Tennessee Market Highlights

Transcription

1 Tennessee Market Highlights April 28, 2017 Number: 17 Trends for the Week Compared to a Week Ago Slaughter Cows Steady to $1 lower Slaughter Bulls $1 lower Feeder Steers $4 to $7 higher Feeder Heifers $2 to $5 higher Feeder Cattle Index Wednesday s index: Fed Cattle The 5-area live price of $ is up $4.63. The dressed price is up $7.59 at $ Corn May closed at $3.58 a bushel, up 1 cent since last Friday. Soybeans May closed at $9.45 a bushel, down 6 cents since last Friday. Wheat May closed at $4.18 a bushel, up 13 cents since last Friday. Cotton May closed at cents per lb, up 1.24 cents since last Friday. Livestock Comments by Dr. Andrew P. Griffith FED CATTLE: Fed cattle traded $4 to $5 higher on a live basis compared to last week. Prices on a live basis were mainly $135 to $137 while dressed prices were mainly $216 to $217. The 5-area weighted average prices thru Thursday were $ live, up $4.63 from last week and $ dressed, up $7.59 from a week ago. A year ago prices were $ live and $ dressed. Despite higher feeder cattle placements and marketings in March, finished cattle prices continue to soar. Federally inspected cattle slaughter is up 6.6 percent year-to-date compared to 2016 which should put a lot more beef on the market. However, cattle dressed weights have kept beef production in check as they have averaged nearly 11 pounds lower thus far in 2017 compared to the same time period in Higher slaughter rates and lower dressed weights have resulted in a 5.2 percent increase in federally inspected beef production. If cattle feeders are able to remain current in marketings then the summer and fall marketing months should remain kind to them as they move through the largest slaughter periods. BEEF CUTOUT: At midday Friday, the Choice cutout was $ up $1.85 from Thursday and up $3.31 from last Friday. The Select cutout was $ up $1.24 from Thursday and up $3.86 from last Friday. The Choice Select spread was $13.08 compared to $13.63 a week ago. Packers continue to market beef at higher prices as both the Choice and Select cutouts continued their ascension. It is necessary for packers to market beef at higher prices to keep pace with the finished cattle market. Higher wholesale prices have not improved packer margins, because they are continuing to pay higher prices for finished cattle. The market dynamics this year are much different from one year ago or even six months ago. Through much of 2016 packers paid relatively low prices for cattle and then were able to market beef at relatively strong prices. The aforementioned conditions resulted in packers being in the driver s seat and bringing in profits by the truckload. Fast forward to April 2017, cattle feeders are now driving the fleet and are maintaining leverage with timely marketings. Packers are being helped with strong domestic beef demand as well as strong demand from the international market. Leverage will shift from the feedlot to the packer, but it may be later than normal if cattle continue to be pushed through. OUTLOOK: The feeder cattle futures market was met with a surge of energy Wednesday and Thursday with most contracts gaining $9 over the two day period. Friday trading was much of the same as futures started slow but gained a full head of steam after the first few hours of trading. There was no doubt feeder cattle had been undervalued for several months leading up to the initial surge in feeder cattle prices. However, the price jolt this week brings to question if the market is moving too high, if feeder cattle are being appropriately valued by the futures market, or if prices should move higher. The price of feeder cattle in the local cash market is largely based on what feedlot managers perceive will happen to finished cattle prices. This is the same situation in the futures market where feeder cattle futures generally follow the price movement of live cattle futures which ties into cash market trade. The live cattle market has been consistently strong the first four months of 2017, but much skepticism remained in the feeder cattle market until recently. The sustained strong finished cattle prices has many in the industry believing cattle prices will remain elevated which now has feedlot managers bidding up the price of feeder cattle. Stronger prices have been good for cow-calf and stocker producers alike, but no one wants to be holding the short end of the stick when the market finds equilibrium. Thus, producers (Continued on page 2)

