Uncertainty borne by the massive selloff in equities helped pressure Cattle futures, especially early in Tuesday’s session. Perhaps some traders were also looking ahead to Thursday’s World Agricultural Supply and Demand Estimates.
For the most part, Cattle futures remain higher week to week.
Live Cattle futures closed an average of 71¢ lower (22¢ to $1.12 lower).
Feeder Cattle futures closed an average of 97¢ lower (62¢ to $1.20 lower).
Choice boxed beef cutout value was $1.00 lower on Tuesday afternoon at $208.43/cwt. Select was $1.43 lower at $202.73.
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On Wall Street Tuesday, major U.S. financial indices gained back about half of what was lost in the previous say’s selloff. Getting there was a wild ride, though with wide swings. Rather than hinting at the beginning of a bear market, some analysts suggested the steep purge stemmed in part from investor concerns about rising interest rates and inflation being magnified by computer-driven algorithmic trading.
The Dow Jones Industrial Average closed 567 points higher. The S&P 500 closed 46 points higher. The NASDAQ closed 148 points higher.
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Producer optimism grew in January, according to the most recent Purdue University-CME Group Ag Economy Barometer (AEB).
At 135, the January barometer was 9 points higher than a month earlier. Both of the sub-indices that comprise the overall AEB were higher, too. The Index of Current Conditions was 5 points higher at 144. The Index of Future Expectations was up 11 points to 131. That’s the largest one-month improvement in future expectations since January 2017.
“To help put January’s responses in perspective, the percentage of farmers who felt their operations were financially worse off reached a high of 81 in August 2016,” says James Mintert, director of Purdue University’s Center for Commercial Agriculture and the barometer’s principal investigator. “Since April 2017, the share reporting that their farms were financially worse off has consistently fallen below 50%. The reduction has been an important driver of the ongoing improvement in the Index of Current Conditions.”
According to Mintert, recent tax reform may be part of the reason behind improving producer optimism.
Surveyed producers were asked to rate the likely impact on their farming operations, as well as their families’ tax burdens. Nearly half of all producers said they expect the tax bill to be beneficial to their operations. Conversely, 19% said they expect the tax bill to have a negative impact on their farming operations. The remaining 35% gave a neutral response.
“It’s possible the 40% of respondents expecting no changes in their taxes and the 35% who provided a neutral rating could reflect uncertainty regarding the specific content of the tax bill and the fact that IRS regulations implementing the tax bill have yet to be issued,” Mintert says.