Choice steers and heifers sold $2.00-$2.25 higher at the fat auction in Tama, IA: $120.52/cwt. for steers at 1,396 lbs.
There were 663 head offered in the weekly Fed Cattle Exchange auction, with 340 head (two Kansas lots) selling for a weighted average price of $113/cwt.; delivery at 1-9 days.
Live Cattle futures closed an average of $1.26 lower (75¢ lower at the back to $1.65 lower).
Feeder Cattle futures closed an average of 96¢ lower (32¢ lower in spot Aug to $1.30 lower).
Wholesale beef values were steady on Choice and lower on Select with light to moderate demand and moderate offerings, according to the Agricultural Marketing Service.
Choice boxed beef cutout value was 24¢ lower Wednesday afternoon at $222.15/cwt. Select was $1.52 lower at $206.73.
Corn futures closed mostly 1¢ to 2¢ higher.
Soybean futures closed 18¢ higher in the front four contracts and then mostly 10¢ to 17¢ higher.
Major U.S. financial indices edged lower Wednesday, amid lingering worries about trade issues. Crude oil prices (WTI-CME) were also about $2 lower for 2019 contracts with wonderments about demand, tied to wonderments about global economic growth.
The Dow Jones Industrial Average closed 43 points lower. The S&P 500 closed 5 points lower. The NASDAQ closed 29 points lower.
“Steer and heifer calf prices are now expected to fall by about 3% in 2019 relative to last year, equivalent to taking between $4-$7/cwt. out of 500-600 lb. calf prices in the Southern Plains,” say analysts with the Livestock Marketing Information Center (LMIC), in the latest Livestock Monitor.
LMIC adjusted expected calf and feeder prices lower based on the dramatic run up in corn prices.
As mentioned in yesterday’s Cattle Current, USDA increased the expected season-average corn price 50¢ higher to $3.80/bu. in the latest World Agricultural Supply and Demand Estimates. LMIC is more bearish.
“LMIC is expecting total corn plantings this spring will be 87.4 million acres, the lowest area since 2009,” according to analysts there. “The lateness in planting also has negative implications for crop yield potential, since the crop will have less time to develop before harvest. Therefore the average yield per acre for the coming harvest is expected to fall to 162.5 bu. Total corn harvest this fall is pegged at 13.0 billion bu., down from 14.4 billion bu. harvested last year. Corn prices will have to go up to ration the smaller supply and LMIC is calling for a crop year average price of $4.50 at the farm for the 2019-2020 corn crop.”
By way of comparison, WASDE projects corn planted area of 89.8 million acres with a yield of 166 bu./acre for total production of 13.7 billion bu.
Between the dramatic increase in expected corn prices and the adjustment lower in calf prices LMIC lowered projected cow-calf returns for this year from +$27 per head to -$14, similar to 2018. Anticipated returns for 2020 remain positive.
Moreover, LMIC anticipates higher cull cow prices.
“Cull cow prices are still expected to move higher in 2019 by about 8.6%, averaging under $60/cwt. in the southern plains,” say LMIC analysts. “LMIC is expecting a substantial rebound in the cull cow price as both beef and dairy cow slaughter is expected to pull back by 2020.”