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Market Summary for the week ending August 19th:
August 19, 2016
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The Cattle Range 10 Day Market Trendline:
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Bearish: With cash cattle steady to lower and cattle futures & dressed beef both lower, the trend turned negative this week.
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The Trendline is an indicator of overall cattle/beef market strength and is based on daily market factors for the last 10 days.  Each daily factor is the aggregate weighted total of the Gain/(Loss) for 10 major market indicators compared to the previous trading day. The angle indicates direction & velocity of the trend.
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Market Data:
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On-Line Store
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National Feeder & Stocker Cattle Weekly Summary:
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RECEIPTS:  Auctions   Direct   Video/Internet    Total
This Week     151,600     40,200           800            192,900 
Last Week     162,800     93,500       209,800        466,100 
Last Year       136,300     24,500        17,400          178,200 

Compared to last week, calves and yearlings started out the week on a steady to 3.00 higher trend, however mid to late week auctions trended steady to weak, with some instances marked up to 3.00 lower.  The cattle complex appears to have taken a breath this week as a slight correction seemed to be in store after a couple weeks worth of higher markets.  Grazers have taken on quite a bit of inventory recently and they want to get the calves in their pens straightened up before moving on to the next group.  This week's lower fed cattle trade came as a surprise to cattle feeders after recent weekly gains in the market.  However, packers are always cautious this time of year as beef demand typically wanes after the Labor Day holiday. 

Boxed beef values have become stagnant this week as Choice was a little over 1.00 lower and Select cutout steady with last Friday's close at 200.07 and 193.60 respectively.  In the South Plains this week, all the market could muster was 1.00 lower trading at 118.00, while the North Plains dressed trade was steady to weak at 186.00-187.00.  Feedlots appear to be current at this time coupled with this week's estimated slaughter of 599,000 head is a good thing for the cattle industry at this time. 

On Monday at Sioux Falls Regional Stockyards in Worthing, SD a load of 717 lb thin steers coming off grass sold for a whopping 166.75. Also on Monday at Tri-State Livestock in McCook, NE, 6 loads of 907 lb steers sold from 152.00-152.10 while on Thursday in Valentine, NE 2 loads of 837 lb steers sold at 156.25.  Optimism abounds for those feedyards willing to take on the inventory at those levels, however there have been many strings of yearlings coming off grass in the North Central region that will gain like a house-a-fire when a high protein and concentrate diet is put on in front of them. 

Last week's record corn production estimate of 15.2 bb has assured friendly cost of gains in the near future.  Cattle on Feed Report was released Friday afternoon with August 1st reported at 102 percent; Placements at 102 percent and Marketings at 99 percent with placements being above estimates and others coming in near the industry analyst estimates.  Auction volume this week included 59 percent weighing over 600 lbs and 38 percent heifers. 

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Stocker Steers:
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Feeder Steers:
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Five Year Moving Average - Stocker Steers, Feeder Steers, & Slaughter Steers:
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Cattle Futures: Live cattle futures closed mixed, ranging from 32 1/2 cents lower to 25 cents higher. October live cattle closed $4.27 1/2 lower for the week. This afternoon's Cattle on Feed Report was bearish compared to expectations, but the market should have a bearish report factored into prices and return their focus to demand and cash prospects. But if the beef market weakened ahead of Labor Day, giving the fact retailers have largely wrapped up purchases for specials, more pressure should be in store for futures.
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Selected Auction Reports:
"Click" on individualauction links for complete report

Farmers & Ranchers Livestock Commission Co. - Salina KS
Receipts:  2887    Last Week:  4418    Year Ago:  2915
Compared to last week: Steers 850-1000 lbs 4.00-6.00 lower; 850 lbs and under steady undertone noted in a light offering. Heifers 750-1000 lbs 2.00 lower; 750 lbs and under lower undertone noted.

Sioux Falls Regional Livestock - Worthing SD
Receipts:  2883    Last Week:  1116    Year Ago:  2150
Compared to last week:  Feeder steers had few comparable sales, best test those weighing 950-1050 lbs 1.00 to 3.00 higher.  Heifers were lightly tested last week, with 900-950 lbs mostly steady.

Mid-South Livestock - Unionville TN...
Receipts: 1159      Last week: 1039       Last year: 837
Compared to last week, Feeder Steers/Bulls mostly steady to 4.00 Higher; Feeder Heifers mostly steady to 4.00 higher; Slaughter Cows Steady; Slaughter Bulls steady.

Florence Livestock Auction - Florence AL...
Receipts:  885    Last Week:  824    Year Ago:  933
Compared to a week ago: Slaughter cows and bulls sold steady. Feeder steers and bulls under 600 lbs sold steady, over 600 lbs sold 2.00 to 4.00 higher.

Tadlock Stockyards - Forest MS...
Receipts     This week    1,118     Last Week    1,017
Compared to last week slaughter cows trended Steady. Slaughter bulls trended Steady. Feeder steers trended Steady. Feeder heifers trended Steady. Feeder consisted of 70 percent steers and 30 percent heifers.

Athens Livestock Auction - Athens GA...
Receipts:  729    Last Week:  984    Year Ago:  926
Compared to one week earlier, slaughter cows mostly steady, slaughter bulls steady to 2.00 higher, feeder steers and steer calves steady to 2.00 lower, feeder bulls mostly steady, feeder heifers steady to 3.00 lower, bull calves and heifer calves steady to 3.00 lower, replacement cows lightly tested.

Cullman Stockyard - Cullman AL...
Receipts:  1122    Last Week:  1167    Year Ago:  1003
Compared to last week: Slaughter cows sold 2.00 to 3.00 higher, slaughter bulls sold steady. Feeder bulls and steers sold 3.00 to 4.00 higher.

Blue Grass South Livestock Market - Stanford KY...
Receipts:  566    Last Week:  756    Year Ago:  553
Compared to last Monday:Feeder steers 2.00-4.00 lower,Feeder heifers 3.00-5.00 lower,Moderate demand for feeder classes.Slaughter cows and bulls 1.00-2.00 lower,Moderate demand for slaughter classes.

