Weekly Market Summary...

For the week ending January 12, 2018 

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The Cattle Range Market Trendlines:

The markets drifted lower all week with feeder cattle losing the most ground.

10 Day Market Trendline

Change from Previous Day: +0.16% 
  Change from 10 Days Ago: -0.70% 
  Change from 60 Days Ago: -8.39%

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. 

 The Cattle Range Market Trendlines:

The markets drifted lower all week with feeder cattle losing the most ground.

 Weekly Market Overview:


National Feeder & Stocker Cattle Weekly Summary:

RECEIPTS:    Auctions   Direct       Video/Internet   Total
This Week     372,300     39,800       118,200        530,300
Last Week     116,000     21,400           5,600        143,000
Last Year       367,500     53,400         78,800        499,700
Compared to last week, feeder steers and heifers were mostly 5.00 to 10.00 lower, instances reported 15.00 lower while steer and heifer calves under 550 lbs sold steady to 5.00 lower.  Demand was moderate for most longtime weaned and preconditioned cattle.  Some locations noted a few loads and packages still coming off the cow but selling with little or no discount. Livestock markets are getting back to normal schedules after the Holidays and many willing sellers were on hand to watch their livestock go through the sale ring this week. 
Auction receipts on this report totaled 372,300 this week; the largest auction volume reported since 2010. Total receipts this week totaled 530,300; almost 25,000 head short of week ending July 17, 2015.  However, during that week in July 2015, 65 percent of the volume was attributed to Video and Internet sales.  This week, over 70 percent was attributed to the auction receipts.  Lackluster futures market late last week followed through into this week and contributed to the sharp losses occurring in the sale rings throughout the country. 
Compared to last Friday, CME cattle complex saw the Live Cattle Contracts 0.35 to 1.88 lower while the Feeder Cattle contracts were 0.68 higher to 2.27 lower.  Some analysts were wondering if convergence between the January Feeder contract and CME Feeder Cattle Index would happen this month.  The January Feeder Contract settled at 144.35 today and the CME Feeder Cattle Index reported yesterday at 146.80.  Lower feedlot trade on Monday this week was abnormal, however some producers wanted to get out in front of the winter storms forecasted mid-week in the Plains states.   Some feedlots had limited interest to procure large numbers of cattle with another round of bone-chilling temps headed their way. 
In the Southern Plains and Colorado the last reported market was on Monday with live cash trades at 120.00.  In Nebraska and the Western Cornbelt the last reported market was on Tuesday with live cash trades at 120.00 and dressed trades were at 192.00.  Packers didn't take on much cash inventory this week as weekly cash volumes reported were as follows: TX/OK/NM - 7,280; KS - 18,354; NE - 35,014; CO - 10,709 and IA/MN - 20,926.  Packers did however try to make up some ground after the holidays and harvested 611,000 cattle this week; 2,000 more than the same week a year ago.  Auction volume this week included 63 percent weighing over 600 lbs and 40 percent heifers.

Stocker Steers:


Feeder Steers:

Stocker& Feeder Cattle Weekly Receipts:


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 closed the Friday session with 25 to 92.5 cent gains. Feeder cattle futures were a dime to $1.275 higher. The CME feeder cattle index on January 11 was $146.80, down $2.01 from the previous day. Wholesale boxed beef values were lower on Friday afternoon. Choice boxes averaged 84 cents lower at $208.23, with Select boxes $1.31 per cwt at $201.64. Estimated weekly FI cattle slaughter is 611,000 head through Saturday. That is 2,000 head more than the same week last year. Quarterly beef production was given a 130 million pound downward adjustment for the fourth quarter of 2017 to 6.74 billion pounds. Total production for 2017 was shown at 26.175 billion pounds, with 2018 up 170 million at 27.760 billion pounds. 

Mexican Feeder Cattle Weekly Import Summary

Receipts EST: 9,000      Week ago Act: ,0      Year ago Act: 3,760
No recent sales to compare to, however compared to early in the week, steer calve prices were firm. Heifers prices were trending 2.00-5.00 higher. Trade and demand moderate. Supply consisted of steers and spayed heifers weighing 300-600 lbs. 
Feeder steers: Medium and large 1&2, 300-400 lbs 170.00-182.00; 400-500 lbs 150.00-162.00; 500-600 lbs 135.00-147.00; Medium and large 2&3, 300-400 lbs 155.00-167.00; 400-500 lbs 135.00-147.00; 500-600 lbs 120.00-132.00.
Feeder heifers: Medium and large 1&2, 300-400 lbs 140.00-152.00; 400-500 lbs 130.00-143.00; 500-600 lbs 120.00-135.00. 

Selected Auction Reports: 

"Click" on individual auction links for complete report
Tulia Livestock Auction - Tulia TX 
Receipts:  4133    Last Week:  1356    Year Ago:  3350 
Compared to last week:  Yearling steers and heifers sold mostly 6.00 to 10.00 lower.  Trade was active on good demand.  Offering consisted of attractive quality yearling steers and heifers weighed 650-900 lbs.

 

Pratt Livestock Feeder Cattle Auction - Pratt, KS 
Receipts:  3550             Last Week:  2561                   Year Ago:  5990 
Compared to last weeks light test: Feeder steers 600-1000 lbs 10.00-12.00 lower; Feeder heifers 650-850 lbs 8.00-10.00 lower. Steer and heifer calves a lower undertone noted on a light supply. Trade slow and demand light.

 

Farmers & Ranchers Livestock Commission Co. - Salina KS 
Receipts:  3089    Last Week:  4187    Year Ago:  5733 
Compared to last week: The area was hit with a major storm today, low to no visibility, extreme low temps, bad roads and cattle covered with snow. Steers 700-1000 lbs 5.00-12.00 lower; 700 lbs and under lower undertone noted; some instances 6.00 lower.

 

Huss Platte Valley Auction - Kearney NE 
Receipts:  4977    Last Week:  4533    Year Ago:  4965 
Compared to last week steers under 600 lbs sold steady to 2.00 lower, steers and heifers over 600 lbs sold 5.00 to 10.00 lower. Demand was moderate for mostly longtime weaned and preconditioned cattle.

 

Valentine Livestock Auction Market - Valentine NE 
Receipts:  4043 Last week:  3450 Last year:  5320 
Compared with last week 600 to 700 lbs steers traded 2.00 to 15.00 lower and 600 to 650 lbs heifers traded 4.00 lower.  Demand was moderate to good. Snow and colder weather in the area. Feeders made up 100 percent of the offering.

 

Denison Wtd Avg Feeder Cattle Auction - Denison IA 
Receipts:  2705    Last Week:  2212    Year Ago:  2482 
Western Iowa Preconditioned Feeder Calf Sale - a lower to steady undertone was noted on all cattle today.  Trade was active, with a higher offering today.  Receipts included 64 percent steers, and 36 percent heifers.

 

El Reno Cattle Narrative - El Reno OK 
Receipts          Last Reported          Year Ago                (12/12/2017) 
 15,130                10,970                  13,319 
** Final report *** Compared to last week' very light offering:  Feeder steers traded fully  10.00-15.00 lower with limited demand.  Feeder Heifers sold 2.00-4.00 lower.  Steer and heifer calves not well tested last week, however a sharply lower undertone was noted.

 

Mitchell Livestock Wtd Avg Report - Mitchell SD 
Receipts:  3590    Last Week:  5426    Year Ago:  5589 
Compared to last week:  Feeder steers 8.00 to 12.00 lower, instances of 13.00 to 15.00 lower.  Feeder heifers under 800 lbs 7.00 to 12.00 lower, instances to 15.00 lower, over 800 lbs 2.00 to 5.00 lower.

