The big selloff in the meats started back on Friday and it willingly continued yesterday, creating a lot of panic in the process. There’s been a lot of damage on the charts from a technical analysis standpoint and that has a chance at providing more active speculative liquidation of longs and new selling to be added to the mix.
That’s not a forecast though, if that’s what you’re looking for, it’s just a valid talking point of the potential that lies ahead. SVB and Signature bank going under was the biggest focus in markets yesterday, along with the very willing bailout by the feds. Economists and finance folks have been and are going to continue to make very confident predictions on the outcome of this mess, but I want to emphasize very heavily that economists and finance folks are the sole cause of the bank collapse in the first place, which should speak very loudly to you as to whether or not you should be listening to their solutions to this problem. Please let that sink in for a moment if it didn’t open your eyes the first time I said it….
Even in big bull runs like we have in cattle, markets don’t go up every day and we’re going to have short spurts and long spurts of correction to the downside in these markets. Spot month March Feeders gapped lower yesterday, but then bounced off of uptrending support. More deferred contracts like the August didn’t leave a gap yesterday, but it also fell well below uptrending support, so it looks worse than the front end on the chart.
All the 2023 live cattle months gapped lower and then proceeded to fall well below any uptrending support. Very ugly situation if that gap stays open, but it looks a little better if it’s filled right away.
Closes yesterday had hogs down anywhere from 10c to 1.22, live cattle were mildly weaker across the board and feeders were in the mildly weaker category on everything except the May contract that somehow managed to close 1.17 lower in the face of the next weakest contract only being down 65c.
Cattle slg.__125,000 unch wa +2k ya
Choice Cutout__284.86 -.05
Select Cutout__273.62 +2.08
Feeder Index:___ 189.77 -.06
Lean Index.__79.86 +.14
Pork cutout___88.80 +1.00
Hog slg.__484,000 +23k wa +18k ya
Moving on to the grain and oilseed trade, wheat caught a little rebound action yesterday and managed to close higher, while the fall crop markets of corn and soybeans were on the south side of unchanged. Beans finished in the teens lower.
Weekly export inspections data is starting to show the shift or the seasonal transition from front end loaded soybean exports to back end loaded corn exports. When I’m talking about the front end and back end, I’m referencing the marketing year, which for corn and beans started back on September 1. Wheat starts June 1. From Sept 1 till late winter, soybean shipments are typically much larger than corn and then from spring through summer corn is typically carrying much larger numbers than soybeans. Corn export loadings were 39.3 mln bushels versus a weekly average pace needed of 46 mln bushels to hit USDA’s export target. Soybeans were 22.7 mln bushels and needed 16.1 mln to stay on pace. Milo inspections were 2.9 mln bushels versus 2.2 mln needed each week as an average. Wheat was 9.1 mln bushels and needs 14.5 mln per week.
Compared to last year at the same time, corn exports are down 37%, milo is down a whopping 76%, soybeans are 2% higher than a year ago and wheat is down 2%. I’m not overly concerned about beans and wheat hitting their export targets. I’m very concerned about milo and corn and of course, USDA dropped their corn export forecast by 75 mln bushels in last week’s S&D report.
Top destinations in everything were Mexico in wheat, Japan in corn, followed by Mexico, China in milo and China in soybeans as well, with Mexico at #2 in beans.
A few individual states put out wheat crop condition ratings yesterday. Kansas was unchanged from last week at 17% g/ex ratings and 52% p/vp. Colorado was 40% g/ex and 23% p/vp. That was a big improvement of 11 points over the week prior. Texas was down 2% with 17% rated g/ex and 50% p/vp. Oklahoma got 9 points worse, moving to 30% g/ex and 44% p/vp.
6-10’s last night still showed below to much below normal temps across the Plains and Corn Belt. Precip chances were above normal across all of HRW wheat country and the rest of the Plains states. From Illinois east it was normal to below on precip chances.
8am daily export reporting showed 612k mt’s of US corn sales to China.
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.