Green Forest Livestock Auction - Green Forest AR...
Receipts:  912          Last week:  1046             Last year:  426
Compared to last week: Feeder steers and bulls steady to 6.00 lower. Feeder heifers mixed with the better 300-400lbs 1.00-3.00 higher over 400lbs and plainer kind 1.00-5.00 lower.

Oklahoma National Stockyards - Oklahoma City OK
Receipts:  8,693     Week ago:   5,789    Year ago:  6,044
Compared to last week: Feeder steers mostly steady.  Feeder heifers steady to  2.00 higher.  Demand good for feeder cattle.  Steer and heifer calves 1.00-3.00 higher.

Cattleman's Livestock Auction - Dalhart, TX
Cattle and Calves:  1323     Week ago: 777       Year Ago:  1103
Compared to last week:  Increased numbers of steer and heifer calves under 600 lbs were highly sought after with buyers pushing prices 5.00-10.00 higher compared to last weeks limited offerings.  Feeder steers and heifers over 600 lbs were 1.00—3.00 higher.

Tulia Livestock Auction - Tulia TX
Receipts:  1601    Last Week:  1520    Year Ago:  1393
Compared to last week:  Feeder steers and heifers under 600 lbs were steady to firm instances 3.00 higher on a light test, over 600 lbs 3.00 to 6.00 lower except 700-750 lbs steers were close to steady on a very good test.

El Reno Cattle Narrative - El Reno OK
Receipts:  7,968    Week ago:    8,481    Year ago:  6,027
Compared to last week, Feeder steers and heifers sold 1.00-3.00 lower. Steer and heifer calves traded mostly 2.00-3.00 higher.  Demand moderate for feeder cattle, good for calves.

Clovis Livestock Auction - Clovis NM
Receipts:  2483              Week Ago: 1657              Year Ago: 1517
Compared to last week:  Steer calves weighing under 500 lbs 2.00-3.00 higher.  Steer calves and yearlings weighing over 500 lbs 1.00-2.00 lower.  Heifer calves weighing under 500 lbs steady to 1.00 higher.

Joplin Regional Stockyards - Carthage MO
Receipts:  4,478     Week ago:   3,842    Year ago:  3,089
***MID-SESSION AND CLOSE*** Compared to last week, steers sold steady to 3.00 higher, spots 5.00 higher on  steer calves. Heifers steady to firm. Pretty strong market today even without much support from the futures, with live and feeder cattle contracts trading
 modestly lower and grains surprisingly higher after last Friday's Crop Production estimated a record corn and bean crop.

Pratt Livestock Feeder Cattle Auction - Pratt, KS
Receipts:  4669    Last Week:  4736    Year Ago:  2475
Compared to last week: Feeder steers 700-1000 lbs 3.00-5.00 lower; Feeder heifers 700-850 lbs steady to firm. Not enough steer and heifer calves for a market test.

Direct Sales of Feeder & Stocker Cattle:

WY, Western NE & Western Dakotas Direct Feeder Cattle Wtd Avg (Fri)
Receipts: 295     Week Ago: 13,207     Year Ago:  810
Not enough comparable offerings this week for an adequate market trend. Some yearling cattle and quite a few calves left to contract in the reporting areas.

AZ-CA-NV Weekly Feeder Cattle Review (Fri)
Confirmed: 3080 
Compared to last week, trade and demand moderate.  A few loads of Holstein steer calves weighing 300 lbs for Nov/Dec Del traded at steady to firm prices.

Colorado Direct Feeder Cattle Report (Fri)
Receipts: 11,095       Last Week 17,281       Last Year 1,160 
Compared to last week:  No trend available for feeder steers and heifers due to limited Current FOB trades.  Demand moderate to good.

IA-South MN Direct Feeder Cattle Weekly (Mon)
Receipts:  0     Last Week:  0     Last Year:  0
Compared to last week:  Feeder steers and heifers not established.  Prices based on net weights FOB after a 3 percent shrink or equivalent and 5-10 cent slide on calves and 4-6 cent slide on yearlings from base weights.

Kansas Direct Feeder Cattle Summary (Fri)
Receipts:  3007    Last Week:  8052    Year Ago:  4120
Compared with last week: Steers 2.00-4.00 lower, heifers few comparable sales steady. Demand moderate for feeders. Sales confirmed on 2569 steers, 438 heifers and no calves for a total of 3,007 head, compared with 8,052 last week and 4,120 last year.

Montana Direct Feeder Cattle Wtd Avg (Fri)
Receipts: 3,415        Last Week 5,553        Last Year 765 
Compared to last week: Feeder steers and heifers not established due to no Current FOB trades.  Unless otherwise stated prices are FOB weigh point with a 2-3 percent shrink or equivalent and with 
a 8-12 cent slide on calves and 4-8 cent slide on yearlings from base weights.

New Mexico Feeder Cattle Report (Mon)
Receipts:  1800    Last Week:  3300    Year Ago: 
Compared to last week:  Feeder steers and heifers very limited comparable sales but a higher undertone noted.  Trade was fairly active on moderate to good demand.

Northwest Wtd Avg Direct Feeder Cattle Report (Fri)
Receipts:  5,950    Last Week:  14,000    Year Ago:  5,900
Compared to last Friday:  Feeder cattle mostly steady.  Cattle futures declined somewhat midweek but demand for feeder cattle remained good. The feeder supply included 64 percent steers and 36 percent heifers.

Oklahoma Direct Feeder Cattle (Fri)
Receipts: 7,352        Last Week 4,342        Last Year 3,246 
Compared to last week:  Feeder steers sold mostly 2.00-5.00 higher Where comparable sales were available.  Feeder heifers not well tested for Current FOB trades but a higher undertone was noted.

Texas Direct Feeder Cattle (Fri)
Confirmed: 38,300     Last Week: 42,900    Last Year: 20,100
Compared to last week current FOB feeder steers and heifers, steady to 5.00 higher continuing the rally that began the last few weeks.  The ongoing uptrend continues to cause wider price spreads in prices because a few early week prices were steady with last week.
 

