Cattle Current Daily—Nov. 4, 2020

Cattle Current Daily—Nov. 4, 2020

Negotiated cash fed cattle trade was mostly inactive on light demand in the western Corn Belt through Tuesday afternoon, according to the Agricultural Marketing Service. Elsewhere, it was at a standstill.

Cattle futures closed mostly lower in light trade Tuesday, despite higher boxed beef prices and thoughts that last week’s shallower packer buy may elevate cash prices this week. Higher grain futures and election uncertainty likely provided some of the pressure.

Live Cattle futures closed an average of 26¢ lower, except for an average of 27¢ higher in the back three contracts.

Feeder Cattle futures closed an average of 57¢ lower.

Choice boxed beef cutout value was 79¢ higher Tuesday afternoon at $209.44/cwt. Select was $2.83 higher at $195.45.

Corn futures closed 3¢ to 4¢ higher through Sep ‘21 and then mostly 1¢ higher.

Soybean futures closed 8¢ to 12¢ higher through Sep ‘21 and then 4¢ to 6¢ higher.

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Major U.S. financial indices closed higher Tuesday, apparently buoyed by thoughts that economic stimulus talks will gain traction after the election, no matter who wins. 

The Dow Jones Industrial Average closed 554 points higher. The S&P 500 closed 58 points higher. The NASDAQ was up 202 points.

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The Purdue University/CME Group Ag Economy Barometer rose 27 points in October to 183, the highest level in the history of the barometer. The Current Conditions Index rose 36 points to a reading of 178 and the Future Expectations Index rose 23 points to a reading of 186.

The Ag Economy Barometer is based on survey responses from 400 U.S. agricultural producers and was conducted Oct. 19-23.

“The combination of good yields, a rally in crop prices and Coronavirus Food Assistance Program payments (CFAP 2) set the stage for an all-time high in the barometer and farmer sentiment,” says James Mintert, the barometer’s principal investigator and director of Purdue University’s Center for Commercial Agriculture. “Since bottoming out this summer, the ag economy has rebounded sharply, and the dramatic improvement in sentiment reflects the turnaround in the farm income picture.”

Mintert refers to a late summer/early fall rally in commodity prices combined with government program payments arising from the second round of the Coronavirus Food Assistance Program, which provided a boost to many producers’ farm income. Corn and soybean prices continued to rally, even though U.S. corn yields are expected to set a record high and USDA projects soybean yields to be the fourth highest on record.

Comparing their farm’s current financial condition to a year earlier, 25% of survey respondents said their operation was better off. That was the most positive response from producers to the question in the history of the barometer survey.

The Farm Capital Investment Index also hit an all-time high in October, up 9 points from September to a reading of 82. The percentage of producers expecting to increase their purchases of machinery in the upcoming year rose to 14% from 11% a month earlier, up from 4% in May. The percentage of respondents who plan to reduce their purchases in the next year was 33%, down from 40% in September.

Meanwhile, 4% more producers (27%) than in September expect land values to increase over the next 12 months. Similarly, 38% said they expect cash rental rates to increase in 2021, compared to 8% a month earlier.

Producer optimism about trade with China also increased, with 59% of respondents expecting China to fulfill the food and agricultural import requirements outlined in the Phase One trade agreement with the U.S.; 12% more than a month earlier.

2020-11-03T18:58:43-06:00

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