 

Cattleman's Livestock Auction - Dalhart, TX 
Cattle and Calves: 2747      Last Week: 1695      Last Year:  2283 
Compared to last week:  Steer calves under 500 lbs steady to weak; heifer calves under 500 lbs 5.00-7.00 lower.  Feeder steers and heifers 500-800 lbs 5.00-7.00 lower; over 800 lbs 3.00-5.00 lower.  Slaughter cows and bulls 1.00-2.00 higher.

 

Joplin Regional Stockyards Feeder Cattle Wtd Avg - Carthage MO 
Receipts          Last Reported          Year Ago            (12/18/2017) 
 8,736                   5,753                      7,338 
***CLOSE***   Compared to last week, steers under 650 lbs steady to 3.00 lower, 650 to 800 lbs 2.00 to 5.00 lower, 800 weights 5.00 to 6.00 lower, heifers under 650 lbs 3.00 to 8.00 lower, over 650 lbs 3.00 to 5.00 lower. Demand moderate, supply heavy.

 

Sioux Falls Regional Livestock wtd Avg Report - Worthing SD 
Receipts:  4998    Last Week:  2974    Year Ago:  6901 
Compared to last week:   Feeder steers under 600 lbs lightly offered with steady to firm undertones noted, 600-700 lbs mostly steady to 3.00 lower, 700-1000 lbs 3.00 to 5.00 lower, over 1000 lbs lightly tested with lower undertones evident.

 

Tri-State Livestock Auction Market - McCook NE 
Receipts:  3610    Last Week:  1100    Year Ago:  3750 
Not enough to show a comparison to last week. Demand was good to moderate today. Steers accounted for 65 percent and heifers 35 percent of the offering today. Weights over 600 lbs 83 percent of the offering. Rest was weigh cows and bulls.

 

Winter Livestock - La Junta CO... 
Receipts:  8010    Last Week:  NA    Year Ago:  6821 
No trend available due to this auction being closed for the holidays, although a higher undertone was noted. Trade and Demand good with a large selection of weaned preconditioned calves and feeders.

 

Russell Wtd Avg Feeder Cattle Auction - Russell IA 
Receipts:  5322       Year Ago:  3666 
No comparison as sale not reported for a month: Trade Active and Demand Good today. Receipts this week included 69 percent feeder cattle over 600 lbs; 62 percent of the feeders were strs and 38 percent were hfrs.

 

Green Forest Livestock Auction - Green Forest AR 
Receipts:  623    Last Week:  0    Year Ago:  944 
No trends available due to markets being closed for holidays. Slaughter cows 11 percent, slaughter bulls 1 percent, feeder supply 88 percent. In the feeder supply, steers made up approximately 9 percent of the run, heifers 42 percent, bulls 42 percent, and replacement cows 7 percent. Feeders over 600lbs. totaled around 28 percent.

 

Clovis Livestock Auction - Clovis NM 
Receipts:  4278          3 Weeks Ago:  1891       Year Ago:  2895 
Compared to three weeks ago:  Feeder steers under 600 lbs mostly 1.00 higher except 500-600 lbs 2.00 lower; over 600 lbs 1.00-3.00 higher.  Compared to last month, Holstein steers 7.00-14.00 lower on limited receipts.

 

Oklahoma National Stockyards - Oklahoma City, OK 
Receipts         Last Reported          Year Ago             (12/18/2017) 
 12,217                 5,947                   11,458 
***Add Close Updating with actual receipts*** Compared to the last sale 12/18/17:   Feeder steers  600-800 lbs 2.00- 6.00 higher, 800-1000 lbs steady to 4.00 lower. Feeder heifers mostly 2.00-4.00 lower.

 

Cullman Stockyard - Cullman AL 
Receipts:  1002    Last Week:  000    Year Ago:  1397 
Compared to last market covered: Slaughter cows and bulls sold steady to 2.00 higher. Feeder bulls and steers sold to 2.00 higher. Feeder heifers sold steady.

 

Toppenish, WA Livestock Auction - Toppenish WA 
Receipts:  2140    Last Week:  1320    Year Ago:  800 
No trends due to the holidays the last two weeks and market not reported. Trade active with good demand for all classes. Slaughter cows 39 percent, slaughter bulls 5 percent, and feeders 56 percent of the supply. The feeder supply included 53 percent steers and 47 percent heifers.

Direct Sales of Feeder & Stocker Cattle:

WY, Western NE & Western Dakotas Direct Feeder Cattle Wtd Avg (Fri) 
Receipts: 2,874     Week Ago: 466    Year Ago: 2,151 
No comparable sales this week for a market comparison. The feeder cattle market traded sharply lower at reporting auctions this week with mostly moderate demand. With a lot of cattle moving through auctions,

 

AZ-CA-NV Weekly Feeder Cattle Review (Fri) 
Confirmed 2465 
Compared to last week, trade and demand moderate.  Holstein steers weighing 325 lbs for Apr/May Del traded 3.00-4.00 lower.  Supply con-sisted of HOlstein steers for Apr/May delivery weighing 300-325 lbs.

 

IA-South MN Direct Feeder Cattle Weekly (Mon) 
Receipts:  0    Last week: 0     Last Year:  140 
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: 270      Last week: 306      Last Year: 0 
Compared to last week:  No current FOB delivered cattle for an accurate market test.  Supply included 100 percent over 600 lbs; 74 percent heifers.

 

Colorado Direct Feeder Cattle Report (Fri) 
Receipts: 3,986        Last Week 1,067        Last Year 5,711  
Compared to last week:  No current FOB trades last week for an accurate market trend.  Demand light to moderate.  Supply consisted of 98 percent over 600 lbs; 35 percent heifers.

 

Kansas Direct Feeder Cattle Summary (Fri) 
Receipts: 1,481         Last Week: 547         Last Year 4,677  
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: 0     Last Year:  140 
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.

 

New Mexico Feeder Cattle Report (Mon) 
Receipts:  2,800    Last Week:  1,100    Year Ago:  1,800 
Compared to last week:  Not enough Current FOB steer or heifer sales for a market trend.  Trade activity was slow to moderate on light demand. Supply consisted of 93 percent steers and 7 percent heifers.  Only 5 percent of the offerings weighed over 600 lbs.

 

Northwest Wtd Avg Direct Feeder Cattle Report (Fri) 
Receipts:  1,519    Last Trade 12/22/17:  366    Year Ago:  2,050 
Compared to last week:  Feeder steers and heifers not well tested but a lower undertone is noted.  Cattle futures moved mostly lower on the week limiting demand. 

  

Oklahoma Direct Feeder Cattle (Fri) 
Receipts: 3,342        Last Week 1,697        Last Year 2,613  
Compared to last week:  No trend available for an accurate market trend for feeder steers and heifers due to limited receipts last week but a lower undertone was noted. 

 

Texas Direct Feeder Cattle (Fri) 
Receipts:  19,900    Last Week:  8,900    Year Ago:  27,600 
Compared to last week:  Current FOB sales of steers and heifers sold mostly 1.00 to 3.00 lower and as much as 5.00 lower on trades late in the week.  Trade was fairly active on moderate to good demand. 

