

Wholesale Beef Value

Boxed Beef  (p.m.) Sept. 18 ($/cwt) Change
Choice $215.64 –  $4.25
Select $203.94 –  $3.16
Ch-Se Spread $11.70 –  $1.09

 

Futures

Feeder Cattle  Sept. 18 Change
Sep $140.875 + $0.875
Oct $142.425 + $1.850
Nov $142.525 + $1.200
Jan ’21 $141.350 + $2.225
Mar $140.950 + $2.250
Apr $142.075 + $1.975
May $142.400 + $1.725
Aug $145.650 + $0.150

 

Live Cattle   Sept. 18 Change
Oct $107.350 + $1.825
Dec $111.850 + $1.950
Feb ’21 $116.675 + $1.750
Apr $118.150 + $1.200
Jun $111.600 + $1.175
Aug $109.875 + $1.250
Oct $111.850 + $1.175
Dec $115.050 + $1.150
Oct $117.375 + $1.750

 

Corn  Sept. 18 Change
Dec $3.784 + $0.100
Mar ’21 $3.874 + $0.092
May $3.926 + $0.082
Jly $3.954 + $0.074
Sep $3.882 + $0.040
Oct $3.932 + $0.036

 

Oil CME-WTI Sept. 18 Change
Oct $41.11 + $3.78
Nov $41.32 + $3.67
Dec $41.61 + $3.53
Jan ’21 $41.93 + $3.37
Feb $42.24 + $3.22
Mar $42.54 + $3.09

 

Equities

Equity Indexes Sept. 18 Change
Dow Industrial Average  27657.42 –     8.22
NASDAQ  10793.28 –   60.26
S&P 500   3319.47 –    21.50
Dollar (DXY)       93.00 –     0.27
September 20th, 2020|Weekly Market Highlights|

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
September 13th, 2020|Weekly Market Highlights|

Cattle Current Weekly Highlights—Week ending Sept. 4, 2020

Softer cash fed cattle prices, seasonally weakening wholesale beef values and a break in equity markets later in the week all added bearishness to Cattle futures for most of the week. Calves and feeder cattle traded mixed but followed suit overall.

Steers and heifers sold $1-$5/cwt. lower, according to the Agricultural Marketing Service (AMS).

Except for $1.55 higher in Aug, Feeder Cattle futures closed an average of $1.05 lower week to week on Friday (40¢ lower at the back to $2.37 lower in spot Sep).

“It is evident the calf and feeder cattle market has softened the past couple of weeks which seems rather early,” says Andrew P. Griffith, agricultural economist at the University of Tennessee, in his weekly market comments. “The summer feeder cattle market generally holds strength into the middle of September while the calf market does not begin to come under severe pressure until October. However, factors beyond the control of cattle producers are putting pressure on the market.”

Drought is part of the story. Griffith points out some form of drought covers more than 85% of the Western United States; severe drought or worse over 50% of the region. Similarly, he says drought covers 77% of the High Plains; severe or worse in 31% of the region.

“The dry conditions led to many producers marketing calves early this year, whether that be from summer grazing programs or having to wean calves early,” Griffith explains. “The evidence of these animals moving early was seen in the August cattle on feed report. July placements were up 11% compared to last year with most of that increase coming from the lighter weight categories.”

Recently updated five-year price projections from the Food and Agricultural Policy Institute (FAPRI) at the University of Missouri peg feeder steer prices (600-650 lbs., Oklahoma City) for this year at $144.46/cwt., $150.54 next year and rising to $179.03 in 2025.

Fed Cattle Prices Droop

Negotiated cash fed cattle prices were $2-$3 less than the previous week in the Southern Plains and Nebraska at $102-$103/cwt. Live trade was steady to $3 lower in the western Corn Belt at $103-$104. Dressed sales were $3-$5 lower at $162-$164.

Through Thursday, the average five-area direct weighted average fed steer price was $103.18/cwt. on a live basis, which was $1.94 less than the previous week. The average dressed steer price of $163.11 was $3.41 less than the previous week.

“Late summer and early fall are consistently a tough time period for cattle exiting the feedlot, as beef demand softens and so does demand for finished cattle,” Griffith says. “This soft demand will persist for several weeks, but it is hard to imagine cattle prices re-testing the lows they have already experienced earlier in the summer. The one thing that should support finished cattle prices is the hole that was created by reduced placements into feedlots during March and April. Many of the animals that would have been placed in March and April would be coming off feed now, but the delay in placing those cattle should result in fewer cattle being marketed the next several weeks.”

Live Cattle futures closed mixed, from an average of 26¢ lower to an average of 68¢ higher week to week on Friday.

Estimated cattle slaughter for the week ending Sept. 5 was 633,000 head, which was 21,000 head fewer than the previous week but 62,000 head more than the same week a year earlier. Beef production for the week of 527.3 million lbs. was 17.3 million lbs. less than the previous week.

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.

Year to date, estimated total cattle slaughter of 21.63 million head is 998,000 head fewer (-4.4%) than the same time last year. Beef production year to date of 17.89 billion lbs. is 320.6 million lbs. less (-1.8%) than the same time last year.

Wholesale Beef Values Decline

Choice boxed beef cutout value was $3.55 lower week to week on Friday at $225.85/cwt. Select was $5.56 lower at $209.30.

“Given that Labor Day purchases are behind the market, wholesale beef prices are remaining fairly strong,” Griffith says. “The lower fed cattle prices and the strong boxed beef prices are continuing to offer strong margins for packers who still hold most of the leverage in the marketplace. The expectation is for beef prices to start softening as summer ends and fall begins, but that has not been the case thus far.”

According to Griffith, loin and rib prices continue on par with a year a year earlier, as do prices for most end cuts.

“The trim market is the one running into some weakness, as 50% lean beef is down more than 50% compared to year-ago prices,” Griffith says. “This is somewhat surprising, given that the ground beef market has been on a tear through the pandemic and that 90% lean beef is at year-ago price levels. The expectation is for beef to soften moving through September and October, but softening prices will not take all the profits out of the business.”

 

Friday to Friday Change

Weekly Auction Receipts

 

Sept. 4 Auction Direct

Video/net

Total
 

160,800

(+4,600)

27,900

(-10,800)

5,200

(-275,100)

193,900

(-281,300)

 

 

CME Feeder Index

CME Feeder Index* Sept. 3 Change
  $140.20 –   $1.36

*Thursday-to Thursday for CME Feeder Index

 

Cash Stocker and Feeder

North Central

Steers-Cash Sept. 4 Change
600-700 lbs. $153.24 –   $5.32
700-800 lbs. $147.27 +  $0.28
800-900 lbs. $141.68 –   $1.12

 

South Central

Steers-Cash Sept. 4 Change
500-600 lbs. $150.91 –  $2.89
600-700 lbs. $146.42 –  $5.64
700-800 lbs. $139.70 –  $0.78

 

Southeast

Steers-Cash Sept. 4 Change
400-500 lbs. $148.77 –  $1.46
500-600 lbs. $137.60 –  $4.17
600-700 lbs. $131.22 –  $2.88

(AMS National Weekly Feeder & Stocker Cattle Summary)

 

Wholesale Beef Value

Boxed Beef  (p.m.) Sept. 4 ($/cwt) Change
Choice $225.85 –  $3.55
Select $209.30 –  $5.56
Ch-Se Spread $16.55 + $2.01

 

Futures

Feeder Cattle  Sept. 4 Change
Sep $137.650 –  $2.375
Oct $138.500 –  $1.675
Nov $139.525 –  $1.075
Jan ’21 $138.075 –  $0.575
Mar $137.725 –  $0.500
Apr $138.975 –  $0.400
May $139.400 –  $0.725
Aug $143.150 + $1.550

 

Live Cattle   Sept. 4 Change
Oct $104.450 –  $0.450
Dec $108.475 –  $0.025
Feb ’21 $112.450 + $0.600
Apr $115.125 + $1.025
Jun $108.450 + $0.700
Aug $106.925 + $0.400
Oct $109.000 -0-
Dec $112.600 –  $0.300
Oct $115.250 n/a

 

Corn  Sept. 4 Change
Sep $3.472 + $0.012
Dec $3.580 –  $0.012
Mar ’21 $3.684 –  $0.008
May $3.746 –  $0.010
Jly $3.792 –  $0.002
Sep $3.772 + $0.002

 

Oil CME-WTI Sept. 4 Change
Oct $39.77 –  $3.20
Nov $40.15 –  $3.14
Dec $40.59 –  $3.03
Jan ’21 $41.02 –  $2.92
Feb $41.44 –  $2.80
Mar $41.83 –  $2.68

 

Equities

Equity Indexes Sept. 4 Change
Dow Industrial Average  28133.31 –   520.56
NASDAQ  11313.13 –   382.50
S&P 500   3426.96 –      81.05
Dollar (DXY)       92.97 +       0.67
September 5th, 2020|Weekly Market Highlights|

Cattle Current Weekly Highlights—Week ending Aug. 28, 2020

More feedlot placements in July than expected and expectations for wholesale beef values to decline seasonally set the stage for lower Cattle futures last week, pressuring cash fed cattle prices, as well as calves and feeders.

Nationwide, steers and heifers sold steady to $4/cwt. lower, according to the Agricultural Marketing Service (AMS).

Feeder Cattle futures closed an average of $4.34 lower week to week on Friday ($3.07 lower at the back to $5.10 lower toward the front).

“The feeder cattle market has been on a tear since the second week of April, when the market lows were set during the peak of the coronavirus pandemic,” says Andrew P. Griffith, agricultural economist at the University of Tennessee, in his weekly market comments. “Since April, the fall feeder cattle futures contracts have increased about $30/cwt. to their recent highs. However, the market has taken a little breather the past couple of weeks as Feeder Cattle futures prices lost approximately $6. This price movement provides some semblance of normalcy as it relates to supply and demand of feeder cattle. It would appear the market is attempting to find the longer-term supply and demand of feeder cattle compared to the short-run shocks that seem to have become so common the past year.”

Given seasonal pressure and what appear to be ample calves and feeder cattle, Griffith says it will be difficult for prices to climb beyond their recent peak for the remainder of the year.

The outlook for grain prices also applied pressure to calves and feeder cattle.

“Grain markets found support with dry weather providing the majority of the strength to the market,” AMS analysts explain. “Soybean markets were especially strong with traders growing concerned about the dry conditions across Nebraska, Iowa, and parts of Illinois. December corn retraced up to the highest prices seen in a month and a half.” 

Week to week on Friday, Corn futures closed an average of 15¢ higher through the front six contracts. Soybean futures closed an average of 43¢ higher through the front six contracts.

Fed Cattle Prices Soften

Negotiated cash fed cattle prices ended the week $1 lower in the Southern Plains at $105/cwt. on a live basis, $1.50 lower in Nebraska at $105 and $2 lower in the western Corn Belt at $104-$107. Dressed trade was $2-$3 lower at mostly $167.

Through Thursday, the five-area direct weighted average steer price was $105.12/cwt. on a live basis, which was $1.50 lower than the previous week. The weighted average dressed steer price of $166.52 was $2.59 less.

Live Cattle futures closed an average of $2.38 lower week to week on Friday ($1.35 lower at the back to $3.65 lower toward the front).

“Prices in the fed cattle market will be under pressure during September and October before demand for beef begins to pick back up leading into end of the year holidays,” Griffith says. “…the market will be steady to soft compared to simply declining in late summer and moving into the fall months. The market is not expected to go back below $100 and should be well supported at $102-$103.”

On the up side, Derrell Peel, Extension livestock marketing specialist at Oklahoma state University notes data and anecdotal indications suggest the backlog of fed cattle is rapidly diminishing and may be nearly erased. 

“Going forward, the 1 million head decrease in feedlot placements in February, March and April suggests that front-end feedlot supplies will be relatively tight at least through September,” Peel explained, in his early-week market comments.

Wholesale Values Plateau

Wholesale beef values appeared to reach their pre-Labor Day zenith, with support from post-holiday re-stocking.

Choice boxed beef cutout value was $3.46 higher week to week on Friday at $229.40/cwt. Select was $5.87 higher at $214.86.

Estimated total cattle slaughter for the week ending Aug. 29 of 654,000 head was 2,000 more than the previous week’s estimate and 1,000 head more than the same time a year earlier. Year-to-date cattle slaughter is estimated at 20.99 million head, which would be 1.06 million fewer (-4.80%) than the same time last year. Estimated beef production so far this year is 17.36 billion lbs., which is 381.2 million lbs. less (-2.1%) than last year.

Friday to Friday Change

Weekly Auction Receipts

 

Aug. 28 Auction Direct

Video/net

Total
 

156,200

(+4,200)

38,700

(-119,300)

280,300

(+192,900)

475,200

(+69,300)

 

 

CME Feeder Index

CME Feeder Index* Aug. 27 Change
  $141.56 –   $2.34

*Thursday-to Thursday for CME Feeder Index

 

Cash Stocker and Feeder

North Central

Steers-Cash Aug. 28 Change
600-700 lbs. $158.56 +  $1.08
700-800 lbs. $146.99 –   $3.88
800-900 lbs. $142.80 –   $2.20

 

South Central

Steers-Cash Aug. 28 Change
500-600 lbs. $153.80 –  $2.86
600-700 lbs. $152.06 + $0.36
700-800 lbs. $140.48 –  $4.32

 

Southeast

Steers-Cash Aug. 28 Change
400-500 lbs. $150.23 –  $1.39
500-600 lbs. $141.77 + $1.10
600-700 lbs. $134.10 –  $0.50

(AMS National Weekly Feeder & Stocker Cattle Summary)

 

Wholesale Beef Value

Boxed Beef  (p.m.) Aug. 28 ($/cwt) Change
Choice $229.40 + $3.46
Select $214.86 + $5.87
Ch-Se Spread $14.54 –  $2.41

 

Futures

Feeder Cattle  Aug. 28 Change
Sep $140.025 –  $4.825
Oct $140.175 –  $5.100
Nov $140.600 –  $4.900
Jan ’21 $138.650 –  $4.775
Mar $138.225 –  $4.025
Apr $139.375 –  $3.700
May $140.125 –  $3.075
Aug $141.600 n/a

 

Live Cattle   Aug. 28 Change
Aug $103.225 –  $2.575
Oct $104.900 –  $3.650
Dec $108.500 –  $3.275
Feb ’21 $111.850 –  $2.775
Apr $114.100 –  $2.350
Jun $107.750 –  $2.075
Aug $106.525 –  $1.850
Oct $109.000 –  $1.550
Dec $112.900 –  $0.350

 

Corn  Aug. 28 Change
Sep $3.460 + $0.190
Dec $3.592 + $0.188
Mar ’21 $3.692 + $0.162
May $3.756 + $0.152
Jly $3.794 + $0.140
Sep $3.770 + $0.098

 

Oil CME-WTI Aug. 28 Change
Oct $42.97 + $0.63
Nov $43.29 + $0.67
Dec $43.62 + $0.69
Jan ’21 $43.94 + $0.71
Feb $44.24 + $0.73
Mar $44.51 + $0.74

 

Equities

Equity Indexes Aug. 28 Change
Dow Industrial Average  28653.87 +  723.54
NASDAQ  11695.63 +  383.83
S&P 500   3508.01 +   110.85
Dollar (DXY)       92.30 –       0.90
August 30th, 2020|Weekly Market Highlights|

Cattle Current Weekly Highlights—Week ending Aug. 21, 2020

Firm to higher negotiated cash fed cattle prices and blooming wholesale beef values continued to support calf and feeder cattle markets last week.

Steers and heifers sold from $1 lower to $2/cwt. higher, according to the Agricultural Marketing Service (AMS), with continued strong demand for yearlings and spring calves making their first seasonal appearance at auctions.

“There are still plenty of yearlings on offer at sales this year due to the elongation of the marketing period as producers were more inclined to wait to sell after the spring’s auction price decline,” say AMS analysts. “Breakevens on fed cattle coming out of feedyards at today’s prices are tempting producers to make another turn on feeding those yearlings.” 

Feeder Cattle futures closed an average of $1.56 lower week to week on Friday (80¢ lower at the back to $2.32 lower).

“The summer and fall feeder cattle futures contracts have been trading above the $140/cwt. mark since the middle of July with only a few instances of prices being below that level. This price level has provided some stability to the market and has provided cattle producers an opportunity to either market cattle at favorable prices or use a price risk management strategy to hedge a strong price for a future sell,” says Andrew P. Griffith, agricultural economist at the University of Tennessee, in his weekly market comments. “The stronger feeder cattle prices have helped support the calf market as well.”

Feedlot Placements Up 11%

Placements in feedlots (feedlots with 1,000 head or more capacity) during July of 1.89 million head were 188,000 more (+11.03%) than a year earlier, according to the monthly Cattle on Feed report. That was significantly more than pre-report expectations of a 6% increase. In terms of placement weight, 38.83% went on feed weighing less than 699 lbs., 47.17% went on feed weighing 700-899 lbs. and 14.0% weighed more than 900 lbs.

Marketings in July of 1.99 million head were 12,000 head fewer than last year (-0.60%), about in line with average analyst estimates ahead of the report.

Total cattle on feed Aug. 1 numbered 11.28 million head, which was 172,000 head more (+1.5%) than the same time a year earlier, a little more than expectations and the largest inventory for the month since the data series began in 1996.

Fed Cattle Steady to Higher

Based on reports from the Agricultural Marketing Service, negotiated cash fed cattle prices ended the week $2 higher in the Southern Plains at $106/cwt. on a live basis, steady to 50¢higher in the Northern Plains at $106.00-$106.50 and $2 higher in the western Corn Belt at $107-$109. Dressed trade was unevenly steady at $169.

Through Thursday, the five-area direct weighted average steer price was $106.62/cwt. on a live basis, which was $2.13 more than the previous week and $2.19 less than the same time last year, keeping in mind the market was dealing with the aftermath of the Tyson plant fire in 2019. The dressed steer price of $169.11 was $1.05 higher than the prior week, but $5.91 less the same time a year earlier.

“The difference in price between the Northern and Southern Plains has been advantageous for packers in the North to procure cattle in the South and truck them a distance,” AMS analysts explain. “Typically, cattle in the South would not be grading as well as they are now, due to a lengthened feeding period.”

Live Cattle futures closed an average of $1.32 lower week to week on Friday (55¢ lower at the back to $1.80 lower in spot Aug).

Wholesale beef values continued higher, receiving lift from retail buying ahead of Labor Day.

Choice boxed beef cutout value was $11.70 higher week to week on Friday at $225.94/cwt. Select was $9.70 higher at $208.99.

“From January through the first week of April (14 weeks), Federally Inspected (FI) beef production was 6.6% higher than the same time period in 2019. The next nine weeks had year-over-year declines in beef production to the tune of 17.9%. Each of the past 10 weeks has had year-over-year increases in beef production with a total increase of 1.8% over that time period. This resulted in 2020 beef production being down 1.7% year to date,” Griffith says.

Total estimated cattle slaughter for the week ending Aug. 22 was 652,000 head, according to USDA. That was 8,000 head more than the previous week’s estimate, but 17,000 head fewer than the same week last year. Estimated beef production for the week of 542.9 million lbs. was 10.5 million lbs. more than the previous week and 7 million lbs. more than the prior year.

Total cattle slaughter of 632,968 head was 3,336 head fewer than the prior week and 13,735 fewer than the same time last year.

The average dressed steer weight of 906 lbs. was 1 lb. heavier than the previous week and 28 lbs. heavier than a year earlier. The average dressed heifer weight of 832 lbs. was 4 lbs. heavier than the previous week and 26 lbs. heavier than the prior year.

CME to Expand Price Limits

CME Group announced proposed changes to daily and expanded daily price limits for Live Cattle and Feeder Cattle futures. Pending approval by the Commodity Futures Trading Commission, daily price limits for Feeder Cattle will increase to $5/cwt. from $4.50; expanded daily price limits will increase to $7.50, from the current $6.75. For Live Cattle, the daily limit will increase to $4/cwt. from $3; the expanded limit will become $6, compared to the current $4.50. Changes are scheduled to begin Oct. 5.

Friday to Friday Change

Weekly Auction Receipts

 

Aug. 21 Auction Direct

Video/net

Total
 

160,400

(+2,300)

51,500

(-15,000)

71,200

(+64,200)

238,100

(+51,500)

 

 

CME Feeder Index

CME Feeder Index* Aug. 20 Change
  $143.90 +  $1.65

*Thursday-to Thursday for CME Feeder Index

 

Cash Stocker and Feeder

North Central

Steers-Cash Aug. 21 Change
600-700 lbs. $157.48 –   $3.13
700-800 lbs. $150.87 +  $0.84
800-900 lbs. $145.00 +  $0.92

 

South Central

Steers-Cash Aug. 21 Change
500-600 lbs. $156.66 –  $0.72
600-700 lbs. $151.70 + $1.67
700-800 lbs. $144.80 + $1.40

 

Southeast

Steers-Cash Aug. 21 Change
400-500 lbs. $151.62 + $1.01
500-600 lbs. $140.67 + $0.59
600-700 lbs. $134.60 –  $1.88

(AMS National Weekly Feeder & Stocker Cattle Summary)

 

Wholesale Beef Value

Boxed Beef  (p.m.) Aug. 21 ($/cwt) Change
Choice $225.94 + $11.70
Select $208.99 + $9.70
Ch-Se Spread $16.95 + $2.00

 

Futures

Feeder Cattle  Aug. 21 Change
Aug $142.925 –  $1.000
Sep $144.850 –  $1.725
Oct $145.275 –  $2.150
Nov $145.500 –  $2.325
Jan ’21 $143.425 –  $1.800
Mar $142.250 –  $1.625
Apr $143.075 –  $1.100
May $143.200 –  $0.800

 

Live Cattle   Aug. 21 Change
Aug $105.800 –  $1.800
Oct $108.550 –  $1.675
Dec $111.775 –  $1.050
Feb ’21 $114.625 –  $1.225
Apr $116.450 –  $1.350
Jun $109.825 –  $1.475
Aug $108.375 –  $1.525
Oct $110.550 –  $1.275
Dec $114.250 –  $0.550

 

Corn  Aug. 21 Change
Sep $3.270 + $0.026
Dec $3.404 + $0.024
Mar ’21 $3.530 + $0.038
May $3.604 + $0.038
Jly $3.654 + $0.030
Sep $3.672 + $0.022

 

Oil CME-WTI Aug. 21 Change
Oct $42.34 + $0.03
Nov $42.62 –  $0.05
Dec $42.93 –  $0.07
Jan ’21 $43.23 –  $0.07
Feb $43.51 –  $0.07
Mar $43.77 –  $0.07

Equities

Equity Indexes Aug. 21 Change
Dow Industrial Average  27930.33 –       0.69
NASDAQ  11311.80 +  292.50
S&P 500   3397.16 +     24.31
Dollar (DXY)       93.20 +       0.10
August 22nd, 2020|Weekly Market Highlights|

Cattle Current Weekly Highlights—Week ending Aug. 14, 2020

Resurgent wholesale beef values and stronger negotiated cash fed cattle prices continued to support market optimism last week.

Nationwide, calves and feeders traded from $1/cwt. lower to $3 higher, according to the Agricultural Marketing Service (AMS). Those analysts note that many of the receipts in the Northern Plains were coming off summer grass, with the yearlings reported in excellent condition. 

Feeder Cattle futures closed an average of 96¢ higher week to week on Friday (27¢ higher at the back to $1.45 higher toward the front).

“Feeder cattle prices are fairly strong right now. It does not hurt to market cattle earlier than normal if a profit can be achieved, and current prices appear profitable,” says Andrew P. Griffith, agricultural economist at the University of Tennessee, in is weekly market comments. “The markets to be wary of are the calf market and the slaughter cow market. The prices for both lighter-weight calves and slaughter cows are expected to come under pressure the next few months. Prices for both classes of animals have held up well thus far, but seasonal trends will likely pressure both of them as more of these classes make their way to the market. There may be some advantages for some producers to early wean calves and market their cull slaughter cows in the near term instead of waiting until October or November.”

Nearer-term, last week’s devastating derecho—a widespread, long-lasting, straight-line wind storm—that swept across the Midwest could add pressure to calf prices from the corn side of the equation.

For instance, based on MODIS satellite imagery and Storm Prediction Center preliminary storm reports, the Iowa Department of Agriculture and Land Stewardship believes 36 counties in Iowa were hardest hit by the derecho. Within those 36 counties, the storm likely had the greatest impact on 3.57 million acres of corn and 2.5 million acres of soybeans.

Corn futures were an average of 15¢ higher through the front six contracts, week to week on Friday, recovering a little more than what was lost the previous two weeks. Part of the that was the derecho and weather outlook and part was due to ending corn stocks in the World Agricultural Supply and Demand Estimates (WASDE) coming in lower than the trade expected.

Fed Cattle Prices Up Again

Negotiated cash fed cattle prices last week were mostly $4 higher on a live basis in the Southern Plains at $104/cwt., $3 higher in the Northern Plains at $106 and $2.50-$4.00 higher in the western Corn Belt at $106.50-$107.00. Dressed trade was $2 higher in Nebraska at $165 and $2-$7 higher in the western Corn Belt at $165-$170.

Through Thursday, the five-area direct weighted average steer price was $104.49/cwt. on a live basis, which was $3.21 more than the previous week, and just 91¢ less than the prior year, keeping in mind that the Aug. 9 Tyson fire last year slammed cattle markets. In the beef, the weighted average steer price was $168.06, which was $4.87 more than the previous week, and $2.40 less than the prior year.

Live Cattle futures closed an average of $2.23 higher week to week on Friday (60¢ higher at the back to $4.80 higher in spot Aug).

USDA’s Economic Research Service (ERS) increased the expected annual fed steer price for this year 50¢ from the previous month’s projection to $107.30/cwt., in the latest WASDE. Forecast prices are $101 in the third quarter, $104 in the fourth quarter and $105 in the first two quarters next year.

Overall wholesale beef values continued to gain ground for the second consecutive week. Choice boxed beef cutout value was $8.77 higher week to week on Friday at $214.24/cwt. Select was $6.54 higher at $199.29.

“Boxed beef prices are at their highest level since the middle of June. Much of this rebound is likely due to the upcoming Labor Day holiday as many grocery stores are making their final purchases for the last grilling holiday of the year,” Griffith says. “Choice prices are only $2/cwt. lower than the same week one year ago, while Select prices are about $7 higher than the same week last year. There may be some additional Labor Day beef buying, as it is still three full weeks down the road, which provides grocery stores a little more time to get product on the shelf. The beef market will continue to be supported as grocery stores make purchases to restock the meat counter following holiday purchases.”

Estimated total cattle slaughter last week of 640,000 was 7,000 head more than the previous week’s estimate, but 13,000 fewer than the same week a year earlier. Year-to-date estimated total cattle slaughter is 5.1% less than the same period last year at 19.69 million head. Estimated year-to-date total beef production is 2.4% less at 16.27 billion lbs.

