Negotiated cash fed cattle trade was mostly inactive on very light demand in the western Corn Belt through Tuesday afternoon, according to the Agricultural Marketing Service. Elsewhere, it was at a standstill.
Prices on a live basis last week were at $112/cwt. in the Southern Plains, at $111-$112 in Colorado and at $110-$112 in Nebraska and the western Corn Belt. Dressed prices were at $175-$176.
Cattle futures rebounded Tuesday, with Live Cattle gaining back most of what was lost in the previous session, while Feeder Cattle regained about half, on an average basis. That was despite another surge in grain futures prices.
Live Cattle futures closed an average of $1.62 higher, except for $1.40 lower in the back contract.
Feeder Cattle futures closed an average of $1.35 higher, from 75¢ to $2.02 higher.
Choice boxed beef cutout value was $3.97 lower Tuesday afternoon at $205.90/cwt. Select was 4¢ lower at $196.49.
Corn futures closed 8¢ higher through the front three contracts and then mostly 3¢ higher.
Soybean futures closed 26¢ to 33¢ higher through the front six contracts and then mostly 18¢-21¢ higher.
Major U.S. financial indices closed higher Tuesday amid positive economic news.
Support included the latest Manufacturing ISM®Report On Business®from the Institute for Supply Management (ISM) indicating the Purchasing Managers Index (PMI®) increased 3.2% month to month in December to 60.7%.
“This figure indicates expansion in the overall economy for the eighth month in a row after contracting in March, April, and May, which ended a period of 131 consecutive months of growth,” says ISM Chair Timothy R. Fiore. He adds, “Survey Committee members reported that their companies and suppliers continue to operate in reconfigured factories, but absenteeism, short-term shutdowns to sanitize facilities and difficulties in returning and hiring workers are causing strains that are limiting manufacturing growth potential.”
As well, West Texas Intermediate Crude Oil futures (CME) surged on the day with a surprise announcement that Saudi Arabia is cutting production by 1 million barrels per day in February and March.
The Dow Jones Industrial Average closed 167 points higher. The S&P 500 closed 26 points higher. The NASDAQ was up 120 points.
Agricultural producer sentiment rose with income prospects in December, according to the latest Purdue University/CME Group Ag Economy Barometer.
The barometer increased 7 points from November to a reading of 174. Both of the barometer’s sub-indices, the Index of Current Conditions and the Index of Future Expectations, were also higher month to month. The Index of Current Conditions climbed 15 points to 202 and the Index of Future Expectations increased by 5 points to a reading of 161.
“The rise in the Ag Economy Barometer was primarily driven by farmers’ perception that the current situation on their farms really improved. The sharp rise in the Index of Current Conditions is correlated with the farm income boost provided by the ongoing rally in crop prices. That appears to be the driving force behind producers’ optimism,” says James Mintert, the barometer’s principal investigator and director of Purdue University’s Center for Commercial Agriculture.
In December, the percentage of ranchers and farmers expecting farmland values to rise over the next year increased 9 points from November to a reading of 35. The percentage expecting farmland values to rise over the next five years increased 11 points from November to a life-of-survey high 65%.
Likewise, more producers said they expect farmland cash rental rates to rise in 2021 when compared to survey results from late summer. In December, 18% of respondents said they expect cash rental rates to rise in 2021, double the percentage who felt that way in August and September. Moreover, it’s clear that any downward pressure on cash rental rates evident earlier in the year has nearly disappeared, as just 5% of farmers said they expect to see cash rental rates decline in 2021 compared to 17% who felt that way in August.
Agricultural producers were less optimistic when asked about the on-going trade dispute between the U.S. and China. In the first quarter of 2020, an average of 76% of respondents thought the trade dispute’s ultimate resolution would favor U.S. agriculture. By spring, that average declined to 62%, and by December it dropped to an all-time survey low of 47%. When asked whether they expect U.S. agricultural exports to increase over the next five years, only 51% of respondents in December said they expect to see export growth.
To learn more about what factors might be motivating the shift in producers’ sentiment before and after the November election, the surveys for November-December included a series of questions focused on producers’ future expectations for environmental regulations, taxes and other key aspects of the agricultural economy.
In December, more than 80% of ranchers and farmers said they expect environmental regulations to become more restrictive, compared to 41% who felt that way in October. More than 70% of producers expect to see higher income and estate taxes compared to 35% and 40%, respectively, in October and November.
The Ag Economy Barometer is calculated each month from 400 U.S. agricultural producers’ responses to a telephone survey. This month’s survey was conducted from Dec. 7-11, 2020.