April 26, 2019 Tennessee Market Highlights Number: 17

FED CATTLE: Fed cattle traded steady to $1 higher in the South compared to last week. Live prices were mainly $126 to $127 while dressed prices were mainly $204 to $205. The 5-area weighted average prices thru Thursday were $126.75 live, down $1.62 from last week and $204.62 dressed, down $3.15 from a week ago. A year ago prices were $120.95 live and $193.93 dressed. It has been difficult the past two weeks to fully understand what is happening in the finished cattle market. The April contract which will soon be pushed to the wayside steadily increased from the low $120s to about $130 from November through the middle of March. Since that time, the con-tract moved from$126 to $128 and then declined to $124 all in a matter of two weeks. Similarly, the cash finished cattle market has moved in a similar pattern with no definitive reason for the gyrations. May-be last week’s cattle on feed report was an influencing factor or maybe it is a broader market signal related to demand. Either way, the market appears to have some un-certainty in it as is evident in the futures market. This does present opportunities. BEEF CUTOUT: At midday Friday, the Choice cutout was $232.90 down $0.03 from Thursday and down $0.31 from last Friday. The Select cutout was $218.96 down $0.79 from Thursday and down $2.82 from last Friday. The Choice Select spread was $13.94 compared to $13.70 a week ago. International meat trade is a big business, and price and quality are the primary deter-minants for importers. Through the first two months of 2019, U.S. beef and veal imports were 0.1 percent above year ago levels while U.S. beef and veal exports were 4.2 percent (19.5 million pounds) below the same two months in 2018. Similar to the slowdown in beef exports, pork exports the first two months of the year were 4.8 per-

cent (47.3 million pounds) below 2018 lev-els. Nearly 40 percent of the decline in U.S. pork exports can be attributed to a slow-down in U.S. pork headed for Japan. Japan’s trade agreements with the European Union and the countries involved in the Compre-hensive and Progressive Trans Pacific Part-nership has resulted in lower tariff rates which has Japan pulling more pork from the EU and from Canada. On the beef export side, reduced exports can primarily be attributed to Hong Kong as exports to Hong Kong have practically been cut in half. How-ever, Japan could slow down imports of U.S. beef unless a more favorable trade deal is established. OUTLOOK: Based on Tennessee weekly auction market averages, steer prices were $1 to $4 higher compared to last week while heifer prices were steady to $2 high-er. Similarly, slaughter cow prices were steady to $2 higher while slaughter bull prices were $2 to $3 higher compared to a week ago. The cash trends from this week have been running counter to feeder cattle futures. Considering the May feeder cattle futures contract, which is now the nearby contract, the contract closed over $151 per hundredweight most of the week prior to Easter, but the price ended the current week nearly $7 lower. The August contract traded between $159 and $161 last week and early this week but then found itself near $153 to round out the week. A very similar story is depicted in the remaining feeder cattle contracts that are being trad-ed. The first aspect of these prices to note is the directional movement. With the two prices moving in opposite directions, con-vergence is starting to occur and basis is beginning to narrow which was discussed last week. The May contract has converged to the feeder cattle index which is still $8 lower than the August contract. Second, a downward movement in feeder cattle fu-tures this week does not mean the market will continue to decline or stay at its cur-

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Livestock Comments by Dr. Andrew P. Griffith Trends for the Week Compared to a Week Ago

Slaughter Cows

Steady to $2 higher

Slaughter Bulls

$2 to $3 higher

Feeder Steers

$1 to $4 higher

Feeder Heifers

Steady to $2 higher

Feeder Cattle Index

Wednesday’s index: 144.96

Fed Cattle

The 5-area live price on Thursday of $126.75 was down $1.62. The dressed price of $204.62 was down $3.15

