Tennessee Market Highlights

Transcription

1 Tennessee Market Highlights June 26, 2015 Number: 26 Trends for the Week Compared to a Week Ago Slaughter Cows Breakers $2 to $3 lower; Boners $1 to $3 higher Slaughter Bulls $2 to $4 higher Feeder Steers Under 600 lbs. $5 to $10 lower; Over 600 lbs. steady to $2 higher Feeder Heifers Under 500 lbs. $3 to $8 lower; Over 500 lbs. steady to $1 lower Feeder Cattle Index Wednesday s index: Fed Cattle The 5-area live price of $ is down $2.61. The dressed price is down $2.19 at $ Corn July closed at $3.85 a bushel, up 32 cents since last Friday. Soybeans July closed at $10.02 a bushel, up 31 cents a bushel since last Friday. Wheat July closed at $5.62 a bushel, up 74 cents a bushel since last Friday. Cotton July closed at cents per lb, up 3.84 cents per lb since last Friday. Livestock Comments by Dr. Andrew P. Griffith FED CATTLE: Fed cattle traded $2 lower on a live basis compared to a week ago. Live prices were mainly $148 while dressed trade was mainly $238 to $240. The 5-area weighted average prices thru Thursday were $ live, down $2.61 from last week and $ dressed, down $2.19 from a week ago. A year ago prices were $ live and $ dressed. Based on weekly weighted average fed cattle prices, this is the first week since September 2013 where the fed cattle market experienced a year over year price decline. The last time year ago prices were higher than the same week prices in the current period was just prior to sequestration which occurred in October of Since that time, the fed cattle market made a steady march up the price chart all the way through the end of Since the end of 2014, live cattle prices actually have a steady to downward price trend through the first six months of The downward price trend has become more prevalent in the past three months. Live cattle prices have declined more than $13 the past seven weeks and nearly $19 since the first week of April. Since April, a 1,380 pound steer has lost $260 worth of revenue due to output price alone which wipes out profits. BEEF CUTOUT: At midday Friday, the Choice cutout was $ down $0.63 from Thursday and up $3.69 from last Friday. The Select cutout was $ down $0.45 from Thursday and up $3.89 from last Friday. The Choice Select spread was $4.85 compared to $5.05 a week ago. As Independence Day quickly approaches, beef is likely experiencing its last shot of support until Labor Day purchases. Most grocers and restaurants have already finished their purchases for the holiday, but they may have to restock some of the inventory following the long holiday weekend. Meat proteins have met significant resistance in 2015 relative to The strength of the dollar relative to other currencies has put a damper on some export markets while the value of the dollar in conjunction with record U.S. beef prices has slowed other export markets. Commercial beef production through May was down 4.7 percent compared to the same time period one year ago. Alternatively, commercial pork production has increased 5.6 percent while chicken production has increased 3.8 percent the first five months of 2015 compared to the same time period a year earlier. Increased production of competing meats will result in lower prices relative to beef. One thing that could support beef would be if the broiler industry is hit by highly pathogenic avian influenza this fall during migration. OUTLOOK: Feeder cattle prices were steady to firm this week across weekly auction markets while calf prices softened. How long feeder cattle prices will maintain current price levels is a major unknown especially with the limit lower move Thursday on feeder cattle futures. Fed cattle prices normally soften during the heat of summer but prices have declined more than many industry experts expected. The fed cattle price decline will undoubtedly put pressure on feeder cattle prices. Additionally, corn prices have started a quick ascent with more than a 40 cent per bushel price increase on the December contract in the past two weeks which will put downward pressure on calf and feeder cattle prices. It sounds like the odds are stacked against cash feeder cattle prices with the decline in feeder cattle futures, the decline in fed cattle prices, and the rising corn prices. However, the cash price for feeder cattle has not been as responsive the past six to twelve months to price movements related to the futures market. If feeder cattle futures continue to decline then it is almost certain cash feeder cattle prices will decline, but cash prices are not likely to be as volatile as futures market prices. It is important to remember that feeder cattle (Continued on page 2)

