TCR's Weekly Market Summary...
For the week ending January 5, 2018
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The Cattle Range Market Trendlines:
Cattle futures closed the week with triple digit losses while dressed beef strengthened this week.
10 Day Market Trendline
Change from Previous Day: -1.55%
Change from 10 Days Ago: +3.63%
Change from 60 Days Ago: -5.78%
60 Day Market Trendline
The Trendlines are indicators of overall cattle/beef market strength and are based on daily market factors. Each daily factor is the aggregate weighted total of the Gain/(Loss) for 12 market indicators compared to the previous trading day.
Weekly Market Overview:
National Feeder & Stocker Cattle Weekly Summary:
RECEIPTS: Auctions Direct Video/Internet Total
This Week 116,000 21,400 5,600 143,000
2 Weeks Ago 133,600 22,200 1,200 157,000
Last Year 211,700 44,100 2,500 258,300
Compared to two weeks ago, steers and heifers were mostly 2.00 to 8.00 higher as buyers were back in the seats ready to fill orders. There were still several auctions nationwide that didn't have sales this week due to the holiday or the bone chilling Polar Vortex that encapsulated much of the country this week. Limited auction receipts only totaled 116,000 this week on the report, with a much larger volume expected next week. Demand was moderate to good for all weights of feeder cattle as most buyers could find a ready home for nearly all weights and classes,especially those that will finish before that ever so elusive June Live Cattle contract.
The extremely cold weather the past week has tempered the flesh condition on those fleshier calves enough to make them more attractive for buyers. Reports that farmer feeders in the North Plains were content to mostly stay on the sidelines this week as they concentrate on keeping the feedyard equipment running instead of receiving and processing cattle in the subzero temperatures. After last week's 3.00 uptick in cash fed cattle sales in the Plains; this week South Plains live sales were 1.00 lower at 122.00 while dressed sales in the North Plains were steady to 2.00 lower at 193.00 to 195.00.
In Ogallala, NE on Thursday, a half load of replacement quality heifers weighing 639 lbs sold for 200.00 and a part load of 708 lb heiferssold for 164.50. Compared to last Friday, CME cattle complex saw the Live Cattle Contracts 1.10 to 2.30 lower while the Feeder Cattle contracts were 0.62 higher to 0.82 lower. The January Feeder contract settled at 146.62 today and the CME Feeder Cattle Index reported yesterday at 155.20. The packers have been aggressive coming back after the holidays to post a slaughter of 541,000 for this shortened week of the New Year, right in line with last years numbers. Auction volume this week included 74 percent weighing over 600 lbs and 39 percent heifers.
Stocker & Feeder Cattle Weekly Receipts:
Weekly sales of Stocker Calves & Feeder Cattle sold via auctions, direct country sales, and video/Internet sales as reported by the UDSA Market News
Five Year Moving Average - Stocker, Feeder, & Slaughter Steers:
Cattle Futures Summary: Live cattle futures finished today with sharp losses in most contracts, as nearby Feb closed limit down on profit taking. Feeder futures were also sharply lower, down $2.40 to $3.575 in most contracts. The CME feeder cattle index on January 4 was $155.20, down 40 cents from the previous day. Wholesale boxed beef values were higher on Friday afternoon. Choice boxes averaged 84 cents higher at $209.51, with Select boxes up $1.46 per cwt at $202.32. That tightened the Ch/Se spread to $7.19. Estimated week to date FI cattle slaughter is 541,000 head through Saturday. That is 39,000 head more than last week, but 2,000 fewer than the same week last year. Cash trade was widespread at $122, with $121-123 reported. That was weak relative to Thursday reports and encouraged some spec longs to leave town. Beef export sales for 2017 came in at 2,422 MT for the last full week of the year, with 8,071 MT in 2018 sales. Cumulative sales for 2018 are lagging last year by 2.5%.
Selected Auction Reports:
"Click" on individual auction links for complete report
Tulia Livestock Auction - Tulia TX
Receipts: 1356 Two Week’s Ago: 1773 Year Ago: 3199
Compared to two weeks ago: Feeder steers and heifers sold 4.00 to 8.00 higher. Trade was fairly active on good demand after the holiday break. The Panhandle remains extremely dry and in much need of moisture for local wheat pastures.
Pratt Livestock Feeder Cattle Auction - Pratt, KS
Receipts: 2561 Last Week: 1951 Year Ago: 3309
The first sale in the New Year 2018. Feeder steers 650-1000 lbs firm to a higher undertone noted. Feeder heifers 650-950 lbs firm to a higher undertone noted on a light supply of Medium and Large 1. Steers and heifer calves a higher undertone on a light test.
Farmers & Ranchers Livestock Commission Co. - Salina KS
Receipts: 4187 Last Week: No Sale Year Ago: 2897
First Thursday sale after the Holiday Break. Receipts were higher even with the Cold weather still in the area with very low temps and terrible windchils. Steers and Heifers are considerably higher than the last sale of the year, Dec 22, 2017.
Huss Platte Valley Auction - Kearney NE
Receipts: 4533 Two Weeks Ago: 4971 Year Ago: 4705
Compared to two weeks ago steer and heifers sold mostly steady. Demand was good on the first sale of the New Year with a large crowd of buyers on hand. Wednesday supply included 54 percent steers with 89 percent of the run over 600 lbs.
Valentine Livestock Auction Market - Valentine NE
Receipts: 3450 Last week: 3505 Last year: 3765
Compared with two weeks ago steers traded steady and 600 to 650 lbs heifers traded unevenly steady. Demand was good with several buyers and warmer weather in the area. Feeders made up 100 percent of the offering.
Denison Wtd Avg Feeder Cattle Auction - Denison IA
Receipts: 2212 Last Week: 1587
Offering of cattle today over 600 pounds was 78.7 percent with 55 percent of them steers and 45 percent heifers.
El Reno Cattle Narrative - El Reno OK
Receipts Last Reported Year Ago (12/12/2017)
3,157 10,970 11,154
*** Final Report *** This is the first sale of the new year, last sale was 12-12/13-2017 so no trend will be available. All classes of feeder cattle sold with very good demand, limited number of calves sold with moderate to good demand. Quality plain thru attractive.
