Cattle Market Notes: Week Ending Feb 07, 2014

For Livestock Prices and Production Information CLICK HERE.

Cash Cattle:

Cash cattle and beef prices fell further as weak beef prices provided plenty of pressure. The five-area live fed steer price ended Friday at $140.56, down $5.24 compared to last Friday. Cash trade was light for most of the week with sales in the Southern Plains not registering enough to call any trends. Limited trade in Nebraska and the Western Cornbelt had live and dressed cattle at $140.50-$141 and $225, respectively.

The sale in Oklahoma City was small this week due to more winter weather (3,394 total receipts compared to 8,974 last week). All calves and feeders were called steady. Mississippi auction markets experienced a similar trend as steer and heifer calves and feeders were mostly steady across the board. On the other hand, cull cows and bulls were up quite a bit, respectively $1-$4 higher and $1-$3 higher.

Futures:

In keeping pace with the underlying cash prices, nearby futures prices (Feb and Apr) slid just a bit this week, but deferred contract months moved slightly higher. The weakness in the cash markets have weighed heavy on futures. Also, the sour economic picture that has been forming the past couple of weeks has done little to help and keeps a dark cloud over potential growth in beef demand. Friday’s Labor Department report showing 113,000 jobs were added during January versus an expected 189,000 and following a dismal increase of 75,000 in December added more fuel to this concern. Spring feeder contracts were down this week, as was the August contract but the rest of the fall contracts were slightly higher. Corn prices were fairly strong this week putting pressure on feeder purchases.

Corn futures were higher this week ahead of Monday’s supply and demand report. Trade took the headlines early in the week as an undisclosed order surfaced, but this was offset later in the week as a shipment (assumed to be for China delivery) was cancelled. South American production estimates also started to filter into the market with both Argentina and Brazil expected to have smaller crops in this month’s report. Look for a post on Monday detailing the USDA’s numbers.

Beef:

Beef prices rose quickly to catch the hot fed market and have now fallen just as fast. Choice boxed beef finished with a weekly average of $216.30, down $15.68. Select averaged $215.35, down $15.81.

Note: all cattle and beef prices are quoted in dollars per hundredweight and corn prices are quoted in dollars per bushel, unless stated otherwise.

Cattle Market Notes: Week Ending Jan 31, 2013

Cash Cattle:

Cash fed cattle came in lower this week. the five-area live price averaged $145.80 on Friday, down $2.45 from last week. This average is based largely on non-cash trade as few sales took place in the cash market given the declines.

In Oklahoma City auctions feeder steers were called steady to $1 lower, while feeder heifers and all calves were steady. Mississippi auctions were also steady this week with all transaction types showing no movement in ether direction compared to last week.

Futures:

Well, markets took a pause this week. Last Friday’s Cattle on Feed report was bullish when compared to pre-report expectations and the market reacted accordingly. Also, U.S. equity markets continue to struggle leaving many wondering what the general economic conditions underlying the slump mean for beef demand. This Friday, the annual cattle inventory report was released (link) and showed a continued decline in the overall size of the cattle herd, but some signs of expansion were noted. The overall report came in under expectations which could provide a lift to start the new trading week.

Beef:

And the trend lower continued in beef trade with Choice carcasses down $6.45, at $231.98, and Select down $5.28, at $231.16, compared to the previous week putting the spread is at $0.82.

*** The livestock price and production tables (link) will be updated soon.

Note: All cattle and beef prices are quoted in dollars per hundredweight.

2014 Cattle Inventories

The United States Department of Agriculture’s National Agricultural Statistics Service released their annual cattle inventory report Friday afternoon (Jan 31). The report was highly anticipated given the continued shrinking herd size which was exacerbated in the past few years due to drought. While it was expected that the total number of beef cows would continue to shrink, industry participants and analyst were focused on the number of heifers held back for replacement as indication of rebuilding.

The report revealed that the number of all cattle and calves in the U.S. total 87.730 million head on January 1, 2014. This represents a drop of 1.76% compared to one year ago. Analyst were expecting a 1.40% decline. The total number of beef cows in the U.S. totaled 29.042 million head, down 0.87% from last year, while pre-report expectations called for a 1.50% decline. Beef heifers held back for replacement totaled 5.471 million head, up 1.18% from a year ago but less than the 3.10% that was expected. So, the current beef cow herd shrunk less than expected (but shrunk none-the-less) and the pace of replacements inched up again but also less than expected. In the end, it appears that the beef cow herd is moving toward an expansion phase. Calf prices continue to encourage this movement but producers appear to be making these moves at a slow and cautious pace.

The number of milk cows in the U.S. totaled 9.209 million head, down 0.10% from last year, the exact amount expected by analyst. Milk replacement heifers totaled 4.539 million head, down 0.25% from a year ago, while analyst expected a slight increase of 0.30%.

