July 19, 2019 Tennessee Market Highlights Number: 29

FED CATTLE: Fed cattle traded $1 to $2 lower compared to last week on a live ba-sis. Live prices were mainly $111 to $114 while dressed prices were mainly $182 to $185.

The 5-area weighted average prices thru Thursday were $113.02 live, down $1.62 from last week and $182.97 dressed, down $0.09 from a week ago. A year ago prices were $113.11 live and $172.00 dressed.

Many feedlots continued purchasing year-ling cattle to fill pen space, but late week price declines may be indicative of a slow-down. At the same time feedlots were try-ing to fill pen space, managers were forced to accept slightly lower prices compared to the previous week. Cattle feeders and pack-ers are likely to battle each other the next six weeks or so, but it is not likely to result in much price movement on the finished cattle side. The expectation is for finished cattle to trade in a narrow range through the end of August and into early Septem-ber, but the market will be similar to a baby size roller coaster. The price fluctuations over the next couple of months will essen-tially be non-eventful.

BEEF CUTOUT: At midday Friday, the Choice cutout was $213.42 up $0.08 from Thursday and down $0.46 from last Friday. The Select cutout was $189.24 up $0.63 from Thursday and down $1.38 from last Friday. The Choice Select spread was $24.18 compared to $23.26 a week ago.

Boxed beef prices have come under duress since the end of April and the dog days of summer will continue tightening the screw that increases this pressure. The $20 per hundredweight decline since the end of April is not at all surprising when consider-ing last year’s summer low was $28 lower than the spring price peak and the five year average decline is $30 per hundredweight. Despite the summer price pressure, the only beef primal exhibiting lower prices compared to last year is the loin. The rib primal struggled through most of May and

June, but it has held its own to start July. The chuck could be considered the primal displaying the most strength as prices are above year ago levels and trading steady with the winter months. However, the bris-ket has been king for most of the year as the smoking of briskets has become a craze in more parts of the U.S. than just Texas. Another beef item price to make note of is fresh 50 percent lean beef. Fresh 50 per-cent lean beef comes from the trimmings of finished cattle, and the price of this product has been over $80 since March.

OUTLOOK: Based on Tennessee weekly auction market averages, steer and heifer prices were mainly $1 to $2 higher com-pared to last week while slaughter cow and bull prices were also $1 to $2 higher com-pared to last week. Demand for calves and feeder cattle was strong this week which was a carryover from the previous week. The pull on yearling cattle is dominated by feedlots that are attempting to fill pen space. Similarly, stocker operators who are taking advantage of the seasonally strong summer feeder cattle market are purchas-ing calves to replace the yearling cattle that are being moved to the feedlot. With the strength in the yearling market the past couple of weeks, the question on many producers’ minds is how long will these prices hold and if there is a chance they can go higher. These are difficult questions to answer, but they deserve an answer given today’s information. Starting with history, yearling cattle prices generally display strength from July through the middle of September. The July market started well, but there are some reasons to be con-cerned that feeder cattle prices will come under pressure sooner rather than later. The expectation of higher corn prices this fall and winter will temper interest in bid-ding up feeder cattle. Similarly, the sluggish live cattle futures price will weigh on feeder cattle prices moving through the second half of summer and into the fall marketing

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

Slaughter Cows

$1 to $2 higher

Slaughter Bulls

$1 to $2 higher

Feeder Steers

$1 to $2 higher

Feeder Heifers

$1 to $2 higher

Feeder Cattle Index: 140.00

Fed Cattle

The 5-area live price on Thursday of $113.02 was down $1.62 The dressed price of $182.97 was down $0.09

Corn

September closed at $4.30 a bushel, down 24 cents since last Friday.

Soybeans

August closed at $9.01 a bushel, down 12 cents since last Friday.

Wheat

September closed at $5.02 a bush-

el, down 21 cents since last Friday.

Cotton

December closed at 63.07 cents per lb, up 0.39 cents since last Friday.