2 Livestock Comments by Dr. Andrew Griffith (Continued from page 1) prices generally reach their yearly apex between the end of July and the first couple of weeks of September. Thus, seasonality is on the side of feeder cattle producers the next few months. Producers planning to market calves in the fall may want to consider some type of price protection such as Livestock Risk Protection Insurance, futures hedge or forward pricing, because there have been some signals for the fall market to be soft relative to today s market price. This does not mean the bottom will fall out of prices this fall, it just means that producers should be prepared to see slightly softer prices than current prices and much lower prices than year ago prices. ASK ANDREW, TN THINK TANK: Several producers have asked questions regarding THE Beef Cattle firm which is a record keeping software for cow-calf producers developed at the University of Tennessee Institute of Agriculture. The software is a tool to maintain individual cow, bull, and calf performance, sale information, and inventory records. The program is primarily a production record keeping system that allows several different reports to be compiled with the click of a button. However, if additional analysis is desired, users of the program can import and export data in a spreadsheet. For more information concerning the program, producers can visit the UT Ag Econ website ( where they will find functions of the program, computer system requirements, and cost of the program. Additionally, the website contains videos of producers who have been successful in using the software program and how they use it to keep records for their operations. 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 $3.85 up $0.09 from Thursday. Average Daily Slaughter Cattle Hogs Number of head This week (4 days) 109, ,750 Last week (4 days) 108, ,250 Year ago (4 days) 115, ,750 This week as percentage of Week ago (%) 101% 99% Year ago (%) 96% 107% 2 Milk Futures Thursday June 25, 2015 Month Class III Close Class IV Close Jun Jul Aug Sep Oct 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, soybeans, cotton, and wheat were up for the week. December corn is now trading above $4.00 for the first time since April 23rd; November soybeans rallied over 45 cents this week to close at $9.86, its highest level since March 2nd; July wheat traded above $5.60 for the first time since early January; and December cotton breached its 13 week high of cents, closing at Weather provided the primary fuel for the futures market rallies in corn, soybeans, and wheat. Excessive rain has affected planting and crop conditions in a large part of the Corn Belt. Compounding the problem is additional rain forecast for the next two weeks which will make replanting difficult and add to the current adverse growing conditions. Wheat was especially weather driven this week with wet conditions in the US hampering harvest and dry conditions in key spring wheat production regions in Canada, Russia, and the EU. As long as the current wet weather forecasts persist prices should continue to remain bullish. For producers that have limited production priced or have not priced 2015 production this rally provides an excellent opportunity to establish a price on some of your anticipated corn and soybean production. For those that have already established a price on a comfortable amount of production a wait-and-see approach may be warranted. Given the current weather concerns, the USDA s June 30th acreage report will likely not have the same impact, in either direction, as last year s Acreage report when: November 2014 soybeans dropped 74 ½ cents from $12.26 to $11.51 ½; December corn dropped 19 ¼ cents from $4.44 ½ to $4.23 ½; and July wheat dropped 18 ¾ cents from $5.83 ½ to $5.55 ¾. The June 30th Acreage report provides planted acreage results based primarily on producer surveys in the first two weeks of June. As such, the results of the producer survey will likely not capture any acres that were flooded/replanted/prevented planted after the surveys were conducted. The report will still provide estimated acreage, however weather related factors will have to be fully