Daily Market Highlights

Cattle Current Daily—June 18, 2019

Cattle futures faded early follow through pressure Monday morning to rally back for a positive close.

Except for 20¢ lower in the back contract, Live Cattle futures closed an average of 71¢ higher (27¢ to $1.35 higher).

Feeder Cattle futures closed an average of $1.19 higher after four consecutive sessions of lower money (75¢ to $1.45 higher).

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

Choice boxed beef cutout value was 41¢ lower Monday afternoon at $221.82/cwt. Select was 25¢ lower at $202.51.

Corn futures closed mostly 4¢ to 5¢ higher through Sep ‘20 and then mostly fractionally higher to 1¢ higher.

Soybean futures closed 10¢ to 16¢ higher through Jul ‘20 (16¢ higher in the front four contracts) and then 6¢ to 9¢ higher.

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Major U.S. financial indices edged higher Monday, basically erasing minimal losses from the previous session. Traders are likely content to wait for further direction from the Fed meeting scheduled to take place Tuesday and Wednesday.

The Dow Jones Industrial Average closed 22 points higher. The S&P 500 closed 2 points higher. The NASDAQ was up 48 points.

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“Softening fed cattle prices in 2019 and the prospect of higher feed input costs could delay steers and heifers from entering feedlots,” say analysts with USDA’s Economic Research Service, in the monthly Livestock, Dairy and Poultry Outlook (LDPO) released Monday. “This could incentivize keeping lightweight cattle on pasture longer to add weight, which may lead to a more gradual pace of heavier cattle placed on feed so that feedlots will spend less time feeding them to the appropriate finishing weights. The slower pace of placement will likely be reflected in fewer fed cattle to be marketed for slaughter in early 2020.”

Higher anticipated feed costs and the anticipated slower pace of fed cattle marketings in the fourth quarter are behind the reduction in projected beef production for this year to 27.2 billion lbs., which would still be 332 million lbs. more than last year.

“Lower fed cattle prices have turned feedlot margins negative, and higher forecast feed input prices could make feedlots less willing to bid up prices for feeder cattle for the rest of 2019,” say ERS analysts. “Based on recent price data, the second-quarter 2019 feeder steer price was lowered by $3 to $142/cwt. Faced with continued poor operating margins, the 2019 third and fourth-quarter price forecasts were each lowered $5 from the prior month to $145 and $142/cwt., respectively. As a result, this month’s annual price forecast for 2019 was $4 lower at $142. The 2020 annual price forecast was reduced $5 from last month’s forecast to $145/cwt. as higher forecast feed costs and a lower forecast for fed cattle prices weigh on feedlot margins.”

Cattle Current Daily—June 18, 2019 2019-06-17T18:27:36-05:00

Cattle Current Daily—June 17, 2019

Negotiated cash fed cattle trade appeared steady to either side of even in two regions through Friday afternoon.

Live sales in the western Corn Belt, was mainly steady at $114-$115/cwt., while dressed sales were steady to $2 higher at $184-$186.

The Texas Cattle Feeders Association reported its members trading at $112, which was $1 less than the previous week.

Cattle futures continued to soften Friday with continued pressure from rising grain prices.

Live Cattle futures closed an average of 56¢ lower.

Feeder Cattle futures closed an average of 88¢ lower amid extremely light trade.

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

Choice boxed beef cutout value was 13¢ higher Friday afternoon at $222.23/cwt. Select was $1.95 lower at $202.76.

Corn futures closed 4¢ to 11¢ higher through Jul ‘20 and then mostly fractionally lower to 3¢ lower.

Soybean futures closed 5¢ to 8¢ higher through May ‘20 (mostly 8¢) and then mostly 1¢ to 3¢ higher.

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Major U.S. financial indices closed lower Friday. Pressure included a decline in chipmakers, tied to U.S. sanctions against China’s Huawei.

The Dow Jones Industrial Average closed 17 points lower. The S&P 500 closed 4 points lower. The NASDAQ was down 40 points.

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With the weather and flooding continuing to wreak havoc across the Northern Plains and Midwest, the Livestock Marketing Information Center (LMIC) reduced  its outlook for hay yield and increased the expected price.

Keep in mind, hay prices were already sharply higher year over year, in the latest USDA Agricultural Prices published at the end of last month. At $199/ton in April, alfalfa was $16 more than the previous year and $15 more than the previous month. At $151/ton, other hay was $27 more than last year and $4 more than in March of this year.