Corn

May closed at $3.51 a bushel, down 7 cents since last Friday

Soybeans

May closed at $8.53 a bushel, down 27 cents since last Friday

Wheat

May closed at $4.35 a bushel, down 9 cents since last Friday

Cotton

May closed at 76.75 cents per lb., down 0.56 cents since last Friday

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rent level. There are fundamental aspects of the market that could support the summer and fall contract months moving north of $160. However, the previous statement is not a solici-tation to remain idle with a hope that the market will make a run. Producers should be considering their marketing alterna-tives and the cost of achieving their marketing objective. Pa-tience is a virtue, but failure to take action when the market is offering a favorable opportunity does not constitute patience. Failure to take action largely stems from inaptitude or fear of “failure.” Inaptitude can be addressed by studying, educating oneself, and practicing while securing a profitable price is not a “failure.” It is called staying in business. ASK ANDREW, TN THINK TANK: I visited with a producer this week that is planning to send a load of cattle to the feedlot this summer and retain ownership. This producer has sent cattle to the feedlot before, but it has been four or five years since he owned them in the feedlot. Based on our discussion, it appears he has made changes to his breeding program with the hope of producing cattle that perform well in the feedlot and grade well on the rail. This cannot be known until the cattle are fed, slaughtered, and the data reviewed. This made me think of all the cattle producers that claim they have good cattle or in some cases great cattle. If producers really think they have such good cattle then why are they not owning them through the feedlot and selling them to a Tyson, Cargill, or National? The only way to know if a person has cattle that will meet what the market is demanding is to own the cattle through the feedlot

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Livestock Comments by Dr. Andrew Griffith

and see how they perform. The Tennessee Beef Evaluation pro-gram is a method of doing this. Talk to a few neighbors and see if they are interested. If we can put a truckload together then we can ship them. Please send questions and comments to agriff14@utk.edu or send a letter to Andrew P. Griffith, Univer-sity of Tennessee, 314B Morgan Hall, 2621 Morgan Circle, Knox-ville, TN 37996. This is Andrew Griffith reporting from the University of Tennes-see Institute of Agriculture on Friday April 26th. FRIDAY’S FUTURES MARKET CLOSING PRICES: Friday’s closing prices were as follows: Live/fed cattle –April $124.55 +0.50; June $115.05 -0.33; August $112.65 -0.28; Feeder cattle –May $143.95 +0.40; August $152.85 -0.40; September $153.85 -0.48; October $154.48 -0.43; May corn closed at $3.51 up $0.04 from Thursday.

Overview Corn, soybeans, cotton, and wheat were down for the week. Currently, bearish news continues to dominate corn, soybean, and wheat markets, pushing cash and futures prices lower. Stocks, trade/exports, Afri-can Swine Fever, global weather, South American production, U.S. soil mois-ture, and large short positions by managed money funds are some of the current factors leading to the bearish sentiment. Stocks of corn, soybeans, and wheat are large both domestically and globally. Currently, the USDA estimates 2018/19 marketing year ending U.S. (global) stocks at 2.035 billion bushels (12.362 billion) of corn, 895 million bushels (3.945 billion) of soybeans, and 1.087 billion (10.127 billion) bushels of wheat. Stocks are abundant and will take time to work through. Trade and exports have been discussed frequently this winter and spring. Trade is crucial to agriculture with approximately 25% of farm and ranch products sent to foreign destinations. With the Chinese trade disruption and USMCA (NAFTA’s replacement) still not finalized, substantial bearish sentiment for trade persists. Further complicating trade is the likelihood of reduced total Chinese soybean imports, due to African Swine Fever. Reduced imports to China could reduce soybean exports from Brazil and Argentina causing additional soybeans to be made available to an already oversupplied global market. As mentioned last week, global weather across multiple growing regions has been very supportive for increased production and hence bearish for prices. This can change rapidly and almost certainly will before the end of the year, but at present few red flags have emerged in 2019. In the U.S. there have been challenges with a wet winter and spring restricting planting pace, but as of right now the abundant soil moisture can be seen a positive for yields, assuming the crop is able to be planted.