considered when interpreting the report s results. The more interesting report may be the June 30th Quarterly Stocks report. The Quarterly Stocks report will provide estimates of implied use year-to-date and remaining stocks. If stocks are tighter than anticipated, particularly in soybeans, this could provide additional fuel to the rally of the past two weeks. Estimated 2014/15 marketing year ending stocks have fallen from 475 million bushels on the September WASDE to 330 million bushels on the June WASDE. Corn July 2015 corn futures closed at $3.85 up 32 from last week. This week July 2015 corn futures prices traded between $3.50 and $3.90. Across Tennessee average basis (cash price- nearby future price) remained unchanged or strengthened at Memphis, Northwest Barge Points, Lower-middle, and Upper-middle Tennessee and weakened in Northwest Tennessee. Overall, average basis for the week ranged from even to 41 over the July futures contract with an average of 15 over at the end of the week. Ethanol production for the week ending June 19th was 994,000 barrels per day up 14,000 barrels per day from last week. Ending ethanol stocks were million barrels down 878,000 barrels from last week. Corn net sales reported by exporters from June 12th to 18th were within expectations with net sales of 19.6 million bushels for the 2014/15 marketing year and 11.7 million bushels for the 2015/16 marketing year. Exports for the same time period were up from last week at 44.3 million bushels. Corn export sales and commitments were 97% of the USDA estimated total annual exports for the 2014/15 marketing year (September 1 to August 31) compared to a 5-year average of 100%. Jul/Sep and Jul/Dec future spreads were 7 cents and 17 cents, respectively. September 2015 corn futures closed at $3.92 up 34 cents since last week. September 2015 cash forward contracts averaged $3.67 with a range of $3.44 to $4.02. Nationally, this week s Crop Progress report estimated corn condition at 71% good to excellent and 6% poor to very poor. In Tennessee, corn condition was estimated at 79% good to excellent and 5% poor to very poor; and corn silking at 6% compared to 7% last year and a 5-year average of 23%. Downside price protection could be obtained by purchasing a $3.95 September 2015 Put Option costing 22 cents establishing a $3.73 futures floor. 3 (Continued on page 4)

4 Crop Comments by Dr. Aaron Smith Soybeans July 2015 soybean futures closed at $10.02 up 31 cents since last week. This week July 2015 soybean futures traded between $9.71 and $ July soybean to corn price ratio was 2.60 at the end of the week. For the week, average soybean basis strengthened at Northwest Barge Points, Memphis, Northwest, and Lower-middle Tennessee and weakened in Upper-middle Tennessee. Basis ranged from 10 under to 62 over the July futures contract at elevators and barge points. Average basis at the end of the week was 23 over the July futures contract. Net sales reported by exporters were above expectations with net sales of 4.4 million bushels for the 2014/15 marketing year and net sales of 7.4 million bushels for the 2015/16 marketing year. Exports for the same period were down from last week at 5.5 million bushels. Soybean export sales and commitments were 103% of the USDA estimated total annual exports for the 2014/15 marketing year (September 1 to August 31), compared to a 5-year average of 102%. August 2015 soybean futures closed at $9.97 up 42 cents since last week. Jul/Aug and Jul/Nov future spreads were -5 cents and -16 cents, respectively. November 2015 futures closed at $9.86 up 47 cents from last week. Nov/Sep 2015 soybean to corn price ratio was October/ November 2015 cash forward contracts averaged $9.59 with a range of $9.26 to $9.93 at elevators and barge points. Nationally, this week s Crop Progress report estimated soybean condition at 65% good to excellent and 8% poor to very poor; soybeans planted at 90% compared to 87% last week, 95% last year, and a 5-year average of 95%; and soybeans emerged at 84% compared to 75% last week, 89% last year, and a 5-year average of 87%. In Tennessee, soybean condition was estimated at 70% good to excellent and 6% poor to very poor; soybeans planted were estimated at 82% compared to 72% last week, 77% last year, and a 5-year average of 85%; and soybeans emerged at 64% compared to 55% last week, 61% last year, and a 5-year average of 69%. Downside price protection