February 1, 2019 Tennessee Market Highlights Number: 5

FED CATTLE: Fed cattle trade was not well established at press. Asking prices were $125 to $126 on a live basis while bid prices were $121 to $123. The 5-area weighted average prices thru Thursday were $123.12 live, up $0.08 from last week and $198.59 dressed, up $2.10 from a week ago. A year ago prices were $125.91 live and $199.90 dressed. Cattle feeders and packers have consistent-ly delayed weekly cattle trade until the end of the week for several consecutive weeks. Cattle feeders are holding onto hopes of a bull market (higher prices) while packers think a bear market (lower prices) is on the horizon. Neither a bull nor a bear market has materialized and both entities appear to be fighting the wind. Cattle feeders have their eyes set on year ago prices which nearly reached $130 based on the 5-area weighted average price during the third week of February and stayed near $126 or higher through the end of March. The key this year will be for cattle feeders to main-tain prices in the mid $120 area or higher April and into May. The little bit of leverage they have now will help. BEEF CUTOUT: At midday Friday, the Choice cutout was $214.07 down $1.32 from Thursday and down $3.33 from last Friday. The Select cutout was $213.18 up $0.30 from Thursday and up $0.89 from last Friday. The Choice Select spread was $0.89 compared to $5.11 a week ago. The weekly percentage of steers and heif-ers grading Choice during 2018 ranged from 69.6 percent to 73.3 percent with only three weeks falling below the 70 percent Choice mark. In 2016, the weekly percent-age of steers and heifers grading Choice ranged from 68.0 percent to 72.2 percent with 26 weeks of sub-70 percent. Compare that to the 2014 production year when the weekly percentage of steers and heifers grading Choice never exceeded 68 percent.

One could continue looking backwards and see the percentage continuing to decline. While the percentage of cattle grading Choice has increased, the percentage of cattle grading Select has decreased. The range in 2018 for the percentage of steers and heifers grading Select ranged from 14.8 to 19.9 percent compared to 16.8 to 22.0 percent in 2016 and 22.7 to 28.9 percent in 2014. Choice has taken some of the Select share but Prime has been the biggest gain-er. The weekly percentage of steers and heifers grading Prime in 2018 maxed out at 11.0 percent compared to 6.9 and 5.5 per-cent in 2016 and 2014 respectively. OUTLOOK: Based on Tennessee weekly auction market averages, steer prices were $4 to $6 higher than last week while heifer prices were $2 to $6 higher. Similarly, slaughter cow prices were $2 to $3 higher than a week ago while slaughter bull prices were $4 to $5 higher. The extremely cold temperatures continued to keep some pro-ducers from moving cattle this week re-sulting in limited receipts at Tennessee auc-tions. However, the January price jump that was discussed in last week’s comments became reality this week. The increase in auction prices this week compared to last week had little to do with stronger feeder cattle futures as futures continue to trade sideways as they have done for three months. The most likely factor that sup-ported prices was stocker producers attempting to get a few spring grass cattle purchased prior to the seasonal price in-crease. Moving through February and March, lightweight calf prices are expected to increase on a weekly basis and may reach an apex in Tennessee between $160 and $164 per hundredweight for a 525 pound steer. Thus the anticipated $10 to $14 per hundredweight price increase from this week through the next couple of months could result in stocker producers paying an additional $50 or more per head compared to this week’s prices. The contra-

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

Slaughter Cows

$2 to $3 higher

Slaughter Bulls

$4 to $5 higher

Feeder Steers

$4 to $6 higher

Feeder Heifers

$2 to $6 higher

Feeder Cattle Index

Wednesday’s index: 142.57

Fed Cattle

The 5-area live price of $123.12 was up $0.08. The dressed price of $198.59 was up $2.10.

Corn

March closed at $3.78 a bushel, down 2 cent since last Friday.

Soybeans

March closed at $9.17 a bushel, down 8 cents since last Friday.

Wheat

March closed at $5.24 a bushel, up 4 cents since last Friday.

Cotton

March closed at 73.64 cents per lb, down 0.49 cents since last Friday.

