Futures Prices

Understanding Basis: The Biggest Risk in the Cattle Market Today

Thu, 03 Jul 2025 19:55:02 GMT

The dynamics of today’s cattle market is unique and challenging. Key to this challenge is a wide basis spread between cash and futures markets.

“What we have is a big division in our basis,” explains Chris Swift, a commodities broker and founder of Swift Trading Co. “The basis spread tells us where we can buy cattle the cheapest, where we can sell cattle at the most expensive. And right now, it’s a very wide positive basis, suggesting that the cash market is trading considerably higher than the futures.”

Swift joined Chip Flory on “ AgriTalk ” July 3 to discuss the current state of the cattle market.

During the conversation Swift explains the spread is because the cash producers, the ones who actually are cattle producers, have to be in the cattle business. If they are going to be in the business, they have to buy and market cattle, but a futures trader does not have to do either.

“There’s a division between the producer, having to produce at these price levels, whether he wants to or not, and a futures trader going: ‘You know what, I think he may continue to do that, but I don’t have to support it at the same price level.’ And the belief is that were futures to run to the price of the cash market, then every producer would lay off the risk to the futures market.”

Thus, today it is difficult for producers to lay risk off in the futures.

“It’s absolutely horrible,” Swift says. “It creates a basis spread, kind of a tiger trap for which you can’t get out of if you have to sell futures and take on some kind of protection at the lower price levels. You are subject to the futures market again, always settling to the cash of that market.”

Some key market drivers Swift note include:

Supply challenges. He referenced the impact of the Mexican border closure on cattle volume, with a 2% to 5% reduction in Southern inventory. “It’s very interesting how the industry has been able to keep so many cattle on feed,” Swifts adds. “Next year may be the real challenge.”
The resilience of consumer demand. Swift says high prices could eventually impact consumer purchasing.
The trend of heifer retention to maintain herd size rather than expand it. His theory is producers are going to continue to sell heifers at the higher price, and they will hold Bessie back and see how many calves they can actually get out of her.
“Well, that process is now probably coming to an end, where Bessie doesn’t have any more calves in her and she’s going to have to be refreshed. So now we’re starting to hold the heifers back a little bit. We sell the cows off, and we continue to move laterally in our supply issue.”

Industry Outlook

“We are now in a position where one of two things has to happen,” Swift says. “We either shrink production and processing capacity, or we grow the number of animals.”

He says producers have zero signals right now to expand the beef herd and that price rations the number of participants.

“That’s what the market’s doing right now,” he adds. “It is telling the U.S. producer, there’s too many of you out there, we need to reduce this amount.”

The market signals are telling the industry to contract, which Swift says will lead to more vertically integrated supply chains to allow producers to move with less risk of price fluctuation. He referenced Walmart’s strategy of building a supply chain for Angus beef as an example of what the beef world could look like in the next 10 years.

Swift says the question is how bad does a cattle feeder or a backgrounder or anyone in the cattle industry want to be in the cattle business.

“If you want to be in it, you’re going to pay these prices regardless, and you’re going to average them out through the years,” he says. “If you don’t want to be in the business anymore, this is the place to get out. It’s the top of the market for what we know right now, and it’s going to become even more difficult.”

He says smaller producers might struggle to remain competitive as they assume more risks to continue in business. He also predicts high prices will adjust consumer demand, and unfortunately, the industry might not ever see a large increase in the cow herd.

Discussing what producers should expect following the July Fourth holiday, Swift says next week starts the big video sales.

“We will sell as much volume in the next three weeks as we pretty much will for the remainder of the year,” he explains adding that a lot of those cattle won’t be delivered September or October.

Selling on the video markets in July, producers turn their price risk into a physical risk, keeping them alive and getting them up to weight.

Despite the challenges, Swift is optimistic about opportunities in the cattle industry. He encourages young producers who want to start raising cattle to absolutely give it a try.

“There is no better opportunity than a dying business,” he says.

How Can Producers Use LRP

Clay Burtrum from Farm Data Services also joined Flory on “AgriTalk.” He explains how July 1 starts a new crop year for Livestock Risk Protection or LRP.
Bertrum shares some new options for the 2026 crop year.