2 Livestock Comments by Dr. Andrew Griffith (Continued from page 1) with physical inventory may want to consider forward contracting summer sales or at a minimum get a price floor on currently owned inventory using the options market or livestock risk protection insurance. The market could continue to go up which means no action is the correct decision. Alternatively, the market could go down which means the owner of the cattle will watch total value drop if no action is taken. The use of a floor price could be beneficial in that it provides downside price protection while leaving the top side open if markets continue to strengthen. Producers should calculate profit margins and determine acceptable margins to capitalize on the recent price movement. ASK ANDREW, TN THINK TANK: A recent question was raised that is one of many variations of a simple question. The question was in relation with whom and how to market cattle. The answer is to do business with trustworthy people and that will work hard for the best interest of all involved. It does not matter if a person uses one livestock market or another. Nor does it matter if the cattle are sold private treaty, through the barn, or on a video sale. The key is for producers to find someone they trust and someone who will help the producer achieve the full value of the animals being marketed. The state of Tennessee has many honest, dependable, and hardworking livestock marketing agencies. Producers should do their homework by calling the marketing agency and talking with sale management as well as talking with other producers about their experiences. If a person does not like whom they are doing business with then they should probably look elsewhere. Please send questions and comments to agriff14@utk.edu or send a letter to Andrew P. Griffith, University of Tennessee, 314B Morgan Hall, 2621 Morgan Circle, Knoxville, TN FRIDAY S FUTURES MARKET CLOSING PRICES: Friday s closing prices were as follows: Live/fed cattle June $ ; August $ ; October $ ; Feeder cattle May $ ; August $ ; September $ ; October $ ; May corn closed at $3.58 down $0.04 from Thursday. Milk Futures Thursday April 27, 2017 Month Class III Close Class IV Close Apr May Jun Jul Aug Average Daily Slaughter Cattle Hogs Number of head This week (4 days) 116, ,250 Last week (4 days) 113, ,000 Year ago (4 days) 112, ,000 This week as percentage of Week ago (%) 102% 108% Year ago (%) 104% 105% USDA Box Beef Cutout Value Choice lbs Select lbs $/cwt - Thursday Last Week Year ago Change from week ago Change from year ago

3 Crop Comments by Dr. Aaron Smith Overview Corn and wheat were up; cotton was mixed; and soybeans were down for the week. December corn opened April at $3.89 ¾ and closed at $3.85, down 4 ¾ cents for the month. The trading range for April was $3.79 ¼ to $3.95 ¾. In March, the December contract decreased 4 ¾ cents. Corn has traded mostly between $3.75 and $4.00 for the past 7 months. November soybeans opened April at $9.54 ¾ and closed at $9.53 ¼, down 1 ½ cents for the month. The trading range for April was $9.41 ½ to $9.68 ½. This was after the major price declines in March when the November contract decreased 64 ¼ cents. December cotton opened April at and closed at 74.62, up 0.57 cents for the month. The trading range for April was to cents. Harvest cotton futures are now at a 5 cent discount compared to the nearby contract. July wheat opened April at $4.42 ¼ and closed at $4.32 ¼, down 10 cents for the month. The trading range for April was $4.49 ½ to $4.16. Weather will be the dominant influence in markets as we move through the planting and early growing periods. Producers should remain patient and look for marketing opportunities to increase pricing. For example, in each of the past two years the December contract has had short lived rallies above $4.25/bu (July 2015 and June 2016). These marketing opportunities have been brief but it is reasonable to expect we will see a rally during this production season, so producers need to remain vigilant for opportunities to secure profitable prices. Corn May 2017 corn futures closed at $3.58 up 1cent since last Friday. For the week, May 2017 corn futures traded between $3.55 and $3.68. Across Tennessee, average basis (cash price-nearby futures price) strengthened or remained unchanged at Northwest Barge Points, Northwest, and Lower-middle Tennessee and weakened at Memphis and Upper-middle Tennessee. Overall, basis for the week ranged from 5 under to 30 over the May futures contract with an average of 7 over at the end of the week. Corn net sales reported by exporters from April were above expectations with net sales of 38.9 million bushels for the 2016/17 marketing year and 0.4 million bushels for the 2017/18 marketing year. Exports for the same time period were up from last week at 54.1 million bushels. Corn export sales and commitments were 90% of the USDA estimated total annual exports for the 2016/17 marketing year (September 1 to August 31) compared to a 5-year average of 88%. Ethanol production for the week ending April 21 was million barrels per day down 6,000 from last week. Ethanol stocks were million barrels, up 235,000 barrels. May/Jul and May/Dec future spreads were 8 and 27 cents, respectively. July 2017 corn futures closed at $3.66 up 3 cents since last Friday. Nationally, the Crop Progress report estimated corn planted at 17% compared to 6% last week, 28% last year, and a 5-year average of 18%; and corn emerged at 4% compared to 4% last year and a 5-year average of 4%. In Tennessee, the Crop Progress report estimated corn planted at 45% compared to 24% last week, 61% last year, and a 5-year average of 46%; and corn emerged at 21% compared to 13% last week and 18% last year. In Tennessee, September 2017 cash forward contracts averaged $3.65 with a range of $3.38 to $3.88. December 2017 corn futures closed at $3.85 up 3 cents since last Friday. Downside price protection could be obtained by purchasing a $3.90 December 2017 Put Option costing 30 cents establishing a $3.60 futures floor. 3 (Continued on page 4)