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ry argument to purchasing this early would be the cost of feed-ing those animals through February. However, cattle producers who planted winter annuals last fall may have inexpensive standing forage ready for harvest which may lend itself to sav-ing a little on the purchase side. Additionally, winter annual forage production should increase the next several days as day-time temperatures are expected to reach the 60 degree mark while overnight temperatures are expected to be above 50 de-grees for three consecutive nights. Cow-calf producers should consider the expected price increase the next couple of months to determine if selling now or delaying marketings into March would be advantageous. ASK ANDREW, TN THINK TANK: The annual January 1 Cattle Inventory report is generally available by the end of January, but the partial government shutdown has resulted in the report being delayed until the end of February. This may or may not be a big deal to many readers of this article, but what it does mean is that the market will go another month trading without this vital information. The USDA has begun rescheduling report release dates and is in the process of backfilling data that was missed during the lapse in funding. The USDA will not be able to backfill all of the data and reports but will do so as data and time permits. Looking forward and barring another shutdown, the impact from missing reports to the overall cattle and beef markets should be minimal. It could have led to increased vola-tility in the market and could result in correctional moves over the next couple of months if reports do not align with expecta-tions. Please send questions and comments to agriff14@utk.edu or send a letter to Andrew P. Griffith, University of Tennessee, 314B Morgan Hall, 2621 Morgan Circle, Knoxville, TN 37996.

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Livestock Comments by Dr. Andrew Griffith

FRIDAY’S FUTURES MARKET CLOSING PRICES: Friday’s closing prices were as follows: Live/fed cattle –February $125.45 +0.65; April $126.28 -0.03; June $116.15 +0.20; Feeder cattle –March $142.53 -0.03; April $144.00 -0.28; May $144.60 -0.20; August $148.70 -0.23; March corn closed at $3.78 up $0.02 from Thurs-day.

Crop Comments by Dr. Aaron Smith

Overview Corn, cotton, and soybeans were down; wheat was mixed for the week.

In January, December 2019 corn futures prices moved sideways opening the month at $3.97 ½ and closing at $4.00, up 2 ½ cents for the month. The Janu-ary trading range was $3.96 ½ to $4.06. November 2019 soybean futures prices increased, opening the month at $9.36 and closing at $9.55 ½, up 19 ½ cents for the month. The January trading range was $9.35 to $9.65. Decem-ber 2019 cotton futures prices moved mostly sideways opening the month at 73.38 and closing at 74.20, up 0.82 cents for the month. The January trading range was 72.24 to 75.20. July 2019 wheat futures prices moved sideways, opening the month at $5.18 and closing at $5.27, up 9 cents for the month. The January trading range was $5.17 to $5.40 ¼.

Next week will be the start of the projected (spring) price determination period for corn, soybean, and cotton crop insurance poli-cies. A simple average of the daily closing price for the harvest contract in the month of February is used to determine the price for crop insurance guarantees.

Due to the partial government shutdown, the USDA extended the Market Facilitation Program (MFP) signup to February 14, 2019. The deadline to report production for the MFP payments is May 1, 2019. The MFP payments are made to producers to assist in

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3

Crop Comments by Dr. Aaron Smith

mitigating the adverse effect of retaliatory tariffs on agricultural commodity prices. Payment rates are: $1.65/bu for soybeans; $0.14/bu for wheat; $0.06/lb for cotton; and $0.01/bu for corn. Payments are for 2018 production only.

USDA provided additional information this week regarding the schedule of report releases that were postponed due to the govern-ment shutdown. Export sales reports will be released January 31 through February 22, after which reports will resume on a regular schedule. Grain Stocks, Crop Production, Winter Wheat Seedings, and WASDE reports will be released February 8.

Corn

Ethanol production for the week ending January 25 was 1.012 million barrels per day, down 19,000 from the previous week. Etha-nol stocks were 23.980 million barrels, up 479,000 barrels. Corn net sales reported by exporters from December 14-20 were down from the previous week with net sales of 66.9 million bushels for the 2018/19 marketing year and 2.1 million bushels for the 2019/20 marketing year. Exports for the same time period were down 8% compared to the previous week at 35.4 million bushels. Corn export sales and commitments were 50% 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 54%. 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 15 under to 20 over the March futures contract with an average of even the March futures at the end of the week. March 2019 corn futures closed at $3.78 down 2 cents since last Friday. For the week, March 2019 corn futures traded between $3.75 and $3.81. May 2019 corn futures closed at $3.87, down 1 cent since last Friday. Mar/May and Mar/Dec future spreads were 9 and 24 cents.

In Tennessee, September 2019 corn cash forward contracts averaged $3.87 with a range of $3.76 to $4.04. December 2019 corn futures closed at $4.02, down 1 cent since last Friday. Downside price protection could be obtained by purchasing a $4.10 Decem-ber 2019 Put Option costing 30 cents establishing a $3.80 futures floor.