  • Reported on Friday for current week.
  • Reported on Monday for previous week.
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    Representative Sales of Cow & Pairs:
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    • Springfield, MO
      • Bred Cows:  Medium and Large 1-2  2-7 yrs most 2nd few 3rd stage 1025-1320 lbs 1200.00-1475.00, 1st stage 1040-1315 lbs most 1015.00-1300.00, fancy black indiv. 1525.00; short and solid mouth to aged 2nd and 3rd stage 1210-1270 lbs 890.00-1010.00. Large 1-2  3-7 yrs 2nd and 3rd stage 1385-1545 lbs 1310.00-1600.00; short and solid mouth to aged 2nd and 3rd stage 1370-1505 lbs 1010.00-1105.00. Medium 1-2  short and solid mouth 2nd stage 950-1000 lbs 840.00-925.00 per head.
      • Cow/Calf Pairs:  Medium and Large 1-2  3-4 yrs 900-1180 lb cows w/newborn to 100 lb calves 1400.00-1475.00; broken mouth 1070 lb cow w/280 lb calf 1325.00.  Medium and Large 2  broken mouth 990-1000 lb cows w/ babies to 390 lb calves 1050.00-1110.00 per pair.
    • Joplin, MO
      • Bred Cows:  Medium and Large 1  4-7 yrs 3rd stage 1225-1365 lbs 1525.00-1735.00. Medium and Large 1-2  2 yrs to short and solid mouth 2nd and 3rd stage 990-1365 lbs 1100.00-1475.00, 1st stage 1000-1300 lbs 1075.00-1260.00; short and solid mouth to aged 2nd and 3rd stage 1095-1340 lbs 820.00-1050.00. Large 1-2  5 yrs to short and solid mouth 3rd stage 1425-1550 lbs 1280.00-1625.00; short and solid mouth to aged 3rd stage 1385-1520 lbs 1095.00-1140.00. Medium 1-2  4-5 yrs 2nd and 3rd stage few 1000-1065 lbs 905.00-1075.00, 1st stage 1000 lb indiv. 875.00; broken mouth to aged 2nd and 3rd stage 940-980 lbs 705.00-760.00 per head.
      • Cow/Calf Pairs:  Medium and Large 1-2  3-4 yrs 1060-1085 lb cows w/baby calves 1550.00-1675.00; broken mouth 1250 lb cow w/baby calf 1335.00. Medium 1-2  3-5 yrs pkg. 1050 lb cows w/275 lb calves and all rebred 1600.00 per pair.
    • West Plains, MO
      • Bred Cows:  Medium and Large 1  2-7 yrs 1025-1450 lbs 2nd and 3rd stage 1200.00-1600.00 per head.  Medium and Large 1-2  4 yrs to short and solid 1025-1450 lbs 2nd and 3rd stage 1000.00-1400.00 per head; Medium 1-23 yrs to broken mouth 800-1100 lbs 1st to 3rd stage 850.00-1000.00 per head. Medium 3 Pkg Longhorn short and solid 820 lbs 2nd and 3rd stage 850.00 per head. 
      • Cow-Calf Pairs: Medium and Large 1 2-7 yrs 925-1200 lbs with baby to 275 lb calves 1400.00-1700.00 per pair. Medium and Large 1-2  4 yrs to short and solid 900-1300 lbs with baby to 300 lbs 1100.00-1350.00 per pair.
    • Arkansas
      • Replacement Cows:  Medium and Large 1-2  2-7 year old 850-1250 lbs second & third stage 100.00-110.00, 1125.00-1225.00/hd; first stage/open      84.00-94.00; 7-10 year old second & third stage 81.00-91.00, 1000.00-1100.00/hd. 
      • Cow-Calf Pairs:  Medium and Large 1-2  3-7 year old 800-1200 lb cows w/100-200 lb calf 1325.00-1425.00/pair, few to 1550.00/pair, w/200-300 lb calf 1500.00-1600.00/pair, 7-10 year old w/100-200 lb calf 1325.00-1425.00/pair.
    • El Reno, OK
      • Replacement Cows:  Medium and Large 1-2  1-4 yr old 1075-1200 lbs 2-6 months bred 900.00-1150.00; 3-6 yr old 1200-1300 lbs 5-7 months bred 1275.00-1800.00; 7-8 yr old 1200-1350 lbs 4-8 months bred 1200.00-1375.00.
      • Pairs:  Medium and Large 1-2  1-5 yr old 1200-1300 lb cow w/50-200 lb calf 1375.00-1650.00; pkg 7 yr old 1250 lb cow w/200 lbs calf 1675.00; pkg 8 yr old 1275 lb cow w/75 lb calf 1275.00.
    • Woodward, OK
      • Replacement Cows:  Medium and Large 1-2  8-10 yr old 1175-1225 lbs 4-5 months bred 1150.00-1200.00.
      • Pairs:  Medium and Large 1-2  2-4 yr old 850-1100 lb cows w/175-225 lb calf 1710.00-2175.00.
    • Oklahoma City, OK
      • Replacement Cows:  Medium and Large 1-2  1-4 yr old 995-1275 lbs 5-7 months bred 1000.00-1225.00; 2-6 yr old 825-950 lbs 3-6 months bred 760.00-925.00; 5-6 yr old 1325-1450 lbs 5-7 months bred 1175.00-1375.00; 5-8 yr old 950-1450 lbs 3-7 months 950.00-1175.00.
      • Pairs:  Medium and Large 1-2 pkg 5  yr old 1325 lb cow w/200 lb calf 1500.00; 9-10 yr old 1195-1250 lb cow w/ 50-75 lb calf 1000.00-1075.00.
    • McAlester, OK
      • Replacement Cows:  1-4 yr old 950-1350 lbs 4-8 months bred 1000.00-1375.00; 7-10 yr old 1125-1400 lbs 4-8 months bred 950.00-1225.00; pkg 9-10 yr old 1175 lbs 6-8 months bred 975.00. 
      • Pairs:  Medium and Large 1-2 pkg 1-4 yr old 1300 lb cow w/175 lb calf 1650.00; 7-8 yr old 900-1100 lb cow w/175-450 lb calf 1025.00-1625.00; 9-10 yr old 900-1175 lb cow w/100-225 lb calf 900.00-1225.00. 
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    Canadian Cattle:
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    Alberta Beef Producers: Alberta direct cattle sales Thursday did not see reported trade as packer bids were pulled in to quell market activity. Clean up trade could develop today as feedlots hold out fro $240.00 delivered.
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    Canadian Cattle Prices:
    Prices have been converted to U.S. $/CWT.  Grades changed to approximate U.S. equivalents
    Exchange Rate: Canadian dollar equivalent to $0.7670 U.S. dollars
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    Prices for the week ending August 12th:
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    Tire-Changing Ramp for Trailers
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    August 19th Cattle on Feed Report:
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    United States Cattle on Feed Up 1.17 Percent
    • Cattle and calves on feed for the slaughter market in the United States for feedlots with capacity of 1,000 or more head totaled 10.2 million head on August 1, 2016. The inventory was 1.17% above August 1, 2015.
    • Placements in feedlots during July totaled 1.57 million head, 1.62% above 2015. Net placements were 1.52 million head. During July, placements of cattle and calves weighing less than 600 pounds were 352,000 head, 600-699 pounds were 235,000 head, 700-799 pounds were 360,000 head, and 800 pounds and greater were 625,000 head.
    • Marketings of fed cattle during July totaled 1.71 million head, 0.70% below 2015. Marketings were the lowest for July since the series began in 1996.
    • Other disappearance totaled 50,000 head during July, 10.71% below 2015
    "Click" to view Charts
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    Fed Cattle Prices & A Broken Futures Market?
    Cassie Fish -- CassandraFish.com
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    There are lots of people that blame the weakness in the fed cattle cash market entirely on the “broken” futures market. To be sure, the CME live cattle contract has issues and always seems to be playing catch-up to reflect today’s reality of the fed cattle market. Plus, the dominance on futures order flow due to “come down” and “position rolling” of large entities seems to hi-jack trade at times. Then there is the ever-present global growth in algorithmic-generated trading and its debatable impact on price action.

