WLI

Negotiated cash fed cattle trade developed Wednesday on moderate trade and demand. Live prices were steady in the Southern Plains at $109/cwt., steady to $1.50 higher in Nebraska at $111-$113 and $1 higher in the western Corn Belt at $112-$113. Although too few to trend, early dressed sales were steady to higher at $178-$180.

Likewise, 53 Kansas heifers sold for a weighted average price of $109 (1-17 day delivery) in the weekly Fed Cattle Exchange auction. That was out of an offering of 392 head.

Live Cattle futures closed an average of 62¢ higher, from 40¢ higher at the back to $1.35 higher in spot Aug.

Feeder Cattle futures closed sharply lower, though, beaten down by light trade and the surge in grain futures.

Feeder Cattle futures closed an average of $1.52 lower.

Wholesale beef values were weak to lower on light demand and moderate offerings, according to the Agricultural Marketing Service.

Choice boxed beef cutout value was $1.22 lower Wednesday afternoon at $219.25/cwt. Select was 63¢ lower at $195.36.

Corn futures closed mostly 12¢ to 19¢ higher through Jul ‘20, and then mostly 1¢ to 3¢ higher.

Soybean futures closed 9¢ to 10¢ higher though Aug ’20 and then mostly 6¢ higher.

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Major U.S. financial indices closed sharply higher Wednesday—record high for the DJIA and NASDAQ—as investors seemed to think weaker labor data will hasten the Fed’s decision to cut rates.

Private sector, non-farm employment increased by 102,000 in June, according to the closely watched ADP National Employment report. That was about 24% less than the trade expected.

The Dow Jones Industrial Average closed 179 points higher. The S&P 500 closed 22 points higher. The NASDAQ was up 61 points.

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“Financial stress for many in agriculture continues to build amid unprecedented uncertainty from trade disputes and weather disasters,” say analysts with CoBank’s Knowledge Exchange Division (KED), in that organization’s Quarterly U.S. Economic Rural Review. “Nearly all sectors of agriculture were affected last quarter by the inundation of spring rains that kept farmers out of fields throughout the U.S. The amount of acreage lost to prevented planting will remain the major unknown in the months ahead for ag commodities markets.”

In fact, the KED folks say elevated corn prices could alter the modest beef cow herd growth previously expected.

On the other side of the ledger, U.S. beef exports and other meat exports could benefit from African Swine Fever in Southeast Asia.

“An expected decline in Chinese pork production will spur a surge of beef, pork, and chicken imports into China as it tries to fill a shortfall in animal protein supply that no single pork-producing country will be able to fill,” say KED analysts.

Among other highlights from the KED Quarterly Review:

Global economic development continues to slide as tariffs drag on global trade and manufacturing.

Despite domestic GDP growth of 3.1% in the first quarter, the pace of investment spending, manufacturing, and demand for capital goods have eased in recent months, and the slowdown trend is widely expected to persist through the remainder of the year.

Negotiated cash fed cattle trade remained undeveloped through Tuesday afternoon.

Feeder Cattle futures continued to rebound, despite slightly higher Corn futures, and helping deferred Live Cattle.

Except for unchanged in Apr, Feeder Cattle futures closed an average of $1.26 higher.

Except for unchanged in spot Aug, Live Cattle futures closed narrowly mixed, from an average of 23¢ lower across the front half of the board to an average of 40¢ higher across the back half.

Wholesale beef values were firm on moderate demand and offerings, according to the Agricultural Marketing Service.

Choice boxed beef cutout value was 75¢ higher Tuesday afternoon at $220.47/cwt. Select was 35¢ higher at $195.99.

Corn futures closed mostly 2¢ to 4¢ higher, perhaps getting some support from crop conditions (see below).

Soybean futures closed 7¢ to 10¢ lower though Jul. ’20 and then mostly 5¢ lower.

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Major U.S. financial indices closed higher on Tuesday after spending most of the session sideways. Tech stocks provided support, countered by threats of more U.S. tariffs on EU imports.

The Dow Jones Industrial Average closed 69 points higher. The S&P 500 closed 8 points higher. The NASDAQ was up 17 points.

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Corn futures closed mostly 2¢ to 4¢ higher, perhaps getting some support from crop conditions.

For the week ending June 30, according to USDA most recent Crop Progress report,

56% of the corn crop was in Good or Excellent condition, which was 20% less than last year. 12% was in Poor or Very Poor condition, compared to 6% a year earlier. For this time of year, that’s second worst crop condition for corn since 1995; the worst was in excessively dry 2012.

Soybean futures closed 7¢ to 10¢ lower though Jul. ’20 and then mostly 5¢ lower, pressured by heavy supplies and the lack of trade progress and despite current crop condition also being the second worst since 1995.

