Not a lot of logic going on in the early stages of the feeder cattle trade yesterday. Live cattle started flat and the corn market was mildly higher, but the feeder market went through some bouts of big time pressure. Prices pushed beyond $2 lower in a lot of months early on, came back up some, pushed back even lower and then somehow managed to close higher in the net changes in all but the August contract.
Chart technicals look ugly in feeders with several contract months knocking at the door of contract lows. The fundamentals are lining up with the technicals fairly well though with corn hitting new contract highs and the live cattle market stagnant to lower. If we could get the cash feedlot trade to budge from the $138 level it’s been in since the first week of March it would help, but it just won’t move.
Cattle slg.__ 124,000 +3k wa +11k ya
Choice Cutout__272.11 +1.64
Select Cutout__260.29 -.04
Feeder Index:___155.67 -.34
Lean Index.__99.63 -.43
Pork cutout___106.64 +3.48
Hog slg.__475,000 -2k wa -9k ya
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Moving on to the grain and oilseed trade, when the day started with an 8am flash sale of 1.02 mmt of US corn to China, one would think we’d build a bullish fire in the corn market, but that didn’t happen. Instead it was the wheat market that exploded higher. Combing through news sources for reasoning generally pointed back to Russia/Ukraine stories and while that’s been a legit source, it’s also nothing fresh or new. I think money flow had a lot to do with the wheat market and the chart technicals back that thought process up pretty well too, because a lot of the wheat contracts looked really friendly on the charts with the big drive higher. The extension last night in the overnight trade confirmed those thoughts as well.
Funds yesterday were estimated buyers of 6k wheat and sellers of 2k corn and 9k beans. Corn settled mixed, soybeans were down sharply on the front end and wheat was up anywhere from the teens in the MGEX spring wheat futures to 30+ higher in KC and Chicago.
Crop condition ratings showed winter wheat conditions 2 points better than last week in the g/ex category, moving up to 32%. P/vp remained unchanged at 36% of the crop. Last year the g/ex rating was 53% and p/vp was only 17% in the same week. Looking at HRW wheat states specifically, Kansas conditions got 2 points better in the g/ex category, but also 2 points worse in the p/vp category, meaning crop that was rated fair dropped 4 points. Oklahoma wheat gained 7 points in g/ex and took 11 away from p/vp. Texas was unchanged in g/ex and p/vp was 79% of the crop. That number was 81% last week.
Export inspections data was overall friendly, even in the wheat. Remember that last week the USDA made some changes to export projections in the April S&D data. Corn exports were unchanged, they raised the soybean export estimate 25 mln bushels and they lowered wheat exports by 15 mln bushels. That led to the average weekly pace needed in soybeans increasing and the average needed in wheat decreasing yet again. Since the marketing year started last June they have lowered wheat exports 115 mln bushels to the current projection of 785 mln bushels. Just for comparison, last year’s exports were 992 mln bushels, or 207 mln bushels bigger than this year. So, the average needed each week to hit USDA’s export target in wheat is now 13.3 mln bushels and we got 15.1 mln yesterday, so I suppose we call that friendly. Soybeans need 21.1 mln each week and we got 28.2 mln. Corn inspections need to average 50.8 mln per week and we got 55.9 mln yesterday. Good week overall for everything.
The top two destinations for all the shipments were; Philippines in wheat, followed by Mexico, China for milo, China, then Mexico in soybeans and China and Mexico in corn as well.
8am daily export reporting was a zero today.
Egypt announced yesterday they were tendering for wheat and the tender specified EU origin. Their last purchase was back in mid-February when they bought three cargos of Romanian wheat.
6-10’s last night showed below normal temps across all of HRW wheat country, the rest of the Plains states and also the Corn Belt. Precip chances were below normal from the Northern Plains down through all of HRW wheat country and that reached over into the Central Corn Belt. From central Illinois to the East Coast the chances were above normal.
Pete Loewen
Loewen and Associates, Inc.
Pete Loewen / Matt Hines / Doug Biswell / Tyson Loewen
www.loewenassociates.com