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time period. With that being said, it is difficult to imagine year-ling cattle prices finding much of a way to climb higher in 2019. At the same time, it may be wise to market yearling cattle soon-er rather than later. There is concern that the feeder cattle market could break following the past couple of weeks of strength. Knowing exactly when this will happen will only be known when it actually happens. Waiting until September to market cattle that are ready to enter the feedlot seems to be more risky than marketing them 50 pounds lighter than antici-pated.

The July cattle on feed report for feedlots with a 1000 head or more capacity indicated cattle and calves on feed as of July 1, 2019 totaled 11.49 million head, up 1.8% compared to a year ago, with the pre-report estimate average expecting an in-crease of 1.8%. June placements in feedlots totaled 1.80 million head, down 2.3% from a year ago with the pre-report estimate average expecting placements down 2.1%. June marketing’s totaled 1.95 million head down 3.0% from 2018 with pre-report estimates expecting a 3.0% increase in marketings. Placements on feed by weight: under 700 pounds down 8.7%, 700 to 899 pounds up 2.4%, and 900 pounds and over up 1.7%.

ASK ANDREW, TN THINK TANK: A common question in the cattle industry deals with how “happy” or “satisfied” someone is with the price he or she received when marketing cattle.

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Livestock Comments by Dr. Andrew Griffith Some people may say they are happy or satisfied, but the truth is that each of those producers would have accepted another $2 per hundredweight or $20 per hundredweight more if buy-ers would have bid them higher. Does that make the person happier or more satisfied? It is difficult to understand how price completely controls how happy or satisfied a person is with a group of cattle. A person who has a 20 percent death loss is almost certain to lose money in the cattle business. Thus, the producer may be satisfied with the price received, but the pro-ducer is probably not happy about the final outcome. Happiness and satisfaction are more likely correlated to achieving a de-fined goal or benchmark such as calving percent, weaning weight, average daily gain, or profit per head. What are your goals for the cattle business and for life?

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 $107.60 +0.20; October $108.50 +0.25; December $113.18 +0.38; Feeder cattle –August $139.98 +0.55; September $139.80 +0.33; October $140.03 +0.30; November $140.23 +0.43; September corn closed at $4.31 up $0.06 from Thursday.

Crop Comments by Dr. Aaron Smith Overview

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

After an explosive May, that saw December corn futures gain over 40 cents, harvest futures have become range bound swinging between $4.20 and $4.75. Daily price ranges have also been amplified in June and July with many days experiencing 10 cent + trad-ing ranges. Uncertainty regarding planted acres, yield, weather, and ex-ports are currently triggering the increased volatility. Continued volatility should be expected as additional information is revealed.

Like corn, harvest soybean futures are also lacking a strong trend moving sideways in June and July, trading in a range of $8.75 to $9.50. Clarification on US planted acres/yield and trade with China are the likely catalysts that will dictate price direction.

2019 harvest cotton futures have trended lower since August 2018 falling from over 80 cents to below 62 cents. Short term price weakness will continue until export demand increases or weather concerns for the US crop emerge. Prices near 60 cents may be considered speculative buying opportunities.

Nearby wheat futures will be linked to movement in corn futures markets. Global wheat stocks are projected at 10.5 billion bush-els, down marginally from 2018 but still near record large. Until wheat stocks are reduced, or expected to be reduced, price in-creases will be constrained. Short term September wheat futures are likely to continue trading between $4.85 and $5.25.

Current USDA export projections for the 2018/19 marketing year for corn, soybeans, cotton, and wheat (marketing year ended May 31) are: 2.1 billion bushels, 1.7 billion bushels, 14.5 million bales, and 936 million bushels. For the forthcoming (current wheat mar-keting year) 2019/20 marketing year, projections (percent increase) are: corn - 2.15 billion (+2.3%); soybeans – 1.875 billion (+10.3%); cotton – 17 million bales (+17.2%); and 950 million bushels (+1.5%). Domestic and global production, economic growth, and further trade developments will ultimately determine US exports for agricultural commodities in 2019/20.