could be achieved by purchasing a $10.00 November 2015 Put Option which would cost 56 cents and set a $9.44 futures floor. Cotton July 2015 cotton futures closed at up 3.84 cents since last week. July 2015 cotton futures traded between 62.5 and cents this week. Adjusted world price (AWP) decreased 0.29 cents to cents per pound. Delta upland cotton spot price quotes for June 25 were to cents/lb. Net sales reported by exporters were down from last week with net sales of 60,500 bales for the 2014/15 marketing year and 52,700 bales for the 2015/16 marketing year. Exports for the same period were down from last week at 187,600 bales. Upland cotton export sales were 107% of the USDA estimated total annual exports for the 2014/15 marketing year (August 1 to July 31), compared to a 5-year average of 108%. October 2015 cotton futures closed at up3.15 cents since last week. Jul/Oct and Jul/Dec futures spreads were 1.05 cents and 0.35 cents, respectively. 4 (Continued on page 5)

5 Crop Comments by Dr. Aaron Smith December 2015 cotton futures closed at up 3.61cents since last week. Nationally, this week s Crop Progress report estimated cotton condition at 55% good to excellent and 9% poor to very poor; cotton planted at 94% compared to 91% last week, 99% last year, and a 5-year average of 100%; and cotton squaring at 22% compared to 13% last week, 23% last year, and a 5-year average of 26%. In Tennessee, cotton condition was estimated at 52% good to excellent and 10% poor to very poor; cotton planted at 100% compared to 99% last week, 100% last year, and a 5-year average of 100%; and cotton squaring at 20% compared to 9% last week, 37% last year, and a 5-year average of 28%. Downside price protection could be obtained by purchasing a 68 cent December 2015 Put Option costing 3.65 cents establishing a cent futures floor. Wheat July 2015 wheat futures closed at $5.62 up 74 cents since last week. July wheat futures traded between $4.87 and $5.66 this week. July wheat to corn price ratio was Net sales reported by exporters were within expectations with net sales of 16.0 million bushels for the 2015/16 marketing year and net sales of million bushels for the 2016/17 marketing year. Exports for the same period were up from last week at 14.3 million bushels. Wheat export sales were 22% of the USDA estimated total annual exports for the 2015/16 marketing year (June 1 to May 31), compared to a 5-year average of 26%. Nationally, this week s Crop Progress report estimated winter wheat condition at 41% good to excellent and 22% poor to very poor; winter wheat harvested at 19% compared to 11% last week, 31% last year, and a 5-year average of 31%; spring wheat condition at 71% good to excellent and 4% poor to very poor; and spring wheat headed at 23% compared to 9% last year and a 5-year average of 15%. In Tennessee, winter wheat condition was estimated at 79% good to excellent and 3% poor to very poor; winter wheat coloring at 98% compared to 96% last week, 98% last year, and a 5-year average of 99%; winter wheat mature at 89 % compared to 61% last week, 82% last year, and a 5-year average of 83%; and winter wheat harvested at 57% compared to 10% last week, 29% last year, and a 5-year average of 60%. June/July 2015 cash forward contracts averaged $4.97 with a range of $4.50 to $5.29 at elevators and barge points. September 2015 wheat futures closed at $5.68 up 76 cents since last week. Jul/Sept and Jul/Jul future spreads were 6 cents and 27 cents, respectively. July 2016 wheat futures closed at $5.89 up 53 cents since last week. Downside price protection could be obtained by purchasing a $5.90 July 2016 Put Option costing 68 cents establishing a $4.22 futures floor. 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, June 19, 2015 Thursday, June 25, 2015 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 Jul ($/cwt) Aug Oct Dec Feb

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 26, lbs lbs lbs lbs Heifers: Medium/Large Frame # lbs lbs lbs lbs Cattle Receipts: This week: 5,977 (11) Week ago: 5,944 Year ago: 8,595 7

