WLI

Negotiated cash fed cattle prices were $2-$3 lower in the Southern Plains Tuesday at $120/cwt., with slow trade and light to moderate demand.

Apparently, prices finally fell enough and conditions were oversold enough for buyers to get back on the long side of Cattle futures. That was despite sharply negative outside markets, tied to the lack of a trade resolution with China.

Except for unchanged in spot Jun, Live Cattle futures closed an average of 48¢ higher.

Feeder Cattle futures closed an average of 93¢ higher.

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

Choice boxed beef cutout value was $3.13 lower Tuesday afternoon at $223.87/cwt. Select was $2.15 lower at $211.83.

Corn futures closed mostly 1¢ to 2¢ higher.

Except for a few cents higher in the back contracts, Soybean futures closed mostly fractionally mixed to 2¢ lower.

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Major U.S. financial indices plunged on Tuesday, with reports attributed to the U.S. Trade Representative that the U.S. will increase tariffs on Chinese imports this Friday, as suggested by President Trump over the weekend. Whether gamesmanship or reality, traders ran for cover. 

The Dow Jones Industrial Average closed 473 points lower. The S&P 500 closed 48 points lower. The NASDAQ was down 159 points.

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Producer sentiment plunged last month, with the Purdue University-CME Group Ag Economy Barometer diving 18 points to 115 points, month to month in April. That’s the fourth largest one-month drop since data collection began in October 2015.

Worsening perceptions of both current economic conditions and weaker expectations for the future drove the decline. The Index of Current Conditions fell 21 points to a reading of 99, and the Index of Future Expectations declined 16 points to a reading of 123.

“Farmers are becoming increasingly anxious over their future financial performance,” says James Mintert, the barometer’s principal investigator and director of Purdue University’s Center for Commercial Agriculture. “Producers have taken stock of their financial position and prospects for 2019 as they head into planting season and are concerned about the uncertainty arising from the ongoing trade disputes with key ag trading partners. Right now it seems that producers are being cautious.”

For instance, only 22% of respondents to the April survey believed now was a good time to make large farm investments.

Producers also expressed less optimism for resolution to the ongoing soybean trade dispute with China: only 28% of respondents felt that the dispute would be resolved before July 1, down from 45% in March. However, 71% still feel the dispute will ultimately be resolved in a way that benefits U.S. agriculture.

The Ag Economy Barometer is a sentiment index based on a monthly survey of 400 agricultural producers across the U.S.

Already bearish Cattle futures received added fuel to the downside from Trump’s weekend tweet that he would increase tariffs on $200 billion worth of Chinese imports from 10% to 25% this Friday, if a trade deal remains unsigned. The president also threatened 25% tariffs on another $325 billion worth of Chinese imports. Lean Hog futures plunged, adding pressure to Cattle futures.

Live Cattle futures closed an average of $1.05 lower.

Feeder Cattle futures closed an average of $1.30 lower.

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

Choice boxed beef cutout value was 36¢ lower Monday afternoon at $227.00/cwt. Select was 69¢ higher at $213.98.

Corn futures closed 4¢ to 7¢ lower through May ’20 and then mostly 1¢ to 2¢ lower.

Soybean futures closed 7¢ to 12¢ lower through Aug ‘20, and then mostly 2¢ lower.

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Major U.S. financial indices closed lower on Monday, but well off of session lows, pressured by President Trump’s aforementioned comments concerning Chinese trade. 

The Dow Jones Industrial Average closed 66 points lower. The S&P 500 closed 13 points lower. The NASDAQ was down 40 points.

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“Beef markets are getting ever more complex, a trend that is likely to continue, if not accelerate,” says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University (OSU), in is weekly market comments. “When the vast array of horizontal beef product markets is considered, along with the complex set of vertical cattle and beef production sectors, all of which operate in complicated dimensions of time and space, there can be little doubt that the U.S. cattle and beef industry is one of, if not the most complex set of markets on the planet.”

Indeed.