Soybeans

Net sales reported by exporters were down from the previous week with net sales of 87.9 million bushels for the 2018/19 mar-keting year and 0.5 million bushels for the 2019/20 marketing year. Exports for the same period were down 54% compared to the previous week at 22.5 million bushels. Soybean export sales and commitments were 58% of the USDA estimated total annual ex-ports for the 2018/19 marketing year (September 1 to August 31), compared to a 5-year average of 80%. Average soybean basis

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Crop Comments by Dr. Aaron Smith

strengthened at Northwest Barge Points, Memphis, Northwest, and Upper-middle Tennessee. Basis ranged from 61 under to 14 under the March futures contract at elevators and barge points. Average basis at the end of the week was 38 under the March fu-tures contract. March 2019 soybean futures closed at $9.17, down 8 cents since last Friday. For the week, March 2019 soybean futures traded between $9.13 and $9.31. March soybean-to-corn price ratio was 2.43 at the end of the week. May 2019 soybean futures closed at $9.31, down 8 cents since last Friday. Mar/May and Mar/Nov future spreads were 14 and 40 cents.

In Tennessee, October/November 2019 soybean cash contracts average $9.19 with a range of $8.96 to $9.39. November 2019 soy-bean futures closed at $9.57, down 7 cents since last Friday. Downside price protection could be achieved by purchasing a $9.60 November 2019 Put Option which would cost 51 cents and set a $9.09 futures floor. Nov/Dec 2019 soybean-to-corn price ratio was 2.38 at the end of the week.

Cotton

Net sales reported by exporters were up from last week with net sales of 373,100 bales for the 2018/19 marketing year and 4,000 bales for the 2019/20 marketing year. Exports for the same time period were 207,100 bales, up 34% from last week. Upland cotton export sales were 74% 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 66%. Delta upland cotton spot price quotes for January 31 were 71.15 cents/lb (41-4-34) and 72.90 cents/lb (31-3-35). Adjusted World Price (AWP) increased 0.17 cents to 65.07 cents. March 2019 cotton futures closed at 73.64, down 0.49 cents since last Friday. For the week, March 2019 cotton futures traded between 73.15 and 74.85 cents. Mar/May and Mar/Dec cotton futures spreads were 1.29 cents and 0.48 cents. May 2019 cotton futures closed at 74.93, down 0.64 cents since last Friday.

December 2019 cotton futures closed at 74.12, down 0.31 cents since last Friday. Downside price protection could be obtained by purchasing a 75 cent December 2019 Put Option costing 4.81 cents establishing a 70.19 cent futures floor.

Wheat

Wheat net sales reported by exporters were down from the previous week with net sales of 19.3 million bushels for the 2018/19 marketing year and 2.8 million bushels for the 2019/20 marketing year. Exports for the week were down 22% compared to the pre-vious week at 18.8 million bushels. Wheat export sales were 64% of the USDA estimated total annual exports for the 2018/19 mar-keting year (June 1 to May 31), compared to a 5-year average of 81%. March 2019 wheat futures closed at $5.24, up 4 cents since

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Crop Comments by Dr. Aaron Smith

last Friday. March 2019 wheat futures traded between $5.10 and $5.26 this week. March wheat-to-corn price ratio was 1.39. Mar/May and Mar/Jul future spreads were 4 cents and 8 cents. May 2019 wheat futures closed at $5.28, up 1 cent since last Friday.

In Tennessee, June/July 2019 wheat cash contracts ranged from $5.10 to $5.51 for the week. July 2019 wheat futures closed at $5.32, down 1 cent since last Friday. Downside price protection could be obtained by purchasing a $5.40 July 2019 Put Option costing 32 cents establishing a $5.08 futures floor.