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Corn

Ethanol production for the week ending July 12 was 1.066 million barrels per day, up 19,000 from the previous week. Ethanol stocks were 23.365 million barrels, up 356,000 barrels. Corn net sales reported by exporters for July 5-11 were down from last week with net sales of 7.9 million bushels for the 2018/19 marketing year and 5.2 million bushels for the 2019/20 marketing year. Exports for the same time period were down 40% from last week at 26.9 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 102%. Across Tennessee, average corn basis (cash price-nearby futures price) strengthened at Memphis, Upper-middle, and Northwest Tennessee and weakened at Northwest Barge Points. Overall, basis for the week ranged from 3 over to 28 over with an average of 14 over the September futures at elevators and barge points. September 2019 corn futures closed at $4.30, down 24 cents since last Friday. For the week, September 2019 corn futures traded between $4.23 and $4.60. Sep/Dec(’19) and Sep/Dec(‘20) future spreads were 5 and -12 cents.

Nationally, the Crop Progress report estimated corn condition at 58% good-to-excellent and 12% poor-to-very poor; and corn silk-ing at 17% compared to 8% last week, 59% last year, and a 5-year average of 42%. In Tennessee, the Crop Progress report estimat-ed corn condition at 80% good-to-excellent and 4% poor-to-very poor; corn silking at 80% compared to 66% last week, 90% last year, and a 5-year average of 85%; and corn dough at 33% compared to 17% last week, 39% last year, and a 5-year average of 24%. In Tennessee, September 2019 corn cash forward contracts averaged $4.36 with a range of $4.12 to $4.60. December 2019 corn futures closed at $4.35, down 24 cents since last Friday. Downside price protection could be obtained by purchasing a $4.40 De-cember 2019 Put Option costing 31 cents establishing a $4.09 futures floor. December 2020 corn futures closed at $4.18, down 4 cents since last Friday.

Soybeans

Net sales reported by exporters were up compared to last week with net sales of 4.7 million bushels for the 2018/19 marketing year and 7.3 million bushels for the 2019/20 marketing year. Exports for the same period were up 31% compared to last week at 33.4 million bushels. Soybean export sales and commitments were 105% of the USDA estimated 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 Memphis, Northwest Barge Points, Northwest, and Upper-middle Tennessee. Basis ranged from 46 under to 18 over the August futures contract at elevators and barge points. Average basis at the end of the week was even the August futures contract. August 2019 soybean futures closed at $9.01, down 12 cents since last Friday. For the week, August 2019 soybean futures traded between $8.75 and $9.18. August/September soybean-to-corn price ratio was 2.1 at the end of the week. September 2019 soybean futures closed at $9.07, down 12 cents since last Friday. Aug/Sep and Aug/Nov future spreads were 6 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 emerged at 95% compared to 90% last week, 100% last year, and a 5-year average of 99%; and soybeans blooming at 22% com-pared to 10% last week, 62% last year, and a 5-year average of 49%. In Tennessee, the Crop Progress report estimated soybean condition at 77% good-to-excellent and 6% poor-to-very poor; soybeans emerged at 97% compared to 90% last week, 97% last year, and a 5-year average of 95%; soybeans blooming at 40% compared to 24% last week, 56% last year, and a 5-year average of 43%; and soybeans setting pods at 13% compared to 3% last week, 23% last year, and a 5-year average of 16%. In Tennessee, Octo-ber/November 2019 soybean cash contracts average $8.84 with a range of $8.38 to $9.18. November 2019 soybean futures closed at $9.19, down 12 cents since last Friday. Downside price protection could be achieved by purchasing a $9.20 November 2019 Put Option which would cost 34 cents and set an $8.86 futures floor. Nov/Dec 2019 soybean-to-corn price ratio was 2.11 at the end of the week.

