Tennessee Market Highlights

Transcription

1 Tennessee Market Highlights June 22, 2018 Number: 25 Trends for the Week Compared to a Week Ago Slaughter Cows Steady to $2 higher Slaughter Bulls Steady to $1 lower Feeder Steers Steady to $5 higher Feeder Heifers Steady to $2 higher Feeder Cattle Index Wednesday s index: $ Fed Cattle The 5-area live price of $ is down $1.14. The dressed price is down $1.11 at $ Corn July closed at $3.57 a bushel, down 4 cents since last Friday. Soybeans July closed at $8.94 a bushel, down 11 cents since last Friday. Wheat July closed at $4.91 a bushel, down 8 cents since last Friday. Cotton July closed at cents per lb, down 4.55 cents since last Friday. Livestock Comments by Dr. Andrew P. Griffith FED CATTLE: Fed cattle traded $2 to $3 lower than last week on a live basis. Prices on a live basis were mainly $109 to $110 while dressed prices were mainly $172 to $173. The 5-area weighted average prices thru Thursday were $ live, down $1.14 from last week and $ dressed, down $1.11 from a week ago. A year ago prices were $ live and $ dressed. Lower finished cattle prices have pushed cattle feeders into the red on closeouts, and it is doubtful much relief is going to come from finished cattle prices in the next couple of months. One bright spot for cattle feeders is lower feed costs as corn futures are 40 to 50 cents per bushel lower than they were one month ago and soybean meal is nearly $50 per ton lower. There remains a legion of cattle on feed that will be coming to market in the next few months which will keep fed cattle prices in check. It will be important for cattle feeders to keep marketings current and not let the lower feed costs seduce them into holding cattle too long just to add some pounds. The market dynamics could make this interesting the next month or so. BEEF CUTOUT: At midday Friday, the Choice cutout was $ down $0.30 from Thursday and down $4.95 from last Friday. The Select cutout was $ up $2.32 from Thursday and up $1.25 from last Friday. The Choice Select spread was $13.18 compared to $19.38 a week ago. The beef, veal, and variety meat export market has been strong for most of Based on monthly data from January through April, total beef and veal exports in 2018 totaled more than 714 million pounds which is 12.4 percent greater than the same four months in The value of those beef and veal exports totaled more than $2.3 billion which is 21.9 percent greater than a year ago. Similarly, beef variety meat exports the first four months of the year increased 1.6 percent compared to a year ago and were nearly 232 million pounds. Beef variety meat export value through April totaled $289 million which is 6.6 percent greater than the same period one year ago. In the midst of a strong beef export market, there is concern among many people in the agricultural industry as trade war talks continue to be stoked with the threats of tariffs. Tariff threats have contributed to a major decline in soybean prices, but the beef market has yet to fill any major effects. It is difficult to measure the impact of a Tweet, but a Tweet by the President seems to influence the market. OUTLOOK: Based on Tennessee weekly auction market price averages, steer prices were steady to $5 higher compared to last week while heifer prices were steady to $2 higher compared to a week ago. Similarly, slaughter cow prices were steady to $2 higher compared to last week while slaughter bull prices were steady to $1 lower. As the market moves into the heat of summer, many producers are forced to make marketing decisions based on forage availability. Thus, there are several producers in the state with calves or feeder cattle that could be marketed today or the alternative is to hold those cattle for a little longer to add weight if feed resources are available as it relates to grass and affordable as it relates to concentrates. This means value of gain and cost of gain need to be evaluated to determine when to market cattle. Using a static approach to calculate value of gain, which is simply considering the current week s price, adding 100 pounds to a 525 pound steer has a value of gain of $75 or $0.75 per pound. Adding 100 pounds to a 625 pound steer has a value of gain of $1.07 per pound. On the heifer side of the business, the value of gain ranges from $0.68 to $0.88 for an additional hundred pounds when considering heifers from 525 to 775 pounds. Though this static approach (Continued on page 2)

