The Cattle Range Market Trendlines:
Cattle futures and fat cattle were higher, feeder & stocker calves steady, while dressed beef continued losing ground, resulting in a slightly lower overall market for the week. Cattle futures were strong on Friday while fat cattle finally traded late Friday afternoon $3.50 higher than last week. This strength could be construed that while acknowledging substantial beef production, the market believes demand will continue to be strong and possibly increase.
10 Day Market Trendline
Change from Previous Day: +1.39%
Change from 10 Days Ago: -3.16%
Change from 60 Days Ago: -0.26%
The Trendlines are indicators of overall cattle/beef market strength and are based on daily market factors. Each daily factor is the aggregate weighted total of the Gain/(Loss) for 12 market indicators compared to the previous trading day.
Weekly Market Overview:
National Feeder & Stocker Cattle Weekly Summary:
RECEIPTS: Auctions Direct Video/Internet Total
This Week 243,800 23,400 16,900 284,100
Last Week 334,300 18,200 1,900 354,400
Last Year 299,900 59,300 2,500 361,700
Compared to last week, steers and heifers traded mixed this week nationwide; from 4.00 lower to 5.00 higher and everything in between with the most common term in all market report trends is: "steady to" fill in the blank. Demand was good to very good at auctions this week as there were many more weaned calves this week with an overwhelmingly amount of those having a total preconditioning program. Most calves were sold in moderate flesh, however some light and some a little heavier at times. The mild weather has allowed these calves to easily maintain, and gain, body condition. With plenty of low cost feed, there were many buyers noted being in the seats geared up to buy cattle.
Fed cattle recovered some of last week's losses by trading 2.00 to 3.00 higher at 119.00 to 120.00 in the Southern Plains. Higher bids have been offered in the feedlots of the Northern Plains, however trade has not been established as of this writing. Steers are not the only items to talk about in this report as replacement heifers were in high demand at the Sheridan Livestock Auction in Rushville, NE on Wednesday. A half load of 617 lb heifers sold at 170.00; a load of 687 lb heifers sold at 192.00, with the weighted average of 187.50 on the replacement type heavy 6-weight heifers. Also a part load of 717 lb heifers sold at 180.50 or near $1300 per head.
Hay trading has picked up in the Plains states in recent weeks as demand has been good in areas where hay supplies are not as plentiful. The mild, open weather is helping to stretch hay supplies as cows are out grazing the corn stalk fields and Ole Man Winter has not reared his ugly head yet. The weather forecast continues to show above normal temps until next week when colder temps are expected to move in along with a couple chances of moisture. On Thursday, the US Drought Monitor was released and continues to show too many colors that producers don't need at this juncture in the year. The South, Midwest and High Plains have areas of short and long term extreme drought in their regions. The top 15 states in number of beef cows all have some type of intensity and impact of a drought this week.
When the cattle inventory report comes out in late January 2018, the number of beef cows in the main cattle states will be watched by analysts to see if producers are continuing to increase cow herds when facing these drought conditions in such a widespread area. Auction volume this week included 50 percent weighing over 600 lbs and 39 percent heifers.
Stocker & Feeder Cattle Weekly Receipts:
Weekly sales of Stocker Calves & Feeder Cattle sold via auctions, direct country sales, and video/Internet sales as reported by the UDSA Market News
Five Year Moving Average - Stocker, Feeder, & Slaughter Steers:
Cattle Futures Summary: Live cattle futures finished the Friday session $1.075 to $2.625 higher in the front months on higher cash cattle trade. Feeder cattle futures were up 80 cents to $1.50 in most contracts. The CME feeder cattle index on December 14 was up 9 cents to $154.40. Wholesale boxed beef values were mixed on Friday afternoon. Choice was up 83 cents at $201.87, with select 44 cents lower at $183.25. Estimated weekly FI cattle slaughter is at 630,000 head through Saturday, 6,000 head fewer than the previous week but 24,000 head larger than the same week last year. Cash trade picked up late Friday afternoon with sales of $119-120.50, up $2 from the previous week. Spec traders were shown as reducing their CFTC net long cattle position by 17,262 contracts during the week ending Tuesday. That net position was at 99,748 contracts as of 12/12.
Mexican Feeder Cattle Weekly Import Summary
Receipts EST: 35,000 Week ago Act: 33,146 Year ago Act: 34,767
Compared to last week steer calves and yearlings steady to 5.00 higher on calves weighing under 400 lbs. Steer calves and yearlings weighing over 400 lbs steady to 5.00 lower. Heifers mostly steady. Trade moderate to active, demand moderate to good. Supply consisted of steers and spayed heifers weighing 300-700 lbs.
Feeder steers: Medium and large 1&2, 300-400 lbs 165.00-180.00; 400-500 lbs 149.00-160.00; 500-600 lbs 130.00-148.00; 600-700 lbs 120.00-135.00; Medium and large 2&3, 300-400 lbs 150-165.00; 400-500 lbs 133.00-148.00; 500-600 lbs 115.00-133.00.
Feeder heifers: Medium and large 1&2, 300-400 lbs 140.00-155.00; 400-500 lbs 130.00-145.00; 500-600 lbs 120.00-135.00.
Selected Auction Reports:
"Click" on individual auction links for complete report
Green Forest Livestock Auction - Green Forest AR
Receipts: 537 Last Week: 744 Year Ago: 1047
Compared to one week earlier, slaughter cows steady, slaughter bulls 2.00 to 4.00 higher, feeder steers and steer calves lightly tested, feeder bulls steady to 2.00 higher, bull calves 2.00 to 7.00 higher, feeder heifers 3.00 to 7.00 higher,
El Reno Cattle Narrative - El Reno OK
Receipts Week Ago Year Ago
10,970 13,312 12,480
*** Final report *** *** The OKC West Livestock Auction will be closed from 12/18/17-01/2/18 *** Compared to last week: Feeder steers and heifers sold 3.00-5.00 lower. Steer calves over 500 lbs that are most suitable for grazing
traded 4.00-8.00 higher. Steers under 500 sold steady to firm from last week's sharply higher market.
Tulia Livestock Auction - Tulia TX
Receipts: 2104 Last Week: 1411 Year Ago: 3066
Compared to last week: Feeder steers and heifers sold mostly 1.00 to 3.00 higher. Trade was fairly active on good demand as the feeder cattle CME board tried to regain some lost footing. Slaughter cows and bulls sold steady.
Pratt Livestock Feeder Cattle Auction - Pratt, KS
Receipts: 1529 Last Week: 2141 Year Ago: 2850
Compared to last week: Feeder steers and heifers not enough Medium and Large 1 for a true market test. However a firm to higher under tone noted. Steer and heifer calves not enough for a test. Slaughter cows steady to weak and slaughter bulls 3.00 lower.
Clovis Livestock Auction - Clovis NM
Receipts: 2693 Week Ago: 3464 Year Ago: 3811
Compared to last week: Feeder steers under 600 lbs mostly steady. No accurate comparison over 600 lbs but a weaker undertone noted. Heifers under 600 lbs mixed 1.00-3.00 lower except 400-450 lbs, instances 2.00 higher; over 600 lbs mostly steady to weak.
Farmers & Ranchers Livestock Commission Co. - Salina KS
Receipts: 2998 Last Week: 2972 Year Ago: 3530
Compared to last week: Steers in a limited supply 400-1000 lbs 1.00-6.00 lower. Heifers 700-1000 lbs 1.00-2.00 lower; 700 lbs and under higher undertone noted. Trade and Demand moderate. Receipts: 71 percent (2105) 600 lbs and over, 28 percent (861) 600 lbs and under; 01 percent (32) slaughter cows.
Mitchell Livestock Wtd Avg Report - Mitchell SD
Receipts: 8583 Last Week: 4227 Year Ago: 4754
Compared to last week: Steer calves under 600 lbs 3.00 to 5.00 higher,over 600 lbs steady to 2.00 higher. Heifer calves steady to 2.00 higher. Yearling steers steady to 4.00 lower, this week’s yearling heifers were of different weights than last week’s limited heifer offering, lower undertones evident.
Cattleman's Livestock Auction - Dalhart, TX
Cattle and Calves: 2292 Week ago: 3420 Year Ago: 3528
Compared to a week ago: Feeder steers and heifers and steers and heifer calves firm to 2.00 higher. Slaughter cows and bulls firm to 1.00 higher. Trade active. Demand good. No sale for the next two weeks due to holiday break.
