Corn, Live Cattle and Feeder Cattle limited down yesterday. This is a rare occurrence. Well, two things just happened.
First, we already knew about the World Agriculture Supply and Demand Estimate (WASDE) report that came out yesterday. Corn limited down 25¢ Monday, 15 minutes after the report came out. The government numbers were higher than expected. Planted acres went down from 91 million acres to 90 million acres with 82 million acres expected to be harvested. Projected yields actually went up from 166 bu/acre to 169 bu/acre. This causes the ending corn stock to be higher than expected. Corn used for ethanol was reduced by 25 million bushels and corn exports were off by 100 million bushels leaving ending corn stocks at 2.18 billion bushels. The report gives corn a bearish (traders believe the price will fall) look.
Secondly, a packing plant in Kansas caught fire last Friday. With this plant down it will have to displace its 30,000 killed head per week capacity. That may not seem like but this plant accounts for about 6% of total U.S. fed cattle packing volume. Tyson says that it can add a Saturday shift and disperse cattle to enough of their plants to cover the 30,000 head loss per week. Time will tell because their closest facilities are about 3 hours away. Trucking cost money and shrinkage. Additionally, packers are dealing with a labor shortage so they may have to get creative if they increase packing numbers at other plants. The low-end speculation on the plant repairs is two months.
Prices: The short team impact is lower fat cattle prices which will probably result in lower feeder cattle prices. With the plant down, beef supply will tighten which will could increase meat price. This is all very speculative right now. The market is not sure what to do and it will probably be like that until Tyson gets a timeline on the plant rebuilt and things adjust. Across the state last week, calves were 4-5 lower, slaughter and replacement cows were steady. The light-calf (250-450lbs) market usually takes a jump in the spring and fall because farmers are stocking them on grass and wheat but with the futures market running backward it is unlikely we see those premiums on the light-calves unless something changes.