January 19, 2018 Tennessee Market Highlights Number: 3

FED CATTLE: Fed cattle trade was not es-tablished at press with bid prices on a live basis at $118 while asking prices on a live basis were $125.

The 5-area weighted average prices thru Thursday were $120.61 live, up $0.54 from last week and $193.00 dressed, up $1.08 from a week ago. A year ago prices were $121.89 live and $194.82 dressed.

Fed cattle trade was slow to be established this week as packers and feedlots were separated by as much as $7 on a live basis. This price separation was largely due to packers holding on to prices from last week’s trade and early week futures mar-ket prices. However, cattle feeders were basing ask prices on late week futures which were $3.80 higher than the close on Tuesday and more than $4.50 higher than the close last Friday. Given the futures close for the week, cattle feeders hold a little leverage over packers in the short term. Packers that are not short bought will likely pass on offerings this week and give it another shot next week. Cattle feeder’s leverage should last as long as the futures price holds.

BEEF CUTOUT: At midday Friday, the Choice cutout was $205.11 down $0.58 from Thursday and down $3.56 from last Friday. The Select cutout was $200.39 down $0.48 from Thursday and down $1.89 from last Friday. The Choice Select spread was $4.72 compared to $6.39 a week ago.

Disposable income is a key factor in beef demand. Increases in disposable income generally result in consumers purchasing more beef. Many consumers move to beef from poultry and pork products while oth-ers trade lower valued beef products for higher valued products when disposable income increases. Alternatively, declines in disposable income generally result in the consumers moving the opposite direction. There are two reasons why this discussion is important right now. First is energy cost.

February crude oil futures are trading near $63 per barrel which is nearly a $20 per barrel increase since June 2017. Higher crude oil prices have pushed fuel prices higher which eats into disposable income. From the natural gas and electricity stand-point, it is increased consumption that is eating into disposable income due to cold temperatures. Alternatively, the new tax code reduces Federal income tax withhold-ings for many consumers which will result in an increase in disposable income starting in February. Thus, it all may even out in the end or it could influence the beef market.

OUTLOOK: The cold temperatures and snow put a damper on calf and feeder cattle marketings this week. Based on lim-ited receipts at Tennessee weekly auction markets, steers weighing less than 650 pounds were $1 to $5 higher than last week while steers 650 pounds and heavier were unevenly steady. Heifers weighing less than 600 pounds were steady to $2 lower com-pared to last week while heifers weigh 600 pounds and heavier were $1 to $5 higher than last week’s weekly auction average. Slaughter cow prices have already started to seasonally strengthen as prices were $1 to $3 higher compared to last week. It has been extremely difficult to get a handle on Tennessee auction market prices since the beginning of the year due to the holidays, cold temperatures, and winter precipita-tion. However, there is a good chance calf and feeder cattle marketings will pick up this coming week as temperatures are ex-pected to escalate and only one day of pre-cipitation is predicted in the next seven days. At this time, there is no reason to expect an increase or decrease in calf and feeder cattle prices. One piece of infor-mation to keep an eye on is the drought monitor. Nearly 61 percent of the country is experiencing abnormal dryness to ex-treme drought which is 18 percentage points higher than the end of November.

(Continued on page 2)

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

Slaughter Cows

$1 to $3 higher

Slaughter Bulls

$2 higher

Feeder Steers

Less than 650 lbs, $1 to $5 higher;

650 lbs and over, unevenly steady

Feeder Heifers

Less than 600 lbs, steady to $2 lower;

600 lbs and over, $1 to $5 higher

Feeder Cattle Index

Wednesday’s index: 146.47

Fed Cattle

The 5-area live price of $120.61 is up $0.54. The dressed price was not available.

Corn

March closed at $3.52 a bushel, up 6 cents since last Friday.

Soybeans

March closed at $9.77 a bushel, up 17 cents since last Friday.

Wheat

March closed at $4.22 a bushel, up 2 cents since last Friday.

Cotton

March closed at 83.42 cents per lb, up 1.74 cents since last Friday.

