Tennessee Market Highlights

Transcription

1 Tennessee Market Highlights September 1, 2017 Number: 35 Trends for the Week Compared to a Week Ago Slaughter Cows Steady to $1 higher Slaughter Bulls $2 to $3 higher Feeder Steers $3 to $5 higher Feeder Heifers $3 to $7 higher Feeder Cattle Index Wednesday s index: Fed Cattle The 5-area live price of $ is down $2.11. The dressed price is down $4.09 at $ Corn September closed at $3.40 a bushel, up 2 cents since last Friday. Soybeans September closed at $9.42 a bushel, up 3 cents since last Friday. Wheat September closed at $4.20 a bushel, up 11 cents since last Friday. Cotton December closed at cents per lb, up 3.73 cents since last Friday. Livestock Comments by Dr. Andrew P. Griffith FED CATTLE: Fed cattle traded $2 lower compared to last week on a live basis. Prices on a live basis were primarily $104 to $105 while prices on a dressed basis were mainly $164 to $166. The 5-area weighted average prices thru Thursday were $ live, down $2.11 from last week and $ dressed, down $4.09 from a week ago. A year ago prices were $ live and $ dressed. Cattle feeders could not put a halt on the live cattle price skid this week as they were the losers on this week s market. The positive basis that held through much of the year has disappeared putting a further damper on cattle feeding margins. With so many weeks of constant price declines, it is becoming difficult for cattle feeders to be optimistic about the next week s market. The dismal outlook may remain through October as the October live cattle futures price is trading just above $105 per hundredweight. Alternatively, the December contract has a hint of promise as it is trading over the $109 mark. It appears cattle feeders may have to continue weathering the storm for a little while longer. BEEF CUTOUT: At midday Friday, the Choice cutout was $ down $0.34 from Thursday and up $0.05 from last Friday. The Select cutout was $ down $0.31 from Thursday and up $1.58 from last Friday. The Choice Select spread was $0.54 compared to $2.07 a week ago. Packers were able to plug all the holes in the dam that is the wholesale beef market this week as they showed signs of steadying for the first time since the middle of June. The Choice cutout price has declined about $58 per hundredweight in an eleven week period while the Select cutout price has lost nearly $29 over the same time period. During the wholesale beef price decline, the Choice Select spread essentially moved from a historically wide spread to no spread at all. The Choice Select spread typically narrows this time of year due to demand factors, but the supply side has provided a strong case for a narrowing spread. Beef has consistently graded over 70 percent Choice through 2017 with recent weeks experiencing 74 percent Choice. This compares to the five year average during August being closer to 64 percent grading Choice. As the percent of beef grading Prime or Choice increases, the quantity of beef grading Select is on the decline. The balance of beef grading has resulted in a narrowing of the spread between Choice and Select grade beef. OUTLOOK: Good fortunes were found by folks marketing calves and feeder cattle this week compared to the previous week. Steer prices were $3 to $5 higher than last week while heifer prices were $3 to $7 higher than a week ago. The futures market is leading the way as prices have lacked stability the last six weeks. Though prices were higher this week than last on the cash market and the futures market, prices on the first day of September were nearly $7 lower than the first day of August in both the cash feeder cattle market and on the futures market. One could say the feeder cattle market has held up well through the fed cattle market decline as well as holding its own against strong feeder cattle supplies. It would appear cattle feeders have been betting on the come all summer, and they are not ready to stop betting on the come just yet. This simply means cattle feeders are expecting or at a minimum hoping the fed cattle market will bounce back and do so strongly. This is great news for folks marketing calves and feeder cattle, but if the finished cattle market does not turn soon then it is likely heavy discounts will be on the way in the feeder cattle market. This analysis is not taking into account the seasonal price decline in the calf market during the fall months which is all but certain to occur. As one tries to look into the (Continued on page 2)

