Livestock producers benefitted this winter from stable corn prices, the result of a large fall harvest and struggling demand.
So far this quarter, the US corn market has reflected the balance of last fall’s huge harvest, good overseas buying interest and accelerated ethanol usage, said the Livestock Marketing Information Center’s Livestock Monitor.
The 15.1-billion-bushel corn crop, an 11.3% increase over the 2015 crop, kept prices on the defensive over the last half of last year – first as it became apparent the crop would be very large and later as the expectations became reality.
Using Omaha corn prices as a proxy for Western Corn Belt values, prices bottomed last August at an average monthly price of $2.98 a bushel. Over the next four months, prices were able to move up $0.10.
Since November, Omaha corn prices have added another $0.30 a bushel. For comparison, Omaha corn prices from November 2015 to February 2016 went down $0.08.
CORN USE FADES
Corn export volumes were up more than 80% from a year earlier during the 2016 harvest, the Livestock Monitor said. Weekly export data for the December 2016-through-February 2017 quarter shows exports up about 50% from the same period a year earlier.
Domestically, corn consumed by food and other industrial processes like ethanol and corn sweeteners during the harvest quarter was up 54 million bushels from a year earlier. This compared with a 16-million-bushel increase during the harvest quarter of 2015.
Industrial corn use in January, the latest reported month, was up 7% from a year earlier, a larger year-over-year percentage increase than was posted during the September-through-November quarter.
PRICE POTENTIAL
The USDA’s World Agriculture Supply and Demand Estimates for corn implies usage gains in the second half of this crop year will not be as large as in the first half. In fact, corn export projections for the second half of the crop year come up short of a year earlier by about 100 million bushels or 5% to 10%.
Corn used domestically for food and industrial products is forecast to maintain an increase in the next six months similar to that registered in the first half of the year.
Last spring, Omaha corn prices moved up $0.20 a bushel from the winter quarter, but if usage gains decelerate in April, May and June, prices may struggle to increase by more than $0.10 to $0.15 on a quarterly average.
CASH CATTLE QUIET
No trading was reported Tuesday in cash cattle markets with asking prices of mostly $132 to $134 per cwt on a live basis and $215 dressed. Reports of light trade at $208 dressed in Iowa point to weaker markets this week.
Cash cattle markets last week were steady to up $5 with trading at $128 to $134 per cwt in the Southern Plains and up $2.50 to $5 in Nebraska at $133 to $136.50, mostly $134. Dressed-basis trading was up $2 at $212.
Average fed cattle exchange auction prices last Wednesday were $5.00 per cwt higher at $133.31, versus $128.31 a week earlier.
The USDA’s choice cutout Tuesday was down $0.34 per cwt at $219.57, while select was off $0.60 at $213.02. The choice/select spread widened to $6.55 from $6.29 with 77 loads of fabricated product sold into the spot market.
The CME Feeder Cattle Index for the seven days ended Monday was $133.26 per cwt, up $0.17. This compares with Tuesday’s Mar settlement of $132.35, up $0.20, and the Apr settlement of $132.95, down $0.15.