Unborn calves. “We’ve had unborn calves in the past, but now you can insure unborn calves that you’re going to sell within about a two-week period,” he explains. This option would be for dairy or beef-on-dairy calves.
A 13-week cull cow program for dairy producers.
Insurance on video sale cattle before taking physical possession.
Billing process now delayed to the second month after contract expiration.

Burtrum explains the value of LRP: “It’s like driving your car down the road. You don’t anticipate having a wreck. You want to pay that premium. This is the same kind of concept in the cattle market. We don’t want to wreck in that market, if you don’t pay your premium, you sold your cattle for a higher price. That absorbed that premium, and then you’re continuing to keep yourself bankable, to keep yourself operating for that next year.”

He encourages producers to find an LRP agent who can help walk them through the process and explain the program options.

Your Next Read: Pounds Pay the Bills, Quality Sets the Price

Follow These 3 Rules To Manage Commodity Market Uncertainty

Mon, 14 Apr 2025 18:01:27 GMT

Tariff action and trade tiffs have dominated the Trump administration’s first three months, creating one of the greatest periods of market uncertainty many of us have ever had to manage. It’s true what they say: Markets don’t like uncertainty.

For markets, certainty equals confidence. If participants are confident in the market’s trend, professional trading funds, for example, pile onto one side of the market with high certainty it’s the right decision.

When there’s uncertainty, or low confidence, traders and fund managers are less committed to positions. They are into a new position at the start of a session and out before the closing bell.

In times of uncertainty, it’s best to go back to the basics of risk management. Effective risk management has little room for mistakes, but that doesn’t mean it has to be perfect. It just means you follow the basic rules in selecting the right marketing tool to use at the right time.

Rule #1: Basis Matters

When basis is above the three-year-average, use marketing strategies that capture that basis strength with a cash sale for immediate or forward delivery. That includes a basis contract that sets basis but leaves price open.
When basis is below the three-year average, use marketing strategies that leave basis open. Those options range from doing nothing to a short position in futures as a hedge against downside price risk.

Rule #2: Price Matters

If you anticipate higher futures prices ahead, use strategies that leave price open.
If you anticipate lower futures prices ahead, use strategies that capture price.

Rule #3: Now Put Basis and Price Together

When basis is strong and you’re bearish on prices, capture basis and price. That’s a cash sale for immediate delivery. If you don’t have the bushels to move that’s a forward-cash contract for future delivery.
When basis is strong and you’re bullish on prices, capture basis and leave price open. A basis contract can work great in a scenario like this — so does a minimum price contract with cash sale covered by a long call option. Remember, the premium on a call option generally appreciates as futures prices rise.
When basis is weak and you’re bearish on prices, capture price but leave basis open. A short futures position against your grain in the bin or in the field captures price. When basis returns to normal or strong levels, make the cash sale and exit the short futures to capture basis. A put option will provide similar protection. The premium on a put option generally appreciates as futures prices fall.
When basis is weak and you’re bullish on prices, choose a strategy that leaves basis and price open. Simply put: do nothing, but make sure the decision to do nothing is reasonable.

Click here to stay up-to-date with commodity markets, prices and futures.

As Farmers Look to Cut Costs for 2025, Machinery and Technology Could Take the Biggest Hit

Fri, 31 May 2024 16:24:27 GMT

Commodity prices have seen a bit of a rebound over the past month, but even with optimism beginning to surface with prices, agricultural economists think net farm income could fall more than expected, and the fallout could be felt with just how much farmers scale back what they purchase over the next year.

The May Ag Economists’ Monthly Monitor , a joint survey of nearly 70 ag economists conducted by the University of Missouri and Farm Journal, is one metric to help gauge the health of the ag economy. As global weather and geopolitical events continue to impact the markets, ag economists grew slightly more optimistic on the health of the overall ag economy in the past month.

