Meat complex futures trade on Monday was an oddly erratic in the feeders and hogs. For the lean hog futures it was up on the front two months and down on all the deferreds. Feeders were down on the front two months and up on all the rest with some of those back months trading close to or over $1 higher at the finish. Live cattle were down across all contract months with the front end April losing over $1. The strange part of that weakness in the April fats though was talk that there were renewed bids at steady money with last week on the feedlot end and Friday’s cash included a $2 jump from the previous week up to $128. There was also a very light amount of reported trade in Nebraska at $205 dressed which is steady with Friday.
Choice beef cutout values took a big leap into new high territory, pushing up past the $223 mark yesterday. Given the weather situation and poor feeding performance, it shouldn’t be a surprise that beef is gaining, but when it’s evaluated relative to other competing meats, it appears more like the cart is way out in the front of the horse at the moment for beef. The ratio of choice beef to pork cutout values is at historical extreme levels, which brings with it the possibility that from a competing meat standpoint, pork gains some favor. From a price standpoint, it’s a given.
Cattle slg.___116,000 +2k wa -2k ya
Choice Cutout__223.55 +2.26
Select Cutout___217.21 +.42
Feeder Index:___139.59 +.36
Lean Index.__ 51.93 -.20
Pork cutout___62.93 +1.01
IA-S.MN direct avg__45.22 no comparison because it wasn’t reported yesterday
Hog slg.___ 465,000 +4k wa +17k ya
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Grain and oilseed trade found strong early trade in the soybeans and decent gains for wheat, but that strength faded as the day progressed. Corn and soybeans managed a higher close, but wheat was down across the entire complex. Export inspections data that came out midmorning was solidly bearish for corn and wheat and mildly bearish beans. Corn came in at 34.1 mln bushels and the pace needed each week between now and the end of the marketing year to hit USDA’s export target is 55.2 mln bushels. Corn was 21.1 mln bushels shy of that mark yesterday. Soybeans need 35.4 mln bushels every week to hit their export target and we got 31 mln, which is 4.4 mln shy of what’s needed. That’s close enough to call it only mildly bearish and really close to neutral. Wheat was big disappointment, coming in at 16.2 mln versus 29 mln needed each week to hit the export target.
For corn and soybeans, there’s a lot of marketing year left since it ends for those commodities on the last day of August. Wheat is very quickly running out of time with a marketing year that ends on the last day of May. USDA trimmed the wheat export target earlier in the marketing year to 1 bln bushels, but that’s still 99 mln bushels more than the 17/18 marketing year total. As of yesterday’s data, total wheat shipments are still 48.6 mln bushels behind a year ago on the same date. In the last S&D numbers, USDA raised wheat ending stocks for old crop up over the 1 bln bushel market to 1.010. If this export picture doesn’t improve, that number could easily be 1.1 bln or more. Increasing ending stocks for old crop isn’t doing any favors for the friendlier picture of reduced planted acres on new crop. Let’s cross our fingers that export trade gets a LOT better, really soon. It doesn’t help any of these markets that rail freight has been a disaster and cold weather holding on is making river barge freight a mess as well. Can’t sell things very well if we can’t get them into exportable position.
Fund activity yesterday was estimated as buyers of 5k corn and 5k beans and sellers of 3k wheat.
Winter wheat crop conditions had some state-by-state reporting again yesterday. Texas wheat declined 2 points from the previous week in the g/ex category, moving down to 36% g/ex. Oklahoma gained 15 points though, showing g/ex conditions at 53%. Kansas wheat ratings came in at 9% p/vp and 49% g/ex.
6-10’s last night showed a little more of a warming trend in the south and for lack of a better term, “slightly less cold in the central and north. From all of the Panhandle region through central Oklahoma and through the Northern Plains the temps were still below normal. From central Texas, angling NE through Chicago, everywhere south and east was above normal on temps. Precip was pegged at above normal for the entire Plains and Corn Belt areas. I can’t help but think at some point soon, the reality of a tremendous amount of fieldwork to get done before planting should start to be somewhat friendly to new crop prices.
Pete Loewen
Loewen and Associates, Inc.
Pete Loewen / Matt Hines / Doug Biswell / Matt Burgener
www.loewenassociates.com