With gasoline consumption dropping off as people observe stay-at-home orders from various states, and others stay home because they’ve been laid off, are sick or for other health-related reasons, it’s gotten cheaper to feed corn to cattle.
Weekly cash corn prices in Omaha dropped over the last two weeks as buying interest from various points declined. And to add another nail to the coffin, the head of the Renewable Fuels Assn., Geoff Cooper told Reuters Tuesday that US ethanol companies are on track to shut down about 2 billion gallons of production this year.
That means a reduction in the amount of distiller’s grains that will be available to cattle feeders, but corn prices are going down. Feedlot nutritionists will be tasked with reformulating rations to accommodate the changing availability/prices of corn versus distiller’s grains.
WEEKLY PRICES DROP
Data from the USDA’s Agricultural Marketing Service and compiled by the Livestock Marketing Information Center in Denver showed that weekly average Omaha cash corn prices went from $3.78 a bushel three weeks ago to $3.25 ½ last week, falling well below last year’s $3.70 and the 2014-2018 average of $3.69.
It is interesting to note that May Globex corn futures moved up on the day Tuesday after the Renewable Fuels Assn., comments.
Southern Plains weekly cash corn prices also dropped the last two weeks, but the move was not as dramatic as it was in Omaha. Nor have prices dropped markedly below those of last year or the previous five-year average.
Last week’s average price reported by the LMIC was $3.77 a bushel, down from $4.17 two weeks previous. The new price was below last year’s $4.03 a bushel and the 2014-2018 average of $4.09.
Southern Plains sorghum prices also are down as they often track closely with corn once production levels are known. Last week’s price was listed by the LMIC as $5.68 ½ a bushel, down from $6.03 two weeks earlier and down from last year’s $6.41 ½ and down from the 2014-2018 average of $6.51.
FEEDLOT PLACEMENTS DOWN, NEAR AVERAGE
Corn demand from feedlots may be down from previous years as feedlots take a step back from uncertain fed cattle and beef markets amid the uncertainty over the Covid-19 Coronavirus pandemic. Consumers have stripped supermarket meat cases bare in preparation for stay-at-home orders, causing meat buyers to scramble to restock, which has pushed wholesale meat prices sharply higher.
However, many market analysts see the buying as temporary, and that once the stores are restocked, the buying panic could be over, and prices will drop faster than they went up.
January and February feedlot placements were very close to the 2014-2018 average, although they were below last year. There is a strong seasonal tendency for placements to rise in March, but it may take something out of the ordinary for placements to keep falling as corn prices drop.
CATTLE, BEEF RECAP
Cash cattle traded in Iowa Tuesday at $118 per cwt on a live basis, up $5 from late-week action in the Plains last week. Some dressed-basis trading also was seen in Iowa at $188 per cwt, up $13 from the upper end of last week’s range in the Plains.
The USDA choice cutout Tuesday was down $1.01 per cwt at $256.31, while select was up $0.34 at $245.48. The choice/select spread narrowed to $10.83 from $12.18 with 84 loads of fabricated product sold into the spot market.
The CME Feeder Cattle index for the seven days ended Monday was $118.23 per cwt, up $2.08. This compares with Tuesday’s Mar contract settlement of $130.22, up $5.00, and the Apr settlement of $130.07, up $6.75.