2 Livestock Comments by Dr. Andrew Griffith (Continued from page 1) crystal ball of beef cattle prices, the one certainty is uncertainty. In prognosticating prices, one has to determine the direction of the price movement and the magnitude of the price movement. The most likely direction for prices to go in the next few months is down, but then one would have to know by how much. For lightweight calves, the price decline will likely be 4 to 8 percent from the August average price to the November average price. This will result in the November monthly average price being $6 to $12 per hundredweight lower than the August average price for 500 to 600 pound steers. Similarly, feeder cattle prices will likely decline 3 to 8 percent over the next three months. Producers should take this into consideration when scheduling marketings. ASK ANDREW, TN THINK TANK: There have been several questions concerning how the recent hurricane will impact beef markets. It is difficult to know the full impact it will have, but there are several known impacts. The hurricane rolled through a large portion of eastern Texas resulting in more than one million head of cattle having buckets of water poured on them. Given the time of year and that eastern Texas is a large cow-calf producing region, it is likely most of the calves were still in the pasture with the cow herd. Additionally, several large port areas in Texas and Louisiana have been negatively impacted by the large quantities of rainfall. This could slow down exports of several agricultural goods including beef. One positive note is that the storm did not hit any major cattle feeding regions or any major packing facilities. Other than a slow-down in exports, cattle feeders and packers will continue moving cattle. 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 October $ ; December $ ; February $ ; Feeder cattle September $ ; October $ ; November $ ; January $ ; September corn closed at $3.40 down $0.02 from Thursday. Milk Futures Thursday August 31, 2017 Month Class III Close Class IV Close Sep Oct Nov Dec Jan Average Daily Slaughter Cattle Hogs Number of head This week (4 days) 116, ,000 Last week (4 days) 117, ,750 Year ago (4 days) 112, ,250 This week as percentage of Week ago (%) 99% 101% Year ago (%) 103% 103% USDA Box Beef Cutout Value Choice 1-3 Select lbs lbs $/cwt - Thursday Last Week Year ago Change from week ago Change from year ago

3 Crop Comments by Dr. Aaron Smith Overview Corn, cotton, soybeans, and wheat were up for the week. For the month of August, December corn opened at $3.83 and closed at $3.57 ¾, down 25 ¼ cents with a high of $3.89 and a low of $3.44 ¼; November soybeans opened at $9.96 ¾ and closed at $9.45 ¼, down 51 ½ cents with a high of $10.00 ¼ and a low of $9.21; December cotton opened at and closed at 70.93, up 2.07 cents with a high of and a low of 66.64; and July wheat opened at $5.37 and closed at $4.83 ½ down 53 ½ cents with a high of $5.43 ½ and a low of $4.74 ¼. As September begins, markets will focus on harvest weather/crop quality and projected yields. Currently, USDA projects national average yields (survey based data) at bu/acre, 49.4 bu/acre, and 892 lbs/acre, for corn, soybeans, and upland cotton, respectively. In Tennessee yields are projected to be 166 bu/acre, 45 bu/acre, and 1,036 lbs/acre, for corn, soybeans, and upland cotton, respectively. Projected yields for all three crops in Tennessee are above the projected trendline yields for The USDA survey based projected yields (above) for corn, soybeans, and cotton are above the trendline by 16.4 bu/acre, 2.6 bu/acre, and 69.9 lbs/acre (2017 trendline projected yields are bu/acre, 42.5 bu/acre, and lbs/acre, for corn, soybeans, and cotton, respectively, in Tennessee). National average yields are also projected above trendline at bu/acre (1.9 bu/acre above), 47.3 bu/acre (2.1 bu/acre above), and lbs/acre (20.1 lbs/acre above). National yields will not be the record setting result of 2016 for corn and soybeans, but they will still be on the high side of the long term trendline. However, Tennessee average yields will be very close to records for corn (168 bu/acre ), cotton (1,104 lbs/acre 2016), and soybeans (46.5 bu/acre 2013). If projected yields in Tennessee are realized, Tennessee producers can anticipate a weaker basis than in recent years. Corn September 2017 corn futures closed at $3.40 up 2 cents since last Friday. For the week, September 2017 corn futures traded between $3.28 and $3.45. Across Tennessee, average basis (cash price-nearby futures price) strengthened or remained unchanged at Uppermiddle, Northwest, and Lower-Middle Tennessee and weakened at Memphis and Northwest Barge Points. Overall, basis for the week ranged from 20 under to 16 over the September futures contract with an average of 6 under the September futures contract at the end of the week. Corn net sales reported by exporters from August were above expectations with net sales of 7.4 million bushels for the 2016/17 marketing year and 31.7 million bushels for the 2017/18 marketing year. Exports for the same time period were up from last week at 38.7 million bushels. Corn export sales and commitments were 100% 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 105%. Ethanol production for the week ending August 25 was million barrels per day down 10,000 from the previous week. Ethanol stocks were million barrels, down 206,000 barrels. Sep/Dec and Sep/Mar future spreads were 15 and 27 cents, respectively. Nationally, the Crop Progress report estimated corn dough or beyond at 86% compared to 76% last week, 91% last year, and a 5-year average of 87%; corn dented at 44% compared to 29% last week, 57% last year, and a 5-year average of 51%; corn mature at 6% compared to 8% last year and a 5-year average of 10%; and corn condition at 62% good-to-excellent and 12% poor-to-very poor. In Tennessee, the Crop Progress report estimated corn condition at 86% good-to-excellent and 4% poor-to-very poor; corn dough or beyond at 97% compared to 96% last week, 99% last year, and a 5-year average of 98%; corn dented at 85% compared to 72% last week, 89% last year, and a 5-year average of 84%; corn mature at 38% compared to 20% last week, 39% last year, and a 5-year average of 32% and corn harvested at 4% compared to 2% last year and a 5-year average of 8%. In Tennessee, September 2017 cash forward contracts av- (Continued on page 4) 3

