Cattle Current—July 27, 2022

Cattle Current—July 27, 2022

Feeder Cattle futures closed an average of $1.79 lower Tuesday, pressured by Corn futures that were 15¢ to 17¢ higher through new-crop contracts as traders added weather premium based on the latest crop conditions, along with further uncertainty regarding Ukrainian exports.

Soybean futures closed 31¢ to 59¢ higher through Jly ‘23 and then mostly 20¢ to 22¢ higher.

Live Cattle futures closed an average of 61¢ lower, uninspired by early cash direction.

Negotiated cash fed cattle trade was slow on light demand in the Texas Panhandle through Tuesday afternoon, according to the Agricultural Marketing Service. There were a few live trades $1 lower at $135/cwt.

Elsewhere, trade ranged from mostly inactive on light demand to a standstill with too few transactions to trend.

Last week, live prices were $136 in Kansas, $139.00-$143.50 in Nebraska and $141-$145 in the western Corn Belt. Dressed prices were $227-$232.

Choice Boxed beef cutout value was $1.00 higher Tuesday afternoon at $269.11/cwt. Select was $1.12 lower at $243.88/cwt.

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Major U.S. financial indices closed lower Tuesday, with much of the pressure attributed to Walmart cutting its profit forecast based on food inflation.

The Dow Jones Industrial Average closed 228 points lower. The S&P 500 closed 45 points lower. The NASDAQ was down 20 points.

CME WTI Crude Oil futures closed 78¢ to $1.72 lower through the front six contracts.

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The Creighton University Rural Mainstreet Index (RMI) fell for the fourth straight month — from 49.8 in June to 46.0 in July — sinking below growth neutral for a second consecutive month, according to the monthly survey of bank CEOs in rural areas of a 10-state region dependent on agriculture and/or energy. The index ranges between 0 and 100 with a reading of 50.0 representing growth neutral.

“The Rural Mainstreet economy is now experiencing a downturn in economic activity. Supply chain disruptions from transportation bottlenecks and labor shortages continue to constrain growth. Farmers and bankers are bracing for escalating interest rates — both long-term and short-term,” says Ernie Goss, Jack A. MacAllister Chair in Regional Economics at Creighton University’s Heider College of Business.

Bankers were asked to identify the greatest risk for ranchers and farmers over the next 12 months. These were the leading responses: rising input prices (53.9%), falling grain and livestock prices (34.6%) and drought (11.5%).

“It’s the combination of higher input costs and a potential fall in commodity prices that are the biggest risks to farmers. Not just one or the other,” says James Brown, CEO of Hardin County Savings Bank in Eldora, IA.

Even with significant input price increases this year, bankers expect a half percentage point decline in farm loan delinquencies over the next 12 months.

Among other highlights:

The region’s farmland price index for July declined to 66.0 from 76.8 in June, marking the 22nd straight month that the index was above growth neutral.

On average, bank CEOs expect farmland prices to advance by 2.1% over the next 12 months.

2022-07-26T19:38:28-05:00

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