Date: December 3rd, 2018
Livestock futures were mixed on Friday, not much action all week actually, but more winter weather forecasted for the Central Plains and hogs especially waiting for the results of the meetings between the U.S. and China over the weekend. Weekly export sales showed China jumping in for U.S. pork for both this year and next ahead of the meeting and also suggesting that the massive outbreak of African swine fever this fall is raising fears of an eventual supply shortfall. Cash feedlot trade confirmed late Friday at $1 higher, up to $118 live in all areas with a few clearing $118.50 in TX and steady at $185 dressed in NE. Early in the week trade in the North was weaker at $115 live in IA and $183 dressed in NE.
NATIONAL FEEDER & STOCKER CATTLE SUMMARY – WEEK ENDING 11/30/2018
RECEIPTS: Auctions Direct Video/Internet Total
This Week 289,500 49,400 43,800 382,700
Last Week 97,700 20,500 0 118,200
Last Year 257,400 28,500 20,200 306,100
Compared to two weeks ago, steers and heifers sold steady to 3.00 higher. Receipts were much larger this week than last due to most livestock auctions observing the Thanksgiving Day holiday. Buyers have become more meticulous when purchasing calves having a health program and ample time of being weaned this time of year. In times past, a 30 to 45 day weaning period was sufficient, however buyers are now almost demanding a calf that is 60 days weaned with at least two rounds of recent vaccinations. Also, this time of year fleshy calves coming off the cows are seeing a steep price discount and several 550 plus pound calves weaned on the trailer have made their way to town this week. Blizzard conditions on Sunday and Monday from basically I-70 to I-80 did harden up some of the fleshy calves as cold temperatures moved in directly after the snow dumped across the Plains. Mud will become an issue rather quickly due to the soil underneath not being frozen. Most of the forthcoming problems will be when the snow melts and muddy lots will be prevalent.
For the week, Friday November 23rd to Friday November 30th, December Live Cattle -$.17, February -$.42, January Feeder Cattle -$4.15, March -$3.07, December Lean Hogs -$1.20, February -$.27. Boxed Beef, Choice -$1.24 @ $212.61, Select -$.10 @ $198.41.
Cattle slaughter for Friday estimated at 121,000 head, up 1,000 from the previous week and up 3,000 compared to a year ago. For the week, 643,000 head, up 70,000 from the previous week and matching last year. Beef production for the week estimated at 531.0 million pounds compared to 472.2 the previous week and 526.3 last year.
Hog slaughter for Tuesday estimated at 473,000 head, up 6,000 from the previous week and up 4,000 compared to last year. For the week, 2,548,000 head, up 290,000 head from the previous week and up 1,000 compared to last year. Pork production for the week estimated at 541.3 million pounds compared to 478.7 the previous week and 546.6 last year.
Boxed beef cutout values steady to weaker on moderate demand and offerings for a total of 104 loads sold.
Choice Cutout__212.61 unchanged
Select Cutout__198.41 -.12
CME Feeder Index:__147.13 -.34
CME Lean Hog Index.__56.42 -.14
Pork Carcass Cutout__69.12 +.68
IA-S.MN Wtd Avg Carcass Base__49.28 -.56
National Wtd Avg Carcass Base__50.03 +.50
December live cattle trending higher since the recent low back on November 13th at $113.55 with resistance up at $117.45 then at $118.80 and support at $115.50. January feeders breaking the higher trend last week with support next at $142.67 and resistance up at $150. December lean hogs still holding the higher trend since mid-October with support at $57 and resistance up at $61.42.
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Over in the grains, the wait and see approach for most of the week turned into a buying frenzy with the front month December contracts hitting first notice day and shooting higher on a lack of deliveries.
The EPA on Friday lifted its requirement for advanced biofuels by 15 percent for 2019, while keeping the volume for conventional biofuels like corn-based ethanol steady. Small refineries can be exempted from the RFS if they prove that complying would cause them financial strain. Since President Donald Trump’s election and under the former EPA administrator Scott Pruitt, who stepped down in July, the EPA has vastly expanded the number of waivers it has handed out to small refineries, in a bid to reduce the refining industry’s regulatory compliance costs.