In Mississippi, the total number of all cattle and calves on January 1, 2014 came in at 930,000 head, up 2.20% compared to last year. The beef cow herd totaled 477,000, down 1.85%, and heifers held back for replacement totaled 91,000, a 16.67% jump. Also of note for Mississippi’s herd size was a reversion back toward 2012’s stocker/feeder numbers, where steers and heifers (not for replacement) over 500 pounds totaled 62,000 and 43,000 head, respectively, up 51.22% and 22.86% compared to 2013. Mississippi’s milk cow herd totaled 13,000 head, a drop of 1,000 from last year, while milk replacement heifers totaled 6,000 head, also a drop 1,000 head.

To veiw details about the inventories click HERE.

2014 Farm Bill: Nearing Completion

Late Monday evening (Jan 27) the conference committee of the U.S. House of Representative and the Senate finalized the Agricultural Act of 2014 putting the new farm bill on its path to approval. The House passed the bill today (Jan 29) by a vote of 251-166.  The Senate may vote tomorrow.  Much of the bill will go into effect in the near future.

As has been expected, the new legislation will abandon the long-standing direct payments. Also, the Average Crop Revenue Election and Counter-Cyclical programs that were introduced, respectively, in the 2008 and 2002 bills will transition to Agricultural Risk Coverage (ARC) and Price Loss Coverage (PLC). The marketing loan program will likely remain unchanged. Cotton will utilize its own program, Stacked Income Protection Plan (STAX).

Producers and/or landowners will face many decisions with the new legislation. First, base acres could have the option to be reallocated and yields can be updated. Second, producers must choose either ARC or PLC for all non-cotton base. With the ARC program, producers will then have the option to choose coverage at their individual farm level or at the county level. The PLC option can be combined with a supplemental layer of coverage, called Supplemental Coverage Option (SCO). However, SCO can be added without opting into PLC, but SCO cannot be combined with ARC.

ARC will be delivered by the Farm Service Agency (FSA) and, again, will trigger at either the farm or county level, depending on the producer’s decision. The county and farm level ARC will both kick in when the farm’s revenue declines 14% from a pre-calculated benchmark revenue. The benchmark revenue, for both options, is the five-year Olympic average[1] yield times the five-year average marketing year price. The county-triggered program will be commodity specific, use county yields and will be paid on 85% of base acres. The farm-level program will aggregate across all program crops, use farm yields, and will be paid on 65% of a producer’s base acres.

The PLC program will also be delivered by FSA and looks very similar to the previous Counter-Cyclical program. Each commodity (corn, peanuts, long and medium grain rice, grain sorghum, soybeans, and wheat — not cotton) has a set reference price and when the market year average price for each individual commodity falls below the reference price, the program will trigger. The program covers 85% of a producer’s base acres.

The STAX plan for cotton will provide an area based level of protection (i.e., county level) and will be delivered by the Risk Management Agency (RMA). Cotton producers electing STAX must pay a premium (similar to crop insurance). Like ARC, the STAX program is revenue based and will kick in when county level cotton revenues decline 10% below a county level benchmark (which is the five-year Olympic average[1] yield times the crop insurance spring time price). The program will continue to cover revenue losses from 10% to 30% below the benchmark and, even though yield and price are county level, the acres stem from the producer’s individual election.

SCO is available as a stand-alone program or can be coupled with PLC. It requires a premium, much like insurance, and provides coverage when revenue losses are 14% below the county level benchmark and will continue to cover losses until crop insurance kicks in.

So, none of these are easily digestible and, once elected, must be maintained for the life of the bill (currently slated to be in place for five years). As a result, a number of important decisions will need to be made. We are currently building an in-depth program that will cover these and other issues that are in the bill. As noted, the Senate will follow shortly thereafter. Once a final piece of legislation is known, look for this educational program to begin.

[1] An olympic average drops the highest and lowest values over the given time period. So, a five-year olympic average will discard the highest and lowest values over the five-year period thus giving an average over the three middle years.

Post written by John Michael Riley and Keith Coble

Cattle Market Notes: Week Ending Jan 24, 2014

For Livestock Prices and Production Information CLICK HERE.

Cash Cattle:

Cash cattle and beef prices remain on their upward trajection. The five-area fed steer price ended Friday at $148.75 and $238.86, respectively for live and dressed, up $6.36 and $11.59 compared to last Friday. In the Southern Plains, live cattle were about $5 higher at $147 on Wednesday. In Nebraska, live and dressed cattle sold at $150 and $240, respectively. Western Cornbelt trade took place on Wednesday at $143.50-$149 for live and $235-$242 for dressed.

