The cattle complex has been stuck at a crossroad for about a week now, trying to figure out if continued bullish fundamentals can resurrect a really bearish technical picture that was created on the charts. Most contract months a week ago posted bearish key reversals at the contract high and then May feeders gapped lower the following day, leaving an island top. In the midst of all that, futures really haven’t recovered much, yet calf and feeder trade remains stout and cash feedlot trade has been steady to higher since. Actually sharply higher yesterday. Odd times for sure and a little precarious considering fund and managed money has the ability to push futures lower while cash hangs in there. Closes yesterday were mild to moderately higher in all the fats and $1+ lower on all feeder months except the spot May.
Regarding that feedlot trade, Kansas and Nebraska reported some instances of sharply higher prices yesterday with northern live trade $229-$230 and dressed up to $370 tops. Kansas was $224-$227. Last week’s Kansas weighted average was in the $220 area. Mind you, June live cattle futures which is the spot month, closed at $214.15, so we’re talking about $10+ positive basis. Historically, the May basis is positive anyway, but nothing like we’re seeing right now.
Weekly export sales in the meats were at the low end of neutral territory in beef and bullish pork. Net beef sales were 12,300 mt’s and actual exports were 14,800 mt’s. Japan, South Korea and Taiwan were the top three buyers. Same three countries topped the list on destinations for actual shipments.
Net pork sales were 37,400 mt’s, along with exports of 28,500 mt’s. Mexico, China and Japan were the top three buyers. Mexico, Japan and South Korea were the top destinations for actual shipments.
We have a COF report coming at us after the close tomorrow. Expectations are friendly and looking for the On Feed total on May 1 to be 98.5% of a year ago, Placements in April at 97.1% and Marketings in April at 96.8%.
Cattle slg.__120,000 +1k wa -3k ya
Choice Cutout__359.59 +.84
Select Cutout__348.28 +3.32
Feeder Index:___297.64 +.31
Lean Index.__92.34 +.49
Pork cutout___100.04 -.48
Hog slg.__485,000 -1k wa +1k ya
In the grain and oilseed trade, everything was headed north and soybeans led gainers with a few double digit higher closes. Corn got an added boost from uptrending ethanol grind numbers, but there really wasn’t much out there for soybeans and wheat. Outside markets had equities getting thumped, but the dollar was considerably weaker also and bigger picture that’s a good thing for export potential.
Weekly EIA ethanol data specifically showed production increasing 4% from the week prior, moving up to 1.036 mln barrels/day. Corn consumption in the grind is still considerably less than what we had through the first half of the marketing year, but at least it’s increasing. Blender demand and exports were fractionally lower this week, but stocks still somehow showed a drop of 2%. Increased production, lower use and still seeing total supply drop doesn’t math very well, but that’s often the case with the reported data and my best guess is that it has to do with “in transit” supply.
Weekly export sales in the grains tailed off quite a bit across the board in the old crop totals. Corn sales were neutral at 46.9 mln bushels, milo was decent at 1.3 mln, soybeans neutral at 11.3 mln bushels and wheat was big time bearish at -500k bushels. The new crop side of wheat was a different story though with a whopping 32.4 mln bushel total, while the rest of them were disappointing. New crop bean sales were 600k bushels, zero milo and 8.6 mln bushels of corn.
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