Friday to Friday Change

Weekly Auction Receipts

 

Aug. 14 Auction Direct

Video/net

Total
 

158,100

(-13,700)

66,500

(+100)

7,000

(-255,400)

231,600

(-268,000)

 

 

CME Feeder Index

CME Feeder Index* Aug. 13 Change
  $142.25 +  $0.33

*Thursday-to Thursday for CME Feeder Index

 

Cash Stocker and Feeder

North Central

Steers-Cash Aug. 14 Change
600-700 lbs. $160.61 +  $4.22
700-800 lbs. $150.03 +  $3.44
800-900 lbs. $144.08 –   $0.41

 

South Central

Steers-Cash Aug. 14 Change
500-600 lbs. $157.38 –  $1.00
600-700 lbs. $150.03 + $0.21
700-800 lbs. $143.40 + $0.83

 

Southeast

Steers-Cash Aug. 14 Change
400-500 lbs. $150.61 + $0.97
500-600 lbs. $140.08 –  $0.82
600-700 lbs. $136.48 + $3.37

(AMS National Weekly Feeder & Stocker Cattle Summary)

 

Wholesale Beef Value

Boxed Beef  (p.m.) Aug. 14 ($/cwt) Change
Choice $214.24 + $8.77
Select $199.29 + $6.54
Ch-Se Spread $14.95 + $2.23

 

Futures

Feeder Cattle  Aug. 14 Change
Aug $143.925 + $1.200
Sep $146.575 + $1.450
Oct $147.425 + $1.025
Nov $147.825 + $0.850
Jan ’21 $145.225 + $1.025
Mar $143.875 + $1.150
Apr $144.175 + $0.725
May $144.000 + $0.275

 

Live Cattle   Aug. 14 Change
Aug $107.600 + $4.800
Oct $110.225 + $3.775
Dec $112.825 + $2.750
Feb ’21 $115.850 + $2.050
Apr $117.800 + $1.475
Jun $111.300 + $1.500
Aug $109.900 + $1.775
Oct $111.825 + $1.375
Dec $114.800 + $0.600

 

Corn  Aug. 14 Change
Sep $3.244 + $0.168
Dec $3.380 + $0.174
Mar ’21 $3.492 + $0.166
May $3.566 + $0.154
Jly $3.624 + $0.148
Sep $3.650 + $0.124

 

Oil CME-WTI Aug. 14 Change
Sep $42.01 + $0.79
Oct $42.31 + $0.82
Nov $42.67 + $0.81
Dec $43.00 + $0.81
Jan ’21 $43.30 + $0.82
Feb $43.58 + $0.82

 

Equities

Equity Indexes Aug. 14 Change
Dow Industrial Average  27931.02 +  497.54
NASDAQ  11019.30 +      8.32
S&P 500   3372.85 +     21.57
Dollar (DXY)       93.10 –        0.29
August 16th, 2020|Weekly Market Highlights|

Cattle Current Weekly Highlights—Week ending Aug. 7, 2020

Calves and feeder cattle continued to trend higher last week, helped along by stronger cash fed cattle prices.

Nationwide, steers and heifers sold steady to $3/cwt. higher, according to the Agricultural Marketing Service (AMS).

“Every year, producers try to get long or short yearling cattle marketed before the Labor Day holiday and this year has been no exception,” say AMS analysts. “The first full week in August brought around 11% more cattle to the sale barns than a year ago.” 

Except for 15¢ higher in Nov, Feeder Cattle futures closed an average of 98¢ lower week to week on Friday (25¢ to $1.95 lower).

“Extremely unique market dynamics are driving the cattle market to price levels that may not have been imaginable just a few weeks ago,” says Andrew P. Griffith, agricultural economist at the University of Tennessee, in his weekly market comments. “The feeder cattle market is being driven by expectations for higher finished cattle prices. The February live cattle contract price increased $7 since July 1, which would be nearly a $100 per head increase in value for a 1,400 lb. animal. The increase in the live cattle contract has pushed the August feeder cattle contract $10 higher, which would be an $80 per head value increase.”

The CME Feeder Cattle Index was $3.34 higher week to week on Thursday at $141.92.

Griffith notes that cattle feeders must expect fed cattle prices to continue increasing, given the current buy-sell margin of locking in a price currently and how much more they’re willing to pay for feeder cattle.

At the same time, AMS analysts point out deepening drought in some parts of the country is beginning to force some management and marketing decisions.

For the week of Aug. 4, the U.S. Drought Monitor classified 54.01% of the continental United States from abnormally dry to extreme drought. That’s the fourth consecutive week that more than half of the nation was enduring designated dryness or drought conditions, according to AMS.

“One region of note would be in Wyoming and creeping into Northwest Nebraska. Some producers in those areas are contemplating early weaning of calves,” AMS analysts explain. 

The most recent USDA Crop Progress report pegged 30% of the nation’s pasture and range condition as Poor or Very Poor, which was 17% more than the same time last year.

Cash Fed Cattle Trade Higher

Negotiated cash fed cattle trade for the week was mainly $3 higher through Friday afternoon at $103/cwt. on a live basis and at $163 in the beef.

Through Thursday, the five-area direct weighted average steer price was $101.28 on a live basis, which was $2.79 higher than the previous week. The average dressed steer price was $163.19, which was $3.17 higher than the prior week. Compared to the same time last year, though, those prices were $12.83 less and $19.38 less, respectively.

According to AMS, slaughter cattle numbers remain tighter in the Northern Plains, while supplies continue to outpace packing capacity in the Southern Plains.

Griffith points out it has been a year since the Tyson packing plant fire in Kansas roiled markets.

“The market has essentially been in a funk for 52 weeks, due to the fire and coronavirus. The market appears to be trying to shake all the tough times over the last year, but there are more rivers to forge before anyone is comfortable,” Griffith says.

Except for 47¢ and 57¢ higher in Apr and away Dec, Live Cattle futures closed an average of 55¢ lower week to week on Friday (2¢ to $1.47 lower).

“Sideways action at the CME could be viewed as a friendly,” say AMS analysts. The largest single-day move this week on any of the six front Cattle contracts was $1.33 lower.” 

Wholesale Values Bump Higher

Wholesale beef prices continued to edge higher from the recent bottom.

Choice boxed beef cutout value was $2.21 higher week to week on Friday at $205.47/cwt. Select was $2.86 higher at $192.75.

Estimated cattle slaughter for the week ending Aug. 8 was 633,000 head, which would be 5,000 head fewer than the previous week and 14,000 head fewer than the same week last year.

Year to date, total cattle slaughter was 1.04 million less (-5.2%) than the same period last year at 19.05 million head.

Estimated beef production for the week was 527.2 million lbs., which was 3.1 million lbs. less than the previous week, but 5.6 million lbs. more than the prior year.

Year to date, estimated beef production of 15.74 billion lbs. is 405 million lbs. less (-2.5%) than last year.

“Beef supply conditions have stabilized, albeit at higher levels of production year over year in the second half of 2020. Beef demand will be critical in determining overall beef prices and, subsequently, cattle prices going forward,” says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly market comments. 

The advance estimate for U.S. real GDP in the second quarter was a staggering -32.9%, according to the U.S. Bureau of Economic Analysis. The nation’s unemployment rate in July was 10.2%.

“In the short run, willingness to purchase beef will depend on the relative prices of other products, particularly substitute products that may be consumed in place of a particular product,” Peel says. “For specific beef products, this is a complicated consideration, including other proteins such as pork and poultry, as well as the multitude of other beef products that may be chosen by consumers. In periods of low income, beef consumers may trade down from high cost beef products to lower valued products. Food service demand, which remains diminished, will emphasize this impact going forward.”

Friday to Friday Change

 

Weekly Auction Receipts

 

Aug. 7 Auction Direct

Video/net

Total
 

171,800

(+35,700)

66,400

(+17,900)

261,400

(+261,000)

499,600

(+314,600)

 

 

CME Feeder Index

CME Feeder Index* Aug. 6 Change
  $141.92 +  $3.34

*Thursday-to Thursday for CME Feeder Index

 

Cash Stocker and Feeder

North Central

Steers-Cash Aug. 7 Change
600-700 lbs. $156.39 +  $2.81
700-800 lbs. $146.59 +  $1.36
800-900 lbs. $144.49 +  $3.63

 

South Central

Steers-Cash Aug. 7 Change
500-600 lbs. $158.38 + $4.16
600-700 lbs. $149.82 + $1.72
700-800 lbs. $142.57 + $2.37

 

Southeast

Steers-Cash Aug. 7 Change
400-500 lbs. $149.64 + $0.82
500-600 lbs. $40.90 + $1.00
600-700 lbs. $133.11 –  $1.15

(AMS National Weekly Feeder & Stocker Cattle Summary)

 

Wholesale Beef Value

Boxed Beef  (p.m.) Aug. 7 ($/cwt) Change
Choice $205.47 + $2.21
Select $192.75 + $2.86
Ch-Se Spread $12.72 –  $0.65

 

Futures

Feeder Cattle  Aug. 7 Change
Aug $142.725 –  $1.950
Sep $145.125 –  $1.100
Oct $146.400 –  $0.250
Nov $146.975 + $0.150
Jan ’21 $144.200 –  $0.400
Mar $142.725 –  $0.625
Apr $143.350 –  $1.225
May $143.725 –  $1.325

 

Live Cattle   Aug. 7 Change
Aug $102.800 –  $0.025
Oct $106.450 –  $1.425
Dec $110.075 –  $1.475
Feb ’21 $113.800 –  $0.750
Apr $116.325 + $0.475
Jun $109.800 –  $0.150
Aug $108.125 –  $0.575
Oct $110.450 –  $0.125
Dec $114.200 + $0.575

 

Corn  Aug. 7 Change
Sep $3.076 – $0.084
Dec $3.206 – $0.064
Mar ’21 $3.326 – $0.056
May $3.412 – $0.048
Jly $3.476 – $0.046
Sep $3.526 – $0.028

 

Oil CME-WTI Aug. 7 Change
Sep $41.22 + $0.95
Oct $41.49 + $0.92
Nov $41.86 + $0.95
Dec $42.19 + $0.97
Jan ’21 $42.48 + $0.99
Feb $42.76 + $1.01

 

Equities

Equity Indexes Aug. 7 Change
Dow Industrial Average  27433.48 +1005.16
NASDAQ  10745.28 +  265.70
S&P 500   3271.12 +     80.16
Dollar (DXY)       93.46 –        0.07
August 8th, 2020|Weekly Market Highlights|

Cattle Current Weekly Highlights—Week ending July 31, 2020

Calf prices continued to move contra-seasonally last week, seeking post-COVID fundamental levels, while strong demand continued for yearlings, with more optimism for fed cattle values.

Nationwide, steers and heifers sold steady to $4/cwt. higher, with the most advance on yearlings weighing more than 800 lbs., according to the Agricultural marketing Service (AMS).

“Calf prices are holding their own, and this is most likely due to how low prices were in the spring. Thus, it is not that calf prices are strong. They are simply trying to find where they should be, given today’s market,” says Andrew P. Griffith, agricultural economist at the University of Tennessee, in his weekly market comments. “This class of cattle will start to see some pressure towards the end of summer and moving into the fall months.”

As for feeder cattle, Griffith says there is plenty of market optimism, but suggests, “Producers should take advantage of the marketing opportunity being made available to them right now. If the cattle will make money with a sale today, then move them. If the cattle need a few more days of growing, then try to forward contract the cattle.”

Feeder Cattle futures closed an average of $3.34 higher week to week on Friday, supported by the outlook for favorable corn prices.

“With improving corn conditions at this time of year, yields will no doubt improve, keeping the corn market under pressure, regardless of demand,” say AMS analysts. “Big crops usually get bigger and yields will be no exception. This makes it hard to convince anyone, especially farmer-feeders, that we will have any corn production problems. Thoughts that the size of the corn crop will overshadow demand has many producers willing to walk a lot of corn to town.”

Corn crop progress is ahead of last year and the five-year average, with 72% rated in Good or Excellent condition, in the USDA Crop Progress report for the week ending July 26.

Corn futures were an average of 7¢ lower through the front six contracts, week to week on Friday.

Griffith also notes demand continues to be contra-seasonally strong for packer cows and bulls. “This is likely due to the demand for lean grinding beef that has skyrocketed during the COVID-19 pandemic as consumers are pulling ground beef off meat counter shelves rapidly,” he says.

Fed Cattle Prices Edge Higher

Negotiated cash fed cattle prices ended the week generally $1-$2 higher on a live basis at $97/cwt. in the Southern Plains, $100 in Nebraska, $98 in Colorado and steady at $101-$102 in the western Corn Belt. Dressed prices were $2 higher at $160.

Through Thursday, the average five-area direct weighted steer prices was $98.49/cwt. on a live basis, which was $1.26 more than the previous week, but $15.48 less than the same time last year. The average dressed steer price of $160.02 was $1.92 higher than the previous week, but $24.49 less than the previous year.

There are still plenty of backlogged market-ready fed cattle to work through, but it appears progress is being made, says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly market comments.

“The calculated estimates of cattle on feed over 120 days are still very large compared to last year, but the difference has decreased by some 160,000 head since May,” Peel says, referring to the latest monthly Cattle on Feed report. “It appears that the backlog is decreasing but a sizable number of cattle remain to be cleaned up before feedlots will be current.”

Estimated total cattle slaughter for the week ending Aug. 1 was 638,000 head, which was 8,000 fewer than the previous week, but 5,000 head more than the same week last year. Year-to-date estimated total cattle slaughter of 18.4 million head is 1.02 million head fewer (-5.26%) than last year.

Live Cattle futures closed an average of $1.81 higher week to week on Friday. Along with firming wholesale beef values, support included a more positive weekly export outlook. U.S. beef export net sales for the week of July 23 totaled 29,500 metric tons (mt)—a market year high—up 89% from the previous week and up 81% from the previous four-week average. That’s according to the U.S. Export Sales report from USDA’s Foreign Agricultural Service.

AMS analysts note the weaker U.S. dollar is helping exports, with the dollar index at its lowest level in two years.

“At this point in the game, it would appear the summer low is in for finished cattle. That likely means a slow grind to higher prices, because the Labor Day holiday is the only grilling holiday remaining and December is several months down the road,” Griffith says. “It is tough to predict how strong this market will be, but there is a chance of reaching $115 in December.”

Wholesale Beef Values Firm

Choice boxed beef cutout value closed higher week to week for the second consecutive week, suggesting the ebb is established and the market will proceed along more fundamental lines.

Choice boxed beef cutout value was $1.49 higher week to week on Friday at $203.26/cwt. Select was 74¢ lower at $189.39.

“Hopefully, price levels should be attractive for retail interest and to consumers with some of the lowest beef prices seen for the month of July,” say AMS analysts. 

The average dressed steer weight the week ending July 18 of 899 lbs. was 3 lbs. less than the prior week but 33 lbs. more than the same week a year earlier, according to USDA’s Actual Slaughter Under Federal Inspection report. The average dressed heifer weight of 829 lbs. was the same as a week earlier but 34 lbs. heavier than the prior year.

“Federally inspected beef production has been above year-ago levels since the second week of June, while federally inspected cattle slaughter is down nearly 70,000 head over the same timeframe, compared to last year,” Griffith explains. “The increase in beef production stems from heavier cattle that spent more days on feed than was anticipated. However, it is not only total beef production that is being influenced by more days on feed. The increased number of days on feed is likely the reason more cattle are grading Choice.”

Friday to Friday Change

 

Weekly Auction Receipts

 

July 31 Auction Direct

Video/net

Total
 

136,100

(+8,000)

48,500

(-31,000)

400

(-96,200)

185,000

(-119,200)

 

 

CME Feeder Index

CME Feeder Index* July 30 Change
  $138.58 –   $0.85

*Thursday-to Thursday for CME Feeder Index

 

Cash Stocker and Feeder

North Central

Steers-Cash July 31 Change
600-700 lbs. $153.58 –   $9.14
700-800 lbs. $145.23 –   $3.79
800-900 lbs. $140.86 –   $0.55

 

South Central

Steers-Cash July 31 Change
500-600 lbs. $154.22 + $1.41
600-700 lbs. $148.10 + $3.00
700-800 lbs. $140.20 –  $0.28

 

Southeast

Steers-Cash July 31 Change
400-500 lbs. $148.82 + $1.98
500-600 lbs. $139.90 + $0.96
600-700 lbs. $134.26 + $2.18

(AMS National Weekly Feeder & Stocker Cattle Summary)

 

Wholesale Beef Value

Boxed Beef  (p.m.) July 31 ($/cwt) Change
Choice $203.26 + $1.49
Select $189.89 –  $0.74
Ch-Se Spread $13.37 + $2.23

 

Futures

Feeder Cattle  July 31 Change
Aug $144.675 + $2.625
Sep $146.225 + $3.475
Oct $145.650 + $3.850
Nov $146.825 + $4.150
Jan ’21 $144.600 + $3.575
Mar $143.350 + $3.175
Apr $144.575 + $3.250
May $145.050 + $2.625

 

Live Cattle   July 31 Change
Aug $102.825 + $1.500
Oct $107.875 + $2.775
Dec $111.550 + $2.225
Feb ’21 $114.550 + $2.100
Apr $115.850 + $1.875
Jun $109.950 + $1.500
Aug $108.700 + $1.400
Oct $110.575 + $1.050
Dec $113.625 + $1.875

 

Corn  July 31 Change
Sep $3.160 – $0.102
Dec $3.270 – $0.080
Mar ’21 $3.382 – $0.078
May $3.460 – $0.070
Jly $3.522 – $0.062
Sep $3.554 – $0.042

 

Oil CME-WTI July 31 Change
Sep $40.27 –  $1.02
Oct $40.57 –  $0.88
Nov $40.91 –  $0.73
Dec $41.22 –  $0.60
Jan ’21 $41.49 –  $0.51
Feb $41.75 –  $0.43

 

Equities

Equity Indexes July 31 Change
Dow Industrial Average  26428.32 –     41.57
NASDAQ  10745.28 +  382.10
S&P 500   3271.12 +     55.49
Dollar (DXY)       93.46 –        0.89
August 2nd, 2020|Weekly Market Highlights|

Cattle Current Weekly Highlights—Week ending July 24, 2020

Recently increased feedlot turnover and the availability of grass yearlings helped lift calf and feeder cattle prices last week. Nationwide, steers and heifers sold steady to $4/cwt. higher, according to the Agricultural Marketing Service (AMS).

Feeder Cattle futures closed an average of 93¢ lower week to week on Friday (32¢ lower at the back to $1.42 lower).

“The strength that has been evident in the futures market the past couple of weeks is beginning to become evident in the cash feeder cattle and calf markets,” says Andrew P. Griffith, agricultural economist at the University of Tennessee, in his weekly market comments. “The calf market price movement could be considered contra-seasonal because the calf market tends to soften during the heat of summer and moving into the fall. However, the coronavirus pandemic depressed the calf market through the spring months and the first part of summer. The calf market is now trying to realign based on fundamental supply and demand. It is going to be extremely difficult to predict where this market will go over the next several months, but there is a good possibility that fall prices will be better than the fall of 2019.”

As for feeder cattle, Griffith notes the seasonal tendency of increasing prices through the summer seems to be intact.

“The market is offering producers an opportunity to sell calves at higher prices, and there is more upside potential,” Griffith says. “However, the market is so fragile that any negative news within the beef industry, such as news of higher feed costs or something negatively associated with coronavirus, could turn the feeder cattle market on its head.”

Get through August and net feedlot returns grow significantly more positive, according to the most recent Historical and Projected Kansas Feedlot Net Returns (HPK) from Kansas State University.

Fed Cattle Prices Edge Higher

Through Thursday, the average five-area direct fed steer price was $97.23/cwt. on a live basis, which was 91¢ higher than the previous week, but $18.20 less than the same time last year.

Regionally, negotiated cash fed cattle trade for the week was generally $1-$2 higher on a live basis at $96/cwt. in the Southern Plains, $98 in the Northern Plains and $99-$100 in the western Corn Belt. Dressed trades were mostly $1 higher at $158.

Live Cattle futures closed an average of 95¢ lower week to week on Friday (12¢ lower at the back to $1.95 lower in spot Aug).

Total estimated cattle slaughter for the week ending July 25 of 646,000 head would be 4,000 head fewer than the prior week and 6,000 head fewer than the same week a year earlier, according to USDA’s Estimated Weekly Meat Production Under Federal Inspection report.  

Year to date, through June, fed cattle slaughter of 12.08 million was 772,600 head fewer (-6.01%) than the same time last year, according to the monthly USDA Livestock Slaughter report.

Boxed Beef Price Might be Established

“There is a very good chance boxed beef prices have hit their summer low,” Griffith says. “If they have hit their low, then there is a good chance they will be somewhat stagnant for a while before a slow grind higher leading up to holidays at the end of the year. How high boxed beef prices move through the end of the year may depend on how holidays are celebrated if coronavirus remains a concern.”

Choice boxed beef cutout value was $1.30 higher week to week on Friday at $201.77/cwt. Select was 32¢ higher at $190.63.

“The expectation of strong beef production through the end of the year will temper wholesale beef values to some degree, simply due to the quantity supplied to the market,” Griffith explains. “Despite this strong production, Choice boxes have the potential to move back to the $225 to $230/cwt. range as an apex before the end of the year.”

Year to date through June, beef production under federal inspection of 12.78 billion lbs. was 279.7 million lbs. less (-2.14%) than the same time last year, according to the Livestock Slaughter report.

Heavier carcass weights continue to close the gap between beef production and the number of cattle harvested.

Year to date through June, the average dressed steer weight of 897 lbs. is 33 lbs. heavier. The average dressed heifer weight of 829 lbs. is 25 lbs. heavier. Both are record high, according to AMS.

“Beef production will be higher year over year for the remainder of the year,” explained Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his early-week market comments. “This may combine with limited demand to keep wholesale beef prices under pressure going forward.

“Longer term, beef demand may be affected by the economic recession. Impacts have not been obvious thus far but unemployment is still high and some unemployment benefits will end this month. With COVID-19 far from controlled, considerable uncertainty remains regarding how school schedules, sporting activities and business travel could affect beef demand this fall.”

USDA Reports on Price Investigation

USDA released its investigation into cattle and beef price reactions to last summer’s fire at the Tyson plant in Holcombe, KS and to disruptions wrought by COVID-19.

The report—Boxed Beef & Fed Cattle Price Spread Investigation Report—details market conditions and prices before, during and after those events, although the pandemic continues.

Keep in mind this USDA investigation does not examine potential violations of the Packers and Stockyards Act. USDA continues to cooperate with the Department of Justice Antitrust Division in that agency’s current investigation.

Instead, the report provides the logic and details behind the price reactions of the two black swan events: higher wholesale beef prices and lower fed cattle prices spawned by disruption to packing capacity and by altered demand flow, in the case of the pandemic.

“Frankly speaking, the report released by USDA did not reveal anything that was not already known,” Griffith says. “It appeared to be less of an investigation and more of a simple analysis and report of the data. Something further could come of this report, but it is highly unlikely any type of investigation is going to result in findings of the packers doing something illegal. Packers were taking advantage of what the market was offering.”

Friday to Friday Change

 

Weekly Auction Receipts

 

July 24 Auction Direct

Video/net

Total
 

128,100

(-21,000)

79,500

(-16,000)

96,600

(-228,800)

304,200

(-266,400)

 

 

CME Feeder Index

CME Feeder Index* July 23 Change
  $139.43 +  $2.82

*Thursday-to Thursday for CME Feeder Index

 

Cash Stocker and Feeder

North Central

Steers-Cash July 24 Change
600-700 lbs. $162.72 +  $11.41
700-800 lbs. $149.02 +  $6.24
800-900 lbs. $141.41 +  $3.90

 

South Central

Steers-Cash July 24 Change
500-600 lbs. $152.81 + $0.55
600-700 lbs. $145.10 –  $0.11
700-800 lbs. $140.48 + $1.35

 

Southeast

Steers-Cash July 24 Change
400-500 lbs. $146.84 + $2.03
500-600 lbs. $138.94 + $1.77
600-700 lbs. $132.08 + $2.27

(AMS National Weekly Feeder & Stocker Cattle Summary)

 

Wholesale Beef Value

Boxed Beef  (p.m.) July 24 ($/cwt) Change
Choice $201.77 + $1.30
Select $190.63 + $0.32
Ch-Se Spread $11.14 + $0.98

 

Futures

Feeder Cattle  July 247 Change
Aug $142.050 –  $0.650
Sep $142.750 –  $0.575
Oct $142.800 –  $0.800
Nov $142.675 –  $1.175
Jan ’21 $141.025 –  $1.375
Mar $140.175 –  $1.425
Apr $141.325 –  $1.125
May $142.425 –  $0.325

 

Live Cattle   July 24 Change
Aug $101.325 –  $1.950
Oct $105.100 –  $1.775
Dec $109.325 –  $1.375
Feb ’21 $112.450 –  $1.325
Apr $113.975 –  $1.000
Jun $108.450 –  $0.275
Aug $107.300 –  $0.475
Oct $109.525 –  $0.275
Dec $111.750 –  $0.125

 

Corn  July 24 Change
Sep $3.262 – $0.068
Dec $3.350 – $0.046
Mar ’21 $3.460 – $0.036
May $3.530 – $0.030
Jly $3.584 – $0.022
Sep $3.596 – $0.008

 

Oil CME-WTI July 24 Change
Sep $42.18 + $1.43
Oct $42.00 + $1.06
Nov $41.82 + $0.71
Dec $41.64 + $0.37
Jan ’21 $41.45 + $0.03
Feb $41.29 –  $0.29

 

Equities

Equity Indexes July 24 Change
Dow Industrial Average  26469.89 –  202.06
NASDAQ  10363.18 –  140.01
S&P 500   3215.63 –       9.10
Dollar (DXY)       94.35 –       1.66
July 26th, 2020|Weekly Market Highlights|

Cattle Current Weekly Highlights—Week ending July 17, 2020

Renewed optimism continued in cattle markets last week, bolstered by strong week-to-week gains in Cattle futures prices. Traders are apparently looking beyond the current backlog of fed cattle.

Calves and feeder cattle sold mixed. Steers and heifers in the South Central region traded $3-$4/cwt. higher, according to the Agricultural Marketing Service (AMS). In the North Central and Southeast regions, though, they sold from $3 lower to $1 higher.

AMS analysts note, “There was a big increase in North Central prices last week, due to some annual specials that bring high-quality, reputation, one-iron brand strings of cattle to town.” 

Feeder Cattle futures closed an average of $4.44 higher week to week on Friday ($2.95 higher to $6.95 higher in spot Aug).

“The market for heavier feeder cattle is beginning to gain some steam, which is a typical seasonal pattern,” explains Andrew P. Griffith, agricultural economist at the University of Tennessee, in his weekly market comments. “The August Feeder cattle contract traded to its highest level since March 4 and has gained more than $6 since the Independence Day holiday. The August Feeder Cattle contract is still $14 lower than its contract high set in early January, but it is also $26 higher than its contract low set in early April. It is probably not feasible for the market to move back above the $150 mark for the August contract, but it could still have some upside potential given its slow and steady ascent back to its current level.”

On the other hand, Griffith notes summer heat and seasonality are weighing on calf prices. “The prices will continue to be pushed lower in the fall as the run of spring born calves make their way to market,” he says.

In the latest monthly Livestock, Dairy and Poultry Outlook (LDPO), analysts with USDA’s Economic Research Service (ERS) say expected higher fed cattle slaughter and increased feedlot marketings should improve demand for feeder cattle heading into the third quarter.

ERS projects the average feeder steer price (basis Oklahoma City) at $133/cwt. in the third quarter and $131 in the fourth quarter for an annual average of $131.70. Prices are projected at $129 in the first quarter of next year and at $132 in the second.

Of course, dry conditions could have plenty to say about late-summer markets.

“For the first time this year, over 50% of the country is in some sort of drought designation,” say AMS analysts. “The last time that occurred was the week ending Sept. 18, 2018, when the country was coming off a historical drought.”

Specifically, 51.4% of the continental U.S. was designated from abnormally dry to Extreme Drought, according to the U.S. Drought Monitor for July 14. At the same time last year, it was 9.79%.

