Cattle Market Notes Week Ending May 26, 2017

Cattle Quick Thoughts

The latest Cattle on Feed Report was released on Friday, May 26th. Inventory in feedlots on May 1st was 11 million head, up 2 percent over the same time in 2016. Feeder cattle placements continued to significantly outpace 2016. There were 1.85 million head placed into feedlots during the month of April – up 11 percent over last year. Fed cattle marketings were also higher than last year at 1.7 million head. This is 3 percent higher than in 2016. Feeder futures and live cattle futures prices dropped after the report was released. Why did the futures markets react negatively? A primary reason is expectations. Projections prior to the report were that May 1st feedlot inventory would be about 1 percent higher than in 2016 and that placements would be about 7 percent higher than last year. Since the report showed there are more cattle in feedlots than anticipated, the futures market reacted negatively to information of larger supplies. Whether or not a slight response occurs in the cash markets next week remains to be seen. It is possible that this report could lead to a small short-term decrease in cattle prices as the market adjusts to this new information.

Cash Cattle:

Cash traded fed cattle prices were lower this week. Fed steers were down $2.68 to an average of $131.59 for live sales. Dressed steers were down $4.14 to an average of $208.60.

Feeder cash prices were mostly unchanged this week in Mississippi. Mississippi feeder steers weighing 450-500 pounds were down 50 cents to an average of $157.50 while 750-800 pound steers were up 50 cents to $132.50. Average feeder prices in Oklahoma City were up slightly on Monday and Tuesday. OKC 500-550 pound steers were up $1.05 to $172.16 while OKC 750-800 pound steers were up $3.46 from last week to $149.65.

[ … For more in depth Livestock Prices and Production data and trends CLICK HERE… ]

Futures:

June live cattle were down $1.18 to $122.63 while August live cattle were down $2.50 to $118.88. August feeder cattle were down $4.08 to $147.20 while September feeder futures were down $3.83 on the week to $147.10. Corn futures prices were up slightly this week with July up a penny to $3.73 and September up 2 cents to and $3.81.

Beef:                                                                                          

Boxed beef values were slightly lower this week. Choice boxes averaged $246.28, down $2.08 from a week ago. Select boxes averaged $220.21, down $2.77 from last week. The choice-select spread grew to $26.07, up 69 cents from last week.

Note: all cattle and beef prices are quoted in dollars per hundredweight and corn prices are quoted in dollars per bushel unless stated otherwise.

EEM Alumni Spotlight: Katie Starr ’16

I have another Environmental Economics & Management (EEM) graduate Q&A for you, this one from a more recent graduate, Katie Starr, who graduated just this past December, 2016.

Katie, where do you currently work, what’s your job title, and what are your overall responsibilities?

I am currently working in Oxford with the Mississippi Department of Environmental Quality. I’m an Environmental Scientist and my overall responsibilities include running air and ozone sampling tests and data collection/analysis. I also handle air pollution complaints and permits for the Northern Mississippi region.

What is a typical day like for you in your job?

A typical day for me is never typical! I could be doing anything from driving to one side of the state to collect data to driving to the other side of the state to investigate a pollution complaint or to finalize a permit for a company that will emit any kind of “pollutant”. I also do a lot of paperwork and data analysis when it comes to permits and complaints. MDEQ has also thrown me into the biochem lab a few times to do some more hands on testing!

How has your background – in particular majoring in EEM – helped prepare you for this experience?

EEM gave me the tools to think outside of the box. I wouldn’t be able to do my job as efficiently if I wasn’t able to look at a problem and think about it from every angle. The analytical skills I gained through EEM have also helped me keep my bearings during our data analysis.

What did you most enjoy about the EEM program?

The thing I appreciated the most about our program was our EEM community. I’m blessed to be able to say that I got to study with some of the brightest students and faculty. Any time I was struggling in a class (or just life in general) there was ALWAYS someone in the department I could turn to; be that study groups and extracurriculars with other students or going directly to the professors. Even now I keep in touch with my old classmates and professors, and I will never be able to thank EEM and the Department of Ag Econ enough for the bonds I’ve made.

What advice would you give to students trying to pick a major or to students thinking about the EEM major?

