Cattle complex futures finished mixed to mostly lower in fats and the feeder cattle market was moderate to actively higher with a few $1+ gains at the finish. Some of those were pushing up close to $2 higher at the peak, but that was also when corn was at it’s low point. The corn market was getting throttled again to the downside early in the day.
Negotiated cash feedlot trade saw some action at $109-$110 in Kansas, $109-$111 in Texas and $109 live in Nebraska. That’s all close to $1 lower than last week’s top. A lower trending cash market doesn’t jive well with the old saying “higher corn makes higher live cattle”, but when you look at the placement trends from last fall in the On Feed reports and the corresponding available supply numbers through February, a lower cash trend makes pretty good sense.
Speaking of On Feed reports, we get one tomorrow afternoon after the close. The first survey I found this week had the range of estimates for the On Feed total from 99%-99.8% of a year ago. Placements in December were expected somewhere between 94.9% and 98.7%, so if that happens it will be the third consecutive month of year over year declines in feedlot in-movement. Marketings are pegged at 99.2% to 101.8% at the high end. A little note of caution on the marketing figures though, because there was one extra slaughter day last month versus the previous year. Dialing those estimates into actual daily data would put marketings at around 96% of a year ago on a daily basis.
Cattle slg.__120,000 +2k wa -2k ya
Choice Cutout__218.91 +1.42
Select Cutout__207.28 +.84
Feeder Index:___132.81 -.09
Lean Index.__ 65.67 -.15
Pork cutout___79.02 +1.60
IA-S.MN direct avg__56.51 +1.88
Hog slg.__498,000 unch wa +5k ya
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When a market goes up 18 out of 23 days and then drops for three days in a row, heads start to spin in panic with people worrying about missing the highs. The market I’m referencing is soybeans. And yes, the last three days of lower trade have been disheartening, yet by percentage, the drop has been puny in comparison to the $6/bu rally since last spring. Same story goes for corn at the moment, although the string of 23 days during the big run in corn only had 3 lower closes versus the 5 in beans. Soybeans, corn and wheat were all double digits lower at one point, but closed well off the lows despite still being net negatives in the daily price changes. Beans were the only market still down doubles at the finish.
The only significant shift in bullish fodder has been an improving weather pattern in South America. We’ve still had good 8am flash sales numbers this week for beans. Export inspections were really bullish. We’ll have to wait till Friday for export sales numbers because of Monday’s holiday, no different than inspections data coming out yesterday instead of the normal Tuesday release. Soybean inspections yesterday were more than 3x’s what was needed to hit the weekly average for USDA’s export target. Also good seeing China as the top taker in beans and milo, along with 5th on the list for corn, although they were absent in wheat this time.
Looking at the numbers specifically, soybean inspections were 75.6 mln bushels and beans only need 19.7 mln per week on average to hit USDA’s export target. Corn inspections were a little bearish with 34.5 mln inspected for export versus 56.7 mln needed every week. Just for the record though, that is still 82% ahead of last year’s pace on the same date. Milo inspections were 6.3 mln compared to 5.6 mln needed and milo is also still 167% over last year’s pace. Wheat export loadings were 10.2 mln bushels, which was less than half the 20.6 mln needed. Wheat exports are also 2.6% behind last year at the same time and USDA’s forecast is for a 2% increase year over year. No Bueno for wheat.
Funds were estimated on the sell side of 3k wheat, 10k corn and 7k beans.
8am daily export reporting showed some hard core proof that supply rationing isn’t very prevalent yet. The report had a long list including; 136k mt’s of US soybean sales to China, 163,290 mt’s of soybeans to Mexico, 138k mt’s of US HRW wheat to Nigeria and 336,500 mt’s of US corn to unknown destination.
6-10’s last night showed above normal temps for most of Kansas and south. The Corn Belt and the rest of the Plains states were a mix of normal to above on temps. Precip chances were normal to below for the Panhandle region and most of the rest of Texas. Areas north and east were predominately above normal on precip. For Kansas specifically, it was above normal everywhere except for the far SW corner that was normal.
Pete Loewen
Loewen and Associates, Inc.
Pete Loewen / Matt Hines / Doug Biswell
www.loewenassociates.com