4 Crop Comments by Dr. Aaron Smith eraged $3.25 with a range of $3.12 to $3.58. December 2017 corn futures closed at $3.55 up 2 cents since last Friday. Downside price protection could be obtained by purchasing a $3.60 December 2017 Put Option costing 15 cents establishing a $3.45 futures floor. March 2018 corn futures closed at $3.67 up 1 cent since last Friday. Soybeans September 2017 soybean futures closed at $9.42 up 3 cents since last Friday. For the week, September 2017 soybean futures traded between $9.21 and $9.44. Average soybean basis strengthened at Lower-middle, Upper-middle, and Northwest Tennessee and weakened at Memphis and North West Barge Points. Basis ranged from 36 under to 32 over the September futures contract at elevators and barge points. Average basis at the end of the week was even the September futures contract. Net sales reported by exporters were within expectations with net sales of 4.5 million bushels for the 2016/17 marketing year and 57.3 million bushels for the 2017/18 marketing year. Exports for the same period were down from last week at 25.2 million bushels. Soybean export sales and commitments were 104% 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 103%. September soybean-to-corn futures price ratio was 2.77 at the end of the week. Sep/Nov and Sep/Jan future spreads were 7 cents and 17 cents, respectively. Nationally, the Crop Progress report estimated soybeans setting pods at 93% compared to 87% last week, 93% last year, and a 5-year average of 92%; soybeans dropping leaves at 6% compared to 5% last year and a 5-year average of 5%; and soybean condition at 61% good-to-excellent and 11% poor-to-very poor. In Tennessee, the Crop Progress report estimated soybean condition at 80% good-toexcellent and 6% poor-to-very poor; soybeans blooming at 97% compared to 94% last week, 99% last year, and a 5-year average of 98%; soybeans setting pods at 90% compared to 84% last week, 90% last year, and a 5-year average of 88%; and soybeans dropping leaves at 3% compared to 3% last year and a 5-year average of 3%. In Tennessee, October/November 2017 soybean cash contracts average $9.28 with a range of $8.93 to $9.56. November/December 2017 soybean-to-corn price ratio was 2.67 at the end of the week. November 2017 soybean futures closed at $9.49 up 5 cents since last Friday. Downside price protection could be achieved by purchasing a $9.50 November 2017 Put Option which would cost 22 cents and set a $9.28 futures floor. January 2018 soybean futures closed at $9.59 up 6 cents since last Friday. Cotton Delta upland cotton spot price quotes for August 31 were cents/lb ( ) and cents/lb ( ). Adjusted world price (AWP) increased 2.2 cents to cents per pound. Net sales reported by exporters were down from last week with net sales of 230,700 bales for the 2017/18 marketing year and 26,400 for the 2018/19 marketing year. Exports for the same period were down 4 (Continued on page 5)

