Cattle futures started weak and finished stronger Tuesday. Fundamental reasons were hard to come by, especially given the sharp decrease in wholesale beef values. Potential support could have stemmed from the rally in Lean Hogs (after the front two contracts) and pressure on Corn.
Live Cattle futures closed an average of $2.34 higher (from 87¢ higher at the back to $3.00 higher toward the front).
Feeder Cattle futures closed an average of $1.92 higher ($1.55 to $2.20 higher).
Wholesale beef values were sharply lower on light demand and light to moderate offerings, according to the Agricultural Marketing Service.
Choice boxed beef cutout value was $7.82 lower Tuesday afternoon at $243.15/cwt. Select was $9.18 lower at $228.96.
Corn futures closed mostly fractionally lower to 2¢ lower through Mar ‘21 and then mostly fractionally higher to 1¢ higher. Pressure included Tuesday’s USDA reports (see below).
Soybean futures closed 1¢ to 3¢ higher through Aug ’21 and then fractionally lower to 2¢ lower.
Major U.S. financial indices closed lower Tuesday, with continued pressure in the energy market, overall uncertainty related to COVID-19 and month-end and quarter-end book balancing.
The Dow Jones Industrial Average closed 410 points lower. The S&P 500 closed 42 points lower. The NASDAQ was down 74 points.
Corn and soybean stocks were less than anticipated, but expected planting intentions were higher, especially for corn, according to the Grain Stocks and Prospective Plantings reports issued by USDA on Tuesday. The National Agricultural Statistics Service (NASS) noted that Mar. 1 on-farm stock estimates included 2019 production from acres that were still standing and expected to be harvested when the survey was conducted in early March.
Corn planted area for all purposes in 2020 is estimated at 97.0 million acres, which would be 8% more or 7.29 million acres more than last year. If realized, this will be the highest planted acreage since 2012, according to NASS. Acreage increases from last year of 800,000 or more are expected in Indiana, Illinois, Ohio, and South Dakota.
Corn stocks in all positions Mar. 1 totaled 7.95 billion bu., down 8% from the same time a year earlier. Of the total stocks, 4.45 billion bu. were stored on farms, down 13% from a year earlier. Off-farm stocks of 3.50 billion bu. are up slightly from a year ago.
Soybean planted area for 2020 is estimated at 83.5 million acres, up 10% from last year. Increases of 250,000 acres or more are anticipated in Arkansas, Illinois, Kansas, Michigan, Minnesota, Missouri, North Dakota, Ohio, and South Dakota.
Soybeans stored in all positions Mar. 1 totaled 2.25 billion bu., down 17% from the previous year. Soybean stocks stored on farms are estimated at 1.01 billion bu., down 20% from a year ago. Off-farm stocks of 1.24 billion bu. are down 15%.
All wheat planted area for 2020 is estimated at 44.7 million acres, down 1% from last year. This represents the lowest all wheat planted area since records began in 1919. The 2020 winter wheat planted area of 30.8 million acres is 1% less than last year and down slightly from the previous estimate. This represents the second lowest planted acreage on record for the United States.
All wheat stored in all positions Mar. 1 totaled 1.41 billion bu., down 11% from a year earlier. On-farm stocks are estimated at 339 million bu., down 8% from last March. Off-farm stocks of 1.07 billion bu. are down 12% from a year ago.
“A lot more market volatility is likely to come as the effects of COVID-19 ripple through our economy,” says David Anderson, Extension livestock economist at Texas A&M University, in the latest issue of In the Cattle Markets. “While we come to grips with all the demand implications it’s worth recognizing that it is occurring in the time of cyclically peak beef supplies.”
With two days left in the first quarter, Anderson explained, year over year: fed steer and heifer slaughter was up 5.4%; cow and bull slaughter was 4.5% higher; average steer dressed weights were 22.5 lbs. heavier; average heifer dressed weights were 13.7 lbs. heavier; cow weights were up 2.6 lbs.
At the time, Anderson says increased slaughter numbers and heavier weights resulted in 6.7% more first-quarter beef production.