2

The drought areas include the Great Plains and much of the Southeast with the hardest hit parts being in the Oklahoma and Texas panhandles. These drought conditions will continue to weigh on wheat grazing country which is not supportive of calf prices. However, the poor grazing conditions in this area have been persistent through much of the late fall and early winter months and are largely priced into today’s market. The market may have to make it through the first quarter of 2018 before significant price improvement occurs. However, producers should not be expecting a repeat of 2017 where prices strengthened from January through June and then held steady for much of the second half of the year. The market continues to slowly seek the historical seasonal price trend and decision makers should consider this.

ASK ANDREW, TN THINK TANK: A question was received this week concerning the 2018 cow-calf budget developed for Ten-nessee cattle producers. Based on the question received, it was evident the person was not aware of all the budget resources available. Thus, it may be prudent to share this with producers and others who may find the University of Tennessee Extension budgets useful. Enterprise budgets for row crop, cow-calf, and stocker production can be found on the following website https://ag.tennessee.edu/arec/Pages/budgets.aspx by selecting the appropriate thumbnail. As it relates to cattle budgets, budg-ets can be downloaded in PDF format or Excel format. The Excel file allows the user to customize the budget for his or her spe-cific operation or use. The flexibility provided by the Excel ver-sion makes this tool appropriate for use by operations outside of Tennessee also.

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 –February $121.90 -0.05; April $122.73 -0.75; June $114.73 -0.63; Feeder cattle –January $147.95 -1.23; March $145.60 -1.58; April $146.08 -1.30; May $145.80 -1.15; March corn closed at $3.53 down $0.01 from Thursday.

(Continued from page 1)

Livestock Comments by Dr. Andrew Griffith

Thursday January 18, 2017

Month Class III Close Class IV Close

Jan 13.83 13.27

Feb 13.54 13.39

Mar 13.52 13.51

Apr 13.73 13.67

May 14.13 13.86

Milk Futures

Cattle Hogs

———— Number of head ————

This week (4 days) 117,750 431,500

Last week (4 days) 118,000 453,750

Year ago (4 days) 102,750 408,000

This week as percentage of

Week ago (%) 100% 95%

Year ago (%) 115% 106%

Average Daily Slaughter USDA Box Beef Cutout Value

Choice 1-3 600-900 lbs

Select 1-3 600-900 lbs

———————— $/cwt —-———————

Thursday 205.69 200.87

Last Week 209.07 202.95

Year ago 193.22 188.06

Change from week ago -3.38 -2.08

Change from year ago +12.47 +12.81

3

Crop Comments by Dr. Aaron Smith

Overview Corn, cotton, soybeans, and wheat were up for the week. Prices were up this week after last week’s USDA reports release. Export sales remain important for old crop prices. Currently, corn, soybean, and wheat sales are behind the export sales pace required to meet USDA’s marketing year projection. Corn export sales commitments are currently 2% behind the

5-year average, while wheat and soybeans lag the 5-year average by 6% and 14%, respectively. Cotton export commitments are currently exceeding the 5-year average pace by 11%. Closing the export sales gap for corn, soybeans, and wheat will be essential to avoid further buildup of domestic stocks. Cotton exports continue to fuel the nearby futures rally, however, harvest 2018 futures have been resistant to moving beyond 75-76 cents. New crop relative prices between corn, soybean, and cotton will be closely followed as producers gear up for 2018 planting. Corn Across Tennessee, average corn basis (cash price-nearby futures price) strengthened or remained unchanged at Memphis and Up-per-middle Tennessee and weakened at Northwest Barge Points, Lower-middle, and Northwest Tennessee. Overall, basis for the week ranged from 16 under to 21 over the March futures contract with an average of 5 over at the end of the week. March 2018 corn futures closed at $3.52, up 6 cents since last Friday. For the week, March 2018 corn futures traded between $3.46 and $3.54. Corn net sales reported by exporters from January 5-11 were above expectations with net sales of 74.3 million bushels for the 2017/18 marketing year and 0.09 million bushels for the 2018/19 marketing year. Exports for the same time period were down from last week at 30.0 million bushels. Corn export sales and commitments were 59% of the USDA estimated total annual exports for the 2017/18 marketing year (September 1 to August 31) compared to a 5-year average of 61%. Ethanol production for the week ending January 12 was 1.061 million barrels per day, up 65,000 from the previous week. Ethanol stocks were 22.743 million barrels, up 24,000 barrels. Mar/May and Mar/Dec future spreads were 8 and 33 cents, respectively.