Representative Sales of Cows & Pairs:

Reported by USDA Market News for the week ending January 12th
  • McAlester, OK: 
    • Replacement Cows:  Medium and Large 1-2  1-4 yr old 925 lb cow 6-8 months bred 975.00; 1-6 yr old 900-1500 lb cow 1010.00-1700.00 per head. 
    • Pairs:  Medium and Large 1-2  1-8 yr old 900-1200 lb cow w/75-350 lb calf 935.00-1500.00; 9-10 yr old 1050-1500 lb cow w/175-425 lb calf 1035.00-1625.00 per pair. 
  • Oklahoma City, OK:
    • Replacement Cows:  Medium and Large 1-2  1-5 yr old 925-1400 lb cow 1-7 months bred 875.00-1335.00; 5-6 yr old 1075-1500 lb cow 1-7 months bred 825.00-1400.00; 7-10 yr old 1075-1475 lb cow 4-8 months bred 750.00-1125.00 per head. 
    • Pairs:  Medium and Large 1-2  4-5 yr old 1125-1225 lb cow w/75-100 lb calf 1500.00-1550.00 per pair. 
  • Clovis, NM:
    • Replacement Cows:  Medium and Large 1-2 Young to long solid mouth 925-1320 lb cows 3-8 months bred 675.00-1025.00, per head; middle aged short solid mouth 1000-1265 lb cows 3-8 months bred 600.00-800.00, per head, aged 915-1535 lb cows 3-8 months bred 550.00-800.00, per head.  First Calf Heifers:  Fancy 981-1029 lb cows 6-8 months bred 1400.00, per head; 750-1000 lbs 1-6 months bred 700.00-800.00, per head. 
    • Cow/Calf Pairs:  Medium and Large 1-2 Middle aged short solid mouth 1050 lb cow w/140 lb calf 800.00, per pair.  First Calf Heifers:  Indiv 900 lb cow w/125 lb calf 800.00, per pair. 
  • Joplin, MO:
    • Bred Cows:  Medium and Large 1  2-5 yrs 2nd and 3rd stage 1275-1365 lbs 1400.00-1550.00. Medium and Large 1-2  2-7 yrs 2nd and 3rd stage 1075-1355 lbs 950.00-1375.00, 1st stage 1000-1320 lbs 1000.00-1025.00; short and solid mouth to aged 2nd and 3rd stage 1085-1350 lbs 670.00-950.00. Large 1-2 short and solid to aged 3rd stage 1475-1665 lbs 830.00-850.00. Medium and Large 2  2 yrs to short and solid mouth 2nd stage 750-1215 lbs 700.00-900.00, 1st stage 785 lb indiv. 800.00. Medium 1-2  2-7 yrs 2nd and 3rd stage 825-1050 lbs 800.00-1050.00, 1st stage 875-996 lbs 825.00-925.00; short and solid mouth to aged 2nd and 3rd stage 1020-1035 lbs 600.00-650.00 per head. 
    • Cow/Calf Pairs:  Medium and Large 1-2  2-3 yrs pkg. 1100 lb cows w/babies to 260 lb calves 1210.00. Medium and Large 2  6 yr 1225 lb cow w/165 lb calf 1000.00. Medium 1-2  2-5 yrs 820-1025 lb cows w/160-370 lb calves 1060.00-1300.00; short and solid mouth 1000 lb cow w/280 lb calf 800.00. Medium 2  2-4 yrs 800-820 lb cows w/140-200 lb calves 850.00-1050.00 per pair. 
  • West Plains, MO:
    • Bred Cows:  Medium and Large 1-2  2-6 yr old 995-1415 lb cows in the 2nd-3rd stage 975.00-1375.00 per head; 7 yrs to short-solid mouth 1295-1570 lb cows in the 2nd-3rd stage 860.00-1050.00 per head.  Medium and Large 2  2-7 yr old 865-1375 lb cows in the 1st-3rd stage 700.00-1025.00 per head; Short-solid to broken mouth 1020-1520 lb cows in the2nd-3rd stage 650.00-825.00 per head.  Medium 2  2-7 yr old 630-990 lb cows in the 1st-3rd stage 300.00-650.00 per head. 
    • Cow-Calf Pairs:  Medium and Large 1-2  3-7 yr old 1070-1400 lb cows with 150-300 lb calves 1190.00-1400.00 per pair; Short-solid to broken mouth 1190-1225 lb cows with 150-200 lb calves 975.00-1000.00 per pair.  Medium and Large 2  3 yr to short-solid mouth 765-990 lb cows with 100-250 lb calves 700.00-1100.00 per pair. 
  • Arkansas:
    • Replacement Cows:  Medium and Large 1-2  2-7 year old 850-1250 lbs 2nd-3rd stage 69.00-75.00/875.00-975.00, first stage/open 62.00-72.00, 7-10 year old 2nd-3rd stage 46.00-56.00/750.00-850.00 per head. 
    • Cow-Calf Pairs:  Medium and Large 1-2  3-7 yr old 800-1200 lb cow w/100-200 lb calf 1100.00-1200.00, few to 1500.00; w/200-300 lb calf 1025.00-1125.00. 

Canadian Cattle:

Alberta Beef Producers: Alberta direct cattle sales so far this week have seen light trade develop with dressed sales ranging from 275.00-280.00 delivered. Initial sales are 2.00-5.00 lower than the previous week. Historically strong basis levels did encourage producers to market cattle This week's cash offering has been cleaned up. Buyers were indicating most of the cattle they bought this week would be lifted in 1-2 weeks.

November Beef & Pork Exports 

Steiner Consulting Group
November beef and veal exports were 260.7 million pounds (carcass wt. basis), 2.7% higher than a year ago and just three million pounds shy of the record volume shipped in August. Based on weekly export data, we think December shipments will be lower than in November and also down about 4% compared to a year ago. Still, this has been a record year for US beef exports and we expect the total volume for the year will establish a new all time record at 2.85 billion pounds, 11.5% higher than a year ago. The gains in exports are even more impressive when we look at the dollar sales. According to USDA, the value of beef and veal exports in November was $594 million, 10% higher than a year ago. In 2017 the value of fresh, frozen and cooked US beef exports was $5.456 billion. This year US beef exports are on track to hit $6.4 billion, a 17% y/y gain and clear evidence of excellent demand for US product. By far the biggest gains in US beef exports in 2017 were in Asian markets, especially Japan and South Korea. Exports to Japan through November were up 166 million pounds (+27.6%), exports to South Korea were up 25 million pounds (+6%) and exports to Hong Kong were up 29 million pounds (+11%). 

The export gains reflect robust economic growth there and the resulting impact on beef demand. Also, increased beef availability in the US has allowed Japanese and South Korean end users to expand their beef offerings, confident that there is enough supply in the US to support their efforts. Price is always important, and US prices have become more competitive in recent years. But just as important is availability. For many Japanese buyers the decline in US cattle numbers and beef production meant that they no longer could rely on a consistent flow of product at reasonable price points. As cattle numbers have recovered, we expect beef shipments to Asian markets to ramp up further. US exporters have also benefited from the fact that Australia, our main competitor in Japan and South Korea, is in a herd rebuilding mode. Bottom line: US beef availability is expected to increase further in 2018 and combined with robust global growth and limited supplies in Australia this should continue to bolster US beef exports. Latest USDA forecast is for beef exports in 2018 to increase 4.7%, a conservative forecast in our view. Pork exports were excellent in November. Total shipments of fresh/frozen and cooked pork were 535.4 million pounds on a carcass weight basis, 5% higher than a year ago and the largest monthly export volume on record. Through November 

US pork exports were 5.118 billion pounds, 8% higher than the previous year. We think December shipments were not as large as a year ago and thus forecast total 2017 pork exports at 5.6 billion pounds, 354 million pounds higher than the previous year. The last USDA forecast of pork production for 2017 was 25.576 billion pounds, 635 million pounds higher than the previous year. This would imply that pork exports absorbed a little over half of the increase in US pork output during 2017. Can we count on exports to once again absorb more than half of the growth in production? It will be a tall order, which is why many analysts are keeping all their fingers and toes crossed for excellent export pork demand. The latest USDA WASDE report forecast pork production in 2018 at 26.9 billion pounds, which is a bit more aggressive than our own forecasts. If USDA is correct, this would mean an increase of 1.365 billion pounds. Even if exports were to climb to 6 billion pounds, a somewhat tall order, it would still leave a little over 900 million pounds to be absorbed in the domestic market. It could be that USDA will moderate some of its forecasts but for hog producers, this is the year to protect the downside and currently futures are providing plenty of opportunity to do just that.


