Date: June 6th, 2018
Morning Ag Markets – Matt Hines
Cattle futures held strong gains yesterday as live cattle futures hit a new 3-week high and feeders now showing a key reversal higher on the charts. No cash feedlot trade yet this week with bids and offers still some $7+ apart. The Fed Cattle Exchange online auction will be later this morning with 568 head consigned compared to last week’s 449 head of which 225 sold at $110 live.
Cash hogs and feeders are sharply higher this week. A few salebarns took off last week for the Memorial Day holiday, so prices from OKC were compared to 2 weeks ago at $3 to $7 higher for calves and feeders. Calf trade in El Reno yesterday though $2 to $6 higher than last week.
Cattle slaughter from Tuesday is estimated at 121,000 head, up 1,000 from last week and last year. Hog slaughter from Tuesday is estimated at 453,000 head, up 27,000 from last week and up 17,000 compared to a year ago.
Boxed beef cutout values steady on Choice and weak on Select on light to moderate demand and offerings for a total of 144 loads sold.
Choice Cutout__227.58 +.01
Select Cutout__205.85 -.40
CME Feeder Index:__139.23 +3.06
CME Lean Hog Index.__71.73 +.65
Pork Carcass Cutout__78.53 +1.37
IA-S.MN Wtd Avg Live__ N/A, Wtd Avg Carcass Base__72.24 +.88
National Wtd Avg Live__ 54.40 +2.82, Wtd Avg Carcass Base__71.21 +.79
June live cattle with resistance just above $108 which is the top of 2+ month long sideways trading, support down at $102.85 then $101.37, the low from May. August feeders hit a new 3-month high last 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 yet holding sideways the past couple months. Support is at $75.00 then $72.50 and resistance up at $79.
******************************************************************************************************************
Grains were steady to higher after the past few days of sharply lower. The U.S./China trade negotiations remain on the front burner as China repeated its announcement it is ready to buy U.S. Ag and Energy products so long as the new tariffs against them slated for mid-June are dropped. This time they stated they would purchase $70 billion worth yet the details of what and when still absent from their comments. Wheat fundamentals are supportive with dry conditions still in southern Russian and Kazakhstan and early harvest reports from TX and OK about as bad a previously predicted.
U.S. weather should determine more direction than anything for the fall crops now that we have entered June. Both soybean and corn crops are off to fantastic starts. The most recent USDA report pegged national corn ratings at 78% G/E, which is the best start in over twenty years, and soybeans first crop rating this year at 75% G/E, 9% ahead of year ago. Crops should look good in early June, more important will be conditions a month from now. U.S. weather is expected to remain good for at least the next week but beyond is questionable with the GFS model looking quite wet, while the Euro model is trending very dry.
Overnight, grains were steady to higher adding to Tuesday’s reversal higher. Corn and soybeans finished steady to 1 higher, wheat 4 to 7 higher.
Not much new news out overnight. South Korea and Taiwan picking up some corn. Taiwan purchased 1 cargo of optional origin corn overnight and South Korea said to be very active this week with recent price drop but still awaiting trade details. Soybean basis racing higher again in Brazil at +$1.05 while there are no bids for trains delivered into the PNW and U.S. gulf values are steady at +$.56.
Over the next 3 days, light scattered rains are in the forecast for KS and NE, possibly clipping northern OK with heavy rains expected in IA. The next 7 day total showing 1 inch from KS to ND and the eastern 1/3 of U.S. with 2 to 4 inches for IA, MN and WI. The latest 6-10 day outlook showing above normal precipitation for the Plains, Southwest and Southeast, below normal for the Rockies, Northeast and Eastern Corn Belt. Temperatures are still forecasted above normal.
July corn needs to hold the support at $3.80 this week but also would need to close the gap from Monday above $3.90 to stimulate additional buying. December corn has support at $3.95, resistance at $4.10 and the contract high matched last week up at $4.29 ½. July soybeans also with a gap remaining from Monday from $10.14 ½ to $10.15, support below the current market at May’s low of $9.92 ½ with resistance up at $10.20, $10.34 and $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. The first support level is at $5.14 and the long term higher trend support just above $5. July Chicago wheat with the same pattern, high last week at $5.54, support around $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 matt@loewenassociates.com
866-341-6700