For the week ending July 12, 36% of the nation’s pasture and range was rated in Good or Excellent condition, which was 32% less than last year, according to USDA’s Crop Progress report. Conversely, 30% was rated in Poor or Very Poor condition, compared to 8% at the same time last year.

Fed Cattle Prices Firm

Negotiated cash fed cattle prices were mainly steady last week.

The weighted average five-area direct fed steer price through Thursday was $96.32/cwt. on a  live basis, which was 35¢higher than the previous week, but $16.70 less than the same week last year. The average steer price in the beef was $157.58, which was 9¢less than the previous week and $25.39 less than a year earlier.

Live Cattle futures closed an average of $1.89 higher week to week on Friday ($1.05 higher to $3.27 higher in spot Aug).

“The October Live Cattle futures contract gained $6 since the beginning of July, while the December Live Cattle contract gained about $5.50 over that same timeframe,” Griffith says. “These prices still do not put finished cattle where cattle feeders want them, but there is a lot of time between now and the fall marketing time period for cattle to keep creeping higher. Another point of optimism is the fact that current cash prices have found a steady state instead of continuing to decline. The steep decline through the spring did not bode well for summer market prices, but they are holding their ground well given seasonal pressure.”

However, ERS lowered forecast fed steer prices by $4 to $100/cwt. in the third quarter and by $3 in the fourth quarter to $103.

“Despite slaughter rates having stabilized near year-ago levels, there continues to be a large volume of market-ready cattle supplies available for slaughter,” say ERS analysts, in the LDPO. “Based on the USDA Cattle on Feed report for June, the number of cattle that have been on feed over 150 days grew to 971,000 head, or 42% more than last year. Further, wholesale beef prices declined rapidly from recent peaks to below year-ago levels, marking a sharp turnaround.”

Retail Beef Prices Still Elevated

Choice boxed beef values last week sank to the lowest levels since December of 2017, according to AMS.

Choice boxed beef cutout value was $4.03 lower week to week on Friday at $200.47/cwt. Select was $3.98 lower at $190.31.

Renewed packing capacity and cattle slaughter is behind normalizing wholesale values, while heavier carcasses are adding extra pressure.

ERS increased forecast beef production for this year by 260 million pounds, compared to the prior month, to 26.9 billion lbs., just about 1% less than last year.

At the same time, retail beef prices remain high, relative to current production, following the price surge in the wake of coronavirus disruptions.

Retail Choice beef value in June was nearly $7.56/lb.. That was a tick lower than in May but $1.05 higher than in January, according to Griffith. The all fresh retail beef price was around $7.38/lb., up 34¢ from May and $1.46 more compared to January.

“Retailers were forced to push prices higher rather rapidly in April and May due to reduced supply of beef from lower cattle slaughter,” Griffith explains. “Though prices escalated quickly at the retail level, it is doubtful they will decline as quickly. Retailers are looking to make up for the losses they likely incurred during late March and April. Therefore, it will be a long slow march through the rest of the year as retail beef prices soften. There is no guarantee the prices will be back to pre-COVID-19 levels by the end of the year.”

Friday to Friday Change

 

Weekly Auction Receipts

 

July 17 Auction Direct

Video/net

Total
 

149,100

(+14,600)

96,100

(+23,100)

325,400

(n/a)

570.600

(+263,100)

 

 

CME Feeder Index

CME Feeder Index* July 16 Change
  $136.61 +  $1.69

*Thursday-to Thursday for CME Feeder Index

 

Cash Stocker and Feeder

North Central

Steers-Cash July 17 Change
600-700 lbs. $151.31 –    $8.53
700-800 lbs. $142.78 –    $2.69
800-900 lbs. $137.51 –    $1.81

 

South Central

Steers-Cash July 17 Change
500-600 lbs. $152.26 + $4.26
600-700 lbs. $145.21 + $2.60
700-800 lbs. $139.13 + $4.02

 

Southeast

Steers-Cash July 17 Change
400-500 lbs. $144.81 –  $0.67
500-600 lbs. $137.17 –  $0.25
600-700 lbs. $129.81 –  $1.91

(AMS National Weekly Feeder & Stocker Cattle Summary)

 

Wholesale Beef Value

Boxed Beef  (p.m.) July 17 ($/cwt) Change
Choice $200.47 –  $4.03
Select $190.31 –  $3.98
Ch-Se Spread $10.16 –  $0.05

 

Futures

Feeder Cattle  July 17 Change
Aug $142.700 + $6.950
Sep $143.325 + $6.000
Oct $143.600 + $5.100
Nov $143.850 + $4.125
Jan ’21 $142.400 + $3.425
Mar $141.600 + $2.950
Apr $142.450 + $3.275
May $142.750 + $3.375

 

Live Cattle   July 17 Change
Aug $103.275 + $3.275
Oct $106.875 + $2.300
Dec $110.700 + $2.300
Feb ’21 $113.775 + $2.050
Apr $114.975 + $1.250
Jun $108.725 + $1.050
Aug $107.775 + $1.325
Oct $109.800 + 1.725
Dec $111.875 + $1.750

 

Corn  July 17 Change
Sep $3.330 – $0.042
Dec $3.396 – $0.050
Mar ’21 $3.496 – $0.054
May $3.560 – $0.052
Jly $3.606 – $0.056
Sep $3.604 – $0.038

 

Oil CME-WTI July 17 Change
Aug $40.59 + $0.04
Sep $40.75 –  $0.01
Oct $40.94 -0-
Nov $41.11 + $0.01
Dec $41.27 + $0.02
Jan ’21 $41.42 + $0.02

 

Equities

Equity Indexes July 17 Change
Dow Industrial Average  26671.95 + 596.65
NASDAQ  10503.19 –  114.95
S&P 500   3224.73 +    39.69
Dollar (DXY)       96.01 –       0.65
July 26th, 2020|Weekly Market Highlights|

Cattle Current Weekly Highlights—Week ending July 10, 2020

Calves and feeder cattle sold mixed last week, with stark regional variation. Steers and heifers sold $4-$9/cwt. higher in the North Central region, but $2 lower to $2 higher in the South Central and Southeast regions, according to the Agricultural Marketing Service (AMS).

“There have been some positive signs of the feeder cattle market recovering, which brings optimism to many,” says Andrew P. Griffith, agricultural economist at the University of Tennessee, in his weekly market comments. “However, it is still going to be a long haul before the market is fully recovered.”

Feeder Cattle futures closed an average of $1.62 higher week to week on Friday, compared to the previous Thursday.

Fed Cattle Prices Steady to Higher

Negotiated cash fed cattle prices last week were generally steady to a touch stronger, leading some to wonder of the price bottom is established. Others suspect more pressure amid increasing beef production.

The weighted average five-area direct fed steer price through Thursday was $95.97/cwt. on a live basis and $157.67 in the beef. That was $1.06 and $3.84 higher, respectively.

In the latest monthly World Agricultural Supply and Demand Estimates (WASDE), analysts with USDA’s Economic Research Service (ERS) project the five-area direct weighted average steer price at $100/cwt. in the third quarter and at $103 in the fourth quarter for an annual average price of $106.80. That’s $1.80 less than the June projection. The projected annual price next year is $110, with prices estimated at $104 in the first quarter and $105 in the second.

Live Cattle futures closed an average of $1.47 higher week to week on Friday, compared to the previous Thursday (57¢ to $2.47 higher).

Griffith points out Aug Live Cattle ground its way back to $100, while Oct and Dec are trading above $100.

“The reason this is optimistic is because there is nothing in the cattle feeder’s favor right now,” Griffith says. “Coronavirus hit the market hard. Now, the seasonal tendencies of finished cattle prices are weighing on the market. On top of what is going on in the cattle market, corn futures prices have increased even though they are beginning to ease a little.”

WASDE estimated corn production for this year at 15.0 billion bu., which was 995 million bu. less (-6.22%) than the previous month’s estimate, given the 5 million fewer planted acres projected in June’s Acreage report.

Corn production, with projected yield of 178.5 bu./acre, would be 1.38 billion bu. more than last year (+10.16%). With 2020-2021 supply declining more than use, the forecast season-average corn price received by producers was raised 15¢ to $3.35/bu. 

Wholesale Values Normalize

Wholesale beef values appear to about back into balance.

Choice boxed beef cutout value was 94¢ lower week to week on Friday (compared to the previous Thursday) at $204.50/cwt. Select was $4.47 lower at $194.29.

“The wholesale beef market is remaining surprisingly strong, given the cattle slaughter rate and total beef production. Weekly beef production has consistently exceeded year-ago levels for several weeks now. This is expected to continue until all of the backlogged cattle are harvested,” Griffith says. “Increased beef production is likely to continue even after the backlog is cleared with heavier cattle coming to market. The key to beef and cattle prices strengthening will be the demand side of the market, because the supply side is firm.”

USDA estimated total federally inspected cattle slaughter for the week ending July 11 at 664,000 head, which would be 6,000 head more than the same week last year. Estimated beef production for the week of 550.3 million lbs. would be 22.3 million lbs. more (+4.22%) than the prior year. Year-to-date beef production is estimated at 13.63 billion lbs., which would be 427 million lbs. less (-3.04%) than the same period last year.

AMS analysts point out 83.7% of carcasses graded Choice and Prime for the week ending June 27. That was 6.6% more than the same time a year earlier. “Most of this is due to cattle being fed for a longer period, with some being fed around 200 days,” they say.

Total red meat production under federal inspection is projected at 1.11 billion lbs., which would be 71.7 million lbs. more (+6.89%) than the same week a year earlier. Year-to-date total red meat production is estimated at 28.18 billion lbs., which would be 318.10 million lbs. less (-1.12%) than the same time last year.

Coronavirus Pressures Beef Demand

Beef demand faces continued challenge, both from economic damage already wrought by COVID-19, and with increasing domestic infections.

Internationally, consider U.S. beef exports in May, which were 33% less than a year earlier at 79,280 metric tons (mt)—the lowest monthly total in 10 years—according to data released by USDA and compiled by the U.S. Meat Export Federation (USMEF). Value was 34% less than the same time last year at $480.1 million.

“As protective measures related to COVID-19 were being implemented, plant disruptions peaked in early May with a corresponding temporary slowdown in exports,” explains USMEF President and CEO Dan Halstrom. “Unfortunately, the impact was quite severe, especially on the beef side. Exports also faced some significant economic headwinds, especially in our Western Hemisphere markets, as stay-at-home orders were implemented in key destinations and several trading partners dealt with slumping currencies.”

Domestically, Griffith explains, “Increased coronavirus cases in many states the past several weeks resulted in many states and local municipalities reverting back to more strict social distancing, as well as adding new precautions. This reversion is sure to negatively influence restaurants again as fewer customers can walk through the doors and because many consumers will revert back to more at-home meals.”

As mentioned in Cattle Current earlier in the week, U.S. restaurant customer transactions stalled for the second week in a row, amid increasing COVID-19 cases in some states, according to The NPD Group (NPD).

For the week ending June 28, total customer transactions at major U.S. restaurant chains were down 14% versus the same week a year ago.  That’s a 1% decline from the previous week, based on NPD’s CREST®Performance Alerts.

Nationwide, full service restaurant customer transactions were 25% less than a year earlier, for the week ending June 28. That was a 1% weekly decline overall, while transactions fell 6-9% in states where coronavirus is increasing.

“It’s apparent that the road to recovery is going to be a challenging one for the U.S. restaurant industry,” says David Portalatin, NPD food industry advisor. “Consumer demand is there, as is the want for normalcy, but there is nothing normal about this situation.”

Friday to Friday Change

 

Weekly Auction Receipts

 

July 10 Auction Direct

Video/net

Total
 

134,500

(+50,800)

73,000

(+39,400)

n/a

(n/a)

207,500

(+58,300)

 

 

CME Feeder Index

CME Feeder Index* July 9 Change
  $134.92 +  $6.04

*Thursday-to Thursday for CME Feeder Index

 

Cash Stocker and Feeder

North Central

Steers-Cash July 10 Change
600-700 lbs. $159.84 +   $11.72
700-800 lbs. $145.47 +   $9.05
800-900 lbs. $139.32 +   $5.20

 

South Central

Steers-Cash July 10 Change
500-600 lbs. $148.00 –  $3.47
600-700 lbs. $142.61 –  $0.70
700-800 lbs. $135.11 + $1.05

 

Southeast

Steers-Cash July 10 Change
400-500 lbs. $145.48 –  $0.26
500-600 lbs. $137.42 –  $2.54
600-700 lbs. $131.72 –  $0.43

(AMS National Weekly Feeder & Stocker Cattle Summary)

 

Wholesale Beef Value

Boxed Beef  (p.m.) July 10 ($/cwt) Change
Choice $204.50 –  $0.94
Select $194.29 –  $4.47
Ch-Se Spread $6.682 + $3.53

 

Futures

Feeder Cattle  July 10 Change
Aug $135.750 + $0.875
Sep $137.325 + $1.475
Oct $138.500 + $1.800
Nov $139.275 + $1.925
Jan ’21 $138.975 + $1.900
Mar $138.650 + $1.825
Apr $139.175 + $1.225
Aug $139.375 + $1.925

 

Live Cattle   July 10 Change
Aug $100.000 + $0.600
Oct $104.575 + $1.900
Dec $108.400 + $2.475
Feb ’21 $111.725 + $1.975
Apr $113.725 + $1.650
Jun $107.765 + $1.665
Aug $106.450 + $1.300
Oct $108.075 + 0.575
Dec $110.125 + $1.125

 

Corn  July 10 Change
Jly  $3.404 – $0.020
Sep $3.372 – $0.062
Dec $3.446 – $0.088
Mar ’21 $3.550 – $0.100
May $3.612 – $0.094
Jly $3.662 – $0.084

 

Oil CME-WTI July 10 Change
Aug $40.55 –  $0.10
Sep $40.76 -0-
Oct $40.94 + $0.03
Nov $41.10 + $0.08
Dec $41.25 + $0.14
Jan ’21 $41.40 + $0.22

 

Equities

Equity Indexes July 10 Change
Dow Industrial Average  26075.30 + 247.94
NASDAQ  10617.44 + 409.81
S&P 500   3185.04 +    55.03
Dollar (DXY)       96.66 –       0.57
July 12th, 2020|Weekly Market Highlights|

Cattle Current Weekly Highlights—Week ending July 2, 2020

Despite the continued decline in negotiated cash fed cattle prices and wholesale beef values, more optimism returned to Cattle futures, helping lift cash and feeder cattle prices. Keep in mind, the week was one day shorter due to observation of Independence Day.

Nationwide, steers and heifers sold steady to $2/cwt. higher, according to the Agricultural Marketing Service (AMS).

Except for an average of 12¢ lower in the back contract, Feeder Cattle futures closed an average of $1.05 higher to week on Thursday (65¢ to $1.62 higher in spot Aug).

Dry conditions continue to expand, though, impacting some marketing decisions. According to the U.S. Drought Monitor, 45.42% of the continental United States was ranked as abnormally dry to extreme drought for the week of July 2. That was 35.46% more than the same time last year.

AMS analysts note that cattle are coming to town off dry summer grass or out of grow yards in droughty areas of the Southern Plains and Northern Plains. They add that cows are starting to come to market in Wyoming and western Nebraska. The same goes for parts of Colorado, per other reports.

According to the most recent Crop Progress report for the week ending June 28, 42% of pasture and range was rated in Good or Excellent condition, which was 33% less than the same time a year earlier. 26% was rated in Poor or Very Poor condition, compared to 7% at the same time last year.

Feed costs also took on a more bearish tone last week with USDA’s lower estimate for corn acres. 

Corn acreage is projected at 92.01 million acres, in last week’s Acreage report. That would be 2.31 million acres more (+2.57%) than last year. However, the projection is about 5 million acres less than the initial outlook in USDA’s Prospective Plantings report that came out at the end of March. Acreage harvested for grain is forecast at 84.02 million acres, which would be 2.70 million acres more (+3.32%) than last year.

Corn futures closed an average of 24¢ higher through the front six contracts week to week on Thursday.

“The higher expected corn price has to enter into the decision making process for cattle feeders as they bid on feeder cattle,” explains Andrew P. Griffith, agricultural economist at the University of Tennessee, in his weekly market comments. “This one report does not mean the expected corn price will remain elevated moving through the next 12 months, but it does put another component of the overall cattle industry back into play.

“At the same time, cow-calf and stocker producers may have to reconsider their grain supplement plan if it is highly dependent on purchasing corn. The one bright side for many parts of the country is that precipitation has been adequate if not abundant, which continues to support forage production.”

Cull cow prices remain a relative bright spot, according to Josh Maples, Extension livestock economist at Mississippi State University. In the latest issue of In the Cattle Markets he explains slaughter cow prices in the Southern Plains averaged $57.84/cwt. over the past six weeks of available data, which is 19.5% above the same period in 2019.

Total cow slaughter so far this year is about par with 2019, with beef cow slaughter up about 2% and dairy cow slaughter down about 2%, according to Maples.

Fed Cattle Prices Steady to Lower

Negotiated cash fed cattle trade ended the holiday-shortened week steady to $2 lower on a live basis in the Southern Plains at $93-$95/cwt.; steady to $1 higher in Nebraska at $95-$96 and unevenly steady in the western Corn Belt at $96-$97. Dressed trade was $1 lower in Nebraska at $154-$155 and steady to $4 lower in the western Corn Belt at $152-$155.

Live Cattle futures closed an average of $2.38 higher week to week on Thursday ($1.37 higher to $3.32 higher in spot Aug).

Choice boxed beef cutout value was $2.82 lower week to week on Thursday at $205.44/cwt. Select was $1.17 lower at $198.76.

“With larger production available, packing plants continue to refill the pipeline and increase beef items to consumers,” say AMS analysts. “Beef and pork will have to find price levels to clear record production that will persist for several months.”

Although recent holidays supported beef demand, Griffith notes it was muted, compared to normal times, as the pandemic and social unrest kept some consumers closer to home. He adds that most beef product still must flow through the retail channel as many restaurants remain limited to drive-thru, curbside pickup and limited seating capacity.

“At the same time, sales that would have occurred at ball games or during vacation are practically non-existent,” Griffith says. “While all of this is happening, one also has to consider discretionary spending. Many consumers’ incomes have declined the past several months, which leaves them with few dollars to spend, which could mean less beef for some. Labor Day will wrap up the summer grilling season, and it may be the benchmark to know how the market is fairing.”

Friday to Friday Change

 

Weekly Auction Receipts

 

July 2* Auction Direct

Video/net

Total
 

79,600

(-76,300)

33,600

(-21,400)

15,900

(-44,700)

129,100

(-142,400)

*Reflects volume for Monday through Thursday.

 

CME Feeder Index

CME Feeder Index* July 1 Change
  $129.05 –   $0.77

*Thursday-to Thursday for CME Feeder Index

 

Cash Stocker and Feeder

North Central

Steers-Cash July 2 Change
600-700 lbs. $148.12 –   $7.93
700-800 lbs. $136.42 –   $6.82
800-900 lbs. $134.12 +   $1.89

 

South Central

Steers-Cash July 2 Change
500-600 lbs. $151.47 + $0.78
600-700 lbs. $143.31 + $1.72
700-800 lbs. $134.06 + $0.92

 

Southeast

Steers-Cash July 2 Change
400-500 lbs. $145.74 –  $0.99
500-600 lbs. $139.96 + $0.07
600-700 lbs. $132.15 + $0.81

(AMS National Weekly Feeder & Stocker Cattle Summary)

 

Wholesale Beef Value

Boxed Beef  (p.m.) July 2 ($/cwt) Change
Choice $205.44 –  $2.82
Select $198.76 –  $1.17
Ch-Se Spread $6.682 –  $1.65

 

Futures

Feeder Cattle  July 2 Change
Aug $134.875 + $1.625
Sep $135.850 + $1.350
Oct $136.700 + $1.250
Nov $137.350 + $0.775
Jan ’21 $137.075 + $0.650
Mar $136.825 + $0.775
Apr $137.950 + $0.925
Aug $137.450 –  $0.125

 

Live Cattle   July 2 Change
Aug $99.400 + $3.325
Oct $102.675 + $3.025
Dec $105.925 + $2.375
Feb ’21 $109.750 + $2.400
Apr $112.075 + $2.275
Jun $106.100 + $2.300
Aug $105.150 + $2.000
Oct $107.500 + $1.375
Dec $109.000 n/a

 

Corn  July 2 Change
Jly  $3.424 + $0.252
Sep $3.434 + $0.230
Dec $3.534 + $0.254
Mar ’21 $3.650 + $0.256
May $3.706 + $0.234
Jly $3.746 + $0.212

 

Oil CME-WTI July 2 Change
Aug $40.65 + $1.93
Sep $40.76 + $1.85
Oct $40.91 + $1.83
Nov $41.02 + $1.76
Dec $41.11 + $1.68
Jan ’21 $41.18 + $1.61

 

Equities

Equity Indexes July 2 Change
Dow Industrial Average  25827.36 +  81.76
NASDAQ  10207.63 + 190.63
S&P 500   3130.01 +  46.25
Dollar (DXY)       97.23 –       0.16
July 12th, 2020|Weekly Market Highlights|

Cattle Current Weekly Highlights—Week ending June 26, 2020

Cash fed cattle prices continued to soften last week as beef production increases and uncertainty grows, relative to how soon the U.S. economy can reopen. At the same time, calf and feeder cattle prices held their own.

Nationwide, steers and heifer sold steady to $4/cwt. higher, according to the Agricultural Marketing Service (AMS). Those analysts note that the most advance came in the North Central region, with overall demand strongest for yearlings.

Except for an average of 11¢ lower in two contracts, Feeder Cattle futures closed an average of 51¢ higher to week on Friday.

“Calf prices will be hard-pressed to find support from now through November. At the same time, summer yearling cattle will be coming to market the next eight to 10 weeks. Prices for these cattle are generally strong during the summer months, which is largely due to cattle supply and when the cattle will be coming off feed, but it is also a factor of generally lower feed costs and good performance through summer and fall,” explains Andrew P. Griffith, agricultural economist at the University of Tennessee, in his weekly market comments. “The problem this year is that placements of many cattle were delayed the past several months, which most likely means more animals to be placed in July, August, and September. This is further exacerbated by expectations of strong beef production moving through the third and fourth quarters of 2020, as well as the first quarter of 2021.”

Dry conditions and expanding drought will likely alter some marketing plans, too. According to the latest U.S. Drought Monitor (June 23), 43.74% of the continental U.S. was rated as abnormally dry (D0) to Extreme Drought (D3), versus 10.10% a year earlier.

Nationally, pasture and range conditions continue to erode, according USDA’s weekly Crop Progress report, with 43% of pasture and range rated in Good or Excellent condition for the week ending June 21. That was 2% less than the previous week and 25% less than last year. 25% was rated in Poor or Very Poor condition, compared to 8% at the same time last year.

“The fundamentals of the feeder cattle market provide little support to expect prices to move much in either direction,” Griffith says. “The failure of prices to reach beginning-of-the-year expectations will likely result in increased cow marketing and reduce the size of the breeding herd. This will result in positive price implications moving forward.”

Fed Cattle Prices Continue Decline

Negotiated cash fed cattle prices ended the week solidly lower, according to reports from the Agricultural Marketing Service. Regionally, live prices were $5-$7 lower in the Texas Panhandle at $93-$95, $5 less in Kansas at $95, $3-$7 lower in Nebraska at $95 and $1-$4 less in the western Corn Belt at $98. Dressed trade was $3-$7 less at $155-$156 in Nebraska and at $153-$156 in the western Corn Belt.

The five-area average direct fed steer price through Thursday was $96.24/cwt. on a live basis, which was $4.58 lower than the previous week and $14.34 less than the same period a year earlier. The average dressed steer price was $154.78, which was $5.96 less than the prior week and $24.58 less than a year earlier.

Except for unchanged to an average of 49¢ higher in the front four contracts, Live Cattle futures closed an average of 76¢ lower week to week on Friday.

“Finished cattle prices have converged to Live Cattle futures…The failure of the futures market to bend in the slightest is not a good sign for summer cattle marketing,” Griffith explains. “The June contract is rolling off, which makes the August contract the next destination, and it is trading ever so slightly higher than the June contract. The answer to this market turning around will most likely show up in finished cattle weights. Once finished cattle weights begin to decline, the price for finished cattle will find support. The reason a decline in finished weight will be the turnaround is because it will mark when we are finished working through the backlog of cattle.”

Wholesale Beef Values Lose Ground

Continued delays in the return of food service demand for beef—tied to ongoing closures and reduced restaurant capacity forced by COVID-19—and the recently higher retail beef prices continue to pressure wholesale beef values.

Choice boxed beef cutout value was $6.55 lower week to week on Friday at $207.17/cwt. Select was $5.06 lower at $198.85. Prices at the same time a year ago were $219.70 and $198.56, respectively.

“Wholesale boxed beef prices have dropped nearly back to pre-COVID-19 levels and may go lower into mid-summer as abundant third-quarter beef production could highlight potential recessionary demand weakness,” explained Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his early-week market comments.

Even as cattle slaughter continues to recover from disruptions wrought by the pandemic, the backlog of fed cattle continues to add days on feed and pounds per carcass.

Year to date, Peel notes steer and heifer carcass weights averaged 27.4 lbs. heavier year over year. Carcasses were an average of 20.4 lbs. heavier in the first quarter; 36.7 lbs. heavier for April 1 to June 6.

USDA estimated total cattle slaughter for last week at 680,000 head, which would be 3.7% more than the previous week and 1.5% more than the same week last year. Total beef production under federal inspection was estimated at 562.3 million lbs., which would be 3.9% more than the previous week and 5.3% more than the same week last year.

“The expectation is that production in the third and fourth quarters of 2020 will far exceed beginning-of-the-year projections, “Griffith says. “The January World Agricultural Supply and Demand Estimates (WASDE) projected third and fourth-quarter beef production to be 6.88 and 6.93 billion lbs., respectively. The June report projected third and fourth-quarter beef production at 6.92 and 6.83 billion pounds, respectively. Essentially, the WASDE report indicates little to no change in production over the next six months, but heavier carcasses and maintaining current slaughter rates should result in year-over-year increases in beef production.”

For January through May, 7.4% fewer fed steers and heifers were slaughtered, while federally inspected beef production was only 3.4% less, according to USDA’s monthly Livestock Slaughter report. That was with 0.8% less total cow slaughter.

