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.

Grain Market Update, January 8, 2014

Corn prices have remained relatively steady since mid-December, with daily fluctuations of only a few cents. Corn has seen strong demand both in the export market and domestically that has helped to support prices despite replenished stocks from the record harvest. Some fear remains in the market with China rejecting shipments of U.S. distiller’s grain, claiming the shipment contained an unapproved GMO. Soybean prices have not been as strong as corn prices, losing more than 60 cents in the last two weeks. Reports of another record soybean harvest in Brazil combined with expectations of an increase in planted acres this summer here in the U.S. have many traders feeling bearish. One positive note in the soybean market is that demand remains strong. Wheat markets are seeing a similar drop in prices. Nearby Chicago wheat futures have lost 70 cents since the beginning of December. While lower corn prices have reduced demand for wheat used as livestock feed, much of the decline is linked to an expected increase in supplies. Planted wheat acres are expected to hit a six year high when official USDA estimates are released. Record-shattering cold temperatures initially caused some fears of winter-killed wheat in some parts of the country and temporarily brought up prices earlier this week, but snow cover in the hardest hit areas has insulated the crop and damage is now expected to be minimal.

Crop Market Update, October 28, 2013

Corn and soybean prices have remained steady throughout the week despite continued harvest progress. Strong demand both in the export market and domestically have helped to support soybean prices this week, but expectations of improved yields have kept prices in check. Soybean harvest is currently 77% complete, right at the 5-year average with 14% of the U.S. crop harvested in the last week. Corn has also held steady this week despite good harvest progress and expectations of a bumper crop. Strong demand as well as many producers expected to store their grain seems to have kept corn prices from falling too far in the face of a record crop. About 20% of the U.S. corn crop was harvested in the last week with 59% of the U.S. harvest complete and just 3% behind the 5-year average. While wheat prices have remained strong throughout the fall, excellent crop conditions and near normal planting progress have contributed to the recent bearish trend in wheat markets. The U.S. winter wheat crop is 86% planted, slightly ahead of the 5-year average and the crop is rated 65% good or excellent.

 

Futures Quotes (Contract) This Friday Last Friday % Change
Corn (Dec 2013) $4.40 $4.41 -0.23%
Soybeans (Nov 2013) $13.00 $12.91 0.70%
Cotton (Dec 2013) $79.08 $83.11 -4.85%
Wheat (Dec 2013) $6.90 $7.05 -2.13%
Rice (Nov 2013) $15.54 $15.29 1.64%
Source: Corn, soybean, wheat, and rice prices are from the CMEGroup; Cotton price is from the Intercontinental Exchange
Prices are $/bu for corn, soybeans and wheat, cents/pound for cotton, and $/cwt for rice

 

Cash/Share Rental Rates in Mississippi

Cash rental rates have trended upward throughout Mississippi in all four geographic/soil regions while share rental rates have remained relatively constant.  However, cash rental agreements have become more common relative to share contracts as the number of share contracts have dwindled according to surveys conducted by Mississippi State.

Rental rates for corn producers have seen rate increases of around 25% since 2008 with the exception of the Hills Region which was about the same in 2012 as in 2008. Soybean producers have seen more modest increases in cash rental rates during the same period with the exception of the lower delta with a rate increase of 21%. Generally cotton producers are paying higher rental rates as well, especially in the hills region where rates were 75% higher than those in 2008.

Year/Region

2005

2006

2007

2008

2009

2010

2011

2012

——Cash Rent Corn—–

Upper Delta

80.80

97.44

83.43

89.32

87.36

101.04

97.94

115.79

Lower Delta

70.19

89.23

85.73

95.95

116.82

111.19

112.31

118.46

Loam/ Lower Coastal

65.80

74.38

54.06

47.84

62.06

54.38

49.71

60.23

Hills Region

36.00

49.16

34.46

56.38

39.63

44.72

56.81

55.01

——% Share Rent   Corn——

Upper Delta

21.8

.

26.5

.