“I think you can look at things like crops in South America, you know, we’ve had some disease issues in places like Argentina, we’ve had some wet weather in Brazil, some of those things, I think, have been helpful to boost prices at the same time. The wheat situation in Russia, I think, has also been important in terms of prices,” says Scott Brown, interim director, Rural and Farm Finance Policy Analysis Center (RaFF), University of Missouri.

(Farm Journal)

Brown helps author the Ag Economists’ Monthly Monitor, and he says the May Monitor shows even with more optimism for some commodities, ag economists’ views on the net farm income picture slightly eroded over the past month, falling from the $117.82 billion projected in the April survey, to $110.4 billion in May.

“I think it’s important to remind ourselves, the changes happen really quickly,” Brown says. “The volatility up and down, is going to continue in front of us. So, although we generally say the trend is down, there will be opportunities for better prices in front of us at times.”

(Farm Journal)

Arlan Suderman, chief commodities economist for StoneX, is one of the nearly 70 ag economists surveyed each month. He says even with the global grain and oilseed supply weather issues around the globe, his outlook on the ag economy hasn’t changed course.

“I don’t think it really has, if anything, I think it’s become a little bit more challenging,” Suderman says. “But I say that within the context. I think that the new world we’re in is going to have more challenges. But those challenges will also create more opportunities. It just means we’re going to have to be more strategic. We went through several years where you could be a lazy marketer and do pretty well - build equity in your farm, expand your operation and buy equipment. We’re going to have to be more strategic in it now. And I think the opportunities are going to be there for the person willing to do so.”

Farmers Forced to Cut Costs

Last month’s survey found nearly 80% of ag economists think current commodity prices, plus higher input and operating costs will spur consolidation within the row crop sector. This month, the survey asked what purchasing decisions may take a hit in the months ahead.

At the top of the list of purchase changes for 2025 was decisions regarding equipment. When asked if farmers would reduce machinery purchases for 2025, 50% of ag economists responded “most likely,” and the other 50% said “somewhat likely.”

“It seemed scaling back on machinery purchases was really the number one purchase change, and I don’t think that’s a big surprise. Almost everyone thought that was one place where we would see cutbacks in terms of trying to reduce costs,” Brown says.

“I think in the short-term, that is the easy answer is they’ll scale back on equipment purchases, and we’ve seen that,” Suderman says. “We would also anticipate them to scale back on some of those fertilizers that have less short-term impact, maybe phosphorus, potassium, some of those. I think farmers will stick with the seed technology, they’ll stick with the technology they think gives them the efficiencies that they need in their production.”

Economists point out machinery purchases are likely to slow, which will reduce capital costs, but could also potentially increase repair and maintenance expenditures.

(Farm Journal)

Another change ag economists think farmers will make is to slow technology upgrades. 35% responded a move to scale back technology upgrades is “most likely,” and 41% said “somewhat likely.”

The May Ag Economists’ Monthly Monitor also found ag economists think more farmers will make the switch to more generic products, with 73% surveyed responding with “somewhat likely.”

Economists also think another change for the upcoming year could be looking for lower interest rates. 65% said “somewhat likely,” 27% said “most likely.”

“I think for producers, in terms of what they want to add in 2025, are already beginning to focus on the changes they can make to be more efficient,” Brown says. “This idea of how to reduce costs when the prices for those inputs maybe aren’t going to change as much as they would like, and how to manage those margins, there is really going to be some opportunities to do that to try to make 2025 a better year.”

Economists Paint Mixed Picture on Price Outlook

As farmer possibly look at ways to cut back on spending, volatile commodity prices have become the new norm for farmers. As economists point out, the direction of commodity prices also now hinges on more than just supply and demand.

“Well, I think the biggest impact is probably geopolitical risks, and the advent of the funds, trying to interpret all of that,” Suderman says. “And as you look at the management of billions of dollars now invested in commodities, either being long and buying them or being short selling them, based on what they see happening in geopolitics, based on what they see in the economy, are we in a re-inflation period? Are we in commodity deflation period? And that’s really driving the economy, more than the actual supply and demand fundamentals.”

