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The Cattle Range Weekly Market Summary provides market data for the informed cattleman. Current industry news & commentary as well as a comprehensive comparison of the past week's prices from around the country in comparison to the previous week, month, 6 months ago, 1 year ago, & 5 year average.  The data is compiled from a variety of sources and is organized to provide insight in determining market movement and trends.
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SAMPLE... Market Summary for the week ending July 11th:
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  • Bullish: Despite increased beef imports, boxed beef cutout values set new daily records this week.
  • Bearish: Friday's USDA WASDE report showed beef imports were larger than exports for the third consecutive month.
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The Cattle Range 10-Day Market Trend:
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An indicator of overall cattle market strength.
The angle indicates direction & velocity of the trend.
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The Trendline is based on daily market factors for the past 10 days.
The daily values are weighted calculations of the cumulative Gain/(Loss)
of 10 major market factors compared to the previous trading day.
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National Feeder & Stocker Cattle Weekly Summary:
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RECEIPTS:             Auctions    Direct  Video/Internet  Total
06/27 - 07/10           190,700     86,200        48,900         325,800 
Two Weeks Ago       151,000     52,900        76,400         280,300 
Last Year                 164,700    152,000       183,200        499,900
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Compared to two weeks ago, feeder and stocker cattle prices ended the holiday interrupted trading session from steady to 5.00 higher, mostly 8.00-10.00 higher on those 800-900 lbs.  However, there was significant volatility throughout the two week stint with many yearling specials posting new lofty all-time record highs but sharply lower CME futures pressuring the cash market late this last week.  August contracts have lost over 7.00 since the 4th of July with the only bright spot being the fact that Friday’s session rebounded to near unchanged after trading near limit losses for most of the day.  There’s no doubt that recent pressure on the Board is more than just minor profit taking and many analysts are blaming the drop on technical negativity.  Somebody must have forgotten to tell the charts just how short cattle numbers are or that we are facing one of the best corn crops in recent memory and the largest in history. 

Spot corn price from the CBOT is now below 4.00/bu and the cash corn price in Omaha is 3.65/bu.  Cash feeder markets remain very strong (especially on heavy yearlings) with renewed interest from farmer-feeders who travel Corn Belt blacktops that seem more like trails through the Redwood Forest.  Many of these independent feeders hope to reach profit through the added value of all-natural beef products with Bassett, NE selling two loads of 800 lb drug free yearling steers at 240.00.  Superior Video’s Week in the Rockies featured 260 head of all-natural Buffalo, SD steers to weigh 1050 lb in October at 205.50.  The key to the all-natural premium on feeders is for the heavier yearlings, as drug free calves are no big deal and rarely yield an advantage despite the extra paperwork.  Making it through the weaning period without the help of antibiotics is the hard part and most producers don’t segregate treated calves from the rest of the herd. 

Lightweight calves received top billing in the Southern Plains with light 3-weight steer calves at the Winter Livestock Auction in Dodge City, KS averaging 323 lbs at 357.40.  Many of us suspected that we were nearing the top of this feeder cattle market, but it’s still unclear whether this was a peak or a plateau that we’ve been climbing.  Fed cattle drifted lower this past week, after setting a new record prior to the holiday, just short of 160.00.  Fats sold 2.00-3.00 lower on a live basis from 155.00-156.00 and 1.00-4.00 lower in the beef from 246.00-249.00.  This week’s reported auction volume included 50 percent over 600 lbs and 40 percent heifers.

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Stocker Steers:
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Feeder Steers:
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Five Year Moving Average - Stocker Steers, Feeder Steers, & Slaughter Steers:
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Selected Auction Reports:
"Click" on individual auction links for complete report
Oklahoma National Stockyards - Oklahoma City OK
Actual Receipts: 3285   Last Monday: 5791   Year Ago Monday: 6955
Compared to last week:  Feeder steers steady to 4.00 higher, mostadvance on 800-900 lbs.  Feeder heifers mostly steady in a light test.Steer and heifer calves steady to firm.  Receipts are light following theholiday weekend.

 El Reno Cattle Narrative - El Reno OK
Receipts:  5570    Last Week:  Holiday    Year Ago:  N/A
Compared to two weeks ago:  Feeder steers sold 5.00-8.00 higher. Feeder heifers traded 7.00-9.00 higher.  Calves up to 10.00 higher on few comparable sales.

Joplin Regional Stockyards Feeder Cattle Wtd Avg - Carthage MO
Receipts:  3464    Last Week:  5866    Year Ago:  3924
Compared to last week, steer and heifer calves and yearlings steady to 5.00 higher.

Valentine Livestock Auction Market - Valentine NE
Receipts:  375    Last Week:  0    Year Ago:  1090
The bred cows consisted mostly of black offerings bred to black angus bulls calving in Aug-Sept.

Russell Wtd Avg Feeder Cattle Auction - Russell IA
Receipts:  1933    2 weeks ago:  997
Compared to the sale 2 weeks ago: Feeder strs mostly 4.00-10.00 higher and feeder hfrs mostly 5.00-12.00 higher.

Mitchell Livestock Wtd Avg Report - Mitchell SD
Receipts:  3779    Two Weeks Ago:  2109    Year Ago:  4366
Compared to two weeks ago:  Narrow comparison of feeder steers 2.00 to4.00 higher except 950 lbs 7.00 to 10.00 higher.  Feeder heifers 3.00 to5.00 higher, instances to 8.00-10.00 higher on 700-850 lbs.  In spite oflimit, or near limit lower trading on CME cattle contracts the last two days,very good demand for all weights and flesh conditions.

Tulia Livestock Auction - Tulia TX
Receipts:  1182    Two Weeks Ago:  982    Year Ago:  1357
Compared to two weeks ago:  Feeder steers and heifers sold steady to weak on limited comparable sales.  Trade activity was moderate on moderate to good demand.  Buyers have backed off some since the CME feeder cattle futures closed down the limit after closing lower since Tuesday.  Talk of the sale barn questions whether we have finally found the top of this previously climbing market.  Rain is in the forecast for next week.  Slaughter cows and bulls sold mostly 3.00 to 6.00 higher with high dressing bulls as much as 10.00 higher.