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Crop Comments by Dr. Aaron Smith

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Crop Comments by Dr. Aaron Smith

Managed money funds – as reported by the CFTC –COT report, have amassed a large net short position corn 370,000+ contracts, soybeans 125,000+, and wheat 65,000+ contracts. This build contributes to the bearish sentiment however these positions will need to unwind providing some hope that fund movement could trigger a rally – eventually. Corn Ethanol production for the week ending April 19 was 1.048 million barrels per day, up 32,000 from the previous week. Ethanol stocks were 22.747 million barrels, up 71,000 barrels. Corn net sales reported by exporters from April 12-18 were down from last week at 30.7 million bushels for the 2018/19 marketing year and 0.1 million bushels for the 2019/20 marketing year. Exports for the same time period were up 2% from last week at 49.2 million bushels. Corn export sales and commitments were 78% of the USDA estimated total annual exports for the 2018/19 marketing year (September 1 to August 31) compared to a 5-year average of 87%. Across Tennessee, average corn basis (cash price-nearby futures price) strengthened at Memphis, Northwest Barge Points, Northwest, and Upper-middle Tennessee. Overall, basis for the week ranged from 2 under to 20 over with an average of 8 over the May futures at the end of the week. May 2019 corn futures closed at $3.51, down 7 cents since last Friday. For the week, May 2019 corn futures traded between $3.42 and $3.59. July 2019 corn futures closed at $3.61, down 6 cents since last Friday. May/Jul and May/Dec future spreads were 10 and 29 cents.

Nationally, the Crop Progress report estimated corn planted at 6% compared to 3% last week, 5% last year, and a 5-year average of 12%. In Tennessee, the Crop Progress report estimated corn planted at 24% compared to 16% last week, 27% last year, and a 5-year average of 30%; and corn emerged at 9% compared to 2% last week, 1% last year, and a 5-year average of 5%. In Tennessee, September 2019 corn cash forward contracts averaged $3.56 with a range of $3.35 to $3.74. December 2019 corn futures closed at $3.80, down 6 cents since last Friday. Downside price protection could be obtained by purchasing a $3.90 December 2019 Put Op-tion costing 29 cents establishing a $3.61 futures floor.

Soybeans

Net sales reported by exporters were up compared to last week at 21.9 million bushels for the 2018/19 marketing year and 0.8 million bushels for the 2019/20 marketing year. Exports for the same period were down 16% compared to last week at 14.6 million bushels. Soybean export sales and commitments were 88% of the USDA estimated total annual exports for the 2018/19 marketing year (September 1 to August 31), compared to a 5-year average of 96%. Average soybean basis strengthened at Memphis, North-west Barge Points, and Northwest Tennessee and weakened at Upper-middle Tennessee. Basis ranged from 45 under to 1 over the

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Crop Comments by Dr. Aaron Smith

May futures contract at elevators and barge points. Average basis at the end of the week was 24 under the May futures contract. May 2019 soybean futures closed at $8.53, down 27 cents since last Friday. For the week, May 2019 soybean futures traded be-tween $8.52 and $8.83. May soybean-to-corn price ratio was 2.43 at the end of the week. July 2019 soybean futures closed at $8.67, down 27 cents since last Friday. May/Jul and May/Nov future spreads were 14 and 34 cents.

Nationally, the Crop Progress report estimated soybeans planted at 1% compared to 2% last year and a 5-year average of 2%. In Tennessee, the Crop Progress report estimated soybeans planted at 1% compared to 1% last year and a 5-year average of 1%. In Tennessee, October/November 2019 soybean cash contracts average $8.60 with a range of $8.26 to $8.97. November 2019 soy-bean futures closed at $8.87, down 26 cents since last Friday. Downside price protection could be achieved by purchasing a $9.00 November 2019 Put Option which would cost 48 cents and set an $8.52 futures floor. Nov/Dec 2019 soybean-to-corn price ratio was 2.33 at the end of the week.