Mexico to Leave NAFTA if Trump Starts Withdrawal Process  

National Association of Farm Broadcasting News Service
Be it a threat, or intention, if President Donald Trump starts the withdrawal process from the North American Free Trade Agreement, Mexico will drop the trade pact. If Trump decides to leave NAFTA, he would trigger a six-month process to withdraw from the agreement.
An official from Mexico said this week that if Trump announces a U.S. withdrawal from NAFTA, “at that moment the negotiations stop.”
AgCanada reports that Mexico remains firm on its position to get up and leave from the negotiating table if Trump goes through with the move.
While a NAFTA termination letter would start the six-month exit clock ticking, the U.S. would not be legally bound to quit NAFTA once it expires. Washington could use the move as leverage over Canada and Mexico in talks to update the 24-year-old trade pact.

Livestock Trade Flows Between US & NAFTA Countries 

CME Group
With talk of NAFTA back on the front pages, we thought it would be best to once again provide a synopsis of the meat and livestock trade flows between US and NAFTA countries. Rather than look at 2016, for which we have complete annual data, we thought it would be best to estimate 2017. Please note that the attached table is based on actual data through November plus our trend estimate for December. A couple of things that stand out on review:
Beef: The US beef trade balance with NAFTA has turned negative in recent years. The US has always been a large net importer of cattle from both Mexico and Canada. Almost all Mexican cattle coming into the US are feeder cattle that are shipped into feedyards in Texas, New Mexico and other nearby states. We currently estimate that total imports of Mexican Cattle in 2017 were 1.057 million head, with a value of $662.8 million. This represents a 12% increase in volume and 13% increase in value compared to 2016. In addition, the US imported an additional 602k head of cattle from Canada. Some US cattle also move north of the border but the US remains a large net importer of Canadian cattle. One of the lines in the table is called ‘net trade’, i.e. exports minus imports. In 2017 our cattle trade balance with Canada was negative 441k head. Total net cattle trade balance with NAFTA countries was –1.457 million head or -$1.2 billion. In the past the US was a net exporter of beef into NAFTA but that has changed as well. We estimate that in 2017 the US ran a negative beef trade balance with these two countries. Net beef trade with Mexico was a negative 62,000 MT (-$191M) while net beef trade with Canada was negative 131.5k MT (-$400M). When you total both cattle and beef, the US ran a negative trade balance with NAFTA of around $1.8 billion. These numbers do no include variety meats, hides or any other such products.

Pork: The US has been running a positive pork trade balance with Mexico in pork and this market is now the top buyer of US pork products. We estimate US pork shipments to Mexico for 2017 at around 660k MT, 12% higher than the previous year and accounting for over a third of all US shipments. The value of pork exports to Mexico in 2017 is estimated at $1.256 billion, about a quarter of the value of all US pork exports. On the other hand, the US ran a negative trade balance with Canada. Swine imports in 2017 were estimated at 5.17 million head, mostly feeder pig, with a value of around $320 million. In addition, the US purchased around 104k MT more pork from Canada than we exported there, with a net trade balance of negative $144 million.
The attached table also includes poultry exports so as to calculate the trade balance in meat/livestock. Total trade balance with Mexico in 2017 was +$1.2 billion while trade with Canada was –$1.165 billion, leading one to conclude that, in terms of the livestock/poultry trade, Canada has more to lose in the event of US pulling from NAFTA.

USDA National Retail Beef Report: 

Advertised Prices for Beef at Major Retail Supermarket Outlets

 

 

This week in Beef Retail, the Feature Rate charted a 10.2 percent increase, the Special Rate is 4.8 percent higher, and the Activity Index climed 14.2 percent . With artic blasts chilling most for the country, many consumers are turning to whole muscle roasting cuts for family dinners. Round, Loin, Brisket and Ground Beef saw more ad space this week, as Rib and Chuck saw less. The cattle slaughter under federal inspections saw a 13.1 percent increase inresponse to a holiday shortened kill week.

USDA World Agricultural Supply & Demand Estimates

LIVESTOCK & POULTRY: The estimate of 2017 total red meat and poultry production is reduced from last month. Based on preliminary data, beef and turkey production estimates are lowered, more than offsetting higher pork and broiler production. The egg production estimate is raised modestly on late-2017 production data. For 2018, the total red meat and poultry production forecast is raised as higher expected pork, beef, and broiler production offsets lower turkey production. The 2018 beef production forecast is raised as higher cattle placements in late 2017 are expected to result in higher fed cattle marketings and slaughter in the first half of 2018. Average carcass weights are also expected to be heavier. USDA will release its semi-annual Cattle report on January 31, providing estimates of heifers held for breeding and an insight into the number of feeder cattle available for placement during 2018. 
The pork production forecast for 2018 is raised. USDA’s Quarterly Hogs and Pigs report estimated the September-November pig crop was 3 percent above 2016 which supports a higher first half production forecast. The report also indicated producers expect to expand farrowings about 3 percent in the first half of the year which, coupled with continued gains in pigs per litter, supports higher second-half production. Forecast broiler production is raised for 2018 on favorable returns. Turkey production is reduced based on continued weak demand. The egg production forecast is raised slightly. Beef imports are increased for 2017 on increased shipments from Oceania. No change is made to exports. Pork exports for 2017 are raised reflecting the pace of trade to date but no change is made to pork imports. Broiler imports and exports are raised for 2017, reflecting recent trade data. For 2018, livestock, broiler, and egg trade forecasts remain unchanged from last month.
Livestock and poultry price estimates for 2017 are adjusted to reflect December price data. For 2018, the cattle price is raised, reflecting early-year price strength. The first-quarter 2018 hog price forecast is raised, reflecting recent price strength and firm demand. First and second quarter broiler and egg price forecasts are raised as well on recent price strength and continued strong demand. Turkey price forecasts for 2018 are lowered on recent price movements and continued weakness in demand.
WHEAT: Projected 2017/18 U.S. wheat ending stocks are raised 29 million bushels on increased supplies and decreased use. Seed use is lowered 4 million bushels on the winter wheat planted area released today in the NASS Winter Wheat and Canola Seedings report. Wheat feed and residual use for 2017/18 is lowered 20 million bushels and reflects disappearance for June - November as indicated by the December 1 and revised September 1 stocks released in the NASS Grain Stocks report. All wheat exports are unchanged at 975 million bushels; however, a 10 million bushel decrease in Hard Red Spring exports is offset by 5-million-bushel increases each for Soft Red Winter and White wheat. Total supplies are raised 5 million bushels on higher imports while production and the season-average farm price are unchanged.
Global wheat supplies for 2017/18 are lowered 0.8 million tons on reduced beginning stocks, more than offsetting increased production. World beginning stocks are lowered 2.6 million tons mostly on a large 2016/17 production cut for Australia, reflecting updated Australia Bureau of Statistics data. World production for 2017/18 is raised 1.8 million tons led by a 2.0-million-ton increase for Russia and a 0.8-million-ton increased for Pakistan. Partially offsetting is a 0.9-million-ton reduction for the EU. All these production changes reflect updated government data. Global exports are lowered 1.3 million tons led by reductions for Australia and the EU that reflect decreased supplies and increase market competition. Russian exports, in contrast, are raised 1.5 million tons to a record 35.0 million on increased supplies and competitive prices. Global use for 2017/18 is lowered fractionally and ending stocks are lowered 0.4 million tons to 268.0 million, which remain record large.
COARSE GRAINS: This month’s 2017/18 U.S. corn outlook is for larger production, increased food, seed, and industrial use (FSI), lower feed and residual use, and greater stocks. Corn production is estimated at 14.604 billion bushels, up 26 million from last month as an increase in yield to a record 176.6 bushels per acre is partially offset by a 0.4-millionacre reduction in harvested area. Among the major producing states, yields are estimated to be record high in Illinois, Minnesota, and Ohio. FSI is raised 10 million bushels, reflecting an estimated amount of corn used for glucose and dextrose during September-November that was above expectations. Feed and residual use is down 25 million bushels to 5,550 million based on indicated disappearance during September-November as reflected by the December 1 stocks. With supply rising and use falling, corn stocks are up 40 million bushels from last month. The season-average corn price received by producers is projected at $3.25 per bushel, up 5 cents at the midpoint based on observed prices to date. Sorghum production for 2017/18 is estimated 8 million bushels higher as an increase in yield to 72.1 bushels per acre more than offsets a marginal reduction in harvested area. Grain sorghum prices are forecast at $3.15 per bushel, up 5 cents at the midpoint. 
Global coarse grain production for 2017/18 is forecast 0.3 million tons higher to 1,324.2 million. This month’s 2017/18 foreign coarse grain outlook is for lower production and consumption and greater trade relative to last month. Foreign corn production is forecast lower with reductions for Russia, Vietnam and the Philippines more than offsetting an increase for Pakistan. Russia’s corn production is down based on harvest results to date. Vietnam corn production is reduced as the impact of heavy rain during the growing season in the northern production area was worse than previously expected. Barley production is down as a reduction for Russia more than offsets an increase for Argentina. Major global trade changes for 2017/18 include lower corn exports for Russia, partially offset by an increase for Thailand. Brazil’s 2016/17 corn exports are reduced based on observed shipments to date for the local marketing year that started in March 2017. Imports for 2017/18 are lowered for Iran but increased for Vietnam and the Philippines. Foreign corn ending stocks are higher than last month, mostly reflecting increases for Brazil and Pakistan. Global corn stocks, at 206.6 million, are up 2.5 million from last month. 