May 2018 corn futures closed at $3.60, up 6 cents since last Friday. In Tennessee, September 2018 corn cash forward contracts averaged $3.60 with a range of $3.50 to $3.85. December 2018 corn futures closed at $3.85, up 5 cents since last Friday. Downside price protection could be obtained by purchasing a $3.90 December 2018 Put Option costing 26 cents establishing a $3.64 futures floor. Soybeans Average soybean basis strengthened or remained unchanged at Memphis, Lower-middle, Upper-middle, and Northwest Tennes-see and weakened at Northwest Barge Points. Basis ranged from 35 under to 20 over the March futures contract at elevators and barge points. Average basis at the end of the week was 3 under the March futures contract. March 2018 soybean futures closed at $9.77, up 17 cents since last Friday. For the week, March 2018 soybean futures traded between $9.61 and $9.82. Net sales report-ed by exporters were above expectations with net sales of 45.6 million bushels for the 2017/18 marketing year and 10.6 million bushels for the 2018/19 marketing year. Exports for the same period were down from last week at 43.3 million bushels. Soybean export sales and commitments were 73% of the USDA estimated total annual exports for the 2017/18 marketing year (September 1 to August 31), compared to a 5-year average of 87%. March soybean-to-corn price ratio was 2.78 at the end of the week. Mar/May and Mar/Nov future spreads were 11 and 19 cents, respectively. May 2018 soybean futures closed at $9.88, up 16 cents since last Friday. In Tennessee, Oct/Nov 2018 soybean cash contracts average $9.78 with a range of $9.54 to $9.94. November

(Continued on page 4)

4

Crop Comments by Dr. Aaron Smith

2018 soybean futures closed at $9.96, up 13 cents since last Friday. Downside price protection could be achieved by purchasing a $10.00 November 2018 Put Option which would cost 54 cents and set a $9.46 futures floor. November/December 2018 soybean-to-corn price ratio was 2.59 at the end of the week. Cotton Delta upland cotton spot price quotes for January 18 were 81.63 cents/lb (41-4-34) and 83.38 cents/lb (31-3-35). Adjusted world price (AWP) increased 3.24 cents to 74.45 cents per pound. March 2018 cotton futures closed at 83.42 cents, up 1.74 cents since last Friday. For the week, March 2018 cotton futures traded between 80.62 and 83.94 cents. Net sales reported by exporters were up from last week with net sales of 275,100 bales for the 2017/18 marketing year and 104,600 bales for the 2018/19 marketing year. Exports for the same period were up from last week at 289,900 bales. Upland cotton export sales were 82% of the USDA esti-mated total annual exports for the 2017/18 marketing year (August 1 to July 31), compared to a 5-year average of 71%. Mar/May and Mar/Dec cotton futures spreads were 0.37 cents and -7.65 cents, respectively.

May 2018 cotton futures closed at 83.79, up 1.83 cents since last Friday. December 2018 cotton futures closed at 75.77, up 0.43 cents since last Friday. Downside price protection could be obtained by purchasing a 76 cent December 2018 Put Option costing 4.69 cents establishing a 71.31 cent futures floor. Wheat In Memphis, old crop cash wheat ranged from $3.91 to $4.31. March 2018 wheat futures closed at $4.22, up 2 cents since last Fri-day. March 2018 wheat futures traded between $4.13 and $4.27 this week. March wheat-to-corn price ratio was 1.20. Wheat net sales reported by exporters were below expectations with net sales of 5.6 million bushels for the 2017/18 marketing year and 14 million bushels for the 2018/19 marketing year. Exports for the week were up from last week at 15.5 million bushels. Wheat export sales were 75% of the USDA estimated total annual exports for the 2017/18 marketing year (June 1 to May 31), compared to a 5-year average of 81%. Mar/May and Mar/Jul future spreads were 13 cents and 26 cents, respectively. May 2018 wheat futures closed at $4.35, up 1 cent since last Friday. In Tennessee, June/July 2018 cash forward contracts ranged from $4.30 to $4.76 for the week. July 2018 wheat futures closed at $4.48, up 2 cents since last Friday. Downside price protection could be obtained by purchasing a $4.50 July 2018 Put Option costing 23 cents establishing a $4.27 futures floor.

(Continued on page 5)

5

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.