 

Friday to Friday Change

 

Weekly Auction Receipts

 

June 26 Auction Direct

Video/net

Total
 

155,900

(-4,500)

55,500

(+8,500)

60,600

(+50,900)

271,500

(+54,900)

 

CME Feeder Index

CME Feeder Index* June 25 Change
  $130.04 +   $2.03

*Thursday-to Thursday for CME Feeder Index

 

Cash Stocker and Feeder

North Central

Steers-Cash June 26 Change
600-700 lbs. $156.05 +   $3.19
700-800 lbs. $143.24 +   $5.99
800-900 lbs. $132.23 +   $3.85

 

South Central

Steers-Cash June 26 Change
500-600 lbs. $150.69 + $2.47
600-700 lbs. $141.59 + $0.99
700-800 lbs. $133.14 + $1.34

 

Southeast

Steers-Cash June 26 Change
400-500 lbs. $146.73 –  $1.02
500-600 lbs. $139.89 + $0.31
600-700 lbs. $131.34 + $0.78

(AMS National Weekly Feeder & Stocker Cattle Summary)

 

Wholesale Beef Value

Boxed Beef  (p.m.) June 26 ($/cwt) Change
Choice $207.17 –  $6.55
Select $198.85 –  $5.06
Ch-Se Spread $8.32 –  $1.49

 

Futures

Feeder Cattle  June 26 Change
Aug $132.600 + $0.050
Sep $133.775 –  $0.100
Oct $134.725 –  $0.125
Nov $135.675 + $0.100
Jan ’21 $135.225 + $0.375
Mar $134.300 + $0.300
Apr $135.275 + $0.600
Aug $136.650 + $1.650

 

Live Cattle   June 26 Change
Jun $94.700 -0-
Aug $95.400 + $0.625
Oct $98.850 + $0.625
Dec $102.850 + $0.225
Feb ’21 $107.275 –  $0.525
Apr $109.875 –  $1.025
Jun $103.650 –  $0.775
Aug $103.050 –  $0.725
Oct $105.900 –  $0.750

 

Corn  June 26 Change
Jly  $3.170 – $0.154
Sep $3.192 – $0.180
Dec $3.252 – $0.200
Mar ’21 $3.366 – $0.200
May $3.444 – $0.186
Jly $3.510 – $0.166

 

Oil CME-WTI June 26 Change
Aug $38.49 –  $1.34
Sep $38.65 –  $1.28
Oct $38.80 –  $1.22
Nov $38.94 –  $1.16
Dec $39.07 –  $1.12
Jan ’21 $39.19 –  $1.08

 

Equities

Equity Indexes June 26 Change
Dow Industrial Average  25015.55 –  855.91
NASDAQ    9757.22 –  188.90
S&P 500   3009.05 –    88.69
Dollar (DXY)       97.50 –       0.16
June 28th, 2020|Weekly Market Highlights|

Cattle Current Weekly Highlights—Week ending June 19, 2020

Depending on weight and location, some classes of calves and feeder cattle came under pressure last week as dry conditions spread and the cash fed cattle market succumbed to the backlog of market-ready cattle, declining wholesale beef values and iffy near-term domestic demand.

Nationwide, steers and heifers traded steady to $4/cwt. lower, according to the Agricultural Marketing Service (AMS).

Still, Feeder Cattle futures closed an average of $2.00 higher to week on Friday.

“The expectation is the market will remain under pressure through the end of fall as the industry works through large supplies of cattle and meat,” says Andrew P. Griffith, agricultural economist at the University of Tennessee, in his weekly market comments. “Cattle prices will start to gain a little momentum in the first quarter of 2021 before really accelerating in the second and third quarter of 2021…This is the expectation because it is likely more cows will be culled this year, as well as fewer heifers retained for breeding, due to lower cattle prices and the need for cash flow. Thus, the increased marketings in the short run will place added pressure on prices while at the same time providing support for prices moving into the longer run.”

Based on recent price data, USDA’s Economic Research Service (ERS) increased the projected annual average feeder steer price (basis Oklahoma City) by almost $7, compared to the previous month, to $131.40/cwt.

“With higher anticipated fed cattle slaughter in 2020, feedlot marketings will increase. A faster pace of marketings and higher forecast fed cattle prices than last month will likely improve feedlot demand for feeder cattle,” say ERS analysts, in the latest monthly Livestock, Dairy and Poultry Outlook.

Heading into this week, the market could see added pressure from the monthly Cattle on Feed report, which will likely be viewed as at least somewhat bearish.

Compared to average expectations ahead of the report, more cattle were placed, fewer were marketed and slightly more were on feed at the beginning of the month. That’s for feedlots with 1,000 head or more capacity.

Placements in May of 2.04 million head were 26,000 head fewer (-1.26%) than the previous year.

Marketings in May of 1.5 million head were 570,000 head fewer (-27.54%) than a year earlier and the least marketings for the month since the data series began in 1996.

There were 11.67 million head on feed June 1, which was 57,000 head fewer (-0.49%) than a year earlier. That’s the second highest June inventory since the data series began in 1996.

Moreover, expanding dryness could hamper intentions and prices as the summer unfolds.

According USDA’s weekly Crop Progress report (week ending June 14), 45% of nation’s pasture and range was rated in Good (39%) or Excellent (6%) condition. That’s 26% less than last year. 22% was rated in Poor (14%) or Very Poor (8%) condition, compared to 6% at the same time last year.

Fed Cattle Prices Lower

Through Thursday, the five-area direct weighted average price for steers was $100.82/cwt., which was  $4.02 less than the previous week. The average dressed steer price was $160.74, which was $5.91 less. Prices at the same time last year were at $110.43 and $180.56, respectively. Keep in mind that carcass weights are contra-seasonal and significantly heavier than last year.

The average dressed steer weight for the week ending June 6 was 892 lbs., which was 1 lb. heavier than the prior week and 46 lbs. heavier than the same week a year earlier, according to USDA’s Actual Slaughter Under Federal Inspection report. The average dressed heifer weight of 824 lbs. was 2 lbs. lighter than the previous week, but 42 lbs. heavier than the prior year.

“The expectation was for finished cattle prices to decline but not $15/cwt. in three weeks,” Griffith says. “The lower prices speak volumes concerning the supply of market-ready cattle and the fact packers have plenty of cattle available to them. One would have thought there was price support at current prices and one can continue to think that based on this week’s prices, but there will continue to be pressure on finished cattle prices moving through the next couple of months. This is not a good sign for cattle feeders or those looking to market feeder cattle in the near term. It may take a while before optimism comes back to the finished cattle market.”

Other than $1.37 lower in spot Jun, Live Cattle futures closed an average of $1.13 higher week to week on Friday (7¢ to $1.65 higher).

Estimated total cattle slaughter for the week of 656,000 head was just 12,000 head fewer (-1.8%) than the same time last year, according to USDA.

The average five-area direct fed steer price in May was $111.53/cwt. on a live basis, which was more than 9% higher than in April, according to ERS. With that in mind, USDA increased its price forecast for fed steers in the second quarter by $3 to $104. Forecast prices for the third and fourth quarters increased by $6 to $105 and $106, respectively.

Wholesale Values Normalizing

Wholesale beef values continue lower with increased beef production.

Choice boxed beef cutout value was $16.92 lower week to week on Friday at $213.72/cwt. Select was $15.36 lower at $203.91.

“The red meat market has traversed some unfamiliar territory the past several months and probably still has a few new trails to cut before some form of normalcy is evident,” Griffith says. “The two broad markets the beef industry navigates are the domestic market and the international market. The international market is a major player in determining the full value of cattle produced domestically, which points to the importance of beef and cattle product exports. Through the first four months of 2020, beef and veal exports on a quantity basis were 7.0% greater than the same four months in 2019. However, beef and veal export value only increased 3.2% for January through April of 2020 compared to 2019. There is a good chance May 2020 beef and veal exports will have struggled compared to year-ago levels, given that May beef production was 19.2% lower than the same month one year ago.”

 

Friday to Friday Change

 

Weekly Auction Receipts

 

June 19 Auction Direct

Video/net

Total
 

160,400

(+100)

46,500

(+12,700)

9,700

(-36,300)

216,600

(+23,800)

 

CME Feeder Index

CME Feeder Index* June 18 Change
  $128.01 –   $1.57

*Thursday-to Thursday for CME Feeder Index

 

Cash Stocker and Feeder

North Central

Steers-Cash June 19 Change
600-700 lbs. $152.86 –    $0.38
700-800 lbs. $137.25 –    $4.18
800-900 lbs. $128.38 –    $4.45

 

South Central

Steers-Cash June 19 Change
500-600 lbs. $148.22 –  $2.52
600-700 lbs. $140.60 –  $0.63
700-800 lbs. $131.80 –  $0.12

 

Southeast

Steers-Cash June 19 Change
400-500 lbs. $147.75 –  $1.43
500-600 lbs. $139.58 –  $2.57
600-700 lbs. $130.56 –  $1.80

(AMS National Weekly Feeder & Stocker Cattle Summary)

 

Wholesale Beef Value

Boxed Beef  (p.m.) June 19 ($/cwt) Change
Choice $213.72 –  $16.92
Select $203.91 –  $15.36
Ch-Se Spread $9.81 –  $1.56

 

Futures

Feeder Cattle  June 19 Change
Aug $132.550 + $1.450
Sep $133.875 + $1.400
Oct $134.850 + $1.700
Nov $135.575 + $2.100
Jan ’21 $134.850 + $2.400
Mar $134.000 + $2.650
Apr $134.675 + $2.300
Aug $135.000 + $2.025

 

Live Cattle   June 19 Change
Jun $94.700 –  $1.375
Aug $95.400 + $0.075
Oct $98.850 + $0.850
Dec $102.850 + $0.800
Feb ’21 $107.275 + $1.275
Apr $109.875 + $1.425
Jun $103.650 + $1.650
Aug $103.050 + $1.500
Oct $105.900 + $1.475

 

Corn  June 19 Change
Jly  $3.324 +$0.024
Sep $3.372 +$0.028
Dec $3.452 +$0.022
Mar ’21 $3.566 +$0.020
May $3.630 +$0.018
Jly $3.676 +$0.014

 

Oil CME-WTI June 19 Change
Jly $39.75 + $3.49
Aug $39.83 + $3.32
Sep $39.93 + $3.15
Oct $40.02 + $3.02
Nov $40.10 + $2.89
Dec $40.19 + $2.77

 

Equities

Equity Indexes June 19 Change
Dow Industrial Average  25871.46 + 265.92
NASDAQ    9946.12 + 357.31
S&P 500    3097.74 +   56.43
Dollar (DXY)       97.66 +      0.57
June 21st, 2020|Weekly Market Highlights|

Cattle Current Weekly Highlights—Week ending June 12, 2020

Cash calf and feeder cattle prices were mixed last week, amid plenty of volatility in equity markets, declining wholesale beef prices and pressure on cash fed cattle.

Steers and heifers sold steady to $2/cwt. higher in the North Central region, but steady to $4 lower in the South Central and Southeast regions, according to the Agricultural Marketing Service (AMS).

“With the slaughter pace inching closer to normal and beef cutout values dropping, the focus may soon turn to the surplus of market ready cattle that history says will have to be whittled away at by getting to a price low enough to stimulate surplus demand (see below),” noted the AMS reporter on hand for Wednesday’s weekly sale at South Central Regional Stockyards in Vienna, MO.

Feeder Cattle futures closed an average of $2.94 lower to week on Friday.

“The fact that fresh-weaned calf prices are not declining speaks to strength in the market,” says Andrew P. Griffith, agricultural economist at the University of Tennessee, in his weekly market comments. “Prices for lightweight calves typically reach their apex in March and then seasonally decline through the summer and fall months…The market did not experience its seasonal peak because coronavirus shut everything down.”

Griffith explains feeder cattle weighing less than 800 lbs. are garnering the most feedlot demand because lighter cattle offer more opportunity to work through the backlog of market-ready fed cattle.

Cow Culling Likely to Increase

Dry conditions and drought continue to expand, according to the latest U.S. Drought Monitor (June 11), with 38.6% of the continental U.S. rated as abnormally dry (D0) to Extreme Drought (D3), versus 10.6% a year earlier.

Much of the affected area ranges from Colorado west and up through the Northwest, as well as northern New Mexico, western Kansas and the Panhandles of Oklahoma and Texas.

A couple of year’s worth of anemic economic cow-calf returns, and now those dry conditions, continue to boost beef cow slaughter, helped along by stronger cull cow values.

According to AMS, year-to-date beef cow slaughter through May 31 (preliminary) is 1.5% more than a year ago and about 15% more than the previous five-year average. Keep in mind that cow slaughter the past couple of months was likely muted by disruptions in packing capacity.

Rather than the short and shallow liquidation phase many expected at the beginning of the year, it now appears a more conventional cyclical liquidation phase is in the cards.

Fed Cattle Prices Turn Sharply Lower

Through Thursday, the average five-area direct fed steer price (AMS) was $104.84 on a live basis, compared to $112.68 the previous week. The dressed steer price was $166.65, versus $179.17 the prior week.

Regionally, live prices were $3-$4 lower in the Southern Plains at $104/cwt. in the Texas Panhandle and at $103-$107 in Kansas. Live trade was $5-$10 lower in Nebraska at $105-$108; $5-$9 less in the western Corn Belt at $103-$105. Dressed trade was $10-$20 lower in Nebraska at $165; $13-$15 lower in the western Corn Belt at $160-$172.

“The available supply of market-ready cattle is high and the demand for cattle cannot physically exceed slaughter capacity. Thus, prices for finished cattle are softening and will remain soft until packers can work through the glut of market-ready cattle,” Griffith says. “This comes at a time when finished cattle prices are seasonally softening as the market moves toward the dog days of summer. How long the backup of cattle can hang over the market is not exactly known. It will depend on how well beef prices are doing and how many Saturdays are utilized. It may take until the fourth quarter of the year before cattle marketings are current.”

Other than $2.17 higher in spot Jun, Live Cattle futures closed an average of $2.04 lower week to week on Friday (85¢ to $2.87 lower at the back).

The average five-area direct live steer price (FOB) in May was $111.53/cwt., which was $9.51 more than the previous month, according to USDA. The average dressed steer price in the beef was $179.02 (delivered), which was $19.75 more than the previous month.

As mentioned in Cattle Current earlier this week, USDA’s Economic Research Service (ERS) increased price projections for this year’s average fed steer price by $4.50 to $108.60/cwt. In the latest monthly World Agricultural Supply and Demand Estimates (WASDE), ERS forecasts fed steer prices to average $106 in the second quarter, $104 in the third quarter and $106 in the fourth quarter. The first-quarter price was $118.32.

Retail Beef Prices Record High

Wholesale beef values continue to decline and normalize as packing capacity recovers.

Estimated cattle slaughter for the week was 658,000 head, according to USDA, which was 22,000 head more (+3.5%) than the previous week; 11,000 head fewer (-1.6%) than the same week last year. Estimated year-to-date cattle slaughter of 13.97 million head is 957,000 head fewer (-6.4%) than the same time a year ago. However, heavier carcass weights contributed to the fact that beef production for the week was 2.1% more than the same week last year at 542.2 million lbs.

Choice boxed beef cutout value was $30.84 lower week to week on Friday at $230.64/cwt. Select was $27.15 lower at $219.27.

Sky-high wholesale prices, especially from the second half of April and throughout May mean consumers will likely be paying higher prices for a while.

“Those high wholesale prices led to major changes in retail prices. Since the price series has been recorded, dating back more than 30 years, the all fresh retail price for beef hit a record high in May, coming in just under $7.05/lb.,” Griffith says. “This is $1.08 higher than the all fresh retail price of beef reported in March. Thus, retail beef prices increased 18% the past two months and that may not be the end. There is no doubt wholesale beef prices have moderated the past several weeks and will continue to do so. However, this does not mean retail prices will decline quickly. Retailers will be looking to recapture some of their losses from April and May, which means retail beef prices will remain elevated.”

Friday to Friday Change

 

Weekly Auction Receipts

 

June 12 Auction Direct

Video/net

Total
 

160,300

(-46,800)

33,800

(-53,600)

46,300

(+35,600)

240,400

(-64,800)

 

CME Feeder Index

CME Feeder Index* June 11 Change
  $129.58 +  $1.65

*Thursday-to Thursday for CME Feeder Index

 

Cash Stocker and Feeder

North Central

Steers-Cash June 12 Change
600-700 lbs. $153.21 +   $1.18
700-800 lbs. $141.43 –    $0.03
800-900 lbs. $132.83 +   $2.41

 

South Central

Steers-Cash June 12 Change
500-600 lbs. $150.74 –  $3.49
600-700 lbs. $141.23 –  $1.92
700-800 lbs. $131.92 –  $0.80

 

Southeast

Steers-Cash June 12 Change
400-500 lbs. $149.18 –  $1.45
500-600 lbs. $142.15 –  $0.03
600-700 lbs. $132.36 –  $0.30

(AMS National Weekly Feeder & Stocker Cattle Summary)

 

Wholesale Beef Value

Boxed Beef  (p.m.) June 12 ($/cwt) Change
Choice $230.64 –  $30.84
Select $219.27 –  $27.15
Ch-Se Spread $11.37 –  $3.69

 

Futures

Feeder Cattle  June 12 Change
Aug $131.000 –  $3.175
Sep $132.475 –  $3.000
Oct $133.150 –  $2.925
Nov $133.475 –  $3.075
Jan ’21 $132.450 –  $2.800
Mar $131.350 –  $3.150
Apr $132.375 –  $2.800
Aug $132.975 –  $2.625

 

Live Cattle   June 12 Change
Jun $96.075 + $2.175
Aug $95.325 –  $0.850
Oct $98.000 –  $1.300
Dec $102.050 –  $1.775
Feb ’21 $106.000 –  $2.050
Apr $108.450 –  $2.300
Jun $102.000 –  $2.475
Aug $101.550 –  $2.750
Oct $104.425 –  $2.875

 

Corn  June 12 Change
Jly  $3.300 – $0.012
Sep $3.344 – $0.010
Dec $3.430 – $0.022
Mar ’21 $3.546 – $0.024
May $3.612 – $0.020
Jly $3.662 – $0.020

 

Oil CME-WTI June 12 Change
Jly $36.26 –  $3.29
Aug $36.51 –  $3.29
Sep $36.78 –  $3.25
Oct $37.00 –  $3.15
Nov $37.21 –  $3.07
Dec $37.42 –  $3.00

 

Equities

Equity Indexes June 12 Change
Dow Industrial Average  25605.54 –  1505.54
NASDAQ    9588.81 –   225.27
S&P 500    3041.31 –   152.62
Dollar (DXY)       97.09 +      0.14
June 14th, 2020|Weekly Market Highlights|

Cattle Current Weekly Highlights—Week ending June 5, 2020

“Barring a major setback, it appears that beef markets are moving past the worst of the disruptions that have caused upheaval in recent weeks,” said Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his early-weekly market comments.

Nationwide, steers and heifers sold from $1 lower to $2/cwt. higher, according to the Agricultural Marketing Service (AMS). Regional average calf and feeder cattle prices for the week were within spitting distance of year-over-year levels, the closest since the end of February, according to the National Weekly Feeder and Stocker Cattle Summary.

After $1.17 lower and 27¢ lower in the front two contracts, Feeder Cattle futures closed an average of 85¢ higher week to week on Friday (5¢ higher to $1.22 higher at the back).

Surging equity markets tied to the reopening of the nation’s economy provided overall support.

“It’s too soon to talk too much about markets returning to normal, but the steady improvements associated with the packing industry facing fewer obstacles is a relief (see below),” said Stephen Koontz, agricultural economist at Colorado State University, in the latest issue of In the Cattle Markets from the Livestock Marketing Information Center.

From the lows of the year, Koontz points out: the five-area weighted average fed steer price is up about $15 at $115/cwt.; 7 to 8-weight feeder prices are up about $15 to $135; 4 to 5-weight calf prices are up about $8 to $170.

“There still remains several unanswered questions in the cattle market moving forward, but price levels for feeder cattle have improved to a point where producers were comfortable marketing some stock,” explained the AMS reporter on hand for Tuesday’s Kingsville Livestock Auction in Missouri, where calves sold steady to $6 lower and yearlings traded steady to $5 higher.

Fed Cattle Prices Sag Lower

Negotiated cash fed cattle prices were lower across a broad range last week. The weighted average five-area direct live steer price was $2.97 lower week to week on Thursday at $112.68/cwt. The dressed price was $4.13 lower at $179.17. Prices were $113.51 and $184.16 at the same time last year.

Live Cattle futures closed an average of $2.52 lower across the front five contracts week to week on Friday (37¢ lower to $5.82 lower in spot Jun) and then an average of 86¢ higher (20¢ higher to $1.22 higher).

Wholesale beef values continue to plunge, adjusting back to more normal fundamentals. Choice boxed beef cutout value was $101.86 lower week to week on Friday at $261.48/cwt. Select was $93.65 lower at $246.42.

Normalizing fundamentals have much to do with increased packing capacity that was significantly reduced by the pandemic.

“Cattle slaughter and beef production decreased on a year-over-year basis for four consecutive weeks. The lowest point occurred the last week of April when total cattle slaughter was down 34.8% year over year. Beef production that same week was down 33.8% compared to the same week one year ago,” Peel says. 

Since then, cattle harvest increased faster than many expected.

Total fed cattle slaughter for the week ending May 23 was 444,378 head, which was 51,816 head more (+13.2%) than the previous week and the most since the first week of April, according to USDA’s Actual Slaughter Under Federal Inspection report. Total cattle slaughter of 571,506 head was 52,383 head more (+10.1%) than the prior week and the most since the first week of April. Compared to the prior year, though, fed cattle slaughter was still 14.5% less and total cattle slaughter was 11.6% less.

Estimated cattle slaughter under federal inspection last week of 636,000 head was 112,000 head more (+21.3%) than the previous week.

“These slaughter numbers will determine when the cattle and beef markets return to more normal relationships,” Koontz says. “There are very large supplies and substantial inventory of long-fed cattle on feed. There has been a steady improvement in fed cattle and feeder cattle prices through last month and into the current. Continued improvement hinges on any further disruptions and steady elevation in slaughter numbers.”

The average dressed steer weight for the week of May 23 was 894 lbs., which was 6 lbs. lighter than the previous week, but 52 lbs. more than the same week a year earlier. The average dressed heifer weight of 826 lbs. was 5 lbs. less than the previous week, but 41 lbs. heavier than the prior year.

Exports Offer Continued Support

Despite the many and varied disruptions wrought by COVID-19, U.S. beef exports are higher year over year.

April beef exports were down 6% from a year ago to 98,613 metric tons (mt), with value falling 11% to $600.9 million, according to data released by USDA and compiled by the U.S. Meat Export Federation (USMEF). But, exports achieved outstanding growth in Japan, where U.S. beef is benefiting from reduced tariffs under the U.S.-Japan Trade Agreement. Exports also trended higher to China, following the late-March implementation of the U.S.-China Phase One Economic and Trade Agreement.

For January through April, beef exports totaled 433,316 mt, up 5% from a year ago, valued at $2.66 billion (up 3%).

“Considering all the challenges the U.S. red meat industry faced in April, export results were encouraging,” says Dan Halstrom, USMEF president and CEO. “Exporters lost several days of slaughter and processing due to COVID-19, and shipments to Mexico and some other Latin American markets declined due to slumping currencies and the imposition of stay-at-home orders. Despite these significant headwinds, global demand for U.S. beef and pork remained strong.”

Friday to Friday Change

 

Weekly Auction Receipts

 

June 5 Auction Direct

Video/net

Total
 

207,100

(+68,900)

87,400

(+45,400)

10,700

(-46,900)

305,200

(+67,400)

 

CME Feeder Index

CME Feeder Index* June 4 Change
  $127.93 –   $1.43

*Thursday-to Thursday for CME Feeder Index

 

Cash Stocker and Feeder

North Central

Steers-Cash June 5 Change
600-700 lbs. $152.03 +   $0.09
700-800 lbs. $141.46 –    $0.60
800-900 lbs. $130.42 –    $1.84

 

South Central

Steers-Cash June 5 Change
500-600 lbs. $154.23 –  $1.57
600-700 lbs. $143.15 + $2.91
700-800 lbs. $132.72 + $1.38

 

Southeast

Steers-Cash June 5 Change
400-500 lbs. $150.63 + $0.64
500-600 lbs. $142.18 + $0.49
600-700 lbs. $132.66 + $0.41

(AMS National Weekly Feeder & Stocker Cattle Summary)

 

Wholesale Beef Value

Boxed Beef  (p.m.) June 5 ($/cwt) Change
Choice $261.48 –  $101.86
Select $246.42 –  $93.65
Ch-Se Spread $15.06 –  $8.21

 

Futures

Feeder Cattle  June 5 Change
Aug $134.175 –  $1.175
Sep $135.475 –  $0.275
Oct $136.075 + $0.050
Nov $136.550 + $0.500
Jan ’21 $135.250 + $1.025
Mar $134.500 + $1.100
Apr $135.175 + $1.225
Aug $135.600 + $1.225

 

Live Cattle   June 5 Change
Jun $93.900 –  $5.825
Aug $96.175 –  $3.425
Oct $99.300 –  $2.125
Dec $103.825 –  $0.875
Feb ’21 $108.050 –  $0.375
Apr $110.750 + $0.200
Jun $104.475 + $0.950
Aug $104.300 + $1.225
Oct $107.300 + $1.050

 

Corn  June 5 Change
Jly  $3.312 +$0.056
Sep $3.354 +$0.054
Dec $3.452 +$0.066
Mar ’21 $3.570 +$0.068
May $3.632 +$0.060
Jly $3.682 +$0.058

 

Oil CME-WTI June 5 Change
Jly $39.55 + $4.06
Aug $39.80 + $3.96
Sep $40.03 + $3.83
Oct $40.15 + $3.72
Nov $40.28 + $3.61
Dec $40.42 + $3.50

 

Equities

Equity Indexes June 5 Change
Dow Industrial Average  27110.98 + 1727.87
NASDAQ    9814.08 +  324.21
S&P 500    3193.93 +   149.62
Dollar (DXY)       96.95 –        0.88
June 7th, 2020|Weekly Market Highlights|

Cattle Current Weekly Highlights—Week ending May 29, 2020

Demand for calves and feeder cattle continued to increase last week, amid plenty of ongoing uncertainty stemming from the growing backlog of fed cattle and worries about what the economic recession will ultimately mean to beef demand.

Nationwide, steers and heifers sold steady to $5/cwt. higher, according to the Agricultural Marketing Service (AMS).

Recent fed cattle price strength and the previous week’s friendly Cattle on Feed report helped bolster Cattle futures.

Feeder Cattle futures closed an average of $3.95 higher week to week on Friday ($2.60 higher at the back to $6.55 higher in spot Aug).

“Given that prices (calf and feeder) were depressed during their seasonal peak, it would make logical sense that calf prices will not decline as much moving forward. Thus, the market may be fairly stable the next several weeks until summer heat begins to take over,” says Andrew P. Griffith, agricultural economist at the University of Tennessee, in his weekly market comments.

Feedlot placements for March and April were down a combined 867,000 head from the previous year, suggesting a significant decline in fed marketing, mostly in September and into October, says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his latest market comments.

“The delayed placements from March and April will show up starting in May, and will be heavier, but the delay will help feedlots have a chance to get current,” Peel says. “The feedlot industry will spend much of the summer working through the backlog of fed cattle but the hole from March and April feedlot placements should provide a marketing window to catch up by this fall if not before.”

Fed Cattle Prices Soften Some

Negotiated cash fed cattle prices continued across a broad range last week. On a live basis, prices were steady to $5 lower in the Texas Panhandle at $115-$120/cwt., $5 less in Kansas at $115, steady to $7 less in Nebraska at $112-$120 and steady to $1 higher in the western Corn Belt at $115. Dressed prices were steady to $12 lower in Nebraska at $178-$190 and $5-$15 lower in the western Corn Belt at $175-$185.

Through Thursday, the five-area direct weighted steer price was $115.65/cwt. on a live basis and $183.30 in the beef. That was $1.64 less and 45¢less, respectively.

Live Cattle futures closed an average of $1.62 higher week to week on Friday (95¢ higher to $2.27 higher).

“Cattle slaughter has rebounded in recent weeks and this week averaged over 110,000 head Tuesday through Friday. Normal daily cattle slaughter in January was around 120,000,” say AMS analysts.

USDA estimated cattle slaughter for the week at 524,000 head, which was 31,000 head fewer (-5.58%) than the previous week, keeping in mind it was a holiday week. Compared to the same week last year, estimated slaughter was 64,000 less (-10.88%).

