Some brief information on corn and cattle for the week.
Cattle
The livestock contracts have returned to their pre-Tyson fire levels, with CME NOV Feeders at $141.025/cwt at time of writing, and CME DEC Live at $110.5/cwt at time of writing. A significant run has been met with some ‘technical’ resistance over the last week.
Figure 1. CME NOV Feeder Cattle Futures, Aug 1 – Present
Figure 2. CME DEC Live Cattle Futures, Aug 1 – Present
Volume was down week-over-week in the High Plains auctions, with fairly stable pricing. The deluge we received this week might change the outlook for the next few months, or at least make some sellers consider their position a bit more prior to heading to the sale. We are currently still in the seasonal low for feeders because of the influx of animals, however we should break out of that range soon.
The drought situation is reaching beyond ‘severe’ and into ‘extreme’ in many parts of Texas, particularly in the Big Country and the northern Rolling Plains. With some of those producers forced to move animals off pasture due to lack of forage, we may see localized shortages of animals in the early spring. If the rains this week didn’t drown your feed and you see the possibility of increased forage from the precipitation, expect a premium vs the current price in the early spring.
Figure 3. Texas Panhandle AMS Auction Reports; Price Received & Quantity Sold (#1 Feeder Steers) by Weight Class (Includes Tulia, Amarillo)
Figure 4. U.S. Drought Monitor 10/2/19
Corn
Corn benefited from a bullish Grain Stocks report this Monday. The last news to hit the market on ending stock came from the September WASDE, with ending stocks set at approximately 2.445 billion bushels. Within the Grain Stocks report this week, that estimate was revised to 2.114 billion bushels, a 331 million bushel decrease. Much of this change was led by increased inventory numbers by pork and poultry.
The decrease in supply led to a rapid price response. On Monday the CME DEC contract ran up from an opening of $3.72/bu to $3.88/bu. By time of writing the contract settled a little lower at $3.854/bu. The current production and stocks amount will lead to the lowest ending stocks since 2015/2016. The $3.854/bu is not at the district-wide break-even level, but it is a beginning a move in the correct direction. The seasonal index shows upward movement going in to late October and early November.
Crop conditions are in line with the average, however progress is significantly behind, a result of the late planting nationwide. Corn dented is within range for Texas, however nationwide only 88% is dented vs a previous average of 98%.
Figure 5. CME DEC Corn Futures, Aug 1 – Present
USDA Announces ‘Top Up’ Payment
See the following announcement from USDA on October ‘Top Up’ payments.
“Producers with Yield Protection and Revenue Protection with Harvest Price Exclusion will receive a 10 percent top-up payment on their indemnity, while producers with Revenue Protection Harvest Price Option will receive 15 percent. They do not need to sign up to receive payments; all producers with a 2019 prevented planting indemnity will receive the top-up. Producers will receive the payment from their Approved Insurance Providers (AIPs) starting in mid-October.”
In the News
AgriPulse – Hemp Growers May Find Processing Bottleneck
Upcoming Dates
October 10 – Crop Production
October 10 – WASDE
October 11 – Texas A&M AgriLife Extension Ranchers Leasing Workshop (Register Here or call 979-845-2604)
October 25 – Cattle on Feed, NASS
November 7 – Texas A&M AgriLife Extension Southwest Dairy Days (Register Here)
January 5-11 – The Executive Program for Agricultural Producers (Register Here)