Great start for the feeder cattle market yesterday, but not a great finish by any means. Sunday night corn trade was sharply lower, which brought friendly expectations for the open. Early trade was well over $1 higher, corn was down in the teens and stayed there till the close, but both the live and feeder markets faded into the closing bell as well. Live cattle had one month down over $1. Feeders were mildly lower on all but the front month August contract that settled mildly higher.
The National Feeder Cattle Summary that comes out Monday afternoon’s now cited steers and heifers across the Central Plains states selling steady to $4 higher last week and cattle in the Southeast were $4-$7 higher. The cheerleaders in the industry and analysis world continue to paint a super bullish picture down the road and I don’t disagree with that analysis. What way too many people lose sight of though is the strong premiums already built into all the deferred month futures contracts, along with some major issues happening on the feed input side of the cattle finishing equation. Forage and corn supply in the heart of cattle feeding country are super tight and only going to get tighter as we move into 2023 because of the drought from Nebraska through Texas. That means a wild ride is still ahead regarding corn basis and roughage cost.
Here’s another way to look at it… Buying $100/hd and larger first cost losses is like betting red all the time on a roulette wheel that has 60% black slots and only 40% red. So, for some of the folks that like to take their own feeders all the way to slaughter weight, be very very mindful that it’s a seller’s market in the feeder cattle world right now, not a buyer’s market. That statement has nothing to do with what prices will do down the road, it’s simply taking a look at the here and now and also taking into consideration live cattle deferred futures prices and current ration costs.
Cattle slg.__124,000 +5k wa +6k ya
Choice Cutout__264.46 +1.09
Select Cutout__239.72 +.13
Feeder Index:___ 179.04 +.77
Lean Index.__121.71 -.22
Pork cutout___124.91 +3.08
Hog slg.__428,000 -30k wa -73k ya
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In the grain and oilseed trade, markets started lower and stayed lower most of the day. Soybeans were the leader and rightfully so with a moderating forecast still in the works over a big part of the Plains and Corn Belt. The biggest part was a sharp break in temperatures. Adding to the soybean pressure was economic reports coming out of China that were sour, prompting some rate cuts.
Weekly export inspections data was fairly routine. Corn export loadings were 21.2 mln bushels which was just barely under the 21.6 mln needed each week to hit USDA’s export projection for a marketing year that ends on the last day of this month. Milo has kind of a dynamic situation going on. USDA has milo exports pegged at 290 mln bushels. We got 2.4 mln bushels in inspections yesterday. When census bushels are added, the total bushels shipped so far add up to 296.2 mln and there’s still three weeks left of shipments to potentially add more to that total. I realize that’s a lot to digest, but basically, USDA didn’t change the milo export projection in last week’s report and we had already shipped more bushels than the projection. In soybeans, USDA decreased the export projection by 10 mln bushels in last week’s report which meant the average needed each week dropped. Inspections yesterday were 27.4 mln bushels and that came in just over the top of the 25.8 mln needed each week to hit their new target. Wheat inspections were 13.7 mln and need 16.5 mln per week. The wheat marketing year goes until the end of May 2023 though, so there’s a lot of time left to get better or worse in wheat…
The top destination in everything was Mexico for wheat and China for corn, milo and soybeans, although Mexico was right behind China in corn and beans as well.
Crop progress and condition data had corn ratings at 57% g/ex, which was down 1 point from last week. Soybeans dropped 1 point out of the g/ex categories as well, coming in at 58%. Spring wheat ratings were 64% g/ex and that was unchanged from a week ago. Milo was 27% g/ex which was 2 points worse than the week prior.
Funds yesterday were estimated sellers of 2k wheat, 10k corn and 12k beans.
8am daily export reporting showed 228,606 mt’s of US new crop soybean sales to Mexico.
Prices a/o 8:56a CST
@CU22 618′ 0 -8′ 6
@CZ22 618′ 0 -10′ 2
@CH23 626′ 2 -9′ 4
@CZ23 589′ 0 -7′ 2
@CZ24 542′ 4 -5′ 0
@SU22 1466′ 6 -27′ 2
@SX22 1396′ 2 -16′ 0
@SF23 1403′ 2 -15′ 6
@SX23 1333′ 0 -10′ 0
@SX24 1262′ 4s -12′ 0
@KWU22 878′ 4 -4′ 2
@KWZ22 880′ 4 -4′ 4
@KWH23 882′ 4 -4′ 6
@KWK23 884′ 0 -5′ 0
@KWN23 877′ 4 -4′ 2
@WU22 794′ 4 -6′ 2
@WZ22 810′ 6 -7′ 0
Pete Loewen
Loewen and Associates, Inc.
Pete Loewen / Matt Hines / Doug Biswell / Tyson Loewen
www.loewenassociates.com