Barring a resurgence of COVID-19, or some other unforeseen circumstance, recent slaughter data suggest the worst of COVID-19 packing disruptions may be over.

“For beef and pork, the plants are mainly back online, but are running at reduced capacity due to social distancing of workers, etc. Beef and pork are currently running at about 10% to 15% below last year,” says Jayson Lusk, agricultural economist at Purdue University, in his latest comments. “The worst of the disruptions occurred in late April and early May when we were running about 40% below last year, but significant improvements have been made since then.”

For perspective, the week ending May 2 might be the ebb in packing capacity, when USDA estimated cattle slaughter at 425,000 head, which was 36.8% less (-248,000 head) year over year. Actual cattle slaughter under federal inspection that week ended up 438,614 head, which was 34.8% less (-233,836 head).

Wholesale Beef Prices Adjust Lower

“Along with the increased slaughter rates, meat production has gone up as well. Year-to-date beef production is still behind year ago but will be making inroads to making up the difference in the coming weeks and months,” AMS analysts explain. “With an accumulation of fed cattle, seasonal weights have increased ahead of schedule. Typically, this time of year, calf-feds comprise a substantial component of the fed cattle slaughter and drops the average weights.” 

The average dressed steer weight for the week ending May 16 (latest available) was 901 lbs., which was 5 lbs. heavier than the previous week and 52 lbs. heavier than the same week a year earlier, according to USDA’s Actual Slaughter Under Federal Inspection report. The average dressed heifer weight of 831 lbs. was 2 lbs. heavier than the previous week and 43 lbs. heavier than last year.

Choice boxed beef cutout value was $33.40 lower week to week on Friday at $363.34/cwt. Select was $34.11 lower at $340.07.

Griffith points out Choice boxed beef prices began the year at just less than $210/cwt. They charged to $459 as COVID-19 reduced packing capacity. Until then, he says the record high price was $263 in May of 2015, when cattle supplies were cyclically snug.

“One would think the higher price of beef at the wholesale level would be passed on to consumers. In some instances that was and will continue to be the case, but not all of the beef price increase has been passed on to consumers, as can be seen in most local grocery stores,” Griffith says. “Regardless of what retail beef prices are now, grocery stores will have to recoup some of those losses, which means retail beef prices are likely to continue creeping higher even as wholesale prices decline. The wholesale price of beef will decline as product is restored to grocery shelves.”

Friday to Friday Change

 

Weekly Auction Receipts

 

May 29 Auction Direct

Video/net

Total
 

138,200

(-66,600)

42,000

(-9,200)

57,600

(+55,800)

237,800

(-20,000)

 

CME Feeder Index

CME Feeder Index* May 28 Change
  $129.36 +  $3.12

*Thursday-to Thursday for CME Feeder Index

 

Cash Stocker and Feeder

North Central

Steers-Cash May 29 Change
600-700 lbs. $151.94 +   $1.39
700-800 lbs. $142.06 +   $2.82
800-900 lbs. $132.26 +   $1.27

 

South Central

Steers-Cash May 29 Change
500-600 lbs. $155.80 + $0.34
600-700 lbs. $140.24 –  $0.89
700-800 lbs. $131.34 –  $0.25

 

Southeast

Steers-Cash May 29 Change
400-500 lbs. $149.99 –  $0.64
500-600 lbs. $141.69 + $1.30
600-700 lbs. $132.25 + $1.39

(AMS National Weekly Feeder & Stocker Cattle Summary)

 

Wholesale Beef Value

Boxed Beef  (p.m.) May 29 ($/cwt) Change
Choice $363.34 –  $33.40
Select $340.07 –  $34.11
Ch-Se Spread $23.27 +   $0.71

 

Futures

Feeder Cattle  May 29 Change
Aug $135.350 + $6.550
Sep $135.750 + $5.600
Oct $136.025 + $4.775
Nov $136.050 + $3.975
Jan ’21 $134.225 + $3.050
Mar $133.400 + $2.475
Apr $133.950 + $2.600
Aug $134.275 + $2.600

 

Live Cattle   May 29 Change
Jun $99.725 + $2.025
Aug $99.600 + $2.275
Oct $101.425 + $2.025
Dec $104.700 + $1.950
Feb ’21 $108.425 + $1.725
Apr $110.550 + $0.975
Jun $103.525 + $0.950
Aug $103.075 + $1.250
Oct $106.250 + $1.450

 

Corn  May 29 Change
Jly  $3.256 +$0.076
Sep $3.300 +$0.074
Dec $3.386 +$0.060
Mar ’21 $3.502 +$0.050
May $3.572 +$0.046
Jly $3.624 +$0.044

 

Oil CME-WTI May 29 Change
Jly $35.49 + $2.24
Aug $35.84 + $2.19
Sep $36.20 + $2.06
Oct $36.43 + $1.94
Nov $36.67 + $1.83
Dec $36.92 + $1.74

 

Equities

Equity Indexes May 29 Change
Dow Industrial Average  25383.11 +  917.95
NASDAQ    9489.77 +  165.28
S&P 500    3044.31 +     88.86
Dollar (DXY)       98.30 –        1.50
May 31st, 2020|Weekly Market Highlights|

Cattle Current Weekly Highlights—Week ending May 22, 2020

Cash fed cattle prices underpinned more optimism last week, with buyers mostly paying more for calves and feeder cattle amid increased auction volume.

Nationwide, steers and heifers sold steady to $4/cwt. higher, according to the Agricultural Marketing Service (AMS). 

Feeder Cattle futures closed an average of $2.23 lower week to week on Friday.

“There are two aspects of the market worth noting and they are that prices for most classes of cattle are holding their ground or showing slight improvements and the number of cattle being marketed is increasing,” says Andrew P. Griffith, agricultural economist at the University of Tennessee, in his weekly market comments. “Even though the economy is not completely business as usual, it does seem the workforce and consumers are trying to achieve some sort of normalcy… Many of the animals that are hitting the feeder calf and feeder cattle market at this time were probably delayed to some degree as producers attempted to manage through the coronavirus pandemic. At the same time, there are producers who are looking to purchase cattle and those producers are likely behind on making purchases because cattle did not come to market from the middle of March through early May. Thus, these producers may have to purchase a little heavier animal than typical to meet their needs.

Feedlot Placements Down 22%

Markets will likely view Friday’s monthly USDA Cattle on Feed report as neutral, with numbers about mirroring pre-report estimates.

For feedlots with 1,000 head or more capacity, April placements of 1.43 million head were 22.26% less than the prior year. April marketings of 1.46 million head were 24.32% less than a year earlier. On-feed inventory May 1 was 5.14% less at 11.20 million head.

In the latest monthly Livestock, Dairy and Poultry Outlook (LDPO), analysts with USDA’s Economic Research Service (ERS) estimated there were 20.54 million head of cattle outside feedlots Apr. 1. That was 657,000 head more (+3.30%) than the same time a year earlier.

As the backlog of market-ready fed cattle continues to grow and feedlot margins are squeezed, ERS expects feeder cattle prices to remain under pressure.

“Based on recent price data, the second-quarter 2020 feeder steer price was lowered by $2 to $121/cwt. The third-quarter 2020 price forecast was lowered $5 to $123 and the fourth-quarter 2020 price was lowered $17 to $118,” say ERS analysts. “As a result, this month’s annual price forecast for 2020 was $124.50/cwt., close to last month’s forecast. The price forecast for first-quarter 2021 is expected to remain relatively low at $125. Feeder steer prices are expected to improve in the second half of 2021 on increased demand. The 2021 annual feeder steer price is forecast at $131.50, more than 5% higher than 2020.”

Fed Cattle Prices Bounce Higher

Negotiated cash fed cattle traded ended up mainly $5-$10 higher on a live basis last week at mostly $120/cwt. in the Southern Plains and at $119-$120 in Nebraska. Dressed trade was mostly $10 higher at mainly $190.

Other than 70¢ and 87¢ higher on either end of the board, Live Cattle futures closed an average of 41¢ lower week to week on Friday.

“This is the first week since the beginning of January when finished cattle prices exceeded year-ago prices from the same week. Additionally, this is only the third week this year when finished cattle prices have been higher than year-ago prices,” Griffith says. “There is a good possibility that finished cattle prices will see year- over-year gains, given that current prices are improving and year-ago prices were declining. The environment today is much different than a year ago, which provides optimism for year-over-year price gains, but that does not mean finished cattle prices will continue to surge higher. Increasing fed cattle slaughter will do the most to improve prices, but the rest will be left up to a consumer base that is struggling with cash flow.”

USDA estimated total cattle slaughter for the week at 555,000 head, which would be 56,000 head more (+11.2%) than the previous week, but 92,000 head fewer (-14.2%) than the same week a year earlier. Year to date, cattle slaughter of 12.11 million head is 893,000 head fewer (-6.9%) than the same period least year.

“The buildup in fed cattle supplies that are market ready is expected to have a substantial and lasting effect on fed cattle prices,” say ERS analysts. “Prices will remain low as the supply of market-ready cattle remains above the sector’s ability to process them, and the supply issue is expected to linger through 2021.”

Consequently, ERS lowered this year’s average price forecast for fed steers (five-area direct) to $104.08/cwt.: $118.32 in the first quarter; $99 in the second and third quarters; $100 in the fourth quarter. The projected annual average price for next year is $109.

Keep in mind the forecast runs counter to current cash prices, which appear to be supported by packers’ willingness to give back some of their margins.

Wholesale Beef Value Decline Continues

As packing capacity recovers and beef production increases, wholesale beef values continue heading south.

Choice boxed beef cutout value was $37.58 lower week to week on Friday at $396.74/cwt. Select was $44.88 lower at $374.18.

“The increase in slaughter and the increase in beef production is slowly lowering boxed beef prices at a time when consumers are preparing for the unofficial start of summer,” Griffith notes. “Generally, this is a weekend when consumers head to the grocery store and spend a little extra at the meat counter to get good quality middle meats to throw on the grill. This typical action will likely be muted this year as unemployment rates have spiked and retail beef prices are extremely high. In some instances, ground beef may even be too expensive for many consumers to consider as the main course when celebrating Memorial Day. It is difficult to imagine consumers trading a steak for a pork chop or a chicken breast but that may be the case if consumers are already running low on cash.”

Friday to Friday Change

 

Weekly Auction Receipts

 

May 22 Auction Direct

Video/net

Total
 

204,800

(+33,800)

51,200

(+24,000)

1,800

(-32,800)

257,800

(-23,000)

 

CME Feeder Index

CME Feeder Index* May 21 Change
  $126.24 +  $1.44

*Thursday-to Thursday for CME Feeder Index

 

Cash Stocker and Feeder

North Central

Steers-Cash May 22 Change
600-700 lbs. $150.55 +   $0.10
700-800 lbs. $139.24 –    $0.44
800-900 lbs. $130.99 +   $4.23

 

South Central

Steers-Cash May 22 Change
500-600 lbs. $154.23 + $0.34
600-700 lbs. $141.13 + $0.28
700-800 lbs. $131.59 + $1.71

 

Southeast

Steers-Cash May 22 Change
400-500 lbs. $150.63 + $2.67
500-600 lbs. $140.39 + $0.99
600-700 lbs. $130.86 + $2.08

(AMS National Weekly Feeder & Stocker Cattle Summary)

 

Wholesale Beef Value

Boxed Beef  (p.m.) May 22 ($/cwt) Change
Choice $396.74 –  $37.58
Select $374.18 –  $44.88
Ch-Se Spread $22.56 +   $7.30

 

Futures

Feeder Cattle  May 22 Change
Aug $128.800 –  $2.275
Sep $130.150 –  $2.600
Oct $131.250 –  $2.700
Nov $132.075 –  $2.500
Jan ’21 $131.175 –  $2.050
Mar $130.925 –  $1.750
Apr $131.350 –  $1.725
Aug $131.775 n/a

 

Live Cattle   May 22 Change
Jun $97.700 + $0.700
Aug $97.325 –  $0.500
Oct $99.400 –  $0.950
Dec $102.750 –  $0.425
Feb ’21 $106.700 –  $0.125
Apr $109.575 –  $0.275
Jun $102.575 –  $0.425
Aug $101.825 –  $0.200
Oct $104.800 + $0.875

 

Corn  May 22 Change
Jly  $3.180 – $0.012
Sep $3.226 – $0.004
Dec $3.326 +$0.006
Mar ’21 $3.452 +$0.006
May $3.526 +$0.006
Jly $3.580 +$0.006

 

Oil CME-WTI May 22 Change
Jly $33.25 + $3.73
Aug $33.65 + $3.53
Sep $34.14 + $3.45
Oct $34.49 + $3.38
Nov $35.18 + $3.28
Dec $35.18 + $3.17

 

Equities

Equity Indexes May 22 Change
Dow Industrial Average  24465.14 +  779.72
NASDAQ    9324.59 +  310.03
S&P 500    2955.45 +     91.75
Dollar (DXY)       99.80 –        0.56
May 24th, 2020|Weekly Market Highlights|

Cattle Current Weekly Highlights—Week ending May 15, 2020

Cash cattle prices mainly increased last week, in the face of volatile futures trade, clouded by how soon and how much packing capacity will return, the growing backlog of market-ready fed cattle, as well as demand uncertainty tied to the reopening of the U.S. economy and consumer economic wherewithal.

Nationwide, calves and feeder cattle traded $1-$5/cwt. higher, according to the Agricultural Marketing Service (AMS).

“The best demand, by far, remains on light calves suitable for backgrounding,” say AMS analysts. “Seller interest improved somewhat, while some ranchers continue to resist the current market.” Even so, they point out that auction volume continued heavy as cattle came to town from winter wheat and ryegrass pastures in the Southern Plains.

Feeder Cattle futures closed an average of $3.89 lower week to week on Friday, giving back about half of what was gained the previous week.

“It is extremely risky, from a market analyst standpoint, to make a statement about the direction of cattle prices, but the past couple of weeks give the appearance that the market may be finding some stability,” says Andrew P. Griffith, agricultural economist at the University of Tennessee, in his weekly market comments. “The key to a stronger feeder cattle market is feedlots being able to move the current cattle out and opening up pen space. This can only be done if slaughter rates begin to accelerate. The thought is that cattle prices will recover as slaughter capacity recovers. However, there will still be seasonal tendencies that influence the market. There will be some changes to seasonal tendencies as fewer cattle have been placed in feedlots the past couple of months, but those seasonal changes may not be as drastic as some people may think. The cattle that are still in the country are going to be heavier placements, which means fewer days on feed.”

Fed Cattle Prices Continue Higher

Packing capacity continues to recover from COVID-19 slowdowns, albeit slowly.

Estimated slaughter under federal inspection last week was 499,000 head, which was 47,000 head more than the previous week and 74,000 head more than two weeks earlier, but still 163,000 head fewer than same week last year, according to the Agricultural Marketing Service (AMS).

That helped boost fed cattle prices, although it remains difficult to get a firm handle on value as prices continue across a wide range and as packers appear to be paying more than current fundamentals dictate.

The five-area direct weighted average steer price through Thursday was $11.36 higher than the previous week at $111.40/cwt. The average price in the beef was $19.90 higher at $179.30.

Regionally, negotiated cash fed cattle prices were $10-$15 higher on a live basis at $115/cwt. in Kansas, $119-$120 in Nebraska and $115 in the western Corn Belt. AMS reported live prices at the Texas Panhandle at mostly $110, while the Texas Cattle Feeders Association reported its members trading steers at a weighted average price of $112.53 and heifers at $113.29. Dressed prices in the North were $10-$30 higher at $180.

“It will likely take many weeks for slaughter rates to catch up with the growing backlog of fed cattle and get the industry current once again,” says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly market comments. “Meantime, all sectors of the industry are responding to the need to slow cattle down and hold them longer in a variety of production settings before proceeding to finish in feedlots. Fed cattle weights are increasing and pushing carcass weights higher counter-seasonally.”

The average five-area direct fed steer price (FOB) in April was $10.46/cwt. less than the previous month at $102.02, according to the most recent monthly report from USDA. In the beef (delivered), the average steer price of $159.27 was $19.30 less.

Other than $2.35 higher in spot Jun, Live Cattle futures closed an average of $3.55 lower week to week on Friday, giving back a little more than half of what was gained the previous week.

“It is understandable for there to be a gap in cash prices and the futures market since it is not June, but the basis is just too large right now,” Griffith says. “There are still a lot of skeptics that think finished cattle prices will continue to falter, but the market is demanding meat protein. There is no way to guess what will happen to finished cattle prices, but feedlots will continue to market as many cattle as possible with the strong basis and backed up cattle.”

Wholesale Beef Values Appear to Top

Wholesale beef values declined sharply Wednesday–the first day-to-day decline since Apr. 8–likely signaling the Covid-skewed top was established.

Choice boxed beef cutout value was $26.56 lower week to week on Friday at $434.32/cwt. Select was $29.93 lower at $419.06.

“The main story from a meat perspective is the daily and weekly slaughter levels. Cattle slaughter the first quarter of the year exceeded 621,000 head every week except the first week of the year. There was even a week when cattle slaughter nearly reached 685,000 head just prior to April,” Griffith explains. “Slaughter levels then declined rapidly as facilities closed or reduced harvest levels in the middle of April. Slaughter levels on a weekly basis fell to about 425,000 head the last week of April and starting into May.”

USDA projects beef production at 25.76 billion lbs. this year, according to the latest monthly World Agricultural Supply and Demand Estimates (WASDE). That’s 1.68 billion lbs. less (-6.12%) than the April forecast and would be 1.39 billion lbs. less (-5.12%) than last year.

Friday to Friday Change

Weekly Auction Receipts

 

May 15 Auction Direct

Video/net

Total
 

171,000

(-11,100)

75,200

(-8,500)

35,400

(+6,100)

281,600

(-13,500)

 

CME Feeder Index

CME Feeder Index* May 14 Change
  $124.80 +  $3.66

*Thursday-to Thursday for CME Feeder Index

 

Cash Stocker and Feeder

North Central

Steers-Cash May 15 Change
600-700 lbs. $150.45 +   $5.24
700-800 lbs. $139.68 +   $4.24
800-900 lbs. $126.76 +   $4.86

 

South Central

Steers-Cash May 15 Change
500-600 lbs. $153.89 + $3.27
600-700 lbs. $140.85 + $3.03
700-800 lbs. $129.88 + $3.16

 

Southeast

Steers-Cash May 15 Change
400-500 lbs. $147.96 + $0.11
500-600 lbs. $139.40 + $1.80
600-700 lbs. $128.78 + $1.59

(AMS National Weekly Feeder & Stocker Cattle Summary)

 

Wholesale Beef Value

Boxed Beef  (p.m.) May 15 ($/cwt) Change
Choice $434.32 –  $26.56
Select $419.06 –  $29.93
Ch-Se Spread $15.26 +   $3.37

 

Futures

Feeder Cattle  May 15 Change
May $124.725 –  $3.175
Aug $131.075 –  $5.875
Sep $132.750 –  $5.400
Oct $133.950 –  $5.075
Nov $134.575 –  $5.050
Jan ’21 $133.225 –  $4.650
Mar $132.675 –  $3.025
Apr $133.075 –  $3.950

 

Live Cattle   May 15 Change
Jun $97.000 + $2.350
Aug $97.825 –  $2.375
Oct $100.350 –  $3.925
Dec $103.175 –  $4.525
Feb ’21 $106.825 –  $4.825
Apr $109.850 –  $4.375
Jun $103.000 –  $3.200
Aug $102.025 –  $2.575
Oct $103.925 –  $2.575

 

Corn  May 15 Change
Jly  $3.192 -0-
Sep $3.230 – $0.016
Dec $3.320 – $0.036
Mar ’21 $3.446 – $0.044
May $3.520 – $0.044
Jly 3.574 – $0.046

 

Oil CME-WTI May 15 Change
Jun $29.43 + $4.69
Jly $29.52 + $3.35
Aug $30.12 + $2.07
Sep $30.69 + $1.18
Oct $31.11 + $0.63
Nov $31.56 + $0.29

 

Equities

Equity Indexes May 15 Change
Dow Industrial Average  23685.42 –   645.90
NASDAQ    9014.56 –   106.76
S&P 500    2863.70 –     66.10
Dollar (DXY)       100.36 +        1.26
May 18th, 2020|Weekly Market Highlights|

Cattle Current Weekly Highlights—Week ending May 8, 2020

Demand increased for calves and feeder cattle–especially after mid-week–helped along by stronger cash fed cattle prices and increasing confidence that the previous week’s Executive Order–mandating meat and processing facilities remain open–will help normalize the supply chain, eventually.

Steers and heifers sold steady to $5/cwt. higher, according to the Agricultural Marketing Service (AMS).

Feeder Cattle futures closed an average of $8.83 higher week to week on Friday.

“From a fundamental standpoint, the futures market started the year overvaluing feeder cattle. However, coronavirus resulted in a huge selloff, which then sent the market into undervaluing feeder cattle which has persisted for nearly two months,” says Andrew P. Griffith, agricultural economist at the University of Tennessee, in his weekly market comments. “It would seem the market is adjusting to the current environment and trying to bring feeder cattle values back in line with a more fundamental expectation for the year. The futures market likely still has feeder cattle undervalued to a slight degree, looking into the summer and fall contracts, but the market is much more in line with expectations.”

Griffith adds that both cash and futures prices will likely remain volatile as the market seeks equilibrium.

Cash Fed Cattle Prices Gain

Negotiated cash fed cattle trade ended the week on a decidedly higher. Live sales in the Southern Plains were at $115/cwt., which was $5 more than earlier in the week and $10-$20 higher than the previous week. Live sales in Nebraska were $19-$20 higher than the previous week at $114-$115. Live sales in the western Corn Belt were mainly $3-$10 higher than the previous week at mostly $103; dressed sales there were $20-$30 higher at mostly $180.

“This strength is most likely due to the slight increase in estimated cattle slaughter and continued strong demand for beef,” Griffith says.

According to AMS, estimated cattle slaughter under federal inspection for the week was reported at 452,000 head, still well below where it needs to be, but 27,000 head more than the previous week.

Live Cattle futures closed an average of $6.02 higher week to week on Friday ($3.50 higher at the back to $7.65 higher toward the front.

Although day-to-day gains moderated as the week wore on, the bottleneck in beef packing and processing continued to boost wholesale beef values.

Choice boxed beef cutout value was $83.43 higher week to week on Friday at $460.88/cwt. Select was $91.86 higher at $448.99.

Cattle slaughter and beef production continue vastly lower year over year, while the backlog of fed cattle continues to build.

Estimated cattle slaughter for the week ending May 2 was 425,000 head, which was 38% less year over year, according to Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly market comments. For the past four weeks (through May 2), he says total cattle slaughter averaged 26.4% less than the same weeks last year–down 689,000 head, or a little more than a week’s worth of cattle slaughter.

Similarly, Peel explains beef production was down 35% the previous week, compared to a year earlier; an average of 25% less for the past four weeks. Relative to the first 14 weeks of the year, before current COVID-19 production declines began, he says the combined 520 million lbs. of reduced beef production over the last four weeks equates to losing a week’s worth of production.

“Given when packing plant workers began to be impacted and the additional attention now focused on protecting worker health, it is likely that we are currently at or very near the worst point of packing plant disruptions,” Peel says. “However, it is unclear how fast plants will resume production levels in the coming weeks. It is likely that the effective capacity will be reduced permanently or certainly for the foreseeable future because of the safety changes needed at packing plants. The impacts on cattle markets will linger for many weeks before backlogs are cleaned up and markets are current again.”

For consumers, Peel emphasizes there is no shortage of beef in the country. Any lack of availability encountered will be temporary.

Even so, there will likely continue to be plenty of angst from the ranch gate to the retail meat case.

“Soon, U.S. consumers will begin to see in their local meat case the effects of the beef and pork plant shut downs in April, with potentially 30% less meat on shelves and prices up to 20% above last year,” according to a new report from CoBank’s Knowledge Exchange Division: Closed Meat Cases Today Mean Empty Meat Cases this Summer. “For cattle and hog producers, the bottlenecks created by the plant slowdowns and shut downs have meant they will lose billions of dollars this year and be forced to euthanize millions of pigs. In spite of President Trump’s executive order to re-open the plants, per capita COVID-19 cases around U.S. meat plants have continued to climb, raising the risk of further plant capacity disruptions.”

U.S. Beef Exports and Imports Continue to Add Value

As scarcer beef supplies spawn more retail and food service outlets to limit customer purchases, some consumers wonder why the U.S. continues to export beef. Similarly, as cattle prices sag and run opposite of wholesale beef values, some producers question why the U.S. continues to import beef.

“Closing off or limiting beef exports does not necessarily mean greater amounts of beef in U.S. retail grocery stores, nor does limiting imports mean greater cattle prices,” says Brenda Boetel, livestock economist at the University of Wisconsin-River Falls. “The reason is because beef exported is not the same as beef imported. Even with beef production down, the importance of keeping export markets (and import markets) open is vital to the long-term health of the cattle industry.”

More specifically, in the latest issue of In the Cattle Markets, Boetel explains the mix of U.S. beef exports add value to domestic cattle prices as international customers place a higher value on some beef products than U.S. consumers.

Likewise, importing beef–mostly lean trim–helps bolster U.S. ground beef demand and keep it more price competitive than using higher value parts of the domestic carcasses.

U.S. beef exports were record high for the first quarter, according to the latest data released by USDA and compiled by the U.S. Meat Export Federation (USMEF).

U.S. beef exports in March totaled 115,308 metric tons (mt), up 7% from a year earlier. Value was 4% more at $702.2 million. Japan, South Korea, Mexico, Canada and Taiwan drove export growth for the month.

First-quarter beef exports climbed 9% from a year earlier to 334,703 mt; valued at $2.06 billion, which was 8% higher.

Beef export value per head of fed slaughter was $308.21 in March, down 8% from the very high March 2019 average. For the first quarter, per-head export value increased 2% to $317.06.

Friday to Friday Change

Weekly Auction Receipts

 

May 8 Auction Direct

Video/net

Total
 

182,100

(-37,100)

83,700

(+8,200)

29,300

(+28,000)

295,100

(-900)

 

CME Feeder Index

CME Feeder Index* May 7 Change
  $121.14 +  $1.75

*Thursday-to Thursday for CME Feeder Index

 

Cash Stocker and Feeder

North Central

Steers-Cash May 8 Change
600-700 lbs. $145.21 –    $1.71
700-800 lbs. $135.44 +   $1.35
800-900 lbs. $121.90 –    $0.63

 

South Central

Steers-Cash May 8 Change
500-600 lbs. $150.62 + $1.27
600-700 lbs. $137.82 + $1.80
700-800 lbs. $126.72 + $4.55

 

Southeast

Steers-Cash May 8 Change
400-500 lbs. $147.85 + $2.60
500-600 lbs. $137.60 + $0.19
600-700 lbs. $127.19 + $1.53

(AMS National Weekly Feeder & Stocker Cattle Summary)

 

Wholesale Beef Value

Boxed Beef  (p.m.) May 8 ($/cwt) Change
Choice $460.88 + $83.43
Select $448.99 + $91.86
Ch-Se Spread $11.89 –  $8.24

 

Futures

Feeder Cattle  May 8 Change
May $127.900 + $10.075
Aug $136.950 + $9.300
Sep $138.150 + $9.100
Oct $139.025 + $9.125
Nov $139.625 + $9.150
Jan ’21 $137.875 + $8.800
Mar $135.700 + $7.575
Apr $137.025 + $7.550

 

Live Cattle   May 8 Change
Jun $94.650 + $7.400
Aug $100.200 + $7.650
Oct $104.275 + $7.475
Dec $107.700 + $6.725
Feb ’21 $111.650 + $6.275
Apr $114.225 + $6.700
Jun $106.200 + $4.950
Aug $104.600 + $3.550
Oct $106.500 + $3.500

 

Corn  May 8 Change
May $3.190 +$0.076
Jul $3.192 +$0.008
Sep $3.246 – $0.008
Dec $3.356 – $0.010
Mar ’21 $3.490 – $0.012
May $3.564 – $0.018

 

Oil CME-WTI May 8 Change
Jun $24.74 + $4.96
Jly $26.17 + $3.88
Aug $28.05 + $3.85
Sep $29.51 + $3.82
Oct $30.48 + $3.69
Nov $31.27 + $3.53

 

Equities

Equity Indexes May 8 Change
Dow Industrial Average  24331.32 +   607.63
NASDAQ   9121.32 +   516.37
S&P 500    2929.80 +     99.09
Dollar (DXY)         99.10 +        0.31
May 9th, 2020|Weekly Market Highlights|

Cattle Current Weekly Highlights—Week ending May 1, 2020

At least shades of normalcy returned to calf and feeder cattle markets last week, with auction receipts of 219,200 head being more year over year for the first time in 10 weeks, according to the Agricultural Marketing Service (AMS).