Cattleman's Livestock Auction - Dalhart, TX
Cattle and Calves:  1324     Two Weeks ago: 770     Year Ago:  1236
Compared to two weeks ago:  Feeder steers and heifers mostly firm in alimited test, instances a few packages of thin or gaunt kinds 2.00-4.00higher.  Slaughter cows and bulls 3.00-5.00 higher.

Clovis Livestock Auction - Clovis NM
Receipts:  1434                Two Week Ago: 959           Year Ago: 1539
Compared to two weeks ago:  Feeder steers 8.00-15.00 higher, heifers 4.00-9.00 higher on comparable sales.  Slaughter cows and bulls 2.00-4.00 higher except high yielding bulls 7.00-8.00 higher. Trade active, demand very good. Bulk supply Medium and Large 1-2 300-800 lb feeder steers and heifers.

Toppenish, WA Livestock Auction - Toppenish WA
Receipts: 1700    Last Week: 1020    Year Ago:  1025
Compared to last Thursday, there is no trend for feeder cattle due to insufficient sales from last week to compare to. Slaughter cows are 10.00 to 11.00 higher and slaughter bulls are steady to 5.00 higher. Starting next week due to forecasted high temperatures the auction will begin two hours early.

Pratt Livestock Feeder Cattle Auction - Pratt, KS
Receipts:  1533    Last Week:  1750    Year Ago:  2711
Compared to two weeks ago: Feeder Steers 5.00-10.00 higher on a limited supply; Feeder Heifers 2.00-5.00 higher on a limited test, Not enough steer and heifer calves for a market test, a higher undertone noted. Slaughter cows and bulls 3.00-5.00 higher.

Weekly Auction Summaries:
"Click" on individual links for complete report

Tennessee Weekly Auction Summary
Receipts on 9 TN Auctions 7,101 2 Last Week 1,400 11 Last Year 8,100
Trends:  No trends were established as last weeks sales were not reported due to the holiday schedule.

Mississippi Weekly Livestock Summary
Cattle Receipts:    9,391       Last Week:       0       Last Year:   8,934
Compared to last week, slaughter cows sold 1.00 to 4.00 higher and bulls sold steady. Feeder steers sold 5.00 to 15.00 higher and heifers sold 5.00 to 10.00 higher.

Alabama Auctions Weekly Summary
Total estimated receipts this week 16,100, last week 0 and 12,286 last year.
Compared to two weeks ago: Slaughter cows and bulls sold 2.00 to 4.00 higher. Replacement cows and pairs sold mostly steady. All feeder classes sold 5.00 to 10.00 higher.

Georgia Cattle Auctions Weekly Review
Cattle receipts at 25 markets 13,065 compared to N/S last week and 9,298 year ago. Compared to one week earlier, slaughter cows 1.00 to 2.00 higher, bulls 2.00 to 4.00 higher, feeder steers and bulls 2.00to 6.00 higher, heifers 2.00 to 5.00 higher, steer calves and bull calves 3.00 to 7.00 higher, heifer calves 2.00 to 5.00 higher, replacement cows steady to 1.00 higher.

Kentucky Weekly Livestock Summary
Receipts This Week 20,687, Last Week 17,147, Last Year 21,347
Compared to last week:  Steers and Heifers sold 2.00 to 4.00 higher.  Demand very good for feeders; good to very good for calves. Slaughter Cows and Bulls 1.00 to 3.00 higher.

Colorado Auction Feeder Cattle Summary
Receipts:  170   Last Week:  1041   Year Ago:  388
Compared to last week: Not enough comparable sales on feeder steers or heifers for a market trend.  Receipts are short this week following the holiday weekend and the CME Feeder cattle board dropping the limit this week.

AZ-CA-NV Weekly Feeder Cattle Review (Fri)
Confirmed: 8360
Compared to last week, 275-300 lb Holstein calves contracted for November, traded steady. 

Direct Sales of Feeder & Stocker Cattle:
"Click" on individual links for complete report

Colorado Direct Feeder Cattle Report (Fri)
Receipts:  170   Last Week:  1041   Year Ago:  388 
Compared to last week: Not enough comparable sales on feeder steers or heifers for a market trend. 

Eastern Cornbelt Direct Feeder Cattle Summary (Fri)
Reported sales this week: 0    Last Week: 0    Last year: 67
Compared to last week: Feeder steers and heifers not tested. 

Georgia Direct Cattle Summary (Fri)
Confirmed sales on 2,094 head

IA-South MN Direct Feeder Cattle Weekly (Mon)
Receipts:  185    Last Week:  0    Year Ago:  0
Compared to last week, no feeder steers reported for a market trend.

Kansas Direct Feeder Cattle Summary (Fri)
Receipts:  1062    Last Week:  12366    Year Ago:  15585
Compared with last week: not enough steers to heifers sold for a market test.

Montana Direct Feeder Cattle Wtd Avg (Fri)
Receipts:  3955    Last Week:  303    Year Ago:  185 
Compared to last week:  Not enough comparable sales on fall delivery feeder steers or heifers from last week for a market trend. 

New Mexico Feeder Cattle Report (Mon)
Receipts:  3300    Last Week:  2400    Year Ago:  7600
Compared to last week:  No current steer or heifer sales available for a market trend. 

Northwest Wtd Avg Direct Feeder Cattle Report (Fri)
Receipts:  7950    Last Week:  3250    Year Ago:  8450
Compared to last week, feeder cattle 5.00-10.00 higher, due in part to lower corn prices. 

Oklahoma Direct Feeder Cattle (Fri)
Receipts:  2147    Last Week:  2416    Year Ago:  8196
Compared to last week:  Feeder steers and heifers not enough comparable sales of current delivery for an accurate trend but a higher undertone noted. 

