Cattle futures closed mainly a touch higher Thursday, supported by follow-through buying and expectations for firm to higher cash fed cattle prices this week. Trade and volume continued to be sluggish, though.
Except for 7¢ lower in spot Aug, Live Cattle futures closed an average of 19¢ higher.
Other than 22¢ and 2¢ lower in the front two contracts, and 12¢ lower at the back of the board, Feeder Cattle futures closed an average of 40¢ higher.
Boxed beef cutout values were lower on light demand and moderate offerings, according to the Agricultural Marketing Service.
Choice boxed beef cutout value was $1.83 lower Thursday afternoon at $208.43/cwt. Select was $1.01 lower at $198.70.
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Major U.S. financial indices closed higher Thursday, boosted by tech stocks and positive economic news. Optimism was capped by worries about the impact of U.S. and China counter-tariffs scheduled to begin Friday.
The Dow Jones Industrial Average closed 181 points higher. The S&P 500 closed 23 points higher. The NASDAQ closed 83 points higher.
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Despite pressure on commodity prices and concerns about trade, producer sentiment crept 2 points higher in June to 143, according to the Purdue University/CME Group Ag Economy Barometer. The barometer is based on a monthly survey of 400 agricultural producers from across the country.
“In June, we saw a sizeable drop in commodity prices that caught many observers by surprise,” says James Mintert, the barometer’s principal investigator and director of Purdue University’s Center for Commercial Agriculture. “Despite the price decline, producers’ appraisal of current economic conditions improved compared to May. However, it was clear from survey responses that uncertainty regarding the agricultural outlook increased considerably.”
The barometer’s rise was underpinned by an increase in the Index of Current Conditions, which climbed to 138 compared to a reading of 132 a month earlier. The Index of Future Expectations remained nearly unchanged with a reading of 146 in June, 1 point higher than in May.
The June barometer survey asked producers how much their crop acreage changed in 2018 and whether or not they use flexible cash rental leases to rent farmland. As expected, most farmers’ crop acreage did not change in 2018 compared to a year earlier, but the survey revealed that some farms were expanding crop acreage rapidly. For example, 8% of farms increased their crop acreage by more than 10%, and 6% of farms increased their crop acreage by up to 10% in 2018, compared to last year. Among farms in the survey that rent cropland, 36% reported they plan to use a flexible cash rent lease on some of their acreage.
“Flexible cash rent leases provide a way for farm operators to share some risk with land owners, while also providing landowners some of the stability that comes with a cash rental agreement,” Mintert explains. “The increase in volatility in crop agriculture could be stimulating interest in flexible cash rent leases.