July 26, 2019 Tennessee Market Highlights Number: 30

FED CATTLE: Fed cattle trade was not well established at press. Asking prices in the South were mainly $113 to $114 while ask-ing prices in the North were $186 to $187.

The 5-area weighted average prices thru Thursday were $115.43 live, up $2.41 from last week and $183.77 dressed, up $0.80 from a week ago. A year ago prices were $110.10 live and $176.09 dressed.

Packers and feedlot managers reverted to their usual tactics of battling it out to get cash deals done. Feedlot managers may have a little leverage in that packers are making an extremely strong margin in to-day’s market. It is doubtful packers are will-ing to pass those dollars on to cattle feed-ers, but the decline of beef in cold storage may point to the need for beef by retailers which is the packers’ job. Thus, packers likely need cattle to hang on the rail in or-der to meet the demand which is where a small amount of feedlot leverage may come into play. Cattle feeders are likely to hold tight to cattle unless they get their desired price because feeding closeouts have been negative for far too long.

BEEF CUTOUT: At midday Friday, the Choice cutout was $212.41 down $0.16 from Thursday and down $1.01 from last Friday. The Select cutout was $188.85 down $0.33 from Thursday and down $0.39 from last Friday. The Choice Select spread was $23.56 compared to $24.18 a week ago.

The monthly cold storage report for June was released by USDA this week. The quan-tity of beef in cold storage at the end of June totaled 394.5 million pounds which only represents 78 percent of the average weekly beef production in 2019. Thus, less than a week’s worth of beef production is in a freezer which is an indicator that beef is moving at a decent pace. The June value is the lowest quantity of beef in cold stor-age since October 2014 which corresponds to a time period when fewer animals were being harvested due to rapid expansion in

the beef cattle herd. Contrary to beef, the quantity of pork in cold storage at the end of June remained elevated. Pork in cold storage at the end of June totaled 622.4 million pounds compared to 559.0 million pounds one year ago. The elevated level of pork in cold storage is not as perplexing as the fact that it only marginally declined from the May value. Pork in cold storage generally declines in June and July due to reduced hog slaughter and lighter weight hogs going to slaughter.

OUTLOOK: Based on Tennessee weekly auction market averages, steer prices were mostly $3 to $4 higher compared to last week while heifer prices were unevenly steady compared to a week ago. Heifer prices ranged from $5 lower to $5 higher moving through the week. Slaughter cow prices were $2 to $4 higher compared to a week ago while slaughter bull prices were steady to $3 higher. The August feeder cattle contract is $11 per hundredweight higher than its contract low and $18 off of its contract high. The recent upswing in cash and futures prices is keeping purvey-ors on their toes as the market is trying to follow its seasonal tendency. There has been good demand for yearling cattle the past few weeks and the demand for weaned and vaccinated cattle remains strong. It is always difficult to project what the market is going to do, but the best guess on yearling cattle is for the market to remain steady or gain a few dollars over the next four to five weeks. The one thing that could stop a feeder cattle price rally in the next couple of weeks is a bullish crop re-port that sends corn prices closer to $5. Weaned and vaccinated cattle will continue to be in strong demand moving through the fall marketing time period as winter stocker programs look for inventory to put on pas-ture. The strong demand for those cattle today is associated with favorable forage conditions, good moisture, and the desire to receive lower risk cattle when the tem-

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

Slaughter Cows

$2 to $4 higher

Slaughter Bulls

Steady to $3 higher

Feeder Steers

$3 to $4 higher

Feeder Heifers

Unevenly steady

Feeder Cattle Index: 137.42

Fed Cattle

The 5-area live price on Thursday of $115.43 was up $2.41. The dressed price of $183.77 was up $0.80

Corn

September closed at $4.14 a bush-el, down 16 cents since last Friday.

Soybeans

August closed at $8.83 a bushel, down 18 cents since last Friday.

Wheat

September closed at $4.96 a bush-

el, down 6 cents since last Friday.

Cotton

December closed at 64.54 cents per lb, up 1.47 cents since last Fri-day.

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perature and humidity reach “suffocation” level. A surprising aspect of the market is the strength in slaughter cow prices. Slaughter cow prices in Tennessee this week represent the highest price for slaughter cows since March of 2018. Produc-ers who have cows that need to be removed from the breeding herd should consider marketing those animals in the near term. There is no expectation for slaughter cow prices to make a price run, but they are likely to head south when fall weaning begins.