South Dakota Direct Feeder Cattle Summary (Fri)
Receipts:  0   Last Week:  0   Year Ago:  420
Compared to last week: No feeder steers or heifers reported.

WY, Western NE & Western Dakotas Direct Feeder Cattle Wtd Avg (Fri)
Receipts: 957        Week Ago: 4,035    Year Ago: 1,452 
Compared to last week steers and heifers sold steady on a light test. 

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Cattle Futures:
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Cattle futures experienced a choppy trading session on Friday. Prices began mixed, turned lower at midday and then rallied in the last hour to close higher. The rebound ended the sharp price decline the previous three days. Even so, August futures ended down nearly 6 cents/pound for the week. A wave a profit-taking from trading funds and speculative sectors hit the market hard. Cash cattle traded at $156 in Nebraska, down $1 to $2 from Wednesday and down $2 from last week. In Kansas, fed cattle traded at $156, down $2 from last week while Texas cattle were $2 to $3 lower to $155 to $156. Beef prices were mixed at midday. The Choice cutout fell $0.88 to $251.29/cwt while Select was $1.14 higher to $244.66 another new high. The cattle market stabilized and began to recover following USDA’s supply demand update. USDA raised the fed steer price forecast for Q3 and Q4. 
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Representative Sales of Cow & Pairs:
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  • El Reno, OK
    • Bred Cows:  Medium and Large 1-2  2-6 yrs 950-1450 lbs 2-8 months 1650.00-2050.00. 
    • Pairs:  Medium and Large 1-2  2-10 yrs 1050-1600 lbs w/75-350 lb calves 2300.00-2650.00; 7-10 yrs 950-1500 lbs w/75-350 lb calves 1800.00-2000.00.
  • Springfield, MO
    • Bred Cows:  Medium and Large 1  3-7 yrs 1200-1400 lbs 2nd-3rd stage 2100.00-2425.00.  Medium And Large 1-2  mixed ages 985-1425 lbs 1st to 3rd stage 1425.00-1725.00. 
    • Pairs:  Medium and Large 1-2  few 2-5 yrs 950-1050 lbs w/150 lb calves 2460.00-2700.00.
  • West Plains, MO
    • Bred Cows:  Medium and Large 1-2  3-7 yrs 935-1385 lbs 2nd-3rd stage 1800.00-2150.00, pkg 4-7 yrs 1135 lbs 3rd stage 2300.00; short-solid to broken-mouth 1000-1220 lbs 2nd-3rd stage 1500.00-1700.00.  Medium and Large 2  2-7 yrs 935-1300 lbs 2nd-3rd stage 1550.00-1750.00; broken-mouth 900-1250 lbs 2nd-3rd stage 1200.00-1300.00.  Medium 2  5-6 yrs 865-1010 lbs 1st-3rd stage 1300.00-1400.00. 
    • Pairs:  Medium and Large 1-2   5-7 yrs 1000-1200 lbs w/100 lb calves 2000.00-2300.00; short-solid to broken-mouth 900-1170 lbs w/100-200 lb calves 1650.00-1900.00.  Medium and Large 2  3-7 yrs 750-820 lbs w/100-250 lb calves 1600.00-1750.00.  Medium 2  5 yrs-short-solid mouth 755-895 lbs w/100 lb calves 1250.00-1400.00.
  • Maryville, MO
    • Bred Cows:  Medium and Large 1  3-5 yrs 1100-1300 lbs blk 3rd stage 2100.00-2250.00, pkg 2nd stage 1850.00; few similar quality 8 yrs to short solid mouthed 1300-1400 lbs 2nd-3rd stage 1800.00, pkg 1st stage 1550.00. 
    • Pairs:  Medium and Large 1  2-6 yrs 1000-1250 lbs blk w/newborn to 200 lb calves 2625.00-2800.00, pkg similar pairs 8 yrs to aged 1960.00.
  • Valentine, NE
    • Fall Bred Cows: Medium and Large 1  Young 1170-1400 lbs 2225.00-2800.00; Middle aged 1330-1535 lbs 2325.00-2450.00, 1600-1670 lbs 2350.00-2525.00; Short/Solid 1240-1585 lbs 1850.00-2260.00,  pkg 1735 lbs 2450.00; Broken Mouth 1235 lbs 1825.00, 1392-1640 lbs 2000.00-2275.00.
  • Clovis, NM
    • Bred Cows:  Medium and Large 1-2 Young 1050-1400 lbs 3-8 months 1675.00-2350.00; young 1110-1375 lbs 1-3 months 1400.00-1900.00; aged 1100-1205 lbs 6-8 months 1375.00-1760.00. 
    • Pairs: Medium and Large 1-2 Young 850-1050 lbs w/200-250 lb calves 2135.00-2375.00.
  • Arkansas
    • Bred Cows:  Medium and Large 1-2  2-7 yrs 850-1250 lbs 2nd-3rd stage 143.00-153.00 cwt; 1525.00-1625.00; first stage/open 120.00-130.00 cwt; 7-10 yrs 2nd-3rd stage 105.00-115.00 cwt; 1300.00-1400.00. 
    • Pairs:  Medium and Large 1-2  3-7 yrs 800-1200 lbs w/100-200 lb calves 1800.00-1900.00; w/200-300 lb calves 1975.00-2075.00; 7-10 yrs w/100-200 lb calves 1500.00-1600.00. 
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The average prices above are from USDA market reports from 2 Southeast markets, 2 Midwest markets, 2 North Central markets, 2 South Central markets, & 1 Western market.  The reports seldom reference breed or quality.  Prices are rounded to nearest multiple of 5.
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Canadian Cattle:
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Alberta Beef Producers:  Alberta direct cattle sales so far this week have seen light to moderate trade develop with prices looking a couple dollars stronger than last week. Cash to futures basis levels did strengthen this week which did encourage producers to market cattle. For the most part showlist volumes have been cleaned up.
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Canadian Weekly Cattle Report:
Provided by CanFax