2 Livestock Comments by Dr. Andrew Griffith (Continued from page 1) to value of gain is simple and useful, a more appropriate method is trying to determine the future price of the animal that will be marketed following a growing period. The value of gain for carrying steers to the 600 to 800 pound range appears even more beneficial as prices for these weight classes are seasonally stronger moving through the summer months. The value of gain on steers appears to be in the $0.95 to $1.10 per pound range. Likewise, the value of gain for heifers using expected prices later this summer increases relative to the static analysis. The value of gain on the heifers appears to be slightly higher than the steers which is largely due to less of a discount relative to steers as heifers add weight. Thus, producers should consider the cost of adding weight with forage and concentrates this summer. The June cattle on feed report for feedlots with a 1000 head or more capacity indicated cattle and calves on feed as of June 1, 2018 totaled million head, up 4.1% compared to a year ago, with the pre-report estimate average expecting an increase of 3.4%. May placements in feedlots totaled 2.12 million head, up 0.2% from a year ago with the pre-report estimate average expecting placements down 4.2%. May marketing s totaled 2.06 million head up 5.4% from 2017 with pre-report estimates expecting marketings up 5.2%. Placements on feed by weight: under 700 pounds up 7.9%, 700 to 899 pounds down 7.0%, and 900 pounds and over up 3.1%. improve net returns. 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 August $ ; September $ ; October $ ; November $ ; July corn closed at $3.57 up $0.01 from Thursday.. ASK ANDREW, TN THINK TANK: There have been several comments the past couple of weeks concerning fly infestation and negative impacts on cattle including eye irritation and poor growth performance. The true economic impact of flies on cattle is tough to calculate. However, a team of researchers at the University of Tennessee is attempting to determine the impact of flies on cattle and the economic losses. At the same time, the team of researchers is attempting to identify characteristics that lead to some cattle being less susceptible to flies than their herd mates as well as trying to determine the value cow-calf producers to feedlot operators place on such a characteristic. This research is just getting underway so it is going to take some time before any results can be shared. However, the hope is that a positive result is discovered and that result is something producers can institute into the cattle operation to Milk Futures Thursday, June 21, 2018 Month Class III Close Class IV Close June July Aug Sept Oct Average Daily Slaughter Cattle Hogs Number of head This week (4 days) 119, ,000 Last week (4 days) 117,00 445,500 Year ago (4 days) 117, ,750 This week as percentage of Week ago (%) 102% 98% Year ago (%) 102% 101% 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 down for the week. Early this week commodity prices continued the three week sell off before stabilizing by the end of the week. From June 1, corn, soybean, wheat, and cotton harvest futures are down 35 ½, 118 ½, 33 ¼, and 6.32 cents. The decrease in prices have been sudden and deep. The reasons for the decline are three fold 1) great growing conditions to date; 2) the escalation of trade tensions with China and other countries; and 3) the liquidation of long positions in corn and soybeans by investment money. All three are intertwined in the price decline as without 1 and 2, 3 wouldn t have occurred (or would at the least been muted to a large extent. The question now is where do we go from here? The rapid and deep decline in futures markets on Tuesday (for example, soybeans were down at one point 64 ½ cents before regaining ground and closing down 20 ½ cents) has resulted in substantial chart damage from a technical standpoint. The decline opens the door for a potential rebound (in the November contract to the $9.35 area) followed by a potential retest of the current low ($8.64 ½ for the November contract). It will be key to hold the existing low in the November contract of $8.64 ½ or further weakness may occur. Producers were fortunate to have opportunities this winter and spring to price 2018 soybeans while the November contract was between $10.00 and $10.60, because without a substantial turn in weather or an about face in trade negotiations, the highs for this year s crop are likely in. A sit and wait approach is likely warranted for those with over half of their estimated production priced or at least they have the ability to be more selective when choosing to secure a price on additional production. For those that have not secured any prices for 2018 production the road forward is a little more challenging. Three things to consider: 1) do not panic and further complicate a challenging situation, there is still time and opportunities will likely still occur; 2) evaluate storage capacity for this crop, most areas of Tennessee have really good growing conditions, so there is the potential for a large crop, the more that can be stored the longer we can extend the marketing period and the ability for a price rebound; and 3) be prepared to take advantage of rallies (above $9.20 and $3.80 on the harvest futures contracts, for soybean and corn, should at least be considered for those with no pricing