January 25, 2019 Tennessee Market Highlights Number: 4

FED CATTLE: Fed cattle traded $1 lower compared to last week on a live basis. Pric-es on a live basis were mainly $123 while dressed prices were primarily $197. The 5-area weighted average prices thru Thursday were $123.04 live, down $1.96 from last week and $196.49 dressed, down $0.51 from a week ago. A year ago prices were $123.05 live and $194.00 dressed. Cattle feeders were able to hold the line this week as prices were mainly steady. The wet and cold pen conditions have cattle feeders on edge because it is negatively impacting feed efficiency and average daily gain. However, the same conditions could be one factor contributing to strong fin-ished cattle prices as slaughter weights are sure to be declining due to the unfavorable conditions. The conditions will eventually improve, but winter does not appear to be coming to an end anytime soon. This may continue to provide support for cattle pric-es in the near term, but industry partici-pants should not be surprised if prices fal-ter before the spring market provides sup-port. BEEF CUTOUT: At midday Friday, the Choice cutout was $212.87 down $0.35 from Thursday and up $4.53 from last Fri-day. The Select cutout was $212.29 up $0.15 from Thursday and up $2.70 from last Friday. The Choice Select spread was $5.11 compared to $3.28 a week ago. The latest World Agricultural Supply and Demand Estimates report was released in December. The January report was not re-leased due to the partial government shut-down. However, considering the December report, a lot of meat is going to be on the market in 2019. United States beef produc-tion for 2019 is projected at 27.848 billion pounds which is 846 million pounds more than 2018 projected production and nearly 1.6 billion more pounds than 2017 beef production. Domestic pork production is a

similar situation with the December report showing an expectation of 27.729 billion pounds of pork production in 2019 which is an increase of 1.4 billion pounds compared to 2018 and more than a 2.1 billion pound increase from 2017 pork production. Why stop at red meat? Broiler production is pro-jected to reach 42.787 billion pounds in 2019 representing a 574 million pound in-crease from 2018 and a 1.57 billion pound increase from 2017. This is a lot of meat and it has to be consumed domestically or internationally. Demand will determine prices. OUTLOOK: Based on weekly auction mar-ket average prices, steer and heifer prices were unevenly steady compared to last week while slaughter cow prices were $2 higher and slaughter bull prices were steady to $1 higher. Cattle receipts this week through reported Tennessee livestock auctions were about half of what they were the previous week. The reduction in cattle being marketed was largely due to unfavor-able weather conditions to get a trailer in the pasture. The bigger issue may have ac-tually been getting a loaded trailer out of the pasture which becomes a major issue with deeper and deeper mud. Another fac-tor that may have some producers hesitant to market calves is the failure of prices to experience their typical first of the year jump. Many producers have become accus-tomed to holding calves through December and marketing them in January. This has become a common practice for some due to tax reasons and more so for others to capitalize on a price increase that has oc-curred nine out of the last ten years (2008-2017 data) from December to January. Since the beginning of November, the weekly weighted average 500 to 600 pound steer price has ranged from $138 to $144 per hundredweight with a flat trend and nothing changed this week with an average price of $142. The current value of a 525 pound steer is about $760 per head while

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

Slaughter Cows

$2 higher

Slaughter Bulls

Steady to $1 higher

Feeder Steers

Unevenly steady

Feeder Heifers

Unevenly steady

Feeder Cattle Index

Wednesday’s index: 142.24

Fed Cattle

The 5-area live price of $123.04 was down $1.96. The dressed price of $196.49 was down $0.51.

Corn

March closed at $3.80 a bushel, down 1 cent since last Friday.

Soybeans

March closed at $9.25 a bushel, up 9 cents since last Friday.

Wheat

March closed at $5.20 a bushel, up 3 cents since last Friday.

Cotton

March closed at 73.89 cents per lb, up 0.24 cents since last Friday.