Photo of the Week:


"Shootin' the Bull" Weekly Analysis:

In my opinion, several pieces of information were gathered this week to help support my analysis that the current environment is less likely to produce a bear market.  Europe is on the mend as they have announced the reduction of quantitative easing sooner than anticipated.  This has pushed the US dollar to a new low in this decline at the close today.  Bloomberg posted an article on Friday reflecting the Chinese agenda of sourcing food for their people.  As well, China lifted a ban on French beef this week.  This action mirrors the lifting of the US ban last March.  Retail sales rose in the month of December and economists relayed this week that US employment is near or has reached a maximum.  This action has caused increased spending by the consumer and is anticipated to help absorb gluts of commodities. Interest rates rose sharply this week with the US 30 year bond futures setting a new contract low.  Rates are rising in reflection of the increased consumer employment.  Lastly, with fat cattle futures down more than $15.00, feeder futures more than $20.00, the feeder index down $14.00, boxes approximately $8.00 and cash fat prices down $5.00, and this being the worst part of the year seemingly for the negative's, there doesn't appear too much more to have to shave off price to keep it moving through the pipeline. 
At this time, I perceive the situation to be that prices in futures are declining due to lack of buying, more than overwhelming selling pressure.  The "money" that has shown up unexpectedly at times this year is thought to be on the sidelines.  I think they are waiting for spooked producers and bearish futures traders to push prices below value to get the biggest pop from the market when they decide to come back in.  I do not know what their trigger is, but I think they are already attempting to dig out a toe hold.  The environment appears at present to be more fat cattle related and that is with perceived elevated inventory to be marketed at present and the consumer having to deal with unpleasant weather in the north east. When markets reopen on Tuesday, half of January will be gone.  As seasonal tendencies begin to firm towards the 1st of February, I believe data revealed to that point will be friendly towards upward price movement.  Supply at this time is like kicking a dead horse.  I know it is there as does everyone else.  That in itself may reduce its impact. 
It's the feeders where I anticipate the first thrust to come from.  Now, I fully understand that the light cattle placed in October, November, and potentially December are in the pipeline and that may make for less demand in the spring.  However, were the demand to remain and numbers pushed out of lots in January and February heavy, we could see feed yards go bid for inventory weighing 900#.  This is where the excitement could be immense.  While there may be elevated numbers due to expansion, there may not be elevated numbers of 900# feeder cattle ready to go on feed to finish filling the pipeline this spring for summer fats.  As time goes on this year, the impact of expansion will be felt less.  Although I do not expect a liquidation phase, it could stay stagnant as demand grows or remains elevated.   One thing I don't expect is further expansion.  With interest rates increasing and most cow/calf operators still dealing with over priced heifers or cows purchased in '14 and '15, I don't see a ferocious appetite for expanding. My analysis suggests traders are beating out a bottom, similarly like they did in June and August of '17.  I would dare to say that March futures above $145.00 would spur some real interest in buying.  Especially if this were to come at a time when futures are crossing paths with the index and moving into a negative basis. 
The grain report offered no glimmer of hope in reversing grain prices at the moment.  Wheat continues to be on the radar, but it is a smoldering fire and no air at this time.

 

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.

Bulls That Sire Just "Boy" Calves

The University of California, Davis' Alison Van Eenennaam is using CRISPR to develop all-male cattle, Technology Review reports.
Her goal, it adds, is to develop bulls that will only sire male offspring in a project she's dubbed "Boys Only." That, Van Eenennaam says, would help beef ranchers out as males are bigger and grow faster and would make the industry more efficient. 
She and her lab are going about it by inserting the SRY gene, which is usually found on the Y chromosome, on the X chromosome, Tech Review says. In mammals, that gene, also called testis-determining factor, can make an animal physically male, even without a Y chromosome, it adds.
So far, Tech Review reports that Van Eenennaam and her team have been able to add SRY to an X chromosome in male skin cells, and that they next have to tackle doing that in a cattle embryo or cloning that altered skin cell. Any males made in this way are expected to be sterile, it notes.
Van Eenennaam has previously worked on developing hornless dairy cows by splicing a gene from Angus cattle, which naturally lack horns, into dairy-producing Holsteins.

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 lower on light to moderate demand and light offerings. Select and Choice rib and chuck cuts mostly steady while round and loin cuts steady to weak. Beef trimmings weak to lower on light to moderate demand and moderate offerings.
The average value of hide and offal for the five days ending Fri, Jan 12, 2018   was estimated at 10.71 per cwt., up 0.01 from last week and down 1.21 from last year.

 


Plant Based Proteins... Burger of the Future  

Ag Center Cattle Report
A few small but extremely well financed companies are introducing a new competitor in the protein market and it is striking at the longest standing icon of Americana -- the all American hamburger. The national chain TGI Friday placed the plant based patty on the menu in its 400+ restaurants this past week. The offerings from the designer labs are created to look like and taste like traditional meat fare but be cleaner, more environmentally friendly and healthier.
One of the companies, Beyond Meat, is designing products to look exactly like traditional burgers and sausages and other recognizable meat products. The audience they are targeting is young people and their advertising campaigns feature young, attractive athletes heralding the benefits of plant based proteins like no cholesterol, lower fat, less saturated fat, no GMOs or gluten and healthier all around. These health claims are accompanied by larger goals of reducing global warming and protecting animal rights.
The beef industry would be remiss to discount this initiative and the plant based meat campaign strikes at the heart of the beef industry's future -- young people. Young people want to know more about the food they eat and how it is produced. In order to attract the young to our beef products, more information must be provided and in a form that will resonate with them on a personal level. The larger food companies are introducing ideas for supply chain links taking the consumer back through the supply chain to see, hear and understand how the product is created.
The message must include explanations of production practices that are environmentally sound and sustainable. Producers also must be able to show how animal treatment throughout the beef pipeline is sensitive to the animal's needs of good health, proper care, and sound nutrition. An explanation of the benefits of beef in the diet is critical to the consumers decisions at the purchase point. Expert nutritional advice has returned beef to its proper role in a balanced diet and this story needs to be told in the proper forums like classrooms -- the natural setting for young people coming to understand food and diet.
Ignoring or underestimating the initiative of plant based proteins would be a colossal mistake. The companies working on these initiatives are backed by some of the country's wealthiest individuals and most prominent scientists. Countering the initiative must be done intelligently and strategically by recognizing the target [consumers and especially young ones] and their concerns about production, nutrition, and the environment.