Oklahoma National Stockyards - Oklahoma City, OK
Receipts Week Ago Year Ago
7,129 8,938 9,293
***Add Close Updating with Actual Receipts*** Compared to last week: Feeder steers sold 2.00-8.00 lower. Feeder heifers 3.00-6.00 lower. Lightweight steer calves steady to 7.00 higher, heavier weight calves 3.00 lower.
Joplin Regional Stockyards Feeder Cattle Wtd Avg - Carthage MO
Receipts Week Ago Year Ago
4,476 7,830 7,448
***CLOSE*** Compared to last Monday, steer calves steady to 5.00 higher, except 450 to 500 lbs weaned steers 8.00 to 10.00 higher, heifer calves steady, yearling steers steady, yearling heifers steady to 2.00 lower. Demand
moderate to good, supply moderate.
Blue Grass South Livestock Market - Stanford KY
Receipts: 472 Last Week: 998 Year Ago: 900
Compared to last Monday:Feeder steers and heifers 3.00-5.00 higher,Good demand for feeder classes.Slaughter cows 1.00-3.00 higher,Slaughter bulls steady,Good demand for slaughter classes.
Sioux Falls Regional Livestock wtd Avg Report - Worthing SD
Receipts: 3860 Last Week: 3468 Year Ago: 4389
Compared to last week: Steer calves 3.00 to 8.00 lower, except 500-550 lbs 2.00 to 3.00 higher and 550-650 lbs 5.00 to instances of 10.00 higher. Heifer calves under 650 lbs steady to 2.00 lower, over 650 lbs 4.00 to 6.00 lower.
Tri-State Livestock Auction Market - McCook NE
Receipts: 3540 Last Week: 3040 Year Ago: 2600
Compared to last week, steers were steady - 3.00 higher and heifers were 2.00 - 7.00 lower. Demand was good on all cattle offered. Steers accountede for 60 percent and heifers 40 percent of the offering today. Weights over 600 lbs 54 percent of the offering. Weigh cows and bulls made up the rest of offering.
Winter Livestock - La Junta CO...
Receipts: 5552 Last Week: 7821 Year Ago: 7518
Compared with last Tuesday: Steer calves under 500 lbs mostly steady, over 500 lbs 2.00 to 3.00 lower. Heifer calves uneven heifers under 400 lbs steady, 400-500 lbs 8.00 to 10.00 higher, over 500 lbs 3.00 to 5.00 instances 8.00
Huss Platte Valley Auction - Kearney NE
Receipts: 5440 Last Week: 2666 Year Ago: 5039
Compared to last week, steers under 650 lbs sold 5.00 to 10.00 higher, over 650 lbs sold steady to 3.00 higher with a flat 800 lbs steers selling 7.00 higher. Heifers under 650 lbs sold 7.00 to 10.00 higher, over 650 lbs sold unevenly steady.
Cullman Stockyard - Cullman AL
Receipts: 798 Last Week: 1024 Year Ago: 1237
Compared to last week: Slaughter cows sold 2.00 to 3.00 lower, slaughter bulls sold 1.00 to 3.00 lower. Feeder bulls and steers old 2.00 to 3.00 higher. Feeder heifers sold 1.00 to 2.00 higher. Replacement cows and pairs sold mostly steady.
Toppenish, WA Livestock Auction - Toppenish WA
Receipts: 1960 Last Week: 2000 Year Ago: 1100
Compared to last Thursday at the same sale, stocker and feeder cattle steady to 4.00 higher. Trade active with very good demand for all classes. Slaughter cows and bulls 5.00-8.00 higher as processors need supplies. Trade very with very good demand.
Valentine Livestock Auction Market - Valentine NE
Receipts: 2560 Last week: 4860 Last year: 3125
Todays Bred cow and heifer auction consisted mostly of black and bwf offering bred to lbw black bulls. Several offerings of bred heifers to calve Feb and Mar AI'd for 2 to 3 days and bull breds calving 20 to 30 day.
Russell Wtd Avg Feeder Cattle Auction - Russell IA
Receipts: 2725 2 weeks ago: 2200 Year Ago: 1200
Compared to the sale 2 weeks ago: Feeder strs mostly 2.00-4.00 lower except 550-700 lbs. mostly 3.00-5.00 higher and feeder hfrs mostly 1.00-3.00 lower. Trade Active and Demand Good today.
Direct Sales of Feeder & Stocker Cattle:
WY, Western NE & Western Dakotas Direct Feeder Cattle Wtd Avg (Fri)
Receipts: 270 Week Ago: 66 Year Ago: 3,545
Not enough comparable offerings from last week to make a market comparison. Demand was light this week for direct feeder cattle as many contacts are busy procuring cattle to fill their orders from the heavy supply of cattle getting sold are area auctions.
AZ-CA-NV Weekly Feeder Cattle Review (Fri)
Compared to last week, 325 lb Holstein steers for January through March delivery traded 10.00-12.00 lower. Trade and demand moderate. Supply con-sisted of Holstein steers for Current through March Delivery weighing 275-325 lbs.
IA-South MN Direct Feeder Cattle Weekly (Mon)
Receipts: 0 Last week: 0 Last Year: 150
Compared to the last report: Feeder steers and heifers not tested. Prices based on net weights FOB after a 3 percent shrink or equivalent and 5-10 cent slide on calves and 4-6 cent slide on yearlings from base weights.
Eastern Cornbelt Direct Feeder Cattle Summary (Fri)
This week: 1,910 Last week: 794 Last Year: 0
Compared to last week: No current FOB delivered cattle for an accurate market test. Supply included 94 percent over 600 lbs; 89 percent heifers.
Colorado Direct Feeder Cattle Report (Fri)
Receipts: 1,759 Last Week: 0 Last Year 1,867
Compared to last week: No current FOB trades this week. Demand moderate. Supply consisted of 100 percent over 600 lbs; 84 percent heifers.
Kansas Direct Feeder Cattle Summary (Fri)
Receipts: 1019 Last Week: 1692 Year Ago: 2296
Compared with last week: not enough confirmed sales of steers or heifers for a market test. Sales confirmed on 523 steers, 496 heifers and no calves for a total of 1019 head compared with 1692 last week and 2296 last year.
Montana Direct Feeder Cattle Wtd Avg (Fri)
Receipts: 0 Last week: 0 Last Year: 148
Compared to last week: No comparable receipts for feeder Steers and heifers. Supply includes 0 percent over 600 lbs and 0 percent heifers.
New Mexico Feeder Cattle Report (Mon)
Receipts: 59 Last Week: 700 Year Ago: 2000
Compared to last week: Not enough steer or heifers sales reported for a market trend. Trade was slow on light demand. Supply consisted of 100 percent steers and 100 percent of the offerings weighed over 600 lbs.
Northwest Wtd Avg Direct Feeder Cattle Report (Fri)
Receipts: 70 Last Week: 0 Year Ago: 4050
Compared to last week: Feeder steers and heifers not well tested. Demand moderate. The feeder supply included 100 percent over 600 lbs and 50 percent heifers.
Oklahoma Direct Feeder Cattle (Fri)
Receipts: 1,285 Last Week 414 Last Year 3,296
Compared to last week: No trend available for an accurate market trend for feeder steers and heifers due to limited receipts. Receipts this week consisted of 100 percent over 600 lbs and 32 percent heifers.
Texas Direct Feeder Cattle (Fri)
Receipts: 13,150 Last Week: 7,900 Year Ago: 40,400
Compared to last week: Current FOB steers and heifers sold mostly steady to 5.00 lower. Trade activity was slow to moderate on moderate demand. Another week of a roller coaster CME Feeder cattle board with a mostly down market caused sellers to hold off and decreased receipts.
Extensive U.S. & Canadian Auction Results are available on The Cattle Range
Representative Sales of Cows & Pairs:
Reported by USDA Market News for the week ending December 15th
El Reno, OK:
Replacement Cows: Medium and Large 1-2 1-4 yr old 775-1100 lb cow 3-7 months bred 800.00-1075.00; pkg 4 yr old 1275 lbs cow 7 months bred 1325.00; 7-10 yr old 1000-1400 lb cow 4-7 months bred 700.00-1100.00 per head.
Pairs: Medium and Large 1-2 6-8 yr old 1200-1325 lb cow w/50-100 lb calf 1075.00-1125.00 per pair.
