Date: June 13th, 2018
Morning Ag Markets – Matt Hines
Cattle futures were under pressure for most of the day yesterday but did come back to finish mixed for fats and only moderate losses for feeders. Lean hogs continue to build on recent strength with supportive cash prices and pork values. The Fed Cattle Exchange online auction will be later this morning with 596 head consigned compared to last week’s 568 head of which none were sold, 2 lots passed out at $110 live. Show lists appear to be bigger this week compared to last, $5 spike paid by packers can do that.
The USDA supply and demand report was released yesterday morning with a few changes to both beef and pork. Beef production for 2018 was estimated at 27.188 billion pounds, down 90 million pounds from last month. Imports were increased by 20 million and exports increased by 15 million. Ending stocks were left unchanged so per capita domestic consumption dropped from 58.1 lbs per person to 57.9. Pork was similar with production total decreased by 55 million pounds, imports and exports each increased 45 million, ending stocks left unchanged which led to per capita consumption decreased from 51.9 lbs per person to 51.7.
Monday salebarns…Tulsa, steers and heifers mostly steady to $2 higher. OKC, feeder steers mostly $1 to $5 higher, feeder heifers steady to $3 higher, steer and heifer calves $2 to $7 higher. Tuesday in La Junta, CO, no report due to light receipts and El Reno, OK reported steady sales on steer and heifer calves ahead of today’s feeder auction.
Cattle slaughter from Tuesday is estimated at 120,000 head, down 1,000 from last week but up 2,000 from last year. Hog slaughter from Tuesday is estimated at 452,000 head, down 1,000 from last week but up 19,000 compared to a year ago.
Boxed beef cutout values steady to firm on light to moderate demand and light offerings for a total of 120 loads sold.
Choice Cutout__224.92 -.21
Select Cutout__203.39 +.59
CME Feeder Index:__140.95 +.34
CME Lean Hog Index.__77.18 +1.39
Pork Carcass Cutout__81.30 +.86
IA-S.MN Wtd Avg Live__ N/A, Wtd Avg Carcass Base__80.09 +1.11
National Wtd Avg Live__ 58.85 +.57, Wtd Avg Carcass Base__78.68 +.78
June live cattle with a key reversal lower on Monday yet so far the $108 support level is holding. August feeders also showing a key reversal lower to start this week, support from $144.30 to $143.70 with resistance up at $149.50. June lean hogs go off the board tomorrow and look to hold above the $80 mark. July broke above the $81 level this week and hit a new 3-month high yesterday at $81.75. The next levels of resistance not until the high back from late February at $84.67 and then the contract high from late January at $85.57. The first level of support is just above $79 with strong support down at $75.
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Over in the grains, market action was led by the USDA report. Winter wheat production estimates were adjusted along with supply and demand estimates for all the grains. USDA did not adjust the Southern Plains harvested acreage or yield which is a bit of a shock compared to the latest harvest reports. They did decrease new crop ending stocks though by 9 million bushels down to 946 million which is overall friendly. Corn and soybean old crop and new crop stocks were decreased more than expected which is friendly for both. Old crop corn stocks down 80 million to 2.102 billion bushels and new crop down 105 million to 1.577 billion. Old crop soybean stocks were reduced by 25 million to 505 million bushels, new crop down 30 to 385 million bushels.
World stocks for the 2018/19 marketing year for wheat were increased though by 1.83 MMT to 266.16 MMT. Production was decreased nearly 3 MMT but that was offset by a reduction in domestic consumption and exports. Futures climbed higher yesterday with the worse than expected U.S. HRW harvest reports and USDA dropped Russian production 3.5 MMT. World corn ending stocks down nearly 4.5 MMT, mostly from the reduction of production estimates for the former Soviet Union countries as well. Soybean stocks were increased .3 MMT all from Brazil with this year’s crop up to 119 MMT, that’s only a ½ MMT behind U.S. old crop production. Next year’s for Brazil up to 118 MMT, +1.5 MMT from the current new crop U.S. estimate.
Overnight, grains were under pressure with soybeans into new lows and finishing 9 lower. Corn traded mixed overnight but finished 1 lower. Wheat gave back some of yesterday’s gains finishing 5 to 8 lower for KC and Chicago.
Australia lowered their 2018/19 wheat production from 23.7 MMT down to 21.9 due to dry weather in the East. They also stated that number will continue to go down unless some much needed rain develops soon. USDA still has production at 24 MMT. Egypt picked up 420,000 MT or 15.4 MBU of Romanian and Russian wheat at much cheaper prices, the lowest they have paid for wheat since February. USDA reported a private sale of 177,000 MT or 6.5 MBU of new crop soybeans for unknown destinations, 5,000 MT of that switched from old crop to new crop.
Over the next 7 days, most of the rains will stay north along the Canadian border and 1” forecasted throughout the Southeast. The latest 6-10 day outlook showing above normal precipitation though for all except the northern border and PNW? Temperatures are to remain above normal expect in the Southwest.
July corn finding support this week at $3.67, contract low down at $3.62, resistance at $3.80 and then $3.90. December corn dipped down to $3.87 ¾, contract low down at $3.79 ¼ with the contract high just 3 weeks ago at $4.29 ½. July soybeans into new lows, we haven’t been down at this level for almost a year. $9.35 was the low back on June 23rd followed by $9.20 back in August of 2016. November soybeans now almost $1 off the contract high from 2 weeks ago. Back in late December and early January we built some strong support from $9.70 to $9.67 ½, if that doesn’t hold, the next is down near $9.40. July KC wheat continues to stair step higher, topping out at a new high not seen since last July at $5.74 ¾. The first support level is at $5.30. July Chicago wheat with the same pattern, high at $5.54 two weeks ago with support at $5.10.