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, January 25, 2019 — Thursday, January 31, 2019

Friday Monday Tuesday Wednesday Thursday

Low High Low High Low High Low High Low High

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

Memphis 9.01-9.09 9.01-9.09 8.97-9.05 8.99-9.07 ———

N.W. B.P. 9.00-9.00 8.98-8.98 8.96-8.96 8.97-8.97 8.94-8.94

N.W. TN 8.35-8.80 8.63-8.78 8.59-8.74 8.61-8.76 8.58-8.76

Upper Md. 8.85-8.90 8.83-8.88 8.79-8.84 8.80-8.84 8.84-8.85

Yellow Corn

Memphis 3.86-3.90 3.90-4.00 3.87-3.97 3.93-4.01 ———

N.W. B.P. 3.84-3.85 3.88-3.93 3.86-3.87 3.90-3.91 3.87-3.92

N.W. TN 3.65-3.80 3.65-3.80 3.62-3.77 3.66-3.81 3.62-3.81

Upper Md. 3.75-3.80 3.75-3.80 3.72-3.77 3.74-3.79 3.76-3.77

Wheat

Memphis 5.20-5.20 5.19-5.19 ——— 5.17-5.17 ———

Cotton ———————–——————————————— ₵/pound ———————————————————–———

Delta 71.38-73.13 71.10-72.85 70.90-72.65 71.11-72.86 71.15-72.90

Prices Paid to Farmers by Elevators

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Cattle Receipts: This week: 5,275 (8) Week ago: 3,683 (9) Year ago: 9,537 (11)

This Week Week Ago Year Ago

Low High Weighted Average Weighted Average Weighted Average

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

Steers: Medium/Large Frame #1-2

300-400 lbs 143.00 182.50 160.29 150.36 171.65

400-500 lbs 139.00 174.00 154.14 148.14 168.49

500-600 lbs 130.00 164.00 146.70 142.42 155.65

600-700 lbs 126.00 145.00 136.96 133.21 142.64

700-800 lbs 120.00 138.00 130.74 124.86 134.05

Steers: Small Frame #1-2

300-400 lbs ——— ——— ——— ——— 159.28

400-500 lbs 140.00 146.00 142.86 137.57 139.59

500-600 lbs 80.00 130.00 111.43 132.25 ———

600-700 lbs ——— ——— ——— ——— ———

Steers: Medium/Large Frame #2-3

300-400 lbs 125.00 162.50 140.53 135.45 158.87

400-500 lbs 117.00 151.00 137.70 138.64 150.59

500-600 lbs 120.00 143.00 133.45 132.83 138.04

600-700 lbs 110.00 125.00 119.30 126.70 130.15

700-800 lbs 110.00 129.00 116.40 ——— 118.67

Holstein Steers

300-400 lbs ——— ——— ——— ——— 69.01

500-600 lbs ——— ——— ——— ——— 85.72

700-800 lbs ——— ——— ——— ——— 64.29

Slaughter Cows & Bulls

Breakers 75-80% 43.00 49.50 45.86 53.33 64.00

Boners 80-85% 50.26 47.36 55.41 43.00 64.00

Lean 85-90% 33.00 45.50 39.71 36.49 48.20

Bulls YG 1 62.50 78.00 70.75 67.01 74.89

Heifers: Medium/Large Frame #1-2

300-400 lbs 115.00 167.50 130.79 131.32 150.03

400-500 lbs 114.00 146.00 127.87 123.27 144.62

500-600 lbs 110.00 134.00 122.53 118.46 133.85

600-700 lbs 104.00 125.00 116.94 112.12 126.24

Heifers: Small Frame #1-2

300-400 lbs 131.00 140.00 135.14 126.57 133.69

400-500 lbs 110.00 112.50 111.29 109.08 125.15

500-600 lbs 110.00 111.00 107.08 ——— 116.98

600-700 lbs ——— ——— ——— ——— 114.87

Heifers: Medium/Large Frame #2-3

300-400 lbs 110.00 155.00 122.49 121.01 137.65

400-500 lbs 106.00 139.00 119.18 116.67 131.80

500-600 lbs 106.00 120.00 115.98 109.93 123.20

600-700 lbs 94.00 116.00 106.19 105.67 118.53

Prices on Tennessee Reported Livestock Auctions for the week ending February 1, 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

2013/2017 Av g 2018 2019

35455565758595

105

Tennessee Slaughter Cow PricesBreakers 75-80%

2018, 2019 and 5-year average

2013/2017 Avg 2018 2019

100

120

140

160

180

200

220

Tennessee 500-600 lbs. M-1 Steer Prices2018, 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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Columbia Graded Sheep and Goat Sale Weighted Average Report for 01/28/2019 Receipts: 284 (178 goats; 106 sheep) Last Sale: 762 Last Year: 410 For complete report: https://www.ams.usda.gov/mnreports/nv_ls320.txt

Graded Sales, Video Board Sales, Video Sales & Loads Graded Sheep and Goat Sales

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