Replacement Cows: Medium and Large 1-2 1-4 yr old 925-1250 lb cow 4-8 months bred 875.00-1400.00; 5-10+ yr old 950-1300 lb cow 4-8 months bred 850.00-1135.00 per head.
Pairs: Medium and Large 1-2 5-6 yr old 1000-1175 lb cow w/75-100 lb calf 910.00-1060.00; 9-10+ yr old 1125-1250 lb cow w/100-125 lb calf 800.00-925.00 per pair.
Oklahoma City, OK:
Replacement Cows: Medium and Large 1-2 3-5 yr old 900-1325 lb cow 1-7 months bred 700.00-925.00; 7-10 yr old 1025-1375 lb cow 4-7 months bred 685.00-750.00 per head.
Pairs: Medium and Large 1-2 pkg 4 yr old 1600 lb black cow w/350 lb calf 1600.00; 5-9 yr old 1175-1475 lb cow w/100-250 lb calf 1200.00-1310.00 per pair.
Replacement Cows: Medium and Large 1-2 3-5 yr old 1050-1300 lb cow, some black, 4-8 month 1375.00-1450.00; 4-6 month old 1100-1475 lb cow, some black, 2-7 months bred 1060.00-1150.00; 4-9 yr old 1225-1400 lb black cow 2-6 months bred 825.00-1060.00; +10 yr old 1200-1450 lbs cows, some black, 4-7 months bred 760.00-950.00 per head.
Pairs: Medium and Large 1-2 4-9 yr old 1025-1300 lb black cow w/100-300 lb calf 1200.00-1435.00; 6-10 yr old 1025-1275 lb cow w/150-200 lb calf 1025.00-1135.00 per pair.
Replacement Cows: Medium and Large 1-2 Young 860-1250 lb cows 3-8 months bred 875.00-1175.00, per head; middle aged 840-1655 lb cows 3-8 months bred 675.00-910.00, per head; aged 835-1195 lb cows 3-8 months bred 550.00-825.00, per head. First Calf Heifer: 625-885 lbs 1-8 months bred 685.00-900.00.
Cow/Calf Pairs: Medium and Large 1-2 Young 7010-815 lb cows w/100-150 lb calves 900.00-925.00 per pair; middle aged indiv 910 lbs w/150 lb calf 950.00 per pair; aged 1000-1050 lb cows w/90-250 lb calves 825-1000.00 per pair.
Bred Cows: Medium and Large 1 4-5 yrs 3rd stage pkg. 1200 lbs 1500.00. Medium and Large 1-2 2-7 yrs 2nd and 3rd stage 1075-1365 lbs 1050.00-1400.00, 1st stage 1120-1275 lbs 925.00-1000.00; short and solid mouth to aged 2nd and 3rd stage 1100-1355 lbs 665.00-975.00. Large 1-2 5 yrs to short and solid mouth 2nd stage 1400-1585 lbs 975.00-1300.00; broken mouth 2nd and 3rd stage 1395-1480 lbs 735.00-875.00. Medium and Large 2 2-6 yrs 2nd and 3rd stage 900-1200 lbs 900.00-1060.00, 1st stage 1070 lb indiv. 850.00; 7 yrs to short and solid mouth 2nd and 3rd stage 1100-1170 lbs 575.00-750.00. Medium 1-2 3-7 yrs 2nd and 3rd stage 900-1050 lbs 800.00-1050.00, 1st stage 5 yrs pkg. 1000 lbs 850.00; short and solid mouth to aged 3rd stage 1000-1045 lbs 550.00-675.00. Medium 2 2-7 yrs 2nd and 3rd stage 700-1020 lbs 550.00-750.00, 1st stage 875 lb indiv. 525.00; short and solid mouth 2nd stage 740-920 lbs 475.00-510.00 per head.
Cow/Calf Pairs: Medium and Large 1-2 3-5 yrs 1085-1185 lb cows w/babies to 285 lb calves 1250.00-1375.00; short and solid mouth to aged 1340-1345 lb cows w/babies to 170 lb calves and a few rebred 1100.00. Medium and Large 2 5 yr 1070 lb cow w/baby calf 1050.00. Medium 1-2 3 yrs to short and solid mouth 970-1040 lb cows w/babies to 155 lb calves 1000.00-1050.00 per pair.
Bred Cows: Medium and Large 1-2 2-6 yrs most 2nd few 3rd stage 1055-1325 lbs 950.00-1225.00, 1st stage 2 yr 965 lb indiv. 1000.00; short and solid mouth most 2nd few 3rd stage 1110-1385 lbs 750.00-1000.00; broken mouth 2nd and 3rd stage 1110-1340 lbs 630.00-775.00. Large 1-2 2-5 yrs 2nd stage 1235-1460 lbs 975.00-1225.00, 1st stage 1455 lb indiv. 730.00; short and solid mouth to aged 2nd and 3rd stage couple 1480-1495 lbs 800.00-885.00. Medium and Large 2 3-6 yrs 2nd and 3rd stage 1100-1290 lbs 775.00-1000.00; short and solid mouth 2nd stage 1100 lb indiv. 510.00. Medium 1-2 4-5 yrs 2nd and 3rd stage 945-1055 lbs 835.00-1050.00, 1st stage 895 lb indiv. 700.00; short and solid mouth to aged 2nd stage 820-1050 lbs 475.00-650.00 per head.
Cow/Calf Pairs: Medium and Large 1-2 3 yr 1230 lb cow w/165 lb calf 1200.00; broken mouth 1100-1270 lb cows w/babies to 350 lb calves 800.00-1010.00. Large 1-2 short and solid mouth 1400 lb cow w/130 lb calf 1075.00. Medium 1-2 short and solid mouth to aged 935-1010 lb cows w/babies to 180 lb calves 850.00-935.00 per pair.
West Plains, MO:
Bred Cows: Medium and Large 1-2 2-6 yr old 995-1490 lb cows in the 2nd-3rd stage 1050.00-1375.00 per head, 1st stage 950.00-1200.00 per head; 7 yrs to broken mouth 1152-1495 lb cows in the 2nd-3rd stage 950.00-1125.00 per head. Medium and Large 2 2-7 yr old 820-1500 lb cows in the 2nd-3rd stage 750.00-1000.00 per head; Short-solid to broken mouth 899-1375 lb cows in the 2nd-3rd stage 600.00-850.00 per head. Medium 2 3 yr to short-solid mouth 625-1115 lb cows in the 1st-3rd stage 525.00-750.00 per head.
Cow-Calf Pairs: Medium and Large 1-2 Few 3-6 yr old 1195-1282 lb cows with 150-250 lb calves 1275.00-1375.00 per pair. Broken mouth 1085-1170 lb cows with 150-200 lb calves 950.00-1125.00 per pair. Medium and Large 2 3-5 yr old 710-975 lb cows with 250-300 lb calves 1050.00-1275.00 per pair.
La Junta, CO:
Replacement Stock: Medium and Large 1 Young 1165-1350 lbs 1700.00-1900.00, mostly 1800.00-1875.00, heavy load fancy 1130 lbs 2100.00, May calvers 1260-1370 lbs 425.00-1550.00, summer calvers 1210-1250 lbs 710.00-800.00; middle age 1260-1375 lbs 1250.00-1350.00; aged short solid mouth 1270-1330 lbs 975.00-1010.00, broken mouth 1070-1370 lbs 750.00-850.00.
Cow-Calf pairs: Medium and Large 1 Young 1000-1200 lbs with 100-225 lb calves 1300.00-1400.00, 1250-1300 lbs with 250-325 lb calves 1475.00-1550.00; middle age 1175-1250 lbs with 100-250 lb calves 1150.00-1275.00.
Replacement Cows: Medium and Large 1-2 2-7 year old 850-1250 lbs second & third stage 115.00-125.00/875.00-975.00, first stage/open 70.00-80.00, 7-10 year old second & third stage 46.00-56.00/700.00-800.00 per head.
Cow-Calf Pairs: Medium and Large 1-2 3-7 yr old 800-1200 lb cow w/100-200 lb calf 1125.00-1225.00, few to 1425.00; w/200-300 lb calf 1150.00-1250.00; 7-10 yr old w/100-200 lb calf 975.00-1075.00 per pair.
Alberta Beef Producers: Alberta direct cattle sales Thursday saw light trade develop with live sales steady to $1.00 lower than Wednesday, but still $2.00 higher than last week's weighted average price. Dressed sales so far this week have been reported from $257.00-263.00 delivered. Initial sales are $7.00-9.00 higher than the previous week. Buyers were indicating cattle bought this week could be lifted in one to two weeks. Stronger basis levels did encourage producers to market cattle.