54% of the soybean crop was rated in Good or Excellent condition, compared to 71% a year earlier. 11% was in Poor or Very Poor condition, which was 5% more than a year earlier.

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Agricultural producer sentiment rebounded in June with farmers expressing more optimism, according to the most recent Purdue University-CME Group Ag Economy Barometer.

The June barometer was 126, up 25 points from the previous month. It’s based on a mid-month survey of 400 agricultural producers across the U.S.

“This year, farmers faced an extremely wet planting season and uncertainty surrounding trade discussions, however, a crop price rally, coupled with USDA’s announcement of its 2019 Market Facilitation Program (MFP) and Congress’ passage of the Disaster Aid Bill, made farmers more optimistic,” says James Mintert, the barometer’s principal investigator and director of Purdue University’s Center for Commercial Agriculture. “While this combination provided a boost to a struggling ag economy, it remains a challenging economic environment for farmers.” 

Both of the Ag Barometer’s sub-indices increased. The Index of Current Conditions rose 13 points from May, to a reading of 97. The Index of Future Expectations jumped 33 points, to a reading of 141 in June.

Given historic delays for corn and soybean planting, producers who planted either crop last year were asked whether the MFP announcement affected their decision to take a prevented planting payment this year. Ten percent of corn and soybean producers said the announcement did impact their prevented planting decision. One out of five farmers within that group said they intended to plant more corn, while one out of 10 farmers within that group said they intended to plant more soybeans, because of the MFP program.

Nearly one-third (32%) of corn/soybean farmers in the survey said they intended to take prevented planting payments on some of their corn acres. Of those who intend to take a prevented planting payment, just over half (51%) said they intend to take prevented planting on more than 15% of their intended corn acreage.

Negotiated cash fed cattle trade last week ended up mostly steady to higher on a live basis at $109/cwt. in the Southern Plains, $111.00-$111.50 in Nebraska and at $111-$112 in the western Corn Belt. Dressed trade in the North was steady to $3 lower at $178-$180.

Cattle futures closed mostly higher Monday, supported by the bounce in Feeder Cattle, tied to lower Corn futures, as well as higher Lean Hog futures and improved overall market optimism regarding trade negotiations between the U.S. and China.

Except for 17¢ higher in spot Aug, Feeder Cattle futures closed an average of $1.48 higher.

Except for 25¢ lower in spot Aug, Live Cattle futures closed an average of 58¢ higher, (10¢ higher to 95¢ higher at the back).

Wholesale beef values were steady on moderate demand and heavy offerings, according to the Agricultural Marketing Service.

Choice boxed beef cutout value was 6¢ higher Monday afternoon at $219.72/cwt. Select was 8¢ higher at $195.64.

Friday’s bearish Acreage report weighed on grains.

Corn futures closed 6¢ to 9¢ lower through Jul ’20 and then fractionally higher to 3¢ lower. That made for a decline of 19¢-30¢ for the front six contracts in the last two sessions.

Soybean futures closed mostly 10¢ to 14¢ lower though Nov. ’20 and then 8¢ to 9¢ lower.

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Major U.S. financial indices closed higher on Monday, buoyed by news that the U.S. and China agreed to shelve additional tariffs and counter-tariffs for the time being, paving the way to resumed trade talks.

The Dow Jones Industrial Average closed 117 points higher. The S&P 500 closed 22 points higher. The NASDAQ was up 84 points.

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“As long as beef demand does not weaken appreciably in the reminder of the year, fed cattle prices are expected to average about equal to 2018 levels for an annual average,” says Derrell Peel, Extension livestock marketing specialist Extension livestock marketing specialist at Oklahoma State University, in is weekly market comments. “Fed prices are expected to be slightly lower year over year in the third quarter before strengthening in the fourth quarter. Feeder prices are generally expected to average 3-5% below 2018 levels for the remainder of the year and for an annual average.”

Part of that has to do with carcass weights continuing to be lighter year over year. If they remain at or below previous-year levels, Peel says beef production for 2019 would be just a little more than 1% higher than last year. 

Peel points out steer carcass weights ebbed to 842 lbs. the last two weeks of May, which was 4 lbs. light than last year’s low. Heifer carcass weights likely reached the low at 779 lbs. in late May, he says, which was 3 lbs. lighter than the low in 2018. He adds that steer and heifer carcass weights typically increase from the recent low to a seasonal peak in the fourth quarter of the year.

