Date: September 10th, 2018
Packers purchased light volume throughout the week at $107 live and $170 dressed yet had to push prices higher on Friday. Cash cattle trade firmed throughout the day to $108 live for the majority of the trade in the South, which is $1 higher than the week previous. Hog futures finished the week mixed but higher overall for the week. Cash prices spiked higher on Friday. China reported several more African swine fever outbreaks bringing the total number since early August up to thirteen in six different provinces.
NATIONAL FEEDER & STOCKER CATTLE SUMMARY – W/E 08/31/2018
RECEIPTS: Auctions Direct Video/Internet Total
This Week 122,200 47,800 57,200 227,200
Last Week 148,700 49,600 10,600 208,900
Last Year 126,500 40,200 11,600 178,300
Compared to last week, steers and heifers traded steady to 4.00 higher. The supply of feeders was light this week as several early week auctions were dark in observance of the holiday and most others had limited offerings. Demand for feeders was good although buyers are showing a stronger preference for cattle with good health programs as fall temperature swings become a concern.
For the week, Friday August 31st to Friday September 7th, October Live Cattle +$1.17, December +$1.45, September Feeder Cattle +$3.02, October +$3.82, October Lean Hogs +$5.22, December +$3.40
Cattle slaughter from Friday is estimated at 119,000 head, up 1,000 from the week previous and matching a year ago. For the week, 563,000 head, down 75,000 from last week due to the Labor Day holiday and down 2,000 compared to last year. Hog slaughter from Friday is estimated at 466,000 head, down 10,000 from the week previous but up 12,000 from last year. For the week, 2,215,000, down 240,000 from the week previous but up 17,000 compared to last year.
Boxed beef cutout values sharply lower on Choice and weak on Select on light to moderate demand and moderate to heavy offerings for a total of 121 loads sold.
Choice Cutout__206.56 -2.19
Select Cutout__197.09 -.74
CME Feeder Index:__151.32 +.28
CME Lean Hog Index.__46.01 +.09
Pork Carcass Cutout__68.56 +.79
IA-S.MN Wtd Avg Live__ N/A, Wtd Avg Carcass Base__42.60 +3.05
National Wtd Avg Live__ 29.88 +.09, Wtd Avg Carcass Base__41.34 +3.07
October live cattle still holding the lower trend with support at $108.50 and resistance at $110. September feeders now with a higher trend in place since the key reversal higher back on August 27th. Support around $150 with resistance up at $153.50 then $155. October lean hogs closed the gap/island top from mid-August on Friday but unable to push higher with resistance next up around $60.
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Export sales Friday morning were not impressive yet both corn and soybeans were steady to higher for the day and for the week. Wheat futures though continue under pressure as Russian dominates the world export market and rumors were squashed again that Russia would be curbing or taxing wheat exports. The next USDA crop report will be on Wednesday with markets waiting for updated estimates on fall crop yields. Corn is expected to be near the 178.4 BPA from a month ago but soybeans could easily be increased and above 52 BPA. Some private crop tours coming up with 53+. Managed money positions last week showed no significant changes with funds sill long soybean meal and wheat while short corn and soybeans.
For the week, Friday August 31st to Friday September 7th, December Corn +$.02, March +$.02, November Soybeans +$.00 ½, January +$.00 ½, December KC Wheat -$.38 ½, March -$.39, December Chicago Wheat -$.34 ¼, March -$.34, December MPLS Wheat -$.28 ¾, December Soybean Meal -$1.20/T.
Overnight, grains were mixed with corn ½ to ¾ lower, soybeans 2 to 3 higher and wheat steady to 4 higher. China’s soybean and meal futures charged higher overnight from a cold snap in parts of the northeast that could cause damage to their domestic soy crop. The largest volume contract in January reached nearly 5% higher which is near the daily record. This also comes after President Trump announced on Friday possible tariffs on all remaining Chinese imports.
China reported August soybean imports at 9.1 MMT compared to 8.0 MMT in July. Year to date though down 2.1% from a year ago at 62.0 MMT. 3 different South Korean companies each purchased a cargo, 2.4 to 2.7 MBU, of US corn. One announced another snap tender to purchase an additional 5.4 MBU today. USDA announced this morning a private sale of 132,000 MT or 4.85 MBU of soybeans sold to unknown destinations.
Soybeans should be well supported at current price levels given the competiveness in the world trade for all except China. Any significant drop or increase in Brazilian basis levels put U.S. soybeans back in play to China even with the high tariffs in place. Argentine corn is the world leader currently due to weakening currency. U.S. corn though is readily available and not that far off from being the cheapest origin. Wheat markets are still dominated by the Black Sea region, Russia specifically, although most still see a tax or cap on exports coming soon. Russia imposed a duty on wheat exports in 2008, officially banned exports in 2010 and halted again in 2014 after stating there was no need to do so at harvest.
Heavy rains this week are isolated to the Texas Gulf and Carolina Coasts with some light scattered rains expected in the Northern Plains. The latest 6-10 day outlook showing above normal moisture for all those areas, below normal in the Central Plains, Southwest and Rockies. Temperatures are above normal for all except in the PNW and Northern Plains.
December corn with support at $3.63 ½ then at $3.55 and the contract low down at $3.50 ¼. The first line of resistance is at $3.70, then $3.82 and $3.88. November soybeans contract low at $8.26 ¼ with resistance at $8.51 and $8.70. December KC wheat testing support at $5.11 ½ with resistance up at $5.57. December Chicago wheat down to $5.07 ½ last week with support next from $4.97 to $4.90 and resistance up at $5.40.
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