Cattle futures closed limit-up Thursday, supported by higher outside markets, the dramatic rise in wholesale beef values for the week, as well as firming cash fed cattle prices.
Live Cattle futures closed limit-up $3.00 across the board.
Feeder Cattle futures closed limit-up $4.50 across the board.
Incidentally, analysts surveyed by Urner Barry and reported in the Daily Livestock Report estimate feedlot placements in February to be 7.6% less than a year earlier, marketings in February to be 5.6% more and cattle on feed Mar. 1 to be 0.2% more. The monthly USDA Cattle on Feed report is scheduled for release Friday afternoon.
Wholesale beef values continued higher Thursday as retailers continue to re-stock.
Choice boxed beef cutout value was $2.63 higher Thursday afternoon at $249.87/cwt. Select was $2.56 higher at $241.06. Week to week, Choice was up $43.86 and Select was up $43.18.
Corn futures closed 7¢ to 10¢ higher through Sep ‘20 and then mostly fractionally higher to 4¢ higher.
Soybean futures closed 13¢ to 17¢ higher through near Aug, 3¢ to 9¢ higher through the next three contracts and then mostly 4¢ lower.
Major U.S. financial indices closed higher Thursday, amid another day of volatile swings. Support included a COVID-19 stimulus package announced by the European Central Bank, as well as reports the U.S. Senate would soon release a third domestic relief package. Energy stocks also rebounded some.
West Texas Intermediate Crude Oil futures on the CME closed $4.33 to $4.85 higher through the front six contracts.
The Dow Jones Industrial Average closed 188 points higher. The S&P 500 closed 11 points higher. The NASDAQ was up 160 points.
The outlook for the U.S. farm economy depends on the implementation of new trade agreements and the evolution of animal and human disease outbreaks, according to the latest analysis of national and global agricultural trends from the University of Missouri (MU).
Economists with MU’s Food and Agricultural Policy Research Institute (FAPRI) and the MU Agricultural Markets and Policy (AMAP) team release the annual U.S. Agricultural Market Outlook (USAMO) report each spring. The baseline projections for agricultural and biofuel markets were prepared using market information available in January.
“Macroeconomic assumptions are based on January forecasts by IHS Markit, which suggested moderate growth in the U.S. and global economies at that time,” says Patrick Westhoff, FAPRI director. “Those forecasts were prepared before much was known about the severity of the coronavirus (COVID-19) outbreak and before recent declines in stock market prices and interest rates.”
This year’s USAMO baseline assumes that China’s retaliatory tariffs on U.S. farm products remain in place and limit bilateral trade. FAPRI economists also explored one possible outcome of the phase-one trade deal, which assumes U.S. exports are exempt from those retaliatory tariffs and that China takes other steps to facilitate trade between the two countries.
Highlights of a baseline assuming continued trade friction with China
Cattle prices increase beginning in 2020, as exports increase and cattle inventories decline after five years of expansion.
African swine fever (ASF) continues to have large impacts on global commodity markets. China’s pork production has declined sharply and only rebounds after 2021. This provides some opportunity for increased meat imports by China, but reduces global demand for soybean meal and other feeds.
Projected 2020 corn area planted is 92.9 million acres. With trend yields, 2020 corn production increases to 15 billion bu., putting downward pressure on corn prices, which are projected to average $3.57/bu. in 2020-21.
Projected soybean area increases by more than 10 million acres to 86.5 million acres in 2020. The increase in production drops projected soybean prices to $8.48/bu. for the 2020-21 crop.