Fed cattle at records

  • Cash trade in fed cattle in Alberta was too light to establish a price or trend, Canfax said.
  • Cash prices in the southern United States jumped to a record $158 per hundredweight, up $3 from the previous week.
  • Canfax said a few feedlot managers carried cattle over with railgrade asking prices at $270 delivered.
  • Recent average fed prices are about $40-42 per cwt. higher than the same week last year.
  • The weekly cash-to-futures fed basis strengthened and was estimated at around -$6.80.
  • Weekly western Canadian fed slaughter to June fell three percent but year to date is up 11 percent to 877,119 head.
  • Weekly fed cattle exports to June 21 rose 25 percent to 6,480 head.
  • So far this year, fed exports at 199,865 head are down five percent.
  • Canadian packers have done an admirable job in buying most of the cash cattle available.
  • Cash supplies are expected to remain tight throughout July.
  • Packers will continue to shore up inventory to maintain their slaughter pace.
  • Strong support from Chicago futures is anticipated this week and fed prices are expected steady to slightly stronger.
Cows up sharply
  • There was strong demand for non-fed animals and prices rose.
  • D1, 2 cows ranged $103-$123.25 to average $112.99 per cwt., up about $2.50. D3 cows showed strong gains, ranging $95-$109 to average $102, up $3.40.
  • Rail bids were steady to stronger in a range of $207-$212 delivered.
  • Butcher bull prices climbed almost $3.50 to average $124.80.
  • Weekly western Canadian non-fed slaughter to June 28 rose 29 percent to 5,967 head.
  • So far this year, western slaughter is down five percent at 163,224 head.
  • Weekly non-fed exports to June 21 rose 25 percent to 6,448 head.
  • To date, exports are down seven percent at 166,679 head.
Market remains strong
  • Early July is usually the slowest time of the year for feeder cattle and many auctions did not have sales during the week.
  • Many of the cattle that did sell were cows.
  • In many regions, there were not enough feeders trading to establish a trend, and in Alberta prices were mixed, as volume and quality varied significantly.
  • Market fundamentals remain strong. Feeders are being marketed with forward delivery dates at prices steady or stronger.
  • Heavy feeder steers weighing 950 pounds or heavier for late fall delivery are priced at $195 per cwt. or more.
  • Eastern Canadian and American buyers continue to show interest in the western Canadian market.
  • Feeder cattle prices have been on an incredibly strong uptrend while feed grains have been falling. Identifying a top for this rally is almost impossible.
  • The large numbers of forward contracted cattle has some buyers uneasy, which is further fueling the market.
  • Changes in the grain market or the Canadian dollar will be important factors to monitor for producers looking to market cattle near term, or into the fall.
  • Bred cows ranged $1,400-$1,920 per head. Cow-calf pairs ranged $1,700-$2,850.
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Canadian Cattle Prices:
Prices have been converted to U.S. $/CWT.  Grades changed to approximate U.S. equivalents
Exchange Rate: Canadian dollar equivalent to $0.9382 U.S. dollars
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Prices for the week ending July 4th:
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Beef Exports & Imports:
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  • Beef exports during May were up 3.7% compared to a year earlier; beef imports were up 19.8%. Exports were strong to Hong Kong, Mexico and South Korea, but weaker to Japan. Imports increased from Mexico, New Zealand and Canada. 
  • Imports were larger than exports for the third consecutive month. May beef exports equaled 10.9% of production while imports equaled 11.8% of production. Through May, U.S. beef exports are up 6.4% and imports are up 8.4%. During May imports of live cattle were up 11% from Canada and up 23% from Mexico.
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Beef Exports Gain Steam:
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The latest trade data from USDA and the U.S. Meat Export Federation (USMEF) show continued strength in international demand for U.S. agricultural products, with beef and pork exports particularly encouraging during May.

Overall U.S. agricultural exports during May were down 3 percent from April’s total, but were up 10 percent since October 2013. The value of U.S. agricultural exports during May totaled $11.8 billion, while imports were valued at $9.8 billion, leaving a positive trade balance of $2 billion.

Beef exports in May, at 103,000 metric tons, were up 5 percent in volume from a year ago, while the value of May beef exports, at $589 million, was up 15 percent from a year ago. For the first five months of 2014, export volume was up 9 percent and value increased 17 percent to $2.64 billion according to USMEF.

Hong Kong has been one of the bright spots for U.S. beef exports, and we should see that trend continue, as the U.S. gained full access to the Hong Kong market in mid-June, allowing export of previously restricted products such as ground beef and processed meats. But even before that development, May beef exports to Hong Kong increased by more than 80 percent from a year ago on a volume basis and more than doubled in value, at $92.5 million.

For January through May of this year, beef exports to Mexico have increased 34 percent in volume and 49 percent in value compared with the same period last year. Exports to Korea during the same period were up 32 percent in volume and 41 percent in value while beef exports to Japan so far this year have been steady with those during the same period in 2013, with a 1 percent decline in volume and a 1 percent increase in value.

According to USMEF, beef export value per head of fed slaughter set another new record in May at $279.39, up $47.72 from a year ago. The ratio of U.S. production exported was 11 percent for muscle cuts and 14 percent for muscle cuts and variety meat combined -- up from 10 percent and 13 percent, respectively, from a year ago.

Pork exports also have remained strong, with significant increases in value. May pork exports totaled 188,030 metric tons up 4 percent from a year ago, while the value of pork exports, at just under $600 million during May, was up 19 percent from a year ago. For January through May, pork export volume was 9 percent ahead of last year’s pace, while export value was up 15 percent to $2.84 billion.

The value of U.S. dairy exports during May declined by 2 percent from April, but has shown a 35 percent year-over-year increase through the October through May time period

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4 Days & 885 Point Freefall -- Major Top or Gut Check?
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Oddly enough, many in the cattle industry have been the non-believers in the Bull of 2014. Lots have been short hedged, wiring in millions to meet margin calls. They’ve pointed out the impossible feat of sustaining beef prices at this level, confident of consumer resistance and rarely mention the underlying fundamentals of a drastically over culled beef cowherd and expanding global beef demand. 