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the heifer mate at the same weight is only valued at $625 per head. The expectation would be for calf values to begin increas-ing slowly over the next couple of months and peak once spring grass is ready to graze. However, calf grazing operations may be hesitant to bid up grass cattle prices with the soft feeder cattle prices that are a drag on the market. One thing is certain, cur-rent calf values are unlikely to invoke any major changes by a cow-calf producer from the standpoint of expanding or con-tracting the cattle herd. ASK ANDREW, TN THINK TANK: The partial government shut-down rolls on impacting many facets of the government and the daily lives of many people. This partial shutdown also influ-ences agriculture in that many USDA reports have not been published which influences information transfer. In the short-run, the reduction in information has a small impact on markets and decision making. The longer reports go unpublished, the more influence the reduction in information has on decision making. Some reports that are in jeopardy from the cattle side include cattle slaughter by type, January Cattle on Feed, and January 1 Cattle Inventory. Despite many reports being delayed or canceled, the Agricultural Marketing Service continues to produce price reports so pricing is transparent across the indus-try. The issue is that market prices are influenced by infor-mation contained in many of the reports that are going un-published. Is this a major issue? It probably is not a major issue today, but it could become one a couple months down the road. 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 $126.05 +0.70; April $126.85 +0.38; June $116.70 -0.30; Feeder cattle –January $143.38 -0.40; March $143.63 -0.70; April $144.73 -0.65; May $145.08 -0.50; March corn closed at $3.80 up $0.03 from Thurs-day.

Crop Comments by Dr. Aaron Smith

Overview Corn and cotton were mixed; soybeans and wheat were up for the week.

On Friday, President Trump announced that a temporary deal to end the par-tial government shutdown had been reached. The temporary measure would fund the federal government to February 15. While this is welcome news to those affected by the shutdown, a long term solution, and the certainty it would afford government agencies and citizens, remains undefined. From an agricultural stand point, resumption of USDA reports (Export Sales, WASDE, Grain Stocks etc.), the ability of FSA to process loans and guarantees, and the implementation of the 2018 Farm Bill will resume (perhaps temporarily). Uncertainty remains beyond the February 15 deadline so markets will continue to wait for additional information.

December 2019 corn futures continue to trade in a 10 cent range $3.95 to $4.05. Limited movement has occurred outside this range since late November. New information contained in the Grain Stocks and WASDE reports or progress in trade talks have the potential to jolt the market outside of this range in either direction. Until then markets will continue to move sideways.

November soybeans have slowly ascended from mid-September lows. On September 18, the November soybean contract traded as low as $8.79 ¼. Today, November soybeans closed at $9.64 ¼, an 85 cent gain. Dry weather in parts of Brazil and optimism re-

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Crop Comments by Dr. Aaron Smith

garding export sales to China has fueled the five month rally. Given the current trajectory new six month highs could occur in the next three weeks.

December cotton has come off the early January low of 72.24, closing on Friday at 74.43 cents. December 2019 cotton futures pric-es are well below the highs from last summer (80-84 cents), however given the uncertainty regarding long-term price prospects, securing a price or reducing downside risk may be a prudent risk management decision.

July wheat futures continue to trade in a 30 cent price range ($5.20 to $5.50). Prices are well above last year’s prices at this time of year but well below prices available before planting when July 2019 futures were over $6.00.

Corn

Ethanol production for the week ending January 18 was 1.031 million barrels per day, down 20,000 from the previous week. Etha-nol stocks were 23.501 million barrels, up 150,000 barrels. Across Tennessee, average corn basis (cash price-nearby futures price) strengthened or remained unchanged at Memphis, Northwest Barge Points, Northwest, and Upper-middle Tennessee. Overall, basis for the week ranged from 15 under to 8 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 $3.80 down 1 cent since last Friday. For the week, March 2019 corn futures traded between $3.75 and $3.82. May 2019 corn futures closed at $3.88, down 2 cents since last Friday. Mar/May and Mar/Dec future spreads were 8 and 23 cents.

In Tennessee, September 2019 corn cash forward contracts averaged $3.88 with a range of $3.77 to $4.02. December 2019 corn futures closed at $4.03, unchanged since last Friday. Downside price protection could be obtained by purchasing a $4.10 December 2019 Put Option costing 30 cents establishing a $3.80 futures floor.