5 Crop Comments by Dr. Aaron Smith from last week at 156,300 bales. Upland cotton export sales were 53% of the USDA estimated total annual exports for the 2017/18 marketing year (August 1 to July 31), compared to a 5-year average of 36%. October 2017 cotton futures closed at up 3.94 cents since last Friday. Oct/Dec and Dec/Mar cotton futures spreads were cents and cents, respectively. Nationally, the Crop Progress report estimated cotton setting bolls at 93% compared to 88% last week, 95% last year, and a 5-year average 93%; cotton bolls opening at 18% compared to 12% last week, 22% last year, and a 5-year average of 20%; and cotton condition at 65% good-to-excellent and 11% poor-to-very poor. In Tennessee, cotton condition was estimated at 88% good-to-excellent and 4% poor-to-very poor; cotton setting bolls at 97% compared to 97% last week, 100% last year, and a 5-year average of 95%; and cotton bolls opening at 9% compared to 7% last week, 16% last year, and a 5-year average of 17%. December 2017 cotton futures closed at cents up 3.73 cents since last Friday. For the week, December 2017 cotton futures traded between and cents. Downside price protection could be obtained by purchasing a 72 cent December 2017 Put Option costing 2.85 cents establishing a cent futures floor. March 2018 cotton futures closed at 71 up 3.07 cents since last Friday. Wheat In Tennessee this week, cash wheat ranged from $3.60 to $4.17. Wheat net sales reported by exporters were within expectations with net sales of 19.7 million bushels for the 2017/18 marketing year. Exports for the week were up from last week at 26.4 million bushels. Wheat export sales were 46% of the USDA estimated total annual exports for the 2017/18 marketing year (June 1 to May 31), compared to a 5-year average of 47%. Sep/Dec and Sep/Jul future spreads were 18 cents and 65 cents, respectively. September 2017 wheat futures closed at $4.20 up 11 cents since last Friday. September 2017 wheat futures traded between $3.94 and $4.21 this week. September wheat-to-corn price ratio was Nationally, the Crop Progress report estimated spring wheat harvested at 76% compared to 58% last week, 79% last year, and a 5-year average of 66%. December 2017 wheat futures closed at $4.38 up 3 cents from last Friday. In Memphis, July 2018 cash forward contracts ranged from $4.73 to $4.89 for the week. July 2018 wheat futures closed at $4.85 the same as last Friday. Downside price protection could be obtained by purchasing a $4.90 July 2018 Put Option costing 34 cents establishing a $4.56 futures floor. Additional Information: Links for data presented: U.S. Export Sales - USDA FAS: Weekly Export Performance Indicator EIA: Weekly ethanol Plant Production - EIA: Weekly Supply Estimates - Upland Cotton Reports - Tennessee Crop Progress - U.S. Crop Progress - USDA AMS: Market News - 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, August 25, 2017 Thursday, August 31, 2017 Commodity Contract Month Friday Monday Tuesday Wednesday Thursday Soybeans Sep ($/bushel) Nov Jan Mar May Jul Corn Sep ($/bushel) Dec Mar May Jul Sep Wheat Sep ($/bushel) Dec Mar May Jul Soybean Meal Sep ($/ton) Oct Dec Jan Mar May Cotton Oct ( /lb) Dec Mar May Jul Live Cattle Aug ($/cwt) Oct Dec Feb Apr Feeder Cattle Aug ($/cwt) Sep Oct Nov Jan Mar Market Hogs Oct ($/cwt) Dec Feb Apr May

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 Prices on Tennessee Reported Livestock Auctions for the week ending September 1, 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 # lbs lbs lbs lbs Heifers: Medium/Large Frame # lbs lbs lbs lbs Cattle Receipts: This week: 8,038 (11) Week ago: 6,564 (11) Year ago: 5,191 (10) 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, August 25, 2017 Thursday, August 31, 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 Athens Stockyard - August 30, load of Holstein Steers; avg. wt. 950 lbs.; $ load of heifers; blk/bwf; avg. wt. 610 lbs.; $ load of heifers; mixed; avg. wt. 615 lbs.; $ East Tennessee Livestock Center - August 30, load out of 90 steers; BQA certified producer; est. wt. 825 lbs.; 95% L&M-1s, 5% L&M-2s; medium flesh; 100% black/bwf; $ load out of 120 Holstein steers; BQA certified producer; est. wt. 875 lbs.; 95% #1s, 5% #2s; medium flesh; $92.35 Browning Livestock - August 30, loads of 120 steers; avg. wt. 801 lbs.; $ Video Board Sale and Graded Sales East Tennessee Livestock Center - August 25, 2017 Graded Feeder Cattle Sale Receipts: 1,061 For complete report: Self-Reported and Self-Graded Livestock Markets 8/29/17 TN Livestock Producers Fayetteville Receipts: 482 (189 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 lbs lbs /29/17 Somerville Livestock Sales Steers/Bulls: Med & Lg 1-2 Heifers: Med & Lg lbs lbs lbs lbs lbs lbs lbs lbs lbs lbs lbs lbs Self-Reported and Self-Graded Livestock Markets Value Added Steers: Med & Lg lbs lbs lbs /28/17 KY/TN Livestock Cross Plains Receipts: 275 Steers: Med & Lg 1-2 Heifers: Med & Lg lbs lbs lbs lbs lbs lbs lbs Bulls: Med & Lg lbs lbs lbs lbs lbs lbs lbs lbs lbs lbs lbs lbs /28/17 Morris Brothers Stockyard, Pikeville, TN Receipts: 95 Last Week: 112 Last Year: 134 Steers: Heifers: lbs lbs lbs lbs lbs lbs lbs lbs lbs lbs lbs lbs Bulls: lbs lbs lbs lbs lbs lbs lbs /28/17 Woodbury Livestock Market, LLC Receipts: 293 (*Weaned/Vaccinated) Steers: Med & Lg 1-2 Heifers: Med & Lg lbs lbs * lbs * lbs * lbs * lbs * lbs * lbs * lbs * lbs * (Continued on page 10) 9