“With feed costs destined to be somewhat higher in the second half of the year, feedlots will have some incentive to trim back days on feed suggesting lighter finished and, thus, carcass weights,” Peel says. “However, feedlots do this largely by placing heavier feeder cattle, which need fewer days to finish. Heavier placement weights imply heavier finish weights. Feedlot data shows that every one pound increase in placement weight results in about one-half pound increase in finished weight. Thus, the impact of higher feed prices on carcass weights is unclear but is unlikely to have a major impact.”

USDA shocked the market Friday with its latest Acreage report (see below), which sent Corn futures diving hard. That fueled gains in Feeder Cattle futures, which closed an average of 50¢ higher (12¢ higher to $1.05 higher in spot Aug). Prices at the close were well off of session highs with likely week-end and month-end position squaring. 

Live Cattle futures closed mixed, from 71¢ lower across the front half of the board—not counting expiring June—to an average of 13¢ higher across the back half, not counting newly minted Dec ’20.

Negotiated cash fed cattle trade began to develop by late Friday afternoon, but there were too few transactions to trend in any region.

Early live sales in the Southern Plains were at $109/cwt. on a live basis, in the middle of the previous week’s trading range. The Texas Cattle Feeders Association also reported its members trading at $109. Early live sales in Nebraska were steady to higher at $109.00-$111.50. In the western Corn Belt, though, the $109-$112 for early live sales was $1-$3 less than the previous week. Earlier week dressed sales in the latter two regions were at $180, which was steady in Nebraska and steady to lower in the western Corn Belt.

Through Thursday, the 5-area direct weighted average price for steers was $110.58/cwt.

Wholesale beef values were firm on Choice and lower on Select with moderate demand and moderate to heavy offerings, according to the Agricultural Marketing Service.

Choice boxed beef cutout value was 63¢ higher Friday afternoon at $219.03/cwt. Select was $1.34 lower at $195.56. At $24.10, the Choice-Select spread Friday afternoon was the highest since May of last year.

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Major U.S. financial indices closed higher on Friday, led by stronger prices for shares of the nation’s largest banks, after they passed the federal stress test administered each year.

The Dow Jones Industrial Average closed 73 points higher. The S&P 500 closed 16 points higher. The NASDAQ was up 38 points.

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USDA’s Acreage report issued on Friday always was going to raise questions, given the uncertainty borne by late and prevented planting, the timing of the survey process and whatnot. Even so, few expected to see so many corn acres.

USDA estimated corn acreage at 91.7 million acres, up 3% from last year. That’s less than the 92.8 million acres estimated in the March Prospective Plantings report, but more than the 89.8 million acres estimated by the World Agricultural Outlook Board (WAOB ) in the June World Agricultural Supply and Demand Estimates, and about 5 million acres more than average estimates ahead of the report. Keep in mind, the acreage report is based on producer surveys, whereas the WAOB estimate is model-based.

USDA’s Grain Stocks report provided some corn market support, with USDA estimating corn stocks in all positions June 1 at 5.20 billion bu., which was 2% less than the previous year.

Of the total corn stocks, 2.95 billion bu. are stored on farms, up 7% from a year earlier. Off-farm stocks, at 2.25 billion bu., are down 12% from a year ago.

Corn futures closed 13¢ to 21¢ lower through Jul ’20 on Friday and then 2¢ to 6¢ lower.

News was as bullish for soybeans as it was bearish for corn, at least in terms of acreage. USDA estimated 80.0 million acres of soybeans, which would be 10% less than last year and the fewest U.S. acreage since 2013. That’s far less than the 84.6 million acres forecast in the Prospective Plantings report and June WASDE.

Soybean futures closed mostly 10¢ to 12¢ higher.

Soybean stocks were more bearish, with soybeans stored in all positions estimated at 1.79 billion bu., which would be 47% more than a year ago, as a variety of factors, including trade issues and impacts from African Swine Fever weigh on U.S. soybean exports.

On-farm soybean stocks totaled 730 million bu., up 94% from a year ago. Off-farm stocks of 1.06 billion bu., were 26% more than a year ago.

USDA pegs the all wheat planted area at 45.6 million acres, which would be 5% less than last year and just slightly less than the 45.8 million acres estimated in March’s Prospective Plantings report and the June WASDE.

Old crop all wheat stored in all positions June 1 totaled 1.07 billion bu., down 2% from a year earlier. On-farm stocks are estimated at 207 million bu., up 58% from last year. Off-farm stocks of 865 million bu. were 11% less than a year ago.

According to the Agricultural Marketing Service (AMS), USDA will re-survey producers in 14 states next month regarding acres planted to corn, cotton, sorghum and soybeans.

“If the newly collected data justify any changes, NASS will publish updated acreage estimates in the Crop Production report to be released Aug. 12,” AMS analysts explain.