Soybeans

Average soybean basis strengthened at Northwest Barge Points, Memphis, Northwest, and Upper-middle Tennessee. Basis ranged from 61 under to 21 under the March futures contract at elevators and barge points. Average basis at the end of the week was 34 under the March futures contract. March 2019 soybean futures closed at $9.25, up 9 cents since last Friday. For the week, March

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Crop Comments by Dr. Aaron Smith

2019 soybean futures traded between $8.99 and $9.26. March soybean-to-corn price ratio was 2.43 at the end of the week. May 2019 soybean futures closed at $9.39, up 9 cents since last Friday. Mar/May and Mar/Nov future spreads were 14 and 39 cents.

In Tennessee, October/November 2019 soybean cash contracts average $9.17 with a range of $8.88 to $9.35. November 2019 soy-bean futures closed at $9.64, up 9 cents since last Friday. Downside price protection could be achieved by purchasing a $9.80 No-vember 2019 Put Option which would cost 61 cents and set a $9.19 futures floor. Nov/Dec 2019 soybean-to-corn price ratio was 2.39 at the end of the week.

Cotton

Delta upland cotton spot price quotes for January 24 were 70.39 cents/lb (41-4-34) and 72.14 cents/lb (31-3-35). March 2019 cotton futures closed at 74.13, up 0.24 cents since last Friday. For the week, March 2019 cotton futures traded between 72.75 and 74.29 cents. Mar/May and Mar/Dec cotton futures spreads were 1.44 cents and 0.30 cents. May 2019 cotton futures closed at 75.57, up 0.25 cents since last Friday.

December 2019 cotton futures closed at 74.43, down 0.34 cents since last Friday. Downside price protection could be obtained by purchasing a 75 cent December 2019 Put Option costing 4.8 cents establishing a 70.2 cent futures floor.

Wheat

March 2019 wheat futures closed at $5.20, up 3 cents since last Friday. March 2019 wheat futures traded between $5.14 and $5.29 this week. March wheat-to-corn price ratio was 1.37. Mar/May and Mar/Jul future spreads were 7 cents and 13 cents. May 2019 wheat futures closed at $5.27, up 4 cents since last Friday.

In Tennessee, June/July 2019 wheat cash contracts ranged from $5.18 to $5.65 for the week. July 2019 wheat futures closed at $5.33, up 5 cents since last Friday. Downside price protection could be obtained by purchasing a $5.40 July 2019 Put Option costing 33 cents establishing a $5.07 futures floor.

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Crop Comments by Dr. Aaron Smith

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 18, 2019 — Thursday, January 24, 2019

Friday Monday Tuesday Wednesday Thursday

Low High Low High Low High Low High Low High

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

Memphis 8.89-8.89 ——— 8.84-8.87 8.90-8.93 8.92-8.94

N.W. B.P. 8.85-8.85 ——— 8.77-8.77 8.87-8.87 8.95-8.95

N.W. TN 8.57-8.72 ——— 8.49-8.64 8.55-8.70 8.60-8.75

Upper Md. 8.77-8.82 ——— 8.69-8.74 8.75-8.80 8.85-8.85

Yellow Corn

Memphis 3.87-3.88 ——— 3.84-3.87 3.87-3.87 3.81-3.85

N.W. B.P. 3.82-3.82 ——— 3.79-3.79 3.79-3.79 3.82-3.82

N.W. TN 3.67-3.82 ——— 3.64-3.79 3.64-3.79 3.65-3.80

Upper Md. 3.77-3.77 ——— 3.74-3.74 3.74-3.79 3.75-3.80

Wheat

Memphis 5.18-5.18 ——— 5.21-5.21 5.26-5.26 5.22-5.22

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

Delta 71.14-72.89 ——— 70.38-72.13 70.77-72.52 70.39-72.14

Prices Paid to Farmers by Elevators

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Cattle Receipts: This week: 3,683 (9) Week ago: 7,296 (8) Year ago: 8,050 (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 137.00 170.00 150.36 154.40 173.99