    But on the other side of the coin of the cattle market’s dilemma is that the market is experiencing the full influence of a shrinking Zoetisnegotiated cash market coupled with expanding cattle supplies. While cattle numbers declined sharply since 2008 to the lowest level in modern history, the number of negotiated cattle dropped from 40% to just 20% currently. It’s logical to conclude that when supplies were tight, less packer competition (due to more captives and small kills) was at the very least muted.

    Now, however, cattle supplies are increasing, so the remaining sellers in the cash market are competing harder against one another while the buyers compete less.

    So many cattle and beef fundamentals have improved this year, but the benefit of these improvements in terms of dollars have flowed to the packing and retail sectors not the feeding sector. This is at least partly due to the lost leverage on the part of negotiated cash seller. It’s even difficult to quantify what benefit improved currentness has brought the feeding industry, even though certainly it is significant.

    This year, 2016, has been the first time in history fed cattle sellers have faced selling an increasing supply to packers who already have a substantial percentage of their inventory covered on a weekly basis. Perhaps this one fact is as responsible for the anemic nature of 2016 cattle rallies as anything else- not mention the big discounts through 2017.

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    Online Auction for Fed Cattle to Resume Sales
    Reuters
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    An online U.S. cattle auction for fed cattle that ranchers and traders hope will restore transparency to livestock pricing and reduce volatility in futures contracts is set to resume operations in September following a three-month halt, its owner said on Thursday, Aug. 18.

    Separately, a U.S. watchdog agency said it will take at least nine months to complete a government review of U.S. cattle markets that was prompted by complaints about a sharp drop in prices last year.

    The online auction, called the Fed Cattle Exchange, and the review by the U.S. Government Accountability Office aim to address concerns that cash and futures prices do not accurately reflect the markets for cattle. The markets have come under scrutiny following a sharp setback in prices in the second half of last year from record levels reached in 2014.

    The Fed Cattle Exchange wants to increase the number of cattle traded in the cash market before slaughter in a bid to provide the sector with a better idea of their value.

    It will begin holding weekly auctions on Sept. 14 after fixing technological problems that hampered its first several sessions in May and June, said Danny Jones, president of exchange owner Superior Livestock Auction.

    "We are going to go forward with the attitude that this is definitely working now and it's got the weight of the industry supporting it," he said in an interview.

    Cash sales of cattle, which producers and meat packers negotiate a few weeks before animals are killed, have dropped over the past decade as producers have increasingly locked in prices months in advance. Futures exchange operator CME Group Inc has said that decline has contributed to high volatility in its cattle market.

    Once the auctions resume, the exchange will post results on its website shortly after they conclude, Jones said.

    The biggest U.S. meat packers, Cargill Inc, Tyson Foods Inc, JBS USA and National Beef Packing Co , bought cattle on the exchange before Superior suspended auctions in June, participants said.

    Separately, the U.S. government's review of cattle pricing is underway and will last at least until May 2017, GAO spokesman Chuck Young said in an interview.

    The agency has previously said the review will include an assessment of the impact of high-frequency trading on cattle futures and "what changes may have occurred in the fed cattle market in the past 10 years."

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    USDA National Retail Beef Report - August 12th thru 18th
    Advertised Prices for Beef at Major Retail Supermarket Outlets

    This week the National Beef Retail Report, compared to last week, shows Feature Rate was mostly steady, Special Rate up 4.8% and Activity Index higher by 7,570. For the week Porterhhouse Steak, Brisket Flat, Ground Sirloin and Skirt Steak had more than twice the ad space when compared to the prior week. 

    In the 4 week Comparison Activity Index Chuck, Loin, Brisket and Ground Beef were higher this week compared to the previous week. With the additional ad space given to Beef cuts this week the feel is that the last beef grilling holiday of the summer season is just around the corner.