Judge Dismisses Charges Against Cliven Bundy 

CBS News
A judge in Las Vegas on Monday dismissed criminal charges against a Nevada rancher and his sons accused of leading an armed uprising against federal authorities in 2014. Chief U.S. District Judge Gloria Navarro signaled when she declared a mistrial last month that she might dismiss the case outright against 71-year-old Cliven Bundy, sons Ryan and Ammon Bundy, and Montana militia leader Ryan Payne.
The judge severely criticized prosecutors for willfully violating the due process rights of the defendants, including failing to properly turn over evidence to their lawyer. But she gave the government a chance to submit written documents opposing dismissal of all charges.
The Las Vegas Review Journal reports that Bundy's attorney, Bret Whipple, said his client wiped away tears after the judge announced her decision. "He's just ecstatic about the results, and we're glad he's finally going home," Whipple said Monday.
The decision is sure to reverberate among states' rights advocates in the Western U.S., where the federal government controls vast land that some people want to protect and others want to use for grazing, mining and oil and gas drilling.
The tense armed standoff outside Bunkerville, about 80 miles northeast of Las Vegas, stopped a federal Bureau of Land Management roundup of Bundy cattle from public land including what is now Gold Butte National Monument.
About three dozen heavily armed federal agents guarding corrals in a dry riverbed faced hundreds of flag-waving men, women and children calling for the release of some 400 cows. The cattle had been rounded up under court orders issued over Bundy letting his herd graze for 20 years without paying government fees.
No shots were fired before the outnumbered and outgunned federal agents withdrew. Several gunmen among the protesters who had assault-style rifles were acquitted of criminal charges in two trials last year.
Ryan and Ammon Bundy also were acquitted of federal criminal charges in Oregon after leading an armed occupation of a national wildlife refuge in early 2016 to demand the government turn over public land to local control.
Payne awaits sentencing in that case but is trying to withdraw his guilty plea to a felony conspiracy charge, which is expected to bring a sentence of more than three years in prison.
In Las Vegas, the judge declared a mistrial Dec. 20, leaving Cliven Bundy as the only defendant still jailed after refusing an offer to be released to house arrest.

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 sold 2.00-5.00 higher with exception of the South East trading 1.00-2.00 lower. 
Cutter Cow Carcass Cut-Out Value Friday was 170.40 -- Up 0.98 from last Friday. 
               Weight        Colorado       Oklahoma     Alabama  
Breakers 1100-1600  57.00-61.00  57.00-60.00  50.00-51.50  
Boners    1000-1450  56.00-59.00  57.00-60.00  52.00-57.00 
Lean       1000-1300  52.00-55.00  55.00-59.00  45.00-50.00 
Bulls       1300-2500  76.00-77.00   82.00-85.00  74.00-79.00
                # Head  Week Ago Year Ago  YTD   Year Ago 
National    7,817      8,526       8,013    45,914    42,643 
S Central  2,460      2,462       2,401    13,834    12,904 
N Central    762      1,296          848       5,066     3,735 
East         1,849      1,911        1,502      9,705    9,053 
West        1,218      1,167        1,655      7,644     7,294 
Midwest   1,528      1,690        1,607      9,665     9,657 

Est. Weekly Meat Production Under Federal Inspection:

Total red meat production under Federal inspection for the week ending Saturday, January 13, 2018 was estimated at 1037.2 million lbs. according to the U.S.Department of Agriculture's Marketing Service. This was 14.0 percent higher than a week ago and 2.0 percent higher than a year ago.  Cumulative meat production for the year to date was 1.4 percent higher compared to the previous year.

Weekly Hay Reports: "Click" on links for detailed report


Weekly Feedstuffs Market Review:

The USDA reports feed ingredient prices for the week ending January 9, 2018 were mixed. 
  • Soybean Meal was 0.30 lower to 25.30 higher. Cottonseed Meal was mixed, 10.00 lower to 15.00 higher. Canola Meal was steady to 2.30 higher. Linseed Meal was steady. Sunflower Meal was steady. 
  • Whole Cottonseed was mixed, 5.00 lower to 5.00 higher.
  • Crude Soybean Oil was 15 to 32 points higher. Crude Corn Oil was steady.
  • Ruminant Meat and Bone Meal was steady to 20.00 lower. Ruminant Blood Meal was steady to 25.00 higher. Feather Meal was steady. Menhaden Fishmeal was not well established. 
  • Corn Hominy was mixed, 5.00 lower to 6.00 higher. Corn Gluten Feed was mixed, 17.00 lower to 5.00 higher. Corn Gluten Meal was mixed, 10.00 lower to 15.00 higher. 
  • Distillers Dried Grain was mixed, 16.00 lower to 15.00 higher. 
  • Wheat Middlings were steady to 25.00 higher. Wheat millrun was 4.00 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 

T. Rowe Price 
STOCKS CONTINUE STRONG START TO YEAR 
Stocks recorded a second week of solid gains, as investors digested the first fourth-quarter earnings reports and celebrated some strong economic data. The S&P 500 Index recorded its first daily decline of 2018 on Wednesday, marking the end of the index’s best start to the year since 1987, according to T. Rowe Price traders. Momentum picked up again late in the week, with consumer discretionary, energy, financials, health care, and industrials and business services shares all recording solid gains. Real estate and utilities stocks underperformed for the week as long-term U.S. Treasury bond yields rose, making their ample dividend payments less attractive in comparison.
CHINA AND TRADE WORRIES SPARK BRIEF VOLATILITY 
China played a surprisingly large role in U.S. investor sentiment early in the week. Stock futures fell sharply before the start of trading on Wednesday on reports that China was considering slowing or even halting its purchases of Treasuries. The news pushed the yield on the 10-year Treasury note to 2.60%, its highest level in 10 months, and led to fears of a disruption in global financial markets. (Bond prices and yields move in opposite directions.) Stocks quickly regained their footing, however, and Chinese officials later denied any changes to their policy. Observers also noted that China has not been an important buyer of Treasuries in recent years. Investors were also briefly unnerved Wednesday by an article published by Reuters that stated that Canadian officials are increasingly convinced that President Trump will soon announce a U.S. withdrawal from the North American Free Trade Agreement (NAFTA). The White House denied the report, however.
STRONG RETAIL SALES DATA SEND RETAIL STOCKS HIGHER 
Investors seemed to turn attention away from Washington, D.C. and toward economic data and earnings late in the week. Stocks shot higher in early trading Friday, following the release of data showing that retail sales had risen by a solid 0.4% in December. The gains were especially welcome coming on the back of a 0.9% gain in November. Shares of Amazon.com and traditional “big box” retailers Home Depot, Best Buy, Costco, and Walmart rose on the data. 
The Commerce Department’s retail figures are not adjusted for inflation, however, and Friday also brought news that core prices (excluding food and energy) had risen by 0.3% in December, more than widely expected. T. Rowe Price Chief U.S. Economist Alan Levenson observes that the rise was narrowly based and driven in part by steep increases in prices for new and used vehicles. He notes that reported auction prices indicate that used car  prices, in particular, seem likely to reverse course in coming months. Nevertheless, he acknowledges that underlying inflation trends are rising, which should keep the Fed on track to continue raising interest rates in 2018. Levenson currently believes that the Fed will raise rates three times, and possibly four times, in 2018.
Friday also brought the release of the first major fourth-quarter earnings reports. Investors seemed to welcome a positive outlook from JPMorgan Chase, while Wells Fargo fell on news that it had set aside $3.25 billion in reserves to cover legal expenses related to its mortgage practices leading up the housing collapse and 2008 financial crisis. As of the end of the week, Thomson Reuters I/B/E/S was expecting fourth-quarter earnings for the S&P 500, as a whole, to increase 12.1% versus the prior year. Data and analytics firm FactSet was a bit less optimistic, expecting a rise of 10.5%.