Canadian Cattle Prices:
Prices have been converted to U.S. $/CWT. Grades changed to approximate U.S. equivalents
Exchange Rate: Canadian dollar equivalent to $0.7795 U.S. dollars
Prices for the week ending December 8th:
The "Nord Fork"
Replaces Flankers at Branding
USDA World Agricultural Supply & Demand Estimates
LIVESTOCK & POULTRY: The 2017 forecast of total red meat and poultry production is reduced from last month on lower beef and pork production forecasts. Beef production is lowered on the current pace of cattle slaughter and lighter carcass weights. The pork production forecast is lowered on smaller-than-anticipated hog slaughter this quarter although partly offset by higher carcass weights. The broiler forecast is raised on a revision to third-quarter production data. The turkey production forecast is unchanged from the previous month.
For 2018, the total red meat and poultry forecast is lowered from last month on lower expected beef and pork production. Beef production is forecast lower, reflecting slightly lighter carcass weights in 2018. Pork production is reduced as fractionally heavier first-quarter carcass weights only partially offset smaller-than-expected hog slaughter. USDA will release its Quarterly Hogs and Pigs report on December 22 which will provide an indication of producers’ farrowing intentions into the first half of 2018. Broiler and turkey production forecasts are unchanged from the previous month.
The beef and turkey export forecasts are raised for 2017 on strong global demand which is expected to carry into first-quarter 2018. No change is made to pork and broiler trade forecasts. The egg export forecast is raised for 2017, supported by expectations of solid demand and recent trade data while the egg import forecast is reduced. No change is made to the 2018 egg trade forecasts.
The cattle price forecast for 2017 is lowered on recent prices, but the 2018 cattle price forecast is unchanged from the previous month. The hog price forecast for 2017 is raised on recent demand strength and as this strength is expected to carry into 2018, hog price forecasts are raised for next year. The broiler price forecast is lowered for 2017, but the
forecast is unchanged for 2018. Turkey price forecasts are lowered for 2017 and 2018 on relatively weak demand. Egg prices are raised for 2017 and 2018 on strength in demand.
WHEAT: Projected 2017/18 U.S. ending stocks are raised this month by 25 million bushels on reduced exports. This reduction is primarily attributed to heightened Canadian competition expected from its increased exportable supplies. Canada and the United States compete in several of the same markets in Latin America and East Asia. No other supply or use categories are revised this month. Based on NASS prices reported to date and price expectations for the rest of the marketing year, the projected 2017/18 season-average farm price (SAFP) is unchanged at the midpoint of $4.60 per bushel. However, the SAFP is narrowed by 10 cents at both ends of the range to $4.50 to $4.70.
Global 2017/18 wheat supplies are increased, primarily on higher production forecasts for Canada and the European Union more than offsetting production declines in Brazil, South Africa, and Yemen. Canadian wheat production is raised 3.0 million tons to 30.0 million, largely on increased yields in the Prairie Provinces as reported in Statistics Canada’s
Production of Principal Field Crops report, released on December 6. EU wheat production is raised 1.0 million tons to 152.5 million, mainly on higher production in Romania, Poland, Latvia, and Bulgaria.
World 2017/18 trade is greater this month as higher exports from Canada, Russia, and Ukraine more than offset reduced U.S. exports. Projected imports are increased for Indonesia, China and Brazil. Indonesia’s imports are raised 1.0 million tons to 11.5 million, primarily on higher expected feed wheat usage. Total world consumption is projected 2.1 million tons higher, primarily on greater usage from Indonesia, Canada, and the EU. Projected global ending stocks are 0.9 million tons higher this month at 268.4 million, which is a new record.
COARSE GRAINS: This month’s 2017/18 U.S. corn outlook is for increased corn used to produce ethanol and reduced ending stocks. Corn used to produce ethanol is raised 50 million bushels to 5.525 billion, based on increased sorghum export commitments, and the most recent data from the Grain Crushings and Co-Products Production report, which
estimated a lower-than-expected amount of sorghum used to produce ethanol during October. With no other use changes, ending stocks are down 50 million bushels from last month. The projected season-average farm price is unchanged this month at a midpoint of $3.20 per bushel but the range is narrowed 5 cents on each end to $2.85 to $3.55 per bushel.
For sorghum, recent large purchases by China have increased sorghum prices relative to corn, sharply reducing the estimated amount of sorghum used to produce ethanol. With expectations of increased U.S. sorghum exports to China, projected food, seed, and industrial use for sorghum is reduced by 50 million bushels, with an offsetting 50 million
bushel increase in exports.
Global coarse grain production for 2017/18 is forecast 1.4 million tons higher to 1,323.9 million. The 2017/18 foreign coarse grain outlook is for larger production, increased consumption, and higher stocks relative to last month. Foreign corn production is forecast higher with increases for China, the EU, Laos, and Guatemala more than offsetting a
reduction for Russia. China’s corn production is raised based on the latest data from the National Bureau of Statistics. EU corn production is higher, mostly reflecting an increase for Romania that more than offsets declines for several countries. Corn exports are lowered for Russia but raised for the EU. Foreign corn ending stocks are raised from last month, largely reflecting increases for China, the EU, and Brazil that more than offset declines for Egypt and Mexico. Global corn stocks, at 204.1 million tons, are up slightly from last month
Analysis of USDA's Beef & Pork Production Projections
The latest USDA WASDE forecasts contained some downward revisions for the 2017 supply outlook while making some modest upward revisions to 2018. The WASDE report is closely followed and, in our experience, the best publicly available commodity outlook report in the world. While the European Commission over the years has made a concerted effort to provide more consistent and timely outlook reports, we think still cannot match the breadth and timeliness of the USDA analysis. For readers that are interested in this sort of stuff we would also suggest the quarterly outlook that ABARE in Australia puts together.
A few points on this latest USDA update:
Beef production for 2017 is now forecast at 26.372 billion pounds, 95 million pounds less than the November projection but still about 1.1 billion pounds (+4.3%) higher than in 2016. The chart to the right shows the progression of the USDA 2017 forecasts since May. Interestingly, the current projection for 2017 is pretty close to what was forecast back in May. But even as the 2017 beef production forecast has been revised lower in the second half of 2017, USDA has actually steadily increased its projections for 2018 production. This is likely a function of expectations for more cattle expected to be available next year and a trend increase in carcass weights. Cattle weights have been notably under year ago for
much of this year and this has limited the supply of beef coming to market. USDA now forecasts beef production in 2018 to be 27.657 billion pounds, a 1.3 billion pound increase (+4.9%) higher compared to 2017. Back in May, USDA was projecting 2018 beef output to increase 2.3% y/y.
Despite the widening gap between 2017 and 2018 beef production forecasts, USDA has made only minor revisions to price expectations in the last few months. Back in May, USDA forecast 2017 steer prices at $122.5/cwt (average of range) while 2018 prices were forecast at $118/cwt, 3.7% lower. The latest December forecast pegs the 2017 steer
prices at 121.42/cwt while 2018 steer prices are forecast to average $117.5/cwt, 3.2% lower. Following the price performance so far this year, clearly USDA is counting on solid demand next year as well. Per capita beef consumption in 2018 is now forecast to be 59.1 pounds (retail basis) 3.7% higher than in 2017. Last May, USDA was only projecting a 1.4% increase in per capita consumption and yet projecting a bigger y/y decline in fed cattle prices.
The trajectory of pork production and consumption forecasts for 2017 and 2018 has been similar to that for beef. The pork production forecast for 2017 has not matched earlier expectations. Back in May USDA was forecasting 2017 pork production to be 26.070 billion pounds. In the December report, 2017 pork production has been lowered to 25.576 million, almost a half a billion pound shortfall. Pork prices have performed better than expected, and this is, in part, due to the smaller than expected supply coming to market. Different from beef, the shortfall has not been a result of lighter but fewer animals slaughtered than earlier expected.
The revisions to 2017 pork production forecasts have had little impact on USDA projections for pork production in 2018. The December WASDE now forecasts US pork production next year to be 26.931 billion pounds, 1.355 billion pounds (+5.3%) larger than in 2017. Back in May USDA was forecasting per capita pork consumption for 2018 to increase 1.6% while today per capita consumption is expected to be up 4.2%. This explains why in May USDA was forecasting 2018 hog prices to be down 2.2% while it now expect hog prices next year to be down 5.7%.