In the latest Livestock Monitor, LMIC notes new seedings of alfalfa in those aforementioned areas—about half of all new seedings—are likely struggling.

“Winterkill was also potentially an issue in these areas, as this winter was not the kindest either,” say LMIC analysts. “It is unknown how many of those fields face irrecoverable situations, but for now, we assume that, should the fields dry out, those acres will still be harvested, but may lose a cutting.”

Cattle Current Daily—June 17, 2019 2019-06-16T13:23:28-05:00

Cattle Current Daily—June 14, 2019

Although too few transactions to trend, negotiated cash fed cattle trade for the week wobbled from the blocks at steady to lower prices. There were some early sales in the Texas Panhandle at $112/cwt., a few in Kansas at $110, as well as some early dressed sales at $185 in Nebraska and the western Corn Belt.

Feeder Cattle futures closed sharply lower Thursday but off of session lows, under continued pressure from rising grain prices. Live Cattle closed lower, to a lesser degree.

Live Cattle futures closed an average of 67¢ lower (22¢ to $1.10 lower).

Feeder Cattle futures closed an average of $1.68 lower.

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

Choice boxed beef cutout value was 5¢ lower Thursday afternoon at $222.10/cwt. Select was $2.02 lower at $204.71.

Corn futures closed 7¢ to 12¢ higher in the front three contracts and then mostly 1¢ to 4¢ higher.

Soybean futures closed mostly 5¢ to 10¢ higher through Sep ‘20 and then mostly 2¢ to 4¢ higher.

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Major U.S. financial indices closed higher Thursday, buoyed in part by a bounce to recently struggling oil prices.

The Dow Jones Industrial Average closed 101 points higher. The S&P 500 closed 11 points higher. The NASDAQ was up 44 points.

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Carcass weights continue to suggest currentness of feedlot marketing.

Average dressed steer weighing of 842 lbs. (week ending June 1) was even with the previous week and 9 lbs. less than the previous year, according to the most recent Actual Slaughter Under Federal Inspection report from USDA. Average dressed heifer weight was 6 lbs. lighter than the previous week at 779 lbs. and 7 lbs. lighter than the previous year. With 3,413 head more total cattle slaughter for the week than the previous year (1,810 head more fed slaughter), beef production for the week was 900,000 lbs. less at 463.8 million lbs.

Although 0.89% more carcasses graded Prime for the week ending May 31, carcasses grading Choice and Prime were 0.12% less with 0.80% fewer grading in the upper two-thirds of Choice.

Cattle Current Daily—June 14, 2019 2019-06-13T18:36:01-05:00

Cattle Current Daily—June 13, 2019

Choice steers and heifers sold $2.00-$2.25 higher at the fat auction in Tama, IA: $120.52/cwt. for steers at 1,396 lbs.

There were 663 head offered in the weekly Fed Cattle Exchange auction, with 340 head (two Kansas lots) selling for a weighted average price of $113/cwt.; delivery at 1-9 days.

Live Cattle futures closed an average of $1.26 lower (75¢ lower at the back to $1.65 lower).

Feeder Cattle futures closed an average of 96¢ lower (32¢ lower in spot Aug to $1.30 lower).

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

Choice boxed beef cutout value was 24¢ lower Wednesday afternoon at $222.15/cwt. Select was $1.52 lower at $206.73.

Corn futures closed mostly 1¢ to 2¢ higher.

Soybean futures closed 18¢ higher in the front four contracts and then mostly 10¢ to 17¢ higher.

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Major U.S. financial indices edged lower Wednesday, amid lingering worries about trade issues. Crude oil prices (WTI-CME) were also about $2 lower for 2019 contracts with wonderments about demand, tied to wonderments about global economic growth.

The Dow Jones Industrial Average closed 43 points lower. The S&P 500 closed 5 points lower. The NASDAQ closed 29 points lower.

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“Steer and heifer calf prices are now expected to fall by about 3% in 2019 relative to last year, equivalent to taking between $4-$7/cwt. out of 500-600 lb. calf prices in the Southern Plains,” say analysts with the Livestock Marketing Information Center (LMIC), in the latest Livestock Monitor.

LMIC adjusted expected calf and feeder prices lower based on the dramatic run up in corn prices.

