Date: January 2nd, 2019
Cash feedlot trade last week in the Iowa jumped the gun a bit at $121.50 live and $190 dressed midweek. Most feedlots held firm until late Friday which paid off with packers paying $3 to $4 higher at $123 live in Nebraska, Texas and Kansas. 2018 was by far one of the most profitable years for beef processing. For the rest of us in the cattle industry, it was just okay with prices fairly flat yet still supported by those higher beef prices that led to profits for the packer.
Monday’s trade was fairly uneventful ahead of the New Year’s break. Futures were mixed for cattle and higher for hogs on Monday. Showlists appear to be larger this week especially in Nebraska and Texas.
Cattle slaughter for the week estimated at 438,000 head, down 221,000 from the previous week and down 60,000 from last year. Hog slaughter for the week estimated at 1,884,000 head, down 833,000 from the previous week and down 205,000 compared to last year.
Cattle slaughter from Monday estimated at 71,000 head, compared to 16,000 last week and 1,000 last year. Hog slaughter estimated at 407,000 head, compared to 75,000 last week and zero a year ago.
Boxed beef cutout values on Monday higher to sharply higher on good demand and moderate offerings for a total of 91 loads sold.
Choice Cutout__215.35 +.94
Select Cutout__210.66 +3.14
Pork Carcass Cutout__70.19 -.27
CME Feeder Index:__144.64 -2.62 from 12/28
CME Lean Hog Index.__53.11 -.01 from 12/27
IA-S.MN Wtd Avg Carcass Base__45.81 +$1.00
National Wtd Avg Carcass Base__45.65 +.35
December live cattle expired on Monday still carrying a premium to cash trade and hitting a new contract high at $125.57. The February contract also hit a new contract high at $124.95 but then reversed lower for a bearish close on Monday. The first line of support is at $123 with trendline support at $122.50. January feeders also with a key reversal lower after hitting a new recent high at $149.85, still unable to take out the $150 resistance with support at $145. February lean hogs holding support at $60.20 after losing over $8 this past month. The next area of support is near $59 with resistance up near $64.
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Over in the grains, soybeans bounced double digits higher with corn steady and wheat continuing on a lower trend last Friday. Optimism on continued trade relations with China as U.S. rice may now be imported into China for the first time ever. South American weather was also supportive with continued hot and dry pockets in Brazil and heavy rains for Argentina that could damage crops.
Fall crops were mixed to start this week but wheat was under pressure again. Export inspections for the week ending December 27th were below expectations. Corn shipments totaled 36.0 MBU, soybeans 24.9, wheat 13.8 and grain sorghum 1.1 MBU. Export sales are still a mystery with the federal government shutdown still ongoing.
No overnight trade in the grains, expectations were a mixed to slightly higher open today. Grain markets are expected to post mostly rangebound trade this week with South American weather and cash market activity driving trade still in the absence of the USDA.
China reported another outbreak of African swine fever. This is the largest farm to be hit with over 73,000 pigs and so far includes 4,686 infected and 3,766 dead. The U.S. will send a trade delegation to Beijing next week in hopes that normal trade will resume quickly.
The 116th U.S. Congress begins today with federal government still partially shutdown. Many USDA Market reports are still absent included daily export sales census crush data. The January crop report scheduled for 11th is in jeopardy unless the shutdown ends soon. This of course is a major crop report with the final 2018 fall crop production estimates.
Cold weather lingers here for another day but the latest 6 to 10 day outlook showing above temperatures throughout the U.S. with above normal moisture for all except the Northern Plains and in the Southeast.
March corn still stuck in a range from $3.67 to $3.90 with nearby support at $3.72 and first area of resistance from $3.78 to $3.80. January soybeans now into delivery with no limits and thin volume. The March contract still holding the long term higher trend from this fall with support at $8.80 and resistance up at $9.02 and then $9.41 (December high and July high). March KC wheat trending lower the past couple weeks with support at contract low at $4.82 ¼ and resistance up at $5.24 ½. March Chicago wheat matching the recent low at $5.03 on Monday, contract low down at $4.82 ¼ and resistance up at $5.38 ½. March soybean meal with support at $307 and resistance at $315.
Loewen and Associates, Inc.
Pete Loewen / Matt Hines / Doug Biswell / Matt Burgener
www.loewenassociates.com pete@loewenassociates.com matt@loewenassociates.com
866-341-6700