USDA National Retail Beef Report:
Advertised Prices for Beef at Major Retail Supermarket Outlets
This week in beef retail, the Feature Rate posted a 3.7 percent increase, the Special Rate fell by .9 percent, and the Activity Index charted a 13.8 percent increase. As the holidays are fastly approaching, beef is making its seasonal surge to be the centerpeice for holiday celebrations. Cuts from the Rib, Round, and Brisket saw more ad space, while cuts from the Chuck, Loin, and Ground Beef saw less. Cattle Slaughter under federal inspection saw a .9 percent decrease.
Japanese GDP & Beef Imports Grow
Steiner Consulting Group Daily Livestock Report
Last Friday, the Japanese government reported that their economy grew an annualized rate of 2.5%, which was 1% above expectations. The latest quarter (July-September, was revised higher from the preliminary data (up 1.4%). Growth in Gross Domestic Product (GDP), the total value of goods and services produced in the country adjusted for inflation, has been steadily gaining but rather modest. The Japanese economic expansion has reached seven consecutive quarters, which is the longest stretch since comparable data have been available (1994). For comparison, the U.S. GDP increased at an annual rate of 3.3% in the third quarter of 2017.
On a tonnage basis, from 2013 through 2016 Japan was the largest foreign market for U.S. beef. In 2016, it represented 25.6% of U.S. beef exports. Turning to pork, during both 2015 and 2016, Japan was the second biggest buyer from the U.S., and before 2015 it was consistently the largest foreign market. The rather strong Japanese economy has likely supported increased imports of red meats. Also, the U.S. Meat Export Federation has attributed the demand improvement in part to some substitution away from seafood caused by relatively high prices.
Each month so far this year, Japan has bought more U.S. beef than a year ago, and annual sales are at a record pace (official data are through October). Japan’s imports of pork year-to-date have exceeded 2016’s. However, U.S pork shipments to Japan have struggled the last two years. The European Union, Canada, Mexico, and Chile have all posted large increases tonnage sold to Japan. The U.S. share of that important pork market could continue to erode as those countries move forward with new trade agreements that involve Japan.
Photo of the Week:
"Shootin' the Bull" Weekly Analysis:
In my opinion, the end of the year window dressing is upon us. As the abbreviated trading weeks start, fewer traders will be around. As I've seen nothing yet to change my analysis, traders continue to pressure futures in anticipation of a change in consumption. I don't see this change coming. I do see the increase of inventory and believe that the drought will now have to be dealt with. These two factors don't necessarily negate the strong demand, but will most likely just keep the volatility high. There were two declines of significance this past summer. At those lows, market action was exceptionally volatile and produced a wide price range. I view those in hopes of drawing conclusions to the current low. As I write this the developing bottom is taking on similar aspects as to the summer lows. I recommend to anticipate this current low to unfold similarly to the summer lows. Were this to play out as anticipated, it would wind up being a simple marking of time. Interestingly enough, it would also have similar aspects to the fundamentals. Those being the anticipation of demand being offset by greater numbers and causing a price decline of significance. What has been the case though is that cash did not follow the futures lower and ended up the futures had to race to get back to the cash levels.
I think the same scenario will play out at this current decline low. Why? Demand. As the US continues to increase employment, disposable income rises and discretionary spending increases. This is more true to the smaller aspects of life than the larger purchases of homes and automobiles. Then, there remains the export business. It remains robust with Japan still leading in consumption. Japanese manufacturing hit an 11 year high in optimism due to increasing global demand. This is interesting as it has led to speculation that Bank of Japan Governor Kuroda may begin to reverse their easing policy. No, this won't have an impact on US beef per se, but what it does suggest is that it reduces the likelihood of Japan slowing current beef consumption. Back in the US, I can see meat salesmen sharpening their pencils to push as much product into the first quarter as possible. The large volumes of available meat makes for greater volume sales and therefore increased commissions. Although most know that beef production won't subside totally until the end of '18, but the increase of inventory in '17 didn't appear to make much difference as the consumer spoke volumes through their discretionary purchases.
The drought is increasing. On this weeks Palmer Drought Index, all areas increased in severity through either a widening of the area or intensity of the dryness. This has impacted stocker cattle that should have remained on the wheat pasture until end of winter. There is a portion being moved to rented land while the other portion is marketed once again. There are a multitude of opinions on what this may or may not do to the price. At this time, with the farmer feeder seemingly aggressive to own inventory, the industry may skate through this without too much difficulty. The lower feed costs to farmer feeders allows them to bid higher for inventory. Whether due to proximity to an ethanol plant or ownership of feed, cost of gains is just enough to have them as strong bidders.
Like the fats, look at the two lows this summer and anticipate a similar bottom this time to those. The excessively wide positive basis makes it very unattractive to hedge or make forward contracted sales. Before years end, I would look for basis to narrow back towards even. Since there has been little overly bullish news out front, an even basis may be about as good as it gets until after spring. At this juncture, I anticipate the futures to push higher in closing the basis rather than the index moving lower. At $10.00 positive, feed yards can capture a portion of this with call options. If my analysis turns out to be incorrect, then then 100% of the option premium is your risk and you buy inventory cheaper. If correct, then you should capture a portion of the basis as well as you are long and benefiting from the long hedge.
Corn remains lifeless, but there is trouble brewing with this drought. Most likely making wheat the most susceptible at this time, but could easily bleed over into corn and beans this spring. The wheat pastures are drying up. Were the stocks to be any less burdensome and I would have anticipated at least a $.30 to $.50 rally out of wheat. They are burdensome though and this has kept a lid on buying. That may not last too long though due to the current severity and increase of. Lastly, I anticipate a resumption of the down trend in the US dollar. While the previous weakness this year has had no impact on the grain markets yet, combined with a drought, it could quickly. Throw into the mix of rising energy costs and it appears that demand for most everything is increasing.
Christopher B. Swift is a commodity broker and consultant with Swift Trading Company in Nashville, TN. Mr. Swift authors the daily commentaries "mid day cattle comment" and "Shootin' the Bull" commentary found on his website @ www.shootinthebull.com
An investment in futures contracts is speculative, involves a high degree of risk and is suitable only for persons who can assume the risk of loss in excess of their margin deposits. You should carefully consider whether futures trading is appropriate for you in light of your investment experience, trading objectives, financial resources and other relevant circumstances. PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
Lawsuit Filed to Force USDA to Reinstate Livestock Fairness Rule
The U.S. Department of Agriculture faces a lawsuit that argues the federal agency must bring back a proposed rule that defined abusive practices by meatpacking companies.
Farmers from Alabama and Nebraska and the Organization for Competitive Markets, a non-profit that works on competition issues in agriculture, filed the suit Thursday in the 8th U.S. Circuit Court of Appeals.
The “fair practice” rule addressed longstanding complaints from many beef, pork and poultry farmers who say meatpackers wield too much power over their businesses. Among other things, it said meat companies cannot break production contracts without notice, retroactively require costly investments in feeding facilities or block farmers from marketing their cattle or hogs.
The rule was withdrawn in October by Agriculture Secretary Sonny Perdue, who said the proposed changes would have caused too many lawsuits and that the market should determine competitive forces. The latter is an opinion shared by some groups representing livestock producers like the National Cattlemen’s Beef Association.
“My fear was it would just have been a windfall for litigators and lawyers who wanted to take these court cases and would’ve been very disruptive to the markets and disruptive to the fair competition among producers there,” Perdue said in November in Omaha, Nebraska.
The suit claims the USDA must go ahead with the rule because it was requested by Congress in the 2008 farm bill. It also says the rule would have prevented frivolous lawsuits.
“The fact is it only will allow the farmer the right to have their grievance filed in court,” OCM executive director Joe Maxwell said. He added that current court precedent sets a high bar to prove meatpackers are abusing their power.
“It’s fruitless to bring a challenge because a farmer does not have the capacity to prove the actions that company did against their farm affected the entire marketplace of beef in the country, or pork,” he said.
The livestock competition rule was first proposed in 2010, but it was blocked for years by budget riders that kept the USDA from finalizing any changes. That ban was lifted at the end of the Obama administration and a final rule was issued -- only to be withdrawn under the Trump administration.
Perdue is expected to move forward with more changes to the department that oversees competition in the grain and livestock industries. Under a planned reorganization of the USDA, the Grain Inspection, Packers and Stockyards Administration (GIPSA) would be eliminated as a standalone agency and its work would be taken on by the USDA’s Agricultural Marketing Service.