As mentioned in yesterday’s Cattle Current, USDA increased the expected season-average corn price 50¢ higher to $3.80/bu. in the latest World Agricultural Supply and Demand Estimates. LMIC is more bearish.

“LMIC is expecting total corn plantings this spring will be 87.4 million acres, the lowest area since 2009,” according to analysts there. “The lateness in planting also has negative implications for crop yield potential, since the crop will have less time to develop before harvest. Therefore the average yield per acre for the coming harvest is expected to fall to 162.5 bu.  Total corn harvest this fall is pegged at 13.0 billion bu., down from 14.4 billion bu. harvested last year. Corn prices will have to go up to ration the smaller supply and LMIC is calling for a crop year average price of $4.50 at the farm for the 2019-2020 corn crop.”

By way of comparison, WASDE projects corn planted area of 89.8 million acres with a yield of 166 bu./acre for total production of 13.7 billion bu.

Between the dramatic increase in expected corn prices and the adjustment lower in calf prices LMIC lowered projected cow-calf returns for this year from +$27 per head to -$14, similar to 2018. Anticipated returns for 2020 remain positive.

Moreover, LMIC anticipates higher cull  cow prices.

“Cull cow prices are still expected to move higher in 2019 by about 8.6%, averaging under $60/cwt. in the southern plains,” say LMIC analysts. “LMIC is expecting a substantial rebound in the cull cow price as both beef and dairy cow slaughter is expected to pull back by 2020.”

Cattle Current Daily—June 13, 2019 2019-06-12T18:56:46-05:00

Cattle Current Daily—June 12, 2019

Live Cattle futures and Feeder Cattle ran in opposite directions Tuesday as Corn futures strengthened on the monthly World Agricultural Supply and Demand Estimates (see below).

Live Cattle futures closed an average of 67¢ higher (40¢ to $1.02 higher).

Feeder Cattle futures closed an average of 68¢ lower (10¢ lower at the back to $1.70 lower in spot Aug).

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

Choice boxed beef cutout value was 73¢ higher Tuesday afternoon at $222.39/cwt. Select was 54¢ lower at $208.25.

Corn futures closed 10¢ to 12¢ higher through May ‘20 and then mostly 4¢ to 6¢ higher.

Soybean futures closed 1¢ to 3¢ higher.

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Major U.S. financial indices edged lower Tuesday.

The Dow Jones Industrial Average closed 14 points lower. The S&P 500 closed 1 point lower. The NASDAQ closed fractionally lower.

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Analysts with USDA’s Economic Research Service (ERS) reduced estimated beef production for this year by 65 million lbs. to 27.20 billion lbs., in the latest World Agricultural Supply and Demand Estimates (WASDE).

“The decline in beef production largely reflects lower steer and heifer slaughter in the second half of the year…as incentives to add weight on pasture slows the pace of feedlot placements,” say ERS analysts.

If realized, estimated total production would still be 332 million lbs. more than last year.

Estimated fed steer price for the year (5-area Direct) was lowered $1.50 from the previous month to $117/cwt. Prices are forecast to average $118 in the second quarter, $110 in the third quarter and $114 in the fourth.

Corn

Despite an increase to projected beginning corn stocks, based on reduced exports, WASDE estimates ending stocks 810 million bu. lower to 1.7 billion bu.—the lowest since 2013-14—with lower production.

“Corn production for 2019-20 is forecast to decline 1.4 billion bu. to 13.7 billion, which if realized would be the lowest since 2015-16,” say ERS analysts. “Unprecedented planting delays observed through early June are expected to prevent some plantings and reduce yield prospects. USDA will release its Acreage report June 28, which will provide survey-based indications of planted and harvested area.” USDA slashed expected yield per acre by 10 bu. to 166 bu./acre, compared to the prior month’s estimate. That would be 6.4 bu. less than the projection for 2018-19. USDA reduced projections for planted corn acreage by 3 million acres to 89.8 million acres.

The season-average farm price for corn was raised 50¢ to $3.80/bu. 

Soybeans

WASDE increased beginning soybean stocks on reduced exports.

“Although adverse weather has significantly slowed soybean planting progress this year, area and production forecasts are unchanged with several weeks remaining in the planting season,” explain ERS analysts.

The 2019-20 season-average price for soybeans is forecast at $8.25/bu., up 15¢ reflecting the impact of higher corn prices. Soybean meal prices are forecast at $295 per short ton, up $5. The soybean oil price forecast is unchanged at 29.5¢/lb. 