6

Friday, January 12, 2017 — Thursday, January 18, 2018

Commodity Contract Month Friday Monday Tuesday Wednesday Thursday

Soybeans Jan 9.44 ——— ——— ——— ———

($/bushel) Mar 9.60 ——— 9.68 9.68 9.73

May 9.72 ——— 9.79 9.80 9.84

Jul 9.81 ——— 9.89 9.89 9.94

Aug 9.83 ——— 9.91 9.92 9.96

Sep 9.82 ——— 9.89 9.89 9.94

Corn Mar 3.46 ——— 3.48 3.53 3.51

($/bushel) May 3.54 ——— 3.56 3.61 3.59

Jul 3.62 ——— 3.65 3.69 3.67

Sep 3.70 ——— 3.72 3.76 3.75

Dec 3.80 ——— 3.82 3.86 3.85

Mar 3.89 ——— 3.91 3.95 3.94

Wheat Mar 4.20 ——— 4.16 4.21 4.25

($/bushel) May 4.34 ——— 4.30 4.34 4.38

Jul 4.46 ——— 4.43 4.47 4.51

Sep 4.60 ——— 4.58 4.62 4.66

Dec 4.79 ——— 4.77 4.80 4.84

Soybean Meal Jan 309 ——— ——— ——— ———

($/ton) Mar 317 ——— 322 324 328

May 320 ——— 326 327 332

Jul 323 ——— 329 330 334

Aug 324 ——— 329 330 334

Sep 324 ——— 329 330 334

Cotton Mar 81.68 ——— 81.43 82.14 82.63

(¢/lb) May 81.96 ——— 81.67 82.39 82.99

Jul 82.22 ——— 81.86 82.60 83.36

Oct 76.77 ——— 76.50 76.90 77.23

Dec 75.34 ——— 75.03 75.09 75.28

Live Cattle Feb 117.37 ——— 118.10 120.97 121.95

($/cwt) Apr 119.45 ——— 120.37 122.77 123.47

Jun 111.62 ——— 112.35 114.45 115.35

Aug 109.05 ——— 109.70 111.52 112.60

Oct 110.37 ——— 110.92 112.47 113.35

Feeder Cattle Jan 144.35 ——— 145.60 147.87 149.17

($/cwt) Mar 142.65 ——— 143.92 145.97 147.17

Apr 143.00 ——— 144.07 146.12 147.37

May 142.70 ——— 143.80 145.85 146.95

Aug 145.75 ——— 146.67 148.65 149.42

Sep 145.72 ——— 146.45 148.42 149.00

Market Hogs Feb 71.57 ——— 73.90 72.72 73.05

($/cwt) Apr 74.32 ——— 76.15 75.52 75.90

May 79.00 ——— 81.00 80.55 80.12

Jun 83.80 ——— 85.02 84.92 85.00

Jul 83.92 ——— 84.97 85.02 85.30

Futures Settlement Prices: Crops & Livestock

7

Cattle Receipts: This week: 1,278 (3) Week ago: 7,757 (11) Year ago: 11,281 (11)