Renewed volume, relative to the continued packing bottleneck and slowed feedlot turnover, went a long ways in explaining some weaker auction prices week to week, despite gains in Cattle futures.

Nationwide, steers and heifers sold steady to $4 /cwt. lower, according to AMS. The exception was $2-$4 higher for heifers weighing 700-900 lbs. in the North Central and South Central regions.

Not counting recently minted away-Apr, Feeder Cattle futures closed an average of 68¢ higher week to week on Friday (10¢ to $1.25 higher), except for $1.62 lower in Mar.

Given ongoing market uncertainty, Andrew P. Griffith, agricultural economist at the University of Tennessee says he continues to receive questions from producers about whether to sell calves now or wait.

“There are very few, if any, acceptable outcomes, given the current environment,” Griffith says, in his weekly market comments. “Determining the true value of the cattle is nearly impossible in this environment, given the risk that the buyer is taking. That is not to say the current marketing environment is any riskier than it was in January, but buyers’ perceptions of risk have changed, which means they are not going to be as willing to bid up for cattle. Not knowing when anything will improve may mean that many producers just have to take their losses today and hope the next round is more profitable.”

It’s also worth noting that cattle are starting to move to market from wheat pasture.

Fed Prices Battle for Steady

Negotiated cash fed cattle prices ended the week across a wide range but generally steady with the previous week with live prices at $95-$100 in the Texas Panhandle, $95-$105 in Kansas and Nebraska and at $93-$100 in the western Corn Belt. Dressed sales were at $150-$160.

Through Thursday, the negotiated five-area daily weighted average direct live steer price was $1.03 less than the previous week at $95.92/cwt. It was 23¢more in the beef at $154.50.

Live Cattle futures closed an average of $2.79 higher week to week on Friday ($1.55 higher at the back to $4.62 higher in spot Jun), not counting newly minted away Oct.

“Cash cattle continue to trade with a strong basis compared to the June Live Cattle futures price, which is trading near $87-$88, which means hedged cattle can still make some money for the feedlot operator,” Griffith says. “The rather large basis points to a disconnect between the cash and futures market at this time, but that disconnect is largely the risk of the unknown. The one known fact is that cattle feeders still have cattle that need to be marketed and they can only slow growth so much.”

Support for the fed cattle market last week included the Executive Order signed by President Trump mandating that meat packing and processing facilities remain open. At the time, estimated daily hog and cattle slaughter were both down about 40% compared to the same time last year, according to Jayson Lusk, noted Purdue University food and agricultural economist, in his blog.

“Plant closures and slow-downs from COVID-19 have reached such levels that it will be impossible for consumers not to notice effects on meat prices or availability in the coming weeks,” Lusk says.

“While there are currently no widespread shortages of beef, we are seeing supply chain disruptions because of plant closures and reductions in the processing speed at many, if not most, beef processing plants in the United States. We thank President Trump for his recognition of the problem and the action he has taken to begin correcting it,” says Colin Woodall chief executive officer of the National Cattlemen’s Beef Association.

“The executive order will help ensure a steady, reliable supply of high-quality U.S. protein-not only for customers in the United States, but across the globe,” says Dan Halstrom, president and CEO of the U.S. Meat Export Federation (USMEF). “The U.S. meat industry is already taking extraordinary steps to ensure worker safety, including COVID-19 testing, temperature checks, use of personal protective equipment and social distancing of employees. But further action is needed to stabilize our meat supply chain, and USMEF greatly appreciates the Trump administration’s prioritization of safe and consistent meat production and processing during this difficult time.”

Under the Executive Order and the authority of the Defense Production Act, USDA will work with meat processing to affirm they will operate in accordance with the CDC and OSHA guidance, and then work with state and local officials to ensure that these plants are allowed to operate, according to U.S. Agriculture Secretary Sonny Perdue.

Of course, there can be a Grand Canyon’s worth of difference between packing and processing plants remaining open and operating at capacity. Until something approaching normalcy returns to beef packing, risk premiums will likely continued to be applied to fed cattle prices and paid for available beef.

“Estimated slaughter under federal inspection for the week was reported at a miniscule 425,000 head, which was 40,000 head less than last week and 248,000 head less than last year,” say AMS analysts. “During this week, fed steer and heifer slaughter was estimated some days at 50,000 head, which would be almost half of what can be done when plants are running at full capacity.”

Choice boxed beef cutout value was $84.08 higher week to week (+28.7%) on Friday at $377.45/cwt. Select was $78.11 higher (+28.0%) at $357.13.

Friday to Friday Change

Weekly Auction Receipts

 

May 1 Auction Direct

Video/net

Total
 

219,200

(+61,100)

75,500

(+15,100)

1,300

(-3,100)

296,900

(+73,100)

 

CME Feeder Index

CME Feeder Index* Apr. 30 Change
  $119.39 –   $0.09

*Thursday-to Thursday for CME Feeder Index

 

Cash Stocker and Feeder

North Central

Steers-Cash May 1 Change
600-700 lbs. $146.92 –    $3.54
700-800 lbs. $134.09 –    $0.23
800-900 lbs. $122.53 –    $2.16

 

South Central

Steers-Cash May 1 Change
500-600 lbs. $149.35 –  $3.77
600-700 lbs. $136.02 –  $1.26
700-800 lbs. $122.17 –  $0.24

 

Southeast

Steers-Cash May 1 Change
400-500 lbs. $145.25 –  $3.81
500-600 lbs. $137.41 –  $2.08
600-700 lbs. $125.66 –  $3.13

(AMS National Weekly Feeder & Stocker Cattle Summary)

 

Wholesale Beef Value

Boxed Beef  (p.m.) May 1 ($/cwt) Change
Choice $377.45 + $84.08
Select $357.13 + $78.11
Ch-Se Spread $20.13 + $5.78

 

Futures

Feeder Cattle  May 1 Change
May $117.825 + $0.375
Aug $127.650 + $1.250
Sep $129.050 + $1.250
Oct $129.900 + $0.975
Nov $130.475 + $0.150
Jan ’21 $129.075 + $0.100
Mar $128.125 –  $1.625
Apr $129.475 n/a

 

Live Cattle   May 1 Change
Jun $87.250 + $4.625
Aug $92.550 + $3.650
Oct $96.800 + $2.325
Dec $100.975 + $2.550
Feb ’21 $105.375 + $2.525
Apr $107.525 + $2.350
Jun $101.250 + $2.050
Aug $101.050 + $1.550
Oct $103.000 n/a

 

Corn  May 1 Change
May $3.114 – $0.042
Jul $3.184 – $0.046
Sep $3.254 – $0.020
Dec $3.366 -0-
Mar ’21 $3.502 +$0.010
May $3.582 +$0.026

 

Oil CME-WTI May 1 Change
Jun $19.78 + $2.84
Jly $22.29 + $1.07
Aug $24.20 + $0.34
Sep $25.69 –  $0.02
Oct $26.79 + $0.02
Nov $27.74 + $0.07

 

Equities

Equity Indexes May 1 Change
Dow Industrial Average  23723.69 –     51.58
NASDAQ   8604.95 –     29.57
S&P 500    2830.71 –       6.03
Dollar (DXY)         98.79 –       1.50
May 3rd, 2020|Weekly Market Highlights|

Cattle Current Weekly Highlights—Week ending Apr. 24, 2020

Increased auction volume returned this week amid narrowly mixed trade as markets tried to sort through slowing beef production and volatile outside markets, in search of when and how the U.S. economy can reopen.

Nationwide, calves and feeders sold from $2 lower to $2/cwt. higher, according to the Agricultural Marketing Service (AMS).

“Grazing calves have started to see their demand wane this week as turnout dates have come and gone. Bigger feeders seem to have stabilized and found some footing,” say AMS analysts.

Except for 27¢ higher in spot Apr and 47¢ lower in Aug, Feeder Cattle futures closed an average of $1.35 lower week to week on Friday (32¢ lower at the back to $2.15 lower).

“The soft prices (calves and feeders) primarily stem from the cattle market assembly line backing up or bottlenecking at the packer level,” explains Andrew P. Griffith, agricultural economist at the University of Tennessee, in his weekly market comments. “The reduced slaughter levels are backing finished cattle up in the feedlot, which means there is limited pen space for new feeder cattle placements. Since there is little space to put feeder cattle, feedlot managers are not willing to bid very hard to pull those cattle out of the country and into their yards because then they have more mouths to feed and nowhere to go with the animals that need to be leaving. This also puts a strain on the calf market because some stocker and backgrounding operations are at capacity and not able to move their heavy feeders to the feedlot.”

Normally, the monthly Cattle on Feed report published Friday would be hailed as more than bullish with 22.69% fewer placements in March than the previous year, 13.11% more marketings in the month and an on-feed inventory Apr. 1 (11.20 million head) 5.49% less. Of course, the notion of normal left a ways back.

Fed Prices Crumble

The choke point of packing capacity grew last week as COVID-19 sidelined workers. According to AMS, the past three weeks of cattle slaughter account for three of the four sparsest weeks since mandatory price reporting began in 2001.

USDA estimated last week’s cattle slaughter at 469,000 head, which would be 6.6% less than the prior week and 26.9% less than the same week a year ago. Year to date, estimated cattle slaughter is 1.9% less than in 2019 at 10.16 million head.

“A backlog of fed cattle at this level will be impossible to eliminate in a timely fashion, resulting in fed supplies remaining above slaughter capacity for several months,” say AMS analysts. “Anecdotes of fed cattle being pulled ahead for slaughter by two to three weeks–around the beginning to middle of February– have now disintegrated to being two to three weeks behind. That is what happens when daily slaughter for the five-day workweek averages 85,000 head compared to 120,000 head.”

“There are no indications this situation will get better moving through the month of May, but the hope is the economy begins to reopen and health is not an issue,” Griffith says. “These are the only two things this market cares about right now. If these two things do not change, then prices will remain depressed, as will cattle feeders’ attitudes. If the economy does start to reopen, then it will be hitting grilling season square in the nose, which should provide support for finished cattle.”

Negotiated cash fed cattle trade for the week through Friday afternoon was $5-$10 lower on a live basis in the Southern Plains at $100/cwt. in Kansas and $95-$100 in the Texas Panhandle. It was up to $10 lower in Nebraska and the western Corn Belt at $95. Dressed trade was from $8 lower to $10 higher at mostly $160, compared to the previous week’s light test.

For all of the gyrations, five-area daily weighted average direct negotiated prices through Thursday were mainly steady week to week with live steers at $96.95 and dressed steers at $154.27.

Live Cattle futures closed an average of $2.83 lower week to week on Friday ($1.50 lower at the back to $9.67 lower in spot Apr).

On the other side of the trade, wholesale beef values screamed higher as buyers scrambled for declining supplies on the cusp of grilling season.

Choice boxed beef cutout value was $54.38 higher week to week on Friday at $293.37/cwt. Select was $51.82 higher at $279.02.

“At this time, plant reductions are mostly resulting in some product disruptions and perhaps temporary shortages of fresh meat,” explained Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly comments. “Barring a catastrophic combination of plant closures or extended periods of plant disruptions, significant shortages of meat are not expected. However, the combination of processing disruptions and the continuing challenges of supply chain disruptions means that consumers will likely experience limited meat supplies and selection in grocery stores in the coming weeks.”

Friday to Friday Change

Weekly Auction Receipts

 

Apr.24 Auction Direct

Video/net

Total
 

158,100

(+59,300)

60,400

(+11,000)

4,400

(-42,600)

222,900

(+27,700)

 

CME Feeder Index

CME Feeder Index* Apr. 23 Change
  $119.48 +   $3.73

*Thursday-to Thursday for CME Feeder Index

 

Cash Stocker and Feeder

North Central

Steers-Cash Apr. 24 Change
600-700 lbs. $150.46 –    $2.96
700-800 lbs. $134.32 +   $0.31
800-900 lbs. $124.69 +   $1.05

 

South Central

Steers-Cash Apr. 24 Change
500-600 lbs. $153.12 –  $0.02
600-700 lbs. $137.28 + $0.37
700-800 lbs. $122.41 + $1.15

 

Southeast

Steers-Cash Apr. 24 Change
400-500 lbs. $149.06 –  $1.31
500-600 lbs. $139.49 –  $1.44
600-700 lbs. $128.79 + $1.24

(AMS National Weekly Feeder & Stocker Cattle Summary)

 

Wholesale Beef Value

Boxed Beef  (p.m.) Apr.24 ($/cwt) Change
Choice $293.37 + $54.38
Select $279.02 + $51.82
Ch-Se Spread $14.35 + $2.56

 

Futures

Feeder Cattle  Apr. 24 Change
Apr $119.800 + $0.275
May $117.450 –  $1.825
Aug $126.400 –  $2.000
Sep $127.800 –  $2.150
Oct $128.925 –  $1.900
Nov $130.325 –  $0.950
Jan ’21 $128.975 –  $0.325
Mar $129.750 –  $0.325

 

Live Cattle   Apr. 24 Change
Apr $84.975 –  $9.675
Jun $82.625 –  $3.675
Aug $88.900 –  $2.200
Oct $94.475 –  $1.650
Dec $98.425 –  $1.450
Feb ’21 $102.850 –  $1.650
Apr $105.175 –  $1.825
Jun $99.200 –  $1.850
Aug $99.500 –  $1.500

 

Corn  Apr. 24 Change
May $3.156 – $0.066
Jul $3.230 – $0.062
Sep $3.274 – $0.062
Dec $3.366 – $0.068
Mar ’21 $3.492 – $0.060
May $3.556 – $0.064

 

Oil CME-WTI Apr. 24 Change
May $16.94 –  $8.09
Jun $21.22 –  $8.20
Jly $23.86 –  $7.34
Aug $25.71 –  $6.37
Sep $26.77 –  $5.94
Oct $27.67 –  $5.63

 

Equities

Equity Indexes Apr. 24 Change
Dow Industrial Average  23775.27 –  467.22
NASDAQ    8634.52 –     15.62
S&P 500    2836.74 –     37.82
Dollar (DXY)      100.29 +      0.57
April 26th, 2020|Weekly Market Highlights|

Cattle Current Weekly Highlights—Week ending Apr. 17, 2020

Calves and feeder cattle traded steady to higher last week as a sense of stability returned to Cattle futures and as hopes grew for the U.S. economy opening sooner rather than later as COVID-19 appeared to plateau.

Steers and heifers traded $5-$10/cwt. higher in the South Central region, according to the Agricultural Marketing Service (AMS). Prices were steady to $4 higher in the North Central and Southeast regions.

Auction receipts continued lighter than normal as some producers hold cattle, hoping markets will improve. Auction volume was less than 100,000 head for the third time in five weeks, according to AMS–about 18.5% less than in 2019 so far this year.

Except for unchanged in spot Apr and 47¢ lower in Aug, Feeder Cattle futures closed an average of $1.14 higher on Friday, compared to the previous Thursday (57¢ to $2.10 higher).

“The recommendation for most producers has been to hold on to cattle and try to lengthen the potential marketing window, and that recommendation holds today,” says Andrew P. Griffith, agricultural economist at the University of Tennessee, in his weekly market comments. “Unfortunately, there are producers that can no longer hold on to cattle, which limits their flexibility. One alternative some producers could consider is shipping cattle to the feedlot. This is a potential solution for producers who can afford to hold on to cattle and do not need the cash flow to sustain business operations. Several producers will need the cash flow, given they have been purchasing feed all winter, and fertilizer bills will be due sooner rather than later. These are the producers who are in the toughest position because there are very few alternatives. Many producers will simply have to make the best decision for today, given the available information. There is no reason to look back a month from now and wish the decision was different.”

Packing Constraints Pressure Fed Cattle Prices

Slowing beef packing and processing, due to COVID-19, pressured negotiated cash fed cattle prices amid a light test.

Live trades were mostly steady in the Southern Plains at mainly $105/cwt. They were steady to $11 lower in the north at $94-$105 in Nebraska and at $95-$105 in the western Corn Belt. Dressed sales were steady to $18 lower at $155-$165 in Nebraska and at $150-$168 in the western Corn Belt.

“The reduction in production means there is not as much need for cash cattle purchases to fill in production holes throughout the week, as many of these facilities are trying to make sure they get all of their contracted cattle processed with a limited labor resource in many instances,” Griffith explains. “What few cattle trade in the cash market will mean lower prices week-over-week, which will play into lower formula prices as well.”

“This predicament could result in a situation not previously seen in the beef industry,” explained Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his Monday market comments. At the time, JBS had closed its Greeley, CO plant for two weeks, according to the Colorado governor’s office.

“It may simply not be possible to slaughter animals in a timely manner,” Peel explained. “Last summer, the loss of a single packing plant in Kansas resulted in relatively little decrease in overall cattle slaughter as production was shifted to other plants; increased Saturday slaughter largely offset the loss of the fire-damaged plant. In the current situation, closure or reduced chain speeds across multiple plants may make it impossible to keep up with slaughter.”

Negotiated cash trade for the week was slightly less than 10,000 head (noon Friday), according to AMS. Those analysts say that would be the sparsest volume since mandatory livestock reporting began in 2001.

Except for 52¢ and 42¢ lower in Oct and Dec, Live Cattle futures closed an average of 90¢ higher from the previous Thursday through Friday (22¢ to $1.92 higher).

Between slower production and anemic returns, feedlot placements are likely to be lower year over year for the next several months, perhaps significantly lower. David Anderson, Extension livestock economist with Texas A&M University provided his outlook for the next Cattle on Feed report, in a webinar hosted by the Texas and Southwestern Cattle Raisers Association Friday afternoon. He sees March placements 20% less than the previous year, March marketings up near 13% and the Apr. 1 cattle on feed inventory being 5% less.

“One of the key factors moving forward will be pasture and range conditions,” say analysts with the Livestock Marketing Information Center, in the latest Livestock Monitor. “Good forage conditions will allow cattle to gain weight outside the feedlot and buy time, which at this point looks like a pivotal hedge/risk management option. If drought becomes an issue, it will force placements into feedlots even if economic conditions for feeding animals is weak. Cattle feeding returns are expected to be negative until fall 2020. Producers selling feeder animals in a drought market will likely face prices sharply below a year ago.”           

On the other side of the equation, reduced production from supply chain disruptions continues to lift wholesale beef values.

Choice boxed beef cutout value was $15.06 higher week to week on Friday at $238.99/cwt. Select was $18.87 higher at $227.20.

“From a consumer perspective, there is concern about meat availability at the local grocery store, while slaughter facilities are trying to manage around employee health and the agricultural producers who are supplying live animals to the facility. When slaughter levels are reduced then animals will start backing up in the feedlot or finishing barn,” says Griffith. “This means cattle feeders and hog finishers have to decide what to do with these animals. Most cattle feeders will feed cattle to heavier weights until they can physically move them to the slaughter facility. This means pen space is not opening up, which backs up feeder cattle and calves.”

Friday to Friday Change

Weekly Auction Receipts

 

Apr. 17 Auction Direct

Video/net

Total
 

98,800

(-141,00)

49,400

(-14,200)

47,000

(+42,400)

195,200

(+14,100)

 

CME Feeder Index

CME Feeder Index* Apr. 16 Change
  $115.75 –  $0.47

*Thursday-to Thursday for CME Feeder Index

 

Cash Stocker and Feeder

North Central

Steers-Cash Apr. 17 Change
600-700 lbs. $153.42 + $10.24
700-800 lbs. $134.01 +   $7.78
800-900 lbs. $123.64 +   $6.47

 

South Central

Steers-Cash Apr. 17 Change
500-600 lbs. $153.14 + $3.49
600-700 lbs. $136.91 –  $1.11
700-800 lbs. $121.26 + $1.03

 

Southeast

Steers-Cash Apr. 17 Change
400-500 lbs. $150.37 –  $0.57
500-600 lbs. $140.93 + $1.77
600-700 lbs. $127.55 –  $0.46

(AMS National Weekly Feeder & Stocker Cattle Summary)

 

Wholesale Beef Value

Boxed Beef  (p.m.) Apr.17 ($/cwt) Change
Choice $238.99 + $15.06
Select $227.20 + $18.87
Ch-Se Spread $11.79 –    $3.81

 

Futures

Feeder Cattle  Apr. 17 Change
Apr $119.525 -0-
May $119.275 + $0.325
Aug $128.400 –  $0.475
Sep $129.950 + $0.575
Oct $130.825 + $0.925
Nov $131.275 + $1.325
Jan ’21 $129.300 + $2.100
Mar $130.075 + $1.625

 

Live Cattle   Apr. 17 Change
Apr $94.650 + $0.650
Jun $86.300 + $1.925
Aug $91.100 + $0.350
Oct $96.125 –  $0.525
Dec $99.975 –  $0.425
Feb ’21 $104.500 + $0.225
Apr $107.000 + $0.675
Jun $101.050 + $1.200
Aug $101.000 + $1.300

 

Corn  Apr. 17 Change
May $3.322 – $0.094
Jul $3.392 – $0.074
Sep $3.336 – $0.080
Dec $3.434 – $0.072
Mar ’21 $3.552 – $0.070
May $3.620 – $0.070

 

Oil CME-WTI Apr. 17 Change
May $18.27 –  $4.49
Jun $25.03 –  $3.79
Jly $29.42 –  $2.58
Aug $31.20 –  $1.92
Sep $32.08 –  $1.50
Oct $32.71 –  $1.25

 

Equities

Equity Indexes Apr. 17 Change
Dow Industrial Average  24242.29 + 523.12
NASDAQ    8650.14 +   496.56
S&P 500    2874.56 +   84.74
Dollar (DXY)         99.72 +      0.16
April 19th, 2020|Weekly Market Highlights|

Cattle Current Weekly Highlights—Week ending Apr. 10, 2020

Auction receipts continued lighter last week as sellers of calves and feeder cattle sort their options amid bearish COVID-19 markets.

Feeder steers and heifers sold $3-$7/cwt. lower, according to the Agricultural Marketing Service (AMS).

Even though equity markets surged higher on increasing optimism about COVID-19 reaching a peak in this country, helping to drag Cattle futures higher, it had an overanxious, unrealistic feel.

Feeder Cattle futures closed an average of $9.98 higher week to week on Thursday, ($8.85 to $11.75 higher).

Andrew P. Griffith, agricultural economist at the University of Tennessee emphasizes and illustrates COVID-19 market volatility, in his weekly market comments.

“In three weeks, the price of the May Feeder Cattle contract declined from $135 to less than $110/cwt. It then took just five days for the contract price to jump back over $130. The sudden increase in price was then followed by eight days of struggling prices that actually saw some contracts trade below $105 at the first of this week,” Griffith explains. “The market price will likely continue this rollercoaster ride, but it will not be a fun one for most participants. The plan for most producers should be to remain calm and keep doing what is being done. There is no reason to have any kneejerk reactions at this time.”

Fed Cattle Prices Sag

Negotiated cash fed cattle prices ended up $7 lower on a live basis last week at $105/cwt. in the Southern Plains, according to AMS. Dressed trade in Nebraska and the western Corn Belt was $7-$12 lower at $168. A light test was noted in all regions.

“Last week’s negotiated purchases of slaughter steers and heifers nationwide (28,923 head) was the second smallest volume reported since mandatory reporting started in 2001,” say AMS analysts.“Slaughter levels were lower than in recent weeks as several facilities have been affected by worker attendance. Cattle slaughter under federal inspection was estimated at 536,000 head for the week, 90,000 less than the previous week and 103,000 less than a year ago.”

Live Cattle futures closed an average of $6.33 higher week to week on Thursday, from $1.17 higher in spot Apr to $8.82 higher.

“The strong basis continues to provide cattle feeders incentive to market cattle in a timely manner,” Griffith says, noting the wide discount of futures to cash.

“It looks like cattle trading this week will be trading at least $10/cwt. higher than the April Live Cattle contract, while the June Live Cattle contract is trading $9 lower than the April price. It is hard to imagine live cattle cash trade dipping into the mid to upper $80 area in the next two months, but that is what the futures market is predicting,” Griffith says.

Boxed Beef prices continued to decline. Choice boxed beef cutout value was $6.51 lower week to week on Friday at $223.93/cwt. Select was $7.51 lower at $208.33.

“One would expect these prices to continue to moderate in the coming weeks as the beef supply chain continues to adjust to the current situation of more retail beef buying and less food service purchases,” Griffith says. “However, the change in consumption patterns of retail versus food service is not the only hurdle to overcome. There have been several packing facilities that are reducing production or shutting down due to the coronavirus, which will most likely reduce production.”

Smithfield Foods, Inc. announced Sunday that its Sioux Falls, SD facility–one of the largest pork processing facilities in the U.S.–will remain closed until further notice.

“The closure of this facility, combined with a growing list of other protein plants that have shuttered across our industry, is pushing our country perilously close to the edge in terms of our meat supply,” explained Kenneth M. Sullivan, Smithfield president and CEO.

According to various news sources, JBS is closing its beef packing plant in Greeley, CO through Tuesday of this week, for deep cleaning facilities and screening new workers. Reportedly, 36 JBS workers tested positive for COVID-19 infections through the end of last week.

“Unfortunately, COVID-19 cases are now ubiquitous across our country. The virus is afflicting communities everywhere. The agriculture and food sectors have not been immune,” Sullivan explained. “Numerous plants across the country have COVID-19 positive employees. We have continued to run our facilities for one reason: to sustain our nation’s food supply during this pandemic. We believe it is our obligation to help feed the country, now more than ever. We have a stark choice as a nation: we are either going to produce food or not, even in the face of COVID-19.”