year-to-date). Corn Across Tennessee, average corn basis (cash price-nearby futures price) strengthened or remained unchanged at Northwest Barge Points, Northwest, Lower-middle, and Upper-middle Tennessee and weakened at Memphis. Overall, basis for the week ranged from 16 under to 30 over the July futures contract with an average of 5 over at the end of the week. July 2018 corn futures closed at $3.57, down 4 cents since last Friday. For the week, July 2018 corn futures traded between $3.38 and $3.62. Corn net sales reported by exporters from June 8-14 were below expectations with net sales of 6.5 million bushels for the 2017/18 marketing year and 13.4 million bushels for the 2018/19 marketing year. Exports for the same time period were down 25% compared to last week at 69.4 million bushels. Corn export sales and commitments were 97% of the USDA estimated total annual exports for the 2017/18 marketing year (September 1 to August 31) compared to a 5-year average of 99%. Ethanol production for the week ending June 15 was million barrels per day, up 11,000 from the previous week. Ethanol stocks were million barrels, down 527,000 barrels. Jul/Sept and Jul/Dec future spreads were 9 and 21 cents, respectively. The Crop Progress report estimated corn condition at 78% good-to-excellent and 4% poor-to-very poor; and corn emerged at 98% compared to 94% last week, 97% last year, and a 5-year average of 97%. In Tennessee, corn condition was estimated at 77% goodto-excellent and 3% poor-to-very poor; corn emerged at 98% compared to 97% last week, 98% last year, and a 5-year average of 99%; and a 5-year average of 98%; and corn silking at 8% compared 1% last week, 10% last year, and a 5-year average of 3%. In (Continued on page 4) 3

4 Crop Comments by Dr. Aaron Smith Tennessee, September 2018 corn cash forward contracts averaged $3.60 with a range of $3.48 to $3.86. September 2018 corn futures closed at $3.7066, down 4 cents since last Friday. December 2018 corn futures closed at $3.78, down 4 cents since last Friday. Downside price protection could be obtained by purchasing a $3.80 December 2018 Put Option costing 25 cents establishing a $3.55 futures floor. Soybeans Average soybean basis strengthened or remained unchanged at Memphis, Northwest Barge Points, Northwest, Lower-middle, and Upper-middle Tennessee. Basis ranged from 41 under to 12 over the July futures contract at elevators and barge points. Average basis at the end of the week was 8 under the July futures contract. July 2018 soybean futures closed at $8.94, down 11 cents since last Friday. For the week, July 2018 soybean futures traded between $8.41 and $9.14. Net sales reported by exporters were within expectations with net sales of 11.1 million bushels for the 2017/18 marketing year and 8.4 million bushels for the 2018/19 marketing year. Exports for the same period were up 66% compared to last week at 36.4 million bushels. Soybean export sales and commitments were 100% of the USDA estimated total annual exports for the 2017/18 marketing year (September 1 to August 31), compared to a 5-year average of 101%. July soybean-to-corn price ratio was 2.50 at the end of the week. Jul/Aug and Jul/Nov future spreads were 6 and 22 cents, respectively. August 2018 soybean futures closed at $9.00, down 11 cents since last Friday. The Crop Progress report estimated soybean condition at 73% good-to-excellent and 5% poor-to-very poor; soybeans planted at 97% compared to 93% last week, 95% last year, and a 5-year average of 91%; and soybeans emerged at 90% compared to 83% last week, 87% last year, and a 5-year average of 81%. In Tennessee, soybean condition was estimated at 76% goodto-excellent and 2% poor-to-very poor; soybeans planted at 87% compared to 79% last week, 84% last year, and a 5-year average of 76%; soybeans emerged at 71% compared to 60% last week, 68% last year, and a 5-year average of 58%; and soybeans blooming at 3% compared to 2% last year and a 5-year average of 0%. In Tennessee, Oct/Nov 2018 soybean cash contracts average $8.96 with a range of $8.70 to $9.32. November 2018 soybean futures closed at $9.16, down 14 cents since last Friday. Downside price protection could be achieved by purchasing a $9.20 November 2018 Put Option which would cost 49 cents and set an $8.71 futures floor. Nov/Dec 2018 soybean-to-corn price ratio was 2.42 at the end of the week. Cotton Delta upland cotton spot price quotes for June 21 were 83.8 cents/lb ( ) and cents/lb ( ). Adjusted World Price (AWP) decreased 4.76 cents to cents. July 2018 cotton futures closed at cents, down 5.29 cents since last Friday. For the week, July 2018 cotton futures traded between and cents. Net sales reported by exporters were down from last 4 (Continued on page 5)