This Week Last Week Year Ago

Low High Weighted Average Weighted Average Weighted Average

—————————————————————— $/cwt ——————————————————————

Steers: Medium/Large Frame #1-2

300-400 lbs 155.00 185.00 175.11 170.40 140.60

400-500 lbs 142.00 180.00 163.85 162.70 134.11

500-600 lbs 135.00 163.00 151.84 148.30 129.24

600-700 lbs 124.00 147.50 139.97 139.94 122.41

700-800 lbs 126.00 136.00 132.30 131.56 117.55

Steers: Small Frame #1-2

300-400 lbs ——— ——— ——— 141.82 126.82

400-500 lbs ——— ——— ——— 144.61 124.33

500-600 lbs ——— ——— ——— 133.43 118.46

600-700 lbs ——— ——— ——— 125.00 101.63

Steers: Medium/Large Frame #2-3

300-400 lbs 140.00 160.00 147.25 149.68 130.40

400-500 lbs 132.00 152.00 140.16 147.54 120.64

500-600 lbs 124.00 148.00 137.01 135.26 113.49

600-700 lbs 128.00 132.50 129.99 125.78 110.45

700-800 lbs ——— ——— ——— 117.07 110.51

Holstein Steers

300-400 lbs ——— ——— ——— ——— 81.10

500-600 lbs ——— ——— ——— 84.40 63.63

700-800 lbs ——— ——— ——— ——— ———

Slaughter Cows & Bulls

Breakers 75-80% 50.00 52.70 50.93 50.95 54.00

Boners 80-85% 55.49 54.33 54.29 47.50 64.00

Lean 85-90% 43.00 51.00 46.36 44.54 46.94

Bulls YG 1 70.00 78.00 73.72 71.80 75.84

Heifers: Medium/Large Frame #1-2

300-400 lbs 125.00 157.00 144.23 141.51 121.81

400-500 lbs 121.00 155.00 137.49 137.67 117.42

500-600 lbs 118.00 141.00 129.45 130.49 112.86

600-700 lbs 105.00 135.00 127.68 125.02 105.65

Heifers: Small Frame #1-2

300-400 lbs ——— ——— ——— 125.28 108.00

400-500 lbs ——— ——— ——— 124.77 100.35

500-600 lbs ——— ——— ——— 115.74 96.67

600-700 lbs ——— ——— ——— ——— 83.96

Heifers: Medium/Large Frame #2-3

300-400 lbs 125.00 140.00 134.73 128.09 111.53

400-500 lbs 117.00 134.00 127.46 128.61 105.70

500-600 lbs 111.00 127.00 122.75 120.01 99.56

600-700 lbs 100.00 123.50 113.74 116.99 96.16

Prices on Tennessee Reported Livestock Auctions for the week ending January 19, 2018

8

Friday, January 12, 2017 — Thursday, January 18, 2018

Friday Monday Tuesday Wednesday Thursday

Low High Low High Low High Low High Low High

———————–——————————————— $/bushel ———————————————————–———

No. 2 Yellow Soybeans

Memphis 9.73-9.82 ——— 9.81-9.91 9.83-9.93 9.88-9.98

N.W. B.P. ——— ——— ——— ——— 9.83-9.85

N.W. TN ——— ——— ——— ——— 9.47-9.57

Upper Md. ——— ——— ——— ——— 9.57-9.73

Lower Md. ——— ——— ——— ——— 9.38-9.43

Yellow Corn

Memphis 3.63-3.71 ——— 3.65-3.72 3.74-3.78 3.72-3.76

N.W. B.P. ——— ——— ——— ——— 3.66-3.69

N.W. TN ——— ——— ——— ——— 3.36-3.44

Upper Md. ——— ——— ——— ——— 3.51-3.51

Lower Md. ——— ——— ——— ——— 3.52-3.66

Wheat

Memphis 3.95-4.25 ——— 3.91-4.21 3.96-4.26 4.00-4.30

Prices Paid to Farmers by Elevators

100

120

140

160

180

200

220

Tennessee 500-600 lbs. M-1 Steer Prices2017, 2018 and 5-year average

2012/2016 Avg 2017 2018

85

105

125

145

165

185

Tennessee 700-800 lbs. M-1 Steers Prices2017, 2018 and 5-year average

2012/2016 Avg 2017 2018

8595

105115125135145155

5-Area Finished Cattle Prices2017, 2018 and 5-year average

2012/2016 Av g 2017 2018

35455565758595

105

Tennessee Slaughter Cow PricesBreakers 75-80%

2017, 2018 and 5-year average

1.00 2017 2018

9

Lower Middle Tennessee Cattlemens Video Board Sale Feeder Cattle Weighted Average Report for 01/12/2018 Receipts: 833 For complete report: https://www.ams.usda.gov/mnreports/nv_ls184.txt

East TN Cattle Alliance Graded Feeder, Farmers Livestock Greeneville, TN Weighted Average Report for Thursday Jan 18, 2018 Cattle Receipts: 449 Feeder Steers: 248 Feeder Heifers: 201 For complete report: https://www.ams.usda.gov/mnreports/nv_ls185.txt East Tennessee Livestock Center, Sweetwater, TN Weighted Average Report for Friday Jan 12, 2018 Cattle Receipts: 797 Graded Steers and Heifers, Blk, Bwf and Char. For complete report: https://www.ams.usda.gov/mnreports/nv_ls183.txt Warren Co. Livestock Graded Sale, McMinnville, TN Weighted Average Report for Wednesday Jan 10, 2018 Cattle Receipts: 1155 For complete report: https://www.ams.usda.gov/mnreports/nv_ls189.txt

