Analyst expects drop in cattle placements

USDA’s monthly cattle on feed update is out Friday and Allendale Inc. expects a big drop in placements.

Allendale sees a 7.2% decline in placements during July, noting that even with solid profit margins and lower feed costs, tighter feeder supplies are a challenge.

Marketings are expected to be up four tenths of a percent due to one more workday in July 2014 than in July 2013 and the total number of cattle on feed could be down 2.8% on the year.

The report is out at 3 PM Eastern/2 PM Central.

Cattle were priced sharply higher than last week

Packer inquiry into the cattle was light to moderate, but not much business was transacted. Several packers and at least one major bid as high as 255.00 dressed in parts of Nebraska. Significantly higher than last week’s weighted average of 246.75. Asking prices are around 160.00 plus in the South and 255.00 plus in the North. The kill totaled 114,000 head, 1,000 below last week, and 7,000 smaller than last year.

Boxed beef prices not available due to computer issues at Market News.

Chicago Mercantile Exchange live cattle contracts settled mostly lower. The August contract established new contract highs early in the trading session on Wednesday. Following the initial push higher, prices tumbled lower. Little changed in the market fundamentally or technically, but the recent highs have allowed traders to square positions as uncertainty about further aggressive price support becomes more apparent. Only the two front months closed higher with August up .10 at 156.05 and October up .12 at 158.00.

Feeder cattle ended the session 17 to 162 points higher. The initial strong follow through gains during overnight trade quickly evaporated as additional volume surfaced. This led to positioning activities through the morning. Trade volume slowed through the complex. August settled 1.22 higher at 217.25, and September was up 1.62 at 218.40.

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Wednesday midday cash livestock markets

Cattle country is fairly quiet with just a few token bids noted in Kansas at 156.00, due in part to yesterday’s sharply higher live cattle contracts and significantly higher boxed beef values. It is a safe bet showlists will be priced even higher today, around 160.00 plus live and 252.00 plus dressed.

Boxed beef cutout values were mixed in the morning report with the choice beef .77 lower at 252.03, and select was up 1.54 at 247.33.

Feeder cattle receipts at the Ozarks Regional Stockyards at West Plains, Missouri totaled 2914 head on Tuesday. Compared to last week, the bulk of the feeder cattle trended 2.00 to 8.00 lower. Yearling steers traded firm with yearling heifers not well tested, although the undertone was lower. Demand was good on a moderate supply. Feeder steers medium and large 1 averaging 625 pounds brought 233.20 per hundredweight. Feeder heifers weighing 612 pounds brought 221.01.

Barrows and gilts in the Iowa/Minnesota and Eastern direct trade areas are not reported due to confidentiality. In the West the market is .79 lower at 125.19 weighted average on a carcass basis. Nationally barrows and gilts are .95 lower at 125.03. Missouri direct base carcass meat price is steady from 119.00 to 122.00. Midwest hogs are 2.00 higher to 2.00 lower from 88.00 to 96.00 on a live basis.

The pork carcass cutout value was down .46 at 133.38 FOB plant in the morning report.

Given the recent surge in wholesale beef prices, pork items are probably becoming increasingly competitive. Furthermore, the discount of lean hog futures represents greater pork featuring plans that can take comfort in both the likelihood of cheaper costs and larger wholesale offerings.

Animal welfare issues are driving change

The vice president of animal well-being for Tyson Foods, Dean Danilson, says farm animal welfare issues will continue to be “a driver for change” in the industry.

“More consumers are becoming aware of animal welfare issues, which are increasingly becoming factors in their purchasing decisions,” Danilson says, “and consumers want to know more about how food is produced—but they aren’t sure where to go for accurate information.”

But Danilson says, at the same time, studies have shown that consumers aren’t interested in hearing science-based arguments.

“Consumers are overwhelmed with studies and facts—they don’t know what to believe,” he says. “In our industry, we use scientific- and experience-based language, (but) it doesn’t resonate with consumers—with the moms in New York City.

“The food industry says ‘here’s the reality of pig farming’—the consumer hears ‘you’re speaking down to me and ignoring my very real concerns’.”

So, Danilson says, the industry must continually ask itself, “Is there a better way to do things?”

“Is what we do today the best and the right thing for sustained animal agriculture—and for the welfare of the animal?  Is what was good yesterday mean that it is good for today or good for tomorrow? And we must always ask ourselves, individually and professionally–is there a better way?”

