Date: January 3rd, 2019
Mixed livestock futures to start the New Year with cattle under pressure most of the day but coming back from double digit losses. Hogs finished higher for the 5th consecutive trading day building some momentum after carving out a low just above $60 for the nearby February contract.
Huss Platte Valley Auction – Kearney, NE
Feeder Cattle Weighted Average Report for 01/02/2019
Receipts: 3264 Two Weeks Ago: 5110 Year Ago: 4533
Compared to two weeks flat 600 lbs steers sold 5.00 higher, 700-800 lbs steers sold steady to 2.00 higher, over 800 lbs sold 5.00 lower. Heifers sold unevenly steady. With pens in poor shape across the trade area buyers didn’t bulk at the auction on Wednesday.
St Joseph Stockyards – St Joseph, MO
Livestock Weighted Average Report for 1/2/2019
Receipts Last Reported Year Ago
2,244 2,043 2,044
Compared to two weeks ago, steer and heifer calves sold unevenly steady with instances 3.00 to 5.00 higher on top quality long time weaned larger strings. Very cold, brisk conditions the last couple of days let producers get cattle out of lots that had been very muddy recently.
Cattle slaughter from Wednesday estimated at 117,000 head, down 2,000 from last week and down 1,000 last year. Week to date now at 188,000 compared to 135,000 last week.
Hog slaughter from Wednesday estimated at 480,000 head, up 8,000 compared to last week and up 20,000 compared to a year ago. Week to date now at 882,000 compared to 547,000 last week.
Boxed beef cutout values higher on Choice and steady on Select on moderate to fairly good demand and light offerings for a total of 117 loads sold.
Choice Cutout__216.64 +1.29
Select Cutout__210.91 +.25
CME Feeder Index:__144.49 -.15
CME Lean Hog Index.__53.05 -.15
Pork Carcass Cutout__70.04 -.15
IA-S.MN Wtd Avg Carcass Base__46.90 +1.02
National Wtd Avg Carcass Base__46.53 +.93
February live cattle 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. The higher trend is still in place from early December as trendline support held yesterday. February lean hogs held support at $60.20 after losing over $8 this past month. Again yesterday was the 5th trading day in a row with a higher close with resistance near the $64 area.
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The soy complex led the grains higher yesterday. Two items supporting beans right now, weather in South America and rumors that China is back in buying U.S. soybeans. December drought across parts of Brazil have already clipped production potential so any additional hot and dry forecasts could see more of a positive market response. The chatter about a new record crop has faded with estimates now from 115 to 120 MMT down from earlier thoughts of 125 to 130 MMT. Last year’s crop was a record 120.3 MMT. Argentina is looking to return to a more normal sized crop near 55 MMT, 17 MMT above last year’s reduced crop. Overall, Brazil and Argentina’s production potential combined is still looking well ahead of last year’s crops.
The rumors of additional U.S. soybeans to China has yet to be confirmed due to the holidays and also the lack of U.S. export sales reports. There is talk that up to another 2 MMT was purchased last week which would take the accumulated purchase total up to around 5 MMT. If confirmed, this would be right in line with the expectations coming out of G-20 meetings to replenish the Chinese government reserves.
Corn held steady to firm to start the New Year as wheat was higher throughout the trading session although all three classes pulled back from highs during the last hour of trading. Australia remains hot and dry with heavy rains hurting the remaining wheat crop in Argentina now pegged at 75% harvested. Jordan, Taiwan and Bangladesh all looking for wheat this week and even some rumors about Chinese interest in U.S. wheat.
Grains traded both sides of unchanged overnight but finished higher. Equities and the US$ are lower to start the day while gold and crude are higher. Corn finished the overnight 1 higher, soybeans 4 higher and wheat 2 to 6 higher.
The federal government continues to be partially shutdown. Many USDA Market reports are still absent included daily export sales. 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. There is also a winter wheat seedings and quarterly stocks report. USDA announced yesterday that they will make the decision on Friday whether to delay the key crop reports scheduled for release on the 11th. Early estimates for both corn and soybeans show a decrease in yield near 1 BPA.
There is talk of rains delaying late soybean planting in Argentina, with some talk of switching of area out of beans and into corn. The rains over Argentina have been violent when they have come, but have held themselves to specific crop areas and have not been general. This has also damaged wheat ready to harvest. International 6-10 day forecasts call for below normal precipitation and above normal temperatures for most of Australia, below normal precipitation for the central Brazilian Ag areas and above normal for the northwest with above normal temperatures for the south of Brazil, above normal precipitation for the north of Argentina with below normal for the south and above normal temperatures for the north. The latest U.S. 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 rangebound over the past 3+ months from $3.67 to $3.90 with nearby support at $3.72 and first area of resistance from $3.78 to $3.80. March soybeans still holding the long term higher trend from this fall with support at $8.80. The first line of resistance at $9.11 being tested now with the next up at $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 near $319.
Loewen and Associates, Inc.
Pete Loewen / Matt Hines / Doug Biswell / Matt Burgener
www.loewenassociates.com pete@loewenassociates.com matt@loewenassociates.com
866-341-6700