Cattle complex futures pushed solidly higher once again yesterday, posting triple digit gains in three of the front four months in live cattle and the front three in feeders. Everything else was higher, but didn’t quite hit the $1 mark. Since the first day of May that has meant just short of $10 up in spot May feeder cattle futures and just over $11 higher in live cattle.
Futures have been the slow runner in the race to higher ground though, because we’re up $15 in cash feedlot trade since the first of the month. The weighted average for last week’s cash, rounded up to the nearest $1 was $114 for steers and $112 for heifers in Kansas, $110 for steers and $117 for heifers in Texas and $112-$113 for steers and heifers in Nebraska. We came into the month of May with Kansas cash ranging from $95-$105 and last week ranged from $110-$120 and none of it in a true “negotiated” cash market. You can’t call it negotiated when packers don’t bid on the majority of cattle that are being offered. Instead, they selectively pay higher money each week on an extremely limited number of what’s ready to kill. They have started doing the reverse in product trade by discounting certain cuts into certain markets and it’s all likely to avoid scrutiny, which obviously isn’t working very well considering all the screaming being done by the squeaky wheel crowd on the internet. The irony will come when price fixing investigations during Covid potentially conclude that prices may have been fixed “too high”, due to the token trade going on at higher levels each week.
Slaughter totals continue to increase as more plants are reopening, or just ramping up speed and efficiencies again after being crushed by Covid slowdowns or shutdowns. Without the Kung Flu troubles, pork packers would have still been killing 490k head/day and beef packers in the vicinity of 120k head/day. The last time beef packers killed anything over 100k head/day was April 8th. The last time the hog tally was over 400k head was April 18th. The low point in hogs was sub 300k early this month and mid 70k head totals for cattle. Yesterday’s hog total was 379k and the cattle number was 94k. Keep in mind, every head between yesterday’s number and 490 in pork and 120 in cattle was another head that got backed up, still being fed and gaining weight. That’s what makes that cash trade such a crazy market at higher money.
Coming up this Friday we get monthly COF report numbers released by USDA. The range of analyst estimates from a survey conducted last week cited the On Feed total on May 1 from 94.1% of a year ago up to 95.4%. Placements in April have a range of estimates from 71.8% to 80%. Marketings estimates ranged from 70% to 75% of a year ago. No doubt the placement totals look super bullish, but the fact marketings were so low and cattle are being backed up in epic proportions tames that bullishness immensely.
Cattle slg.__94,000 +8k wa -26k ya
Choice Cutout__414.95 -19.37
Select Cutout__394.87 -24.19
Feeder Index:___125.73 +.93
Lean Index.__67.60 -.90
Pork cutout___107.46 -2.66
IA-S.MN direct avg__n/a
Hog slg.__379,000 +22k wa –84k ya
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Grain and oilseed trade yesterday finished with corn and soybeans higher and wheat lower. It’s very discouraging knowing wheat is literally dying out in the field in the droughty areas of the western HRW wheat belt and dying in the futures market as well. It doesn’t help that funds were net sellers on the day of 3k wheat, but were on the buy side of 4k corn and 4k beans.
Weekly export inspections data was very disappointing in soybeans and wheat yesterday, almost neutral in corn and bullish milo. Corn export loadings were 45.3 mln bushels versus a weekly pace needed of 47.9 mln to hit USDA’s export target for the marketing year. Milo needs 5.4 mln a week and we got 9 mln yesterday. Soybeans need 25.7 mln bushels each week and only got 12.9 mln. Wheat was equally disappointing, needing 37 mln bushels and only got 16.2 mln.
Crop progress and condition data that came out yesterday afternoon showed the nation’s corn planting pace at 80% complete. That’s a gain of 13 points from last week, it’s 36% ahead of last year and 9 points ahead of the 5 year average. In the big four corn producing states, Illinois is 8% ahead of normal at 83% done, Iowa is 14% ahead of normal and 96% done, Minnesota is 18% ahead of normal at 95% done and Nebraska 13 points ahead of normal at 91% complete. Emergence is 43%, which is just 3 points ahead of the 5 year average.
Soybean seeding was 53% done across the country, which is 15% up from last week and 15 points ahead of the average pace as well. Last year, 44% of the crop was in the ground at this point.
Spring wheat seeding was 60% done, up from 42% a week ago. That’s still 20% behind the 5 year average and it’s even 3 points behind last year’s pace.
HRW wheat crop conditions showed 52% of the crop rated g/ex, which was down 1 point from last week and 14% below last year at the same time. Kansas g/ex conditions got 2 points better, Oklahoma dropped 3 points and Texas conditions eroded by 5 points.
6-10’s last night showed above normal precip chances over all of the Corn Belt and the vast majority of the Plains states areas. Temperatures were much above normal in the Eastern Corn Belt and above normal in the rest of the Corn Belt, Northern and Central Plains. From the Panhandle region south it was normal to below on temps.
Pete Loewen
Loewen and Associates, Inc.
Pete Loewen / Matt Hines / Doug Biswell
www.loewenassociates.com