4 Crop Comments by Dr. Aaron Smith Soybeans May 2017 soybean futures closed at $9.45 down 6 cents since last Friday. For the week, May 2017 soybean futures traded between $9.41 and $9.62. Average soybean basis strengthened or remained unchanged at Northwest Barge Points, Northwest, and Lower-middle Tennessee and weakened at Memphis and Upper-middle Tennessee. Basis ranged from 37 under to 11 over the May futures contract at elevators and barge points. Average basis at the end of the week was 12 under the May futures contract. Net sales reported by exporters were above expectations with net sales of 29.7 million bushels for the 2016/17 marketing year and 2.7 million bushels for the 2017/18 marketing year. Exports for the same period were up from last week at 28.7 million bushels. Soybean export sales and commitments were 102% of the USDA estimated total annual exports for the 2016/17 marketing year (September 1 to August 31), compared to a 5-year average of 96%. May soybean-to-corn futures price ratio was 2.64 at the end of the week. May/Jul and May/Nov future spreads were 11 cents and 8 cents, respectively. July 2017 soybean futures closed at $9.56 down 4 cents since last Friday. Nationally, the Crop Progress report estimated soybeans planted at 6% compared to 3% last year and a 5-year average of 3%. In Tennessee, the Crop Progress report estimated soybeans planted at 4% compared to 2% last year, and a 5-year average of 1%. In Tennessee, October / November 2017 soybean cash contracts average $9.46 with a range of $9.14 to $9.71. November/December 2017 soybean-to-corn price ratio was 2.48 at the end of the week. November 2017 soybean futures closed at $9.53 down 6 cents since last Friday. Downside price protection could be achieved by purchasing a $9.60 November 2017 Put Option which would cost 51 cents and set a $9.09 futures floor. Cotton May 2017 cotton futures closed at cents up 1.24 cents since last Friday. For the week, May 2017 cotton futures traded between 79 and 81.2 cents. Delta upland cotton spot price quotes for April 27 were cents/lb ( ) and cents/lb ( ). Adjusted world price (AWP) increased 0.88 cents to cents per pound. Net sales reported by exporters were down from last week with net sales of 115,500 bales for the 2016/17 marketing year and 65,300 bales for the 2017/18 marketing year. Exports for the same period were down from last week at 302,400 bales. Upland cotton export sales were 102% of the USDA estimated total annual exports for the 2016/17 marketing year (August 1 to July 31), compared to a 5-year average of 96%. July 2017 cotton futures closed at down 0.46 cents since last Friday. May/Jul and May/Dec cotton futures spreads were cents and cents, respectively. 4 (Continued on page 5)

5 Crop Comments by Dr. Aaron Smith Nationally, the Crop Progress report estimated cotton planted at 11% compared to 8% last week, 10% last year, and a 5-year average of 12%. In Tennessee, cotton planted was estimated at 3% compared to 1% last year and a 5-year average of 1%. December 2017 cotton futures closed at down 0.34 cents since last Friday. Downside price protection could be obtained by purchasing a 75 cent December 2017 Put Option costing 4.14 cents establishing a cent futures floor. Wheat May 2017 wheat futures closed at $4.18 up 13 cents since last Friday. May 2017 wheat futures traded between $3.98 and $4.18 this week. May wheat-to-corn price ratio was 1.17.Wheat net sales reported by exporters were within expectations with net sales of 2.3 million bushels for the 2016/17 marketing year and 11.2 million bushels for the 2017/18 marketing year. Exports for the week were down from last week at 22.5 million bushels. Wheat export sales were 100% of the USDA estimated total annual exports for the 2016/17 marketing year (June 1 to May 31), compared to a 5-year average of 102%. In Memphis, old crop cash wheat ranged from $4.09 to $4.28. May/Jul and May/Sep future spreads were 14 cents and 27 cents, respectively. Nationally, the Crop Progress report estimated winter wheat condition at 54% good-to-excellent and 13% poor-to-very-poor; winter wheat headed at 32% compared to 19% last week, 24% last year, and a 5-year average of 23%; spring wheat planted at 22% compared to 13% last week, 40% last year, and a 5-year average of 34%; and spring wheat emerged at 5% compared to 7% last year and a 5-year average of 8%. In Tennessee, winter wheat condition was reported at 63% good-to-excellent and 11% poor-tovery poor; winter wheat jointed at 94% compared to 88% last week, 86% last year, and a 5-year average of 82%; and winter wheat headed at 60% compared to 34% last week, 22% last year, and a 5-year average of 28%. In Tennessee, June/July 2017 cash wheat ranged from $3.99 to $4.56. July 2017 wheat futures closed at $4.32 up 11 cents from last Friday. Downside price protection could be obtained by purchasing a $4.35 July 2017 Put Option costing 18 cents establishing a $4.17 futures floor. July 2017 wheat-to-corn price ratio was September 2017 wheat futures closed at $4.45 up 10 cents since last Friday. Additional Information: If you would like further information or clarification on topics discussed in the crop comments section or would like to be added to our free list please contact me at aaron.smith@utk.edu. 5

