Negotiated cash fed cattle trade began to develop in the Southern Plains on Wednesday, according to the Agricultural Marketing Service. Live prices were $2 higher in Kansas at $103/cwt. and $1.50-$2.00 higher in the Texas Panhandle at $103.00-$103.50.
That helps explain why there were no sales in the weekly Fed Cattle Exchange Auction, where 613 were offered—all from the Southern Plains. Two lots in that sale were passed on at $102.25.
At the fat auction in Tama, IA, though, 221 head of Choice 2-4 steers weighing an average of 1,379 lbs. brought an average of $104.63, which was more than the $100-$103 country trade in the region last week.
Similarly, slaughter steers sold steady to $2 higher in the fat auction at Sioux Falls Regional in South Dakota, where 250 head of Choice 2-3 steers weighed an average of 1,431 lbs. and brought an average of $105.20.
Cattle futures closed mixed again, with Feeder Cattle receiving some pressure from grains.
Live Cattle futures closed mixed but mostly marginally higher (an average of 15¢ lower to an average of 20¢ higher).
Feeder Cattle futures closed an average of 71¢ lower (27¢ to $1.27 higher).
Choice boxed beef cutout value was 71¢ lower Wednesday afternoon at $215.38/cwt. Select was $1.77 lower at $204.51.
Corn futures closed 4¢ to 5¢ higher through Jly ’21 and then mostly 2¢ to 3¢ higher.
Soybean futures closed 13¢ to 19¢ higher through Aug ’21 and then mostly 3¢ to 8¢ higher, helped along by recent export sales.
Major U.S. financial indices closed mixed on Wednesday, pressured by big tech stocks, while some other sectors received support from the FOMC announcement it was maintaining the current interest rate levels.
“The Committee decided to keep the target range for the federal funds rate at 0% to 0.25% and expects it will be appropriate to maintain this target range until labor market conditions have reached levels consistent with the Committee’s assessments of maximum employment and inflation has risen to 2% and is on track to moderately exceed 2% for some time,” according to the FOMC statement.
In other words, it will likely be a good while before they entertain an increase in interest rates.
The Dow Jones Industrial Average closed 36 points higher. The S&P 500 closed 15 points lower. The NASDAQ closed 139 points lower.
“Farm commodity prices are down by 10.4% over the last 12 months. As a result, and despite the initiation of $32 billion in USDA farm support payments in 2020, only 8% of bankers reported their area economy had improved compared to July, while 18.4% said economic conditions had worsened,” says Ernie Goss, Jack A. MacAllister Chair in Regional Economics at Creighton University’s Heider College of Business.
Goss is referring to the Creighton University Rural Mainstreet Index (RMI) and monthly survey of bankers in 10 regional states, dependent on agriculture and/or energy. It focuses on approximately 200 rural communities with an average population of 1,300, and offers the most current real-time analysis of the rural economy.
The RMI increased slightly in August to 44.7, compared to 44.1 in July. The index ranges between 0 and 100; a reading of 50.0 represents growth neutral.
Bank CEOs included in the survey note that August’s index represented the sixth straight month with a reading in a recessionary economic zone.
For only the second time in the last 81 months, the farmland price index moved above growth neutral with an August reading of 50.1, up from July’s 45.6.
Economic COVID-19 impacts vary among state economies, depending on government enforced shutdowns. For instance, Todd Douglas, CEO of the First National Bank in Pierre, South Dakota, says, “We were a state that did not shut down. Western parts of the state have seen a significant boost to the economy due to tourism from shut down states.”
Goss and Bill McQuillan, former chairman of the Independent Community Banks of America, created the monthly economic survey in 2005.
Bankers estimated that farm loan defaults would rise by 5.3% over the next 12- month period. That’s slightly higher than the 5% recorded the previous month, and the 4.8% a year earlier.