The Trump administration has temporarily put on hold the processing of current waiver applications as the EPA and the Department of Energy review the scoring system used to evaluate them.
The US, Mexico and Canada signed off on the new USMC (formerly NAFTA) agreement but the deal must still be approved by Congress. The soon to be US House majority leader Pelosi says the trade pact negotiated over the past year between the US-Canada-Mexico does not go far enough to protect labor markets, nor the environment.
For the week, Friday November 23rd to Friday November 30th, December Corn +$.07 ½, March +$.07 ¼, January Soybeans +$.13 ¾, March +$.12 ¾, December KC Wheat +$.25 ¼, March +$.14 ¼, December Chicago Wheat +$.16, March +$.08 ½, December MPLS Wheat +$.09, March +$.04 ½, December Soybean Meal +$2.50/T, January +$2.50/T.
Now for the biggest news over the weekend, the United States and China reached a 90-day ceasefire in a trade dispute that has rattled financial markets and threatened world economic growth. The breakthrough came after a dinner meeting Saturday between President Donald Trump and Chinese leader Xi Jinping at the Group of 20 summit in Buenos Aires. Trump agreed to hold off on plans to raise tariffs Jan. 1 on $200 billion in Chinese goods. The Chinese agreed to buy a “not yet agreed upon, but very substantial amount of agricultural, energy, industrial” and other products from the United States to reduce America’s huge trade deficit with China. To have expected the two sides to drop all tariffs at this meeting was way too much to ask. The overall tone and rhetoric though seems to have changed to get all trade issues resolved sooner than later.
In response, grain markets opened higher with soybeans up 24 with corn and wheat 6 to 7 higher. The DOW is up 400+ points and gold up $10+. Corn finished the overnight 4 higher, soybeans 15 to 16 higher and wheat 4 to 5 higher.
USDA announced a private sale of 147,500 MT or 5.4 MBU of soybeans for delivery to unknown destinations.
Argentine wheat 32% harvested, soybeans 40% planted, corn and grain sorghum both 38% planted. Brazil soybeans are rated 95% good/excellent with harvest to begin in 30-60 days.
U.S. Crop Progress data has been shelved for the year, so no report later this afternoon.
Stats Canada can will update their production estimates this Thursday. All wheat is estimated at 31.4 MMT vs 31.0 MMT in Sept and 30 MMT last year. Canola is estimated at 20.8 MMT, down slightly from 20.99 MMT in September, the soybean crop at 7.4 MMT, down from 7.515 MMT and corn projected at 14.1 MMT compared to 14.46 MMT in September. Australia’s Ag agency estimates this year’s wheat production at 16.95 MMT, down from their previous estimate at 19.1 MMT with USDA’s current 17.5 MMT forecast. USDA will update crop production along with supply and demand on December 11th.
The New York Stock Exchange will be closed Wednesday, the national day of mourning for President Bush’s funeral. The CME will only close its U.S. based equity and interest rate products.
South American weather forecasts calling for favorable growing conditions to persist across Brazil and Argentina for the next 10 days with variable temps. Areas of NC Brazil will endure too much rain, but the risk of flooding will be localized. Needed drying allows for Argentine wheat harvesting/spring planting to continue. U.S. 6-10 day outlook showing below normal temps central and east with above normal west and above normal precipitation is forecasted for Southeast and West Coast with below normal north.
March corn gapped higher overnight breaking the resistance at $3.78 which is now support with the next resistance up near $3.90. January soybeans also gapping higher overnight and into a new 4-month high with resistance from $9.25 to $9.32 and support at $8.76. March KC wheat with only a ½ cent gap higher overnight, support at $4.82 and resistance up near $5.33. March Chicago wheat closing the overnight gap this morning with support at $5.03 and resistance next up at $5.46. January soybean meal gapping higher with resistance next at $328.50.
Loewen and Associates, Inc.
Pete Loewen / Matt Hines / Doug Biswell / Matt Burgener
www.loewenassociates.com pete@loewenassociates.com matt@loewenassociates.com
866-341-6700