6 Futures Settlement Prices: Crops & Livestock Friday, April 21, 2017 Thursday, April 27, 2017 Commodity Contract Month Friday Monday Tuesday Wednesday Thursday Soybeans May ($/bushel) Jul Aug Sep Nov Jan Corn May ($/bushel) Jul Sep Dec Mar May Wheat May ($/bushel) Jul Sep Dec Mar Soybean Meal May ($/ton) Jul Aug Sep Oct Dec Cotton May ( /lb) Jul Oct Dec Mar Live Cattle Apr ($/cwt) Jun Aug Oct Dec Feeder Cattle Apr ($/cwt) May Aug Sep Oct Nov Market Hogs May ($/cwt) Jun Jul Aug Oct

7 Steers: Medium/Large Frame #1-2 This Week Last Week Year Ago Low High Weighted Average Weighted Average Weighted Average $/cwt lbs lbs lbs lbs lbs Steers: Small Frame # lbs lbs lbs lbs Steers: Medium/Large Frame # lbs lbs lbs lbs lbs Holstein Steers lbs lbs lbs Slaughter Cows & Bulls Breakers 75-80% Boners 80-85% Lean 85-90% Bulls YG Heifers: Medium/Large Frame # lbs lbs lbs lbs Heifers: Small Frame #1-2 Prices on Tennessee Reported Livestock Auctions for the week ending April 28, lbs lbs lbs lbs Heifers: Medium/Large Frame # lbs lbs lbs lbs Cattle Receipts: This week: 3,965 (7) Week ago: 5,293 (8) Year ago: 7,274 (11) 7

8 Tennessee lbs. M-1 Steer Prices 2016, 2017 and 5-year average Tennessee lbs. M-1 Steer Prices 2016, 2017 and 5-year average /2015 Avg /2015 Avg Area Finished Cattle Prices 2015, 2016 and 5-year average Tennessee Slaughter Cow Prices Breakers 75-80% 2015, 2016 and 5-year average 2011/2015 Avg / Prices Paid to Farmers by Elevators Friday, April 21, 2017 Thursday, April 27, 2017 Friday Monday Tuesday Wednesday Thursday Low High Low High Low High Low High Low High $/bushel No. 2 Yellow Soybeans Memphis N.W. B.P N.W. TN Upper Md Lower Md Yellow Corn Memphis N.W. B.P N.W. TN Upper Md Lower Md Wheat Memphis