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    Photo of the Week:
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  • Red Angus Bred Heifers... Central AR*
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    Shootin' the Bull Weekly Analysis:
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    In my opinion, the cattle market was inundated with supply news last week and this.  Admittedly, the rehashing of this caused me some anxiety.  I forwarded all articles to clients and subscribers.  Most of the comments from others was that this was old news and were aware of the situations being written.  As I listened, the anxiety was being relieved as there is nothing new about the anticipation of increasing supplies.  Although supply can somewhat be visualized through statistics and the ability to count cattle, the demand side remains illusive.  A demand picture almost has to be made up from several different factors with no one particular item offering greater weight than another.  Therefore, it is more difficult to ascertain demand than supply.  Hence, why the multitude of articles on supply and only one on demand.  That demand picture came from Wendy's CEO.  His demand aspect was merely concerning consumers unwillingness to spend during times of economic or political uncertainty.  Clearly we have that.  So, what if this uncertainty were to begin to subside?  What if the Fed's thoughts of nearing full employment are true, and that with a small bump up in wages, consumers may begin to change discretionary spending habits.  No one mentioned that in the articles I read.  So, I am not bearish cattle.  I am not bullish either.  With not much having changed fundamentally, and even less technically, cattle are anticipated to remain in a firm cash market and weak stance in the futures.  The only difference I see now than previously, is that I anticipate trading to remain closer to the upper end of the trading range than bottom. 

    Feeder cattle futures have been creating a contracting wedge on the basis spread for months.  With the futures ability to move further and faster than the index, the spread between the two can widen and narrow quickly.  So, while the index has remained fairly stable, the futures move is so that it has created positive and negative spreads, back and forth a multitude of times.  On Friday, the basis of October continued positive to the top end of the down trend channel line.  This leads me to anticipate a return to a negative basis.  This suggests to anticipate a rally in the futures and still not much price fluctuation in the index.  Although not very favorable from the aspect of history, the over $7.00 positive basis October appears very friendly towards yards wanting to accumulate inventory.  The problem with that is, few yards are aggressive and want to hedge inventory.  In my opinion, this not necessarily too damning.  It would not take much of a change to increase beef consumption.  Any increase would be perceived to trickle down to the feeder market.  I am exceptionally hesitant to recommend marketing inventory at such steep discounts, and even more so if option premiums are subtracted from a strike.  I perceive the positive basis to remain favorable to the industry as a whole.  Keeping the front end the highest reduces the likelihood of inventory being held back. With inventory anticipated increasing, holding anything for longer than it should be is just prolonging the situation. 

    The retracement in price, from the most recent high, remains within the boundaries of Fibonacci retracement levels.  With there only having been one move up from contract low to the most recent high, one would anticipate two more waves to unfold.  My analysis suggests the current decline to be a wave 2 or B correction with anticipation of a wave 3 or C higher.  Barring a catastrophic on feed report, I anticipate feeder cattle futures to begin trading higher.  Not to any great extent, but I anticipate a trade above the most recent $147.00 October high. 

    Corn continues to wallow off the lows made.  The USDA will have a difficult time increasing the yield any further, but any retractions in this are anticipated to be minimal.  It would take a significant decline in yield or harvested acres to make a dent in the current size of the crop.  Therefore, I don't anticipate much to transpire in the corn market.  Of most interest this week has been the bond market.  After having moved lower from its all time historical, 35 year long bull market high, bond traders built a complex wave 2 correction.  Today, traders pushed the bond price below all of the previous lows and up trend channel lines.  As I write this,  the current low of 169'31 remains the last hurdle before the wave 2 is confirmed complete and wave 3 down in progress.  What this means is to anticipate higher retail interest rates when you go to borrow money.  I have urged clients and subscribers to restructure any and all debt that can be while rates are at their lowest in history.  In my opinion only, an increase in interest rates is a psychological boost to many as it would suggest that the need for further stimulus is waning.  If stimulus is not needed, it suggests that the economy may be finally healing on its own.  In 5 years, we may look back and say that the Fed's policy of "if we don't kill it, it will get better" worked.  It only took 8 years and untold trillions of dollars to do it. 

    Christopher B. Swift is a commodity broker and consultant with Swift Trading Company in Nashville, TN. Mr. Swift authors the daily commentaries "mid day cattle comment" and "Shootin' the Bull" commentary found on his website @ www.shootinthebull.com

    An investment in futures contracts is speculative, involves a high degree of risk and is suitable only for persons who can assume the risk of loss in excess of their margin deposits.  You should carefully consider whether futures trading is appropriate for you in light of your investment experience, trading objectives, financial resources and other relevant circumstances. PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.

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    Brazil Aims to Become World's Top Meat Exporter:
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    Brazil plans to challenge the US for the position of being the world’s biggest meat producer and exporter over the next decade, according to government estimates.

    "Click Here" for details...

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    Canadian Herd Expansion Slower than U.S.
    Daily Livestock Report
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    Different from the US, where we have seen robust growth in terms of both cattle and hog supplies, Canadian livestock expansion has been notably slower. Statistics Canada released yesterday the results of its semiannual surveys for cattle and hogs and below are some of the highlights and implications for North American beef and pork production. Interestingly, the Canadian semiannual cattle survey comes even as USDA decided, for budgetary reasons, to discontinue the US survey.  As a result, we cannot provide a July 1  North American inventory and will have to wait until January to review the overall supply status. 

    The total cattle inventory in Canada as of July 1 was estimated at 13.205 million head, 170k head (+1.3%) higher than the previous year. Despite this year’s increase, Canadian cattle inventories are still about 3.7 million head smaller than in 2005. The outbreak of BSE in Canada in  2002, the shift in exchange rates and the spike in feed costs all contributed to chop off about a  fifth of the Canadian  cattle industry in the past decade. And while the latest numbers show some modest growth, we do not see the kind of expansion trajectory as in the US. Last year Canadian cattle inventories actually declined in July as extremely strong demand for feeders in the US pushed more calves into the US herd and US feedlots. This year US calf prices have cooled off and this has supported Canadian herd expansion. Canadian producers held back about 642,000 heifers for beef cow replacement, 28,000 (+4.5%) more than a year ago and the largest beef cow replacement number since  2008. 