Wheat

WASDE projects U.S. 2019-20 wheat supplies lower, with reduced beginning stocks partly offset by slightly higher production.

U.S. beginning wheat stocks were estimated to be 25 million bu. less based on increased 2018-19 exports. Ending stocks were lowered 69 million bu. to 1,072 million.

“Winter wheat production is forecast up 6 million bu. to 1,274 million with an increase to Hard Red Winter more than offsetting decreases for Soft Red Winter and White Winter,” say ERS analysts. “Total wheat production is forecast at 1,903 million bu., up 5.8 million bu. from the May forecast.”

The season-average farm price for wheat was raised 40¢/bu. to $5.10, reflecting  sharply higher Wheat futures prices and reduced 2019-20 corn supplies.

Cattle Current Daily—June 12, 2019 2019-06-11T18:38:59-05:00

Cattle Current Daily—June 11, 2019

Cattle futures surged higher Monday, recovering most of the losses from the previous session, even more for Live Cattle. Some attributed the reversal to the after-hours announcement on Friday that threatened U.S. tariffs on Mexican imports were suspended indefinitely.

Live Cattle futures closed an average of $2.15 higher ($1.57 to $3.00 higher).

Feeder Cattle futures closed an average of $2.31 higher.

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

Choice boxed beef cutout value was 65¢ lower Monday afternoon at $221.66/cwt. Select was $1.87 higher at $208.79.

Corn futures closed mostly 2¢ higher, except for unchanged to fractionally lower in the front three contracts. 

Soybean futures closed 2¢ to 4¢ higher, except for 7¢ higher in the back three contracts.

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Major U.S. financial indices closed higher Monday with apparent support from the aforementioned agreement between the U.S. and Mexico regarding illegal immigration that staved off U.S. tariffs.

The Dow Jones Industrial Average closed 95 points higher. The S&P 500 closed 13 points higher. The NASDAQ was up 82 points.

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“While good moisture conditions bodes well for forage growth in general, ongoing flooding and excessively wet conditions is limiting grazing and hay production in some regions,” says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly market comments. “Sloppy feedlot conditions continue to hamper feedlot production in some areas. Additionally, the record late planting of corn and soybeans this year is adding uncertainty about corn acreage and yield and is beginning to push corn prices higher. There is little doubt that the corn crop will be smaller than anticipated just a few weeks ago but carryover levels are still expected to be adequate. While significantly higher feed prices are not anticipated at this time, the uncertainty remains.”

Peel outlined the variety of quandaries adding pressure to cattle markets, including ongoing trade issues. So far this year, he says weaker year-to-year exports of beef, pork and poultry suggest the meat complex is struggling internationally.

“Weaker beef demand may be the biggest threat to cattle and beef markets for the remainder of the year,” Peel says. “Strong beef demand supported cattle and beef markets in 2017 and 2018, but there are signs that some weakness may be developing in beef demand in both domestic and international markets. While unemployment remains very low, other indications of weakness in the macro-economy are concerning and have led to reduced forecasts for U.S. economic growth in 2019; largely due to ongoing impacts of tariffs and trade disruptions. Relatively slow domestic income growth and higher prices for major consumer items, such as gasoline, combined with record large supplies of beef, pork and poultry may be limiting domestic beef demand going forward in 2019. Relatively wet and cold weather thus far has likely stifled summer beef demand somewhat and probably contributed to an early seasonal peak in boxed beef prices and recent weakness in wholesale beef values.”

Cattle Current Daily—June 11, 2019 2019-06-10T19:32:24-05:00

Cattle Current—June 10, 2019

Negotiated cash fed cattle trade ended up generally $2-$3 lower on a live basis last week at $112-$113/cwt. in the Southern Plains and at $114-$115 in Nebraska and the western Corn Belt. Dressed trade was also $2-$3 lower at $183-$184.

Cattle futures, especially Feeder Cattle, closed sharply lower on Friday. Along with sharp pressure on Lean Hogs, there was likely plenty of trepidation related to the tariffs scheduled to begin on Mexican imports Monday unless negotiators reached a resolution on the illegal immigration issue. Friday night, those tariffs were suspended, according to various reports; no details given.

Live Cattle futures closed an average of $1.16 lower (67¢ to $1.50 lower).

Feeder Cattle futures closed an average of $2.35 lower.

