Date: June 26th, 2018
The bearish Cattle on Feed and Cold Storage reports from last Friday pressured cattle futures on Monday, live cattle to limit lower and feeders $3+ lower. There is a sharp decline in show lists this week, slaughter last week was the largest of the year at 664K head and expected to be near that level again this week. A couple thousand head of cash fats confirmed for Monday at $108 to $109 live and $170 to $172 dressed, steady to $2 lower from the majority of last week’s trade.
Monday’s salebarns…Joplin with 9,442 head compared to 7,280 last week. Compared to last week, steer and heifer calves steady to mostly $3 to $5 lower, yearlings steady to $3 lower. OKC had a good run yesterday as well with over 8,000 head. Compared to last week, feeder steers and heifers trading unevenly steady while 500-600 lb steer and heifer calves were $1 to $4 lower on a light test.
Cattle slaughter from Monday is estimated at 119,000 head, up 1,000 from last week and up 3,000 compared to last year. Hog slaughter from Monday is estimated at 435,000 head, up 20,000 from last week and up 1,000 compared to a year ago.
Boxed beef cutout values steady to firm on moderate demand and offerings for a total of 103 loads sold Monday.
Choice Cutout__217.69 +.53
Select Cutout__201.89 -.13
CME Feeder Index:__142.28 -.29
CME Lean Hog Index.__86.20 +.03
Pork Carcass Cutout__86.44 +.80
IA-S.MN Wtd Avg Live__ N/A, Wtd Avg Carcass Base__78.31 -.71
National Wtd Avg Live__ 62.24 -.23, Wtd Avg Carcass Base__79.50 -.47
June live cattle expire this coming Friday with cash trade looking to be lower as well if futures stay under pressure. August gapped lower on Monday breaking through trendline and technical support with the next near $100. August feeders also gapped lower but still trending higher with last week’s high at $150.75 and support at $145 then near $142. July lean hogs pulling back nearly $6 from last week’s high up at $83.82 with good support right above $75.
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Over in the grains, export inspections for the week ending June 21st were again above the average needed for corn at 59.5 MBU. Soybeans and wheat still on the lower end and below expectations at 18.9 MBU and 13 MBU respectively while only 13,228 BU of grain sorghum went acres the borer into Mexico.
Crop progress and conditions released after the close on Monday continue to show very good conditions overall for the fall crops and all right in line with expectations. Corn conditions down one point to now 77% rated good to excellent, soybeans unchanged at 73%, grain sorghum up 2 points to 56% and spring wheat down 1 to 77% good to excellent. Winter wheat harvest now 41% complete with KS at 52%, TX at 71% and OK at 92%. Progress has advanced for the fall crops now ahead of the average pace with corn silking at 5%, soybeans blooming at 12% and spring wheat 34% headed.
Soybeans and wheat continued to be under the most pressure with funds selling all grains on Monday. Russian wheat prices continue to fall, now down to price levels seen this past February. Egypt is tendering for another round of wheat and I would expect Russia to be more aggressive after missing last week’s business to Romania. Rain continues to move through the Corn Belt, again some excessive though in NE, IA and MN with rivers and fields flooding.
Overnight, grains managed a small recovery with corn 3 higher, soybeans 4 higher and wheat 1 to 3 higher.
China’s Finance Ministry announced plans, which go into effect July 1, to lift import tariffs on soybeans, soymeal and rapeseed meal imports from 5 Asian countries. Currently the tariffs on soybeans is at 3% and meal at 9%. The 5 countries, Bangladesh, India, Laos, South Korea and Sri Lanka, are all small producers and also source soybeans from the U.S.
South Korea active corn buyers again with a total of 207,000 MT or 8.15 MBU of optional origin corn. Taiwan’s Flour Millers Association purchased 95,350 MT or 3.5 MBU of U.S. origin milling wheat.
Rain makes grain so long as it isn’t under water. Heavy rains moved through NE yesterday and still more in the forecast for this week in IA and MN with scattered showers for the rest of the Midwest. The 6-10 day outlook showing above normal precipitation for the North and Southeast with below normal for the Southern Plains. Temperatures are forecasted above normal central and east with below normal for the western third of the U.S.
July corn spiked lower for a new contact low last week at $3.38 ¾, resistance at $3.60. The December contract down to $3.60 last week after matching the contract high at $4.29 ½ back on May 24th. The first line of resistance now at $3.80 then around $4. July soybeans down to $8.41 ½ last week with resistance at $9. November down to $8.64 ½ with resistance at $9.20. July KC wheat fell nearly $.90 in two weeks breaking the long term higher trend. Monday was a new recent low at $4.68 ¾ followed by another overnight at $4.65 ½ with resistance up at $4.96. July Chicago wheat looks similar but holding support at $4.74 with last week’s low at $4.67 ½ and resistance at $4.97 ½.
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