U.S. Dollar - 6 Month Chart:
Over the last 5 years, an average of around 10% of U.S. beef production has been exported, making exports an extremely important factor affecting beef and cattle prices. A strong dollar depresses export demand.
Choice Boxed Beef Cutout, Slaughter, & Feeder Steers:
Boxed beef cutout values higher on Choice and weak on Select on light to moderate demand and moderate offerings. Select and Choice rib, chuck, round, and loin cuts steady to weak. Beef trimmings firm to higher on moderate demand and light offerings.
The USDA trimmed estimated fourth quarter beef production by 95 million pounds to 6.87 million billion pounds. The 4Q figure is still the largest in at least 14 years. Production for 2018 was cut 30 million pounds to 27.59 billion pounds.
USDA FAS weekly beef exports were 16,341 metric tons, up 2.2 percent from the previous four-week average. Pork exports were 24,131 metric tons, up 1.5 percent from the previous four-week average. USDA steer carcass weights were down 1 pound to 903, and are now down 10 pounds from a year ago.
The average value of hide and offal for the five days ending Fri, Dec 15, 2017 was estimated at 10.64 per cwt., up 0.01 from last week and down 0.95 from last year.
"Natural Beef" Label Has No Value When Explained
Consumers were willing to pay $1.26 per pound more for steak with the USDA natural label when they didn’t know the definition, but not when they knew it, a study from Arizona State University found.
Consumers unfamiliar with the definition were willing to pay even more when the natural label was combined with other positively perceived labels, as much as $2.43 more per pound for natural and no growth hormones.
Those who were given the USDA definition were not willing to pay a premium for the natural label alone, but said they would pay $3.07 per pound more for steak labeled natural and no growth hormones.
Consumers who considered themselves already familiar with the natural definition also did not place a premium on natural beef, but were willing to pay $2.93 more per pound for the natural and no growth hormones label combination and $3.80 per pound more for natural and grass fed.
The findings support the hypothesis that consumers who are familiar with the natural definition do not value it as a standalone label, the researchers said.
The ASU researchers asked 663 beef-eating consumers about their willingness to pay for steak labeled with different attributes: natural, grass fed or corn fed, fed without genetically modified feed and produced without growth hormones and antibiotics. Half of the participants were provided with the definition of natural, while half were not.
“Labeling food with claims that are not clearly defined can be costly for consumers and hold disadvantages for food manufacturers or producers who don’t use such claims,” said Carola Grebitus, assistant professor of food industry management at ASU, in a press statement.
Several companies and consumer groups have voiced concerns that the natural label on food products is misleading and should be banned or redefined, the ASU researchers noted. The study was published in Applied Economic Perspectives and Policy.
Natural Meat: An Oxymoron?
It was early in the 1980s when the USDA was first approached about labeling beef as natural. The perpetrator of this “natural” approach was Mel Coleman. It was a suggestion from his daughter-in-law the propelled Mel to start thinking about marketing his cattle as natural beef. But, the USDA had no “natural” definition and thus no beef label could carry such a word.
So, Mel took it upon himself to change the way beef was marketed. He proposed that “natural” should mean that the animal from which natural beef would emanate could not be administered growth stimulating hormones nor antibiotics in any fashion.
The FSIS powers that be at first felt this was a reasonable marketing description and set about to codify it. However, as you might imagine, there was a hue and cry within the meat and poultry industry. Strenuous arguments were put forth that such a definition of “natural” just wasn’t fair or accurate. FSIS agreed and came up with the now infamous definition of natural as “minimally processed with no artificial ingredients.”
That definition lives on to this day and must be on any meat or poultry package label that bares the word natural.
Mel and anyone else who wanted to raise cattle differently and in their view better than the mainstream conventional beef industry were left with a meaningless natural definition.
As an interlude to this “natural” story, a little about Mel Coleman to give you some perspective on this beef innovator. Mel ranched in the San Luis Valley of south central Colorado near the little town of Saguache. Growing up on a cattle ranch may have been tough in the 1930s, but Mel was ambitious and smart enough to be his high school’s valedictorian and smarter still to marry his high school sweetheart, Polly Curtis.
Mel served aboard a US Navy cruiser during World War II. He came home from the war, went to college and upon graduation, he and his brother Jim bought out their other three brother’s interest in the family’s San Luis Valley cattle ranch and began what would become a lifelong quest to raise cattle the way they thought was the best and right way.
When asked what he did for a living in Saguache, Mel would always respond, “Well, we raise cattle, kids and hell.” And he meant it.
Back to the “natural” story. Mel decided in 1990 to go back to the USDA with his definition of natural only now he called it organic. By then I had become CEO of Coleman Natural Beef and I accompanied Mel on the visit to Dr. Lester Crawford, FSIS administrator at the time. We argued that organic should apply to how the animal was raised not just how the resultant meat was processed. Dr. Crawford agreed with us and said he would support such an organic label. About that time, a staff aide to Senator Patrick Leahy had also proposed what organic should mean and thus the twelve year process of defining organic began. It culminated in 2002 with a law that governed organic which is still in force to this day.
But, it still left the term “natural” in limbo. All those who wanted to use the term natural on their meat or poultry label were left to self-define and self-certify what “natural” meant. What a mess that caused!
Some beef companies would tout the fact that their cattle did not receive antibiotics nor hormones for the last 60 or 90 days of their life. Some said that there were no residues of antibiotics or hormones in their cattle. And, of course all of them had to say, “Minimally processed with no artificial ingredients.”
For those of us who still contend that such a “natural” definition is fallacious, we are left with the argument; how can you raise something unnaturally i.e. with antibiotics and hormones, and call it natural because you minimally processed the meat or poultry with no artificial ingredients.
While the term “natural’ resonates with consumers, it is a true oxymoron when it appears in conjunction with beef or poultry. The USDA needs to clear up this confusion and define “natural” as more than just “minimally processed with no artificial ingredients.”
Feeder Steers/Corn Correlation:
Historically, the value of 25 bushels of corn is approximately equal to the price per cwt. for feeder steers.
Slaughter Cows & Bulls:
Slaughter cows sold steady to 2.00 higher. Demand moderate to good in all regions.
Cutter Cow Carcass Cut-Out Value Friday was 166.34 -- Down 3.23 from last Friday.
Weight Colorado Oklahoma Alabama
Breakers 1100-1600 56.50-59.00 54.00-57.00 48.00-51.50
Boners 1000-1450 55.00-58.00 54.50-58.00 52.00-57.00
Lean 1000-1300 51.00-54.50 53.00-56.00 45.00-50.00
Bulls 1300-2500 74.00-77.00 75.00-78.00 73.00-78.00
# Head Week Ago Year Ago YTD Year Ago
National 7,853 8,112 8,504 44,445 43,346
S Central 2,394 2,566 2,525 13,220 13,101
N Central 596 679 940 3,124 3,312
East 2,249 2,118 1,765 12,152 9,894
West 1,014 1,065 1,511 6,377 7,456
Midwest 1,600 1,684 1,763 9,572 9,583
Est. Weekly Meat Production Under Federal Inspection:
Total red meat production under Federal inspection for the week ending Saturday, December 16, 2017 was estimated at 1079.6 million lbs. according to the U.S.Department of Agriculture's Marketing Service.
This was 0.6 percent higher than a week ago and 3.9 percent higher than a year ago. Cumulative meat production for the year to date was 3.1 percent higher compared to the previous year.
Weekly Hay Reports: "Click" on links for detailed report
Washington - Oregon (Columbia Basin)
Weekly Feedstuffs Market Review:
The USDA reports feed ingredient prices for the week ending December 13, 2017 were mixed.
Soybean Meal was 1.00 to 25.60 lower. Cottonseed Meal was steady to 11.00 lower. Canola Meal was 15.60 to 18.60 lower. Linseed Meal was steady to 10.00 lower. Sunflower Meal was mixed, 5.00 lower to 10.00 higher.
Whole Cottonseed was mixed, 5.00 lower to 13.00 higher.
Crude Soybean Oil was 5 points lower. Crude Corn Oil was 75 points lower.
Ruminant Meat and Bone Meal was steady to 15.00 higher. Ruminant Blood Meal 10.00 to 60.00 higher with limited comparable sales. Feather Meal was 5.00 to 100.00 higher. Menhaden Fishmeal was steady to 50.00 higher.