And futures prices have obliged staying a respectful distance behind cash prices, plainly reflecting cattle market psychology more than the market fundamentals. Of course, that is what futures markets are, a snapshot of current opinions, recorded, tic by tic. And here we are still $8 back of this week’s lower cash trade. 

Both Feb and June LC waited until the bitter end to rally while August altered the pattern and rallied immediately after June’s expiration only because a completely counter seasonal push in all cash prices required it. 

Show Me the Money

It has been the money managers who have been long and stayed long in the cattle complex for the Bull of 2014, riding the methodical climb and banking the big bucks. And it is those same traders, who have bailed out of positions this week at a very rapid rate. And until the weaker longs have been cleansed from the open interest, pressure will continue.

Of course the shorts had been run in the three days prior to this week’s collapse, indicative of a blow off. And now it’s going their way after all, exclaiming, “I knew we were too high for July.”

What’s Changed?

Other than an indisputable weekly reversal on big volume, which many are hanging their hats on as “the sign” that it’s safe to go back in the water, and short a market at prices sharply discount, what has changed?

Some argue it’s the markets job to anticipate, and it’s telling us cash cattle prices and boxed beef prices are going lower over the next couple of months. As mentioned yesterday, June LC had proclaimed the same message when the market had its last big technical correction in May. But if indeed that is the case this time, how much lower, realistically, can cash prices go in this time of current and limited fed cattle supplies and tiny non-fed slaughter? This of course is our million dollar question. 

Boxed Beef Prices Not Lower Yet

The choice and select cutouts are up $4 and $2 from a week ago despite middle meat weakness. Beef 90s are up $15 from a week ago, as the lean complex strength dominates. The chuck and round primals are up $6 and $8 from a week ago. 

Cash Cattle Prices Cave; Packer Margins Widen

The packer has had a good year. And he keeps having one, which isn’t supposed to happen because cattle supplies are record small. There have already been whispers about hours being added to kill schedules for next week. Long term this is bullish. Kill them now or kill them later. Now is always more bullish. 

It appears to us that this market is so tight that needing the numbers now is trumping saving any for later. That’s what the structure of the futures market is telling us. 

In the Meantime

It’s the end of a highly emotional week and more than likely, more long liquidation will be seen today, along with put buying and short hedging by cattle feeders. Unless cash prices truly collapse, which given the underlying fundamentals appears unlikely, we will wake up one morning sooner rather than later and discover we are once again too cheap.

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Photo of the Week:
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  • 110 Angus Cows... Central KY*
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    Shape of the Market:
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    While the rains served as the catalyst for a spike in cattle prices, they did nothing to affect the numbers of cattle. They simply rearranged how they come to market and maybe created the environment for more heifers to be held for breeding. The future from the supply side is tightening numbers likely for the next couple of years.

    The fact does not translate into a linear price graph headed straight for the sky as some have come to believe. The spike in prices today will put into place several forces strategically designed to ameliorate the impact of high prices on the marketplace and the consumer.  Some of those adjustments will come at the hands of the consumer and others will be encouraged by prices themselves.

    Clearance of beef from the meat counters of retail stores for the holiday weekend was thought to be good. The price of beef, however, was not fully priced at many supermarkets. Retailers, thinking prices were due to soften this summer, held back major re-pricing to bring consumers into the stores. As the marketing side of the beef pipeline, including grocers and restaurants, recognize the current price structure is not going to offer any price relief, they will fully price beef to consumers in stores and restaurants throughout the country. We have yet to test the elasticity of beef demand when faced with sharply higher prices -- again.

    Sharply higher prices especially for 90% lean beef has driven much of the rise in the cutout. Primed by a dramatic decline in cow slaughter, the grind has advanced to record levels. Countries that historically has exported lean beef to the USA will put the wheels of commerce in motion to ratchet up those exports and the domestic market will see large increases in imported beef. Australia, New Zealand, Brazil, Argentina, and others will ramp up to exploit high prices offered in this country.

    These reactive measures will not create a crash in our beef markets but they will temper what has quickly become a runaway market. They also will not happen all at once but will incrementally be introduced into the marketplace. On the producer side, the message is clear for breeders -- Enjoy windfall profits by raising more calves.

    The Cattle Report

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    The Saga of Bart -- Trials & Tribulations of a Cattle Buyer
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    Bart rushed into a bar and ordered a double whisky.  With a worried look, he asked the bartender, "Do you happen to know how tall penguins grow?"

    "Between 2 and 3 feet tall" answered the bartender.

    "Are you sure?" Bart asked.

    "Positive" said the bartender.

    "Damn" Bart muttered.  "I think I just ran over a nun."

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    Submit a "Bart Joke"  If we use it, you'll receive a $25.00 Gift Certificate to The Cattle Range Mercantile.
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    Ag Groups Oppose Interpretative CWA Rule:
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    The same day EPA and the U.S. Army Corps of Engineers (the Corps) published a proposed rule to redefine what waters fall under federal jurisdiction of the Clean Water Act, an “interpretative rule” was also published (and went into effect immediately) that brought USDA NRCS into the mix by listing 56 specific conservation practices that will not be subject to Clean Water Act dredge and fill (Section 404) permitting requirements. The agencies were attempting to interpret what Congress meant when it included a statutory exemption for “normal farming, silviculture and ranching activities” under Section 404.

    The agencies proudly issued statements proclaiming that farmers and ranchers need not worry – the exemptions in the interpretive rule, in conjunction with the proposed rule, will protect them from any additional permitting requirements under the law. Their proverbial pats on the back have been met with resistance from agriculture groups, however, who say the interpretive rule is nothing more than the federal government trying to pull a fast one on farmers and ranchers.

    The National Cattlemen’s Beef Association, National Corn Growers Association and a coalition of nearly 100 organizations led by the American Farm Bureau Federation and National Pork Producers Council have filed comments recently urging the agencies to withdraw the interpretive rule immediately. By listing 56 specific practices, NCBA’s Ashley McDonald says the interpretive rule actually narrows the scope of what is considered normal farming and ranching practices.