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

Choice boxed beef cutout value was 6¢ higher Friday afternoon at $222.31/cwt. Select was 24¢ lower at $206.92. Week to week, Choice was 90¢ lower and Select was down 77¢.

Corn futures closed mostly 2¢ to 4¢ lower.

Soybean futures closed mostly 9¢ to 12 ¢lower. 

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Major U.S. financial indices closed sharply higher Friday. Apparently, much of the support came from significantly fewer new jobs than expected. Although counterintuitive, the notion is the anemic numbers will help encourage the Fed to cut interest rates.

Total non-farm employment increased by 75,000 in May, compared to the previous month, according to the Employment Situation Summary from the U.S. Bureau of Labor Statistics.

Average hourly earnings for all employees on private nonfarm

payrolls in May increased by 6¢ to $27.83. Over the year, average hourly

earnings are up 3.1%.

The Dow Jones Industrial Average closed 263 points higher. The S&P 500 closed 29 points higher. The NASDAQ was up 126 points.

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Although U.S. beef exports continued at a strong pace in April, they faltered from year-earlier levels beneath the weight of ongoing trade issues.

For instance, Dan Halstrom, president and CEO of the U.S. Meat Export Federation (USMEF) explained, “U.S. beef is holding its own in Japan, but the April numbers are telling. With the April 1 rate cut, Australian, Canadian, New Zealand and Mexican beef are now subject to a 26.6% duty while the rate for U.S. beef remains at 38.5%. It is absolutely essential that the U.S. secures an agreement that will level this playing field. U.S. beef’s exceptional growth in Korea is a great example of what’s possible when tariffs are less of an obstacle.”

April U.S. beef exports to Japan were 6% less than the previous year in both volume (24,149 mt) and value; 24,149 metric tons (mt) and $156.8 million, respectively.

Overall, U.S. beef exports totaled 105,241 mt in April, down 5% year over year and export value was down only slightly at $674.2 million, according to data released by USDA and compiled by the USMEF. For January through April, exports were 4% below last year’s record pace in volume (412,547 mt) and 1% lower in value ($2.58 billion).

Beef export value per head of fed slaughter in April averaged $305.61 (down 7% from April 2018). The January-April average was $308.34 per head, down 3% from a year ago.

U.S. pork exports totaled 216,757 mt in April, down 6% from a year earlier. Pork export value of $535.2 million was 8% less. For January-April, pork exports were 6% below last year’s pace in volume (817,025 mt) and were down 12% in value to just over $2 billion.

Cattle Current—June 10, 2019 2019-06-08T18:58:40-05:00

Cattle Current Daily—June 7, 2019

Cattle futures, especially Feeder Cattle, recovered from sharp losses early to close from narrowly mixed to a touch higher. Early pressure came from rising front-month Corn futures. Presumably part of the relief came with chatter that talks between the U.S. and Mexico continue on a positive note (see below).

Early negotiated cash fed cattle sales were $2 lower on a live basis at $114-$115/cwt. in Nebraska and the western Corn Belt. Dressed sales were $2-$3 lower at $183-$184.

Except for 25¢ lower in spot Jun, Live Cattle futures closed an average of 31¢ higher.

Feeder Cattle futures closed narrowly mixed, but mostly lower (an average of 12¢ lower to an average of 5¢ higher).

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

Choice boxed beef cutout value was 14¢ higher Thursday afternoon at $222.25/cwt. Select was 2¢ lower at $207.16.

Corn futures closed 5¢ higher through Jul ’20 and then mostly 1¢ to 2¢ higher.

Soybean futures closed fractionally lower to 1¢ lower. 

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Major U.S. financial indices closed higher Thursday. Key support was attributed to news that talks are progressing between the U.S. and Mexico, regarding illegal immigration from that country, and that threatened tariffs by the U.S. may be postponed.

The Dow Jones Industrial Average closed 181 points higher. The S&P 500 closed 17 points higher. The NASDAQ was up 40 points.

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Grading percentages and carcass weights continue to suggest market currentness.

Carcass quality in May was higher year over year with an average of 78.36% grading Choice and Prime, which was 1.13% more than the previous year. However, the average was 1.86% less month to month—compared to a decline of 0.84% the previous year.