Mitchell Livestock Wtd Avg Report - Mitchell SD
Receipts: 5426 Last Week: 3582 Year Ago: 6814
Compared to last week: Feeder steers under 600 lbs 2.00 to 5.00 higher, over 600 lbs unevenly steady. Feeder heifers steady to 2.00 higher instances to 4.00 higher on 600-650 lbs and 700-750 lbs. Good demand for all weights of feeders this week, the best demand was seen for heavier weight steers that will finish before the summer months.
Cattleman's Livestock Auction - Dalhart, TX
Cattle and Calves: 1695 Three Weeks ago: 2292 Year Ago: 1,857
Compared to three weeks ago: No market comparison available due to holiday, however firm undertone noted. Trade fairly active. Demand fairly good. Bulk of supply Medium and Large 1-2 400-950 lb feeder steers and heifers.
Joplin Regional Stockyards Feeder Cattle Wtd Avg - Carthage MO
Receipts Last Reported Year Ago (12/18/2017)
5,950 6,252 5,233
***CLOSE*** No recent Value Added Sale for a true price comparison but compared to Monday's regular feeder cattle auction, steers under 700 lbs sold mostly 5.00 to 7.00 higher with instances 9.00 higher. Steers weighing over 700 lbs sold steady.
Sioux Falls Regional Livestock wtd Avg Report - Worthing SD
Receipts: 2974 Two Weeks Ago: 2984 Year Ago: 6120
Compared to two weeks ago: Feeder steers under 600 lbs unevenly steady, 600-700 lbs steady to 3.00 lower, over 700 lbs 3.00 to 5.00 lower. Feeder heifers under 600 lbs 6.00 to 12.00 lower, instances sharply lower, 600-700 lbs 4.00 to 5.00 lower, over 700 lbs not well tested.
Direct Sales of Feeder & Stocker Cattle:
WY, Western NE & Western Dakotas Direct Feeder Cattle Wtd Avg (Fri)
Receipts: 466 Week Ago: 319 Year Ago: 1,300
No comparable sales this week for a market comparison. Demand was light to moderate this week from area feedlots. Most feedlots pen space is limited or they are procuring cattle from large auction receipts this week.
AZ-CA-NV Weekly Feeder Cattle Review (Fri)
Compared to last week, no sales to compare to. Trade and demand moderate. Supply consisted of HOlstein steers for May delivery weighing 300-325 lbs. Cattle weighing over 600 lbs totaled 0 percent. Heifers totaled 0 percent.
IA-South MN Direct Feeder Cattle Weekly (Mon)
Receipts: 0 Last week: Closed for Christmas Last Year: 0
Compared to the last report: Feeder steers and heifers not tested. 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.
Eastern Cornbelt Direct Feeder Cattle Summary (Fri)
This week: 306 Last week: 1,296 Last Year: 0
Compared to last week: No current FOB delivered cattle for an accurate market test. Supply included 100 percent over 600 lbs; 100 percent heifers. 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.
Colorado Direct Feeder Cattle Report (Fri)
Receipts: 1,067 Last Week: Closed Last Year 1,732
Compared to last week: No current FOB trades last week for an accurate market trend. Demand moderate. Supply consisted of 100 percent over 600 lbs; 02 percent heifers.
Kansas Direct Feeder Cattle Summary (Fri)
Receipts: 547 Last Week: Closed Last Year 3,175
Compared with last week: Not enough comparable FOB trades for an accurate market test, however a firm undertone is noted. Volume includes 100 percent 600 lbs and over. Feeder supply includes 100 percent steers and 0 percent heifers.
Montana Direct Feeder Cattle Wtd Avg (Fri)
Receipts: 0 Last week: Closed for Christmas Last Year: 1,074
Compared to last week: No test for feeder Steers and heifers. Supply includes 0 percent over 600 lbs and 0 percent heifers. 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: 1100 Two Weeks Ago: 400 Year Ago: 400
Compared to two weeks ago: Not enough Current FOB sales of steers or heifers for an adequate market trend. Trade activity and demand were moderate. Supply consisted of 92 percent steers and 8 percent heifers. Approximately 78 percent of the offerings weighed over 600 lbs.
Northwest Wtd Avg Direct Feeder Cattle Report (Fri)
Receipts: 366 Last Trade 12/22/17: 268 Year Ago: 2,050
Compared to last week: Feeder steers and heifers not well tested. Demand moderate. The feeder supply included 100 percent over 600 lbs and 98 percent heifers.
Oklahoma Direct Feeder Cattle (Fri)
Receipts: 1,697 Last Week: Closed Last Year 2,035
Compared to last week: No trend available for an accurate market trend for feeder steers and heifers due to limited receipts. Receipts this week consisted of 95 percent over 600 lbs and 34 percent heifers.
Texas Direct Feeder Cattle (Fri)
Receipts: 8,900 Last Week: 14,800 Year Ago: 26,200
Compared to two weeks ago: Current FOB sales of steers and heifers sold mostly steady to 4.00 higher. Trade activity and demand were moderate after the holiday break. Slow start to kick off the new year as the Panhandle is in much need of moisture for local winter wheat pastures.
Extensive U.S. & Canadian Auction Results are available on The Cattle Range
Representative Sales of Cows & Pairs:
Reported by USDA Market News for the week ending January 5th
Bred Cows: Medium and Large 1 3-6 yrs 2nd and 3rd stage 1175-1365 lbs 1350.00-1625.00. Medium and Large 1-2 2-7 yrs 2nd and 3rd stage 1000-1285 lbs 1100.00-1425.00, 1st stage 1300 lb indiv. 1100.00; short and solid mouth to aged 2nd and 3rd stage 1170-1365 lbs 700.00-900.00. Large 1-2 short and solid mouth 2nd and 3rd stage 1475-1655 lbs 825.00-1050.00. Medium and Large 2 broken mouth 2nd stage 850 lb indiv. 500.00. Medium 1-2 3-6 yrs 2nd and 3rd stage 780-1025 lbs 810.00-1050.00, 1st stage 1000 lb indiv. 750.00; broken mouth 3rd stage 800-915 lbs 500.00-525.00 per head.