10 Self-Reported and Self-Graded Livestock Markets Bulls: Med & Lg lbs lbs lbs lbs /25/17 Coffee County Livestock Market Graded Goat and Sheep Sale Manchester, TN Receipts: 760 (391 Goats; 369 Sheep) Next Sale Sep 8, 2017 Graded Sheep and Goat Sales Columbia Graded Sheep and Goat Sale Weighted Average Report for 08/28/2017 Receipts: 623 (464 goats; 159 sheep) Last sale not reported Next Sale September 11, 2017 (Second and fourth Monday of each month For complete report: Goats sold per hundred weight (cwt) unless otherwise noted, weights, actual or estimated. Slaughter Classes: Kids Selection 1 Selection 2 Selection lbs lbs lbs lbs lbs Feeders lbs Yearlings lbs Nannies lbs Replacement Nannies Small Nannies Thin Medium Billies lbs Large Billies Thin SHEEP: Slaughter Lambs-Includes all breeds, sold per hundred weight (cwt). Choice and Prime lbs Good Choice and Prime lbs Good Choice and Prime lbs Good Choice and Prime lbs Good Choice and Prime lbs Feeders lbs Yearlings Replacement Ewes Ewes lbs Rams lbs

11 Beef Industry News Featured Article from DROVERS CattleNetwork Putting "Record High" Meat Production in Context By Livestock Marketing Information Center August 31, 2017 Total U.S. red meat and poultry production are often cited as "record high," which is correct this year and last, and the Livestock Marketing Information Center (LMIC) forecasts that situation to persist through However, production numbers need to be in context, which is often not done. First, looking at the timeframe from 1960 through 2016 (56 years), 40 of those years set new all-time highs in U.S. red meat and poultry production. That is 71% of the year's set new highs; records are the typical situation, not abnormal. The LMIC projects that among the U.S. red meats (beef, pork, lamb, and veal), only commercial production of pork will set a new all-time high this year (25.7 billion pounds on a carcass weight basis). Beef output in 2017 is expected to be about 26.2 billion pounds; that would be the largest for any year since U.S production of lamb in 2017 is forecast to erode to 143 million pounds, a new low. Commercial veal production is projected to be just over 79 million pounds, larger than 2016 s but the second lowest since the data have been compiled (1960). Overall, U.S. production of red meats will set a new high this year (about 52.1 billion pounds carcass weight), but the breakdown is important. Further insight is provided by calculating disappearance (sometimes called consumption) on a per person basis. Besides accounting for population growth, that calculation entails subtracting exported tonnage, adding imports, and adjusting for any year-over-year change in stocks (frozen product). Usually, disappearance is discussed as a retail weight (weight estimated at the meat counter in the grocery store). Retail weight per capita disappearance of total red meat and poultry in 2017 is projected to be the largest since 2008, not record large. LMIC projects this year s U.S. per person beef disappearance will be the largest since For pork, due mostly to large export tonnage, per person disappearance in 2017 is expected to come in at slightly below 2016 s. Combined chicken and turkey disappearance (retail weight) in 2017 is likely to be slightly below a year ago (note that 2016 was record high). Drilling down into the production numbers shows large supplies of most meats and poultry, but not unheard of levels. Looking at the retail weight per person story is important. It gives insight, among other things, to how exports have impacted domestic use. In the U.S. poultry complex (chicken and turkey), led by chicken, 2017's total output is projected to set a new all-time high (Federally Inspected output of 47.4 billion pounds). Turkey tonnage is expected to be slightly below a year ago. Department of Agricultural and Resource Economics 314 Morgan Hall 2621 Morgan Circle arec.tennessee.edu USDA / Tennessee Department of Agriculture Market News Service