Negotiated cash fed cattle trade was slow on light demand through Tuesday afternoon, according to the Agricultural Marketing Service. Although too few transactions to trend in any region, there were some live sales in the Southern plains and Nebraska at $137/cwt. Early dressed trades were $218.
Last week, live prices were at $137/cwt. in the Southern Plains, $137-$138 in Nebraska and at $137-$139 in the western Corn Belt. Dressed prices were $218.
Cattle futures continued to lose ground Tuesday, unable to escape the uncertain packing pace and volatile outside markets.
Lower wholesale beef prices on the day, perhaps signaling a near seasonal top, added to Live Cattle angst. Live Cattle futures closed an average of 22¢ lower, except for an average of 29¢ higher in three contracts at either end of the board.
Choice Boxed beef cutout value was $1.12 lower Tuesday afternoon at $292.38/cwt. Select was $1.47 lower at $283.32.
Nearby Corn futures prices beyond the $6.00 mark added pressure to Feeder Cattle futures, which closed an average of $1.14 lower, except for 7¢ higher in spot Jan.
Corn futures closed mostly 2¢ to 8¢ higher.
Soybean futures closed mostly 11¢ to 13¢ higher after 4¢ to 9¢ higher in the front four contracts.
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Major U.S. financial indices closed lower Tuesday but a canyon away from session lows for the second consecutive day of a massive sell-off followed by a frantic comeback. Underlying forces appeared the same — inflation, rising interest rates and the standoff between Russia and Ukraine.
The Dow Jones Industrial Average closed 66 points lower. The S&P 500 closed 53 points lower. The NASDAQ was down 315 points.
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Creighton University’s Rural Mainstreet Index (RMI) declined in January, but remained above growth neutral the for the 14th consecutive month, according to the monthly survey of bank CEOs in rural areas of a 10-state region dependent on agriculture and/or energy.
The region’s overall reading for January fell 5.6 points from the previous month to 61.1. The index ranges between 0 and 100 with a reading of 50.0 representing growth neutral.
“Solid grain prices, the Federal Reserve’s record-low short-term interest rates, and growing agricultural exports have underpinned the Rural Mainstreet Economy,” says Ernie Goss, the Jack A. MacAllister Chair in Regional Economics at Creighton University’s Heider College of Business.
Bankers overwhelmingly named rising farm input prices, such as fertilizer, as the top threat this year to agricultural producers in their respective areas. Disruption of farm input deliveries and rising interest rates ranked second and third.
“Inflation is a serious problem here. Gasoline prices have nearly doubled since November 2020,” says Jim Eckert, president of the Anchor State Bank in Anchor, Illinois. “Food prices are up well above what’s claimed by the government. Poor fiscal policy in D.C. is sinking all ships!”
“Increased input costs have raised our average farmer break even points, but current commodity prices still produce moderate gains in all areas of financial statements,” according to Jim Brown, CEO of Hardin County Savings Bank, Eldora, Iowa.
On average, bank CEOs expect the Federal Reserve to raise short-term interest rates by 0.70% (70 basis points) this year. Approximately 18.5% of bankers expect four or more one-quarter percentage point rate hikes in 2022.
Still, Brown says, “Our loan reviews show an increase in working capital, net worth and lower leverage in almost every case.”
The region’s farmland price index decreased to 88.5 from December’s record high of 90.0. January’s reading was the 16th straight month the index was above growth neutral.