Date: July 9th, 2018
Cattle futures were sharply higher my midday on Friday from higher cash feedlot trade but got spooked late and pulled lower into the close. Compared to the week previous in the Texas Panhandle live cash trades moved $5 higher from $112 to $113.50 with the bulk at $113. Kansas live cash trades moved $6 higher at $112 with a few up to $113. Nebraska saw live cash trades $6.50 to $7.50 higher from $113.50 to $114 and dressed trade moved $10 to $11 higher mostly at $180.00.
NATIONAL FEEDER & STOCKER CATTLE SUMMARY – W/E 07/06/2018
RECEIPTS: Auctions Direct Video/Internet Total
This Week 17,000 34,300 29,000 80,300
This Week 182,800 47,400 66,800 297,000
Last Year 15,800 38,200 55,500 109,500
Compared to last week, there were not enough feeder cattle on offer to establish a trend as the majority of auction barns took the week off in observance of Independence Day with over half of the auction receipts attributed to the drought stricken state of Missouri. Next week all the major markets will be open for business and will give an indication on trends.
For the week, Friday June 29th to Friday July 6th, August Live Cattle -$.35, October -$.40, August Feeder Cattle +$.87, September +$1.32, July Lean Hogs -$1.50, August -$1.02. Boxed Beef, Choice cutout -$3.93 at $208.03, Select cutout +$.14 at $198.71.
Cattle slaughter from Friday is estimated at 119,000 head, matching the week previous but down 1,000 compared to last year. For the week, 562,000 head, down 84,000 from the week previous but up 15,000 from last year. Beef production for the week at 449.5 million pounds last week compared to 514.9 million the week previous and 443.0 last year.
Hog slaughter from Friday is estimated at 451,000 head, up 16,000 from the week previous and up 27,000 compared to a year ago. For the week, 1,988,000 head, down 251,000 from the week previous but up 111,000 from last year.
Boxed beef cutout values steady to weak on light to moderate demand and moderate to heavy offerings for a total of 147 loads sold.
Choice Cutout__208.03 -.40
Select Cutout__198.71 +.01
CME Feeder Index:__145.15 +.42
CME Lean Hog Index.__82.11 -.13
Pork Carcass Cutout__85.52 -.77
IA-S.MN Wtd Avg Live__ N/A, Wtd Avg Carcass Base__77.35 -.55
National Wtd Avg Live__ 58.38 +.80, Wtd Avg Carcass Base__76.61 -.10
August live cattle topped at $108.45 last week with support right around $106 and the next resistance level around $110. August feeders continued to hit new recent highs every day last week testing the $154 resistance level on Friday with the next up at $156 and good support from $146 to $145. July lean hogs gapped lower Friday and finished near support from the 10-day and 20-day moving averages with resistance up at $84.
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U.S. and China “Trade War” got real coming into Friday morning with both sides imposing tariffs on the pre-ordained $34 billion worth of goods. In classic “buy the rumor, sell the fact” fashion, the entire grain room rallied, led by soybeans sharply higher. Both daily and weekly charts for beans and meal posted reversals higher. The weather forecast showed plenty of above normal heat and rains that will favor the eastern belt while the western belt enters a drier pattern for the next couple of weeks although. This could have also spurred some additional weather premium to be added in ahead of the weekend.
Weekly export sales featured disappointing corn sales of 26.5 MBU combined old and new crop while soybean sales were better than expected at 41 MBU combined. China cancelled 13.5 MBU old crop soybeans and 2.4 MBU new crop with one cargo each redirected to Pakistan and Bangladesh and 5 more cargoes switched from unknown to other destinations. The steep discount to Brazilian beans should continue to support strong non-China trade with the US during the trade dispute. That spread is out to nearly $1.80/BU and Brazil basis levels up to levels not seen since 2004. There is over 28 MBU of old crop soybean sales on the books to China which will be redirected or cancelled, along with some percentage of 128 MBU to unknown.
Wheat markets continue to rally with recent production downgrades in Russia, Germany, France, Australia and the EU.
For the week, Friday June 29th to Friday July 6th, September Corn +$.00 ¾, December +$.01 ¾, August Soybeans +$.14, November +$.14 ½, September KC Wheat +$.24 ½, December +$.22 ¾, September Chicago Wheat +$.14, December +$.13 ¼, September MPLS Wheat +$.21 ½, December +$.20 ½, August Soybean Meal +$7.10/T, December +$7.50/T
Overnight, grains were weaker with corn 3 to 4 lower, soybeans 9 lower and wheat 3 to 6 lower.
USDA announced a private sale of 132,000 MT or 4.85 MBU of new crop soybeans sold for unknown destinations. Bloomberg reported that buyers of U.S. soybeans in China will have their 25% tariff reimbursed by the government if the soybeans are for Chinese held state reserves.
Hot temps and little rain expected over the Plains this week. Rains are light for the Midwest this week and heavier for the Northern Corn Belt. The latest 6-10 day outlook showing above normal precipitation for the Southwest through the Midwest and above normal temps west and in the Northeast.
September corn with support at $3.47 and resistance at $3.68. December corn down to $3.58 ½ last week with resistance up at $3.80. August soybeans with support at $8.37, resistance up at $8.80 and then just above $9. November soybeans still on a lower trend with the contract low at $8.53 ¼, resistance at $9 and then $9.20. September KC wheat with support at $4.70 and resistance at $5.16. September Chicago wheat with support at $4.80 and resistance at $5.16.
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