As for carcass weights, after catching up and surpassing year over year levels for several weeks, average dressed steer weights sunk to 842 lbs. the week ending May 25, the lightest of the year. Though a seasonal decrease is unsurprising, dropping 7 lbs. from the previous week and 6 lbs. from the previous year speaks to heavy, timely marketing.

Also positive, as reported previously, beef in freezers as of  Apr. 30 totaled 430.35 million lbs. That was 5% less (-40.8 million lbs.) than the previous month and 9% less than the previous year, according to the monthly USDA Cold Storage report.

“This is the lowest cold storage number since June of 2017,” according to analysts with the Livestock Marketing Information Center (LMIC), in the latest Livestock Monitor. “Seasonally, beef in cold storage typically declines in the first five months of the year and remains there through the summer quarter before inventories build again in September through the end of the year. Another decline in May might take inventories back to the lowest levels since 2014. These smaller levels in cold storage point to several positive signs for the beef industry.”

For one thing, LMIC analysts point to the fact that the inventory of beef in cold storage is declining more aggressively than last year, despite increased beef production and reduced beef exports.

Cattle Current Daily—June 7, 2019 2019-06-06T19:46:19-05:00

Cattle Current Daily—June 6, 2019

Cattle futures crawled higher Wednesday, building on the previous session as lower grain futures provided some support, despite lower cash fed cattle prices and languishing wholesale beef values.

Established country trade so far this week is $2-$3 lower on a live basis at $113/cwt. in the Texas Panhandle and $112-$113 in Kansas.

Similarly, there were 412 head (three lots from Kansas) offered in the weekly Fed Cattle Exchange Auction. One lot (heifers) sold for a weighted average price of $113, with delivery at 1-9 days.

Live Cattle futures closed an average of 87¢ higher (30¢ to $1.22 higher).

Feeder Cattle futures closed an average of $1.87 higher.

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

Choice boxed beef cutout value was 89¢ lower Wednesday afternoon at $222.11/cwt. Select was 3¢ lower at $207.18.

Grain futures dove lower amid heightened volatility as traders weigh domestic planting prospects against what looks to be bumper crops in South America. That’s besides the potential impact of threatened U.S. tariffs on Mexican imports.

Corn futures closed mostly 10¢ lower through Jul ’20 and then 2¢ to 8¢ lower.

Soybean futures closed mostly 9¢ to 12¢ lower. 

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Major U.S. financial indices closed strongly higher again Wednesday. Follow-though support seemed tied to the previous day’s notion that the Fed is willing to cut interest rates in an effort to sustain economic growth.

Perhaps that’s why markets faded the ADP National Employment Report that indicated a month-to-month increase in private-sector non-farm employment of just 27,000, which was significantly less than the trade expected.

Optimism also came in the face of further erosion in oil prices, with pressure including more inventory than anticipated and wonderments about economic growth and demand. Crude Oil futures (WTI-CME) closed at their lowest levels since January, about $7 lower week to week through the front six contracts.

The Dow Jones Industrial Average closed 207 points higher. The S&P 500 closed 22 points higher. The NASDAQ was up 48 points.

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Assuming other costs remain constant, last month’s increase in corn prices equates to an additional $5/cwt. for feedlot cost of gain, according to Brenda Boetel, Extension agricultural economist at the University of Wisconsin-River Falls.

“Using regression results obtained by Michael Langemeier from Purdue University that found each $0.10/bu. increase in corn prices increases feeding cost of gain by $0.87/cwt. and each $5/ton increase in alfalfa prices increases feeding cost of gain by $0.55/cwt., one can estimate that even if hay price and all other costs remain constant, cost of gain will increase by $5/cwt., given the May increase in price of corn,” Boetel, explains. “This calculation assumes price remains at this level and feeders haven’t conducted any hedging activities, but it highlights the increased costs of feeding producers should expect.”

In the latest issue of In the Cattle Markets, as of the first part of June, Boetel points out CME Corn futures for the front three months were up 59¢, which was 48¢ more than the 5-year average for the same period of time.

“If one assumes corn planting will be down 6 million acres to 86.8 million acres and we see a decrease of 2 bu./acre to 174.6 bu./acre yield we would see a decrease in corn production of 554 million bu.,” Boetel says. “Although the market may focus on the news concerning Mexico and trade, the long-term impact (and in my opinion the more likely scenario) of lower acres and yield will eventually have the greater impact on prices.”

