Date: September 19th, 2018
Livestock futures were mixed yesterday with cattle under pressure all day while lean hogs scored triple digit gains. Hogs gapped higher at the open yesterday with the nearby contract touching the $3 limit at one point. Cash prices were higher along with pork while cleanup is ongoing in the North Carolina. China’s sow herd is reportedly down 4.8% in August compared to a year ago and down 1.1% from last month. Total hog herd is down 2.4% from a year ago.
Salebarns are reporting decent volume so far this week with feeders and calves mostly higher than last week, some reports stating $8 to $9 higher. There have been a few hundred fat cattle trade this week in NE at $111.50 live, matching the top end of last week’s trade. Fed cattle exchange online auction later today with only 528 head consigned compared to last week’s 444 head of which none sold.
Cattle slaughter from Tuesday is estimated at 120,000 head, up 1,000 from last week and up 2,000 from last year. Hog slaughter from Tuesday is estimated at 422,000 head, down 47,000 from last week and down 32,000 from last year.
Boxed beef cutout values lower on light to moderate demand and heavy offerings for a total of 174 loads sold.
Choice Cutout__205.29 -.75
Select Cutout__195.47 -1.91
CME Feeder Index:__153.62 +.24
CME Lean Hog Index.__54.58 +1.10
Pork Carcass Cutout__77.57 +1.55
IA-S.MN Wtd Avg Live__ N/A, Wtd Avg Carcass Base__53.79 +1.96
National Wtd Avg Live__ 39.98 +2.19, Wtd Avg Carcass Base__52.92 +2.26
October live cattle finished limit higher on Friday, followed up by a new 6-month high just 1 tick short $114 on Monday but yesterday failed to test the area again. The next area of resistance is from $114.65 to $115 then at $117. Feeders scored new contract highs on Friday but have yet to break through since. Looking at the continuous weekly chart, the next area of resistance is from $161 to $161.50 from this past November. October lean hogs again gapped higher yesterday and tested the spike high from mid-August at $59.50. The next resistance line is at $60.20 with support at $54.
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Over in the grains, the soy complex continues to be pressured with additional tariffs on Chinese goods followed up by another round lobbed back at the U.S. The U.S. announced a round of 10% on $200B worth of goods from China as China levied tariffs on the remaining $60B of U.S. goods they have not acted on to date. Tariffs on both sides are set to go into effect Sept 24th with the U.S. tariffs increasing to 25% for 2019. The U.S. has threatened to slap a tariff on the remaining untaxed $267B in Chinese goods should the Chinese react.
China will need to get creative, as they have tariffed pretty much everything the U.S. has sent to them in recent years by this point. The question and concern now…Will China increase the tariff rate on U.S. soybeans already at 25%? China can afford U.S. soybeans currently with U.S. gulf values $2.50 discount to Brazilian FOB offers.
Egypt purchased a total of 17.5 MBU of wheat for delivery in November, 7 cargoes from Russia and 1 from Ukraine, no offers yet again originating from the U.S. Informa already out with a forecast for next year’s fall crops with soybean acres down sharply to 82.27 million and corn acres up to 93.04 million.
Grains were higher overnight with neither corn nor soybeans hitting new lows. Corn finished steady to 1 higher, soybeans 1 to 2 higher, wheat 5 to 7 higher and meal $3/T higher.
Stats Canada out this morning with their model based estimates improving from their July estimates. Corn is estimated to be a record crop at 14.5 MMT or 570.8 MBU. Canola production is estimated at 21 MMT and soybeans at 7.5 MMT. Total wheat production is estimated at 31 MMT compared to USDA at 31.5 MMT just last week. This would be a 3.5% increase over last year’s crop.
Rains over this next week the heaviest for OK, AR and the Great Lakes with light scattered rains for eastern 2/3 of the U.S. The latest 6-10 day outlook showing above normal moisture for the center 1/3 of the U.S. with above normal temps southeast and below normal northwest.
December corn with a new contract low yesterday at $3.42 ½, support next at $3.36 and $3.30 with the first line of resistance is at $3.70. November soybeans with a new contract low at $8.12 ¼ with support at $8.10 and the low from 2008 down at $7.76, resistance up near $8.50. December KC wheat breaking through the month and half lower trend with support at $5 and resistance up near $5.30 then $5.50. December Chicago wheat looks similar with support at $4.95 and resistance up near $5.30. December soybean meal into a new recent low yesterday with long term support at $300 then $292.
Loewen and Associates, Inc.
Pete Loewen / Matt Hines / Doug Biswell / Matt Burgener
www.loewenassociates.com pete@loewenassociates.com matt@loewenassociates.com
866-341-6700