    Normally the increase in heifer retention translates into a larger beef cow herd but feed supplies over the summer and fall remain a  critical factor. The total beef cow herd in Canada as of July 1 was 3.811 million head, just 11,000 head (+0.3%) larger than the previous year and now some 30% smaller than it was back in 2005.  This number particularly highlights  the difficulties that Canadian producers have in outlining a robust growth strategy going forward. About  1.7 million beef cows have disappeared in the past decade, a number that cannot be recovered by retaining a few thousand heifers every spring. The calf crop for the first six months of this year was estimated at 3.435 million head, 115k head  (+3.5%) larger than the previous year. For all of 2016 we estimate the  Canadian calf crop at 4.423 million head, 125k head (+2.9%) larger than a year ago. 

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    Choice Boxed Beef Cutout, Slaughter, & Feeder Steers:
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    The average value of hide and offal for the four days ending Thu, Aug 18, 2016  was estimated at 11.14 per cwt., down 0.13 from last week and down 1.34 from last year.
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    U.S. Live Animal Imports:
    LMIC
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    U.S. feeder cattle imports from Mexico were rather small in May and June of this year, compared to historical levels. For the first half of 2016, feeder cattle imports from Mexico were 16% below 2015’s (down 98,000 head). This could indicate herd rebuilding in Mexico and definitely reflects lower U.S. cattle prices.  Lower imports compared to a year ago are expected to continue for the balance of 2016.

    Cattle imports by the U.S. from Canada were down 10% (down 50,000 head) from January through June of this year, compared to 2015’s. The U.S. imports both feeder cattle and slaughter cattle from Canada, and the year-over-year decrease is fully attributed to fewer feeder cattle imports in the 440-700 pound category.  For the first half of the year, the U.S. actually imported 4% more feeder cattle over 700 pounds and 20% more slaughter cattle, compared to 2015’s levels. 

    Live hog imports from Canada are above year ago levels for the January to June time frame, up 1% (up 30,000 head). Within that timeframe, slaughter hog imports declined 13% year-over-year (down 75,000 head), but feeder pig imports were up 5% (increased from 2015’s by almost 105,000 head). The trend of year-over-year increases in U.S. feeder pig imports is expected to continue. 

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    Out of Kilter:
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    A good way to determine if something is “going on” in a market is by noticing when market relationships are out of kilter. Cattle and grains typically have a positive correlation. They tend to move in tandem. Moderately increase the price of corn and the cattle will follow suit. The opposite is also true as the cost of feed declines, so does the cost of production. However, when this relationship breaks down, it's because one market can't keep pace or pass on the costs of the other. 

    Normally, the value of 25 bushels of corn is approximately equal to the price per cwt. for feeder steers.

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    5 Year Moving Average:
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    Crude/Cattle Correlation:
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    The chart below shows a fairly consistent correlation between the price for a barrel of crude oil and the per cwt. price for slaughter cattle.  Since it is unlikely the price of cattle affects the price of oil on the world market, it might be assumed the price of crude oil affects the price of cattle, but that is unlikely as well.  It is more likely that economic factors affecting demand for crude oil have a similar effect on demand for beef.

    Accordingly, in the absence of geo/political events disrupting or distorting oil supply, since price trends occur slightly sooner in the crude oil market, crude oil has been a good indicator of the direction of near term cattle prices. However, with increased supplies of crude oil and decreased supplies of slaughter cattle, an "Out of Kilter" situation between the two commodities has developed.

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    5 Year Moving Average:
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    Slaughter Cows & Bulls:
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    Slaughter cows and bulls steady to 3.00 lower than last week. 
    Cutter Cow Carcass Cut-Out Value Friday at the close on Friday was 170.82 -- Down 1.10 from last Friday.

                     %Lean    Weight          Montana          Oklahoma         Alabama 
    Breakers 75-80%   1100-1600   74.50-78.50     76.00-78.00    67.00-72.00
    Boners     80-85%  1000-1450   74.00-79.00     76.00-79.00    71.00-76.00
    Lean         85-90%  1000-1300   73.00-76.50     75.00-77.00    65.00-70.00
    Bulls         88-92%   1300-2500   86.00-92.00   97.00-100.00   92.00-97.00

                        Confirmed   Week Ago    Year Ago       WTD     Week Ago    Year Ago
    National         7,385            7,971           7,349          36,435    38,505          33,124
    S Central       2,207            2,348            1,971         10,117    10,496             8,801
    N Central          989            1,008            1,122           3,357       3,398             3,209
    East               1,455            2,213            2,053           9,650     10,462             9,810
    West              1,278            1,024            1,235           6,103       6,234             6,168
    Midwest         1,456            1,378               968          7,208        7,915             5,136

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    Est. Weekly Meat Production Under Federal Inspection:
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    Total red meat production under Federal inspection for the week ending Saturday, August 20, 2016 was estimated at 971.9 million lbs. according to the U.S.Department of Agriculture's Marketing Service. This was 3.0 percent higher than a week ago and 4.9 percent higher than a year ago.  Cumulative meat production for the year to date was 2.1 percent higher compared to the previous year.
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    Weekly Hay Reports: "Click" on links for detailed report
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    Weekly Feedstuffs Market Review:
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    The USDA Market News Service reports feed ingredient prices for the week ending  August 16 were mixed. 
    • Soybean Meal was 0.40 to 10.40 higher. Cottonseed Meal was  steady to 20.00 lower.Canola Meal was steady to 14.60 lower. Linseed Meal was mostly 30.00 higher.  Sunflower Meal only had limited offers. 
    •  Whole Cottonseed was steady to 5.00 lower. 
    • Crude Soybean Oil was 214 to 271 points higher. Crude Corn Oil was steady. 
    • Ruminant Meat and Bone Meal was steady to25.00 lower, mostly 5.00 to 20.00 lower. Ruminant Blood Meal was steady to 35.00 higher in a limited test. Feather Meal was steady to 10.00 lower. Menhaden Fishmeal was steady to 25.00 higher. 
    • Corn Hominy was mixed, 5.00 lower to 7.00 higher. Gluten Feed was steady to 15.00 higher. Corn Gluten Meal was mixed, 20.00 lower to 30.00 higher. 
    • Distillers Dried Grain was mixed, 10.00 lower to 15.00 higher, mostly steady to 5.00 lower. 
    • Wheat Middlings were steady to 10.00 lower.  Wheat millrun was steady.

