The “outside markets” were the fly in the ointment of the ag commodity markets this week. The European debt crisis, the slumping stock market and sharply lower oil prices pressured all the markets we watch during the past week.
Live Cattle futures were hit the hardest, with the June contract down $4.05 compared to last Tuesday, while the August contract was down $3.85 and October lost four bucks. Cash sales of fed cattle last week were still OK at mostly $100, but expect lower prices this week when packers finally get serious about acquiring cattle. Boxed beef cutout values were also softer, with the Choice down $2.52 for the week while Select lost $2.62. In addition to the pressure from the economy and outside markets, the cattle market is also battling seasonality. It’s the time of year when supplies of fed cattle start to grow and demand will likely start to drop off a bit after Memorial Day.
Feeder Cattle futures were also lower, with the May contract down $2.35 for the week ended Tuesday, while the August lost $3.02 and October dropped $3.10. Lower grain prices failed to offset the lower values of fed cattle and the general bad attitude around the markets last week, resulting in the lower prices. Cash sales of feeders were also lower, particularly for yearling weight cattle to go to the feedlots.
Hog prices took a severe beating as well, with the June Lean Hog futures contract down $4.02 compared to last Tuesday, while the July contract dropped $3.60. Cash sales of butchers were softer as well, although they were not hit as hard as the futures predicted. In Sioux Falls, cash hogs traded Tuesday at $59, down just 50 cents from last week, while in Red Oak, cash butchers lost $1.50 to trade at $58.50.
The fundamentals of the grain markets were mostly weak, and combined with pressure from outside markets all three major grains took a nosedive. July Soybean futures were down more than 26 cents for the week ended Tuesday, with the August contract down nearly 29 cents and new-crop November off 24 cents. Although planting progress was slowed somewhat by cool, wet weather in the Midwest last week, farmers still had 38 percent of the soybeans in the ground by Sunday, which was three points ahead of the five-year average and 15 percent better than last year. Export inspections were also lower than expected and the strong dollar and roiling of foreign markets may make it harder to sell soybeans in the coming weeks.
July Wheat futures in Chicago were down more than 25 cents for the week, while in Kansas City the July contract was off more than 21 cents and the September lost nearly 22 cents. Sixty-six percent of the winter wheat crop is rated good or excellent, which surprisingly is unchanged from the previous week. Most traders expected a reduction in crop condition due to scattered freeze damage in some areas as well as the seasonal trend for wheat conditions to decline as the crop approaches maturity. The fact that conditions did not get worse was likely an indication that the crop may have even improved. Combined with a strong dollar and weak exports there was simply not enough good news to support wheat values this past week.
Corn prices also slid lower, as the July futures contract dropped more than 17 cents compared to last Tuesday, while the September was down nearly 16 cents and new-crop December lost more than 14 cents. As with soybeans, corn planting was slowed by cooler and wetter weather, but 87 percent of the crop is planted, compared to 61 percent last year and the five-year average of 78 percent. The stronger dollar and unsettled outside markets also affected corn pricing, and lower than expected exports pressured prices as well.
This Friday, USDA releases the May 1 Cattle on Feed report, but if the outside markets continue to swing wildly, don’t expect any fallout from the report to last past the first hour of trading on Monday. The stock market, oil prices and Greece’s sovereign debt will likely be bigger factors in the next few weeks.
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The “outside markets” were the fly in the ointment of the ag commodity markets this week. The European debt crisis, the slumping stock market and sharply lower oil prices pressured all the markets we watch during the past week.
Live Cattle futures were hit the hardest, with the June contract down $4.05 compared to last Tuesday, while the August contract was down $3.85 and October lost four bucks. Cash sales of fed cattle last week were still OK at mostly $100, but expect lower prices this week when packers finally get serious about acquiring cattle. Boxed beef cutout values were also softer, with the Choice down $2.52 for the week while Select lost $2.62. In addition to the pressure from the economy and outside markets, the cattle market is also battling seasonality. It’s the time of year when supplies of fed cattle start to grow and demand will likely start to drop off a bit after Memorial Day.
Feeder Cattle futures were also lower, with the May contract down $2.35 for the week ended Tuesday, while the August lost $3.02 and October dropped $3.10. Lower grain prices failed to offset the lower values of fed cattle and the general bad attitude around the markets last week, resulting in the lower prices. Cash sales of feeders were also lower, particularly for yearling weight cattle to go to the feedlots.
Hog prices took a severe beating as well, with the June Lean Hog futures contract down $4.02 compared to last Tuesday, while the July contract dropped $3.60. Cash sales of butchers were softer as well, although they were not hit as hard as the futures predicted. In Sioux Falls, cash hogs traded Tuesday at $59, down just 50 cents from last week, while in Red Oak, cash butchers lost $1.50 to trade at $58.50.
The fundamentals of the grain markets were mostly weak, and combined with pressure from outside markets all three major grains took a nosedive. July Soybean futures were down more than 26 cents for the week ended Tuesday, with the August contract down nearly 29 cents and new-crop November off 24 cents. Although planting progress was slowed somewhat by cool, wet weather in the Midwest last week, farmers still had 38 percent of the soybeans in the ground by Sunday, which was three points ahead of the five-year average and 15 percent better than last year. Export inspections were also lower than expected and the strong dollar and roiling of foreign markets may make it harder to sell soybeans in the coming weeks.
July Wheat futures in Chicago were down more than 25 cents for the week, while in Kansas City the July contract was off more than 21 cents and the September lost nearly 22 cents. Sixty-six percent of the winter wheat crop is rated good or excellent, which surprisingly is unchanged from the previous week. Most traders expected a reduction in crop condition due to scattered freeze damage in some areas as well as the seasonal trend for wheat conditions to decline as the crop approaches maturity. The fact that conditions did not get worse was likely an indication that the crop may have even improved. Combined with a strong dollar and weak exports there was simply not enough good news to support wheat values this past week.
Corn prices also slid lower, as the July futures contract dropped more than 17 cents compared to last Tuesday, while the September was down nearly 16 cents and new-crop December lost more than 14 cents. As with soybeans, corn planting was slowed by cooler and wetter weather, but 87 percent of the crop is planted, compared to 61 percent last year and the five-year average of 78 percent. The stronger dollar and unsettled outside markets also affected corn pricing, and lower than expected exports pressured prices as well.
This Friday, USDA releases the May 1 Cattle on Feed report, but if the outside markets continue to swing wildly, don’t expect any fallout from the report to last past the first hour of trading on Monday. The stock market, oil prices and Greece’s sovereign debt will likely be bigger factors in the next few weeks.
