Cattle Current Daily—Feb. 3, 2021

Cattle Current Daily—Feb. 3, 2021

Negotiated cash fed cattle trade was at a standstill in the Southern Plains through Tuesday afternoon, according to the Agricultural Marketing Service. Elsewhere, trade was mostly inactive on very light demand.

Last week, cash fed cattle prices ended up $2-$3 higher in the Southern Plains at $113/cwt., $3 higher in the Northern Plains at $113 and $2.50-$5.00 higher in the western Corn Belt at $110.00-$112.50. Dressed trade was $5-$8 higher at $178.

Cattle futures gained again on Tuesday, supported by softer Corn futures, last week’s stronger cash prices and higher Lean Hog futures.

Live Cattle futures closed an average of 64¢ higher (40¢ higher at the back to $1.10 higher in spot Feb).

Feeder Cattle futures closed an average of $1.21 higher.

Choice boxed beef cutout value was $1.08 higher Tuesday afternoon at $236.76/cwt. Select was 55¢ lower at $225.04.

Corn futures closed 5¢ to 6¢ lower through the front three contracts and then mostly fractionally higher.

Soybean futures closed 10¢ to 11¢ lower through the front four contracts, and then mostly 2¢ lower to fractionally higher.

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Major U.S. financial indices closed sharply higher again Tuesday. Reportedly, much of the optimism had to do with growing investor confidence the recent barrage against short sellers of stocks like GameStop is in check.

Another day higher in energy markets added support—the front six contracts of West Texas Intermediate crude oil futures on the CME were up an average of $2.41 in the last two sessions.

The Dow Jones Industrial Average closed 475 points higher. The S&P 500 closed 52 points higher. The NASDAQ was up 209 points.

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Agricultural producer sentiment declined in January, driven by weaker expectations about the future, according to the Purdue University/CME Group Ag Economy Barometer.

The Index of Current Conditions declined 3 points to 199, while the Index of Future Expectations dropped 10 points to 151. The overall Ag Economy Barometer was 7 points less month to month in January, at 167. From October to January, the Index of Future Expectations dropped 19%. The Index of Current Conditions increased 12% over the same period.

“The ongoing strength in the Current Conditions Index appears to be driven by the ongoing rally in crop prices, while the deterioration in the Future Expectations Index seems to be motivated by longer-run concerns about policies that could impact U.S. agriculture in the future,” says James Mintert, the barometer’s principal investigator and director of Purdue University’s Center for Commercial Agriculture.

The Ag Economy Barometer includes a survey of 400 U.S. agricultural producers. The latest was conducted Jan. 18-22.

Weakening agricultural producer expectations for the future appear to be motivated by concerns about several policy issues. For instance, confidence that the ongoing trade dispute with China will ultimately be resolved in a way that favors U.S. agriculture declined 12 points in January to 38%.

Producers are also significantly more concerned about potentially restrictive environmental policies: 83% of respondents in January expect to see more restrictive regulations from the new presidential administration, up 42 points from October. Significantly more also expect higher estate taxes and income taxes over the next five years.

Shorter term, nearly one-third of survey respondents expect improved financial performance this year than in 2020. When asked about the size of their operating loan, 17% of respondents expect their loan to increase this year. Of those, 20% said the increased loan is due to carrying over unpaid operating debt from the previous year. This implies that 3 to 4% of those surveyed are suffering financial stress. However, that’s down from 5-6% of farms identified as suffering financial stress a year earlier.

Farmers also remained bullish about short-term farmland values and cash rental rates. In January, 43% of respondents said they expect farmland values to rise over the next year (up 8 points from December) and 27% said they expect cash rental rates to rise in 2021 (up 9 points from the previous month).

Also of note, more respondents expressed interest in following specified production practices in order to capture carbon and market the sequestration.

Overall, 30% of respondents to the January survey said they are aware of opportunities to receive a payment for capturing carbon. Among that group, 22% said they have actively engaged in discussions about receiving a carbon capture payment. This implies that 6 to 7% of the producers in the January survey have given consideration to contractually sequestering carbon.

Finally, interest in receiving the COVID-19 vaccine quickly is trending higher. Respondents were asked if they planned to get vaccinated. Response choices were: Yes, as soon as possible; Yes, but not right away; No.

In January, 58% said they plan to get vaccinated as soon as possible, up from 39% in December, 36% in November, and 24% in October.

2021-02-02T20:09:52-06:00

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