Corn Hominy was mixed, 5.00 lower to 3.00 higher. Corn Gluten Feed was steady to 3.00 higher. Corn Gluten Meal was steady to 10.00 lower.
Distillers Dried Grain was steady to 18.00 higher.
Wheat Middlings were mixed, 5.00 lower to 10.00 higher. Wheat millrun was steady.
5 Year Bullish/Bearish Consensus Charts:
The theory behind the "Bullish/Bearish Consensus" indicator is when the public reaches a consensus, they are usually wrong:
They get too bullish after prices have risen and too bearish after they have already fallen.
Because of this tendency, there are often extremes in opinion right before major changes in trend:
When the public reaches a bullish extreme, i.e., a great majority thinks prices will keep rising, then prices often decline instead.
And when they become too bearish, then prices tend to rise.
So when Public Opinion moves above the red dotted linein the chart, it means that compared to other readings over the past year, you're seeing excessive optimism. You also want to look at the absolute level of Opinion, too - if it's at 90%, then there's no question we're seeing an historic level of bullish opinion. Watch for readings above 80% (or especially 90%) to spot those dangerous times when the public is overly enthusiastic about a commodity.
Conversely, when Public Opinion moves below the green dotted line, then the public is excessively pessimistic about the commodity's prospects for further gains compared to their opinion over the past year. Looking for absolute readings under 20% (or especially 10%) often indicates an upturn in the market.
Bullish/Bearish Consensus: Cattle
Bullish/Bearish Consensus: Corn.
Stock Markets & Economic News
U.S. stocks rallied to new highs and the dollar strengthened as investors grew increasingly optimistic that Congress would reach a deal to cut corporate taxes.
The S&P 500 Index, Dow Jones Industrial Average and Nasdaq 100 Stock Index closed at records after Republican leaders said they’ll release the final version of the tax overhaul bill Friday evening. A vote is expected next week, with key senators signaling approval. Domestically focused small caps surged to give the Russell 2000 Index its best day since Nov. 16. The dollar gained for the ninth time in 10 sessions as the cuts are expected to bolster the world’s largest economy. Treasury yields were little changed.
Uncertainty surrounding the fate of U.S. tax reform had investors on edge as they look to the end of a stellar year for equities, with money managers showing signs of dialing back their appetite to take risk. That turned on the final session of the week, with the tax overhaul nearing approval days after multiple central banks indicated optimism in their regional economies.
The Federal Reserve on Wednesday raised a key short-term U.S. interest rate to a range of 1.25% to 1.5%, but in a sign of caution the central bank stuck to its earlier forecast for just three 1/4-point rate hikes in 2018. The Fed made no change to its inflation forecast, reflecting the persistent worry among some senior officials that price pressures could remain unusually soft despite the tightest labor market in almost two decades. Two Fed members voted against the rate hike in a 7-2 tally. The central bank did raise its GDP forecast for 2018 to 2.5% from 2.1%, indicating the Fed expects federal tax cuts to boost the economy next year. The bank also predicted unemployment would average 3.9% in both 2018 and 2019, down from the current 4.1% rate.
2017 Beef Cow Herd Dynamics
Derrell Peel, Oklahoma State University Livestock Marketing Specialist
The beef cow herd began recent expansion in 2014 growing 0.75 percent followed by more significant growth in 2015 (2.95 percent) and in 2016 (3.46 percent). From the January, 2014 low of 29.1 million head, the herd has expanded by 2.1 million head to the January, 2017 level of 31.2 million head. There are numerous indicators that herd expansion continued in 2017. The answer will come with the Cattle report issued by USDA-NASS in late January.
The potential for herd growth starts with available replacement heifers. On January 1, 2017, 6.4 million replacement heifers were reported, representing 20.6 percent of the beef cow inventory. This was the third largest replacement heifer percentage, down just slightly from the two prior years.
Of the total replacement heifers, 4.0 million were expected to calve in 2017. This was a record number of reported heifers calving since this data became available in 2001. These numbers confirm considerable potential for herd expansion and indicated producer intentions to continue adding to cow inventories.
The question is whether producers have adjusted their intentions during the year. Open replacement heifers can be easily diverted into feeder markets if producers’ expectations have changed.
Changes in the beef cow herd are a function of the pace of heifer retention relative to the pace of cull cow slaughter. Heifer slaughter provides a delayed indication of heifer retention. Year to date heifer slaughter through late November was up 12.3 percent year over year. This follows from the jump in quarterly heifers on feed, up 10.6 percent in July and 13.0 percent year over year in October.
However, even with the increase in heifer slaughter, the ratio of steer to heifer slaughter remains well above historical levels. Heifer slaughter was squeezed dramatically in 2015 and 2016 and, although it is increasing, has yet to return to normal levels relative to steer slaughter.
Beef cow slaughter is up 10.1 percent in 2017 through late November. This follows a 13.7 percent year over year increase in cow slaughter in 2016. Part of the increase in cow slaughter is simply due to herd growth since 2014. However, like heifer slaughter, beef cow slaughter was sharply reduced in 2014-2016 as a part of jumpstarting herd expansion.
Net beef cow culling was a record low 7.6 percent in 2015. Sustained below-average culling rates in 2014-2016 were possible following above average culling rates from 2008-2013, including drought-forced liquidation that removed many older cows, and allowed a period of reduced culling as herd expansion began. If the current beef cow slaughter pace continues through the end of the year, the 2017 beef cow culling rate will be 9.0 percent, still below but close to the long term average of 9.6 percent.
In other words, the industry is returning to normal beef cow culling rates. Both heifer and beef cow slaughter are consistent with continued but slowing herd expansion.
There seems little doubt that herd expansion continued in 2017, albeit at a slower pace than 2016.
The jump in heifer and beef cow slaughter both reflect a return to more typical relative slaughter rates. I am currently estimating that the 2018 beef cow herd will be up 1.5-2.0 percent over January, 2017. Expansion rates above or below this level are possible, though expansion above 2.5 percent is difficult to reconcile with current numbers. Expansion slower than 1.5 percent is, of course, possible but it would suggest that an unusually large percentage of pregnant heifers available on January 1 did not in fact enter the herd.
This begs the question of what happened to them in that situation. The annual cattle inventory numbers in the January report are eagerly anticipated, not only to confirm what happened to the beef cow herd in 2017 but for indications of what lies ahead in 2018.
"Click Here" to view a Slide Show of Drought Monitor maps for the last 12 weeks
Looking Ahead:The precipitation pattern across the contiguous United States over the next week appears to be somewhat similar to the pattern seen over this past week: dryness from California stretching over to eastern Texas and Kansas. The far Pacific Northwest is poised to see heavy precipitation and some precipitation is expected over other parts of the Northwest and the High Plains. Most of the East Coast should also see some precipitation, with the heaviest amounts likely in New England.
Looking further ahead, the Climate Prediction Center’s (CPC) 6-10-day forecast (December 19-23) indicates probable dryness across the western U.S., and parts of the Midwest, Mid-Atlantic, and Florida. Temperatures are expected to be above normal during this time across most of the contiguous U.S.; however, New England may be colder than average. Wet conditions are expected across the northern tier of the U.S. and in the Southeast, from Mississippi to Georgia.
Looking even further out, CPC’s 8-14 day forecast (December 21-27) suggests dryness will prevail across the western U.S. and southern Florida. Wetness is projected across much of the northern U.S. most of the High Plains, and much of the South and Southeast. Warmer-than-average temperatures are expected across most of the Southwest and the Southeast, while cooler-than-average conditions may occur across most of the rest of the contiguous U.S.
Feedyards Full to the Gills
Ag Center Cattle Report
The bottom of the herd cycle saw many feeding operations at low occupancy and others close. The supplies of cattle simply weren't around. Some of the creative attempts to work around the problem by feeding more dairy cattle or even penning up cows attempting to harvest a high dollar calf, failed to provide a workable solution. Work arounds are difficult when the cattle simply aren't there.
Times change and the herd has grown. The short supplies of 2014-15 are gone and larger volumes of cattle are moving through the beef pipeline at every level of production. Double digit placement increases have been reported in most of the monthly reports this year. Cattle feeders have had a good year and beef plants a banner year.
As the year ends the nation's feedyards are full. Dry spots in part of the plains may force some early movements off wheat fields. The feeding capacities are more flexible than beef processing plants. Grow yards can quickly turn into finishing yards. Grow yards also can serve as a proxy for winter grazing by taking the light weight cattle to heavier weights before placing them in finishing facilities.