24.0

.

24.0

.

Lower Delta

.

20.0

25.0

20.0

23.3

.

20.0

20.0

Loam/ Lower Coastal

25.0

20.0

18.8

16.7

20.0

20.0

20.0

25.0

Hills Region

22.1

25.2

23.3

23.8

23.3

20.0

21.7

22.1

Year/Region

2005

2006

2007

2008

2009

2010

2011

2012

——Cash Rent Soy—–

Upper Delta

61.60

62.80

63.04

73.04

77.08

89.44

92.69

70.27

Lower Delta

58.87

69.36

77.58

80.62

90.34

91.94

78.06

97.62

Loam/ Lower Coastal

43.43

58.25

50.45

50.25

45.74

55.16

56.42

54.00

Hills Region

37.37

28.75

34.28

39.44

37.55

41.42

36.11

41.42

——% Share Rent   Soy——

Upper Delta

25

25

25

22

25

25

25

25

Lower Delta

.

.

.

25

25

23

20

25

Loam/ Lower Coastal

24

23

24

20

20

20

23

21

Hills Region

22

24

23

22

23

34

22

20

Year/Region

2005

2006

2007

2008

2009

2010

2011

2012

——Cash Rent   Cotton—–

Upper Delta

85.96

97.44

79.68

94.46

85.36

93.33

109.21

105.75

Lower Delta

83.41

89.23

88.88

100.00

106.84

106.95

116.92

120.62

Loam/ Lower Coastal

71.93

74.38

66.94

75.00

77.50

87.50

89.85

71.25

Hills Region

51.66

49.46

41.42

49.00

42.50

58.57

69.35

85.90

——% Share Rent   Cotton——

Upper Delta

25.00

0.00

21.66

20.00

25.00

22.50

.

23.33

Lower Delta

.

20.00

.

.

20.00

20.00

.

21.66

Loam/ Lower Coastal

23.00

20.00

20.00

22.00

21.11

21.11

21.66

21.66

Hills Region

23.88

25.20

18.85

0.00

25.00

25.00

20.00

20.00

corn cotton and soybeans 7 year

While commodity prices have declined in 2013.  Rental rates and land prices can be slow to react and expectations of higher prices in the future may continue upward pressure on prices or support rates from the previous year.

 

 

September WASDE Report Revises Corn Yields Higher and Soybean Yields Lower

CORN

After all of the news from crop scouts in the corn belt a few weeks ago, the much anticipated September WASDE report has been released. One of the bigger surprises came with the estimated corn yield. Pre-report estimates were expecting a reduction in corn yields from last month on news that the Iowa corn crop was not as good as previously thought. But, the USDA actually revised yields 0.9 bu/acre higher with a great crop in the South and the Eastern Corn Belt more than offsetting lower yields further West. The increase in yields will result in a record 13.843 billion bushels in corn being harvested this fall. Even with an increase of 55 million bushel in demand, ending stocks were revised up 15 million bushels from last month. Mississippi is expected to top last year’s record corn yields with a 170 bu/acre yield.

SOYBEANS

With reports coming out a few weeks ago of poor pod counts, it is unsurprising that the USDA revised soybean yields down by 1.4 bu/acre to 41.2 bu/acre. This figure is in line with most pre-report estimates. The lower production is partially offset by decreased crush and exports, however ending stocks were still revised down by 70 million bushels from last month to 150 million bushels. This is only 25 million bushels more than last year’s ending stocks.

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”

The Return of Interest?

Interest rates as a percentage of annual agricultural expenses have continued to decline reaching a low of 2.4% for U.S. farms.  This marks a decrease of nearly 56% in interest’s contribution to total agricultural expenses since 2002 when, on average, interest accounted for 5.4% of total operating costs. This is due in part to the fact that input costs such as seed, chemicals, fuel, ect. have risen swiftly, and high commodity prices have allowed greater percentages of new land and equipment purchases to be paid for with cash. Continue reading “The Return of Interest?”