Cow/Calf Pairs: Medium and Large 1-2 few 6-7 yrs 1100-1350 lb cows w/150-170 lb calves 1250.00-1300.00. Medium and Large 2 5 yrs to short and solid mouth 1060-1200 lb cows w/200-285 lb calves 1050.00-1150.00. Medium 1-2 2 yr 800 lb cow w/325 lb calf 1150.00. Small 1-2 4-6 yrs pkg. 750 lb cows w/170-260 lb calves 825.00 per pair.
West Plains, MO:
Bred Cows: Medium and Large 1-2 2-6 yr old 970-1590 lb cows in the 2nd-3rd stage 1000.00-1300.00 per head; 1st stage 1000.00-1175.00 per head; Seven yrs to broken mouth 1216-1605 lb cows in the 2nd-3rd stage 800.00-1000.00 per head. Medium and Large 2 2-7 yr old 840-1350 lb cows in the 1st-3rd stage 650.00-850.00 per head; Short-solid to broken mouth 985-1290 lb cows in the 2nd-3rd stage 550.00-750.00 per head. Medium 2 3 yr to short-solid mouth 620-915 lb cows in the 1st-3rd stage 400.00-600.00 per head.
Cow-Calf Pairs: Few Medium and Large 1-2 Pkg 6 pair short-solid mouth 1240 lb cows with 200 lb calves 1175.00 per pair. Medium and Large 2 4 yr old to short-solid mouth 1070-1215 lb cows with 100-150 lb calves 1000.00-1150.00 per pair.
Bred Heifers: Medium and Large 1 “AI” bred heifers in 2nd and 3rd stage 921-1099 lbs 1535.00-1925.00; 1103-1199 lbs 1600.00-2050.00; 1200-1281 lbs 1635.00-2500.00; 1331-1368 lbs 1950.00. Bull bred heifers in 2nd-3rd stage 895 lbs 1510.00; 906-1097 lbs 1450.00-1750.00; 1105-1187 lbs 1535.00-1950.00; 1207-1280 lbs 1710.00-2400.00; 1303 lbs 1800.00.
Bred Cows Dispersions: Medium and Large 1 Young 2nd-3rd stage 1011-1098 lbs 1825.00-2050.00; 1101-1122 lbs 1835.00-2025.00; 1263-1299 lbs 2125.00-2125.00; 1302-1371 lbs 1825.00-1925.00; 1400-1500 lbs; 1527 lbs 1750.00. Solid Mouth: 2nd-3rd stage 1277-1299 lbs 1560.00-1575.00; 1324-1369 lbs 1275.00-1710.00; 1424-1456 lbs 1400.00-1685.00; 1500-1554 lbs 1360.00; 1650 lbs 1385.00. Short Solid Mouth 2nd-3rd stage 1336-1347 lbs 1175.00-1175.00; 1400-1464 lbs 1175.00-1200.00; 1514-1545 lbs 1210.00-1225.00;1682 lbs 1110.00 Broken Mouth 2nd-3rd stage 1252-1295 lbs 1000.00-1000.00; 1315-1300 lbs 1025.00; 1400-1461 lbs 1150.00-1175.00; 1510 lbs 1125.00; 1621-1631 lbs 1125.00 all per head. Bred
Cows: Medium and Large 1-2 Young in 2nd-3rd stage 1078-1182 lbs 1300.00-1885.00; 1214-1286 lbs 1560.00-1910.00; 1308-1382 lbs 1475.00-1910.00; 1517 lbs 1800.00; 1st stage 1224-1395 lbs 1150.00-1210.00. Solid mouth 1220-1280 lbs 1410.00-1510.00; 1419-1487 lbs 1335.00-1510.00; 1500-1598 lbs 1350.00-1350.00. Short Solid in 2nd-3rd stage 1165 lbs 935.00; 1306-1394 lbs 1100.00-1200.00; 1400-1502 lbs 1125.00-1175.00. Broken Mouth in 2nd-3rd stage 1203-1249 lbs 960.00-1085.00; 1300-1374 lbs 950.00-1150.00; 1425-1499 lbs 1075.00-1100.00 all per pair.
Alberta Beef Producers: Alberta direct cattle sales so far this week have seen light trade develop with dressed sales ranging from 280.00-282.00 delivered. Initial sales are 5.00-6.00 higher than the previous week. Buyers were indicating cattle that they bought this week would be lifted next week. Cash to futures basis levels did strengthen. Tentatively cash to futures are at their strongest levels since May 2015. Fed prices have now traded higher for seven straight weeks.
The "Nord Fork"
Replaces Flankers at Branding
What to Watch & What to Manage in 2018
Derrell S. Peel, Oklahoma State University Livestock Marketing Specialist
Continued growth in beef production in 2018 is likely to pressure cattle and beef prices. Cattle producers have a number of economic conditions to watch that will indicate the impact of factors they cannot control and that will have implications for those factors they do control.
Domestic and international beef demand will continue to be critical factors affecting cattle and beef prices in 2018. The U.S. economy is currently strong with low unemployment and a stock market supported by lots of cash from earlier Federal Reserve stimulus. Economic growth has been rather plodding but steady over the past few years. Though inflationary fears have not yet materialized, the Federal Reserve began raising interest rates in 2017 as the economy gained strength. The recent tax cuts and proposed infrastructure investments could provide additional fiscal stimulus that adds to inflation concerns. This may pressure the Federal Reserve to raise interest rates more and faster in 2018 and beyond. Though no major change is expected at this time, macroeconomic conditions are a factor to watch in 2018.
Record beef production is expected to combine with growing pork and poultry production to result in record total meat supplies in 2018. Wholesale and retail beef prices held up well to growing meat production in 2017, indicating strong beef demand and there is no indication it is changing going into 2018. However, ample meat supplies will continue to be a demand challenge for beef in the coming year. Pork and poultry production and trade are factors to watch this year.
Beef trade provided much support for cattle and beef markets in 2017, led by growth in beef exports. Modest beef export growth is expected to continue in 2018 assuming no change in trade policy. However, the cloud of uncertainty due to NAFTA renegotiations continues to hang over meat markets. Beef, pork and poultry exports to Mexico and Canada represented 31 percent of total U.S. meat exports and included 26 percent of total beef exports for the first ten months of 2017. Both the U.S. and South Korea have suggested a possible renegotiation of KORUS-FTA, which could impact the number two beef export market. International beef markets and trade policy are also factors to watch in 2018.
