Date: June 18th, 2018
Morning Ag Markets – Matt Hines
Cash feedlot trade was hard to pin down last week as scattered light trade was reported at $110 live and $178 dressed, sharply lower than the week previous. Friday afternoon some trade was reported at $110 to $113 live, still $2 to $5 lower than the week previous. Boxed beef demand is strong but prices have pulled back some from their peak in late May. Exports will continue to be the key driver and some concern moving forward with all the trade issues currently.
NATIONAL FEEDER & STOCKER CATTLE SUMMARY – WEEK ENDING 06/15/2018
RECEIPTS: Auctions Direct Video/Internet Total
This Week 179,900 56,400 80,200 316,500
Last Week 217,300 35,500 6,100 258,900
Last Year 146,700 32,500 200 179,400
Compared to last week, steers sold 3.00 lower to 3.00 higher, while heifers were steady to 3.00 higher. Another week away from Memorial Day and the aggressive movement of cattle out of feedlots in recent weeks brought good demand for offerings at auctions this week. Heat has become a concern in the Central Plains recently as summer-like temperatures have become very evident even though the calendar hasn’t come to the summer solstice yet.
For the week, Friday June 8th to Friday June 15th, June Live Cattle -$1.57, August -$1.00, August Feeder Cattle +$.70, September -$.15, July Lean Hogs +$1.00, August +$1.12. Boxed Beef, Choice -$4.62 @ $221.59, Select -$.45 @ $202.73.
Cattle slaughter from Friday is estimated at 118,000 head, down 2,000 from the week previous and down 1,000 compared to last year. For the week, 654,000 head, down 4,000 from the week previous but up 15,000 from last year. Beef production for the week at 519.4 million pounds last week compared to 523.1 million the week previous and 511.9 last year.
Hog slaughter from Friday is estimated at 412,000 head, down 7,000 from the week previous and down 6,000 compared to a year ago. For the week, 2,215,000 head, down 56,000 from the week previous but up 37,000 from last year.
Boxed beef cutout values weak on Choice and higher on Select on light to moderate demand and offerings for a total of 120 loads sold.
Choice Cutout__221.59 -.49
Select Cutout__202.73 +.76
CME Feeder Index:__140.73 +.03
CME Lean Hog Index.__81.44 +1.35
Pork Carcass Cutout__84.09 +1.69
IA-S.MN Wtd Avg Live__ N/A, Wtd Avg Carcass Base__83.51 +.08
National Wtd Avg Live__ 61.21 -.35, Wtd Avg Carcass Base__82.87 +1.20
Key reversal higher in June live cattle last Friday, bouncing off support from the 50-day moving average. The June high is up at $110.65, with the recent higher trend in place, look for a test of that level here this week. August feeders also with a key reversal higher and only a couple ticks away from limit higher for the day. A wide trading range of $14.50 now in place over these past couple months with resistance from $149 to $149.50. July lean hogs broke out for a new recent high last week at $83.30 with the contract high up at $85.57 from January. Good support down around $75.
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Grains continued lower to end last week, mostly in the soy complex as the trade war with China stepped up. U.S. tariffs were imposed as previously announced to do so on June 15th and China fired back with their own tariffs, soybeans included on this list. The U.S. enacted a 25% tariff on $50 billion worth of Chinese goods. The first set will be enacted July 6th covering $34 billion and the second set covering $16 billion will be under further review. China announced 25% tariffs on $50 billion against US goods including soybeans, light aircraft, orange juice, whiskey and beef, starting July 6th. Corn and wheat futures both reached down for new recent lows but came back to only finish slightly lower for the day. Wheat harvest continues to progress in the Southern Plains with buyers very anxious to get ownership and pushing basis levels higher. High protein levels continue to be present but TW has been hit in some areas with the flash dry finish.
For the week, Friday June 8th to Friday June 15th, July Corn -$.16 ½, December -$.15 ¼, July Soybeans -$.63 ¾, November -$.59 ¼, July KC Wheat -$.18 ½, December -$.20 ¾, July Chicago Wheat -$.20 ½, December -$.24 ¾, July MPLS Wheat -$.21 ¾, September -$.23, July Soybean Meal -$18.90/T, December -$15.70/T
Overnight, grains were again pressured lower, with corn finishing 3 lower, soybeans 1 to 2 lower, wheat 6 to 8 lower.
Japan announced last week a halt to Canadian Wheat imports after GMO material was found in Alberta fields. South Korea announced they have suspended Canadian wheat and flour imports also here today.
Over this next week, heavy rains in the forecast for northern KS and eastern NE, 5+ inches tampering down to 2+ for the entire Corn Belt. The latest 6-10 day outlook showing above normal precipitation central and east, below normal west with below normal temps here in the Plains and above normal on both coasts.
July corn hit a new contract low last Friday at $3.55 ¼, that is $.57 off from the high back on May 24th. December bottomed out at $3.77 ¾ on Friday down from the contract high on May 24th at $4.29 ½. July soybeans down to $9.02 ½ testing the long term support with the next down near $8.50 from 2 years ago. Both corn and soybeans are very oversold right now and could catch a bounce soon. July KC wheat still holding the long term higher trend from mid-December with support at $5. July Chicago wheat looks similar with trend line support at $4.85 and resistance around $5.38.