U.S. Stocks:


"Ags" Enjoy Strong Hedge Fund Buying 

AgriMoney
Ags enjoy strongest start to year for hedge fund buying since 2012
This year began with the biggest swing positive in speculators’ positioning on agricultural commodities since 2012 – but it is not clear yet that this was driven by the sector’s improved long-term appeal to funds.
Managed money, a proxy for speculators, cut its net short position in futures and options in the top 13 US-traded agricultural commodities, from corn to cattle, by 54,001 contracts in the week to last Tuesday, analysis of data from the Commodity Futures Trading Commission regulator shows.
The shift, bar the strong start to 2012, represented the biggest swing net bullish in positioning to start a year on data going back to 2007.
And it came it continued talk of funds looking more favourable on commodities, and agricultural ones in particular, for reasons such as perceived undervaluation compared with equities, and expectations of rising inflation and dollar weakness.
‘Winterkill became a concern’
Among grains, Kansas City hard red winter wheat looks the biggest target of index fund buying, on relative terms, with buying equivalent to 3.6% of total open interest, on JP Morgan calculations.
And, indeed, the grain contract also saw a more positive trend of betting too by hedge funds, which cut their net short in Kansas City wheat futures and options by 5,461 lots in the latest week, from the record high set as of December 26.
The short-covering was also attributed to a worries over winter wheat crops in the US, where “a cold snap in the southern Plains drove managed money to cover shorts as crop winterkill became a concern”, Rabobank said.
Still, the trend was reflected more in Chicago-traded soft red winter wheat, the world’s benchmark wheat contract, in which hedge funds cut their net long by 17,557 contracts to 128,178 lots.
‘Brutal’ cold
In the livestock sector, a small increase in the net long in the latest week, of 1,048 contracts to 144,522 lots, reflected buying in lean hog futures and options, which more than offset selling in live cattle, and reflecting in part the impact of cold weather on meat supplies.
“Winter weather along all the eastern US was brutal,” said livestock analysts at Steiner Consulting.
“Regarding red meat animal harvest and processing, the pork industry has likely faced the biggest challenges given the location of some major packing plants in that [eastern] region.”
“Cattle slaughter in the impacted states is relatively limited, though transportation of beef to refill the marketing chain to consumers early in the new year has faced transportation issues.”

"Click Here" to view a Slide Show of Drought Monitor maps for the last 12 weeks

 




Looking Ahead: Over the next 5-7 days, precipitation is widespread over much of the contiguous United States, with all but areas of the Southwest expecting to record some precipitation. The Pacific Northwest and northern Rocky Mountains are anticipated to have significant precipitation with liquid amounts of 3-4 inches along the coasts of northern California, Oregon, and Washington as well as over much of northern Idaho and western Montana. Significant precipitation is also anticipated over the Ohio River Valley and into the Mid-Atlantic, where 1.50-2.50 inches of liquid precipitation is forecast over widespread areas. Cooler than normal temperatures are anticipated over most areas east of the continental divide with departures of up to 15 degrees below normal while the western areas are anticipated to be warmer than normal with departures of 5-10 degrees above normal.
The 6-10 day outlooks show that the trend of warmer over the West and cooler over the East will likely continue. Temperatures have the greatest chance of being below normal over the Mid-Atlantic into the Southeast and above normal over the Southwest. Precipitation chances are projected to be greatest over the Great Basin and Pacific Northwest as well along the Mississippi River Valley. Drier than normal conditions are anticipated to mainly be over the areas of west Texas and southern New Mexico as well as along the coastal regions of the Southeast, with higher than normal chances of dry conditions along much of the east coast.

 


 


Drought Likely for Southern Tier of States

Drought is likely to continue through the winter and into planting season for most of the South.
No one expects a repeat of the disastrous drought of 2011, even with much of the nation stuck in a dry spell that’s persisted for several months. “But it is a concern, a big concern,” says AccuWeather Senior Meteorologist Dale Mohler, State College, Pa.
Mohler says dry conditions are expected to persist across the “southern third of the country,” into spring, with little chance of significant improvement after that. “Most of the South is dry, with some areas drier than others. We are in a weak La Nina, the biggest factor affecting the drought for the next two to three months, through early spring.”
He says some areas of the South may get some snow or rain over the next three months, “but precipitation will be below normal.” Even with occasional snowfall or rain events, the South is expected to see a “net loss,” in moisture. “We could see a little more moisture in places but not enough to make a difference. We don’t see much change in the next three months.”
Many areas in the South have been without appreciable precipitation for 60 days or longer.
“Spring and summer could be a little more interesting as La Nina dies off,” Mohler says. “But will conditions change enough to bring in more moisture across the South?”
He says air mass storms may help the Mid-South and Southeast, but are less likely in the Southwest. “The chances of getting meaningful moisture in the Southwest are not good.”
He says members of the AccuWeather team say spring may bring some moisture, but question whether it will be enough to make a difference in soil profiles. “We’re just not sure yet; we may know more in another month.”
Limited Precipitation
Mohler says limited precipitation may not be enough to substantially improve conditions for “summer crops that need a lot of moisture, like cotton and soybeans. Wheat also will need moisture. Southwest producers had good field moisture to establish the crop, but will need more when it comes out of dormancy in late winter.
“We think La Nina will be ending, but we don’t know the residual effects, or whether it will be replaced by a more friendly weather pattern.”
Mohler says drought -- and rainfall -- tend to persist. “When it’s not raining, it’s like an invisible dome prevents precipitation. We get feedback from moisture in the ground.  It evaporates and puts moisture back in the atmosphere. We just need that first one or two rainfalls to break through.”
Continuous drought has the opposite effect. “And with no moisture, the soil may add as much as 5 degrees to soil temperature. Then the downward spiral begins. We still have a lot of uncertainty.”
Mohler says La Nina will affect weather from the Carolinas, into the Mid-South, the Southwest and across the Sunbelt to California. The further east we go, the better the chance of receiving moisture out of the gulf,” Mohler says. 
“This is not likely to be another year like 2011, but this drought is a big concern.”