Cattle Current Daily—June 6, 2019 2019-06-05T18:02:59-05:00

Cattle Current Podcast—June 5, 2019

Cattle futures burst higher on Tuesday, supported by higher outside markets, what some would call obscenely oversold conditions and likely short covering. There was also chatter about support coming from news that Brazil halted beef exports to China after confirming a case of atypical BSE. The ball will likely be in China’s hands because it seem doubtful the discovery will change Brazil’s OIE BSE risk status.

The rally came despite negotiated cash fed cattle sales opening in the Southern Plains a day earlier at $113/cwt., which was $2 less than the previous week.

Live Cattle futures closed an average of $1.35 higher (77¢ to $1.70 higher).

Feeder Cattle futures closed an average of $3.42 higher.

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

Choice boxed beef cutout value was 20¢ lower Tuesday afternoon at $223.00/cwt. Select was 34¢ higher at $207.21.

Corn futures closed mostly 1¢ to 2¢ higher.

Soybean futures closed mostly 3¢ to 4¢ higher. 

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Major U.S. financial indices closed sharply higher Tuesday with hints that the Fed is willing to cut interest rates in an effort to sustain economic growth. At least that’s what the trade seemed to interpret from opening remarks made by Federal Reserve Chair, Jerome Powell at the Conference on Monetary Policy Strategy, Tools, and Communications Practices:

“I’d like first to say a word about recent developments involving trade negotiations and other matters,” Powell said. “We do not know how or when these issues will be resolved. We are closely monitoring the implications of these developments for the U.S. economic outlook and, as always, we will act as appropriate to sustain the expansion, with a strong labor market and inflation near our symmetric 2% objective.”

The Dow Jones Industrial Average closed 512 points higher. The S&P 500 closed 58 points higher. The NASDAQ was up 194 points.

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The Purdue University/CME Group Ag Economy Barometer—a measure of producer sentiment—dropped 14 points in May to 101, the lowest level since October 2016.

“Ag producers are telling us the agricultural economy weakened considerably this spring as the barometer has fallen 42 points (29%) since the start of this year,” says James Mintert, the barometer’s principal investigator and director of Purdue University’s Center for Commercial Agriculture. “Farmers are facing tough decisions in the midst of a wet planting season and a lot of uncertainty surrounding trade discussions.”

Month to month, producer perspectives weakened considerably, relative to both current and future economic conditions. The Index of Current Conditions declined 15 points to 84. The Index of Future Expectations also declined 15 points to 108.

Unsurprisingly, producers continue to be concerned about agricultural trade issues. For instance, only 65% of respondents expect U.S. agriculture to see a favorable outcome to the U.S.-China trade dispute. That’s down from 77% in March and 71% in April.

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The political football that was the supplementary disaster aid bill finally made it through the uprights Monday night. If signed by President Trump, as expected, it will start the ball rolling on $19.1 billion in aid for natural disasters going back a few years.

According to a statement from Iowa Secretary of Agriculture, Mike Naig, these are some of the highlights:

Approximately $3 billion is provided to the USDA Office of the Secretary to cover producers’ agricultural losses due to natural disasters.

$435 million will be provided to the Emergency Watershed Protection Program (EWPP) for rural watershed recovery.  

$558 million will be provided to the Emergency Conservation Program (ECP) for repairs to damaged farm land.   

$150 million will be allocated to repair Rural Development Community Facilities in towns affected by natural disasters. 

Cattle Current Podcast—June 5, 2019 2019-06-04T19:09:33-05:00

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This Sliding Bar can be switched on or off in theme options, and can take any widget you throw at it or even fill it with your custom HTML Code. Its perfect for grabbing the attention of your viewers. Choose between 1, 2, 3 or 4 columns, set the background color, widget divider color, activate transparency, a top border or fully disable it on desktop and mobile.

This Is A Custom Widget

This Sliding Bar can be switched on or off in theme options, and can take any widget you throw at it or even fill it with your custom HTML Code. Its perfect for grabbing the attention of your viewers. Choose between 1, 2, 3 or 4 columns, set the background color, widget divider color, activate transparency, a top border or fully disable it on desktop and mobile.

This Is A Custom Widget

This Sliding Bar can be switched on or off in theme options, and can take any widget you throw at it or even fill it with your custom HTML Code. Its perfect for grabbing the attention of your viewers. Choose between 1, 2, 3 or 4 columns, set the background color, widget divider color, activate transparency, a top border or fully disable it on desktop and mobile.