9 Video Sales East Tennessee Livestock Center April 26, load of 61 steers; avg. wt. 810 lbs.; $ loads of 115 steers; avg. wt. 865 lbs.; $ load of 62 Holstein steers; avg. wt. 800 lbs.; $92.75 Blue Grass Stockyards April 27, load of 60 steers; mostly blk/bwf; avg. wt. 835 lbs.; $ Video Board Sale and Graded Sales 4/11/17 Farmers Livestock Market Greeneville TN Holstein Steer Sale Receipts: 650 Holstein Steers Lg #3 Holstein Steers Lg # lbs lbs lbs lbs lbs lbs lbs lbs lbs lbs lbs lbs lbs lbs lbs lbs lbs lbs /10/17 People s Stockyard Cookeville TN Feeder Calf Sale Receipts: 345 Steers: Med & Lg #1 Heifers: Med & Lg # lbs lbs lbs lbs lbs lbs lbs lbs lbs lbs lbs lbs lbs Steers: Med & Lg #2 Heifers: Med & Lg # lbs lbs lbs lbs lbs lbs lbs lbs lbs Self-Reported and Self-Graded Livestock Markets 4/25/17 TN Livestock Producers Fayetteville Receipts: 523 (238 graded & grouped) Steers: Med & Lg 1-2 Heifers: Med & Lg lbs lbs lbs lbs lbs lbs lbs lbs lbs lbs lbs lbs Bulls: Med & Lg lbs lbs lbs /25/17 Somerville Livestock Sales Receipts: 194 Steers/Bulls: Med & Lg 1-2 Heifers: Med & Lg lbs lbs lbs lbs lbs lbs lbs lbs lbs /18/17 Woodbury Livestock Market, LLC Receipts: 116 (*Weaned/Vaccinated) Steers: Med & Lg 1-2 Heifers: Med & Lg lbs * * lbs * * lbs * * lbs * lbs * * lbs * lbs * Bulls: Med & Lg lbs lbs lbs lbs Graded Sheep and Goat Sales Columbia Graded Sheep and Goat Sale Weighted Average Report for 04/24/2017 Receipts: 362 (166 goats; 196 sheep) Last Sale: 1007 For complete report: 9

10 Beef Industry News Featured Article from DROVERS CattleNetwork Spring Weather Hurt Fescue Growth, but Second Cutting may be Possible By Duane Dailey, University of Missouri April 26, 2017 This may be the year for two cuttings of tall fescue hay. That's good news. The bad news: The first cutting will make lousy hay, says Craig Roberts, University of Missouri Extension forage agronomist. Erratic weather caused fescue to set seed early. Under stress, grass made seed instead of leaves. "Those early seed stems must be cut to make good hay later in the second cutting," Roberts says. The story came out during a weekly University of Missouri teleconference. Regional and state extension specialists trade what they see during the growing season. Todd Lorenz, extension agronomist at Boonville, said farmers see their fescue setting seed at least two weeks early. "There's just no undergrowth there." Unfortunately, farmers who fertilized pastures for early growth are hit hardest. Roberts saw some fescue make seed a month early because of weather. Lorenz said pasture growth is similar to 2007, when late cold weather stressed grass growth. Roberts said the problem becomes what to do with stemmy first growth. In toxic tall fescue, which is most fescue in the state, seeds and stems make the most toxic forage. "Even if it's not good hay, stems must be cut," Roberts said. For best livestock gains, seed stems are bad on grazing paddocks, not just hay ground. "If weather cooperates, second cutting hay would be much less toxic. That's because seed heads are gone." A two-week outlook from Pat Guinan, MU Extension climatologist, shows heavy rain ahead for Missouri, 2 to 6 inches, with heaviest rain to the south. "With rain, we'll have good forage growth if it doesn't turn to instant drought," Roberts added. In other forage news, alfalfa has bad news and good news. "We had lots of alfalfa winter kill," Wayne Flanary said from northwestern Missouri. Ben Puttler, retired entomologist, said that in central counties, alfalfa outgrew alfalfa weevil populations this year. The plants are strong enough to fend off light populations. Now a fungus that kills alfalfa weevil is coming on. Puttler led efforts to bring natural controls for weevils to the state. Valerie Tate reported from Linneus that alfalfa she scouted in north-central Missouri has three weevils per stem. However, growth there is about 10 days behind mid-missouri. Puttler noted that alfalfa is about ready for harvest at 20-inch height. Harvesting kills weevils. Rob Kallenbach, MU Extension agronomist, said May is the best time for spring planting of warm-season grasses. Those fill the summer slump in cool-season grass growth. Crabgrass or native warm-season grasses fill the gap. Plantings in late May or June put seedlings in summer drought risk. In other teleconference news, Wayne Flanary said northern Missouri farmers are "planting corn left and right." Soybean growers wait for drier soils with higher temperatures. Soybean planting usually follows corn. Farmers with forage or crop questions can contact their regional MU Extension agronomists for help. In wet weather, farmers ask about making haylage from poorquality first-cutting hay. "Baleage or haylage, wet preservation in plastic bags, preserves the toxin," Roberts said. "Toxin in bales declines in storage. Hay becomes half as toxic as pasture or baleage." Department of Agricultural and Resource Economics 314 Morgan Hall 2621 Morgan Circle USDA / Tennessee Department of Agriculture Market News Service