Steer and heifer calves in Oklahoma City were steady, feeder steers were steady to $2 lower, and feeder heifers were $1-$3 lower. In Mississippi auction markets steer calves were mostly steady, heifer calves were mixed, feeder steers $2-$10 higher, and heifers were $3-$5 lower. Cull cows were $1 lower to $1 higher, cull bulls were steady to $5 lower, and replacements were higher.

Futures:

The nearby February once again contract took advantage of the direction in the cash cattle and beef markets, moving higher by $5.80. More deferred contracts continue to have a wait a see attitude, but still picking up about $1 on the week. On Friday, the USDA, NASS released their monthly Cattle on Feed report. The report revealed that 10.593 million head of cattle were in feedlots with 1,000 head or larger capacity on January 1, 2014, down 5.4% from last year. Placements of cattle during December were 1.0% higher than last year. Both were a tad above expectations so the report was mildly bearish and expect the market to react accordingly on Monday. More detail about the report can be found here.

Corn were higher this week. Prices slowly inched up as the week progressed. It was a very slow news week (and holiday shortened week too).

Beef:

Like cash cattle, wholesale boxed beef was much higher this week. Choice boxed beef finished with a weekly average of $238.43, up $13.81. Select averaged $236.44, up $14.27. With Select continuing to gain on Choice the spread between the two has narrowed to $1.99.

Note: all cattle and beef prices are quoted in dollars per hundredweight and corn prices are quoted in dollars per bushel, unless stated otherwise.

January Cattle on Feed Report Recap

The United States Department of Agriculture Released their monthly Cattle on Feed report Friday afternoon (Jan 24).The report revealed that 10.593 million head of cattle were in feedlots with 1,000 head or larger capacity on January 1, 2014, down 5.4% from last year and the lowest January 1st number since the series started in 1996. Analysts were expecting the on feed number to be down 6.0%. The on feed number is 6.7% below the January average from 2009 to 2013.

Placements during December totaled 1.681 million head, up 1.0% from December 2012 and up 1.3% from the prior five0year average. Pre-report expectations were looking for a 1.9% drop from last year’s number but the highest guess was a 2.1% increase so the reported value was within the range of expectations.

Marketings during December did little to help the inventory number coming in at 1.736 million head, down 0.5% from one year ago and down 1.1% from the five-year average. (Important to keep in mind that as placements drop due to the tightening supplies of feeder cattle, marketings must come down as well.) Pre-report expectations called for a 2.2% increase in year-over-year marketings.

So, the report was bearish given that placements were above expectations and marketings were below them. The on feed number continues to be indicative of the tight cattle supplies but was slightly higher than year ago levels due to the larger than expected in-flow of cattle and the smaller than expected out-flow.

Summary of the Cattle on Feed report:

Pre-report Estimates:

(1,000 head)

vs. 2012

vs. 5-Yr Avg

Average

Range

Placed in Dec

1,681

1.0%

1.3%

-1.9%

-8.6%

2.1%
Marketed in Dec

1,736

-0.5%

-1.1%

2.2%

-2.3%

4.5%
On Feed, Jan 1

10,593

-5.4%

-6.7%

-6.0%

-7.5%

-5.3%

Placements by state and weight:

AZ

CA

CO

ID

IA

KS

NE

< 600 lbs.

N/A

N/A

14.3%

N/A

N/A

0.0%

14.3%

600-699 lbs.

N/A

N/A

14.3%

N/A

N/A

-10.0%

11.1%

700-799 lbs.

N/A

N/A

0.0%

N/A

N/A

4.8%

-13.6%

800+ lbs.

N/A

N/A

0.0%

N/A

N/A

0.0%

8.3%

TOTAL

-3.4%

18.0%

7.1%

23.1%

17.1%

-1.4%

3.8%

OK

SD

TX

WA

Other [1]

U.S.

< 600 lbs.

N/A

N/A

-20.0%

N/A

12.5%

-2.0%

600-699 lbs.

N/A

N/A

-10.0%

N/A

11.1%

1.2%

700-799 lbs.

N/A

N/A

15.4%

N/A

18.8%

3.2%

800+ lbs.

N/A

N/A

-10.0%

N/A

6.3%

2.7%

TOTAL

-17.3%

26.5%

-10.8%

36.0%

8.9%

1.0%

[1] Individual weight categories include states that are N/A

Cattle Market Notes: Week Ending Jan 17, 2014

For Livestock Prices and Production Information CLICK HERE.

Cash Cattle:

The hot streak continues for cattle and beef prices. The five-area fed steer price ended Friday at $142.39 and $227.27, respectively for live and dressed, up $2.91 and $5.79 compared to last Friday. In the Southern Plains, live cattle were about $3 higher at $142 on Wednesday. In Nebraska, live and dressed cattle sold at $142 (on Thursday) and $226-$229 (on Wednesday), respectively. Western Cornbelt trade took place on Wednesday at $139-$142 for live and $225-$227 for dressed.