Cotton

Net sales reported by exporters were up compared to last week at 239,000 bales for the 2018/19 marketing year and 48,900 bales for the 2019/20 marketing year. Exports for the same time period were down 7% compared to last week at 318,000 bales. Upland cotton export sales were 98% of the USDA estimated total annual exports for the 2018/19 marketing year (August 1 to July 31), compared to a 5-year average of 97%. Delta upland cotton spot price quotes for April 25 were 75.07 cents/lb (41-4-34) and 75.57 cents/lb (31-3-35). Adjusted World Price (AWP) decreased 0.20 cents to 68.68 cents. May 2019 cotton futures closed at 76.75, down 0.56 cents since last Friday. For the week, May 2019 cotton futures traded between 75.77 and 77.86 cents. May/Jul and May/Dec cotton futures spreads were 0.95 cents and -0.56 cents. July 2019 cotton futures closed at 77.7, down 0.57 cents since last Friday.

Nationally, the Crop Progress report estimated cotton planted at 9% compared to 7% last week, 10% last year, and a 5-year aver-age of 9%. In Tennessee, the Crop Progress report estimated cotton planted at 1% compared to 0% last week, 0% last year, and a 5-year average of 1%. December 2019 cotton futures closed at 76.19, down 0.86 cents since last Friday. Downside price protection could be obtained by purchasing a 77 cent December 2019 Put Option costing 4.32 cents establishing a 72.68 cent futures floor.

Wheat

Wheat net sales reported by exporters were up compared to last week at 15.6 million bushels for the 2018/19 marketing year and 8.3 million bushels for the 2019/20 marketing year. Exports for the same time period were up 59% from last week at 29.1 million bushels.

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Crop Comments by Dr. Aaron Smith

Wheat export sales were 99% of the USDA estimated total annual exports for the 2018/19 marketing year (June 1 to May 31), com-pared to a 5-year average of 104%. May 2019 wheat futures closed at $4.35, down 9 cents since last Friday. May 2019 wheat fu-tures traded between $4.28 and $4.44 this week. May wheat-to-corn price ratio was 1.24. May/Jul and May/Sep future spreads were 7 cents and 15 cents.

Nationally, the Crop Progress report estimated winter wheat condition at 62% good-to-excellent and 8% poor-to-very-poor; winter wheat headed at 9% compared to 6% last week, 12% last year, and a 5-year average of 18%; and spring wheat planted at 5% com-pared to 2% last week, 3% last year, and a 5-year average of 22%. In Tennessee, winter wheat condition was estimated at 62% good-to-excellent and 8% poor-to-very poor; winter wheat jointing at 87% compared to 78% last week, 88% last year, and a 5-year average of 78%; and winter wheat headed at 21% compared to 5% last week, 9% last year, and a 5-year average of 17%. In Tennes-see, June/July 2019 wheat cash contracts ranged from $4.28 to $4.72 for the week. July 2019 wheat futures closed at $4.42, down 6 cents since last Friday. Downside price protection could be obtained by purchasing a $4.50 July 2019 Put Option costing 21 cents establishing a $4.29 futures floor. September 2019 wheat futures closed at $4.50, down 4 cents since last Friday.

Additional Information: Links for data presented: U.S. Export Sales - https://apps.fas.usda.gov/export-sales/esrd1.html USDA FAS: Weekly Export Performance Indicator – https://apps.fas.usda.gov/esrquery/esrpi.aspx EIA: Weekly ethanol Plant Production - https://www.eia.gov/dnav/pet/pet_pnp_wprode_s1_w.htm EIA: Weekly Supply Estimates - https://www.eia.gov/dnav/pet/pet_sum_sndw_a_EPOOXE_sae_mbbl_w.htm Upland Cotton Reports - https://www.fsa.usda.gov/FSA/epasReports?area=home&subject=ecpa&topic=fta-uc Tennessee Crop Progress - https://www.nass.usda.gov/Statistics_by_State/Tennessee/Publications/Crop_Progress_&_Condition/ U.S. Crop Progress - http://usda.mannlib.cornell.edu/MannUsda/viewDocumentInfo.do?documentID=1048 USDA AMS: Market News - https://www.ams.usda.gov/market-news/search-market-news

If you would like further information or clarification on topics discussed in the crop comments section or would like to be added to our free email list please contact me at aaron.smith@utk.edu.