Friday to Friday Change

Weekly Auction Receipts

 

Apr. 10 Auction Direct

Video/net

Total
 

112,900

(-66,200)

63,600

(+42,100)

4,600

(+4,100)

181,100

(-20,000)

 

CME Feeder Index

CME Feeder Index* Apr. 8 Change
  $116.79 –  $9.30

*Thursday-to Thursday for CME Feeder Index

 

Cash Stocker and Feeder

North Central

Steers-Cash Apr. 10 Change
600-700 lbs. $143.18 –  $5.42
700-800 lbs. $126.23 –  $6.33
800-900 lbs. $117.17 –  $3.53

 

South Central

Steers-Cash Apr. 10 Change
500-600 lbs. $149.65 –  $6.64
600-700 lbs. $138.02 –  $4.15
700-800 lbs. $120.23 –  $2.50

 

Southeast

Steers-Cash Apr. 10 Change
400-500 lbs. $150.94 –  $5.07
500-600 lbs. $139.16 –  $5.48
600-700 lbs. $128.01 –  $3.39

(AMS National Weekly Feeder & Stocker Cattle Summary)

 

Wholesale Beef Value

Boxed Beef  (p.m.) Apr.10 ($/cwt) Change
Choice $223.93 –  $6.51
Select $208.33 –  $7.51
Ch-Se Spread $15.60 + $1.00

 

Futures

Feeder Cattle  Apr. 9 Change
Apr $119.525 + $8.850
May $118.950 + $7.300
Aug $128.875 + $11.225
Sep $129.375 + $11.525
Oct $129.900 + $11.750
Nov $129.950 + $11.275
Jan ’21 $127.200 + $8.950
Mar $128.450 + $8.950

 

Live Cattle   Apr. 9 Change
Apr $94.000 + $1.175
Jun $84.375 + $1.300
Aug $90.750 + $6.350
Oct $96.650 + $8.700
Dec $100.300 + $8.825
Feb ’21 $104.275 + $8.200
Apr $106.325 + $8.175
Jun $99.850 + $7.550
Aug $99.700 + $6.700

 

Corn  Apr. 9 Change
May $3.316 – $0.018
Jul $3.366 – $0.018
Sep $3.416 – $0.004
Dec $3.506 +$0.010
Mar ’21 $3.622 +$0.010
May $3.690 +$0.014

 

Oil CME-WTI Apr. 9 Change
May $22.76 –  $2.56
Jun $28.82 + $0.77
Jly $32.00 + $2.08
Aug $33.12 + $2.21
Sep $33.58 + $2.08
Oct $33.96 + $1.96

 

Equities

Equity Indexes Apr. 9 Change
Dow Industrial Average  23719.37 + 2305.93
NASDAQ    8153.58 +   666.27
S&P 500    2789.82 +   262.92
Dollar (DXY)         99.56 –         0.54
April 12th, 2020|Weekly Market Highlights|

Cattle Current Weekly Highlights—Week ending Apr. 3, 2020

Seemingly bottomless Cattle futures prices cast a pall over cash markets last week, amid continued COVID-19 uncertainty.

Feeder steers sold $5-$17/cwt. lower in the North Central and South Central areas, according to the Agricultural Marketing Service (AMS). Feeder heifers in the same regions traded $7-$15 lower. Calves in the Southeast sold from steady to $5 higher early in the week to steady to $5 lower later in the week.

“Prices are tracking $10-$20 lower than a year ago,” say AMS analysts. “Demand was reported as moderate to good in auctions this week as buyers did want to procure cattle, just at lower price levels. Some backgrounders who sold yearlings did not recoup the first cost of those calves.”

Feeder Cattle futures closed an average of $11.36 lower week to week on Friday, ($7.45 lower at the back to $12.82 lower toward the front).

“Maybe even worse than the fact that prices (cash) are struggling is the extreme volatility in the futures market,” says Andrew P. Griffith, agricultural economist at the University of Tennessee, in his weekly market comments. “In the past six weeks, the April Feeder Cattle futures contract traded from $142/cwt. down to $108. It then traded back over $130 before going back under $110. Such volatility makes it difficult for anyone to physically want to trade cattle.”

The AMS reporter on hand for this week’s sale at Green City Livestock Auction in Missouri aptly summed up the current market situation: “Volatile doesn’t seem a strong enough word to describe the situation anymore, as daily limit up and down moves at the CME are almost expected…Those big moves take all the confidence out of a cash market and make it difficult for producers to decide when to turn loose as well as for buyers to figure what one is worth.”

Fed Cattle Prices Sink

Negotiated cash fed cattle trade remained largely undeveloped through Friday afternoon. However, according to the Agricultural Marketing Service (AMS), there was a light test of live sales in all regions Wednesday at mostly $112/cwt. and at $175-$180 in the beef. That was $6-$8 less than last week on a live basis and $10-$15 less dressed.

“Last week’s prices were wildly higher and this week’s prices were wildly lower,” Griffith says. “The unknowns of the coronavirus are enough to result in huge price swings in the market but those movements would still imply market efficiency. Where the inefficiency comes in is when government officials begin telling people what to do and how to act…Technically, the market is still acting as efficiently as it can, but there are cattle producers being caught in the whiplash.”

Live Cattle futures closed an average of $6.47 lower week to week on Friday, from $4.00 lower at the back to $12.62 lower in spot Apr.

“A lot more market volatility is likely to come as the effects of COVID-19 ripple through our economy,” says David Anderson, Extension livestock economist at Texas A&M University, in the latest issue of In the Cattle Markets. “While we come to grips with all the demand implications it’s worth recognizing that it is occurring in the time of cyclically peak beef supplies.”

With two days left in the first quarter, Anderson explained, year over year: fed steer and heifer slaughter was up 5.4%; cow and bull slaughter was 4.5% higher; average steer dressed weights were 22.5 lbs. heavier; average heifer dressed weights were 13.7 lbs. heavier; cow weights were up 2.6 lbs. 

Wholesale beef values sank lower as it appeared the initial onslaught of increased retail demand was coming to an end.

Choice boxed beef cutout value was $22.40 lower week to week on Friday at $230.44/cwt. Select was $26.54 lower at $215.84.

“More and more states are ordering residents to stay at home, which means more meals are being prepared and consumed at home instead of away from home. One would think this change would influence meat consumption and meat disappearance,” Griffith says. “Boxed beef prices are still extremely strong, but they are likely to decline further and the extent of the price decline will likely depend on how long the current situation persists. Things are likely to get worse before they get better.”

Feed Prices Appear Friendly

Corn planted area for all purposes in 2020 is estimated at 97.0 million acres, which would be 8% more or 7.29 million acres more than last year. That’s according to USDA’s Prospective Plantings report. If realized, this will be the highest planted acreage since 2012, according to the National Agricultural Statistics Service. Acreage increases from last year of 800,000 or more are expected in Indiana, Illinois, Ohio, and South Dakota.

“Weather delays may change that number to the downside; reduced demand from ethanol will also be a contributing factor,” say AMS analysts. “As expected, U.S. ethanol production dramatically declined last week and reported the largest week-to-week decline ever recorded. Ethanol blender demand decreased again this week and is the lowest blender demand on record since they started collecting the data in 2010.”

As demand for oil declines and as oil prices declined further with the price war between the U.S. and Russia, ethanol demand follows suit, pressuring corn prices.

 

Friday to Friday Change

Weekly Auction Receipts

 

Apr. 3 Auction Direct

Video/net

Total
 

179,100

(+91,900)

21,500

(-500)

500

(-3,700)

201,100

(+87,700)

 

CME Feeder Index

CME Feeder Index* Apr. 2 Change
  $121.07 –  $9.37

*Thursday-to Thursday for CME Feeder Index

 

Cash Stocker and Feeder

North Central

Steers-Cash Apr. 3 Change
600-700 lbs. $148.60 –  $7.06
700-800 lbs. $132.56 –  $10.62
800-900 lbs. $120.70 –  $12.35

 

South Central

Steers-Cash Apr. 3 Change
500-600 lbs. $156.29 –  $5.01
600-700 lbs. $142.17 –  $3.63
700-800 lbs. $122.73 –  $14.31

 

Southeast

Steers-Cash Apr. 3 Change
400-500 lbs. $156.01 –  $2.21
500-600 lbs. $144.64 + $0.41
600-700 lbs. $131.40 –  $0.97

(AMS National Weekly Feeder & Stocker Cattle Summary)

 

Wholesale Beef Value

Boxed Beef  (p.m.) Apr. 3 ($/cwt) Change
Choice $230.44 –  $22.40
Select $215.84 –  $26.54
Ch-Se Spread $14.60 + $4.14

 

Futures

Feeder Cattle  Apr. 3 Change
Apr $108.250 –  $12.350
May $108.100 –  $12.825
Aug $114.425 –  $12.675
Sep $115.800 –  $11.775
Oct $116.900 –  $11.625
Nov $117.550 –  $11.250
Jan ’21 $117.350 –  $10.900
Mar $120.250 –  $7.450

 

Live Cattle   Apr. 3 Change
Apr $88.325 –  $12.625
Jun $80.850 –  $8.575
Aug $84.300 –  $6.150
Oct $88.500 –  $5.825
Dec $92.350 –  $5.975
Feb ’21 $97.025 –  $5.600
Apr $99.950 –  $4.550
Jun $93.450 –  $4.975
Aug $93.000 –  $4.000

 

Corn  Apr. 3 Change
May $3.306 – $0.154
Jul $3.366 – $0.150
Sep $3.422 – $0.138
Dec $3.506 – $0.136
Mar ’21 $3.620 – $0.120
May $3.682 – $0.102

 

Oil CME-WTI Apr. 3 Change
May $28.34 + $6.83
Jun $30.90 + $5.75
Jly $32.33 + $4.20
Aug $33.00 + $2.95
Sep $33.37 + $2.07
Oct $33.62 + $1.48

 

Equities

Equity Indexes Apr. 3 Change
Dow Industrial Average  21052.53 –   584.25
NASDAQ    7373.08 –   129.30
S&P 500    2488.65 –     52.82
Dollar (DXY)      100.68 +    2.375
April 4th, 2020|Weekly Market Highlights|

Cattle Current Weekly Highlights—Week ending Mar. 27, 2020

Oversold conditions and atypically high wholesale beef prices, tied to the shift in more consumers eating at home, helped lift Cattle futures and negotiated cash fed cattle prices last week. In turn, cash calf and feeder cattle prices found some traction.

Steers and heifers sold $8-$15/cwt. higher, according to the Agricultural marketing Service (AMS). Auction receipts continued sparser than normal, stalled by understandable producer caution.

“Much of this stronger undertone is likely associated with the strong week that feeder cattle futures experienced and the strong week for live cattle sales,” explains Andrew P. Griffith, agricultural economist the University of Tennessee, in his weekly market comments.

Feeder Cattle futures closed an average of $2.12 higher week to week on Friday, not counting recently minted away Mar (65¢ higher at the back to $3.30 higher).

Except for 10¢ and 30¢ lower in two contracts, Live Cattle futures closed an average of 54¢ higher week to week on Friday, from 12¢ higher to $2.30 higher in spot Apr.

Extreme volatility continued, though, with limit-up and expanded limit-up moves early in the week and then limit-down and near-limit down moves toward the end of the week.

“Despite the stronger prices, the volatility in the futures market will keep many cattle producers on the sidelines as it should,” Griffith says. “…Market volatility is not a big issue for producers who do not have anything that needs to be marketed immediately, because they are only experiencing a loss in value of a commodity. Alternatively, those who must market cattle in the near term may actually experience that loss in value. As an example, a person with a load of feeder cattle two weeks ago may have been offered $10-$15/cwt. less for those animals than they may have been offered this week. That equates to a $5,000 to $7,500 difference in value over a two-week period on a 50,000 lb. load. The situation cattle producers are traversing right now is the exact reason price risk management should be included in a producer’s business plan.”

Fed Cattle Prices Climb

Wholesale beef values continued extraordinarily high last week, relative to supplies and seasonal expectations.

Choice boxed beef cutout value was 91¢ lower week to week on Friday at $252.84/cwt. Select was $2.21 higher at $242.38.

Wholesale price strength helped boost fed cattle prices. Week to week through Thursday, the five-area direct fed steer price was $9.64/cwt. higher on a live basis at $119.44. It was $16.20 higher in the beef at $189.31.

Regionally, negotiated cash fed cattle prices were mostly $8-$10 higher on a live basis at $118-$120/cwt. in the Southern Plains and $119-120 up north. Dressed sales were $15-$20 higher at $190.

“Slaughter cow prices skyrocketed early in the  week at auctions nationwide,” say AMS analysts. “Demand for boneless lean ground beef continued to move higher as cow plants needed product to move through the marketing chain to fill ground beef orders place by retailers. With most restaurants nationwide either closed or only filling carry out orders, grocery stores have had trouble finding enough protein products to fully stock their cases.”  

Earlier in the week, Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, explained in his weekly market comments, “Disruptions in normal activities due to COVID-19 have produced a surge in at-home food demand. Recent reports indicate a 77% year-over-year increase in grocery meat sales in mid-March. The spike in grocery demand overwhelmed the retail meat supply chain, resulting in temporary shortages of meat in many grocery stores. The shortages are due to the tremendous logistical challenges of shifting meat supplies from food service channels to retail grocery channels.”

Peel emphasized for consumers that there is no shortage of beef or other meats. Beef, pork and poultry production was record large in the first quarter and is projected to be record large this year at 109.3 billion lbs., 4.3% more than last year.

“Beef production is projected to be 1.9% higher year over year in 2020, totaling 27.7 billion lbs.,” according to Peel. “Increased beef production is concentrated in the first half of the year. Total steer and heifer slaughter is up 3.9% year over year for the year to date. Steer carcass weights for the year to date are up over 21 lbs. year over year with heifer carcass weights up over 12 lbs. First-quarter beef production is estimated to increase 6.6% over last year.”

Uncertain domestic demand in tandem with increasing beef supplies helped pressure Live Cattle futures at the end of the week.

As Brenda Boetel, livestock economist at the University of Wisconsin-River Falls explained in the latest issue of In the Cattle Markets, “There is no evidence that consumers are eating more beef currently, and as such the demand will likely decrease significantly once the supply system catches up with the rush demand of the last few weeks.”

 

Friday to Friday Change

Weekly Auction Receipts

 

Mar. 27 Auction Direct

Video/net

Total
 

87,200

(+28,200)

22,000

(+11,800)

4,200

(-12,300)

113,400

(+27,700)

 

CME Feeder Index

CME Feeder Index* Mar. 26 Change
  $130.44 + $9.06

*Thursday-to Thursday for CME Feeder Index

 

Cash Stocker and Feeder

North Central

Steers-Cash Mar. 27 Change
600-700 lbs. $155.66 + $9.05
700-800 lbs. $143.18 + $10.05
800-900 lbs. $133.05 + $7.41

 

South Central

Steers-Cash Mar. 27 Change
500-600 lbs. $161.30 + $15.04
600-700 lbs. $145.80 + $11.26
700-800 lbs. $137.04 + $16.31

 

Southeast

Steers-Cash Mar. 27 Change
400-500 lbs. $158.22 + $14.08
500-600 lbs. $144.15 + $10.65
600-700 lbs. $132.37 + $10.14

(AMS National Weekly Feeder & Stocker Cattle Summary)

 

Wholesale Beef Value

Boxed Beef  (p.m.) Mar. 27 ($/cwt) Change
Choice $252.84 –  $0.91
Select $242.38 + $2.21
Ch-Se Spread $10.46 –  $3.12

 

Futures

Feeder Cattle  Mar. 27 Change
Apr $120.600 + $1.775
May $120.925 + $2.675
Aug $127.100 + $3.300
Sep $127.575 + $2.700
Oct $128.525 + $2.450
Nov $128.800 + $1.300
Jan ’21 $128.250 + $0.650
Mar $127.700 n/a

 

Live Cattle   Mar. 27 Change
Apr $100.950 + $2.300
Jun $89.425 –  $0.100
Aug $90.450 –  $0.300
Oct $94.325 + $0.325
Dec $98.325 + $0.125
Feb ’21 $102.625 + $0.225
Apr $104.500 + $0.125
Jun $98.425 + $0.300
Aug $97.000 + $0.350

 

Corn  Mar. 27 Change
May $3.460 – $0.024
Jul $3.516 – $0.022
Sep $3.560 – $0.014
Dec $3.642 – $0.010
Mar ’21 $3.740 – $0.008
May $3.784 – $0.010

 

Oil CME-WTI Mar. 27 Change
May $21.51 –  $1.12
Jun $25.15 + $0.79
Jly $28.13 + $2.20
Aug $30.05 + $2.95
Sep $31.30 + $3.28
Oct $32.14 + $3.34

 

Equities

Equity Indexes Mar. 27 Change
Dow Industrial Average  21636.78 +2463.30
NASDAQ    7502.38 +  622.86
S&P 500    2541.47 +  236.55
Dollar (DXY)      98.31 –        4.51
March 29th, 2020|Weekly Market Highlights|

Cattle Current Weekly Highlights—Week ending Mar. 20, 2020

Market carnage and uncertainty spawned by the COVID-19 panic prompted lots of calf and feeder cattle sellers last to hold cattle or offer fewer than they would otherwise. In fact, auction receipts were the least for a non-holiday week since the current report format was established in 2002, according to the Agricultural Marketing Service (AMS).

There were some week-to-week price gains for some classes at some auctions, but according to AMS, overall, steers and heifers sold $5-$10/cwt. lower, with instances of $12-$15 lower.

“It is likely feeder cattle receipts will continue to be light next week as cattle producers attempt to wait out the market suppression,” says Andrew P. Griffith, agricultural economist at the University of Tennessee, in his weekly market comments. “The risk in this is that there is no way to know how short or how long market prices will remain under pressure…The best advice today is for producers to keep one eye on the market and the other eye on national and world efforts to mitigate the length of this pandemic.”

Thanks to a late-week rally, supported by the extraordinary increase in wholesale beef values, Cattle futures closed higher week to week for the first time in five weeks.

Feeder Cattle futures closed an average of $4.47 higher week to week on Friday (2.60 higher to $7.72 higher in spot Mar).

Except for 22¢ and 50¢ lower in two contracts, Live Cattle futures closed an average of $1.06 higher week to week on Friday 42¢ higher to $3.07 higher in spot Apr).

The monthly Cattle on Feed report published Friday should be supportive, mirroring pre-report expectations. February placements for feedlots with 1,000 head or more capacity were 1.71 million head, which was 7.91% less (-147,000 head) than the previous year. Marketings in February of 1.77 million head were 5.47% more (+92,000 head) than the previous year. The on-feed inventory Mar. 1 of 11.81 million head was 0.18% more (+21,000 head), compared to a year earlier.

Fed Cattle Prices Firm

When all was said and done, negotiated cash fed cattle trade last week was steady to $2 higher on a live basis at $110-$112/cwt. and fully steady in the beef at $175.

According to the Texas Cattle Feeders Association on Friday, “Tyson announced this afternoon that for all fed cattle harvested next week, they will make a one-time assistance payment to cattle feeders of $5/cwt. live and $7.94/cwt. dressed.”

Choice boxed beef cutout value was $45.61 higher week to week on Friday at $253.75/cwt. Select was $38.19 higher at $240.17.

That’s the fastest rally on record, according to AMS analysts.

“As businesses and schools continue to close, along with restaurants, consumers swarmed the meat cases to stockpile protein items. Reports of empty meat cases started last week, all over the country,” AMS analysts explain. “The magnitude of the buying caught retailers by surprise, and as this consumer-driven market rages on, it appears that the cutout will be volatile in the short term.”

“There will be a variety of impacts on markets for specific beef products,” explained Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly market comments. “For example, increased demand for ground beef has resulted in local shortages of product at grocery stores, while reduced restaurant demand may result in weaker middle meat sales. We can expect significant disruptions and stress on beef supply chains given the consumption changes associated with requirements to control COVID-19.”

Should the labor forces of beef packing, processing, or shipping be directly impacted by COVID-19, Peel says supply chain disruptions could be more significant.

“The dynamics of the beef market have changed the past couple of weeks, which is what is driving market prices,” Griffith explains. “Restaurants and food retailers demand different cuts; packers have had to adjust to meet these needs because of the change in consumption patterns across the nation. Thus, packers are taking advantage of what the market is offering them at this time. The market is offering lower cattle prices and strong prices for beef cuts that go to grocery stores. The market is not offering as much value for beef cuts that would typically enter the restaurant business. The market will adjust as more and more unknowns are resolved.”

Equity Markets Continue Lower

Despite fiscal stimulus announced so far, U.S. financial markets continue to plunge lower.

Week to week on Friday, the Dow Jones Industrial Average closed 4,012 points lower. The broader S&P 500 closed 406 points lower.

Keep in mind, the collapse in crude oil prices adds to the overall economic weakness. Although already under pressure from softer demand and plentiful supplies, OPEC added undue and unexpected price pressure when it decided to increase production in retaliation against Russia.

Week to week on Friday, West Texas Intermediate Crude Oil futures on the CME were an average of $7.87 lower through the front six contracts.

“The uncertainty in the cattle market and most other markets persist as market participants try to determine the true impact from coronavirus. As more and more information becomes available, the market will continue to try to find an equilibrium point,” Griffith says. “The market will eventually find that equilibrium. However, it may take longer than some expect because market participants are treading through unfamiliar and murky water.”

 

Friday to Friday Change

Weekly Auction Receipts

 

Mar. 20 Auction Direct

Video/net

Total
 

59,000

(-139,200)

10,200

(-11,800)

16,500

(+14,600)

85,700

(-135,400)

 

CME Feeder Index

CME Feeder Index* Mar. 19 Change
  $121.38 –  $6.53

*Thursday-to Thursday for CME Feeder Index

 

Cash Stocker and Feeder

North Central

Steers-Cash Mar. 20 Change
600-700 lbs. $146.61 –  $4.89
700-800 lbs. $133.13 –  $2.75
800-900 lbs. $125.64 –  $0.21

 

South Central

Steers-Cash Mar. 20 Change
500-600 lbs. $146.26 –  $11.93
600-700 lbs. $134.54 –  $9.31
700-800 lbs. $120.73 –  $5.46

 

Southeast

Steers-Cash Mar. 20 Change
400-500 lbs. $144.14 –  $11.31
500-600 lbs. $133.50 –  $9.63
600-700 lbs. $122.23 –  $10.11

(AMS National Weekly Feeder & Stocker Cattle Summary)

 

Wholesale Beef Value

Boxed Beef  (p.m.) Mar. 20 ($/cwt) Change
Choice $253.75 + $45.61
Select $240.17 + $38.19
Ch-Se Spread $13.58 + $7.42

 

Futures

Feeder Cattle  Mar. 20 Change
Mar $120.725 + $7.725
Apr $118.825 + $6.225
May $118.250 + $3.775
Aug $123.800 + $2.625
Sep $124.875 + $2.600
Oct $126.075 + $3.150
Nov $127.500 + $4.250
Jan ’21 $127.600 + $5.450

 

Live Cattle   Mar. 20 Change
Apr $98.650 + $3.075
Jun $89.525 –  $0.225
Aug $90.750 + $1.575
Oct $94.000 + $0.200
Dec $98.200 –  $0.500
Feb ’21 $102.400 + $0.425
Apr $104.375 + $0.575
Jun $98.125 + $0.575
Aug $96.650 + $1.000

 

Corn  Mar. 20 Change
May $3.436 – $0.220
Jul $3.494 – $0.190
Sep $3.546 – $0.130
Dec $3.632 – $0.098
Mar ’21 $3.732 – $0.094
May $3.774 – $0.100

 

Oil CME-WTI Mar. 20 Change
Apr $22.43 –  $9.30
May $22.63 –  $9.48
Jun $24.36 –  $8.23
Jly $25.93 –  $7.22
Aug $27.10 –  $6.64
Sep $28.02 –  $6.34

 

Equities

Equity Indexes Mar. 20 Change
Dow Industrial Average  19173.18 –  4012.44
NASDAQ    6879.52 –    995.36
S&P 500    2304.92 –    406.10
Dollar (DXY)      102.00 +        3.31
March 21st, 2020|Weekly Market Highlights|

Cattle Current Weekly Highlights—Week ending Mar. 13, 2020

There are market guttings, then there’s last week as panic over COVID-19 wreaked havoc.

Week to week on Friday:

Feeder Cattle futures closed an average of $17.48 lower.

Live Cattle futures closed an average of $11.32 lower.

The Dow Jones Industrial Average closed 2,679 points lower. The S&P 500 closed 261 points lower. The NASDAQ was down 700 points. And that was after a significant rally Friday.

West Texas Intermediate Crude Oil futures on the CME were an average of $8.98 lower through the front six contracts.

“The sheer uncertainty in the worldwide marketplace is driving a massive downward trend in the livestock sector,” explained analysts with the Agricultural Marketing Service (AMS). “The CME Cattle Complex has taken the brunt of losses in the ag sector, but grains have reported losses as well.”

Nationwide, steers and heifers sold $5-$10/cwt. lower, according to AMS. Declines were significantly steeper at some auctions. Producers cancelling consignments was common.

“The calf market is easily $10-$12/cwt. lower than where it was expected to be this time a couple of months ago,” says Andrew P. Griffith, agricultural economist at the University of Tennessee, in his weekly market comments. “The question on every market participants mind is when the fortunes of the market will turn in favor of increasing prices. The answer is that it may take a while for the coronavirus scare to subside, which means it may take a while for the market to return to normalcy.”

As such, Griffith says it’s difficult to recommend anyone sell calves in such a market. On the other hand, he points out even more dollars will be lost by holding cattle if the market fails to rebound.

Perhaps thanks to trade taking place earlier in the week, negotiated cash fed cattle trade was established at $110/cwt. on a live basis last week, which was $3 lower in the Southern Plains and Nebraska; $2-$5 lower in the western Corn Belt. Dressed sales were $5-$7 lower at $175-$176. There were trades at lower money later in the week, but too few to trend.

Wholesale beef values continue to fade much of the market pressure. Choice boxed beef cutout value was 67¢ higher week to week on Friday at $208.14/cwt. Select was 59¢ lower at $201.98.

“As more and more events are canceled, suspended, or postponed, fewer patrons will be making their way to restaurants and eating meals away from home,” Griffith says. “As consumer movement declines, there will likely be more meals consumed at home. Will these meals include beef as the main course or will consumers move to other meats such as poultry and pork? Regardless of what meats are consumed at home, record meat production is expected in the United States this year, and clearing the market will take increased consumption domestically and moving meat overseas.”

Although no one would be surprised to see reduced U.S. beef exports in February and March, as the world deals with COVID-19, the year began positively, offering optimism once business disruptions fade.

U.S. beef exports in January were 2.5% more than a year earlier at 107,347 metric tons (mt) and export value was 5% more at $672.7 million according to data released by USDA and compiled by the U.S. Meat Export Federation (USMEF).

In fact, beef muscle cut exports were the highest ever for the month of January at 81,342 mt, up 4% from a year ago, while muscle cut value increased 5% to $589.2 million.

Export value per head of fed slaughter was $302.93, up 3% from a year ago.