Domestic and international beef demand will determine cattle and beef price pressure relative to increasing beef production. Modest price pressure is expected at this time but any threat to demand would quickly result in additional price weakness. Larger down-side price risk means that risk management takes on an added importance in 2018. While cattle producers cannot have much impact on overall market price levels, they may be able to reduce the risk of lower individual prices with risk management tools.
Producers will have challenges to maintain profitability in 2018. Lower prices increase the likelihood of lower revenue and puts additional emphasis on production and cost management in the coming year. The beginning of a new year is a good time to evaluate all aspects of cattle operations for the coming year including major budget items such as forage management and use; harvested and supplemental feed use; and machinery costs. Overall production costs are expected to remain stable in 2018, though rising interest rates may impact debt management at some point. Maintaining profitability this year in the face of lower prices will require increased production and/or reduced costs.
Cattle producers are watching a variety of external factors that may impact cattle and beef markets this year while focusing management on resource use and cost of production. Profitability will likely be squeezed but decent returns are possible in 2018.
Fourth Quarter Fed & Feeder Cattle Price Performance
Livestock Marketing Information Center
Slaughter steer prices this fall have posted the biggest increase from September of any year in the last eleven. Based on the 5-market Choice steer price monthly average (reported by USDA’s Agricultural Marketing Service), October prices were up $5.35 per cwt. from the prior month. In 2013, the September-to-October increase was $5.13, and in 2014 the rise was $4.44. Over the last ten years, the average September-to-October price change was a decline of $0.16, in no small part due to drops in 2015 and 2016 of $4.45 and $5.03, respectively.
The comparisons of fed cattle price increases in 2017 from September to November were even more dramatic. The average change for that two-month span during the prior eleven years was up by $1.42 per cwt. This year the price increase was $14.26. The biggest September-November price change since 2005 before this year was in 2014, which posted a gain of $9.82. In 2015, fed steer prices recorded the biggest September-November price drop in the last eleven years of $8.21. In 2016, November cattle markets started a rebound that continued into 2017.
During the fourth quarter of 2017, the lowest fed steer price (5-market average) occurred in the very first week (week ending October 7th) at $109.45 per cwt. The quarterly high was for the week ending November 4th at $123.53. For the quarter, fed steers are projected to have averaged just over $117.50 per cwt., more than 9% above 2016’s.
In light of the auspicious price performance of fed cattle in 2017’s fourth quarter, feeder cattle prices also have increased but kept within the bounds of gains seen in recent years. Using the Oklahoma City auction market for 750-to 800-pound feeder steers as a reference point for yearling cattle values, prices moved up in both October and November. The September-October price increase in 2017 was $3.61 per cwt. followed by a $3.09 gain in November. Prices then declined in December.
On a weekly basis feeder steer prices in 2017’s fourth quarter peaked at $166.28 per cwt. the week ending November 10th and then generally eroded, averaging $149.87 for the last auction of the calendar year. In 2017’s final quarter 750- to-800-pound steers at Oklahoma City averaged $155.10 per cwt. That was a year-over-year surge of $26.48 per cwt. or up 21%.
The year-over-year gains in yearling prices in the fourth quarter of 2017 was directionally consistent with the demand for yearling steers caused by rising prices of fed cattle. Additionally, specifically the increase from early October into November, prices were supported by the supply side of the feeder cattle market. The supply driver for the yearling market in the fall is the calves that were born in the prior year. In 2016, the U.S. calf crop expanded by 3%, according to USDA’s National Agricultural Statistics Service (NASS). Calves born in Oklahoma during 2016 surpassed the prior year tally by 8%. Oklahoma City auction market receipts for 750- to 800-pound feeder steers in October were up 7% from the previous October. In November, market receipts for 750-to 800-pound steers fell short of the prior November by 7%. That suggests both supply and demand factors drove the last leg up in prices (into early November).
Market receipts for 750- to 800-pound steers in Oklahoma City in December continued to be less than a year ago. As in November, that situation reflected large numbers of yearling animals placed into feedlots during August through October. Further, the composition of 750- to 800-pound steers moving through the Oklahoma auction is also made up of more calves than a year ago, with 8.9% of the steers noted as calves versus 4.3% last year during the November-December interval. Even though feeder steer prices declined during December, the tight supply of traditional yearling steers likely mitigated the price drop.
USDA National Retail Beef Report:
Advertised Prices for Beef at Major Retail Supermarket Outlets
This week in Beef Retail, the Feature Rate was 3.7 percent higher, the special Rate posted a 9.5 percent increase, and the Activity Index charted a 7.4 percent increase. Roasting cuts have taken their place back on retail ads as consumers are getting back to work and school after the holidays and are looking for easy dinner ideas that they can enjoy indoors during the winter months. Cuts from the Rib, Chuck, Round, and Ground Beef saw more ad space while cuts from the Loin and Brisket saw less. Cattle slaughter under federal inspection saw a 7.8 percent increase when compared to last week.
Restaurant Performance Index Increases
Katelyn McCullock - Economist - American Farm Bureau
The restaurant industry accounts for $799 billion in sales, according to the National Restaurant Association. It’s an important piece of the food business, debuting food trends, shaping how we eat and employing 14.7 million people. The restaurant industry is also highly cyclical and exposed to the economic winds of the overall economy. To capture restaurant owner sentiment, the National Restaurant Association surveys owners on a monthly basis, asking them to evaluate the current situation of the restaurant industry and what the expectations are for the next six months. That data is released as an index value in what is known as the Restaurant Performance Index.
The most recent data, released at the end of December, looked at November through the beginning of 2018. The overall index increased compared to the previous month to 101.1. A value of 100 is recognized as a stable state of the industry—neither expansion nor contraction. Values above 100 indicate expansion, while values below 100 indicate contraction. November marks the 15th consecutive month the index has been over 100.
The index is divided into two categories: the current situation and the expectations index. This is designed to indicate strength or weakness in specific areas such as same-store sales, capital expenditures, labor, and customer traffic. In November, the current situation also improved, showing stronger same-store sales, customer traffic and labor. However, the current index value was still slightly below the 100 mark, indicating some current weakness. In an interesting contrast, a separate National Restaurant Association survey showed that in 2017 one in 10 adults planned on eating Thanksgiving at a restaurant.
