Date: June 4th, 2018
Morning Ag Markets – Matt Hines
Livestock futures were mixed on Friday but still finished higher for the week for both cattle and hogs. The volatility in the stock market and concerns over trade continue to push and pull on these markets. Cash feedlot trade wrapped up in the South on Thursday of last week at mostly $110 live on light volume. $111 live and $177 to $180 on a dressed basis traded in the North through Friday. This was mostly steady with prices paid the week previous and supportive to futures which are still discount to cash by $5.
NATIONAL FEEDER & STOCKER CATTLE SUMMARY – W/E 06/01/2018
RECEIPTS: Auctions Direct Video/Internet Total
This Week 110,900 51,600 15,900 178,400
Last Week 184,200 47,500 10,600 242,300
Last Year 120,100 43,900 300 164,300
Compared to last week, steers and heifers sold 2.00 lower to 2.00 higher on this holiday shortened week. Reduced receipts at auctions nationwide this week as many sales took the week off to celebrate the Memorial Day holiday. The stands may not have been full of buyers this week, however the normal players showed up to procure limited supplies of top quality feeders. Yearlings are getting harder to come by as most have been sold by this time of year. Boxed-beef movement was largest of the year last week with over 1600 loads reported sold with very good export sales despite the dollar index posting highs for the year. Typically, an increasing dollar slows buying activity, but export sales continue to be aggressive. Beef demand seems to be hitting on all cylinders with retailers featuring beef which is promising with the large supply of fed cattle and demand is exceeding expectations.
For the week, Friday May 25th to Friday June 1st, June Live Cattle +$.25, August +$1.32, August Feeder Cattle +$1.40, September +$2.15, June Lean Hogs +$3.40, July +$1.25. Boxed Beef, Choice +$.10 @ $227.53, Select +$.18 @ $204.80. Pork Carcass Cutout +$.72 @ 76.32.
Cattle slaughter from Friday is estimated at 121,000 head, up 2,000 from the week previous and up 4,000 compared to last year. For the week, 582,000 head, down 65,000 from the week previous but up 19,000 from last year. Beef production for the week at 463.2 million pounds last week compared to 447.5 last year and year to date running 3.6% ahead of last year.
Hog slaughter from Friday is estimated at 450,000 head, up 14,000 from the week previous and up 15,000 compared to a year ago. For the week, 2,030,000 head, down 266,000 from the week previous but up 50,000 from last year. Pork production for the week at 433.4 million pounds last week compared to 416.6 last year with year to date running 3.7% ahead of last year.
Boxed beef cutout values weak on Choice and firm on Select on light to moderate demand and offerings for a total of 116 loads sold.
Choice Cutout__227.53 -.67, +.10 for the week
Select Cutout__204.80 +.33, +.18 for the week
CME Feeder Index:__136.17 +1.35
CME Lean Hog Index.__70.01 +.38
Pork Carcass Cutout__76.32 -1.90
IA-S.MN Wtd Avg Live__ N/A, Wtd Avg Carcass Base__69.33 -.15
National Wtd Avg Live__ 51.61 +.06, Wtd Avg Carcass Base__69.14 +.35
June live cattle now at their midpoint with resistance up at $108, the high from May and support down at $102.85 then $101.37, the low from May. August feeders hit a new 3 month high on Thursday at $149.50 with the next resistance level up at $154 and support around $143. June lean hogs still on the long term lower trend but did hit recent high to end last week. Support is at $75.30 then $72.50 and resistance up at $79.
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Corn futures finished near the lows for the week while most of the pressure came on soybeans and wheat. The favorable start for corn along with trade concerns outweighed the bullish extended forecasts calling for hot and dry weather throughout the Midwest. Export sales were strong again for corn and soybeans but wheat sales were disappointing which triggered more fund liquidation to end the week.
The EU raised its corn production estimate +1.4 MMT to 65.4 MMT. That compares to 62 MMT for the 2017/18 crop year and 61 projected by the USDA this year. Brazil getting rain, but will likely come too little, too late, for most of the second corn crop acres. Analyst estimates still trending either side of 80 MMT vs. 97 MMT last year (for combined first and second crop).
USDA April census soybean crush came in at 5.149 MMT or 171.6 MBU, right in line with expectations. This compares to 182.1 MBU in March and last April at 149.7 MBU. USDA also reported corn usage for ethanol at 445 MBU in April compared to 432 MBU a year ago. DDG production at 1.832 MMT vs. 1.752 last April.
For the week, Friday May 25th to Friday June 1st, July Corn -$.14 ½, December -$.13 ¼, July Soybeans -$.20 ¼, November -$.15 ¾, July KC Wheat -$.23 ¼, December -$.23, July Chicago Wheat -$.19 ¾, December -$.16 ¾, July MPLS Wheat -$.40 ¼, September -$.36, July Soybean Meal -$6.10/T, December -$5.50/T.
Overnight, grains continued under pressure as the trade war with China is ongoing. Over the weekend China stated that their previous commitment to purchase U.S. commodities would be off the table is the U.S. starts to apply any tariffs. Corn finished 3 to 4 lower, soybeans 9 lower, wheat 10 lower in KC, 8 lower in Chicago and 3 lower for MPLS.
USDA reported a private sale of 114,300 MT or 4.2 MBU of new crop soybeans sold to Mexico. Brazil continues to benefit from the U.S. and China trade war. Soybean export for May are reported at 12.3 MMT vs. 10.2 MMT in April and only 10.9 MMT last May.
Corn planting progress should be pushing 95 to 97% complete in this afternoon’s report. Conditions should hold steady and may even touch 80% good to excellent. Soybean planting should advance from 77% to near 90% and the first conditions report for beans will be released today.
Over this next week, scattered light rains expected mostly in the Northern Corn Belt. The latest 6-10 day outlook showing below normal precipitation for the Plains, above normal for the Southeast. Temperatures are still forecasted above normal for all except for the PNW.
July corn gapped lower overnight, support at $3.85 and getting close to breaking the long term higher trend. July soybeans also gapped lower overnight and have been trending lower since early March. Support next at $9.92 ½ with resistance up at $10.50. July KC wheat continues to stair step higher, topping out last week at a new high not seen since last July at $5.74 ¾. We are now pulling back with support at $5.13 and the long term higher trend support just above $5. July Chicago wheat as the same pattern, high last week at $5.54, support at $4.90 and trendline support at $4.80.
Loewen and Associates, Inc.
Pete Loewen / Matt Hines / Doug Biswell / Matt Burgener / Alex Gasper
www.loewenassociates.com pete@loewenassociates.com matt@loewenassociates.com
866-341-6700