“The total carcass value that drives beef and cattle markets is the net effect of several hundred products that result from slaughter and fabrication and ultimately become thousands of different products that are part of retail grocery; hotel, restaurant and institutional (HRI) markets and exports, along with markets for edible offals and other byproducts of cattle slaughter,” Peel explains.

OSU researchers recently conducted interviews with companies representing a cross-section of the beef product industry, including multiple firms at all beef market levels. The research identified issues and trends associated with the evolution of beef markets. Among them, according to Peel:

• Increasing exports and impacts in specific beef markets.
• Increasing demand for additional fabrication of beef products.
• The impact of increasing carcass size.
• Demand for bone-in versus boneless beef products.
• Fresh versus frozen products and the use of deep chill technology.
• Increased demand for value-added products, including more beef products resulting from additional fabrication, as well as added-ingredient products.
• The blending of beef marketing channels with growing popularity of home food delivery resulting from increased demand for restaurant take-out along with meal kits for home delivery or in-store purchase.

Negotiated cash fed cattle prices were sharply lower last week. Live trade was $3-$4 lower at $122-$123/cwt. in the Southern Plains; mostly $124 in Nebraska and $123-$127 in the western Corn Belt. Dressed trade was mainly $4-$6 lower at mostly $200.

Feeder Cattle futures continued to lead Live Cattle lower on Friday. Declining wholesale values at a time seasonality suggests a boost from grilling demand, as well as the continued unwinding of long-held long positions continue to weigh.

Except for 25¢ and 42¢ lower at either end of the board, Live Cattle futures closed an average of $1.10 lower. From the previous Friday through Thursday, open interest declined by 14,124 contracts.

Feeder Cattle futures closed an average of $1.30 lower.

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

Choice boxed beef cutout value was $1.44 lower Friday afternoon at $227.36/cwt. Select was $1.79 lower at $213.29.

Except for 1¢ higher in spot May, Corn futures closed mainly fractionally mixed.

Soybean futures closed 1¢ lower to 1¢ higher, except for 4¢ higher in the back three contracts.

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Major U.S. financial indices bounced back Friday, fueled by the monthly national employment report.

Total non-farm payroll employment increased 263,000 in April, compared to the previous month, according to the U.S. Department of Labor’s Bureau of Labor Statistics. The unemployment rate declined 0.2% to 3.6%, the lowest rate since 1969.

In April, average hourly earnings for all employees on private non-farm payrolls rose by 6¢ cents to $27.77. Over the year, average hourly earnings have increased by 3.2%.

The Dow Jones Industrial Average closed 197 points higher. The S&P 500 closed 28 points higher. The NASDAQ was up 127 points.

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The clock is ticking, but there’s still time for producers to get corn in the ground without impairing yield.

For instance, Bill Wiebold, agronomist with the University of Missouri (MU) Extension Service explains, “Our data provide some optimism that reasonably high yield can be obtained when corn is planted in mid-to-late May. However, yield potential is very strongly dependent on weather conditions in summer. For this reason, it is difficult to predict in any specific year what will happen to corn yield if planting is delayed.”

According to a 5-year MU study, yield potential in the state declines when corn planting is delayed through the first three weeks of May: -5% by the first week of May; -20% by the end of the month; -40% by the end of June.

Likewise, University of Minnesota studies show that corn yield is typically maximized when planting occurs from late April through mid-May.

“Minnesota corn growers have achieved good yields in the past several years even when the average corn planting date (50% of the corn planted in the state) has been April 29 for the years 2014-2016 and May 7 in 2017,” according to Minnesota Crop News.

“…in central Iowa from 2014-2016, the highest yield potential was attained with early May planting dates. Planting in mid-April resulted in 95% yield potential and planting in early June resulted in 81% yield potential,” according to Iowa State University.

By the way, according to the Iowa Farm Bureau, farmers in that state can plant up to 1.4 million acres in a day; more than 60% of the crop in a week.

USDA’s monthly World Agricultural Supply and Demand Estimates are due out Thursday.