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    Bullish/Bearish Consensus:
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    The theory behind the "Bullish/Bearish Consensus" indicator is when the public reaches a consensus, they are usually wrong:
    • They get too bullish after prices have risen, and too bearish after they have already fallen.
    Because of this tendency, there are often extremes in opinion right before major changes in trend:
    • When the public reaches a bullish extreme, i.e., a great majority thinks prices will keep rising, then prices often decline instead. 
    • And when they become too bearish, then prices tend to rise.
    So when Public Opinion moves above the red dotted line in the chart, it means that compared to other readings over the past year, you're seeing excessive optimism. You also want to look at the absolute level of Opinion, too - if it's at 90%, then there's no question we're seeing an historic level of bullish opinion.  Watch for readings above 80% (or especially 90%) to spot those dangerous times when the public is overly enthusiastic about a commodity.

    Conversely, when Public Opinion moves below the green dotted line, then the public is excessively pessimistic about the commodity's prospects for further gains compared to their opinion over the past year.  Looking for absolute readings under 20% (or especially 10%) often indicates an upturn in the market.

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    Bullish/Bearish Consensus: Cattle
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    Bullish/Bearish Consensus: Corn
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    Stock Markets & Economic News:
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    Most segments of the U.S. stock market were little changed to slightly lower on the week. Trading volumes were lackluster even for August, despite the Federal Reserve releasing the minutes from its late-July policy meeting and crude oil moving back into bull market territory. The Russell 2000 Index of small-cap stocks generated marginally positive returns for the week, outperforming large- and mid-cap shares.

    The minutes from the Fed’s July 26–27 policy meeting showed that Federal Open Market Committee (FOMC) members were divided about when the central bank should raise interest rates again and reaffirmed that the timing of the central bank’s next move remains dependent on the strength of U.S. economic data. The minutes indicated that some FOMC members thought the economy is strong enough to raise rates as soon as September; most Fed policymakers anticipate that growth will accelerate in the second half of 2016. However, others believed that a near-term rate increase would prevent inflation from reaching the Fed’s 2% target. Stock investors seemed to favor the latter view, reading the minutes with a slightly dovish interpretation and not selling amid worries about an impending rate hike.

    Price changes in crude oil seemed to drive equities more than the noncommittal FOMC minutes. The price of Brent crude, the worldwide benchmark, climbed back above $50 per barrel, as oil quickly flipped into a bull market (up more than 20% from recent lows) from a bear market (down more than 20% from recent highs) over the last few weeks. A weakening trend in the U.S. dollar likely contributed to the increase in oil prices because oil is priced in dollars worldwide. However, Brent crude declined somewhat on Friday as the dollar strengthened.

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    U.S. Stocks:
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    "Click Here" to view a Slide Show of Drought Monitor maps for the last 12 weeks
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    Looking Ahead:
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    During the next 5 days (August 18-22), the Far West should stay seasonably dry. Meanwhile, the heaviest rains (1-4 inches) should fall on the southern Great Plains and upper Delta (TX-OK-AR), from southern Montana and northern Wyoming eastward to northern sections of Wisconsin and Michigan, on the southern Appalachians, and along the Carolinas coast. 5-day temperatures will be above-normal in the Far West and the Atlantic Coast States while subnormal readings are expected in the middle third of the Nation.

    During August 23-27, the odds favor above-median precipitation in the southern three-quarters of the Plains and most of Alaska, while sub-median rainfall is favored in Arizona, Pacific Northwest, and mid-Atlantic southward to the central Gulf Coast. Subnormal temperatures are likely in the southern two-thirds of the Rockies and Plains, the Tennessee and lower Ohio Valleys, and central Appalachians, while above-normal readings are favored in southern Alaska, the Pacific Northwest, and along the East Coast.

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    The 2016 Corn Crop:
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    USDA release an important crop report last week and raised the size of the corn crop by 600 million bushels taking it to over 15 billion bushels -- a new record. This falls on the heels of a large 2015 corn crop and a large 2016 wheat crop.  The country is awash in grain and the prospects for favorable pricing for those in the meat production business has never been brighter.

    While grain supplies are abundant, usage is also surging upward and increasing production of cattle, pork and chicken will fuel the demand side of the grain markets. Exports markets in the coming year are also expected to expand from this years levels providing the value of the dollar does not jump. A less than optimum South American crop will push more reliance on to the United States as a supplier of grain to the world.

    Within the United States and specific to the beef industry, cheaper grain will accompany larger cattle supplies and encourage feeding them to heavier weights. While many analysts have pointed to the carcass weights that are below last year and expectations the gap will continue to increase, there will be some support for the decision by cattle feeders to add more pounds given the impact on breakevens and the cost of feed. The large discounts in the deferred futures prices for cattle have also narrowed and there is currently less incentive to market early.

    The large corn crop also will have implications for the regional placement of cattle for feeding. In the northern plains where many feeding operations are smaller in size, many farmers will choose to feed their crop to cattle rather than market grain at money losing prices. In the southern plains where feedlots have seen an improvement in basis levels on grain compared to the north, large supplies of feeder cattle and cheap grain will keep feeding facilities full.

    Farmers will be reluctant to sell grain at today's price levels. This may impact the corn basis during the coming months. The crop is not yet in the grain elevators. There can be weather events such as a widespread early freeze that might pose a danger to the size of the crop.

    Grain merchandizing also is expected to undergo changes in the coming months. Grain is a easy product to trade online. Trade standards are well defined and easily applied. The arcane method of selling using telephone call with merchandisers to end users in inefficient and rarely accomplishes the objective of all trading -- letting the best bid find the best offer. Online centralized trading brings all the participants together and allows efficient pricing along with settlement and clearing services.