 

Friday to Friday Change

Weekly Auction Receipts

 

Mar. 13 Auction Direct

Video/net

Total
 

174,600

(-4,600)

22,000

(-24,000)

1,900

(-26,400)

198,500

(-55,700)

 

CME Feeder Index

CME Feeder Index* Mar. 12 Change
  $127.91 –  $5.96

*Thursday-to Thursday for CME Feeder Index

 

Cash Stocker and Feeder

North Central

Steers-Cash Mar. 13 Change
600-700 lbs. $151.50 –  $5.22
700-800 lbs. $135.88 –  $7.77
800-900 lbs. $125.85 –  $6.77

 

South Central

Steers-Cash Mar. 13 Change
500-600 lbs. $158.19 –  $8.56
600-700 lbs. $143.85 –  $5.12
700-800 lbs. $126.19 –  $10.61

 

Southeast

Steers-Cash Mar. 13 Change
400-500 lbs. $155.45 –  $8.36
500-600 lbs. $143.13 –  $8.20
600-700 lbs. $132.34 –  $7.25

(AMS National Weekly Feeder & Stocker Cattle Summary)

 

Wholesale Beef Value

Boxed Beef  (p.m.) Mar. 13 ($/cwt) Change
Choice $208.14 + $0.67
Select $201.98 –  $0.59
Ch-Se Spread $6.16 + $1.26

 

Futures

Feeder Cattle  Mar. 13 Change
Mar $113.000 –  $17.700
Apr $112.600 –  $17.450
May $114.475 –  $16.750
Aug $121.275 –  $17.225
Sep $122.275 –  $17.650
Oct $122.925 –  $17.775
Nov $123.250 –  $17.750
Jan ’21 $122.150 –  $17.525

 

Live Cattle   Mar. 13 Change
Apr $95.575 –  $10.175
Jun $89.750 –  $10.275
Aug $89.175 –  $11.900
Oct $93.800 –  $12.400
Dec $98.700 –  $11.775
Feb ’21 $101.975 –  $11.475
Apr $103.800 –  $11.200
Jun $97.550 –  $11.325
Aug $95.650 –  $11.325

 

Corn  Mar. 13 Change
Mar  $3.706 – $0.066
May $3.656 – $0.104
Jul $3.684 – $0.108
Sep $3.676 – $0.098
Dec $3.730 – $0.084
Mar ’21 $3.826 – $0.090

 

Oil CME-WTI Mar. 13 Change
Apr $31.73 –  $9.55
May $32.11 –  $9.40
Jun $32.59 –  $9.18
Jly $33.15 –  $8.89
Aug $33.74 –  $8.59
Sep $34.36 –  $8.28

 

Equities

Equity Indexes Mar. 13 Change
Dow Industrial Average  23185.62 –  2796.16
NASDAQ    7874.88 –   700.74
S&P 500    2711.02 –    261.35
Dollar (DXY)        98.69 +       2.60
March 16th, 2020|Weekly Market Highlights|

Cattle Current Weekly Highlights—Week ending Mar. 6, 2020

Extreme volatility reigned in Cattle futures and equity markets again last week as folks grapple with the unknowable eventual economic impact of COVID-19.

“The main unknown that markets are concerned with is in relationship to demand for consumer goods,” explains Andrew P. Griffith, agricultural economist at the University of Missouri, in his weekly market comments. “Meat markets are trying to figure out how demand for meat in the food service industry will be influenced, and if any losses in that sector will be offset by gains at grocery stores and other similar retail food outlets. Additional unknowns about markets and the virus itself lead to even more uncertainty and the tendency to undervalue commodity goods.”

Nationwide, calves and feeders traded from $2 lower to $3 higher, according to the Agricultural Marketing Service (AMS).

That was despite another horrendous week for Cattle futures.

Except for 57¢lower in spot Mar, Feeder Cattle futures closed an average of $3.30 lower week to week. After the spot month, that makes for an average decline of $11.04 in the last two weeks.

Live Cattle futures closed an average of $1.81 lower week to week on Friday ($1.17 lower toward the front to $2.82 lower at the back). That’s an average of $8.15 lower in the last two weeks.

AMS analysts point out the April Live Cattle contract lost $18.55 since Jan. 24, while the June contract gave up $16—equivalent to more than $200 per head, basis a steer at 1,300 lbs.

Fed Cattle Prices Erode Further

Negotiated cash fed cattle trade ended up $2 lower on a live basis last week in Nebraska and the Southern Plains at $113/cwt. It was $1 higher to $2 lower in the western Corn Belt at $113-$115. Dressed trade was $5 lower in Nebraska at $180-$182; steady to $5 lower at the same money in the western Corn Belt.

Wholesale beef values appeared to turn the seasonal corner. Week to week on Friday, Choice boxed beef cutout value was $2.17 higher at $207.47/cwt. Select was $3.66 higher at $202.57.

“As the beef market wades through the uncertainty of coronavirus, it is clear that higher grading beef is taking a bigger hit than lower grading beef, while seasonal trends are also weighing heavily on beef that is grading Choice or higher,” Griffith explains. “From November 2019 through February, the monthly Prime beef cutout value declined from $256 to $224/cwt., while the branded beef cutout value slipped from $240 to $214.

“The Choice cutout responded similarly with the composite value declining from $233 to $210 over that four-month period. Alternatively, the Select cutout price in November was $212 and traded close to $207 in February, while ungraded beef was at $200 in November and $194 in February.”

One bright spot is that cattle slaughter continues at an aggressive pace.

Last week’s cattle slaughter, estimated at 647,000 head—20,000 head more than the previous week and 40,000 head more than last year—was the most for the week since 2008, according to AMS.

Looking Ahead

Near term, at least the next 30-60 days, Derrell Peel, Extension livestock marketing specialist at Oklahoma State University believes producers should expect markets to remain weak, if not weaker.

“It seems unlikely that any definitive news is forthcoming, certainly not in the next few weeks, which would allow markets to bounce back with any confidence,” Peel explains in his weekly market comments. “I don’t think we are ready yet to change the overall outlook for the year, but the prospect is growing that we might have to trim back our expectations for 2020.

“Producers probably should not make dramatic changes to production and marketing plans just yet, but it would be a good idea to think about how you will adjust things if we have to shift from offense to defense for the entire year.”

 

Friday to Friday Change

Weekly Auction Receipts

 

Mar. 6 Auction Direct

Video/net

Total
 

179,900

(-22,800)

46,000

(-21,000)

28,300

(+27,100)

254,200

(-16,700)

 

CME Feeder Index

CME Feeder Index* Mar. 5 Change
  $133.87 –  $1.73

*Thursday-to Thursday for CME Feeder Index

 

Cash Stocker and Feeder

North Central

Steers-Cash Mar. 6 Change
600-700 lbs. $156.72 –  $0.15
700-800 lbs. $143.65 + $0.91
800-900 lbs. $132.62 –  $1.59

 

South Central

Steers-Cash Mar. 6 Change
500-600 lbs. $166.75 + $3.33
600-700 lbs. $148.97 + $1.58
700-800 lbs. $136.80 + $1.08

 

Southeast

Steers-Cash Mar. 6 Change
400-500 lbs. $163.81 + $1.52
500-600 lbs. $151.33 + $0.66
600-700 lbs. $139.59 + $1.52

(AMS National Weekly Feeder & Stocker Cattle Summary)

 

Wholesale Beef Value

Boxed Beef  (p.m.) Mar. 6 ($/cwt) Change
Choice $207.47 + $2.17
Select $202.57 + $3.66
Ch-Se Spread $4.90 –  $1.49

 

Futures

Feeder Cattle  Mar. 6 Change
Mar $130.700 –  $0.575
Apr $130.050 –  $2.650
May $131.150 –  $2.375
Aug $138.500 –  $3.050
Sep $139.925 –  $3.600
Oct $140.700 –  $4.125
Nov $141.025 –  $4.625
Jan ’21 $139.675 –  $2.675

 

Live Cattle   Mar. 6 Change
Apr $105.750 –  $1.825
Jun $100.025 –  $1.175
Aug $101.175 –  $1.100
Oct $106.200 –  $1.325
Dec $110.475 –  $1.800
Feb ’21 $113.450 –  $2.175
Apr $115.000 –  $2.150
Jun $108.875 –  $1.925
Aug $106.975 –  $2.825

 

Corn  Mar. 6 Change
Mar  $3.772 +$0.108
May $3.760 +$0.078
Jul $3.792 +$0.068
Sep $3.774 +$0.050
Dec $3.814 +$0.044
Mar ’21 $3.916 +$0.042

 

Oil CME-WTI Mar. 6 Change
Apr $41.28 –  $3.48
May $41.51 –  $3.43
Jun $41.77 –  $3.33
Jly $42.04 –  $3.19
Aug $42.33 –  $3.02
Sep $42.64 –  $2.82

 

Equities

Equity Indexes Mar. 6 Change
Dow Industrial Average  25864.78 +  455.42
NASDAQ    8575.62 +       8.25
S&P 500    2972.37 +      18.15
Dollar (DXY)        96.09 –        2.04
March 8th, 2020|Weekly Market Highlights|

Cattle Current Weekly Highlights—Week ending Feb. 28, 2020

Accelerating panic about the impact novel coronavirus—Coronavirus Disease 2019 (COVID-19)—will have on the domestic and global economies drove equities and futures markets steeply lower last week amid harshly volatile trade.

Wall Street folks say it was the worst week for equities since the Great Recession in 2008. Week to week on Friday: the Dow Jones Industrial Average closed 3,513 points lower; the NASDAQ was down 1,189 points and the broader S&P 500 closed 383 points lower.

West Texas Intermediate Crude Oil futures on the CME sank an average of $8.27 lower week to week, through the first six contracts.

Then there was cash cattle and futures prices.

“U.S. cattle markets were affected immediately as beef demand is expected to be hindered in the near term,” say AMS analysts. 

Cash calf and feeder cattle prices were $4-$10 lower in the North Central and South Central regions, according to the Agricultural Marketing Service (AMS). Prices in the Southeast were $2-$4 lower. Some producers cancelled consignments at various auctions, wanting to see how the dust settles.

Feeder Cattle futures closed an average of $7.74 lower week to week on Friday, from $5.50 lower at the back to $9.40 lower toward the front.

Thursday to Thursday, the CME Feeder Cattle Index sank $6.48 to $135.60. That’s a touch lower than any time since the Tyson plant fire.

Live Cattle futures closed an average of $6.34 lower week to week on Friday, from $3.70 lower at the back to $10.67 lower in new spot Apr.

“The April live cattle contract is trading at a $6.50 discount compared to the week’s cash price, which is contrary to seasonal trends for finished cattle,” explains Andrew P. Griffith, agricultural economist at the University of Tennessee, in his weekly market comments. “That same April contract which traded over $124 from the beginning of November until the third week of January, and actually exceeded $128 a few times, is now trading near $109/cwt.”

For perspective, the week following last August’s fire at the Tyson packing plant in Kansas:Feeder Cattle futures closed an average of $5.48 lower, the CME Feeder Cattle Index was down $4.06 at $137.60 and Live Cattle futures closed an average of $6.53 lower.

Although COVID-19 and a packing plant fire are completely different, the uncertainty spawned is similar. In the case of the former, it’s a matter of not knowing how far the virus will spread, how fast, when the likely pandemic will end and how much economic destruction will be wrought, from slowing economic growth, to displaced and delayed demand, to supply chain disruptions (see below).

“Producers must take advantage of the opportunities being offered by the market and buying is the opportunity being offered right now,” Griffith says. “In the short term, the predictability of the market, given today’s environment, is essentially null and void. However, longer-term predictability of market direction just became easier. With a total collapse in the market, the only direction the market can move with a longer term outlook is in a positive direction.”

Griffith suggests now might be a good time to consider hedging strategies related to purchasing cattle in the summer and fall months. Conversely, he emphasizes it’s not the time to hedge the sale of cattle in the summer and fall.

“There is a lot of time between March and August for this market to overcome the news of the coronavirus and bounce back to a favorable market price, when discussing feeder cattle,” Griffith says.

Fed Cattle Prices Start Lower and then Lose More Ground

Through Friday afternoon, negotiated cash fed cattle prices for the week were $4-$5 less on a live basis at $115/cwt. in the Southern Plains and Nebraska. Dressed trade was $3-$5 less in Nebraska at $185-$187 and mostly $7 lower in the western Corn belt at mainly $183.

All things considered, wholesale beef values held their own.Choice boxed beef cutout value was 21¢higher week to week on Friday at $205.30/cwt. Select was $2.79 lower at $198.91.

Moreover, Griffith points out packer cow and bull prices remain resilient.

“The market needs lean grinding beef and this need has resulted in strong slaughter cow and bull prices,” Griffith says. “Prices are expected to continue to increase the next few months, but some producers may find it advantageous to go ahead and move some of these cows that are consuming valuable hay and forage resources.”

COVID-19 Continues to Spread

COVID-19 has been front-page news since it was first identified in China in December-January. Besides its ongoing global spread last week’s heightened market panic seemed to stem from Centers for Disease Control and Prevention (CDC) reports.

In its situation summary Tuesday, CDC  officials explained, “For the general American public, who are unlikely to be exposed to this virus at this time, the immediate health risk from COVID-19 is considered low. However, it’s important to note that current global circumstances suggest it is likely that this virus will cause a pandemic…”

CDC defines a pandemic as: “A global outbreak of a new influenza A virus. Pandemics happen when new (novel) influenza A viruses emerge which are able to infect people easily and spread from person to person in an efficient and sustained way.” There were four pandemics in the last 100 years, according to CDC.

Wednesday evening, CDC confirmed an infection with the virus that causes COVID-19 in California, in a person who reportedly did not have relevant travel history or exposure to another known patient with COVID-19.

“It’s possible this could be an instance of community spread of COVID-19, which would be the first time this has happened in the United States,” according to the CDC statement. “Community spread means spread of an illness for which the source of infection is unknown. It’s also possible, however, that the patient may have been exposed to a returned traveler who was infected.” So far there are 15 confirmed COVID-19 cases in the U.S.

Over the weekend, the first Covid-19-related death was reported in the U.S. As other nation’s reported their first infections, some counties heightened travel restrictions and population movement.

Late Friday, Federal Reserve Chair Jerome H. Powell issued this statement:

“The fundamentals of the U.S. economy remain strong. However, the coronavirus poses evolving risks to economic activity. The Federal Reserve is closely monitoring developments and their implications for the economic outlook. We will use our tools and act as appropriate to support the economy.”

 

Friday to Friday Change

Weekly Auction Receipts

 

Feb. 28 Auction Direct

Video/net

Total
 

202,700

(-37,400)

67,000

(+30,900)

1,200

(-37,700)

270,900

(-44,200)

 

CME Feeder Index

CME Feeder Index* Feb. 27 Change
  $135.60 –  $6.48

*Thursday-to Thursday for CME Feeder Index

 

Cash Stocker and Feeder

North Central

Steers-Cash Feb. 28 Change
600-700 lbs. $156.87 –  $4.80
700-800 lbs. $142.74 –  $6.59
800-900 lbs. $134.21 –  $5.08

 

South Central

Steers-Cash Feb. 28 Change
500-600 lbs. $163.42 –  $9.72
600-700 lbs. $147.39 –  $6.67
700-800 lbs. $135.72 –  $5.70

 

Southeast

Steers-Cash Feb. 28 Change
400-500 lbs. $163.42 –  $9.72
500-600 lbs. $147.39 –  $9.67
600-700 lbs. $135.72 –  $5.70

(AMS National Weekly Feeder & Stocker Cattle Summary)

 

Wholesale Beef Value

Boxed Beef  (p.m.) Feb. 28 ($/cwt) Change
Choice $205.09 + $0.21
Select $201.70 –  $2.79
Ch-Se Spread $3.39 + $3.00

 

Futures

Feeder Cattle  Feb. 28 Change
Mar $131.275 –  $8.925
Apr $132.700 –  $9.400
May $133.525 –  $9.325
Aug $141.550 –  $8.125
Sep $143.525 –  $7.475
Oct $144.825 –  $6.975
Nov $145.600 –  $6.200
Jan ’21 $142.350 –  $5.500

 

Live Cattle   Feb. 28 Change
Feb  $112.700 –  $7.025
Apr $107.575 –  $10.675
Jun $101.200 –  $9.075
Aug $102.275 –  $7.125
Oct $107.525 –  $5.750
Dec $112.275 –  $5.250
Feb ’21 $115.625 –  $4.375
Apr $117.150 –  $4.125
Jun $110.800 –  $3.700

 

Corn  Feb. 28 Change
Mar  $3.664 –  $0.106
May $3.682 –  $0.124
Jul $3.724 –  $0.110
Sep $3.724 –  $0.096
Dec $3.770 –  $0.090
Mar ’21 $3.874 –  $0.078

 

Oil CME-WTI Feb. 28 Change
Apr $44.76 –  $8.62
May $44.94 –  $8.56
Jun $45.10 –  $8.44
Jly $45.23 –  $8.27
Aug $45.35 –  $8.02
Sep $45.46 –  $7.74

 

Equities

Equity Indexes Feb. 28 Change
Dow Industrial Average  25409.36 –   3513.05
NASDAQ    8567.37 –   1189.22
S&P 500   2954.22 –     383.53
Dollar (DXY)        98.13 –          1.13
March 2nd, 2020|Weekly Market Highlights|

Cattle Current Weekly Highlights—Week ending Feb. 21, 2020

Despite plenty of pressure and uncertainty in futures and equity markets, cash calf and feeder cattle prices surged higher last week. In fact, regional feeder steer prices in all regions were higher year-over-year for the first time in a long spell, according to the National Weekly Feeder and Stocker Cattle Summary from AMS.

Nationwide, steers and heifers sold $2-$6/cwt. higher, with some auctions from the Northern Plains to the Southern Plains quoting double digit gains, according to the Agricultural Marketing Service (AMS).

“Newfound optimism and warmer weather brought out buyers ready to take on grazing calves,” AMS analysts explain. “Many auction reports made note of the condition of cattle and alluded that buyers were hoping for compensatory gain as soon as the cattle got off the truck.”

“The hope and expectation that 500-550 lbs. steers could reach as high as $160/cwt. this spring is back in play,” says Andrew P. Griffith, agricultural economist at the University of Tennessee, in his weekly market comments. “Concern was beginning to creep in as the market struggled through the end of January and the first couple of weeks in February, but optimism is back on the table…the thought is that calf prices will continue to escalate for at least three to five weeks before softening.”

Early-week optimism was tied to the rebound in Cattle futures. By the last two trading sessions, though, Cattle futures moved lower, pressured in part by resurgent fears about the impact of novel coronavirus on the global economy, as well as recognition that positive feeding weather is boosting beef production.

Except for $1.67 higher and 72¢higher in the front two contracts, Feeder Cattle futures closed an average of 69¢lower week to week on Friday.

In the meantime, Griffith points out the cull cow market is gaining some steam.

“Breaker-grade cattle exceeded $62/cwt. on average this week with higher dressing cattle exceeding the $70 price mark,” Griffith explains. “The price of slaughter cows is also expected to continue increasing, but the current market may offer some producers an opportunity to offload animals that are consuming valuable feed resources. Fall calving producers should consider pregnancy evaluation this spring and market open animals on what is likely to result in a strong salvage value.”

Fed Cattle Prices Mostly Steady

Negotiated cash fed cattle trade ended the week steady to $1 higher on a live basis at $120/cwt. in the Southern Plains and $119-$120 in the north. Dressed trade was steady at $190.

Live Cattle futures closed an average of $1.49 lower through the front four contracts week to week on Friday. They were an average of 63¢lower across the rest of the board.

Near term, increased slaughter numbers and heavier carcass weights year over year, magnified by the mostly open winter so far are keeping a firmer seasonal lid on wholesale beef prices.

Choice boxed beef cutout value was $3.00 lower week to week on Friday at $205.09/cwt. Select was $4.01 lower at $201.70.

The average steer dressed weight in January was 904 lbs., according to USDA’s monthly Livestock Slaughter report. That was 18 lbs. more than the same month a year earlier. The average dressed heifer weight of 833 lbs. was 9 lbs. more than a year earlier.

Commercial beef production in January was 2.39 billion lbs., which was 78.7 million lbs. more (+3.41%) than the same time a year earlier. Total commercial red meat production for the month was 257.7 million lbs. more (+5.48%) at 4.96 billion lbs.

“There is no doubt that beef demand has been strong since the drought in 2012 and 2013. However, many cattle producers are probably asking why they are not benefiting more from strong demand in the form of higher cattle prices,” Griffith says. “The answer to that lies on the supply side of the equation. Producers responded to high cattle prices by increasing beef supply. Beef production in 2019 was nearly 3.5 billion pounds greater (+14.6%) than in 2015 when the demand index hit 112. Thus, cattle prices are lower.”

Fewer Feedlot Placements than Expected

Feedlots placed fewer cattle in January year over year, according to the monthly USDA Cattle on Feed report released Friday. The report is for feedlots with 1,000 head or more capacity.

Cattle feeders placed 1.96 million head in January, which was 0.61% less (-12,000 head) than the previous year. Ahead of the report, estimates were for placements to be up about 2%.

Marketings in January of 1.93 million head were 1.10% more (+21,000 head) than a year earlier.

Cattle on feed Feb. 1 of 11.93 million head were 2.16% (+252,000 head) more than a year earlier.

Both marketings and the on-feed inventory were close to pre-report estimates.

 

Friday to Friday Change

Weekly Auction Receipts

 

Feb. 21 Auction Direct

Video/net

Total
 

240,100

(+48,300)

36,100

(+6,100)

38,900

(+33,900)

315,100

(+88,300)

 

CME Feeder Index

CME Feeder Index* Feb. 20 Change
  $142.08 +  $1.48

*Thursday-to Thursday for CME Feeder Index

 

Cash Stocker and Feeder

North Central

Steers-Cash Feb. 21 Change
600-700 lbs. $161.67 + $3.52
700-800 lbs. $149.33 + $5.11
800-900 lbs. $139.29 + $2.74

 

South Central

Steers-Cash Feb. 21 Change
500-600 lbs. $173.14 + $5.62
600-700 lbs. $154.06 + $3.71
700-800 lbs. $141.42 + $1.49

 

Southeast

Steers-Cash Feb. 21 Change
400-500 lbs. $166.56 + $5.82
500-600 lbs. $152.89 + $5.20
600-700 lbs. $139.59 + $4.44

(AMS National Weekly Feeder & Stocker Cattle Summary)

 

Wholesale Beef Value

Boxed Beef  (p.m.) Feb. 21 ($/cwt) Change
Choice $205.09 –  $3.00
Select $201.70 –  $4.01
Ch-Se Spread $3.39 + $1.01

 

Futures

Feeder Cattle  Feb. 21 Change
Mar $140.200 + $1.675
Apr $142.100 + $0.725
May $142.850 –  $0.350
Aug $149.675 –  $0.525
Sep $151.000 –  $0.500
Oct $151.800 –  $0.550
Nov $151.800 –  $0.750
Jan ’21 $147.850 –  $1.475

 

Live Cattle   Feb. 21 Change
Feb ’20 $119.725 –  $1.100
Apr $118.250 –  $2.075
Jun $110.275 –  $1.725
Aug $109.400 –  $1.075
Oct $113.275 –  $0.375
Dec $117.525 –  $0.575
Feb ’21 $120.000 –  $0.750
Apr $121.275 –  $0.900
Jun $114.500 –  $0.550

 

Corn  Feb. 21 Change
Mar ’20 $3.770 –  $0.006
May $3.806 –  $0.014
Jul $3.834 –  $0.020
Sep $3.820 –  $0.022
Dec $3.860 –  $0.026
Mar ’21 $3.952 –  $0.028

 

Oil CME-WTI Feb. 21 Change
Apr $53.38 + $1.06
May $53.50 + $0.90
Jun $53.54 + $0.75
Jly $53.50 + $0.63
Aug $53.37 + $0.52
Sep $53.20 + $0.43

 

Equities

Equity Indexes Feb. 21 Change
Dow Industrial Average  28992.41 –   405.67
NASDAQ    9576.59 –   154.59
S&P 500   3337.75 –     42.41
Dollar (DXY)        99.34 +      0.18
February 22nd, 2020|Weekly Market Highlights|

Cattle Current Weekly Highlights—Week ending Feb. 14, 2020

Despite continued futures price pressure for most of the week, and lower negotiated cash fed cattle prices, calves and feeders mostly found increased support.

Steers and heifers sold from $1/cwt. lower to $3 higher, according to the Agricultural Marketing Service (AMS). Those analysts note demand was strongest for lightweight calves suited for summer grazing.

Weather lightened auction receipts again with an arctic blast and heavy rains limiting movement from southern Oklahoma through the Southeast.

“The mud has made it impossible to get trucks and trailers in and out of fields, not to mention that it has resulted in poorer cattle performance the past couple of months,” says Andrew P. Griffith, agricultural economist at the University of Tennessee, in his weekly market comments. “On top of tough weather conditions, feeder Cattle futures have been languishing for three weeks towards the bottom of the trading range.”

Futures optimism increased toward the end of the week, though, as oversold conditions helped set the stage for stronger prices.

Week to week on Friday, Feeder Cattle futures closed an average of $2.61 higher (1.70 to $3.87 higher).

Looking further ahead, USDA’s Agricultural Projections to 2029 suggest calf prices this year will be slightly higher than last year and the lowest for the next decade. This year’s projected farm calf price of $160/cwt. is the lowest of the projection period, which ranges from $165.17 (2028) to $180.88 (2023).

Fed Cattle Prices Sag

Negotiated cash fed cattle trade ended the week $2-$3 lower at $119/cwt. on a live basis and $3 lower in the beef at $190.

“Most of the cattle coming off feed today are profitable, and with the dip in feeder cattle prices the past few weeks, current placements have a good chance of being profitable,” Griffith says.

Except for 50¢lower in spot Feb, Live Cattle futures closed an average of 63¢higher week to week on Friday.

The latest World Agricultural Supply and Demand Estimates (WASDE) increased projected beef production for this year 40 million lbs. more than the January estimate at 27.48 billion lb.

“The beef production forecast is raised from the previous month on higher cattle slaughter and heavier cattle weights in the first half of the year. However, the forecasts for second-half beef production is reduced on lower anticipated steer and heifer slaughter in the second half of the year,” explain USDA analysts. “This reflects a smaller number of cattle outside feedlots implied by the Jan. 1 Cattle report which results in lower placements during 2020.”

Total red meat and poultry production was projected 634 million lbs. more at 108.79 billion lbs.

The annual fed steer price (five-area direct) was projected at $117/cwt.: $123 for the first quarter; $118 for the second; $112 for the third; $114 for the fourth quarter.

In the meantime, Choice boxed beef cutout value was $2.03 lower week to week on Friday at $208.09/cwt. Select was $1.82 higher at $205.71.

“Despite the struggle of cutout prices during a time when beef demand is slack, retail prices started off the year extremely strong,” Griffith explains. “The retail price of Choice beef for January was nearly $6.06/lb., which was 20¢/lb.higher than it was in January of 2019. The all fresh retail beef price for January was nearly $5.94/lb., which was 24¢ higher.”

 

Friday to Friday Change

Weekly Auction Receipts

 

Feb. 14 Auction Direct

Video/net

Total
 

191,800

(+5,200)

30,000

(+22,100)

5,000

(-19,900)

226,800

(+7,400)

 

CME Feeder Index

CME Feeder Index* Feb. 13 Change
  $140.60 –   $0.03

*Thursday-to Thursday for CME Feeder Index

 

Cash Stocker and Feeder

North Central

Steers-Cash Feb. 14 Change
600-700 lbs. $158.15 –  $0.35
700-800 lbs. $144.22 –  $2.47
800-900 lbs. $136.55 –  $1.44

 

South Central

Steers-Cash Feb. 14 Change
500-600 lbs. $167.52 + $4.31
600-700 lbs. $150.35 + $0.65
700-800 lbs. $139.93 + $0.42

 

Southeast

Steers-Cash Feb. 14 Change
400-500 lbs. $160.74 + $4.16
500-600 lbs. $147.69 + $1.26
600-700 lbs. $135.15 + $0.31

(AMS National Weekly Feeder & Stocker Cattle Summary)

 

Wholesale Beef Value

Boxed Beef  (p.m.) Feb. 14 ($/cwt) Change
Choice $208.09 –  $2.03
Select $205.71 + $1.82
Ch-Se Spread $2.38 –  $3.85

 

Futures

Feeder Cattle  Feb. 14 Change
Mar $138.525 + $3.325
Apr $141.375 + $3.875
May $143.200 + $3.625
Aug $150.200 + $2.325
Sep $151.500 + $2.025
Oct $152.350 + $2.000
Nov $152.550 + $1.700
Jan ’21 $149.325 + $2.025

 

Live Cattle   Feb. 14