Pretty depressing day of trade in the cattle yesterday. At the close, the feeders had several contract months down in the triple digits and April live cattle were down over $1 as well. The rest of the live cattle months were just mild to moderately weaker.
Weekly export sales were bullish for both beef and pork with 44,700 mt’s of sales in pork and 25,100 in beef. Hogs finished up, cattle obviously didn’t, so I don’t think there was any bearing on the market from that data.
In the negotiated cash feedlot trade, with packers losing a lot of leverage in recent months, unfortunately that now morphed into a lot fewer days of actual price discovery and trading in cash each week. Cattle feeders digging their heels in and packers not wanting to pay up pushes Southern Plains trade into Thursday or Friday these days it seems. Unfortunately also, the last two weeks it has resulted in progressively lower cash trade as well. January started at $157 in Texas and Kansas and dropped $1 each of the next two weeks. As of yesterday afternoon, the only volume that had traded in the big three states was in Nebraska at $245-$248 dressed. That’s fully steady with last week.
Cattle slg.__126,000 +6k wa +5k ya
Choice Cutout__268.75 +.47
Select Cutout__251.48 -.32
Feeder Index:___178.80 +1.03
Lean Index.__72.52 +.20
Pork cutout___80.46 +1.35
Hog slg.__491,000 +57k wa +17k ya
*****************************************************************************
Great day of trade in the grain and oilseed markets with the front end KC wheat and soybean month finishing up 20+ cents and at least double digits higher on a lot of the rest.
On the chart technicals, March KC wheat poked down into new recent lows in early January, taking out the low water mark from back in August. Prices didn’t accelerate lower after the new lows though. They traded progressively higher since, actually taking out downtrending resistance and trying to act mildly friendly on the charts. Yesterday’s high hit the top end of new uptrending resistance though and last night’s lower price action added some validity to that mark. The overall trend is still mildly friendly, but prices could drop quite a ways and still maintain the uptrend. Remember, not every day has to be higher in a bull market.
March corn has looked mostly friendly on the chart since early December, but it’s been a slow process trying to claw back up to the big resistance point that’s the October high just over $7.10. I’ll call the corn trend mildly friendly, just like wheat.
March soybeans have been in a nice, consistent upward trend since October, although you can actually date it back to the July lows being the change in trend that started the bull run. Contract highs were over $15.72 back in June, it traded down to $12.99 by late July and we’re back up over $15 again with the recent high just under $15.50. That’s actually the first major resistance point and contract highs at $15.72 ¼ would be the next target. I’m not saying we’ll hit those, I’m just quoting resistance points in this rally. Brazil is in the process of starting harvest on a monster crop that’s going to try and fight this trend tooth and nail.
Weekly export sales were solid in everything except corn yesterday. Current marketing year to date totals in everything are sitting in neutral territory for soybeans and wheat, but it’s ugly for corn and milo. We’ve sold 946 mln bushels of corn so far and last year at the same time we’d sold 1.73 bln bushels. 24.4 mln bushels of milo are on the books. Last year it was 242 mln bushels. Yup, that’s 90% below last year. Soybeans are sitting at 1.71 bln in sales, which is above last year’s 1.622 bln on the same week. Wheat has 589 mln in total sales compared to 632 last year. As a rule of thumb, when wheat carryout is over 900 mln bushels, we really need to be seeing 20 mln per week in export sales. The current carryout estimate is 567 mln bushels though, so a number close to 20 mln is super bullish. 10 mln is what we need to see. We got 18.4 mln this week, but we’ve had a LOT of single digit weeks this marketing year as well.
Big picture though, never overestimate US wheat exports. You’ll be disappointed almost every time.
Funds yesterday were estimated buyers of 3500 wheat, 10k corn and 6k beans.
Pete Loewen
Loewen and Associates, Inc.
Pete Loewen / Matt Hines / Doug Biswell / Tyson Loewen
www.loewenassociates.com
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