Video Sales & Loads Self-Reported and Self-Graded Livestock Markets

Graded Sales

10

JBS finds buyer for Five Rivers Cattle Feeding Krissa Welshans Jan 18, 2018

JBS S.A. announced Jan. 17 that its subsidiary, JBS USA Food Co., has entered into an agreement to sell the totality of Five Rivers Cattle Feeding's feedlot operations in the U.S. to affiliates of Pinnacle Asset Management LP for approximately $200 million, including the market value of silage and grain inventories at clos-ing, and subject to adjustments by working capital variation also at closing. Coupled with the acquisition of Five Rivers U.S. shares, Pinnacle also agreed to sign a long-term contract to sup-ply cattle to JBS in North America.

JBS said the conclusion of the transaction is subject to the usual regulatory approvals and adjustments, including corporate ap-provals, the buyer securing the relevant funding and approval by U.S. antitrust authorities.

The company also said it will use a portion of the proceeds to further reduce debt in Brazil, subject to its stabilization agree-ment.

Five Rivers Cattle Feeding is the largest cattle feeding operation in the world, with roots in the U.S. dating back to the 1920s. The transaction includes 11 feedyards across Arizona, Colorado, Ida-ho, Kansas, Oklahoma and Texas, with a feeding capacity of more than 900,000 head of cattle, and a long-term agreement to supply cattle to JBS USA beef processing plants. The current Five Rivers management team will remain in place, led by president and chief executive officer Mike Thoren, to ensure business con-tinuity and build upon Five Rivers’ strong track record of innova-tion and stewardship.

“The sale of the Five Rivers Cattle Feeding assets and farms is a strategic move that will allow JBS USA to more efficiently deploy working capital and focus on the company’s core food and value-added products businesses,” said Andre Nogueira, CEO of JBS USA. “The transaction concludes the divestment program previ-ously announced and unanimously approved by the JBS S.A. board of directors and more favorably positions the company for future opportunities.”

He continued, “The long-term partnership with Pinnacle will ensure JBS USA’s continued ability to produce high-quality beef products -- including natural, certified humane, raised without antibiotics, source-verified and traditional products -- enjoyed by

Beef Industry News Featured Article from Feedstuffs

customers and consumers around the world.”

Jason Kellman, managing partner and chief investment officer of Pinnacle, said the acquisition strengthens Pinnacle's strategic path of investment and development of its global, diversified physical commodity platform. “We are excited to work closely with our operating partner, Arcadia Asset Management, and strategic partner, Ospraie Management, to support Five Rivers’ talented management team,” he said.

JBS divestment update

The announcement was made as part of an update on the pro-gress of the company’s divestment program, wherein JBS said the sale of the majority of the assets comprised by the divest-ment program was concluded in 2017.

On July 14, 2017, the company entered into an agreement to sell the Five Rivers Cattle Feeding feedlot operations in Canada for $50 million (Canadian; approximately $40 million U.S.). On Sept. 11, 2017, Moy Park was sold to Pilgrim's Pride Corp., which is controlled by JBS, for approximately £1.0 billion (enterprise val-ue). On Oct. 26, 2017, JBS concluded the sale of its shareholding interest in Vigor Alimentos S.A. for approximately 1,112 million reals (enterprise value). These transactions were in addition to the sale of JBS's beef operations in Argentina, Paraguay and Uru-guay, which were closed on July 31, 2017, for $300 million (U.S.) plus price adjustment after closing.

JBS said a substantial portion of the proceeds received from these asset sales was used to make extraordinary debt amortiza-tion. As a result of the divestment program and the robust cash generation during the period, the company's leverage ratio (net debt-to-EBITDA) decreased significantly from 4.16x at the end of the second quarter of 2017 to 3.42x at the end of the third quar-ter of 2017.

The company said the results reached in 2017 “clearly demon-strate a successful implementation of the divestment and delev-eraging strategy defined by management.”

"JBS has been strengthened by this divestment process and has increased liquidity. We were able to sell the assets for the value we expected, while cash generation has been very strong during the period," JBS CEO José Batista Sobrinho said.

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