On the expectations side of the index, restaurant owners are expecting the next six months to continue to improve. The November expectations index is the highest it has been in nine months. Business conditions were expected to gain the most ground, up 0.8 percent from last month, followed by same-store sales. Capital expenditures declined relative to a month ago, but still posted a value over 100.
In the last three months the gap between the current situation and the expectations index has widened. Expectations indicate strong growth in the future, but the current situation indicates that the last several months of positive expectations have yet to come to fruition. Capital expenditures declined relative to October in both the current and expectations index, which are longer term investments and could point to hesitation to commit to large upgrades, although both values were still at 100 or above.
Photo of the Week:
"Shootin' the Bull" Weekly Analysis:
In my opinion, there are some shenanigans going on in the cattle market. Especially the feeders. Although a disappointing dollar lower cash trade this week, it appears only the futures are upset. The 50% retracement of the initial decline from contract high gave good reason to market some inventory. I made several recommendations and urged producers to market inventory this week. I did not want to be short for the sake of being short, but do believe it was an opportune time to market inventory. The futures are anticipated to be volatile. The marketing of what is believed to be elevated inventory in the Colorado and Kansas feed yards will make for some pressure on the market. The solid demand and elevating box price is anticipated to keep this event from turning into a bear market. Almost like a pretty even brawl would be my best guess with one side having the upper hand one week, and vice versa the next. The next 45 to 60 days are anticipated to produce elevated volatility and significant price expanse. At this time, at the money puts remains the derivative of choice. I think there are too many factors to want to solidify a price. The options provide leeway in marketing, yet a minimum sale floor as well. If you use futures to market inventory, then you will just have to be satisfied with the price. Options though, give you options.
Feeders is where the real story is. Who bought a string of cattle, somewhere that was USDA reportable, in one of the slowest time frames of the year, to push the feeder cattle index up $9.72? We may never know, but it smells just like someone long the January contract that would like to see them higher than where they were when this took place. So, since the futures settle to the index, we now have 15 trading days for the feeder index to drop $9.32, the January futures rally $9.32, or they meet somewhere in the middle. When viewing this perspective in the spring months, it is closer to $13.20. Of the most important factor would be that you don't want to solidify your marketing in the future at this wide of a positive basis. If you sell the March feeders to market your inventory, the underlying cash will have to fall over $13.00 before you would make the first penny at expiration. This is not to say that it won't happen, but I would prefer to not be exposed to basis risk and price risk when price risk alone is so extensive. Using options was applicable up until Thursday's turnaround. The basis had narrowed enough to make this plausible. Today though it is not. I would not recommend buying puts at such a wide basis. This recent anomaly has created a mess to deal with. Where it is most advantageous is to feed yards needing to replenish sales this winter. Running at full capacity has merits, and with the consumer's palate seemingly having turned back to beef, demand is anticipated to continue. So, be on guard as the basis situation will unfold rapidly. For feed yard managers wanting or needing to secure feeders for $13.00 less in the future than today, this appears the environment for which to achieve this.
Grains have been my Achilles' heel. I've not been correct all of '17, and '18 isn't starting off much better. However, the most minute movement off the lows in the corn and wheat does offer a glimmer of hope that these could be building blocks for future higher price movement. There are a bunch of articles going around about the grains consisting of cyclical movement, drought, weaker US dollar and improving European countries that have merit towards a higher grain trade. Potentially there will be some acres swapped from corn to beans, but the major factor will be the extent of the current drought that appears to be widening and increasing in intensity every week. This where Wheat could be the most impacted. I know Wheat can be killed a multitude of times and still come back. It may be a little harder this year though.
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.
Americans Will Eat a Record Amount of Meat in 2018
For all the buzz about pea protein and lab-grown burgers, Americans are set to eat more meat in 2018 than ever before.
To be precise, the average consumer will eat 222.2 pounds (100.8 kilos) of red meat and poultry this year, according to the U.S. Department of Agriculture, surpassing a record set in 2004. Meanwhile, domestic production will surpass 100 billion pounds for the first time, as livestock owners expand their herds on the back of cheap feed grain.
Though the USDA’s per-capita measure isn’t a true gauge of consumption, it serves as a common proxy. It shows egg demand reaching an all-time high as well in 2018. Dairy items like cheese and butter have also been growing in popularity.
“If you look at the items that consumers say they want more of in their diet, protein tops the list,” said David Portalatin, a Houston-based food industry adviser for NPD Group.
Prices have gotten cheaper at the grocery store as supply grows. Chicken breast costs in November were the lowest in five years, and steak and ham are getting less expensive, government data show.
Many Americans are actively shunning carbohydrates in favor of protein, though any health benefits may be outweighed by the sheer volume of meat, eggs and dairy being consumed. While the government recommends that adults eat 5 to 6.5 ounces of protein daily, the USDA forecasts the average person will down almost 10 ounces of meat and poultry each day in 2018.
It’s a sharp turnaround from 2007 through 2014, a time when per-capita meat and poultry demand slumped 9 percent as rising corn-based ethanol demand and a drought sent commodity prices sharply higher. Though cattle and hogs are now far cheaper than their 2014 peak, prices have staged a rebound. U.S. meat exports have soared as the global economy improves, outpacing the gains in domestic demand.
Most-active cattle futures in Chicago rose 4.7 percent in 2017, the first gain in three years, and hogs climbed 8.5 percent. Cash livestock prices may fall in 2018, the USDA forecasts.
Meat substitutes have gained attention in recent years amid concerns about the impact of a carnivorous diet on health, animal welfare and the environment. For example, Chicago-based Epic Burger Inc. last year started selling the Beyond Burger plant-based patty that mimics meat. Protein from plants, insects or cultured meat are a top food trend to watch, though the category isn’t expected to significantly dent animal product sales just yet, according to a November report from CoBank.
“Ten years from now, there will be higher plant consumption, but beef will always be king,” Epic Burger founder David Friedman said. “People are always looking to put more protein into their diets. But they want high quality and transparency in the food they’re eating.”