(Farm Journal)

Still, Suderman and other economists say in the short-term, the outlook for grain prices will center around supply and what happens with weather. One of the major wildcards for the summer is the transition from El Nino to La Nina, and not only how quickly it occurs, but what areas of the U.S. crop and cattle production could be hit by dry and hot weather.

Suderman still thinks the health of the U.S. and global economies will be a critical piece to watch over the next 12 months, particularly if we reestablish inflation.

Other economists also pointed to inflation in the May Monthly Monitor. “I expect a return of inflation and tighter credit due to expanding Congressional spending and the expanding national debt,” said one economist in the anonymous survey.

Beef Prices and Demand

The inflation piece is something Suderman says could impact both grain and livestock prices, especially considering demand and the health of global economy will have a major impact on prices as we test just how much consumers are willing to pay.

“We’re in a world economy where imports of beef in the first quarter of this year were up 25% year on year. So, when we get too expensive, we simply import more. And then the consumer is the driver of what that the demand factor is moving forward,” Suderman says. “If we keep the consumer confidence and we prop it up, they’re willing to pay more, which means import more but holding up our domestic prices. If they’re not, then those imports start to overwhelm us and pressures beef prices even more.”

(Farm Journal)

Pork Price Outlook

Impressive export demand has also been a bright spot for U.S. pork producers. The strong export picture has propelled prices for hog producers across the U.S., which helps paint a more positive picture for an industry that was hit hard over the past 12 to 14 months.

“Hog prices, I think, have been the surprise, and a surprise in a good way,” Brown says. “We started 2024 with lower prices. Generally, those in the survey answering about pork prices would have been slightly more optimistic relative to the last. So, I think when you look at where wholesale pork prices are today, they could be supportive of yet higher hog prices.”

Brown points out consumer demand is also a major factor for the trajectory of hog prices the remainder of the year.

“If consumer demand were to slow, and that’s just as much international demand that has the attention of the economist in terms of international demand has been good for pork this year, if it were to waver in the second half, that could be more troubling for where we’re at the pork market,” Brown says.

What else are economists saying about the ag economy? You can view previous Ag Economists’ Monthly Monitor updates here .

Corn Market Stabilizing with Improved Export Demand

Thu, 19 Nov 2020 01:41:31 GMT

Happy Thanksgiving! Here is your weekly grain and livestock market outlook and review for Nov. 25, 2019, from the economic experts at Doane Advisory Services. The next weekly review and outlook will be published on Dec. 9, 2019.

Major market movers last week:

The corn market stabilized last week in response to signs of improving export demand. Concerns about the vulnerability of yet-unharvested acres seem minimal, especially with traders focusing upon the potential for a big surge in plantings next spring. Traders apparently sold in response to diminishing optimism about a U.S.-China trade deal.
Problems associated with the seemingly never-ending Canadian harvest seemed to boost oat prices again last week, with the expiring December contract making a run at last year’s four-year high before backing off later in the week.
Pessimism about the ability of the U.S. and China to reach a Phase 1 trade deal in the near future seemed to drive soybeans lower again last week. News of much needed rainfall over major South American production areas also weighed upon prices.
The soybean meal market had firmed in early November, likely due to expected reductions in Argentine processing and to talk of a surge in October feedlot placements, but Monday’s sharp reversal spurred follow-through losses. Bean oil probably benefited from spillover palm oil strength, but Thursday’s big setback limited the weekly rise.
The U.S. and South Korea announced an agreement to improve U.S. access to Korea’s rice market last Tuesday. Anticipation of that event and the release of that news apparently powered the strong rally. Thursday’s surge implied more of the same.
As with soybeans, cotton futures turned decidedly lower as traders and farmers lost hope for a quick agreement on a partial U.S.-China trade deal. The slowing U.S. harvest and the early-November USDA cut to its domestic crop estimate apparently had little sustained impact upon the market.
Cash cattle prices continued their advance last week, with most animals reportedly changing hands around $116/cwt. However, futures stalled, which indicated traders were relatively comfortable with the sizable premiums already built into the market.
In contrast to the firmness exhibited by fed cattle values, feeder futures turned sharply lower late in the week. The drop seemed technical in nature, especially given the discounts already built into feeder futures and corn futures also sliding.
Although the latest export sales data looked quite supportive of the hog outlook, futures fell to two-month lows on Wednesday. Pessimism about a U.S.-China trade deal, as well as big ham and pork losses, apparently drove the market lower.
The expiring November Class III milk contract remained above $20/cwt last week (as dictated by the early-month quote for Class I milk), but the deferred contracts continued their losses from the week prior. Conversely, they bounced strongly from support.
After tumbling late last week and again on Monday, the U.S. dollar turned higher at midweek, then surged on Friday. Supportive economic data, particularly early November reads on U.S business activity, spurred the Friday advance. The strong week-ending close suggests significant potential for a bullish follow-through.
The crude oil market began the week poorly, but staged a major advance to its best close since the September attack on Saudi oil facilities. It would have been easy to think Friday’s supportive data would spur further gains, but crude futures stalled.
Gold futures lost considerable ground in mid-November after having failed at 40-day moving average support on November 5. Prices then rebounded early last week, but bulls couldn’t challenge overhead resistance, which in turn seemed to open the door to a poor weekly close. Reduced geopolitical tensions are undercutting support.
With the recent surge to record highs having at least partially incorporated fresh optimism about the intermediate-term economic outlook, the major equity indices turned lower last Tuesday. However, Friday’s strong indications on domestic business activity powered a firm weekly close.

