The start of the week for the cattle complex ended with a mixed close and prices in both the live and feeder markets showing just a little less green on the screen than red. Given the fact the negotiated cash feedlot trade from Friday jumped $4 from the previous week, trading up to $115 live, I honestly thought we’d see a more bullish reaction than mixed. Front end October fats that expire tomorrow on the last day of the month did close higher, but were still 57 cents under that $115 trade, making a positive basis. December, which is the next month out, plunged to triple digit losses though and I think that was way too aggressive even with the $2.97 premium it held over the Oct at the finish.
Last year during the same week of October, cash feedlot trade jumped from $111 up to $119. Kind of ironic that cash had been stuck at $111 this year for six consecutive weeks and then jumped to $115 the same week the rally happened last year. It had been a long wait for the seasonal pattern of higher fall cash feedlot trade to happen and hopefully it’s a trend that continues. Given the fact breakevens at the feedlot level do nothing but go up from this point forward into the end of the year, the beginning and continuation of this cash rally was and still is desperately needed for anybody with unhedged cattle.
Cattle slg.___117,000 -1k wa unch ya
Choice Cutout__213.76 +.29
Select Cutout___201.11 +2.28
Feeder Index:___153.56 -.45
Lean Index.__ 64.16 -.45
Pork cutout___77.52 +.93
IA-S.MN direct avg__58.41 +.48
Hog slg.___ 474,000 -1k wa +30k ya
*****************************************************************************
Moving on to the grain and oilseed trade, it was fairly quiet once again on Monday. Wheat managed to squeak out a higher close on the front end of the KC and Chicago markets. Corn and soybeans finished the day under mild pressure. Funds were sellers of 4k corn and 8k beans and buyers of 2k wheat. Considering it’s the end of the month tomorrow, I would have thought the activity by those funds would have been a lot more brisk.
Export inspections data that came out midmorning was bullish for soybeans and bearish on corn, milo and wheat. Even after the first US sale of wheat to Egypt in what seems like forever, wheat just keeps getting kicked in the teeth each week in the sales and shipments data. Yesterday’s wheat total was 14.5 mln bushels. The weekly pace of inspections needed to hit the USDA export target for the year is all the way up to 22.9 mln bushels. We’re also lagging last year’s inspections pace by 93.2 mln bushels.
The big takeaway from all these numbers is that one of these week’s we’re going to get a tally that’s over 20 mln bushels and if it’s not over 22.9 mln, it’s only going to be a neutral number. It won’t even be bullish. Granted, there might be other ways to trim wheat supply and the fact the HRW wheat planting pace is so far behind is one of them. Fast forward about 6 months from now though and take into consideration that the Northern Plains that has gone heavily towards bean plantings in recent years has a NO Bid at some elevator locations because there’s no market for beans up there, we might be buried in spring wheat seedings come April of 2019…
Shifting focus to the fall crop’s export inspections, milo was 122k bushels yesterday versus a 3.3 mln bushel per week pace that’s needed to hit the USDA target. Corn was only 25.7 mln bushels compared to 48.6 mln needed each week. That’s terrible. Soybeans were the darling of the day with 47.9 mln bushels in export inspections versus 40.7 mln needed each week. That was a great, bullish number for the soybeans!
Crop progress and condition data gave us the first winter wheat condition ratings of the year yesterday afternoon. G/ex ratings came in at 53% g/ex versus 52% g/ex at the same time last year. Kansas was rated 42% g/ex and 18% p/vp. Oklahoma was 38% g/ex and 26% p/vp. Texas was 46% g/ex and 22% p/vp. Also make note of the fact there’s a very large amount of HRW wheat yet to be planted and from Kansas north, we’re very rapidly getting past the ideal planting date for optimum yields. Nationwide, winter wheat is 78% planted versus 85% on average for that date. In the HRW wheat belt, Kansas is 15% behind normal, Nebraska 3% behind, South Dakota 3% behind, Colorado 2% behind, Oklahoma behind by 10 and Texas behind by 8%.
Nationwide corn harvest was pegged at 63% complete, which is right at the average pace. Soybean harvest is 9% under the normal pace at 72% done. BIG lag still in Iowa, Minnesota, Nebraska and the Dakota’s. I still think that’s a developing bull story for beans given harvest and quality loss potential from it being too wet for way too long on beans that are ready to be cut.
6-10 day weather forecasts yesterday showed above normal temperatures for the entire High Plains and western US. The Central Plains and Corn Belt showed normal temps and then above normal in the East again. Precip was normal for the Panhandle and above normal moisture chances for the rest of the Plains and Corn Belt. Still wet for areas harvesting, but at least it’s a little warmer in that offering.