Increased grain prices helped pressure Feeder Cattle futures on Tuesday, while apparent continued fund liquidation held Live Cattle in check.
Other than 22¢ and $1.35 higher in the back two contracts, Live Cattle futures closed an average of 49¢ lower.
Feeder Cattle futures closed an average of $2.09 lower across the front half of the board ($1.50 to $2.72 lower) and then an average of 51¢ lower.
Choice boxed beef cutout value was $2.01 higher Tuesday afternoon at $226.43/cwt. Select was $2.30 higher at $207.09.
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Major U.S. financial indices closed mixed on Tuesday. Support came from a surge in Apple stock, ahead of that company’s after-hours earnings report.
The Dow Jones Industrial Average closed 64 points lower. The S&P 500 closed 6 points higher. The NASDAQ closed 64 points higher.
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Trade war concerns continue to drive a sharp decline in producer sentiment toward the agricultural economy, according to the latest Purdue University/CME Group Ag Economy Barometer.
The April barometer reading of 125 was 10 points lower than a month earlier and 15 points below the February reading. The barometer is based on a monthly survey of 400 agricultural producers from across the country.
The drop in producer sentiment was driven by declines in both the Index of Current Conditions, which fell 11 points to 123, and the Index of Future Expectations, which fell 9 points to 126.
The Index of Current Conditions was at its lowest level since May 2017. The Ag Economy Barometer and the Index of Future Expectations were at their lowest levels since March 2017.
“There seems to be a spillover effect that is driving concern among agricultural producers,” says James Mintert, the barometer’s principal investigator and director of Purdue University’s Center for Commercial Agriculture. “Negative perceptions about exports spill over into lower expectations for commodity prices, and then that changes producers’ views about farmland prices.”
The biggest issue surrounding U.S. agriculture and the trade dispute with China currently revolves around the possible impact on U.S. soybean exports, according to Mintert. About 30% of U.S. soybean exports go to China.
Producers were also more pessimistic about the livestock sector, in the April survey. Just 45% said they felt optimistic about the future, compared to 59% a month earlier. That’s the largest one-month drop since data collection began in fall 2015.
“There was already a sharp drop in hog prices that took place from mid to late- winter,” Mintert explains. “Then, add to that the impact of China’s 25% tariff on U.S. pork imports. It adds a layer of doubt regarding the profitability of pork production and appears to be affecting producers’ plans to increase hog production.”