    “These practices, such as building a fence, or grazing cattle, never needed a permit before, but now require oversight by NRCS and mandatory compliance with its standards,” McDonald says.

    NCBA says the original statutory exemption already covers “normal” farming and ranching activities but that the IR will require ranchers to meet strict, and often costly, national conservation standards in order to receive the exemption for many routine, everyday activities like building and maintaining fence, prescribed grazing and prescribed burning. The result, NCBA says, is “to force farmers and ranchers to comply with once voluntary NRCS standards, or face draconian penalties {up to $37,000 per day} for violating the CWA, in effect making those standards mandatory.”

    The groups also said that the IR has binding authority with new, specific legal obligations under the Clean Water Act, making it a substantive rule. Under the Administrative Procedures Act, a substantive rule must go through the normal rulemaking process, which includes specific requirements with regard to notice and comment periods, in the federal government. Calling it an interpretive rule allowed the agencies to skirt those requirements.

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    Margin between the Choice Boxed Beef Cutout & Feeder Steers:
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    5 Year Average: $45.94 --- This Week: $42.58
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    Out of Kilter:
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    A good way to determine if something is, “going on” in a market is by noticing when market relationships are out of kilter. Cattle and grains typically have a positive correlation. They tend to move in tandem. Moderately increase the price of corn and the cattle will follow suit. The opposite is also true as the cost of feed declines, so does the cost of production. However, when this relationship breaks down, its because one market can't keep pace or pass on the costs of the other. 

    That is what occurred in the spring of 2012 with cattle and corn. The price of feed exceeded the livestock market's ability to pass on the costs.  Over the 2013 summer months, the gap was erased and corn went "Out of Kilter" last fall.  A correction that started in January has run out of steam with corn now trading lower while cattle continue to surge higher.

    Normally, the value of 25 bushels of corn is approximately equal to the price per cwt. for feeder steers.

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    5 Year Moving Average:
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    Crude/Cattle Correlation:
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    The chart below shows a fairly consistent correlation between the price for a barrel of crude oil and the per cwt. price for slaughter cattle.  Since it is unlikely the price of cattle affects the price of oil on the world market, it might be assumed the price of crude oil affects the price of cattle, but that is unlikely as well.  It is more likely that economic factors affecting demand for crude oil have a similar effect on demand for beef.

    Accordingly, in the absence of geo/political events disrupting or distorting oil supply, since price trends occur slightly sooner in the crude oil market, crude oil has been a good indicator of the direction of near term cattle prices. However, with increased supplies of crude oil and decreased supplies of slaughter cattle, an "Out of Kilter" situation between the two commodities has developed.

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    5 Year Moving Average:
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    Slaughter Cows & Bulls:
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    Slaughter cows and bulls 6.00-8.00 lower in the West; 7.00-9.00 higher in Oklahoma and steady to firm in the East.  Packer demand remains good. 

    USDA's Cutter cow carcass cut-out value Friday morning was 228.61 -- Up 11.22 from last Thursday.

                 %Lean      Weight        Wyoming          Oklahoma           Alabama 
    Breakers  75-80%     1100-1600     101.00                121.00               105.00-110.00
    Boners     80-85%     1000-1450     99.00-100.00      117.00-122.00     108.00-114.00
    Lean        85-90%     1000-1300     96.00-103.00      112.00-117.00     100.00-105.00
    Bulls        88-92%     1300-2100    116.00-127.00      135.00-140.00     126.00-131.00

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    Weekly Hay Reports: "Click" on links for detailed report
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    Weekly Feedstuffs Market Review:
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    The USDA Market News Service reports feed ingredient prices for the week ending July 08, were mixed, mostly lower. 
    • Cottonseed Meal was 5.00 to 20.00 lower.  Whole Cottonseed was steady to 30.00 lower. 
    • Soybean Meal was 9.60 to 29.60 lower. Canola Meal was 18.80 to 20.00 lower.  Linseed Meal was steady in limited trade.  Sunflower Meal was 5.00 to 25.00 lower.
    • Crude Soybean Oil was 107 to 184 points lower.  Crude Corn Oil was steady. 
    • Ruminant Meat and Bone Meal was mixed, 15.00 lower to 23.00 higher mostly 15.00 lower to 10.00 higher. Ruminant Blood Meal was mixed, 25.00 lower to 50.00 higher.  Feather Meal was steady to 110.00 higher, mostly 25.00 to 110.00 higher. Menhaden Fishmeal was steady. 
    • Corn Hominy was steady to 5.00 lower. Corn Gluten Feed was mixed, 22.00 lower to 20.00 higher.  Corn Gluten Meal was steady to 45.00 lower, mostly 10.00 to 30.00 lower. 
    • Distillers Dried Grains were steady to 17.00 lower. 
    • Wheat Middlings were mixed, 10.00 lower to 20.00 higher, mostly steady to 10.00 lower.

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    Est. Weekly Meat Production Under Federal Inspection:
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    Total red meat production under Federal inspection for the week ending Saturday, July 12, 2014 was estimated at 861.9 million lbs. according to the U.S.Department of Agriculture's Marketing Service. This was 15.9 percent higher than a week ago and 7.1 percent lower than a year ago.  Cumulative meat production for the year to date was 3.6 percent lower compared to the previous year.
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    Bullish/Bearish Consensus:
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    The theory behind the "Bullish/Bearish Consensus" indicator is when the public reaches a consensus, they are usually wrong:
    • They get too bullish after prices have risen, and too bearish after they have already fallen.
    Because of this tendency, there are often extremes in opinion right before major changes in trend:
    • When the public reaches a bullish extreme, i.e., a great majority thinks prices will keep rising, then prices often decline instead. 
    • And when they become too bearish, then prices tend to rise.
    So when Public Opinion moves above the red dotted line in the chart, it means that compared to other readings over the past year, you're seeing a statistically extreme value.  You also want to look at the absolute level of Opinion, too - if it's at 90%, then there's no question we're seeing an historic level of bullish opinion.  Watch for readings above 80% (or especially 90%) to spot those dangerous times when the public is overly enthusiastic about a commodity.

