Widespread heavy rain and flooding continued to mire crop planting, increase price uncertainty and weigh heavy on feeder cattle markets.
Nationwide, the Agricultural Marketing Service (AMS) pegged cash prices for steers and heifers at steady money to $5/cwt. lower, amid receipts curtailed by both Memorial Day and continued severe weather.
AMS analysts noted that last week’s heavy rains will test levees and dams in South Dakota, Nebraska, Kansas, Oklahoma, Arkansas, Missouri and Illinois.
At the same time, high water levels continue to test and disrupt transportation.
“Commercial navigation on the McClellan-Kerr Arkansas River Navigation System (MKARNS) is being disrupted due to high waters,” explains Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly market comments. “MKARNS provides inland ports that connect directly to the Mississippi river as far inland as the Port of Catoosa, near Tulsa. The MKARNS is an important transportation artery for agriculture in a multi-state region, providing a market for grain shipments downstream and the arrival of inputs such as fertilizer.”
Crop Uncertainty Pummels Feeder Cattle Futures
Softer cash prices for calves and feeders felt more severe, given the collapse in futures prices over the week’s last two sessions.
Feeder Cattle futures closed an average of $8.80 lower week to week on Friday ($6.37 lower to $10.10 lower in spot Aug). Plenty of the pressure stemmed from
the extraordinary increase in grain futures prices, tied to growing uncertainty about this year’s crop production.
“Corn planting progress is the slowest on record for this time of year and soybean acreage planted is reported to be the second slowest on record,” say AMS analysts.
Just 58% of corn was planted as of May 26, according to the most recent USDA Crop Progress report. That was 32% less than last year and 32% less than the 5-year average. 32% was emerged, which was 37% less than last year and 37% less than average. Progress was even more bearish in some key states, compared to average: Illinois (-60%); Indiana (-63%); Iowa (-20%); Minnesota (-27%); Nebraska (-13%).
Corn futures closed an average of 22¢higher through the front six contracts week to week on Friday. That’s an average of 42¢ higher in the last two weeks.
Similarly, only 29% of soybeans were in the ground, compared to 74% for the previous year and 66% for the average. 11% were emerged, which was 33% less than last year and 24% less than average.
Soybean futures were about 48¢higher week to week on Friday, through the front six contracts. They’re up an average of 56¢over the last two weeks.
“The four remaining feeder cattle futures contracts for 2019 as well as the four feeder cattle contracts trading in the first half of 2020 are all trading in less than a $2 range,” says Andrew P. Griffith, agricultural economist at the University of Tennessee, in his weekly market comments. “Maybe today’s futures market quotes are correct in predicting the future cash price for the next 12 months, but it seems highly unlikely that feeder cattle will continue to trade in such a narrow range.”
Cattle futures were also pressured by news Friday that President Trump plans to impose 5% tariffs on Mexican imports, beginning June 10, unless that country makes significant progress toward stemming the flow of illegal immigrants across its northern border into the U.S. Should that come to pass, the move also casts a shadow over ratification of the U.S.-Mexico-Canada trade agreement.
Live Cattle futures closed an average of $3.45 lower week to week on Friday ($2.67 to $4.87 lower).
Fed Cattle Prices Steady
Negotiated cash fed cattle trade ended the week mainly steady with the previous week on a live basis at $115 in the Southern Plains, $116 in Nebraska and mostly $116-$117 in the western Corn Belt. Dressed trade was steady to $3 higher at $186 in Nebraska and at $185-$187 in the western Corn Belt.
“There is no definitive way to know what halted the finished cattle price collapse in the cash market, but something came to the aid of cattle feeders,” Griffith says. “Finished cattle continue to trade with a positive basis which is desirable for anyone on the selling side of a transaction. However, the June Live Cattle contract is trading around $110 and the expectation would be to see convergence of the futures contract price and the cash price.”
In the latest Livestock Monitor, analysts with the Livestock Marketing Information Center forecasts average fed steer prices in the third quarter (July-September) at $112-$115/ cwt., about 3% more year over year.
In the meantime, despite increasing beef production, wholesale beef values continue to trade steady to higher.
Choice boxed beef cutout value was $1.57 higher week to week on Friday afternoon at $223.21/cwt. Select was 78¢ lower at $207.69.
Friday to Friday Change*
Weekly Auction Receipts
CME Feeder Index
|CME Feeder Index*||May 30||Change|
*Thursday-to Thursday for CME Feeder Index
Cash Stocker and Feeder
|600-700 lbs.||$172.48||+ $1.81|
|700-800 lbs.||$161.27||– $0.34|
|800-900 lbs.||$146.73||– $2.91|
|500-600 lbs.||$158.99||– $5.07|
|600-700 lbs.||$147.63||– $7.89|
|700-800 lbs.||$137.55||– $8.93|
|400-500 lbs.||$148.38||– $6.41|
|500-600 lbs.||$144.64||– $1.15|
|600-700 lbs.||$134.92||+ $0.35|
(AMS National Weekly Feeder & Stocker Cattle Summary)
Wholesale Beef Value
|Boxed Beef (p.m.)||May 31 ($/cwt)||Change|
|Ch-Se Spread||$15.52||+ $2.35|
|Feeder Cattle||May 31||Change|
|Jan ’20||$133.650||– $9.225|
|Live Cattle||May 31||Change|
|Feb ’20||$112.775||– $3.450|
|Corn futures||May 31||Change|
|Mar ’20||$4.514||+ $0.222|
|Oil CME-WTI||May 31||Change|
|Equity Indexes||May 31||Change|
|Dow Industrial Average||24815.04||– 770.65|
|S&P 500||2752.06||– 74.00|
|Dollar (DXY)||97.61||+ 0.01|