5 Crop Comments by Dr. Aaron Smith week with net sales cancelations of 112,400 bales for the 2017/18 marketing year and net sales of 295,400 bales for the 2018/19 marketing year. Exports for the same period were down 32% compared to last week at 312,800 bales. Upland cotton export sales were 108% 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 103%. Jul/Oct and Jul/Dec cotton futures spreads were 0.91 cents and cents, respectively. Oct 2018 cotton futures closed at 86.34, down 4.94 cents since last Friday. The Crop Progress report estimated cotton condition at 38% good-to-excellent and 26% poor-to-very poor; cotton planted at 96% compared to 90% last week, 94% last year, and a 5-year average of 94%; and cotton squaring at 22% compared to 15% last week, 21% last year, and a 5-year average of 17%. In Tennessee, cotton condition was estimated at 74% good-to-excellent and 6% poor-to-very poor; cotton planted at 100% compared to 99% last week, 99% last year, and a 5-year average of 99%; and cotton squaring at 33% compared to 16% last week, 22% last year, and a 5- year average of 17%. December 2018 cotton futures closed at 85.3, down 4.55 cents since last Friday. Downside price protection could be obtained by purchasing an 86 cent December 2018 Put Option costing 5.68 cents establishing an cent futures floor. Wheat In Tennessee, June/July 2018 wheat cash contracts ranged from $4.62 to $5.20 for the week. July 2018 wheat futures closed at $4.91, down 8 cents since last Friday. July 2018 wheat futures traded between $4.67 and $4.99 this week. July wheat-to-corn price ratio was Wheat net sales reported by exporters were within expectations with net sales of 17 million bushels for the 2018/19 marketing year. Exports for the week were up 38% compared to last week at 15.7 million bushels. Wheat export sales were 19% of the USDA estimated total annual exports for the 2018/19 marketing year (June 1 to May 31), compared to a 5-year average of 28%. The Crop Progress report estimated winter wheat condition at 39% good-to-excellent and 33% poor-to-very poor; winter wheat headed at 95% compared to 91% last week, 96% last year, and a 5-year average of 95%; winter wheat harvested at 27% compared to 14% last week, 66% last year, and a 5-year average of 19%; spring wheat condition at 78% good-to-excellent and 3% poor-to-very poor; spring wheat emerged at 97% compared to 94% last week, 98% last year, and a 5-year average of 95%; and spring wheat headed at 9% compared to 14% last year and a 5-year average of 12%. In Tennessee, winter wheat condition was estimated at 58% good-to-excellent and 6% poor-to-very poor; winter wheat mature at 94% compared to 69% last week and 94% last year; and winter wheat harvested at 60% compared to 13% last week, 69% last year, and a 5-year average of 34%. Jul/Sep and Jul/Jul future spreads were 13 cents and 63 cents, respectively. September 2018 wheat futures closed at $5.04, down 9 cents since last Friday. July 2019 wheat futures closed at $5.54, down 13 cents since last Friday. Downside price protection could be obtained by purchasing a $5.60 July 2019 Put Option costing 48 cents establishing a $5.12 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, June 15, 2018 Thursday, June Commodity Contract Month Friday Monday Tuesday Wednesday Thursday Soybeans Jul ($/bushel) Aug Sep Nov Jan Mar Corn Jul ($/bushel) Sep Dec Mar May Jul Wheat Jul ($/bushel) Sep Dec Mar May Soybean Meal Jul ($/ton) Aug Sep Oct Dec Jan Cotton Jul ( /lb) Oct Dec Mar May Live Cattle Jun ($/cwt) Aug Oct Dec Feb Feeder Cattle Aug ($/cwt) Sep Oct Nov Jan Mar Market Hogs Jun ($/cwt) Jul Aug Oct Dec

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 June 22, lbs lbs lbs lbs Heifers: Medium/Large Frame # lbs lbs lbs lbs Cattle Receipts: This week: 6,447 (10) Week ago: 7,777 (11) Year ago: 4,764 (8) 7

8 Tennessee lbs. M-1 Steer Prices 2017, 2018 and 5-year average Tennessee lbs. M-1 Steers Prices 2017, 2018 and 5-year average /2016 Avg /2016 Avg Area Finished Cattle Prices 2017, 2018 and 5-year average Tennessee Slaughter Cow Prices Br eakers 75-80% 2017, and 5-year average 2012/2016 Avg Prices Paid to Farmers by Elevators Friday, June 15, 2018 Thursday, June 21, 2018 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 & Loads East TN Livestock June 20, load out of 65 steers; BQA producer; 100% L&M-1s; medium flesh; 100% Blk/BWF; est. wt. 836 lbs.; $ Other: Head Cows: Slaughter Cows (over 900 lbs): Browning Livestock Market June 20, load of 77 steers; M&L-1&2s; est. wt. 661 lbs.; $ Graded Sales East TN Livestock Center Sweetwater, TN Graded Holstein Steer Report for Friday, June 15, 2018 Receipts: 987 For complete report: nv_ls182.txt Self-Reported and Self-Graded Livestock Markets 6/19/18 TN Livestock Producers Fayetteville Receipts: 543 (319 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 /18/18 Morris Brothers Stockyard, Pikeville, TN Receipts: 76 Last Week: 68 Last Year: 111 Steers: Heifers: lbs lbs lbs lbs lbs lbs lbs lbs Bulls: Under 200 lbs lbs lbs lbs lbs lbs lbs