Steer and heifer calves in Oklahoma City were steady to $3 higher, feeder steers were steady to $1 lower, and feeder heifers were steady to $2 higher. In Mississippi auction markets steer calves were $2-$7 lower, heifer calves were mostly steady, feeder steers and heifers were $5 higher. Cull cows were $2 lower, cull bulls were $3 higher, and replacements were lower.

Futures:

The nearby February contract took advantage of the direction in the cash cattle and beef markets, moving higher by $3.65. As the contract month moved further out the gains weakened, implying the market is in a “wait and see” mode. This is not surprising given the record breaking pace. I suspect deferred contracts want to see how demand holds up as these prices move to the retail meat case. Feeder future gains were less dramatic despite a drop in corn prices.

Corn futures were a few pennies per bushel lower this week. Dr. Williams has some comments here. I will add that pressure also came about from lower ethanol production and, more importantly, last Friday’s supply/demand report. The report pushed the market higher which led many to send grain to the market. It has been known that producers were holding their corn in storage as a result of the drop in prices. It appears they saw an opportunity and jumped in.

Beef:

Like cash cattle, wholesale boxed beef was much higher this week. Choice boxed beef finished with a weekly average of $224.62, up $14.62. Select averaged $222.17, up $15.64.

Note: all cattle and beef prices are quoted in dollars per hundredweight and corn prices are quoted in dollars per bushel, unless stated otherwise.

Cattle Market Notes: Week Ending Jan 10, 2013

*** There are price and production tables at this link (here). As always, if you have any comments, don’t hesitate to let me know (riley@agecon.msstate.edu, 662-325-7986) ***

Cash Cattle:

Wow, much has happened since my last update. Cattle markets have been on fire as 2013 came to an end and thus far in 2014. For example, this week’s five-area live steer price finished the week at $139.54, up $2.06 per hundredweight, dressed steers were at $221.48, up $4.34, both records when prices are not adjusted for inflation. Futures and boxed beef prices are also higher. Live cattle sales in the Texas Panhandle and Southwest Kansas were called at $139. In Nebraska cattle transactions were, respectively, at $139-$140 and $220-$222. In the Western Cornbelt live and dresses cattle trade was a bit lower at $138-$139 and $220-222, respectively.

Oklahoma City feeder steers and steer calves were $5-$8 higher compared to three weeks ago – prior to the Christmas and New Year holiday. Feeder heifers and heifer calves were $3-$6 higher. In Mississippi auction markets, compared to the pre-holiday period,  feeder steers were steady to $10 higher and steer calves were mostly $10 higher. Feeder heifers were mixed and heifer calves were mostly $10 higher. Cull cows and bulls were steady to $5 higher.

Futures:

Live cattle futures continue to move higher. Following last week’s records, prices kept up the pace. Both cash prices and wholesale beef prices helped support futures as both were higher on the week. Last week was aided by a scorching equities market, which tempered a bit this week. Friday brought about two notable reports. The first, from the Labor Department, revealed a large decline in job creation for December where 74,000 jobs were added compared to an expected 197,000 (the fewest in over three years). On the other hand the unemployment rate dropped to 6.7% versus 7.0% in November (which was the same expected by analyst). Finally, the United States Department of Agriculture released their monthly World Agriculture Supply and Demand Estimates report later in the day. The report revealed an increase in expected beef production as more cattle have been placed into feedlots at the tail end of 2013 which should push 2014 production higher.

Corn futures rebounded a bit this week. The supply and demand report revealed less production due to lower per acre yield on top of higher use from both feed and ethanol. Also, the quarterly Grain Stocks report showed fewer bushels of corn in storage than expected across the U.S. Both of these helped push corn higher to end the week.

Beef:

Wholesale beef prices ended the week much higher, helping support cash fed and futures prices. Choice beef averaged $210 for the week, up $9.17. Select averaged $206.53, up $10.20. The weekly average price for Choice is second only to late-May’s $210.47 but Friday’s single day price of $214.98 was a record.

Note: Unless otherwise noted, all cattle and beef prices are quoted in dollars per hundredweight and corn prices are quoted in dollars per bushel.

Crop Market Update – Sept 6, 2013

Cereal Grains & Soybeans (by: Brian Williams)

It has been a tough week for corn markets again this week. Much of the downward pressure in the corn markets is because we are expecting a record corn crop this fall. Harvest is also in full gear in much of the South, with 34% of Mississippi’s corn harvest already complete. This is behind the average pace of 64%, but with the warm, relatively dry week throughout much of the state we should see significant progress reported next week. Soybean prices have held steady much of the week, closing ten cents higher than a week ago. Continue reading “Crop Market Update – Sept 6, 2013”