U.S. Dollar - 6 Month Chart:
Over the last 5 years, an average of around 10% of U.S. beef production has been exported, making exports an extremely important factor affecting beef and cattle prices. A strong dollar depresses export demand.
Choice Boxed Beef Cutout, Slaughter, & Feeder Steers:
Boxed beef cutout values higher on moderate demand and light offerings. Select and Choice rib and round cuts steady while chuck and loin cuts steady to firm. Beef trimmings sharply higher on good demand and light offerings.
The average value of hide and offal for the four day ending Fri, Jan 05, 2018 was estimated at 10.70 per cwt., up 0.01 from last week and down 1.13 from last year.
Fed Cattle Market... Stunning Disappointment
Cassie Fish -- cassandrafish.com
CME cattle futures reversed yesterday, after making a new high for the move, raising a technical caution flag. And today, as if someone flipped a switch, futures opened lower today and fell sharply. Today’s action decidedly ended the modest rally, (only $6 in Feb LC) since December 11.
The repercussions of the futures failure are many. Negotiated cash cattle, set to trade fully steady or higher this week have traded $1 lower than last week’s $123. A few basis traders sold quickly in Nebraska and Kansas, responding to lower futures. More packers are now bidding $122 as the morning wears on, some cattle feeders are passing, despite futures that are near limit-down.
The futures break has placed the packer firmly back in complete control of the market. Packer margins will now widen back out quickly over $100 per head, as choice boxed beef cutout values rise over $210 next week, bolstered by smaller holiday kills and aggressive end user restocking. This week’s kill is not estimated at 530k-535k.
It hasn’t happened often in history, that the packer is able to break cash after multiple, consecutive weeks of sub-100k head trade volumes, but psychology is such, that for them, taking advantage of lower futures appears to be turning out to be easy.
This all speaks to the many facets of this market that have changed in the last several years. The active participation of algorithmic-based, computer-generated trading has sped up the velocity of futures price movement and volatility is one. Money flow impact being greater than fundamentals on spreads and market direction is two. Another is that many cattle feeders focus solely on basis rather than price is another, not to mention a heavily short cattle feeding industry influencing outlook. Packers controlling 74.3% percent of their needs through formulas and contracts reduces their reliance on negotiated trade is also a reality.
Layer on top of all-of-the-above the fact that all are bearish 2018 cattle prices because of well-known expansion, and maybe the futures market collapse is not a surprise in hindsight. Of course, a bearish outlook was true one year ago too. But 2017 turned out better than 2016, with the market making a higher high and a higher low, absorbing 1.6M more cattle into the supply chain. Demand fueled it and packers stepped up production aggressively and had a record profitable year. It was the packer consistently reaching for cattle to supply expanding demand that made 2017 what it was.
It only took 3 trading days into 2018 for another ‘race to the bottom’ to commence. But in reality, fed cattle supplies for Q1 are only slightly larger than a year ago. There is no reason to expect Q1 demand to be any worse than 2017. Q1 cash prices last year traded between $117 and $130 and there really isn’t any reason to expect this year go be any different. During Q1 2017, boxes traded between $192 and $223 and if anything, this year’s range will be higher, meaning packer margins could be wider.
Some analysts are pointing to carcass weights the week before Christmas, which were released yesterday as a bearish sign. But last year, carcass weights rose 8 pounds from that week to the first week of January, back up to 905 pounds. And with the clarity that hindsight provides, that proved to be irrelevant.
Available fed cattle supplies will grow significantly year over year in Q2. However, it seems the marketplace is choosing to take a bearish stance starting now. It will take the same elements of 2017, excellent demand and a brisk slaughter pace for the market to maintain the front-end currentness in Q1 that has benefited the market so significantly.
So perhaps this week’s bearish disappointment won’t actually prove to be all the bearish over the coming weeks. Giving the packer back the advantage, widening packer margins ought to support slaughter levels and encourage bookings by end users. And that is truly where it’s at.
Feeder Steers/Corn Correlation:
Historically, the value of 25 bushels of corn is approximately equal to the price per cwt. for feeder steers.
Slaughter Cows & Bulls:
Slaughter cows and bulls not tested due to the holiday shortened week.
Cutter Cow Carcass Cut-Out Value Friday was 169.42 -- Up 0.49 from last Friday.
Weight Colorado Oklahoma Alabama
Breakers 1100-1600 N/A 55.00-59.00 N/A
Boners 1000-1450 N/A 55.00-60.00 N/A
Lean 1000-1300 N/A 54.00-57.00 N/A
Bulls 1300-2500 N/A 75.00-81.50 N/A
# Head Week Ago Year Ago YTD Year Ago
National 8,526 7,780 7,656 41,842 39,451
S Central 2,462 1,780 1,759 13,149 10,794
N Central 1,296 1,065 1,161 5,601 6,314
East 1,911 2,099 1,742 10,440 7,534
West 1,167 1,137 931 5,430 6,094
Midwest 1,690 1,699 2,063 7,222 8,715
Est. Weekly Meat Production Under Federal Inspection:
Total red meat production under Federal inspection for the week ending Saturday, January 06, 2018 was estimated at 914.3 million lbs. according to the U.S.Department of Agriculture's Marketing Service. This was 4.8 percent higher than a week ago and 1.3 percent higher than a year ago. Cumulative meat production for the year to date was 1.3 percent higher compared to the previous year.
Weekly Hay Reports: "Click" on links for detailed report
Washington - Oregon (Columbia Basin)
Weekly Feedstuffs Market Review:
The USDA reports feed ingredient prices for the week ending January 2, 2018 were mixed.
Soybean Meal was mixed, 22.30 lower to 6.70 higher. Cottonseed Meal was steady to 5.00 lower. Canola Meal was mixed, 1.70 lower to 7.70 higher. Linseed Meal was steady. Sunflower Meal was steady to 10.00 lower.
Whole Cottonseed was mixed, 3.00 lower to 10.00 higher.
Crude Soybean Oil was mixed, 52 points lower to 43 points higher. Crude Corn Oil was steady.
Ruminant Meat and Bone Meal was mixed, 15.00 lower to 15.00 higher, mostly steady. Ruminant Blood Meal 40.00 to 85.00 higher with limited comparable sales. Feather Meal was steady to 15.00 higher. Menhaden Fishmeal was steady.