I was caught between the general business economics and EEM when I first came to Mississippi State. I ultimately chose EEM because the economics was the same (it’s very easy to minor in business econ with EEM) but with EEM you get a deeper look into some of the world’s most pressing issues. Combine the narrowed economic field and the Department’s size and you truly could not get a better program.

Any other comments on the major, your experiences, or anything else?

A++ for EEM (if I were grading)

Thanks, Katie!

Cattle Market Notes Week Ending May 19, 2017

Cattle Quick Thoughts

The latest steer dressed weights released were down significantly from the previous week and from a year ago. We are continuing the trend of slaughtering lighter weight cattle which is pulling cattle through the feedlots at an aggressive pace. Dressed slaughter weights for the week ending May 6, 2017 were 30 pounds lower on average than in the same week last year. This is a 3.5% decline in average weights. Weights were 15 pounds lower than the previous week in 2017.

Also in the news this week, the Trump administration formally notified Congress of their intent to renegotiate NAFTA with the goal of modernizing and strengthening the 25-year-old agreement. This process will certainly be worth monitoring as Mexico and Canada are significant trading partners for U.S. beef.

Cash Cattle:

Cash traded fed cattle prices continued to drop this week. Fed steers were down $3.59 to an average of $134.27 for live sales. Dressed steers were down $7.79 to an average of $212.74.

Feeder cash prices were also lower this week in Mississippi. Mississippi feeder steers weighing 450-500 pounds were down $4.50 this week to average $158 while 750-800 pound steers were down $3 to $132. Average feeder prices in Oklahoma City were down on Monday and Tuesday.  500-550 pound steers were down $6.36 to $171.11 while OKC 750-800 pound steers were down $2.07 from last week to $146.19.

[ … For more in depth Livestock Prices and Production data and trends CLICK HERE… ]

Futures:

June live cattle were down $1.83 to $123.80 while August live cattle were down 83 cents to $121.38. May feeder cattle were down $1.13 to $143.45 while August feeder futures were down 55 cents on the week to $151.28. Corn futures prices were mostly unchanged this week with July and September contracts each up a penny to $3.72 and $3.79, respectively.

Beef:                                                                                          

The gap widened between choice and select boxed beef values. Choice boxes averaged $248.36, up $3.81 from a week ago. Select boxes averaged $222.98, down $1.56 from last week. The choice-select spread grew to $25.38, up $5.37 from last week.

Note: all cattle and beef prices are quoted in dollars per hundredweight and corn prices are quoted in dollars per bushel unless stated otherwise.

Cattle Market Notes Week Ending May 12, 2017

Cattle Quick Thoughts

The Trump administration announced Thursday that China will allow imports of U.S. beef under certain conditions by no later than July 16, 2017. The announcement was part of the “Initial Results of the 100-Day Action Plan of the U.S. – China Comprehensive Economic Dialogue” released by the White House. This 10-point plan also includes an agreement for the U.S. to accept cooked poultry from China along with Initial Actions for financial services, investment, and energy. I discuss this announcement and what it tells us in a separate ( and longer) blog post that can be accessed by clicking HERE.

Cash Cattle:

The fed cash market was lower this week. Fed steers were down $6.83 to an average of $137.86 for live sales. Dressed steers were down $9.33 to an average of $220.53.

Feeder cash prices were mixed to mostly unchanged this week in Mississippi. Mississippi feeder steers weighing 450-500 pounds were up $1 this week to average $162.50 while 750-800 pound steers were down $2 to $135. Average feeder prices in Oklahoma City were up significantly on Monday and Tuesday.  500-550 pound steers were up $10.69 to $177.47 while OKC 750-800 pound steers were up $12.38 from last week to $148.26.

[ … For more in depth Livestock Prices and Production data and trends CLICK HERE… ]

Futures:

June live cattle were down $2.68 to $125.63 while August live cattle were up $1.03 to $122.20. May feeder cattle were 80 cents to $144.58 while August feeder futures were down $1.60 on the week to $151.83. Corn futures prices were mostly unchanged this week with May down a penny to $3.62 and July even $3.71.

Beef:                                                                                          

Wholesale boxed beef prices continued to climb this week as we approach Memorial day weekend, a prime grilling time. Choice boxes averaged $244.55, up $12 from a week ago. Select boxes averaged $224.54, up $9.73 from last week. The choice-select spread was $20.01, up $2.27 from last week.