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 31st
  • P/(L) based on the futures when placed on feed: $80.11
 
Cost of 750 lb. steer delivered @ $147.62 per cwt:       $1,107.15
Feed Cost for 600 lbs. @ $76.55 per cwt:                        $459.30
Interest @ Prime + 2% on cattle cost for 165 days:            $28.78
Interest @ Prime + 2% of the feed cost for 165 days:          $5.97
Total Cost & Expense:                                                $1,601.20
 
Sale proceeds: 1,350 lb. steer @ $120.00 per cwt:   $1,620.00
 
This week's Profit/(Loss) per head:                                $18.80
 
Profit/(Loss) per head for previous week:                           $23.06
Change from previous week:                                             -$4.26
 
Sale price necessary to breakeven:                            $118.61

 


Projected closeout for steers placed on feed this week:
  • Projected Sale Date @ 165 days on feed = June 26th
Cost of 750 lb. steer delivered @ $148.70 per cwt:       $1,115.25
Feed Cost for 600 lbs. @ $74.48 per cwt:                        $446.88
Interest @ Prime + 2% on cattle cost for 165 days:            $31.51
Interest @ Prime + 2% of the feed cost for 165 days:          $6.31
Total Cost & Expense:                                                $1,599.95
 
Sale proceeds: June Futures @ $111.62 per cwt:     $1,506.87
 
This week's Profit/(Loss) per head:                          ($93.08)
 
Profit/(Loss) per head for previous week:                    ($126.86)
Change from previous week:                                           +$33.78
 
Sale price necessary to breakeven:                           $118.52

 


                                 Typical closeout for hedged steers sold this week: $80.11 
                                Typical closeout for un-hedged steers sold this week: $18.80 
                               Projected closeout for steers placed on feed this week: ($93.08) 

Slaughter Cattle:

Slaughter Cattle: Friday trade and demand was very light in most major feeding regions. In the Texas Panhandle, a few live purchases traded at 119.00. A few live purchases in Nebraska, traded from 117.00-119.50. In the Western Cornbelt a few dressed purchases traded at 190.00. However not enough purchases in any feeding region for an adequate market test. In the Southern Plains and Colorado, the last reported market was on Monday with live cash trades at 120.00. In Nebraska and the Western Cornbelt the last reported market was on Tuesday with live cash trades at 120.00 and dressed trades were at 192.00.
Negotiated Sales: Confirmed: 6,581    Week Ago: 69,832    Year Ago: 2,336
Formula Purchases: Net - Dressed 
Head count priced today: 14,700 
Weighted avg weight:       875.00 
Weighted avg net price:   193.11
Livestock Slaughter under Federal Inspection:
                               CATTLE      CALVES     HOGS       SHEEP 
Friday  (est             116,000     2,000     454,000     7,000 
Week ago (est)       118,000    2,000     439,000      7,000 
Year ago (act)        116,000     3,000     420,000      6,000 
Week to date (est) 588,000   10,000   2,269,000    39,000 
Last Week (est)     458,000     8,000   1,764,000    29,000 
Last Year (act)       581,000   11,000   2,140,000    37,000
Saturday  (est          23,000        0         181,000         0 
Week ago (est)        83,000        0          366,000         0 
Year ago (act)         29,000        0          242,000         0 
Week to date (est) 611,000  10,000    2,450,000    39,000 
Last Week (est)     541,000    8,000    2,130,000    29,000 
Last Year* (act)     609,000   11,000   2,382,000    37,000 
2018 YTD           1,152,000   18,000   4,618,000    68,000 
2017 *YTD         1,152,000   21,000   4,468,000    72,000 
Percent change       0.0%      -16.0%        3.3%       -5.3%

Colorado Legislature to Consider Identifying US Beef

On Jan. 5, state Rep. Kimmi Lewis and state Sen. Vicki Marble introduced in Colorado’s 2018 General Assembly a bill titled, “Beef Country of Origin Recognition System,” also referred to as the “Beef COORS bill” by the sponsors.
If passed, the bill would require Colorado retailers to place a placard in the immediate vicinity of beef products, including ground beef, that informs consumers as to whether the beef was derived exclusively from animals that were born, raised, and slaughtered in the United States, or whether the beef was imported or derived from imported animals.
Federal regulations allow beef products sold in Colorado to be labeled as “Product of the U.S.A.” when, for example, a multinational meatpacker like JBS imports beef from Australia and subsequently unwraps and rewraps the beef before selling it to a retail grocery store in Colorado.
The “Product of the U.S.A.” label can also be used in Colorado on beef derived exclusively from cattle born and raised in Mexico and Canada and then imported into the U.S. for immediate slaughter.
“The Beef COORS bill corrects the federal government’s deceptive labeling scheme by reserving the “USA Beef” placard only for beef exclusively derived from animals that were born, raised, and slaughtered in the United States,” said Lewis who also owns and operates the Muddy Valley Ranch in Kim, Colorado.
“The public will finally be able to distinguish between beef produced exclusively under the United States’ production and food safety standards versus beef produced in countries with different production standards and food safety systems that are not identical to ours,” Lewis added.
Lewis and Marble introduced a similar bill during last year’s General Assembly. However, about one-week before their bill was scheduled for a hearing before the state’s House Agriculture, Livestock & Natural Resources Committee, one of the bill’s fiercest opponents, the world’s largest beef packer and prominent beef importer, Brazilian-owned JBS, contributed $12.5 million to Colorado State University.
“This well-timed monetary contribution by JBS had a chilling effect on the committee and, unsurprisingly, our bill was defeated,” commented Lewis adding “And soon after that JBS was cited by Brazilian authorities for bribing nearly 2,000 government officials and shipping tainted beef in the world export market, and the company’s top executives were jailed for insider trading.
“We think our chances for a fair hearing this year will be far better than we had last year and because our bill is a no-nonsense bill that gives consumers important information about where their beef was actually produced, we think most Colorado legislators will enthusiastically support it for their constituents,” she concluded.

National Grain Summary:

Compared to last week, cash bids for wheat and corn were mixed, soybeans and sorghum were lower.  This week, trading may have been focused on getting final positions set ahead of the next round of WASDE reports set to be released this afternon Friday.  The soy complex fell under bearish pressure this week from slow export pace, a weaker soybean meal market, as well as beneficial weather in South 
America.  USDA said last week's export sales and shipments of corn totaled 17.2 million bushels and 35.0 mb, export sales and shipments of soybeans totaled 22.3 mb and 56.8 mb, and export sales and shipments of wheat totaled 2.6 mb and 10.6 mb.  All export figures could be viewed as bearish, and total shipments remain lower than a year ago.  Wheat was mixed from 8 3/4 cents lower to 50 1/2 cents higher.  Corn was mixed from 6 cents lower to 2 cents higher.  Sorghum was 4 cents lower.  Soybeans were 15 3/4 to 24 3/4 cents lower.
Corn futures settled Friday with most contracts 2 to 3 cents lower in the face of another record corn yield. A private export sale of 320,000 MT of 17/18 corn was reported to Unknown Destinations through the USDA’s daily system. NASS updated the US corn yield 1.2 bpa higher than December at a record 176.6 bpa this morning. The production increase of 26 mbu was limited, due to 400,000 fewer harvested acres. December 1 stocks of corn were 12.516 bbu, above expectations due to the larger crop and 130 mbu larger compared to last year. On the world side, South American production was left unchanged, while analysts had been expecting to see a smaller crop. That caused an increase of 2.49 MMT to the world ending stocks now at 206.57 MMT. South Korea purchased 70,000 MT of corn on Friday, with the US the likely origin.
Wheat futures posted steep losses on Friday, pressured by larger than expected winter theat acreage and larger 17/18 carryout. This morning’s Winter Wheat Seedings report showed 32.6108 million acres of winter wheat was planted last fall. That was down 88,000 acres from last year and is the lowest since 1909. It was much larger than expected, however. It included a reduction of HRW at 23.1 million acres, as both SRW and White was increased slightly to 5.98 million and 3.56 million acres respectively. Stocks of wheat on December 1 totaled 1.874 bbu, down 203 mbu from last year and in line with expectations. US old crop ending stocks were shown at 989 mbu, as imports were raised and feed usage was trimmed. World ending stock tallied 268.02 MMT, down 0.4 from December. A reduction in Australia’s carryover by almost 3 MMT offset a 2 MMT increase in Russian production (now 85 MMT).

Five Year Moving Average - Corn & Wheat:


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