Danilson spoke at the Iowa Farm Bureau Economic Summit in Ames.

AUDIO: Dean Danilson-excerpt from his presentation at the Iowa Farm Bureau Economic Summit (12:58 MP3)

Young farmer concerned with water rule

The EPA’s “Waters of the U.S.” rule dominated the discussion on the Nebraska Farm Bureau’s Young Farmers and Ranchers National Affairs Trip to Washington, D.C.

One of the participants, Dustin Fairley, wonders if the EPA hasn’t already set the wheels in motion.

“I serve on our local FSA board and just since the first of the year we’ve had six new rulings on wetland classifications,” Fairley says. “We haven’t had six in the last six years.  So all of a sudden to have six in one year, it kind of makes you a little nervous about how EPA is going about this.

“They have this new proposed ruling, but I kind of think they’re already starting to push that ruling through other routes.”

Fairley says over-regulation of agriculture and regulatory uncertainty are major concerns.

“As a young farmer, these rules will impact everything we do in the future of ag,” he says.

Fairley farms near Fairbury.  He also has a custom farming business.

AUDIO: Dustin Fairley (8:59 MP3)

Cattle futures close with limit gains

The feedlot cattle trade remained at a standstill on Tuesday afternoon with some not expecting significant business until late in the week. Asking prices seemed to be firming in the wake of sharply higher futures. Most showlists appear to be priced around 158.00 plus in the South and 250.00 plus in the North. The kill totaled 117,000 head, 1,000 more than last week, but 4,000 less than last year.

Boxed beef cutout values were sharply higher in the afternoon report on good demand and moderate offerings. Choice beef was up 2.28 at 252.80 and select was 1.71 higher at 245.79.

Chicago Mercantile Exchange live cattle contracts settled 155 to 300 points higher with the August finishing with limit gains. This kept front month futures from moving to new contract highs, but the momentum seen in the market could easily draw additional buyers back into the market on Wednesday, sparking another aggressive round of buying. There was very little new direction seen in the market, although the focus through the session was once again being paced on the ability to sustain strong summer demand and raise questions about the ability to gain access to market ready cattle over the near term. August settled 3.00 higher at 155.95, and October was up 2.62 at 157.87.

Feeder cattle settled 242 to 300 points higher with all remaining 2014 contracts locked limit up. The continued pressure in the corn market as well as expectations that cattle and beef supplies will continue to tighten through the late summer and early fall created a swarm of buyer interest into the market. August settled at 216.02, and September at 216.77 with both up the 3.00 limit.

Feeder cattle receipts at the Oklahoma National Stockyards on Monday totaled 5700 head. Steer and heifer calves were weak in a light test. The demand was good for most all classes. Quality was typical of the summer and plain and average. Feeder steer calves medium and large 1 weighing 550 to 600 pounds ranged from 241.00 to 250.00. 650 to 700 pound yearlings brought 223.00 to 234.00. 500 to 575 pound heifer calves traded from 226.00 to 235.00. 650 to 700 pound yearling heifers’ brought209.00 to 216.00.

Lean hogs settled unchanged to 247 higher. The early pressure in the lean pit was quickly replaced by moderate to strong gains following the limit higher moves in the cattle complex. August settled 2.47 higher at 127.57 and October was up .75 at 113.45.

Barrows and gilts in the Iowa/Minnesota direct trade closed 1.63 lower at 126.02 weighted average on a carcass basis, the West was down 1.52 at 125.97, and the East was .63 lower at 125.94. Missouri direct base carcass meat price was steady from 119.00 to 122.00. Midwest barrows and gilts were fully steady on a live basis from 89.00 to 96.00.

The pork carcass cutout value was 1.15 lower at 133.84 FOB plant. The belly primal was responsible for much of the loss, down over 10.00.

While the belly primal calculated sharply lower again on Tuesday in light volume, the speed bump looks temporary with good seasonal strength expected to continue for another two to three weeks. Furthermore, sources in the ham trade continued to be impressed with the potential for third-quarter ham demand.

The hog kill was estimated at 398,000 head, 1,000 more than last week, but 2,000 less than last year.

Meat stocks decline

USDA reports red meat and poultry supplies at the end of June were sharply below last year’s levels.

On June 30, 2014, red meat totaled 929.972 million pounds, down 5% from May 31, 2014 and 13% less than on June 30, 2013, mainly thanks to strong beef demand. Beef stocks were pegged at 357.759 million pounds, a decrease of 5% from last month and 26% from last year, and well below the five year average of 438 million pounds. Pork came out at 537.717 million pounds, 7% less than a month ago and 5% lower than a year ago, but above the five year average of 529 million pounds.

