Cattle Current—Dec. 13, 2019

Cattle Current—Dec. 13, 2019

Negotiated cash fed cattle trade was light on light to moderate demand in Kansas through Thursday afternoon, based on USDA reports. Prices were steady with last week at $119/cwt.

Cattle futures closed narrowly mixed again on Thursday.

Live Cattle futures closed from an average of 18¢ lower to an average of 14¢ higher.

Feeder Cattle futures closed from an average of 25¢ lower to an average of 13¢ higher.

Wholesale beef values were sharply lower on Choice and lower on Select with light demand and heavy offerings, according to the Agricultural Marketing Service.

Choice boxed beef cutout value was $3.00 lower Thursday afternoon at $215.65/cwt. Select was $1.16 lower at $202.56.

Corn futures closed mostly 4¢ to 6¢ higher; 9¢ higher in spot Dec.

Soybean futures closed 2¢ to 4¢ higher through Nov. ’20 and then fractionally higher to 1¢ higher.

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Major U.S. financial indices closed higher on Wednesday, buoyed by reports that the U.S. and China reached a phase-one trade deal, which awaited President Trump’s signature.

The Dow Jones Industrial Average closed 220 points higher. The S&P 500 closed 26 points higher. The NASDAQ was up 63 points.

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“Most current signals indicate the overall domestic economy is on firm footing, thanks almost exclusively to the consumer,” says Dan Kowalski, vice president of CoBank’s Knowledge Exchange division (CKE). “However, without a meaningful U.S.-China trade deal, the U.S. agricultural economy will continue to struggle with uncertainty in 2020.”

For perspective, CKE analysts explain GDP growth in rural counties since 2014 has averaged almost 1% less than in urban counties. That trend is likely to continue without a significant upswing in agricultural commodity prices, energy exploration, rural manufacturing and other industries upon which rural economic growth depend.

Despite that bearish prognosis, and lingering uncertainty surrounding trade issues, CKE analysts believe some agriculture sectors will see stronger exports and higher prices next year.

CoBank’s 2020 Year Ahead outlook report, released Thursday, examines 10 key factors that will shape agriculture and market sectors that serve and impact rural communities throughout the U.S.

Among the highlights:

Animal Protein and Dairy

With dairy and animal protein production looking toward another year of increased production in 2020, a rebound in exports will be critical to profitability in both sectors, according to CKE. Per capita consumption of animal protein in the U.S. will likely set a new record in 2019. Strong demand and rising exports, though, will not erase financial stress at the farm level. Producers of beef, pork, poultry, and dairy will likely experience stress from higher feed costs due to lower crop yields this fall.

Grain, Farm Supply and Biofuels

Challenges for the grain sector will persist in 2020, fueled by commodity price pressure, policy uncertainty and export weakness amid growing global supply abundance, especially for corn and soybeans. U.S. wheat producers and exporters, though, may benefit from an improved export pace in 2020 with the Russian wheat crop struggling. Biofuels also face challenges in 2020. U.S. ethanol production, according to the U.S. Energy Information Administration, is expected to fall by 1.9% in 2019 to 15.8 billion gallons and remain flat in 2020.

Global Economy

Consumer strength the world over has prevented further slowing in the global economy. The direction and severity of the U.S.-China trade dispute will continue to have the most significant influence on the world economy in 2020. A leveling off of trade tensions would allow global economic growth to bottom out in early 2020 before showing signs of life later in the year. However, the vulnerable state of the global economy makes it susceptible to contraction if trade conditions worsen.

U.S. Economy

The U.S. economy will enter 2020 decisively split—powered by a resilient and confident consumer but hamstrung by a risk-averse business sector that has stopped investing. Now that stimulus effects from the 2017 tax reform and the 2018 spending bill have faded, the economic expansion will show its age, losing steam in the coming year. There is evidence that since 2017 more people, including those in rural communities, have broadly shared the benefits of economic growth, despite the continual rise in wealth inequality.

2019-12-12T19:54:27-05:00

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