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CME: Live Cattle Futures Steady to Slightly Higher for Most of W22

04 June 2019

US - A Memorial Day shortened work week has not been an impediment to the chaos that washed over the food and agriculture markets this week, writes Steiner Consulting Group, DLR Division, Inc.

For openers, USDA-National Agricultural Statistical Service (NASS) reported that as of 26 May, 58 percent of the intended plantings of corn had been completed. This compares to the prior five year average for this date of 90 percent.

Last year, 92 percent of the crop had been planted. Corn plantings last year totaled 89.1 million acres so the 92 percent completion mark calculates to 82.0 million acres planted as of late May in 2018.

In March, USDA-NASS surveyed farmers, and based on that data collection effort, estimated that farmers would plant 92.8 million acres. The 58 percent planting progress reported for the end of last week implies that only 53.8 million acres of corn have been planted through the end of last week, a 28 million acre decline from a year ago.

Market conversation for the rest of the week has been dominated by how many acres will actually be planted to corn and whether it will even be as much as last year.

Less supply (fewer acres planted, less corn production) translates into higher prices to ration the reduced supply. Corn prices did not waste time. On a Thursday-to-Thursday week, nearby July futures climbed 46 cents to $4.36 per bushel.

New crop (December) corn prices increased 44 cents, not exactly consistent with the issue that the change in supply is associated with next year’s crop. Out in cattle feeding-land, cash corn prices in the Texas Panhandle were up 47 cents.

In the Western Cornbelt, where the hogs are (and cattle too), Omaha corn prices mirrored the increase in the new crop futures with a 44 cent gain. Cash corn-wise, these are the highest corn prices since the last week in June of 2014.

This will open some eyes or minds about feeding more wheat this year. New crop corn futures are on track to average above $4.40 this week, which would be the most expensive weekly price since mid-June 2016.

The feeder cattle futures market did not show vulnerability to the corn price action until Thursday. The August feeder cattle contract dropped a dollar on Tuesday, regained half of it back on Wednesday and then fell $4.50 on Thursday. The loss was close to $5 per cwt from a week earlier.

The Friday market was pummeled another $4.50 to $133.70. Cash trade during the prior two weeks was starting to look healthier following the debacle of late April and early May when prices dropped 10 percent in the Southern Plains.

Southern Plains yearling steer prices had posted two weeks of gains, albeit modest, but this week saw it all slip away. Medium and large frame #1 steers weighing 700-800# in Kansas and Oklahoma were $3 lower than the previous week, the lowest price since mid-May of last year.

From a live cattle perspective, slaughter cattle prices held steady for most of the week. The Five Area live steer average price was in the $115-118 range for most of the week, compared to $115.78 in the prior week.

Prices had declined for five consecutive weeks. Live cattle futures were steady to slightly higher until Thursday, when the specter of government policies on international trade intersected with immigration policies, an economic tornado if there ever was one. To say the stage has been set for another interesting week would be a sizable understatement.

Daily Livestock Report - Copyright © 2008 CME. All rights reserved.

TheCattleSite News Desk


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