Likely market movers this week:

USDA Crop progress (11/25).
EIA petroleum status (11/27).
USDA Farm Income (11/27).
USDA Export sales (11/29).
Economic reports this week: Chicago Fed national activity index (11/25), Case-Shiller home price index, Consumer confidence index, New home sales (11/26), Jobless claims, GDP revision, Durable goods orders, Core capex orders, Chicago PMI, Personal income, Consumer spending, Core inflation, Pending home sales, Beige book (11/27).

Dan Vaught is a senior economist with Doane Advisory Services. He has been engaged in commodity market analysis for 27 years. Since earning his master’s degree in agricultural economics from the University of Arkansas, Dan has been involved in commodity market research and analysis, specializing in fundamental analysis and studying supply/demand factors and price charts to find market opportunities for clients. Dan specializes in livestock markets, including cattle, hogs and dairy.

Doane Advisory Services is a market leader for agricultural economic information and outlook. Doane’s economists combine Farm Journal’s deep farm-data content with its proven models and analysis – which distinguish Doane as the only advisory services with direct contact with America’s farmers and ranchers. Started in 1919 by Mr. D. Howard Doane, Doane Advisory Services was built with the vision of creating a more efficient, productive agriculture industry. Our promise is to provide research, analysis and insight with a personal component to each and every client as we celebrate our 100th anniversary and many more to come.

Block Trades Come to Agriculture, Sparking Transparency Concern

Thu, 19 Nov 2020 01:41:03 GMT

(Bloomberg) -- Block trading -- when two customers agree outside of open outcry or outside of the electronic trade to transact a deal -- has come to the world of Chicago agriculture trading, and not everyone’s happy about it.

CME Group Inc. data show the exchange cleared four block trades in agricultural futures Monday, the first day when registered participants were allowed to make the transactions. Block trades took place in hog futures, Black Sea wheat and urea fertilizer.

In hogs, the block trade accounted for 8.2 percent of Monday’s estimated June futures volume, raising concerns that the price discovery purpose of the exchange is less transparent, Roy Huckabay, executive vice president at Chicago-based Linn & Associates said in an email. Block trades are required to be reported within 15 minutes of completion.

Block trading “is aimed at big funds and does not fit most commercial firms,” Huckabay said. “It will not help encourage participation from the customers that matter.”

CME began offering block trading based on “customer demand,” spokesman Chris Grams said by email.

“These transaction types will enable many types of clients to execute trades when market liquidity is not readily evident, including in deferred contract months, less liquid option strikes or in spread or combination strategies,” Grams said. “By allowing block trades, these trades can now be conducted at the exchange, which will enhance transparency, as reporting is required.”

