Cattle futures brought two sided trade yesterday as most contracts started the week off by opening lower following another hefty leg downward on Friday. It didn’t take long for both fats and feeders to push to the positive side shortly into the morning but then feeders started to turn back lower and that’s the direction they continued, although they recovered quite a bit by the time the closing bell rang in the afternoon. Live cattle were able to fight the pressure as most contract months remained in the green. August fats continue to trade premium to the rest of the contracts which is somewhat counter seasonal, but negotiated cash trade last week was premium to futures at $185 in TX and KS. With cash being down now a few weeks in a row, cash and futures have been working towards convergence but there are still a couple bucks left between before that happens, or if that happens. Fats finished steady to mostly higher, and feeders had minor losses from 7-50 cents, but another stout day in the lean hog futures with $1+ gains.
National Feeder and Stocker Cattle Summary for the week ending August 17th – Compared to last week, feeder steers and heifers sold mostly steady to 5.00 higher, with instances 8.00 to 10.00 higher where the previous week’s losses were more egregious. Demand was moderate to good this week as feeder cattle buyers were somewhat cautious again as cattle futures ended the week sharply lower wiping out any early week hopes of recovery and marking the third week in a row for losses. That weakness in the Cattle Complex left cattle feeders struggling to get cattle bought that fit into a rapidly declining futures contract. The structure of the Live Cattle contract is concerning and confusing as the Aug contract leads all the months on the board when normally the winter and Apr contracts are dollars higher than the summer months. Cattle feeders have an opportunity currently to sell their finished cattle at a profitable level and are now concerned about taking on more inventory that look to lose according to what the Live Cattle futures contracts are predicting. Spring-born calves have not made their way to the marketplace yet, however one could expect those unweaned calves to be coming later next month.
In the grain and oilseed trade, corn, beans and KC wheat were up against fresh new contract lows from back on Friday while the other wheat markets managed to stay out of new low territory. The oilseed markets were strong yesterday, with corn tagging along on the coat tails. Some additional export demand provided support as 8am flash sales yesterday showed 332K MT’s of new crop beans sold to China, and another 110K MT’s of new crop beans sold to unknown destinations. A weaker US dollar also supportive on that front. The wheat complex looked to be fighting pressure yesterday to join corn and beans on the plus side but KC was the only one able to close in the green and it was marginal. The pro farmer crop tour kicked off and goes until Thursday this week. They are projecting South Dakota corn yield at 156.51 bu/a compared to 157.42 bu/a last year, but above the three yr avg from the tour of 142.44 bu/a. The tour is projecting Ohio corn yield at 183.29 bu/a which is just below last years of 183.94 bu/a, but above the prior 3 yr avg as well of 181.06 bu/a.
Weekly Export inspections for the week ending August 15th – met or exceeded expectations but corn was the standout once again. Corn inspections for the week came in at 45.9 MBU compared to 38.8 M the week prior. MYTD corn shipments are ahead of last year’s pace by 548 MBU, and the current USDA estimate of 2.25 BBU for export is 588 MBU larger than last year so corn is nearly on pace as long as inspections continue to exceed expectations. Soybean inspections for the week were 14.6 MBU compared to the week prior at 12.8 M. Current MYTD for beans is behind last year’s pace by 285 MBU, but USDA’s export estimate is 280 MBU smaller than a year ago. Close to being on pace there as well. Milo inspections came in at 4.2 MBU compared to just 2.3 M the week prior. Current MYTD for milo is ahead of last year by 129 MBU, while USDA’s estimate is only 126 M larger than last year. Lastly, wheat inspections came in at 12.8 MBU compared to the week prior at a whopping 24.5 MBU. Current MYTD for wheat is ahead of last year by 34.7 MBU and the USDA estimate is 118 MBU larger than last year.
Moving on to yesterday’s crop progress report- corn conditions remained at 67% GEX but added a point to the PVP now at 11%. Corn silking at 97%, 74% has reached the dough stage, 30% is dented, and now 5% is mature which compares to 3% for a 5 yr avg. Soybean conditions unchanged and rated 68% GEX and 8% PVP. Soybeans blooming advance 4 points to now 95% which is in line with the 5 yr avg, and beans setting pods at 81% which is 1% ahead of the avg. Milo conditions declined again, now rated 49% GEX and 18% PVP. Milo headed is at 83%, coloring at 39% which is 4% ahead of the previous 5 yr avg. Winter wheat harvest advanced 3 points to now 96% complete. Spring wheat harvest jumped 13 points to now 31% which is behind the 5 yr avg pace by 5 points. Conditions improved by 1 point to now 73% GEX and 5% PVP.
Overnight trade in the grains brought the pressure back to corn and beans but let up on wheat. Corn finished fractionally lower, beans down 1-2, and the wheat complex on the plus side by a fraction to 2 pennies.
8am flash sales showed 132K MT’s of beans sold to China and 239,492 MT’s of beans sold to Mexico. That is 813,492 MT’s of beans sold in just two days.
IMPORTANT—PLEASE NOTE
This does constitute a solicitation to buy or sell commodities futures and/or options. The information contained herein is provided for informational purposes only. The information is not guaranteed as to its accuracy or completeness, although the information was taken from sources we believe to be reliable. The market recommendations of Loewen and Associates, Inc. are based solely on the judgment of Loewen and Associates, Inc. personnel. We do not guarantee or warranty, either expressed or implied, of success to you in the use of this information. Loewen and Associates, Inc. disclaims responsibility for or loss associated with use of information from our commentary, analysis or recommendations. There is risk of loss in trading commodity futures and options. The risk in trading can be substantial; therefore only genuine “risk” funds should be used.