Cotton

Net sales reported by exporters were up compared to last week with net sales of 54,000 bales for the 2018/19 marketing year and 218,900 bales for the 2019/20 marketing year. Exports for the same time period were down 7% compared to last week at 310,300 bales. Upland cotton export sales were 115% 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 18 were 56.53 cents/lb (41-4-34) and 58.78 cents/lb (31-3-35). Adjusted World Price (AWP) decreased 2.24 cents to 55.81 cents.

Nationally, the Crop Progress report estimated cotton condition at 56% good-to-excellent and 15% poor-to-very poor; cotton squaring at 60% compared to 47% last week, 70% last year, and a 5-year average of 69%; and cotton setting bolls at 20% compared to 13% last week, 30% last year, and a 5-year average of 25%. In Tennessee, the Crop Progress report estimated cotton condition at 61% good-to-excellent and 15% poor-to-very poor; cotton squaring at 63% compared to 54% last week, 91% last year, and a 5-year average of 79%; and cotton setting bolls at 13% compared to 6% last week, 31% last year, and a 5-year average of 23%. December 2019 cotton futures closed at 63.07, up 0.39 cents since last Friday. For the week, December 2019 cotton futures traded between 61.66 and 64.09 cents. Dec/Mar and Dec/Dec cotton futures spreads were 0.91 cent and 2.66 cents. Downside price protection could be obtained by purchasing a 64 cent December 2019 Put Option costing 4.32 cents establishing a 59.68 cent futures floor. March 2020 cotton futures closed at 63.98, up 0.24 cents since last Friday. December 2020 cotton futures closed at 65.73, up 0.17 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 57% compared to 47% last week, 72% last year, and a 5-year average of 71%; spring wheat condition at 76% good-to-excellent and 4% poor-to-very poor; and spring wheat headed at 78% compared to 56% last week, 91% last year, and a 5-year average of 87%. In Tennessee, the Crop Progress report estimated winter wheat harvested at 99% compared to 98% last week and 100% last year. In Tennessee, July 2019 wheat cash contracts ranged from $4.85 to $5.28 for the week.

Wheat net sales reported by exporters were up compared to last week with net sales of 12.8 million bushels for the 2019/20 mar-keting year. Exports for the same time period were down 57% from last week at 10.5 million bushels. Wheat export sales were 30% of the USDA estimated total annual exports for the 2019/20 marketing year (June 1 to May 31), compared to the previous 5-year average of 35%. September 2019 wheat futures closed at $5.02, down 21 cents since last Friday. September 2019 wheat futures traded between $4.92 and $5.31 this week. September wheat-to-corn price ratio was 1.17. Sep/Dec and Sep/Jul future spreads were 11 and 29 cents. December 2019 wheat futures closed at $5.13, down 22 cents since last Friday. July 2020 wheat futures closed at $5.31, down 22 cents since last Friday. Downside price protection could be obtained by purchasing a $5.40 July 2020 Put Option costing 43 cents establishing a $4.97 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 12, 2019---Thursday, July 18, 2019

Friday Monday Tuesday Wednesday Thursday

Low High Low High Low High Low High Low High

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

Memphis 9.19-9.28 9.08-9.17 8.94-9.05 8.97-9.01 8.95-8.96

N.W. B.P. 9.24-9.25 9.17-9.18 0-0 8.99-8.99 0-0

N.W. TN 8.64-8.64 8.56-8.87 0-0 8.39-8.52 0-0

Upper 8.98-9.09 9.02-9.02 0-0 8.84-8.88 0-0

Yellow Corn

Memphis 4.6-4.66 4.47-4.53 4.41-4.53 4.44-4.54 4.33-4.4

N.W. B.P. 4.74-4.74 4.61-4.61 0-0 4.51-4.53 0-0

N.W. TN 4.58-4.74 4.46-4.69 0-0 4.39-4.55 0-0

Upper 4.64-4.69 4.56-4.62 0-0 4.5-4.56 0-0

Wheat

Memphis 5.23-5.38 5.08-5.28 5.08-5.24 5.06-5.14 4.94-4.99

Cotton

Memphis 58.11-60.36 59.45-61.7 58.08-60.33 57.64-59.89 56.53-58.78

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Prices on Tennessee Reported Livestock Auctions for the week ending Friday, July 19, 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 142.50 166.50 151.23 152.84 162.94