©2018 Bloomberg L.P.

U.S. Cold Blast Threatens Winter Wheat, Cattle

Fri, 13 Nov 2020 02:21:05 GMT

Bitterly cold weather in the middle of the U.S. is threatening wheat plants as cattle battle to stay warm.

A wide swath of the U.S. wheat belt faced readings below 0 Fahrenheit (-18 Celsius) on Monday, damaging crops that didn’t have a protective layer of snow, according to World Weather Inc. Temperatures through Jan. 4 are forecast at 15 to 25 degrees below normal from the Southern Plains to Ohio Valley, the National Weather Service forecasts. The chill can also slow grain movement as ice builds on rivers and railways.

March futures tracking both hard red winter and soft red winter wheat climbed to the highest since early December in Chicago, while the February cattle contract reached a one-month high. Feeder-cattle futures rose as much as 4.5 cents, the exchange limit.

For wheat, “widespread winterkill occurred on Monday across southeastern Colorado, much of Kansas, far northern Oklahoma, central Missouri, southern Illinois, and southwestern Indiana,” according to Radiant Solutions.

The full extent of the grain damage won’t be known until the crop begins to grow again in the spring, said Mike O’Dea, risk management consultant for INTL FCStone in Kansas City, Missouri. Winter wheat is planted in the fall and lies dormant during the winter months until warmer weather triggers further plant development. Several of the top U.S. growing states have also faced an expanding drought in the past few months.

The cold weather means it takes longer for cattle to add pounds, though the impact isn’t expected to last long, said Dennis Smith, a senior account executive at Archer Financial Services in Chicago. While hogs and poultry are primarily raised indoors, cattle graze on pastureland and bulk up in outdoor feedlots throughout the year.

“When it’s so cold, they have to consume so much energy just to stay warm that the weight gain is going to be minimal,” Smith said. Once the freeze ends, “they also will probably recover fairly quickly because it’s not going to be a huge muddy mess,” thanks to recent dry weather, he said.

First Thing Today: Senate Will Vote on Perdue after Easter Recess

Fri, 13 Nov 2020 01:17:24 GMT

Choppy overnight action amid position evening... Corn futures traded in a narrow range on either side of unchanged overnight and the market is currently posting fractional losses. Soybeans are steady to a penny higher in most contracts after a choppy overnight session Wheat futures are mixed, with HRS favoring the upside. The U.S. dollar index is just above unchanged, while crude oil futures are slightly higher.

Perdue’s confirmation vote scheduled after lawmakers return... The Senate will finally vote on USDA Secretary-nominee Sonny Perdue on April 24, the day the Senate returns from its two-week recess. Senate Majority Leader Mitch McConnell (R-Ky.) announced he cut a deal with his Democratic counterpart setting when the chamber will vote on former Georgia Governor Perdue’s cabinet nomination. Perdue was first tapped on Jan. 19, the day before President Donald Trump’s inauguration. The one up-or-down vote the chamber is set to take will require 51 votes -- not 60.

Weekly export sales report expected to show still-solid bean sales... USDA will release its weekly update on export sales activity at 7:30 a.m. CT. Traders expect the report to show corn sales ranging from 800,000 MT to 1.3 MMT, soybean sales of 500,000 MT to 900,000 MT, wheat sales between 300,000 MT and 700,000 MT, soymeal sales ranging from 100,000 MT to 400,000 MT, and soyoil sales of 5,000 MT to 35,000 MT.

Global food prices soften in March... The Food and Agriculture Organization of the United Nation’s (FAO) Food Price Index averaged nearly 171 points in March, which was down 5 points (2.8%) from February, but still up 20 points (13.4%) from year-ago levels. All of the commodity indices except meat fell last month, with sugar and vegetable oil prices leading the retreat. FAO’s initial world cereal supply and demand outlook for 2017-18 “points to another season of relative market tranquillity, with global production declining only slightly.” But with relatively weak growth in utilization, it says world cereal stocks will remain near record levels. FAO projects global wheat production will drop 20.3 MMT from year-ago to 740 MMT in 2017 due mainly to “price-induced cuts” in Australia, Canada and the United States.