Friday, April 19, 2019 — Thursday, April 25, 2019

Friday Monday Tuesday Wednesday Thursday

Low High- Low High Low High Low High Low High

No. 2 Yellow Soybeans ———————–——————————————— $/bushel ———————————————————

Memphis ——— 8.63-8.67 8.48-8.52 8.41-8.45 8.49-8.51

N.W. B.P. ——— 8.66-8.67 8.51-8.52 8.46-8.50 8.49-8.55

N.W. TN ——— 8.33-8.35 8.18-8.32 8.11-8.17 8.14-8.18

Upper Md. ——— 8.49-8.53 8.39-8.47 8.31-8.35 8.29-8.35

Yellow Corn

Memphis ——— 3.69-3.73 3.65-3.69 3.61-3.67 3.64-3.68

N.W. B.P. ——— 3.71-3.72 3.67-3.68 3.63-3.65 3.65-3.66

N.W. TN ——— 3.55-3.63 3.52-3.59 3.48-3.56 3.48-3.53

Upper Md. ——— 3.57-3.65 3.54-3.63 3.52-3.58 3.45-3.59

Wheat

Memphis ——— ——— ——— ——— ———

Cotton

Memphis ——— 73.97-75.72 73.41-75.16 72.62-74.37 73.82-75.57

Prices Paid to Farmers by Elevators

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Cattle Receipts: This week: 5, 804 (8) Week ago: 7,355 (8) Year ago: 7,949 (11)

This Week Last Week Year Ago

Low High Weighted Average Weighted Average Weighted Average

—————————————————————— $/cwt ——————————————————————

Steers: Medium/Large Frame #1-2

300-400 lbs 155.00 190.00 176.95 174.48 176.73

400-500 lbs 149.00 181.00 167.15 165.32 165.79

500-600 lbs 144.00 178.00 162.66 159.40 154.19

600-700 lbs 130.00 164.00 147.42 147.13 145.38

700-800 lbs 119.00 146.00 136.44 130.85 131.53

Steers: Small Frame #1-2

300-400 lbs 145.00 170.00 162.17 167.97 172.83

400-500 lbs 130.00 165.00 150.51 156.65 151.39

500-600 lbs ——— ——— ——— ——— 145.05

600-700 lbs ——— ——— ——— ——— 129.23

Steers: Medium/Large Frame #2-3

300-400 lbs 151.00 180.00 167.23 161.60 161.48

400-500 lbs 140.00 174.00 159.37 153.04 157.77

500-600 lbs 130.00 162.50 149.82 147.31 142.35

600-700 lbs 125.00 150.00 138.34 138.64 133.42

700-800 lbs 116.00 135.00 122.28 124.87 119.67

Holstein Steers

300-400 lbs 81.00 90.00 87.91 78.12 ——

500-600 lbs ——— ——— ——— 90.25 85.62

700-800 lbs ——— ——— ——— ——— 76.54

Slaughter Cows & Bulls

Breakers 75-80% 43.00 53.66 53.34 56.02 65.00

Boners 80-85% 56.72 53.98 57.87 47.00 69.00

Lean 85-90% 37.00 51.00 44.44 44.22 50.57

Bulls YG 1 74.50 85.50 79.45 76.45 81.39

Heifers: Medium/Large Frame #1-2

300-400 lbs 132.00 168.00 150.78 147.16 153.06

400-500 lbs 128.00 159.50 145.10 143.86 144.49

500-600 lbs 118.00 152.00 139.20 137.02 133.52

600-700 lbs 110.00 142.00 128.40 129.66 124.29

Heifers: Small Frame #1-2

300-400 lbs 132.50 150.00 139.59 144.86 146.74

400-500 lbs ——— ——— ——— 133.92 127.24

500-600 lbs 125.00 130.00 128.19 119.73 114.00

600-700 lbs ——— ——— ——— ——— ——

Heifers: Medium/Large Frame #2-3

300-400 lbs 120.00 162.50 145.12 139.36 141.31

400-500 lbs 108.00 152.50 135.28 135.64 134.17

500-600 lbs 110.00 137.50 128.05 126.09 125.33

600-700 lbs 115.00 128.00 122.05 117.68 117.25

Prices on Tennessee Reported Livestock Auctions for the week ending April 26, 2019