Note: all cattle and beef prices are quoted in dollars per hundredweight and corn prices are quoted in dollars per bushel unless stated otherwise.

China to Import U.S. Beef by July 16, 2017

The Trump administration announced Thursday that China will allow imports of U.S. beef under certain conditions by no later than July 16, 2017. The announcement was part of the Initial Results of the 100-Day Action Plan of the U.S. – China Comprehensive Economic Dialogue released by the White House (read the full joint release here). This 10-point plan also includes an agreement for the U.S. to accept cooked poultry from China along with Initial Actions for financial services, investment, and energy.

The language specific to beef is the first point on the fact sheet attached to the release and states “Following one more round of technical consultations between the United States and China, China is to allow imports of U.S. beef on conditions consistent with international food safety and animal health standards and consistent with the 1999 Agricultural Cooperation Agreement, beginning as soon as possible but no later than July 16, 2017.”

The announcement is certainly good news for the U.S. cattle industry. National Cattlemen’s Beef Association President Craig Uden is being quoted by many outlets as saying “It’s impossible to overstate how beneficial this will be for America’s cattle producers,” Some estimates suggest China to be a potential $2.6 billion market for U.S. beef. However, it will remain difficult to estimate the impact until the trade specifications are known.

While a trade date has been set, it is still unclear what beef products will be allowed. The 1999 Agricultural Cooperation Agreement that is mentioned in the fact sheet casts a broad net by stating that “China will accept meat from all USDA Food Safety Inspection Service (FSIS) approved plants” (read the full 1999 agreement here).  The requirement that beef will have to be USDA inspected is not a surprise. It is also very unlikely to be the only trade condition. This document does not mention factors such as traceability or beta agonist use that have been expected by many to be part of negotiations. It is also not obvious what the “international food safety and animal health standards” are and what impact they will have on trade.

In summary, we have a date! A date that has been 14 years in the making. This is a critical step to getting U.S. beef into China. The technical consultations will still be the driving factor in determining the specifications of beef China will accept (discussed further here). The trade specifications will determine the type of impact we can expect exports to China to have on demand for U.S. beef in the short term.

Cattle Market Notes Week Ending May 5, 2017

Cattle Quick Thoughts

Feeder cattle futures prices for the fall hit the high 150’s on Thursday. The October contract even touched $160 before giving it all back that afternoon. The October contract closed the week at $148.78. While down $4 from last week, this is still nearly $18 higher than a month ago. This latest rally in the futures markets should have us thinking about risk management. This is a time to give serious consideration to price protection strategies for fall calves. Futures contracts, options, or sales for future delivery should all be explored as tools to take advantage of the current price levels.

Cash Cattle:

Cash traded fed cattle continue to rally due to strong demand for tight supplies of fat cattle. Fed steers were up $8.44 to an average of $144.69 for live sales. This is the third largest weekly increase over the past 15 years. Dressed steers were up $13.05 to an average of $229.86. Fed cattle trade volume was 138,000 head through Thursday.

Feeder cash prices surged this week in Mississippi. Mississippi feeder steers weighing 450-500 pounds were up $6 this week to average $161.50 while 750-800 pound steers were up $8 to $137. Average feeder prices in Oklahoma City for 500-550 pound steers were down $6.23 to $166.78 while OKC 750-800 pound steers were down $5.86 from last week to $135.88.

[ … For more in depth Livestock Prices and Production data and trends CLICK HERE… ]

Futures:

June live cattle were up $4.23 to $128.30 while August live cattle were up $1.30 to $121.18. Feeder cattle futures closed lower despite large mid-week spikes. May feeder cattle were down $4.70 to $143.78 while August feeder futures were down $0.15 on the week to $153.43. Corn futures prices were up this week with May and July futures up 5 and 6 cents to $3.62 and $3.71, respectively.

Beef:                                                                                           

Wholesale boxed beef prices surged higher this week. Exports continue to boom and retailers are demanding beef as Memorial day looms. Choice boxes averaged $232.55, up $12.99 from a week ago. Select boxes ended the week at an average of $214.81, up $8.68 from last week. The choice-select spread was $17.74, up $8.68 from last week.

Note: all cattle and beef prices are quoted in dollars per hundredweight and corn prices are quoted in dollars per bushel unless stated otherwise.