    Conversely, when Public Opinion moves below the green dotted line, then the public is too pessimistic about the commodity's prospects for further gains compared to their opinion over the past year.  Looking for absolute readings under 20% (or especially 10%) often indicates an upturn in the market.

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    Bullish/Bearish Consensus - Cattle
    Last Updated: July 8th
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    Bullish/Bearish Consensus - Corn
    Last Updated: July 8th
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    National Economic News:
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    Stocks pull back as earnings season looms: Stocks pulled back from the previous week's record highs as investors faced new worries about the European financial system and nervously awaited the start of second-quarter earnings season. The Standard & Poor's 500 Index saw its largest weekly drop since early April, but much of the selling took place among small-caps, with the Russell 2000 declining nearly 4% for the week and falling back into negative territory for the year-to-date period.

    New worries about European financial system weigh on sentiment: One of the catalysts in the week's declines was the revelation of financial problems at a major Portuguese bank, Banco Espírito Santo. News that the bank's parent was delaying coupon payments on some of its debt sent European markets sharply lower on Wednesday, and markets in the U.S. followed suit when they opened. Worries over the European financial system may have been exacerbated by recent economic data, which have revealed disappointing slowdowns in manufacturing and other activity. U.S. stocks recovered somewhat later in the trading day,  however.

    Investors brace for earnings disappointment: A larger factor weighing on U.S. market sentiment may have been worries that corporate earnings reports could prove disappointing in the coming weeks. According to analytical firm FactSet, earnings for the S&P 500 as a whole are expected to increase by 4.9% in the second quarter, a faster pace than in the first quarter but a smaller rebound than had been anticipated when the second quarter began. Only a few major companies had released earnings reports by the end of the week, making any overall trend difficult to discern at this early stage.

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    • Federal Reserve officials have decided to end its asset purchase program in October if the economy stays on track, according to the minutes of the June meeting released Wednesday. According to the plan, the Fed will make a $15 billion final reduction at its October meeting, after trimming it by $10 billion at each meeting up to that point. After a discussion of its exit plan, Fed officials generally agreed to keep reinvesting the proceeds of securities that mature on its balance sheet until after it had hiked interest rates. Fed officials also agreed that the rate of interest on excess reserves would plan a "central role" in moving rates higher when the time comes. It will have an overnight reverse-repo facility with an interest rate set below the IOER rate. The spread would be "near of above the current level of 20 basis points and give the Fed adequate control over interest rates. Fed officials said they would release a more detailed exit plan later this year.
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    AMA Seeks Ban on Antibiotic Use for Growth Promotion 
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    The American Medical Association (AMA) is calling for federal action to ban antibiotic use in food animals for growth promotion purposes to slow the development of antibiotic-resistant bacteria, reports Food Safety News.

    “Use drives resistance, and overuse drives resistance to happen even faster,” says David Wallinga, a physician on the Keep Antibiotics Working steering committee. Wallinga notes there is also overuse in hospitals, but he says, “As much as 70 percent of the use in agriculture is unnecessary or overuse.”

    Resolution 513, which was adopted earlier this month at AMA’s annual meeting, also calls for members to support regulatory and legislative measures requiring that antibiotic prescriptions for animals be overseen by a veterinarian within a valid context and for the U.S. Food and Drug Administration (FDA) to expand its surveillance and data collection of antibiotic use in agriculture.

    Infectious disease doctors are “quite freaked out by the fact that their antibiotics are not working a lot of the time now,” Wallinga notes. “The AMA policy is a reflection of the increasing level of crisis that these doctors feel, but there’s still a disconnect in the general public at how serious a problem it is.”

    This new, more stringent AMA policy replaces the earlier one that opposed the use of antimicrobials at non-therapeutic levels in agriculture and urged that such uses be terminated or phased out. 

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    "Click Here" to view a Slide Show of Drought Monitor maps for the past 12 weeks
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    Looking Ahead:
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    • During July 10-14, 2014, a broad band of moderate precipitation (0.5-2.0 inches) is expected from Arizona and New Mexico northeastward and eastward across the north-central Plains, the north-central Mississippi Valley, the Ohio Valley, and interior Northeast. A band of moderate to heavy rainfall (1.0-3.5 inches) is forecast for the central and eastern Gulf Coast states, and the southern Atlantic states from Florida to Delaware.
    • For the ensuing 5-day period, July 15-19, 2014, there are enhanced odds of above-median rainfall in the Southwest, the Southeast, and over northern and southwestern Alaska. There are enhanced odds of below-median rainfall in the Pacific Northwest, from eastern Montana to Michigan, southern Texas, southern Louisiana, and over south-central and southeast Alaska including the Panhandle.
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    Beef Production:

    Friday's USDA WASDE report increased the estimate of 2014 beef production by 130 million pounds and increased their estimate for 2015 by 60 million pounds. Despite predicting more beef, they increased the midpoint estimate of 2014 slaughter steer prices to $148/cwt from $146/cwt in their June estimate. USDA left unchanged their forecast that 2015 fed steers will average somewhere between $145 and $157 per hundred pounds.

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    Feedyard Closeouts: Profit/(Loss)
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    • Typical closeout for steers sold this week & hedged when placed on feed: ($50.89)
    • Typical closeout for un-hedged steers sold this week: $242.36
    • Projected closeout based on the futures & estimated Cost of Gain for steers placed on feed this week: ($80.81)
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    Slaughter Cattle:
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    Friday trading has been very limited on light demand in all major feeding regions. Not enough sales for a full market trend. The last reported market in all regions was on Thursday. In the Texas Panhandle live sales sold from 155.00-156.00. In Kansas live sales sold at 156.00. In Nebraska live sales sold from 155.00-157.00 and the bulk of dressed sales sold from 246.00-249.00. Live sales in Colorado sold at 156.50. The Western Cornbelt saw live sales from 154.00-157.00 and dressed sales from 245.00-249.00.
     