    Ag Center Cattle Report

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    Feedyard Closeouts: Profit/(Loss)
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    Closeout projections are for cattle placed on feed by a cattle owner at a commercial feedyard and not for cattle owned by a feedyard and fed at cost or a farmer/feeder utilizing his own feed.
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    Typical closeout for un-hedged steers sold this week:
    • Placed On Feed 150 days ago = March 22nd
    • Projected Profit/(Loss) based on the futures when placed on feed: ($44.13)
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    Cost of 750 lb. steer delivered to the feedyard @ $160.37 per cwt. 
    $1,202.78
    Cost of gain* for 600 lbs. @ $75.96 per cwt.
    $455.76
    Interest** @ Prime + 2% on cattle cost for 150 days
    $27.19
    Interest** @ Prime + 2% of the feed cost for 150 days
    $5.15
    Total Cost & Expense
    $1,690.87
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    Sale proceeds: 1,350 lb. steer @ $117.50 per cwt.
    $1,586.25
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    This week's Profit/(Loss) per head
    ($104.62)
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    Profit/(Loss) per head for previous week
    ($107.81)
    Change from previous week
    +$3.19
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    Sale price necessary to breakeven
    $125.25
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    Projected closeout for steers placed on feed this week:
  • Projected Sale Date @ 150 days on feed = January 16th
  • Cost of 750 lb. steer delivered to the feedyard @ $148.15 per cwt.
    $1,111.13
    Cost of gain* for 600 lbs. @ $72.53 per cwt.
    $435.18
    Interest** @ Prime + 2% on cattle cost for 150 days
    $25.11
    Interest** @ Prime + 2% of the feed cost for 150 days
    $4.92
    Total Cost & Expense
    $1,576.34
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    Sale proceeds: February Live Cattle Futures @ $111.70 per cwt.
    $1,507.95
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    Projected Profit/(Loss) per head
    ($68.39)
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    Projected Profit/(Loss) per head for previous week
    ($15.10)
    Change from previous week
    -$53.29
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    Sale price necessary to breakeven
    $116.77
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    *In addition to feed costs, "Cost of Gain" includes death loss, medicine, insurance, etc.
     **Interest Rate @ Prime + 2.00% - Prime Rate as defined and published by The Wall Street Journal
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    Typical closeout for steers sold this week and hedged when placed on feed: ($44.13)
    Typical closeout for un-hedged steers sold this week:($104.62)
    Projected Profit/(Loss) based on the futures & estimated Cost of Gain this week: ($68.39)
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    Slaughter Cattle:
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    Friday trade was mostly inactive on light demand in all feeding regions. The latest established market in the Southern Plains was on Thursday with live sales at 118.00. In Nebraska on Thursday live sales sold from 117.00-118.00 with dressed sales mostly at 187.00. In Colorado live sales sold at 118.00 with dressed sales at 187.00. In the Western Cornbelt on Thursday, live sales sold from 116.00-117.00. Dressed sales for the week have sold from 185.00-187.00.

    Livestock Slaughter under Federal Inspection:
                                     CATTLE     CALVES    HOGS         SHEEP
    Friday est)              112,000        2,000         428,000           6,000
    Week ago (est)      112,000       1,000          410,000           6,000
    Year ago (act)        107,000        2,000         408,000           6,000
    Week to date (est  564,000       9,000       2,146,000         36,000
    Last Week (est)     561,000        8,000      2,144,000         38,000
    Last Year (act)       538,000        8,000      2,096,000         38,000

    Saturday  (est)          35,000         0                145,000         0
    Week ago (est)        17,000         0                   92,000         0
    Year ago (act)             6,000         0                134,000         0
    Week to date (est) 599,000        9,000      2,291,000         36,000
    Last Week (est)     578,000        8,000      2,236,000          38,000
    Last Year* (act)      545,000        8,000      2,231,000         38,000
    2016 YTD          18,785,000    281,000   72,387,000    1,265,000
    2015 *YTD         18,054,000   276,000    72,146,000   1,272,000
    Percent change       4.1%            1.7%           0.3%           -0.6%

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    Corn Crop Condition:
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    National Grain Summary:
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    Grain and soybeans were higher for the week.  Soybeans saw gains on overnight export announcement and higher outside markets.  However, the market continues to be pressured by unchanged crop ratings for corn and soybeans, as well as favorable weather forecasts.  The corn crop is at 74 percent good to excellent and soybeans are rated at 72 percent.  Spring wheat is 48 percent harvested, with 66 percent rated as good to excellent and winter wheat is 97 percent harvested. 

    The NOPA report came in at 143.7 million bushels of U.S. soybeans crushed in June, less than the 147 mb that analysts were expecting.  Weekly export sales and shipments of wheat totaled 18.0 mb and 26.4 mb, respectively.  Each were above the needed total to be on pace with USDA’s August demand projection of 950 mb, which can be viewed as bullish news.  Export sales of corn totaled 47.6 mb, with shipments totaling 45.9 mb, which is neutral to bearish news for the corn market.  Export sales and shipments for soybeans totaled 65.2 mb and 31.8 mb, respectively.  These numbers are neutral to bearish for the soy complex.

    Corn Futures Summary: Corn futures closed 1 to 2 1/4 cents higher, closing near their highs for the day. December futures gained 11 cents for the week. Traders will watch for signs the market has posted a near-term low next week. Weather worries will not likely be an issue as no above-normal heat is in the forecast. Main point of interest, however, will be reports coming from the Pro Farmer Midwest Crop Tour.

    Soybean Futures Summary: Soybean futures posted losses of 5 1/4 to 10 cents for the day, but still posted weekly gains. November beans ended the week 22 1/4 cents above last week's close. Funds sold an estimated 3,000 (15 million bu.) soybean contracts today and for the week were net buyers of 5,500 (27.5 million bu.) contracts. Traders' focus will remain on demand next week, but more focus will be on the supply side of the market as traders analyze Pro Farmer Midwest Crop Tour data.

    Wheat Futures Summary: Wheat futures saw another choppy day of price action, with SRW and HRS futures ending with slight price gains and HRW closing around 1 to 2 cents lower. For the week, December SRW posted a gain of 4 3/4 cents, December HRW futures ended 2 1/4 cents higher for the week and December HRS posted a weekly gain of 10 3/4 cents. It's encouraging to see wheat futures build a base of support for a post-harvest rally.

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    Five Year Moving Average - Corn & Wheat
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