400-500 lbs 130.00 160.00 145.65 146.05 158.38

500-600 lbs 122.00 186.00 140.64 142.82 149.31

600-700 lbs 118.00 149.00 134.54 133.47 141.36

700-800 lbs 114.00 135.00 126.15 126.32 131.45

Steers: Small Frame #1-2

300-400 lbs --- --- --- --- 135.49

400-500 lbs --- --- --- 130.62 134.57

500-600 lbs --- --- --- --- ---

600-700 lbs --- --- --- --- ---

Steers: Medium/Large Frame #3

300-400 lbs 122.00 150.00 134.30 140.13 149.43

400-500 lbs 112.00 141.00 130.10 140.06 144.51

500-600 lbs 119.00 138.00 129.30 135.41 136.73

600-700 lbs 110.00 131.00 124.22 132.17 129.78

700-800 lbs 103.00 123.00 115.24 124.62 118.95

Holstein Steers

300-400 lbs 75.00 87.00 82.91 85.49 ---

500-600 lbs 83.50 87.50 85.94 --- 79.51

700-800 lbs --- --- --- --- ---

Slaughter Cows & Bulls

Breakers 75-80% 50.50 66.50 60.37 55.59 55.22

Boners 80-85% 50.00 67.50 58.79 56.34 56.68

Lean 85-90% 44.00 55.50 49.43 48.14 50.55

Bulls YG 1 70.00 92.00 82.65 79.59 81.32

Heifers: Medium/Large Frame #1-2

300-400 lbs 116.00 145.00 129.95 129.98 146.14

400-500 lbs 110.00 282.00 125.61 125.97 142.75

500-600 lbs 104.00 292.00 120.60 122.19 133.97

600-700 lbs 99.00 129.00 114.46 117.58 127.27

Heifers: Small Frame #1-2

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

400-500 lbs 114.00 116.00 115.01 111.67 127.83

500-600 lbs --- --- --- 113.09 126.20

600-700 lbs --- --- --- --- ---

Heifers: Medium/Large Frame #3

300-400 lbs 110.00 135.00 119.56 122.92 134.64

400-500 lbs 105.00 126.00 116.83 121.64 132.43

500-600 lbs 105.00 123.00 115.82 115.96 127.41

600-700 lbs 95.00 112.00 107.54 112.00 118.52

Cattle Receipts

This week: 8,397 Week ago: 6,347 Year ago: 7,715 (11)

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East Tennessee Livestock Center, Sweetwater, TN

July 17, 2019

Lot #1 1 load out of 85 steers from BQA certified producer Est. weight 835 lbs 95% L&M-1s & 5% L&M-2s; medium flesh 100% Black/BWF, $137.35 per cwt.

Lot #2 1 load out of 90 Holstein steers from BQA certified pro-ducer Est. weight 900 lbs 95% #1s & 5%#2s; medium flesh,

$89.75 per cwt

East Tennessee Livestock Center, Sweetwater, TN

Graded Holstein Steer Sale Weighted Average Report for July 12, 2019

Cattle Receipts: 300

For complete report:

https://www.ams.usda.gov/mnreports/lsd_mars_2072.pdf

Lower Middle TN Cattlemens Video Board Sale, Columbia, TN

Feeder Cattle Sale Weighted Average Report for July 12, 2019

Receipts 858

For complete report:

https://www.ams.usda.gov/mnreports/nv_ls184.txt

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