ASK ANDREW, TN THINK TANK: A few different questions have been asked recently about being new to the cattle business with a couple of those questions relating to exploring a differ-ent segment of the cattle business than what the person is al-ready involved. The questions were fairly general, but the gen-eral questions always lead to more specific questions when an answer is provided. The first thought is that those in the cattle industry should always attempt to educate those who are ask-ing questions if the question pertains to something in which the cattle producer is well versed. In actuality, I have probably learned more from asking producers and other academic spe-cialists questions than anyone has ever learned from my educa-tional program. The second thought is that helping newcomers to the business can help with the overall public perception of the industry, and it may keep the neighbor from experiencing a bad situation such as losing a lot of money or even being hurt

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Livestock Comments by Dr. Andrew Griffith by an animal.

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.

FRIDAY’S FUTURES MARKET CLOSING PRICES: Friday’s closing prices were as follows: Live/fed cattle –August $108.65 +0.00; October $109.90 +0.00; December $114.30 -0.05; Feeder cattle –August $143.73 +0.93; September $144.10 +0.88; October $143.58 +0.30; November $143.30 +0.18; September corn closed at $4.14 down $0.04 from Thursday.

Crop Comments by Dr. Aaron Smith Overview

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

On Thursday, the USDA released details for the 2019 trade mitigating support package for farmers. The 2019 version of the Market Facilitation Program (MFP) is very different than the 2018 version. 2018 MFP payments were paid based on production for speci-fied commodities ($/bu or $/lb). For example, for each bushel of soybeans produced in 2018 producers were eligible to receive a payment of $1.65/bu. The 2019 version of MFP pays producers based on 2019 aggregated planted acres for specified commodities (alfalfa hay, barley, canola, corn, crambe, dried beans, dry peas, extra-long staple cotton, flaxseed, lentils, long grain and medium grain rice, millet, mustard seed, oats, peanuts, rapeseed, rye, safflower, sesame seed, small and large chickpeas, sorghum, soybeans, sunflower seed, temperate japonica rice, triticale, upland cotton, and wheat). All 2019 planted acres for eligible commodities produced on a farm will be added together and multiplied by the county payment rate, however, planted acres cannot exceed 2018 planted acres for the farm. Acres must have been planted before August 1, 2019 to receive payment.

Each county has its own payment rate (county specific payment rates can be found at: https://www.farmers.gov/sites/default/files/documents/PaymentRates.pdf). In Tennessee, the average payment rate per planted acre is $62/acre with a range of $16/acre (Anderson County) to $126/acre (Hardeman County). Producers that filed a prevented planting claim and planted an FSA-certified cover crop, with the potential to be harvested qualify for a $15 per acre payment. Acres that were not planted in 2019 are not eligi-ble for an MFP payment. Planted acres for 2019 are not available at this time, however 2018 FSA acreage data indicates the poten-tial for up to 3.016 million acres eligible for payment in Tennessee (approximately $187 million to producers).

Sign-up for the program is at local Farm Service Agency (FSA) offices and begins Monday, July 29 and ends December 6, 2019. Pay-ments will be made in up to three payments. The first payment will be comprised of the greater of 50 percent of a producer’s cal-culated payment or $15 per acre. The first payment will be made in mid-to-late August. The second and third payments will be

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evaluated as market conditions and trade opportunities dictate. If conditions warrant, the second payment will be made in Novem-ber, and the third in early January. Payment restrictions per legal entity ($250,000) and adjusted gross income (average 2014, 2015, and 2016 AGI of less than $900,000) will be imposed.

The payments will help mitigate some of the financial losses producers have experienced due to trade disruptions.

Corn

Ethanol production for the week ending July 19 was 1.039 million barrels per day, down 27,000 from the previous week. Ethanol stocks were 23.689 million barrels, up 324,000 barrels. Corn net sales reported by exporters for July 12-18 were up from last week with net sales of 4.8 million bushels for the 2018/19 marketing year and 15.2 million bushels for the 2019/20 marketing year. Ex-ports for the same time period were down 15% from last week at 22.8 million bushels. Corn export sales and commitments were 93% of the USDA estimated total annual exports for the 2018/19 marketing year (September 1 to August 31) compared to the pre-vious 5-year average of 103%. Across Tennessee, average corn basis (cash price-nearby futures price) strengthened at Upper-middle and Northwest Tennessee and weakened at Memphis and Northwest Barge Points. Overall, basis for the week ranged from 2 over to 28 over with an average of 14 over the September futures at elevators and barge points. September 2019 corn futures closed at $4.14, down 16 cents since last Friday. For the week, September 2019 corn futures traded between $4.13 and $4.32. Sep/Dec(’19) and Sep/Dec(‘20) future spreads were 10 and 2 cents.

