Apparently, negotiated cash fed cattle trade will continue the trend of recent weeks: move-ahead one week with strong volume and then retreat the next.
Fed cattle sold mainly $3-$4 lower on a dressed basis yesterday at $174-$175/cwt. in Nebraska and the western Corn Belt; a few up to $179 in both regions for the week. Live trade in the western Corn Belt was mostly $2 lower at $109-$112.
Cattle futures started out sharply lower, but were able to pare some of the losses by session’s end. The notion of lower cash prices could have been part of the pressure. Likewise, chatter about the unwinding of hog and cattle spreads may have played a role. More than anything, though, it had the feel of one of those piling-on algo-trading days.
Live Cattle futures closed an average of $1.69 lower through the front three contracts and then an average of 42¢ lower.
Feeder Cattle futures closed an average of $1.02 lower (72¢ to $1.30 lower).
Boxed beef cutout values were firm for Choice and lower for Select on light to moderate demand and moderate offerings, according to the Agricultural Marketing Service.
Choice boxed beef cutout value was 33¢ higher Thursday afternoon at $206.06/cwt. Select was 77¢ lower at $198.09.
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Major U.S. financial indices closed mixed Thursday, once again supported by tech stocks and capped by trade worries.
The Dow Jones Industrial average closed 74 points lower. The S&P 500 closed 4 points lower. The NASDAQ was up 3 points.
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Most bankers in the Eighth Federal Reserve District expect farm income to continue to decline in the third quarter, based on the second-quarter survey of 24 agricultural banks in the region.
“Bankers have reported lower comparative income levels since the fourth quarter of 2013, reaching a low point in the second quarter of 2016,” according to the Agricultural Finance Monitor published by the Federal Reserve Bank of St. Louis. “This correlates with an extended period of depressed prices for commodities.”
The Eighth District includes all or parts of seven Midwest and Mid-South states: Arkansas, Illinois, Indiana, Kentucky, Mississippi, Missouri and Tennessee.
The outlook varies across and within regions, of course.
“Farm income in our region is not as volatile as it is in row crop areas. We are mostly contract poultry and animal production. Independent cattle producers make up the balance of our agriculture production; those prices are off the highs but have stabilized,” says an Arkansas lender.
Similarly, a Missouri lender explained demand for recreational and low-income producing properties is increasing, as buyer confidence grows in the economy.
Quality farmland values in the district declined 3.5% in the second quarter but cash rents increased by 0.4% compared with a year ago.
Conversely, ranchland or pastureland values increased 1.6% relative to a year ago, while cash rents declined by 9%. The drop in cash rents for ranchland or pastureland was the largest percentage drop recorded since the fourth quarter of 2016.