Corn Hominy was steady to 6.00 higher. Corn Gluten Feed was steady to 15.00 higher. Corn Gluten Meal was mixed, 10.00 lower to 18.00 higher.
Distillers Dried Grain was steady to 15.00 higher.
Wheat Middlings were steady to 5.00 higher. Wheat millrun was mixed, 3.00 lower to 5.00 higher.
5 Year Bullish/Bearish Consensus Charts:
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 linein 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.
Bullish/Bearish Consensus: Cattle
Bullish/Bearish Consensus: Corn
Stock Markets & Economic News
Stocks got off to a strong start in the first week of 2018, bringing all of the major indexes to new highs. The Dow Jones Industrial Average, although narrowly focused, garnered the most attention by passing the 25,000 threshold on Thursday -- less than a year after breaking through 20,000 for the first time. Less noticed but perhaps more telling was a new record low on Wednesday for the CBOE Volatility Index (the VIX), Wall Street’s so-called “fear index.” Energy stocks were particularly strong, helped by a climb in domestic oil prices to their best levels in three years. Information technology and materials shares also performed especially well. Utilities and real estate stocks were weak, held back by a sharp rise in long-term bond yields, which makes their dividend yields less attractive in comparison.
Fed Divided Over Rate Hikes
The Federal Reserve in December forecast three rate hikes in 2018 but minutes of the central bank meeting released Wednesday show a distinct lack of unity with the projection.
The minutes portray two camps, of roughly the same size, who are both uncomfortable with the forecast for completely different reasons.
One camp of a “few” officials, on the dovish side, thought that three rate hikes this year might be too aggressive.
These officials argued that three rate hikes might prevent a “sustained” return to the Fed’s 2% inflation. They said they didn’t think interest rates had much further to rise before reaching the level of rates that would no longer be “accommodative” or boosting growth.
The other, more hawkish, camp of a “few” officials thought the forecast of three rate hikes was too slow.
These officials noted that financial conditions had not tightened since the Fed started raising rates at the end of 2015 and that continued low rates risked financial instability.
Ironically, at the same time Fed officials appear not to like their own forecast, the market has come around to basically accepting it.
Investors have penciled in a 70% chance of a rate hike at the central bank’s March meeting and have now priced in slightly more than another move by December.
Minutes from meeting showed that Fed officials expect only a modest impact on the economy from the Republican tax plan.
The Fed staff said it pushed up its forecast for GDP growth modestly because the final tax plan was larger than assumed.
Fed officials said there would be a modest boost to capital spending but the benefits to the economy were uncertain.
While this had the chance of having some “positive supply-side effects” including the expansion of the economy’s growth potential over the next few years, the central bank’s business contacts seemed cautious and suggested the increase in cash flow might be used for mergers, debt reduction and stock buybacks that don’t have wide economic benefits.
At the December meeting, by a seven-to-two vote, the Fed increased its benchmark federal-funds rate by a quarter percentage point to a range between 1.25% and 1.5%, the third increase of the year. That move was widely expected.
"Click Here" to view a Slide Show of Drought Monitor maps for the last 12 weeks
Looking Ahead: A rapidly-intensifying storm system near the Atlantic Seaboard will produce wind-driven snow from parts of the Mid-Atlantic into the Northeast. Substantial snow- and wind-related impacts are expected in New England, as well as coastal cities such as Savannah, Georgia, and Charleston, South Carolina. In the storm’s wake, late-week temperatures will again plunge across the Midwest and Northwest. However, temperatures will rebound to above-normal levels by Sunday in all areas west of the Mississippi River. In the middle and lower Mississippi Valley and environs, some rain or freezing rain could precede the warmer weather. Elsewhere, periods of rain and snow will affect northern California and the Northwest, while dry weather prevails across the central and southern Plains.
The NWS 6- to 10-day outlook for January 9 – 13 calls for above-normal precipitation across much of the nation, with drier-than-normal weather confined to the nation’s southern tier save for the Southwest. Colder-than-conditions will linger in the upper Midwest, while near- to-above-normal temperatures prevail elsewhere, with the greatest likelihood of abnormal warmth from the Rockies to the Pacific Coast.
2017 Prices Exceeded Expectations... Can They Do It Again?
Ag Center Cattle Report
This year everyone knew the beef production machine was churning out larger numbers of cattle and after the disappointment in prices during 2016, the expectations were for the market to struggle and for the supplies to present a potentially burdensome amount of tonnage on the market and threaten price stability. The expectations for increased tonnage proved correct, and month after month, the weekly slaughter posted 5-7% larger numbers of fed cattle brought to market.
Hedge positions were recorded for most operations and many a wary operator watched as prices generally exceeded expectations for most of last year. While in the early months of 2017, the positive basis on hedges lessened the impact of hedge losses, overall cash on cash profits were diminished by hedge losses but most of the industry had a good year.
Beef processors didn't just have a good year, they had a banner year. The beef plants that were forced to close during the bottom of the cattle cycle, limited slaughter capacities and in the face of larger offerings of cattle all year, packers were able to hold on to record margins at the beef plants. Without any new or reopened beef plants to come on board in 2018, the processors can reasonable expect another good year.
The key to success for the market prices in 2017 was beef demand. Several important factors converged to increase demand at a time when fed numbers were increasing. Our economy is healthy and unemployment is low by historical standards and consumers ate a lot of beef and, for that matter, a lot of meat. Nutritional advice has slowly been changing to advise more protein in the diet and beef has been cast in a favorable light.
The dollar has weakened and at year end was on the low end of the trading range for the year. This, combined with rebuilding of the herd in Australia, and the Brazilian meat scandals, opened the door for greatly expanded exports of U.S. beef. Those exports will be a critical component of market prices for 2018. New increased tonnage of beef in 2018 will be heavily dependent on exports as a safety valve for excess supplies of beef.
The future for cattle prices in 2018 will be a challenge. Beef tonnage is expected to increase again as more cattle continue to be fed and slaughtered. Placements in late 2017 continue at a brisk pace and unfortunately carcass weights, that have been below 2016 most of this year, are expected to rise above 2017 next year. All protein sources are expected to continue growing in 2018 and there will be abundant supplies of chicken, pork and beef.
