Corn futures closed mostly 11¢ to 18¢ lower on Friday, which helped lift Feeder Cattle futures an average of 77¢ higher (32¢ higher toward the front to $1.37 higher at the back), except for 77¢ lower in spot May. Soybean futures closed 20¢ to 25¢ lower.
On the other hand, Live Cattle futures closed an average of 50¢ lower (25¢ lower toward the back to $1.02 lower in spot Jun), except for 35¢ higher in the back contract. They sagged with lower wholesale beef prices and waning cash momentum.
Week to week on Friday, Choice boxed beef cutout value was $6.34 lower at $254.44/cwt. Select was $2.91 lower at $245.06. That’s $13.47 lower for Choice over the last two weeks and $9.71 lower for Select.
Estimated total cattle slaughter last week of 657,000 head was 8,000 head more than the previous week and 18,000 more than the same week last year. Estimated total year-to-date cattle slaughter of 11.66 million head was 61,000 head more (+0.5%) than the same time last year. Estimated total year-to-date beef production of 9.74 billion lbs. was 81.6 million lbs. more (+0.8%) year over year.
Negotiated cash fed cattle trade ranged from limited on light demand to mostly inactive on light demand through Friday afternoon, according to the Agricultural Marketing Service, with too few transactions to trend.
Last week, live prices were steady at $140/cwt. in the Texas Panhandle and at $146 in Nebraska. Prices were steady to $2 lower in Kansas at $138-$140, $2 lower to $1 higher in Colorado at $142-$146 and $1 higher to $1 lower in the western Corn Belt at $146. Dressed prices were steady in Nebraska at $232 and steady to $2 lower in the western Corn Belt at $230-$232.
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Follow-through bearishness pressured major U.S. financial indices lower Friday, despite a bullish jobs report.
Total non-farm payroll increased by 428,000 in April, according to the U.S. Bureau of Labor Statistics. That left the unemployment rate unchanged at 3.6%. Average hourly earnings for all employees on non-farm payrolls increased 10¢ in April to $31.85.
The Dow Jones Industrial Average closed 98 points lower. The S&P 500 closed 25 points lower. The NASDAQ was down 173 points.
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Recent rains continued to provide slight improvement to the nationwide drought last week. As of May 5, 63.9% of the nation was experiencing either abnormally dry conditions or some degree of drought, compared to 64.1% the previous week and 65.6% the previous year, according to the U.S. Drought Monitor. However, the Drought Severity Coverage Index (DSCI) for the week was 5 points higher than the previous year at 181. Of course, that’s another way of saying it’s been way too dry for way too long.
The same week, approximately 56% of the nation’s cattle inventory was in areas experiencing drought. Looking at primary cattle states, that included 85% of the cattle in Texas, 79% in Kansas, 98% in Nebraska, and 100% in Oklahoma. At the same time, approximately 41% of the nation’s hay acreage was in areas experiencing drought.
As for other crops in areas experiencing drought (approximate percentage of production): 23% of corn; 14% of soybean; 69% of winter wheat; 71% of barley; 90% of sorghum.
“There may be some relief in the 7-day forecast for the Southern Plains, however it is likely insufficient to provide substantial relief,” says Aaron Smith, crop marketing specialist at the University of Tennessee, in his weekly market comments.
Plenty of eyes will be on Thursday’s monthly World Agricultural Supply and Demand Estimates, which will include the first glimpse of 2022-23 crop expectations.
“Will the USDA modify U.S. planted acres and Ukraine production? Both could have significant impacts on commodity markets, even when accounting for market expectations.” Smith says.
According to Smith, the relative change in prices from February 1 to May 5 favors increased corn and cotton planted acres over soybeans. “However, with the drought in the Southern Plains and fertilizer prices increasing 2-16% over the same 3-month time period, the acreage estimates continue to be uncertain,” he says.