7

85

105

125

145

165

185

Tennessee 700-800 lbs. M-1 Steers Prices2018, 2019 and 5-year average

2013/2017 Avg 2018 2019

8595

105115125135145155

5-Area Finished Cattle Prices2018, 2019 and 5-year average

201 3/20 17 Avg 201 8 201 9

35455565758595

105

Tennessee Slaughter Cow PricesBreakers 75-80%

2018, 2019 and 5-year average

2013/2017 Avg 2018 2019

100120140160180200220

Tennessee 500-600 lbs. M-1 Steer Prices

2018, 2019 and 5-year average

2013/2017 Avg 2018 2019

Futures Settlement Prices: Crops & Livestock

Corn: https://www.cmegroup.com/trading/agricultural/grain-and-oilseed/corn.html

Soybeans: https://www.cmegroup.com/trading/agricultural/grain-and-oilseed/soybean.html

Wheat: https://www.cmegroup.com/trading/agricultural/grain-and-oilseed/wheat.html

Soybean Meal: https://www.cmegroup.com/trading/agricultural/grain-and-oilseed/soybean-meal.html

Cotton: https://www.theice.com/products/254/Cotton-No-2-Futures/data?marketId=5352193

Live Cattle: https://www.cmegroup.com/trading/agricultural/livestock/live-cattle.html

Feeder Cattle: https://www.cmegroup.com/trading/agricultural/livestock/feeder-cattle.html

Lean Hogs: https://www.cmegroup.com/trading/agricultural/livestock/lean-hogs.html

Class III Milk: https://www.cmegroup.com/trading/agricultural/dairy/class-iii-milk.html

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East Tennessee Livestock Center, Sweetwater, TN April 24, 2019 Video lot 1- 2 loads out of 170 mostly black/black white face 95% large and medium frame #1 medium flesh vaccinated and dewormed steers weighing est. 830 lbs. sold for 138.00 per cwt. Video lot 2- 1 load out of 58 mostly black/black white face 95% large and medium frame #1 medium to medium plus flesh dou-ble-vaccinated and dewormed steers weighing est. 840 lbs. sold for 136.50 per cwt. Video lot 3- 1 load out of 76 seventy-five percent black/black white face 95% large and medium frame #1 medium flesh dou-ble-vaccinated and dewormed heifers weighing est. 750 lbs. sold for 125.00 per cwt. Hardin County Stockyard-April, 24, 2019 1 load of 68 heifers, avg. wt. 720lb; M&L 1-2; Black/BWF Red/RWF CHX, 5 flesh; $133.75 1 load of 69 steers; avg. wt. 788lbs., M&L 1-2; Black/BWF, 5-6 flesh; $142.75 1 load of 108 steers; avg. wt. 940lbs.; M&L 1, Black/BWF Red/RWF CHX; 5 flesh; $133.50 Blue Grass Stockyards-April 23, 2019 1 load of 65 steers; mostly Blk/BWF, avg. wt. 765lbs.; $144.75 1 load of 120 steers; Blk/BWF, avg. wt. 820lbs.; $145.25 1 load of 116 steers; Blk/BWF, avg. wt. 880lbs.; $136.00

Columbia Graded Sheep and Goat Sale

Weighted Average Report for 04/22/19

Receipts: 479 (222 goats; 257 sheep) Last sale: 819

For complete report:

https://www.ams.usda.gov/mnreports/nv_ls320.txt

Graded Sales, Video Board Sales, Video Sales & Loads

Department of Agricultural and Resource Economics 314 Morgan Hall • 2621 Morgan Circle • arec.tennessee.edu

USDA / Tennessee Department of Agriculture Market News Service http://www.tennessee.gov/agriculture/article/ag-farms-market-news 1-800-342-8206

Self-Reported and Self-Graded Livestock Markets

Graded Sheep and Goat Sale