Brazil’s exit from recession attributed to big soy crop... Brazil’s economy grew between 0.1% and 0.3% for the first quarter of 2017, with the record soybean crop credited for pulling the nation out of recession, according to economists. While Brazil’s ag output accounts for just 5% of Brazil’s economy, the sector may have climbed as much as 8% from the fourth to the first quarter, according to private estimates. Economists expect a broader recovery later this year, with annual growth projected at 0.5%.

CME cuts May margin for corn futures... CME Group has lowered maintenance margins for corn futures by $150 to $750 per contract for May 2017, a drop of 16.7%. The change takes effect today. CME says all initial margin rates are 110% of these levels.

Attaché: India to boost cotton exports and trim imports in 2017-18... India’s 2017-18 cotton crop will likely total 28 million 480-lb. bales, which would be up 1 million bales from year-ago, according to an attaché in the country. The post expects India to export 4.5 million bales of cotton in 2017-18, up 600,000 bales from the year prior. Its imports of the fiber are projected at 1.5 million bales, down 500,000 bales from 2016-17.

LFTB lawsuit heading to trial... South Dakota’s Supreme Court denied a petition from ABC to avoid trial in a defamation lawsuit regarding its reports on lean finely textured beef (LFTB), which it dubbed “pink slime.” Beef Products Inc. sued the network in 2012, saying its reports misled customers into believing LFTB was unsafe, leading to plant closures and layoffs. The trial is scheduled to start in June.

Still waiting on cash trade... Cash cattle trade remains at a standstill after some light cleanup sales at lower prices in Nebraska earlier this week. Interestingly, no sales took place at the online Fed Cattle Exchange auction, signaling this week’s negotiations could be tough. Lower trade is widely expected given the sharp rise in showlists and the decline in beef prices this week, but there is uncertainty as to just how much of a decline is likely.

Cash hog prices remain under pressure... Hog supplies are rising seasonally, which is keeping cash hog bids under pressure. Yesterday’s average hog weight data for Iowa and Minnesota reflected a slightly uptick from week-ago. Traders will monitor whether weights continue to climb as this could be a sign that supplies are backing up on farms. Plus hog weight gain picks up amid the milder temps of spring.

Overnight demand news... Iraq has tendered to buy at least 50,000 MT of wheat. Japan purchased 65,536 MT of food-quality wheat from the U.S., as well as 29,511 MT from Canada and 25,460 MT from Australia. Jordan issued a new tender to buy 100,000 MT of feed barley from optional origins.

Can Cattle Futures Find a Floor?

Fri, 20 Nov 2020 04:58:29 GMT

Following two days of falling cattle futures prices, Joe Vaclavik, president of Standard Grain, is calling the market moves a knee-jerk reaction to the latest Cattle on Feed report from the USDA.

“It was generally considered to be very bearish,” says Vaclavik from CME Group in Chicago at the end of the trading day Tuesday. “The boxed beef market is also finally finding some footing after what had been a pretty sharp collapse.”

Vaclavik says he’ll be watching boxed beef prices and Wednesday’s Fed Cattle Exchange for pricing transparency.

“Most areas traded $108 [cwt] last week,” says Vaclavik. “We’ll see if markets can improve on that despite that bearish Cattle on Feed report.”

Prior to the Cattle on Feed report, Brian Splitt, a broker with Allendale Inc., told AgDay host Clinton Griffiths that prices have held together better than expected in 2017.

“We had a stronger rally than last year coming into roughly this same time of year,” says Splitt. “December cattle topped out September 22 last year and eventually fell below a dollar.”

The market winds appear to be changing. Splitt says in August, producers flipped from making money to losing money.

“The break-even [prices] are moving higher, " says Splitt. “We see them at approximately $114 in September, $120 by October and we’re projecting up to $124 by December.”

Splitt says lower input prices, like corn, should help cattle industry margins.

“If the people that are buying corn are making money then they’re going to continue to buy more of it,” says Splitt.