    Livestock Slaughter under Federal Inspection:
                                              CATTLE    CALVES   HOGS         SHEEP
    Friday 07/11/2014        (est)   111,000      2,000     275,000       6,000
    Week ago (est)                         4,000         0            1,000         0
    Year ago (act)                       122,000      3,000      401,000       8,000
    Week to date (est)                 567,000    10,000   1,857,000      41,000
    Same Period Last Week (est)  468,000     8,000    1,627,000      34,000
    Same Period Last Year (act)   613,000    14,000    2,024,000      45,000

    Saturday 07/12/2014      (est)   9,000         0             2,000           0
    Week ago (est)                       23,000        0                  0             0
    Year ago (act)                        27,000         0            17,000          0
    Week to date (est)                576,000     10,000   1,859,000        41,000
    Same Period Last Week (est) 491,000       8,000   1,627,000        34,000
    Same Period Last Year* (act) 641,000     15,000   2,042,000        45,000
    2014 Year to Date             15,916,000   320,000  55,424,000   1,119,000
    2013 *Year to Date           17,046,000   388,000  58,054,000   1,109,000
    Percent change                    -6.6%      -17.5%       -4.5%         0.9%

    Negotiated prices paid for Slaughter Steers and Heifers:

    Live basis:            Steers                              Heifers
    Over 80% Choice    155.00-155.00 avg 155.00   155.00-155.00 avg 155.00
    65 - 80% Choice     155.00-155.00 avg 155.00         - 
    35 - 65% Choice     155.00-155.00 avg 155.00   155.00-155.00 avg 155.00
    0 - 35% Choice             -                                      - 
    Total all grades    155.00-155.00 avg 155.00   155.00-155.00 avg 155.00

    Dressed basis
    Over 80% Choice    247.00-247.00 avg 247.00         - 
    65 - 80% Choice     244.00-245.00 avg 244.43         - 
    35 - 65% Choice     245.00-245.00 avg 245.00         - 
    0 - 35% Choice             -                                       - 
    Total all grades    244.00-247.00 avg 246.02         - 

     

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    Corn Crop Condition:
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    It hasn’t been smooth sailing for all crop-producing states over the last week, but for most of the Corn Belt, milder weather helped push the corn crop to its best conditions in 15 years.  According to the USDA’s latest Crop Progress report, 75 percent of U.S. corn is in good to excellent condition, virtually unchanged from last week and well-above last year’s report of 68 percent in these same conditions.

    Corn conditions aren’t just ahead of 2013’s conditions. Looking at historic data, corn conditions in 2014 had surpassed reports from the last 15 years, topped only by those reported in 1999.

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    National Grain Summary:
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    Bearish expectations for grains developed as the USDA Supply and Demand Report drove new-crop prices to new contract lows.  USDA estimates corn production at 13.86 billion bushels for 2014-2015 with yields at 165.3 bpa and ending stocks at 1.801 billion bushels.  Soybeans closed with new lows as USDA estimates production at 3.8 billion bushels for 2014-2015 with yields at 45.2 bpa and ending stocks at 415 million bushel.  USDA had wheat at 1.992 billion bushels for 2014-2015 with yields at 43.1 bpa and ending stocks at 660 million bushels.
    Corn Futures Summary: Corn prices proved vulnerable in response to the July WASDE. In that report, USDA revised the 2013/14 ending stocks up to 1.246 billion bushels from 1.146 billion last month. The new-crop ending stocks are now forecast at 1.801 billion compared to 1.726 billion last month. Favorable weather outlooks for corn pollination also weighed on the market. USDA maintained the yield forecast at 165.3 bu/a. USDA increased its forecast for global corn ending stocks for 2014/15 to 188.0 mmt from 182.65 mmt last month. September corn lost 8.00 cents lower to $3.7825/bushel and December descended 8.0 cents to $3.8475.

    Soybean Futures Summary: Soybean prices turned decisively lower following the release of the July WASDE. The nearby August contract fell to the lowest level of 11.595 per bushels during the session as USDA revised the 2013/14 ending stocks up to 140 million bushels from last month at 125 million. For the new crop, the ending stocks forecast was also increased from 325 million to 415 million due to the record production forecast at 3.8 billion bushels. August futures closed 37.00 cents lower to $11.9575 and November futures traded down 18 cents to$10.75. August soyoil fell 0.71 cents to 36.77 cents/pound, while August soymeal tumbled $11.5 to $387.8/ton.

    Wheat Futures Summary: Wheat futures traded sharply lower after the monthly WASDE report was released. CBOT front-month SRW futures posted the largest weekly decline since June 2012 and dropped 9.3% on the week. KC hard red winter wheat also fell 6%. Surging supplies and reduction in demand added pressure to the markets. USDA raised 2014 US by 50 million to 1.992 billion bushels. Exports are forecast down to 900 million from 1182 million last year. Accordingly, 2014/15 ending stocks rose to 660 million bushels, up 70 million from 2013/14. September CBOT wheat plunged 22.5 cents to $5.26/bushel, while September MGE wheat dove 11.0 cents to $6.3625/bushel and September KC wheat dropped 13.0 cents to $6.28/bushel.

    In the USDA’s latest Weekly Export Sales report, corn net sales for 2013-2014 were up 25 percent from the previous week at 363,000 metric tons (MT). This is also up 36 percent from the four-week average.

    The July USDA WASDE report revised the 2013/14 ending stocks for corn up to 1.246 billion bushels from 1.146 billion last month. The new-crop ending stocks are now forecast at 1.801 billion compared to 1.726 billion last month. Favorable weather outlooks for corn pollination also weighed on the market. USDA maintained the yield forecast at 165.3 bu/a. USDA increased its forecast for global corn ending stocks for 2014/15 to 188.0 mmt from 182.65 mmt last month.

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    Five Year Moving Average - Corn
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