Negotiated cash fed cattle trade remained undeveloped through Wednesday afternoon. Although too few to trend, there were a few live trades in the western Corn Belt at $122-$125.
Prices were higher at some fat cattle auctions. For instance, Ch 2-4 steers brought $127.29 to $128.87/cwt. at Tama, IA, which was $2-$3 higher than last week’s negotiated trade in the region. On the other hand, Ch 2-3 steers brought $120.00 to $123.25 at Sioux Falls.
There were 4,139 head offered in the weekly Fed Cattle Exchange Auction. One lot of Texas steers (63 head) sold for 1-9 day delivery at $123/cwt. One lot of Kansas heifers (116 head) were passed out at $123 for 1-9 day delivery.
Feeder Cattle futures led Live Cattle higher Wednesday. Support included firmer outside markets and resurgent wholesale beef values.
Live Cattle futures closed an average of 53¢ higher.
Feeder Cattle futures closed an average of $1.60 higher ($1.37 to $2.15 higher).
Corn futures closed mostly fractionally higher to 1¢ higher.
Soybean futures closed mostly 2¢ to 5¢ higher.
Wholesale beef values were firm to higher on moderate to fairly good demand and light offerings, according to the Agricultural Marketing Service.
Choice boxed beef cutout value was 87¢ higher Wednesday afternoon at $217.21/cwt. Select was 32¢ higher at $212.04.
Major U.S. financial indices closed higher Wednesday, gathering back some of the previous session’s losses. Support included strong quarterly earnings reports from the likes of IBM and Procter and Gamble.
The Dow Jones Industrial Average closed 171 points higher. The S&P 500 closed 5 points higher. The NASDAQ was up 5 points.
“Trade uncertainty, rising debt levels and market volatility are threatening to derail the global economy and creating difficult operating environments for U.S. agriculture,” says Dan Kowalski, vice president of CoBank’s Knowledge Exchange Division (KED). “Trade is the outsized risk. Unresolved disputes with Mexico, Canada, Europe and China are the greatest collective threat to the U.S. economy in 2019.”
Although the U.S. economy is still performing well by most key measures, global and U.S. economic prospects are weakening and the agricultural economy shows few signs of an imminent comeback, according to a comprehensive 2019 outlook report from CoBank’s KED.
The CoBank report examines 10 key factors that will shape agriculture and markets sectors that serve rural communities throughout the U.S. Among them:
Global Economy—World economic output hit an 8-year high in 2018, powered by both advanced economies and emerging markets. Challenges mounted in late 2018 and risks are decisively weighted to the downside for the coming year… Trade policy between the U.S. and China will remain the leading risk to the global economy. Increasing debt levels is another undercurrent that threatens to derail the global economy. Total global debt levels (all public and private debt) are now more than three times greater than in 2001.
U.S. Economy—The U.S. economic expansion is set to become the lengthiest in history this summer, but clouds forming on the horizon suggest more modest growth in 2019 and greater concerns for 2020.
Dairy and Animal Protein—In 2018, the U.S. animal protein sector began suffering from the same oversupply and weak margins that have plagued U.S. dairy producers since 2015. Despite the less favorable profitability environment, the protein and dairy sectors will continue to expand production in 2019, prolonging the margin squeeze.
Of the three major animal protein species, beef appears to be weathering the animal protein oversupply situation best, with favorable fed cattle prices and historically high packer margins resulting from tight processing capacity.