Between follow-through buying and increasing fundamental bullishness, Cattle futures extended gains from the surge in the previous session.
Live Cattle futures closed an average of $1.37 higher (92¢ to $2.25 higher).
Except for 55¢ higher in the back contract, Feeder Cattle futures closed an average of $1.74 higher ($1.10 to $1.95 higher).
Choice boxed beef cutout value was $3.12 higher Tuesday afternoon at $206.44/cwt. Select was 26¢ higher at $193.90. At $12.54, the Choice-Select spread was the highest since July.
***************************
Major U.S. financial indices ended the month slightly higher on Tuesday.
The Dow Jones Industrial Average closed 28 points higher. The S&P 500 closed 2 points higher. The NASDAQ closed 28 points higher.
******************************
Agricultural lenders cited commodity prices, liquidity positions, income levels, and financial leverage as their top concerns about customer financial health in the first half of 2017, according to the Summer Agricultural Lender Survey results released this week.
“Overall, the data showed that agricultural lenders are a little more optimistic about what’s ahead for their customers than they were in December of 2016,” says Brittany Kleinpaste, director of economic policy and research for the American Bankers Association (ABA).
All told, 82% of agricultural lenders reported a decline in farm profitability in the last 12 months, according to the joint survey by the ABA and the Federal Agricultural Mortgage Corporation (Farmer Mac). Despite the continued decline, the survey of more than 580 agricultural lenders indicates the agricultural loan approval rate is 84%.
By commodity sector, lenders expressed the most concern about grains, dairy and beef cattle (see chart below). They were less concerned about the sectors of swine, poultry, fruit and nuts, and vegetables.
“Farmland represents an increasingly important component of agricultural industry wealth and borrowing capacity,” according to the report. “Real estate represents more than 80% percent of all farm sector assets, and it secures more than $200 billion in mortgage lending. Because many farm acres are at least partially financed through loans, agricultural lenders must be in-tune with changes in land markets. Through a previous survey, Farmer Mac tracked lender expectations of land markets since 2014, which showed a downward trend. The June 2017 ABA-Farmer Mac survey shows a slight reversal of this trend, with
57% of respondents reporting stable values in the first half of 2017, and 51% expecting no major changes in the second half of 2017. On average, survey respondents from the June survey exhibited more confidence in stable land values than respondents to the December survey.”
Other highlights from the survey include:
- The average agricultural lender expected 52% of their customers to be profitable in 2017, a drop of two percentage points from December 2016.
- Portfolio credit quality and competition topped lender business concerns in early 2017.
- Virtually all respondents expected short-term interest rates to rise in the second half of 2017 (85%), and a wide majority of respondents expected long-term interest rates to rise as well (71%).