8 Tennessee lbs. M-1 Steer Prices 2014, 2015 and 5-year average Tennessee lbs. M-1 Steer Prices 2014, 2015 and 5-year average /2013 Avg /2013 Avg Area Finished Cattle Prices 2014, 2015 and 5-year average Tennessee Slaughter Cow Prices Breakers 75-80% 2014, 2015 and 5-year average 2009/2013 Avg /2013 Avg Prices Paid to Farmers by Elevators Friday, June 19, 2015 Thursday, June 25, 2015 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 HARDIN COUNTY STOCKYARD June 24, load of 54 steers; avg. wt. 867 lbs.; $ Self-Reported and Self-Graded Livestock Markets 6/23/15 TN Livestock Producers Fayetteville Receipts: 305 (148 graded & grouped) Steers: Med & Lg 1-2 Heifers: Med & Lg lbs lbs lbs lbs lbs lbs lbs lbs lbs lbs Bulls: Med & Lg lbs lbs lbs /22/15 Morris Brothers Stockyard, Pikeville, TN Receipts: 80 Steers: Heifers: lbs lbs lbs lbs lbs lbs lbs lbs lbs lbs lbs lbs Bulls: lbs lbs lbs lbs lbs Tennessee Bred & Pairs Replacement 6/25/15 Athens Replacement Sale 291 head Replacement Cows: 4-7 years old lbs 6-7 months bred /head 8-9 years old lbs 5-7 months bred years old lbs 2-4 months bred years old lbs 5-7 months bred Cow and Calf Pairs: 5-7 years old lbs baby to 200 lb calves /pr 8-9 years old lbs baby to 150 lb calves Tennessee Sheep and Goat Auction 6/22/15 Tennessee Livestock Producers Graded Goat and Sheep Sale, Columbia, TN Receipts: 1089 (699 Goats; 390 Sheep) Last Sale 1346 Next Sale July 13, (2nd and 4th Monday of each month) Goats sold per hundred weight (cwt) unless otherwise noted, weights, actual or estimated. Slaughter Classes: Kids Selection 1 Selection lbs lbs lbs lbs lbs lbs lbs lbs lbs lbs Selection lbs lbs lbs lbs lbs Yearlings Selection 2-3: lbs lbs Slaughter Bucks/Billies: lbs lbs lbs and up Slaughter Nannies/Does: lbs lbs 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 Slaughter Ewes Utility and Good: lbs lbs lbs and up Slaughter Rams: lbs lbs 150 lbs and up

10 Beef Industry News Featured Article from DROVERS CattleNetwork Performance of replacement heifer calves following deworming By Jeremy Powell and Elizabeth Backes, UAEX June 24, 2015 Internal parasites are estimated to cost the U.S. cattle industry over $2.5 billion annually. Parasite burdens have been reported to decrease animal appetite, feed efficiency, ADG and total gain performance. Parasites also have potential to negatively affect reproductive performance of cows and developing heifer calves due to their effect on gain performance. According to the USDA s National Animal Health Monitoring System, only slightly over 40% of replacement heifers and cows are dewormed at least one time a year. bo treated group was intermediate, and LongRange heifers had the lowest fecal egg counts. In this study, treatment against gastrointestinal nematodes positively impacted replacement heifer body weights, ADGs, and fecal egg counts. LongRange treated heifers reported the strongest benefit over the 84-day study period. A recent study focused on the effects of deworming on the gain performance of replacement heifers. The study took place during the summer of 2014, with 83 head of replacement heifers located at University of Arkansas Research Station near Fayetteville. The heifers were allocated to one of three deworming treatments based on body weight, fecal egg counts and days of age. The three treatments were 1) negative control (no dewormer); 2) a combination of a full label dose of Cydectin pour-on and a full label dose of Synanthic drench (Combo); and 3) a label dose of LongRange injectable treatment (Table 1). Heifers grazed in multiple groups, with only one treatment represented per grazing group, and had access to forage available in the assigned pasture and were fed a corn gluten supplement at 1% of body weight daily. Heifers were processed for body weights and fecal egg counts on multiple dates throughout the study (Table 2). Over the 84-day study, heifer body weights (Table 3) were similar on day 0, 14, 28; however, heifer body weights were greatest for LongRange treated heifers, intermediate for Combo heifers and least for the Control groups. Heifer average daily gain (ADG) overall was highest for LongRange treated heifers at 1.52 lb/day, intermediate for combo treated heifers at 1.2 lb/day and least for negative control heifers at 1 lb/day. Fecal egg counts were similar amongst heifers on day 0. On day 14, Combo and LongRange treated heifers exhibited lower fecal egg counts compared to control heifers. LongRange and Combo heifers were similar on day 28 and again had lower fecal egg counts compared with the control treated group. Control heifers exhibited the highest fecal egg counts on day 84, the Com- Department of Agricultural and Resource Economics 314 Morgan Hall 2621 Morgan Circle USDA / Tennessee Department of Agriculture Market News Service