Nationally, the Crop Progress report estimated corn condition at 57% good-to-excellent and 13% poor-to-very poor; corn silking at 35% compared to 17% last week, 78% last year, and a 5-year average of 66%; and corn dough at 5% compared to 16% last year and a 5-year average 10%. In Tennessee, the Crop Progress report estimated corn condition at 85% good-to-excellent and 2% poor-to-very poor; corn silking at 88% compared to 80% last week, 94% last year, and a 5-year average of 92%; and corn dough at 45% compared to 33% last week, 61% last year, and a 5-year average of 46%. In Tennessee, September 2019 corn cash forward con-tracts averaged $4.17 with a range of $3.99 to $4.32. December 2019 corn futures closed at $4.24, down 11 cents since last Friday. Downside price protection could be obtained by purchasing a $4.30 December 2019 Put Option costing 28 cents establishing a $4.02 futures floor. December 2020 corn futures closed at $4.16, down 2 cents since last Friday.

Soybeans

Net sales reported by exporters were down compared to last week with net sales cancellations of 2.9 million bushels for the 2018/19 marketing year and net sales of 8.2 million bushels for the 2019/20 marketing year. Exports for the same period were down 30% compared to last week at 23.4 million bushels. Soybean export sales and commitments were 105% of the USDA estimat-ed total annual exports for the 2018/19 marketing year (September 1 to August 31), compared to the previous 5-year average of 103%. Average soybean basis strengthened at Northwest and Upper-middle Tennessee and weakened at Memphis and Northwest Barge Points. Basis ranged from 48 under to 15 over the August futures contract at elevators and barge points. Average basis at the end of the week was 7 under the August futures contract. August 2019 soybean futures closed at $8.83, down 18 cents since last Friday. For the week, August 2019 soybean futures traded between $8.81 and $9.04. August/September soybean-to-corn price ratio was 2.13 at the end of the week. September 2019 soybean futures closed at $8.88, down 19 cents since last Friday. Aug/Sep and Aug/Nov future spreads were 5 and 18 cents.

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Crop Comments by Dr. Aaron Smith

Nationally, the Crop Progress report estimated soybean condition at 54% good-to-excellent and 12% poor-to-very poor; soybeans blooming at 40% compared to 22% last week, 76% last year, and a 5-year average of 66%; and soybeans setting pods at 7% com-pared to 41% last year and a 5-year average of 28%. In Tennessee, the Crop Progress report estimated soybean condition at 82% good-to-excellent and 1% poor-to-very poor; soybeans blooming at 56% compared to 40% last week, 70% last year, and a 5-year average of 60%; and soybeans setting pods at 27% compared to 13% last week, 36% last year, and a 5-year average of 29%. In Ten-nessee, October/November 2019 soybean cash contracts average $8.74 with a range of $8.34 to $9.02. November 2019 soybean futures closed at $9.01, down 18 cents since last Friday. Downside price protection could be achieved by purchasing a $9.20 No-vember 2019 Put Option which would cost 41 cents and set an $8.79 futures floor. Nov/Dec 2019 soybean-to-corn price ratio was 2.13 at the end of the week.

Cotton

Net sales reported by exporters were up compared to last week with net sales of 163,000 bales for the 2018/19 marketing year and 208,000 bales for the 2019/20 marketing year. Exports for the same time period were up 3% compared to last week at 318,300 bales. Upland cotton export sales were 116% of the USDA estimated total annual exports for the 2018/19 marketing year (August 1 to July 31), compared to the previous 5-year average of 107%. Delta upland cotton spot price quotes for July 25 were 59.56 cents/lb (41-4-34) and 61.81 cents/lb (31-3-35). Adjusted World Price (AWP) increased 0.26 cents to 56.07 cents.

