Cattle futures collapsed late in Thursday’s session with Feeder Cattle limit down in the front months and Live Cattle sharply lower.
Feeder Cattle futures closed an average of $4.10 lower.
No doubt, surging grain prices had plenty to do with the pressure in Feeder Cattle.
Corn futures on Thursday closed 11¢ to 17¢ higher through Jul ‘20 and then mostly 1¢ higher. Week to week, that’s an average of 41¢ higher through the front six contracts.
Soybean futures closed 16¢ to 17¢ higher through Mar ‘20 and then mostly 8¢ to 14¢ higher. Week to week, that’s an average of 66¢ higher through the front six contracts.
Other than spillover pressure, it was harder to explain the hard decline in Live Cattle, especially from a fundamental standpoint.
Live sales so far this week are mainly steady at $115/cwt. in the Southern Plains and at $116 in Nebraska. Though too few to trend, early dressed sales on Thursday were steady to $4 higher at $186-$187 in Nebraska and the western Corn Belt.
Wholesale beef values are higher, too. Week to week on Thursday, Choice boxed beef cutout value was $2.79 higher at $223.58/cwt. Select was $2.34 higher at $208.87.
But, Live Cattle futures closed an average of $2.32 lower.
Major U.S. financial indices edged higher Thursday. Though worries about economic growth continue, the second estimate for first-quarter GDP growth of 3.1%, from the U.S. Bureau of Economic Analysis, provided some support.
Crude oil futures (WTI-CME) tumbled $2.13 to $2.22 lower through the front six contracts.
The Dow Jones Industrial Average closed 43 points higher. The S&P 500 closed 5 points higher. The NASDAQ was up 20 points.
Slowing global economic growth is one factor behind expectations for reduced year-over-year U.S. agricultural exports, according to the most recent Outlook for U.S. Agricultural Trade, From USDA’s Economic Research Service (ERS).
“Per capita world GDP growth is expected to decrease from 2.1% in 2018 to 1.8% in 2019,” say ERS analysts. “Global trade tensions and the fading impact of fiscal stimulus in the United States, and monetary stimulus elsewhere, will lead to slowed growth for the remainder of 2019.”
Projected livestock, dairy and poultry exports were reduced $500 million to $29.9 billion.
Beef exports are forecast $300 million lower to $7.4 billion on softer prices and volumes. However, ERS analysts point out Australia’s weather-related struggles (lower exportable supplies) provide the U.S. opportunity to expand Asian market share.
“Overall, U.S. agricultural exports for fiscal year 2019 are projected at $137.0 billion, down $4.5 billion from the February forecast, due to reductions in grains, oilseeds, and livestock and products,” say ERS analysts. “Export forecasts for commodities published in the May 10 WASDE (grains, oilseeds, cotton, and livestock and products) include Chinese tariffs in place as of that date. The impact of additional retaliatory tariffs announced by China May 13 on exports of other commodities have been determined to be minimal for fiscal 2019.”