There was a lot of green across the screen in the major ag markets to start the week. Cattle and hogs were up, along with corn and soybeans, but the wheat market didn’t want any part of the action. In the hogs, that up move included $1-$2+ gains on the front three months. Live and feeder cattle traded on both sides of unchanged, but ended up closing on their highs for the day.
Hog slaughter yesterday was the new daily record since covid started hammering kill plants back in March/April. 482k head was the tally yesterday and that’s the largest since April 7th. A comfortable plant capacity on a daily basis is upper 490’s. The last time a daily hog slaughter total was over 490k head was March 31.
Baby steps are better than no steps at all, but with larger daily and weekly kills comes larger pork production totals as well. That’s a double edge sword because on one side, bigger capacity utilization helps clean up backlogged marketings faster and that’s long term positive. The other side to that equation though is big increases in daily and weekly total pounds of pork being produced by those plants. More meat pushed into domestic channels in all three markets between pork, beef and poultry means less ability and potential for price gains short term. The best thing that could happen would be for economies to open up without any major Kung Flu hurdles to cross, but we all know that’s no likely to happen soon. In the interim, the next best thing is to hope for continued strong export demand in the meats to help clear some of the excess production that isn’t being consumed domestically.
Cattle slg.__117,000 +4k wa +2k ya
Choice Cutout__207.20 +1.73
Select Cutout__193.93 +1.18
Feeder Index:___142.61 +.69
Lean Index.__53.02 +.58
Pork cutout___70.07 -1.86
IA-S.MN direct avg__38.15 +.18
Hog slg.__482,000 +62k wa +26k ya
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In the grain and oilseed trade, wheat broke through a lot of long term technical support last week and the speculative pressure has been piling on since. Corn and soybeans posted mild gains at the close yesterday and some of that was being helped by social media cheerleading from the windstorm that swept through Iowa and Illinois and even some areas farther east yesterday. Soybeans also had a long list of 8am daily sales reported yesterday morning. Those sales included 264k mt’s to China, 324k mt’s in a separate sale to China and 111k mt’s to unknown destinations. All of that was new crop action.
Export inspections numbers were bearish across the board. Versus the pace needed in each commodity, corn inspections were only 67% of the amount needed to reach USDA’s export target by the end of the marketing year, milo 17%, 46% in soybeans and 78% in wheat. Specific numbers showed; 45.3 mln bushels of soybeans compared to 66.9 mln needed, 1.5 mln bushels of milo versus 8.6 mln needed, 23.4 mln corn versus 51.3 mln needed and 14 mln wheat versus 18 needed. The wheat marketing year started on June 1. Corn, soybeans and milo old crop marketing year ends on the last day of this month. The bullishness lately in the export arena has been new crop sales commitment related, not old crop sales or shipments. Commitments are great, but actual inspections, which means a commodity that is loaded on a truck, train or boat and shipped is what makes an actual export. I guess technically, being unloaded at a foreign destination is even better and more accurate. There is growing odds that old crop sales for the fall crops will fall short of USDA’s current export targets and that’s bearish. New crop sales totals have been really bullish for the last several months though, so that’s where the balancing act comes into play.
Funds yesterday were estimated sellers of 3k wheat and buyers of 5k corn and 3k beans.
Crop progress and condition report data yesterday afternoon had corn rated 71% g/ex, down 1 point from last week and 14 points better than last year at the same time. Soybeans got 1 point better, moving up to 74% g/ex. Last year they were 54% g/ex on the same date. Milo improved 3 points, moving up to 58% g/ex. Spring wheat dropped 4 points to 69% g/ex.
15% of the nation’s spring wheat crop is harvested now, down 10% from the normal pace. Winter wheat harvest is 90% complete, 3 points behind normal.
Cooler conditions last week slowed down maturity a little bit. 97% of the corn crop is silking, which is 2 points ahead of the 5 year average, 59% is in the dough stage and that’s 7 points ahead of normal and 11% of the corn crop is dented, which is actually 1 point behind normal. Soybeans percent blooming is 92%, which is 3% ahead of the average and setting pods was 75%, up 7% from normal.
8am daily export reporting showed another 132k mt US soybean sale to China.
Tomorrow morning at 11am we get Crop Production and S&D data released from USDA. Technically speaking, this is some of the first actual enumerated data for the year and will include satellite imagery analysis and producer and elevator surveys, even though actual infield, objective yield data that use to come out in August was pushed to September reports beginning last year. I’m not sure if Kung Flu changed some of that data collection or not. The data for the report was compiled long before yesterday though, so I’m sure a lot of folks will immediately start shooting holes in corn and soybean yield numbers because of yesterday’s wind damage.
Average yield estimates show corn at 180.3 bu/ac versus 178.5 in July. Soybeans have an average estimate of 51.4 bu/ac versus 49.8 in July. That puts production totals at 15.163 bln corn, 4.278 bln beans and all wheat is expected at 1.832 bln. All of those numbers are larger than the July USDA data.
Ending stocks for the 2019/20 marketing year are pegged at 2.263 bln corn, 615 mln beans and 1.036 bln wheat. New crop stocks are pegged at 2.795 bln corn, 527 mln beans and 946 wheat. All of those numbers are bigger than July as well (on new crop).
Pete Loewen
Loewen and Associates, Inc.
Pete Loewen / Matt Hines / Doug Biswell
www.loewenassociates.com