Nationally, the Crop Progress report estimated cotton condition at 50% good-to-excellent and 10% poor-to-very poor; cotton squaring at 78% compared to 60% last week, 77% last year, and a 5-year average of 80%; and cotton setting bolls at 33% compared to 20% last week, 40% last year, and a 5-year average of 37%. In Tennessee, the Crop Progress report estimated cotton condition at 74% good-to-excellent and 6% poor-to-very poor; cotton squaring at 79% compared to 63% last week, 96% last year, and a 5-year average of 87%; and cotton setting bolls at 24% compared to 13% last week, 48% last year, and a 5-year average of 40%. December 2019 cotton futures closed at 64.54, up 1.47 cents since last Friday. For the week, December 2019 cotton futures traded between 62.9 and 64.68 cents. Dec/Mar and Dec/Dec cotton futures spreads were 0.92 cent and 1.76 cents. Downside price protection could be obtained by purchasing a 65 cent December 2019 Put Option costing 3.2 cents establishing a 61.8 cent futures floor. March 2020 cotton futures closed at 65.46, up 1.48 cents since last Friday. December 2020 cotton futures closed at 66.3, up 0.57 cents since last Friday.

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Crop Comments by Dr. Aaron Smith

Wheat

Nationally, the Crop Progress report estimated winter wheat harvested at 69% compared to 57% last week, 79% last year, and a 5-year average of 79%; spring wheat condition at 76% good-to-excellent and 4% poor-to-very poor; and spring wheat headed at 92% compared to 78% last week, 96% last year, and a 5-year average of 94%. In Tennessee, the Crop Progress report estimated winter wheat harvested at 100% compared to 99% last week. In Tennessee, July 2019 wheat cash contracts ranged from $4.67 to $5.05 for the week.

Wheat net sales reported by exporters were up compared to last week with net sales of 24.2 million bushels for the 2019/20 mar-keting year. Exports for the same time period were up 73% from last week at 18.2 million bushels. Wheat export sales were 33% of the USDA estimated total annual exports for the 2019/20 marketing year (June 1 to May 31), compared to the previous 5-year av-erage of 37%. September 2019 wheat futures closed at $4.96, down 6 cents since last Friday. September 2019 wheat futures trad-ed between $4.83 and $5.07 this week. September wheat-to-corn price ratio was 1.20. Sep/Dec and Sep/Jul future spreads were 8 and 25 cents. December 2019 wheat futures closed at $5.04, down 9 cents since last Friday. In Memphis, June/July 2020 cash con-tracts ranged from $5.19 to $5.27. July 2020 wheat futures closed at $5.21, down 10 cents since last Friday. Downside price protec-tion could be obtained by purchasing a $5.30 July 2020 Put Option costing 40 cents establishing a $4.90 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.

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100120140160180200220

Tennessee 500-600 lbs. M-1 Steer Prices2018, 2019 and 5-year average

2013/2017 Avg 2018 2019

85105125145165185

Tennessee 700-800 lbs. M-1 Steers Prices2018, 2019 and 5-year average

20 13/201 7 Avg 20 18 20 19

8595

105115125135145155

5-Area Finished Cattle Prices2018, 2019 and 5-year average

2013/2017 Avg 2018 2019

35455565758595

105

Tennessee Slaughter Cow PricesBreakers 75-80%

2018, 2019 and 5-year average

20 13/201 7 Avg 20 18 20 19

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

Futures Settlement Prices: Crops & Livestock

Prices Paid to Farmers by Elevators

Friday, July 19, 2019---Thursday, July 25, 2019

Friday Monday Tuesday Wednesday Thursday

Low High Low High Low High Low High Low High

No. 2 Yellow Soy-beans --------------------------------------$/bushel------------------------------------------

Memphis 9.14-9.16 8.98-9.02 8.78-8.96 8.83-9.01 8.75-8.93

N.W. B.P. 9.14-9.16 8.99-9.03 8.95-8.98 9.01-9.04 8.92-8.97

N.W. TN 8.46-8.56 8.43-8.66 8.4-8.53 8.43-8.5 8.36-8.56

Upper Md. 8.83-9.01 8.88-8.96 8.85-8.92 8.89-8.94 8.82-8.92

Yellow Corn

Memphis 4.39-4.46 4.3-4.37 4.32-0 4.26-4.29 4.21-4.24

N.W. B.P. 4.43-4.51 4.35-4.41 4.36-4.46 4.35-4.38 4.3-4.31

N.W. TN 4.35-4.5 4.27-4.5 4.29-4.44 4.27-4.45 4.24-4.44

Upper Md. 4.45-4.45 4.37-4.45 4.38-4.46 4.38-4.49 4.34-4.43

Wheat

Memphis 5.03-5.06 4.87-4.9 4.87-4.92 4.98-5.03 5-5.05

Cotton

Memphis 0-0 0-0 0-0 0-0 59.56-61.81

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Prices on Tennessee Reported Livestock Auctions for the week ending Friday, July 26, 2019 This Week Last Week's Year Ago