400-500 lbs 135.00 162.00 148.14 150.25 166.39

500-600 lbs 120.00 157.00 142.42 142.34 152.69

600-700 lbs 122.00 146.00 133.21 133.80 141.32

700-800 lbs 108.00 132.00 124.86 127.92 133.32

Steers: Small Frame #1-2

300-400 lbs ——— ——— ——— 143.25 145.33

400-500 lbs 132.50 143.00 137.57 128.41 144.78

500-600 lbs 130.00 136.00 132.25 120.74 132.45

600-700 lbs ——— ——— ——— ——— ———

Steers: Medium/Large Frame #2-3

300-400 lbs 124.00 150.00 135.45 139.25 154.09

400-500 lbs 130.00 149.00 138.64 136.17 152.50

500-600 lbs 120.00 145.00 132.83 129.71 139.15

600-700 lbs 125.00 130.00 126.70 120.91 125.69

700-800 lbs ——— ——— ——— 106.68 124.85

Holstein Steers

300-400 lbs ——— ——— ——— ——— ———

500-600 lbs ——— ——— ——— ——— ———

700-800 lbs ——— ——— ——— ——— ———

Slaughter Cows & Bulls

Breakers 75-80% 38.50 45.86 43.71 54.82 52.00

Boners 80-85% 47.36 45.90 57.87 40.00 57.00

Lean 85-90% 30.00 43.50 36.49 37.75 48.46

Bulls YG 1 62.00 74.00 67.01 66.12 75.22

Heifers: Medium/Large Frame #1-2

300-400 lbs 109.00 148.00 131.32 128.23 146.05

400-500 lbs 110.00 138.00 123.27 124.62 140.10

500-600 lbs 103.00 135.00 118.46 118.61 132.43

600-700 lbs 103.00 128.00 112.12 114.40 125.93

Heifers: Small Frame #1-2

300-400 lbs 120.00 130.00 126.57 116.17 132.07

400-500 lbs 92.00 120.00 109.08 107.87 126.22

500-600 lbs ——— ——— ——— 104.81 119.16

600-700 lbs ——— ——— ——— 94.89 122.12

Heifers: Medium/Large Frame #2-3

300-400 lbs 105.00 133.00 121.01 123.67 132.47

400-500 lbs 105.00 127.50 116.67 115.65 132.72

500-600 lbs 103.00 122.00 109.93 108.54 120.98

600-700 lbs 100.00 110.00 105.67 99.35 116.59

Prices on Tennessee Reported Livestock Auctions for the week ending January 25, 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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Blue Grass Stockyards - KCA Convention Internet Sale - Janu-ary 18, 2019 1 load of 70 heifers; blk; avg. wt. 740 lbs.; $133.00 1 load of 75 heifers; blk; avg. wt. 725 lbs,; 130.00 2 loads of 125 steers; blk; avg. wt. 800 lbs.; $139.00 2 loads of 120 steers; blk; avg. wt. 825 lbs.; $132.50 2 loads of 125 steers; blk; avg. wt. 800 lbs.; $137.25 2 loads of 118 steers; blk; avg. wt. 850 lbs.; $131.00 1 load of 64 steers; blk; avg. wt. 825 lbs.; $136.50 East TN Cattle Alliance Graded Precondition Sale, Greeneville, TN Weighted Average Report for Thursday Jan 24, 2019 Cattle Receipts: 405 For complete report: https://www.ams.usda.gov/mnreports/nv_ls185.txt East Tennessee Livestock Center, Sweetwater, TN Graded Holstein Weighted Average Report for Friday Jan 18, 2019 Cattle Receipts: 381 For complete report: https://www.ams.usda.gov/mnreports/nv_ls182.txt

01/22/2019 TN Livestock Producers Fayetteville Receipts: 191 (84 graded & grouped) Steers: Med & Lg 1-2 Heifers: Med & Lg 1-2 300-400 lbs 137.50 300-400 lbs 138.00 400-500 lbs 137.00-140.00 400-500 lbs 120.00-130.00 500-600 lbs 130.00-136.00 500-600 lbs 115.00-125.00 600-700 lbs 134.00-144.50 600-700 lbs 110.00-119.50 700-800 lbs 133.50 700-800 lbs 107.00-108.00 800-900 lbs 105.00 Bulls: Med & Lg 1-2 400-500 lbs 134.00-144.00 500-600 lbs 126.00-135.00 600-700 lbs 118.00-129.00

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