Plains states and Midwestern cattle feeders are benefitting from lower feed costs as crop production prospects look at least as good as last year, and export markets remain competitive.
Weekly corn prices in Omaha, Neb., for the first two weeks of this year are slightly below those of a year earlier and are running well below the 2011-2015 average.
For the first two weeks of the year, weekly corn prices in Omaha averaged $3.37 and $3.34 a bushel, respectively. These were $0.08 ½ and $0.06 a bushel below last year’s $3.45 ½ and $3.40. However, this year’s prices were $2.064 a bushel and $2.093, or 38.0% and 38.5%, below the five-year average of $5.434 and $5.433, respectively.
The futures market doesn’t show any confidence in the market remaining at such low numbers, however.
Thursday’s market settled with each successive delivery month through Jul being higher. The nearby Mar contract settled at $3.66 ¼, compared with the Jul contract at $4.07.
That’s a $0.40 3/4, or 11.1%, gain through July, and if weekly Omaha corn prices rise as much, feeders could be looking at corn costs of $3.71 a bushel by summer. Any weather scare could send prices even higher.
If feedlot managers have purchased their corn that far in advance, they won’t have to face those cost increases. If they haven’t, they’re betting on large plantings and good growing weather to help them out.
If the US dollar retains its recent strength against other currencies, US corn could back up in the pipeline and pressure corn prices, analysts said. A higher dollar makes dollar-denominated commodities, like US exports, higher for the buyer. The natural tendency for them is to pull back from the market, and go elsewhere for their corn needs.
There has been a definite surge following the election of Donald Trump to be the next US president.
However, the Index has dropped off in the last three weeks as the euphoria over what the market thinks a President Trump will do with the economy wears thin waiting for actual administrative action or legislation.
But the rise in the US Dollar Index cannot be laid solely at the feet of the election results. Since mid-2014, the Index has risen steeply, a result of the US’ relative economic growth out of the Great Recession over that of most other countries of the world.
CASH CATTLE TRADE HIGHER
Average fed exchange auction prices Wednesday were $1.35 per cwt higher at $120.52, versus $119.17 a week earlier.
Cash cattle then traded lightly at $120 to $121.25 on a live basis, steady to up $1.25 to $2. More trade was reported Thursday from $121 to $123, mostly $122, up $3.00 from last week.
Dressed-basis trades were reported at $193 to $194 per cwt against the previous week’s $186, a gain of $7 to $8.
The USDA’s choice cutout Thursday was down $1.62 per cwt at $191.60 per cwt, while select was off $0.57 at $187.49. The choice/select spread narrowed to $4.11 from $5.16 with 82 loads of fabricated product sold into the spot market.
The CME Feeder Cattle Index for the seven days ended Wednesday was $132.25 per cwt, down $0.12. This compares with Thursday’s Jan settlement of $131.95, up $0.95.