Low High Weighted Average Weighted Average Weighted Average

--------------------------------------------------------$/cwt---------------------------------------------------------

Steers: Medium/Large Frame #1-2 300-400 lbs 140.00 162.00 152.06 151.23 166.21

400-500 lbs 134.00 161.00 149.07 145.65 157.62

500-600 lbs 130.50 157.00 142.89 140.64 152.64

600-700 lbs 125.00 150.00 139.02 134.54 143.72

700-800 lbs 120.00 136.00 127.90 126.15 135.75

Steers: Small Frame #1-2

300-400 lbs --- --- --- --- 129.85

400-500 lbs --- --- --- --- ———

500-600 lbs --- --- --- --- ———

600-700 lbs --- --- --- --- ———

Steers: Medium/Large Frame #3

300-400 lbs 116.00 145.00 132.97 134.30 147.70

400-500 lbs 130.00 153.00 136.93 130.10 141.97

500-600 lbs 120.00 143.00 127.45 129.30 139.13

600-700 lbs 116.00 133.00 125.07 124.22 132.87

700-800 lbs 110.00 120.00 116.58 115.24 ———

Holstein Steers

300-400 lbs --- --- --- 82.91 72.81

500-600 lbs --- --- --- 85.94 71.53

700-800 lbs --- --- --- --- ———

Slaughter Cows & Bulls

Breakers 75-80% 53.50 71.00 61.00 60.37 55.46

Boners 80-85% 52.00 72.00 61.94 58.79 57.66

Lean 85-90% 37.00 61.00 49.76 49.43 49.84

Bulls YG 1 75.00 95.00 83.21 82.65 81.51

Heifers: Medium/Large Frame #1-2

300-400 lbs 120.00 147.50 129.37 129.95 148.73

400-500 lbs 115.00 163.00 126.37 125.61 142.93

500-600 lbs 107.50 194.00 121.26 120.60 134.97

600-700 lbs 102.00 126.50 114.55 114.46 128.15

Heifers: Small Frame #1-2

300-400 lbs --- --- --- --- ———

400-500 lbs --- --- --- 115.01 ———

500-600 lbs 107.00 112.50 109.72 --- 113.03

600-700 lbs --- --- --- --- ———

Heifers: Medium/Large Frame #3

300-400 lbs 110.00 118.00 114.03 119.56 131.23

400-500 lbs 100.00 110.00 106.34 116.83 130.61

500-600 lbs 100.00 115.00 109.20 115.82 123.18

600-700 lbs --- --- --- 107.54 119.00

Cattle Receipts

This week: 5,032 Week ago: 8,397 Year ago: 7,042 (9)

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East Tennessee Livestock Center, July 24, 2019 Lot #1 $140.00 1 load out of 90 steers from BQA certified pro-ducer Est. weight 830 lbs 95% L&M-1s & 5% L&M-2s; medium flesh 100% Black/BWF

Blue Grass Stockyards, July 23, 2019

1 load of 125 steers; mostly blk/bwf, avg. wt. 830lbs.; $135.75 1load of 68 steers; mostly blk/bwf, avg. wt. 730lbs.; $142.75 1 load of 78 steers; mostly blk/bwf, avg. wt. 640lbs.; $145.25 1 load of 66 heifers; mostly blk/bwf, avg. wt. 765lbs.; $129.50 1 load of 77 heifers; mostly blk/bwf, avg. wt. 675lbs.; $136.75 1 load of 62 steers; mostly blk/bwf, avg. wt. 800lbs.; $143.25

Columbia Graded Sheep and Goat Sale

Weighted Average Report for 07/22/19 Receipts: 667 Last Sale: 479 For complete report:

https://www.ams.usda.gov/mnreports/lsd_mars_2081.pdf

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

Graded Sheep & Goat Sale