Let's switch gears now and take a look at current market conditions for grain and cattle markets.

The latest release of the Grain Stocks report was last Friday, September 29. You can go to the https://usda.library.cornell.edu/concern/publications/xg94hp534?locale=en. and check the numbers from this report (look for the "latest release, Sep 29, 2023" box on the right end of the screen). Let's focus on corn stocks and soybean stockson September 1, 2023 compared to September 1, 2022.

[A] Look at corn stocks and soybean stocks on farm, off farm and total (on farm + off farm). How do these numbers on September 1, 2023 compare to last year's position (September 1, 2022)?

[B] Based on how much corn stocks and soybean stocks have changed on September 1, 2023 compared to September 1, 2022, explain what you think the corn basis and soybean basis should be in September 2023 compared to September 2022. In other words, in general would you say corn and soybeans basis in September 2023 should have been wider, narrower or about the same compared to September 2022?

Here we are still taking a look at current market conditions for grain and cattle markets.

The latest release of the Cattle on Feed report was on September 22. You can go to the https://usda.library.cornell.edu/concern/publications/m326m174z. and check the numbers from this report (look for the "latest release, Sep 22, 2023" box on the right end of the screen).

Based on the numbers in the report, discuss the prompts below.

[A] Explain what the latest report shows for the cattle on feed on September 1, 2023 (latest report) compared to August 1, 2023 (previous month) and also compared to September 1, 2022 (previous year). In other words, how much larger/smaller is the cattle inventory (cattle on feed) now (September 1, 2023) compared to the previous month (August 1, 2023) and compared to the previous year (September 1, 2022)?

[B] Explain what the latest report shows for placement and marketings during the month of August 2023 (latest report) compared to July 2023 (previous month) and also compared to August 2022 (previous year).

[C] When we think about how much the Cattle on Feed report can impact cattle futures prices, we need t compare the numbers that come out in the report with market expectations. Remember that futures prices already reflect expectations about supply and demand from market participants. Therefore, the release of market reports (such as the Cattle on Feed) will only affect futures prices if the new numbers in the report are different from what was expected by market participants. Let's look into this point for the last Cattle on Feed report.

The Daily Livestock Report published on September 19 showed a table with the expectations of market analysts ("Pre-Report Estimates") for the Cattle on Feed report published on September 22. You can see the Daily Livestock Report and the expectations of market analysts by clicking here Download by clicking here. The "Pre-Report Estimates" table is on the top-right corner of the Daily Livestock Report. It shows the average of estimates (the average of all estimates from market analysts) and also the range of estimates (the lowest and highest estimates across all market analysts). In addition, the chart below the table shows all the estimates from each market analyst (the blue dots in the chart represent individual analysts). Finally, the text of the Daily Livestock Report also discusses these expectations from market analysts.

Compare the market expectations from market analysts with the actual numbers released in the last Cattle on Feed report for cattle on feed, placements and marketings, and explain how the report could have impacted the futures prices for cattle. For example, would you say that futures prices should have increased or decreased because the actual number for cattle on feed (and placements, and marketings) was higher or lower than market expectations?