Before the industry needs to add more finishing capacity, it must first add more processing capacity. The year over year increases in placements will at some point overshoot the ability of packers to find slots for the cattle -- never a good sign for the feeding industry. Feeding capacities and processing capacities require a certain balance for maintaining sustainable margins for both. If feeding capacities are too large relative to processing, packers will keep all the margin as feeders lower prices to bid for kill slots.
The ideal situation is one in which both processing and feeding expand together maintaining the proper balance. This allows the final arbitrator in herd size and industry growth to be driven by beef demand. With all meats production at all time highs, it will be difficult to expand our domestic markets in a significant way either by beef encroaching market share from the other meats or growing all the meats in consumption again in 2018-9. The safety valve and expansion possibilities will be with quality beef for export. The world is a big place and our beef products only reach a few. Fortunately, we are seeing many countries affording to include more meat in their diet as emerging economies grow more prosperous.
Feedyard Closeouts: Profit/(Loss)
Closeout projections are for cattle placed on feed by a cattle owner at a commercial feedyard and not for cattle owned by a feedyard and fed at cost or a farmer/feeder utilizing his own feed.
Typical closeout for un-hedged steers sold this week:
Placed On Feed 165 days ago = July 3rd
P/(L) based on the futures when placed on feed: $0.16
Cost of 750 lb. steer delivered @ $150.84 per cwt: $1,131.30
Feed Cost for 600 lbs. @ $76.92 per cwt: $461.52
Interest @ Prime + 2% on cattle cost for 165 days: $29.41
Interest @ Prime + 2% of the feed cost for 165 days: $6.00
Total Cost & Expense: $1,628.22
Sale proceeds: 1,350 lb. steer @ $121.00 per cwt: $1,620.00
This week's Profit/(Loss) per head: ($8.22)
Profit/(Loss) per head for previous week: ($25.84)
Change from previous week: $17.62
Sale price necessary to breakeven: $120.61
Projected closeout for steers placed on feed this week:
Projected Sale Date @ 165 days on feed = May 29th
Cost of 750 lb. steer delivered @ $154.96 per cwt: $1,162.20
Feed Cost for 600 lbs. @$ 73.88 per cwt: $443.28
Interest @ Prime + 2% on cattle cost for 165 days: $31.52
Interest @ Prime + 2% of the feed cost for 165 days: $6.01
Total Cost & Expense: $1,643.01
Sale proceeds: June Futures @ $114.72 per cwt: $1,548.72
This week's Profit/(Loss) per head: ($94.29)
Profit/(Loss) per head for previous week: ($118.00)
Change from previous week: $23.71
Sale price necessary to breakeven: $121.70
Typical closeout for hedged steers sold this week: $0.16
Typical closeout for un-hedged steers sold this week: ($8.22)
Projected closeout for steers placed on feed this week: ($94.29)
Slaughter Cattle: Friday in the Southern Plains, Nebraska and the Western Cornbelt trading has been limited on moderate demand. In the Southern Plains and Nebraska a few early live cash trades were from 118.00-119.00 and early dressed trades were at 188.00 in Nebraska. In the Western Cornbelt a few early cash dressed trades were at 188.00. Not enough trades in these feeding regions for a full market trend. Thus far for Friday in Colorado trading has been at a standstill. The last full reported market was for the prior week. In the Southern Plains and Western Cornbelt live cash trades were at 117.00 with dressed trade in the Western Cornbelt from 186.00-188.00. For the prior week in Nebraska, live trades ranged from 117.00-118.00 with dressed trades at 187.00. For the previous week in Colorado live trades were from 118.00-118.50. ***Trade developed late Friday afternoon at $120.50 per cwt.
Negotiated Sales: Confirmed: 15,692 Week Ago: 4,234 Year Ago: 3,693
Formula Purchases: Net - Dressed
Head count priced today: 8,800
Weighted avg weight: 880.00
Weighted avg net price: 187.65
Livestock Slaughter under Federal Inspection:
CATTLE CALVES HOGS SHEEP
Friday (est) 118,000 2,000 464,000 7,000
Week ago (est) 114,000 2,000 459,000 7,000
Year ago (act) 108,000 2,000 427,000 7,000
Week to date (est) 593,000 10,000 2,330,000 41,000
Last Week (est) 591,000 10,000 2,313,000 41,000
Last Year (act) 568,000 10,000 2,191,000 43,000
Saturday (est) 37,000 0 248,000 2,000
Week ago (est) 45,000 0 224,000 2,000
Year ago (act) 39,000 0 310,000 0
Week to date (est) 630,000 10,000 2,578,000 43,000
Last Week (est) 636,000 10,000 2,537,000 43,000
Last Year* (act) 606,000 11,000 2,502,000 43,000
2017 YTD 30,590,000 481,000 115,926,000 1,858,000
2016 *YTD 29,025,000 458,000 113,133,000 1,930,000
Percent change 5.4% 5.1% 2.5% -3.7%
Veterinary Use of Antibiotics Declines
U.S. sales and distribution of antibiotics approved for use in food animals fell 10 percent in 2016, the Food and Drug Administration said in a report published this month.
It marked the first year-to-year sales drop since 2009 when the agency began collecting such data, food and consumer health groups noted.
Fears that regular use of antibiotics in livestock is fostering antibiotic resistant infections in people prompted FDA to issue guidelines in 2013 partly aimed at reducing drugs deemed medically important that could be used to promote animal growth.
Domestic sales and distribution in that category decreased by 14 percent in 2016, according to the latest report.
Medically important antimicrobial drugs represented 60 percent of U.S. sales of all antimicrobials approved for use in food animals that year, with 43 percent intended for cattle, 37 percent for swine, 9 percent for turkeys and 6 percent for chickens, the agency noted.
Tetracyclines accounted for 70 percent of these sales, penicillins for 10 percent, macrolides for 7 percent, sulfas for 4 percent, aminoglycosides for 4 percent, lincosamides for 2 percent, and cephalosporins and fluoroquinolones each for less than 1 percent.
National Grain Summary:
Compared to last week, cash bids for corn, and wheat were mixed, sorghum and soybeans were lower. More favorable weather conditions in Argentina put pressure onthe soy complex this week. The next round of WASDE reports were released on Tuesday, putting pressure on all grain markets from changes in US and world ending stocks. World ending stocks of corn were increased from 203.86 mmt to 204.08 mmt, US ending stocks of soybeans were raised from 425 mb to 445 mb, and US ending stocks of wheat were raised from 935 mb to 960 mb. USDA’s export estimates for corn remained steady at 1.925 bb, with soybean export estimates lowered by 25 mb. Last week export sales of corn totaled 34.1 million bushels, soybeans totaled 53.4 million bushels, and wheat totaled 21.6 million bushels. All export sales figures could be viewed as bearish for last week. Wheat was mixed from 2 1/2 cents lower to 21 cents higher. Corn was mixed from 21 cents lower to 9 cents higher. Sorghum was 5 to 6 cents lower. Soybeans were 23 1/4 to 24 1/4 cents lower.
Corn futures closed the Friday session with most contracts as much as a penny lower. A private export sale of 134,503 MT of corn was sold to Costa Rica as announced by the USDA through their daily export reporting system. The Friday Commitment of Traders report showed spec funds adding to their net short position by 36,673 contracts in the week ending December 12. They were net short 197,192 contracts of futures and options on that date. Informa analysts updated their projection for the 17/18 US corn yield at 176.6 bpa, compared to the USDA estimate of 175.4 bpa. They also lowered their 2018 corn planted acreage estimate to 89.675 million acres, down 1.74 million acres from their November number.
Wheat futures were mixed on Friday. MPLS was the strongest, with gains of 2 1/4 to 3 3/4 cents. Most CBT contracts were fractionally on either side of UNCH, with KC contracts steady to 2 cents lower. Private exporters reported a sale of 130,000 MT of SRW wheat to Unknown Destinations for 17/18 delivery, according to the USDA FAS reporting system. Informa updated their 2018 winter wheat acreage number to 31.093 million acres. 0.830 million acres lower than their previous estimate. The CFTC report on Friday afternoon showed the big spec funds adding back to their net short Chicago SRW positions by 38,871 contracts in the week ending 12/12. They were net short 157,652 contracts at that time.
Five Year Moving Average - Corn & Wheat:
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