WLI

Negotiated cash fed cattle trade ended up steady in the Southern Plains last week at $109/cwt. on a live basis. Prices were $1-$2 higher in Nebraska at $113.00-$113.50 and at $112-$114 in the western Corn Belt. Dressed trade was steady to $2 higher at $180.

Likewise, the 5-area direct weekly average price for steers was $1.11 higher week to week on Monday at $111.24/cwt. on a live basis. Live heifers traded $1.25 higher at $110.82.

Cattle futures closed mainly narrowly mixed on Monday after early follow through support.

Live Cattle futures closed mixed, from an average of 66¢ lower in the front three contracts to an average of 23¢ higher.

Feeder Cattle futures closed narrowly mixed from 17¢ lower to 7¢ higher.

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

Choice boxed beef cutout value was 21¢ lower Monday afternoon at $217.46/cwt. Select was 39¢ lower at $194.41.

Corn futures closed mixed, from fractionally higher to 4¢ higher through Jul ‘20, and then mostly 1¢ to 2¢ lower.

Soybean futures closed 3¢ higher.

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Major U.S. financial indices closed lower Monday, led by tech stocks.

The Dow Jones Industrial Average closed 115 points lower. The S&P 500 closed 14 points lower. The NASDAQ was down 63 points.

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U.S. beef exports continue to reflect resilience in the face of ongoing trade barriers, according to data released by USDA and compiled by the U.S. Meat Export Federation (USMEF).

U.S. beef exports in May were steady year-over-year in volume at 117,541 metric tons (mt), but 1% more in value at $727.6 million—the second-highest on record.

For January through May, beef exports were 3% below last year’s record pace in volume (530,088 mt) but only slightly lower in value at $3.3 billion.

Beef export value per head of fed slaughter averaged $312.85 in May, down slightly from a year ago. For January through May, beef export value averaged $309.33 per head, down 3%.

Korea and Taiwan Set the Pace

Beef exports to South Korea remained on a record pace in May, climbing 11% to 23,004 mt and 13% in value to $165 million. January-May exports to Korea were 11% above last year in volume (101,761 mt) and 15% higher in value ($743.5 million).

Beef exports to Taiwan also strengthened for the second straight month at 5,873 mt in May (up 27% from a year ago), valued at $52.6 million (up 28%). Through May, exports to Taiwan were 11% above last year’s record pace in volume (24,478 mt) and 4% higher in value ($218.2 million).

May export volume to leading market Japan also bounced back, despite the U.S. disadvantage borne by the lack of a trade agreement with that nation.

According to USMEF, all of U.S. pork and beef’s major competitors gained tariff relief in Japan this year through the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the economic partnership agreement between Japan and the European Union.

“The explosive growth U.S. beef has achieved in Korea and Taiwan is a testament to the quality of the product and the outstanding customer base the U.S. industry has established over the years,” explains Dan Halstrom, USMEF President and CEO. “That same dynamic is present in Japan, on an even larger scale. But for Japan to remain in the ‘strong growth’ column, it is essential that we have market access comparable to our key competitors.”

Pork Exports Show Signs of Renewed Strength

U.S. pork exports in May were also steady with the previous year at 217,999 mt. Value was 1% higher at 567.8 million—the highest monthly value total since April 2018. For January through May, however, pork exports were 4% below last year in volume (1.035 million mt) and 10% less in value at $2.57 billion.

Although pork exports to Mexico remained slow—the 20% retaliatory duty on most U.S. pork entering that nation wasn’t removed until May 20—exports to China/Hong Kong rebounded, despite the ongoing 50% retaliatory duty on U.S. pork going to China. U.S. pork exports to the region were 33% more year over year for volume (45,422 mt) and 5% more in value at $84 million. Through the first five months of 2019, though, exports to the region trailed last year by 7% in volume (173,642 mt) and 25% in value ($326 million).

“May export results for U.S. pork were very encouraging, especially the renewed momentum in Japan and China/Hong Kong,” Halstrom says. “When exports to Mexico get back on track and trade talks with Japan and China show progress, this will be a very welcome lift for the U.S. pork industry.”

Negotiated cash fed cattle traded ended up steady in the Southern Plains at $109/cwt. on a live basis. It was $1-$2 higher at $113.00-$113.50 in Nebraska and at $112-$114 in the western Corn Belt. Dressed trade was steady to $2 higher at $180.

Through Thursday, the weighted average 5-Area Direct price for steers was 59¢ higher than the prior week at $111.17/cwt. on a live basis. The dressed price was 74¢ higher at $180.10.

Cattle futures closed sharply higher Friday, helped along by sluggish trade and higher cash fed cattle prices in the North.

Live Cattle futures closed an average of $1.18 higher (67¢ to $1.77 higher).

Feeder Cattle futures closed an average of $1.41 higher ($1.10 to $2.25 higher in spot Aug).

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

Choice boxed beef cutout value was $1.58 lower Friday afternoon at $217.67/cwt. Select was 56¢ lower at $194.80.

Corn futures closed fractionally higher to 2¢ higher through Jul ‘20, and then mostly unchanged to 2¢ lower.

Soybean futures closed mostly 10¢ to 14¢ lower.

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Major U.S. financial indices closed lower Friday. Popular thinking ascribed the pressure to a positive monthly employment report, which might make the Fed more reticent to cut interest rates.

Total non-farm payroll employment increased by 224,000 in June, according to the U.S. Bureau of Labor Statistics Employment Situation Summary. The unemployment rate was little changed at 3.7%.

Average hourly earnings in June of $27.90 was 6¢ more than the previous month. Average hourly earnings increased 3.1% over the past 12 months.

Earlier in the week, ADP National Employment report showed private sector, non-farm employment increasing by 102,000 in June, significantly less than the trade expected.

The Dow Jones Industrial Average closed 43 points lower. The S&P 500 closed 5 points lower. The NASDAQ was down 8 points.

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The Creighton University Rural Mainstreet Index  (RMI) rose 4.7 points in June to 53.2. That’s the sixth month out of seven the index was above growth neutral. The index ranges between 0 and 100 with 50.0 representing growth neutral, and an RMI below the growth neutral threshold. 50.0, indicating negative growth for the month.

The RMI is based on a monthly survey of bank CEOs in rural areas of a 10-state region dependent on agriculture and/or energy: Colorado, Illinois, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, South Dakota and Wyoming.

“Higher agriculture commodity prices and rebuilding from recent floods boosted the Rural Mainstreet Index (RMI) for the month. Furthermore, despite the negatives from the trade war, 69.4% of bankers support either raising, or continuing current tariffs,” said Ernie Goss, PhD, Jack A. MacAllister Chair in Regional Economics at Creighton University’s Heider College of Business. 

At the same time, more than one in four bank CEOs reported rising loan defaults due to farmer financial woes. Almost half of bankers reported that due to crisis-level farm income, farmers in their area have responded by selling the farm, or otherwise leaving the farm.

One of the notable quotes came from Jeff Bonnett, president of Havana National Bank in Havana, IL, who said there are estimates that 15-20 million corn acres were not planted nationwide.

“Based upon this information, corn prices should be in the range of $5.75 to $6.00/bu., or more. What are we missing? Will the true corn acres planted be revealed after the required certification through FSA due by July 15th?”

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.”