10 Beef Industry News Featured Article from Drovers Cattle Pest Control Vital By: Ellen Crawford, NDSU Extension Service Integrated pest management concepts that are commonplace for controlling crop pests also apply to controlling livestock pests, North Dakota State University Extension livestock and pest management specialists say. Those key concepts for controlling pests effectively are using the right type of control at the right time for the right duration. Many North Dakota livestock producers apply pest control prior to pasture turnout, which may be optimal for control of some pests but not others, says Miranda Meehan, NDSU Extension livestock environmental stewardship specialist. In a recent survey NDSU Extension conducted, North Dakota livestock producers reported that face and horn flies were the most common and most treated pest on their operations. Left untreated, these pests can cause significant loss in production, says Gerald Stokka, NDSU Extension veterinarian and livestock stewardship specialist. In the U.S., horn flies are estimated to cause an economic loss of $1 billion annually. Horn and Face Flies Horn flies are grayish and look like small houseflies. Horn flies are biting flies; they spend most of their time on cattle clustered on the animals head, shoulders and back. Horn flies also can be found on the cattle s belly during warm weather. These blood-sucking flies feed up to 30 times per day. This constant biting causes pain and stress, and can reduce weight gains by as much as 20 pounds. When fly counts reach 200 flies per animal, the economic threshold has been reached and animals will have significant weight loss. The life cycle of a horn fly ranges from 10 to 20 days, depending on weather conditions. Populations typically peak in midsummer and early fall. Face flies look like large, dark-colored houseflies. Face flies are nonbiting flies that feed on animal secretions, plant nectar and manure liquids. These flies may transmit pathogens responsible for infecting the eye and causing keratoconjunctivitis, or pinkeye, in cattle. The life cycle of a face fly is approximately 21 days. Populations tend to peak in late summer. Horn and face flies typically are not present at pasture turnout and do not reach economic thresholds for applying control until midsummer. Control Methods The first step to determining when to apply control is to properly scout pastures and cattle to determine fly type and fly populations, says Patrick Beauzay, a research specialist in NDSU s Plant Pathology Department. Horn flies typically rest on cattle throughout the day, whereas face flies land on the face of cattle for a meal and then retreat to nearby structures (forages, fences, etc.). Once threshold populations are achieved, control measures can be implemented. One control method is ear tags containing insecticides that are released slowly into an animal s hair by movement. Ear tags should not be applied until fly populations are nearing the economic thresholds (typically from mid-june to July). Read insecticide container labels carefully because recommendations can vary in the number of tags to apply (one or two), age of cattle that can be tagged and chemical class of active ingredient (pyrethroid, organophosphate or a combination), Beauzay says. To help prevent resistance, he recommends rotating the class of insecticide each year and removing the tags when they no longer are providing effective fly control. Stokka says that to achieve proper fly control, pour-on and sprays must be applied every two to three weeks throughout the fly season. Applying these products only before pasture turnout likely will not be an effective fly control method. The use of avermectin pour-on or injectable products will have more impact on internal parasite loads later in the summer, when internal parasite populations are greater, he notes. Additionally, avermectin products are not labeled for fly control and their use will contribute to resistant fly populations. Feed-additive Insecticides Feed-additive insecticides can be included in mineral formulations that pass through the animals digestive system and destroy the developing horn and face fly maggots in the manure, advises Janna Kincheloe, Extension livestock systems specialist at NDSU s Hettinger Research Extension Center. These insecticides are effective in killing 80 to 90 percent of the developing fly larvae in animals that have consumed the product. Feed additives offered at least one month prior to peak fly populations will diminish overall populations, according to the specialists. However, migration of adult flies from neighboring herds still may present problems. Providing enough feeding stations to achieve a more consistent intake is critical to this system s impact, Kincheloe says. A rule of thumb is to provide one mineral feeding station for every 30 to 50 cows. For complete article: Department of Agricultural and Resource Economics 314 Morgan Hall 2621 Morgan Circle arec.tennessee.edu USDA / Tennessee Department of Agriculture Market News Service