Once again the U.S. beef industry will look to the export markets for help from excessive supplies. It will be difficult to expand domestic beef consumption in a meaningful way. Expanding the export markets will require the industry to modernize itself and identify the U.S. cattle herd opening the door for expanded buying interest from the EU and other Asian sources where animal identification is required. Supply chain links must be completed to provide food safety and source integrity to the world's highest quality beef supplier.
Feedyard Closeouts: Profit/(Loss)
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.
Typical closeout for un-hedged steers sold this week:
Placed On Feed 165 days ago = July 24th
P/(L) based on the futures when placed on feed: $31.29
Cost of 750 lb. steer delivered @ $148.75 per cwt: $1,115.63
Feed Cost for 600 lbs. @ $76.64 per cwt: $459.84
Interest @ Prime + 2% on cattle cost for 165 days: $29.00
Interest @ Prime + 2% of the feed cost for 165 days: $5.98
Total Cost & Expense: $1,610.44
Sale proceeds: 1,350 lb. steer @ $121.00 per cwt: $1,633.50
This week's Profit/(Loss) per head: $23.06
Profit/(Loss) per head for previous week: $9.82
Change from previous week: + $13.24
Sale price necessary to breakeven: $119.29
Projected closeout for steers placed on feed this week:
Projected Sale Date @ 165 days on feed = June 19th
Cost of 750 lb. steer delivered @ $154.25 per cwt: $1,156.88
Feed Cost for 600 lbs. @ $74.55 per cwt: $447.30
Interest @ Prime + 2% on cattle cost for 165 days: $32.69
Interest @ Prime + 2% of the feed cost for 165 days: $6.32
Total Cost & Expense: $1,643.18
Sale proceeds: June Futures @ $112.32 per cwt: $1,516.32
This week's Profit/(Loss) per head: ($126.86)
Profit/(Loss) per head for previous week: ($76.08)
Change from previous week: -$50.76
Sale price necessary to breakeven: $121.72
Typical closeout for hedged steers sold this week: $31.29
Typical closeout for un-hedged steers sold this week: $23.06
Projected closeout for steers placed on feed this week: ($126.86)
Slaughter Cattle: Friday negotiated cash trade and demand was light to moderate in the Southern Plains. In the Texas Panhandle, compared to last week early live purchases traded 1.00-1.50 lower from 121.50-122.00. In Kansas compared to last week sold mostly 1.00 lower at 122.00 with a few at 121.00.
Trade was moderate on light to moderate demand in the Northern Plains and Western Cornbelt. Compared to last week in Nebraska, live purchases traded 1.00 lower at 122.00 with dressed purchases steady to 1.00 lower from 193.00-195.00. In Colorado compared to last week, live purchases traded 1.00-2.00 lower from 121.00-122.00. In the Western Cornbelt compared to last week, live purchases traded steady from 122.00-123.00 with dressed purchases steady to 1.00 lower from 193.00-195.00.
Negotiated Sales: Confirmed: 69,471 Week Ago: 1,035 Year Ago: 3,594
Formula Purchases: Net - Dressed
Head count priced today: 24,600
Weighted avg weight: 888.00
Weighted avg net price: 196.09
Livestock Slaughter under Federal Inspection:
CATTLE CALVES HOGS SHEEP
Friday (est 118,000 2,000 439,000 7,000
Week ago (est) 118,000 2,000 463,000 8,000
Year ago (act) 113,000 3,000 434,000 7,000
Week to date (est) 458,000 8,000 1,764,000 29,000
Last Week (est) 446,000 8,000 1,741,000 29,000
Last Year (act) 473,000 11,000 1,755,000 34,000
Saturday (est 83,000 0 387,000 0
Week ago (est) 56,000 0 361,000 0
Year ago (act) 71,000 0 333,000 1,000
Week to date (est) 541,000 8,000 2,151,000 29,000
Last Week (est) 502,000 8,000 2,102,000 29,000
Last Year* (act) 543,000 10,000 2,087,000 35,000
2018 YTD 343,000 6,000 1,340,000 23,000
2017 *YTD 543,000 10,000 2,087,000 35,000
Percent change -36.9% -42.1% -35.8% -34.3%
National Grain Summary:
Compared to last week, cash bids for wheat and soybeans were higher, corn traded mixed, and sorghum traded lower. The DOW hit 25,000 yesterday, possibly pulling some interest away from commodity markets. Ethanol manufacturing for week ending December 29th saw a 58,000 barrel per day reduction from the week prior, totaling an average 1.03 million barrels per day. Export sales for this year remain somewhat slow. USDA's export sales and shipment totals are set to be released mid morning Friday and
will give any updated look at the current export pace. Soybeans rallied in overnight trading, leading to some spillover buying in the corn market as well. Wheat was steady to 13 cents higher. Corn was mixed from 1 cent lower to 1 cent higher. Sorghum was 2 cents lower. Soybeans were 17 to 24 cents higher.
Corn futures saw most contracts within 1/4 cent of UNCH on Friday, as March was 1/2 cent higher on the week. The USDA indicated old crop export sales of just 101,198 MT during the holiday week in this morning’s Export Sales report. That is a marketing year low and just 23.58% of the same Christmas week last year. Analysts had been expecting 600,000-900,000 MT in 17/18 sales. Export shipments of corn came in at 657,645 MT, which was 7.98% larger than the sale week last year. Mexico brought in 185,900 MT, with 148,600 MT going to Japan. A Reuters’ survey of analysts projects Brazil’s first corn crop production at 25.3 MMT, down from last year’s 30.46 MMT.
Wheat futures closed the Friday session with most CBT and KC contracts 2-4 cents lower on profit taking ahead of the weekend. MPLS was down a penny in the nearby contract. This morning’s Export Sales report showed old crop wheat sales at a MY low as well at 130,963 MT. That fell well short of the range of expectations at 225,000-500,000 MT, and it was 28.7% lower than the same holiday week in 2016. All wheat exports were reported at 228,100 MT, which was just over half of the same week last year. The Friday Commitment of Traders report showed spec funds trimming their net short Chicago SRW positions by 17,557 contracts. Their net position for the week ending Jan 2 was -128,178 contracts.
Five Year Moving Average - Corn & Wheat:
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