Poultry totaled 1.019 billion pounds, down 2% on the month and 18% on the year, with chicken at 556.830 million pounds, 18% lower than last year, and turkey at 460.414 million pounds, a 19% year to year decline.

USDA’s livestock and poultry slaughter numbers are out on Thursday.

Tuesday midday cash livestock markets

The new cattle showlists distributed on Monday looked to be mixed, some larger in the North and moderately smaller in the South. Overall the ready numbers seem about as tight and price positive as they have been through the first half of summer. The country is quiet with bids and asking prices not fully established. A few showlists have been suggested to be priced around 158.00 to 160.00 in the South, and 250.00 plus in the North.

Boxed beef cutout values ae sharply higher in the morning report. Choice boxed beef is up 3.07 at 253.59, and select is 2.10 higher at 246.18.

Feeder cattle receipts at the Oklahoma National Stockyards on Monday totaled 5700 head. Steer and heifer calves were weak in a light test. The demand was good for most all classes. Quality was typical of the summer and plain and average. Feeder steer calves medium and large 1 weighing 550 to 600 pounds ranged from 241.00 to 250.00. 650 to 700 pound yearlings brought 223.00 to 234.00. 500 to 575 pound heifer calves traded from 226.00 to 235.00. 650 to 700 pound yearling heifers’ brought209.00 to 216.00.

Barrows and gilts in the Iowa/Minnesota, Western and Eastern direct trade ae not established due to confidentiality. Nationally the market is 1.03 lower with a weighted average of 126.01 on a carcass basis. Missouri direct base carcass meat price is steady from 119.00 to 122.00. Midwest barrows and gilts are fully steady on a live basis from 89.00 to 96.00.

The pork carcass cutout value is .01 higher at 135.00.

While the belly primal calculated sharply lower yesterday in light volume, the speed bump looks temporary with good seasonal strength expected to continue for another two to three weeks. Furthermore, sources in the ham trade continued to be impressed with the potential for third-quarter ham demand.

Heat “emergency” forecast in cattle country

The high heat and humidity in the middle of the U.S. and part of the southwest today directly impacts cattle country.  The USDA/NOAA forecast map shows Kansas, Oklahoma and most of Texas and neighboring states at the “emergency” level for heat stress in cattle.  Parts of southern California and Arizona are also at the emergency level. The next level down, the “danger” level, covers most of the Eastern U.S.  The heat wave is expected to remain in Texas, Arizona and Southern California after it reaches its peak in most other areas today and will then diminish.

Cattle feeders are reminded to work cattle early or in the evening during these conditions.

Boxed beef was sharply higher but pork was lower

Cattle country was quiet on Monday afternoon following the distribution of the new showlists. The new offering appears to be mixed, somewhat larger in the North and smaller in the South. Generally speaking, ready numbers continue to be historically tight. A few preliminary asking prices have been suggested around 158.00 plus in the South, and 250.00 plus in the North. The kill totaled 115,000 head, 3,000 more than last week, but 4,000 smaller than a year ago.

Boxed beef cutout values are higher on moderate to good demand and light to moderate offerings. Choice boxed beef was up 2.07 at 250.52, and select was 1.43 higher at 244.08.

Chicago Mercantile Exchange live cattle contracts settled 25 to 132 points higher. Futures held strong gains throughout the Monday session. The most aggressive support was evident in the nearby contacts. Traders remained focused on tight cattle supplies and the need to gain access to live cattle while beef values continue to appreciate at a rapid pace, August settled 1.32 higher at 152.95, and select was up .92 at 155.25.

Feeder cattle ended the session 95 to 147 points higher supported by stronger live cattle futures and that sparked additional buying interest in the feeder complex. Traders continued to look for additional direction from outside markets. The softness in the grain complex also lent support to the market. August settled 1.37 higher at 213.02, and September was up 1.47 at 213.77.

Feeder cattle receipts at the Joplin, Missouri Regional Stockyards on Monday totaled 4,000 head. Compared to last week, steer calves opened 5.00 to 15.00 higher, heifer calves were steady, and yearlings had no early test. Demand was good on a moderate supply. Feeder steers medium and large 1 weighing 500 to 600 pounds ranged from 255.00 to 290.00. 5 to 6 weight heifers brought 225.00 to 236.00. [Read more...]