Date: January 14th, 2019
Light cash feedlot trade during the week led to another standoff for Friday. This time feeders were the beneficiary with futures steady to higher and packers paying $1 higher at $124 live and $2 higher at $197 on a dressed basis. Lean hog futures finished lower to end the week but both cattle and hog futures were higher compared to a week ago.
NATIONAL FEEDER & STOCKER CATTLE SUMMARY – WEEK ENDING 01/11/2019
RECEIPTS: Auctions Direct Video/Internet Total
This Week 366,900 65,000 154,400 586,300
Last Week 79,300 23,200 7,400 109,900
Last Year 372,300 39,800 118,200 530,300
Compared to last week, steers and heifers sold uneven, from 4.00 lower to 1.00 higher. This week’s total receipts on this report is the largest since July 2018 and is 50,000 head larger than the first marketing week of 2018. Weather scares started mid-week when Winter Storm Gia was named and projected to move through the heart of the country late week and into the weekend. Rain, snow and freezing rain are going to be seen in the breadbasket of the country and the East
Coast is not going to be spared from this storm either. Calendar wise January 11 is a long way from the end of winter. Muddy feedyards in Kansas, Nebraska and Iowa want to get cattle moved out of the poor pen conditions as cattle performance has been seriously impeded due to above average moisture recently. News of beef demand rising in recent years is a welcome sight to beef producers as ground beef and loin cuts have driven that demand due to their popularity in retail outlets.
For the week, Friday January 4th to Friday January 11th, February Live Cattle +$3.05, April +$2.37, January Feeder Cattle +$1.22, March +$2.07, February Lean Hogs +$.70, April +$.60. Boxed Beef, Choice -$2.05 @ $212.46, Select -$1.39 @ $206.27.
Cattle slaughter from Friday estimated at 117,000 head, down 2,000 from the previous week and matches the total compared to a year ago. For the week 626,000 head, up 106,000 from the previous week and up 14,000 from last year. Beef production for the week at 520.3 million pounds compared to 430.5 the previous week and 507.1 million pounds last year.
Hog slaughter from Friday estimated at 475,000 head, down 2,000 from the previous week but up 23,000 compared to a year ago. For the week 2,565,000 head, up 303,000 from the previous week and up 125,000 compared to last year. Pork production estimated at 547.1 million pounds last week compared to 482.6 the week previous and 522.9 million pounds last year.
Boxed beef cutout values lower on light demand and moderate offerings for a total of 107 loads sold.
Choice Cutout__212.46 -1.50
Select Cutout__206.27 -1.50
CME Feeder Index:__145.46 -.09
CME Lean Hog Index.__56.69 +.70
Pork Carcass Cutout__70.96 +.50
IA-S.MN Live Price__40.56 -.09, Wtd Avg Carcass Base__50.73 -.27
National Live Price__38.51 -.02, Wtd Avg Carcass Base__50.88 -.20
February live cattle hit a new contract high at $125.65 last Friday as the higher momentum continues. Support is down at $123 with resistance next up near $130 from the weekly charts and going back to last February. January feeders still choppy in a range from $142.67 up to $150 over these past couple months. February lean hogs trending higher since holding support at $60.20 after losing over $8 in December. Nearby support at $62 with resistance at $64.
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Grains traded back and forth all week still without export sales and delayed January crop reports. Egypt bought 7 cargoes of wheat, all from Russia this round and CONAB dropped Brazil’s soybean production estimate but not as much as expected or anticipated by the market. Corn still stuck in its rangebound trade with most looking for a reduction in the U.S. crop but ethanol margins have been horrendous which could lead to less corn used this marketing year.
The most influential bit of news last week was the story that began to circulate regarding the Russian Ag minister telling their exporters to cut back on their planned exports over the second half of the marketing year. IKAR released a statement basically saying that the Russian Government called in the top exporters and gave them informal export quotas based on their historical percentage of export clearances and that 12 MMT is the cap on wheat exports over the balance of the season (until the end of June). Since the start of their marketing year (July 1), Russia has exported around 23.8 MMT of wheat, so that would put them right in line with their expectations that they were going to export between 35 and 36 MMT of wheat this year. Everyone knew the slowdown was eventually going to have to come, and with this being about the fourth round of Russian rumors of tightening wheat exports, the markets had a somewhat muted reaction compared to previous times.
For the week, Friday January 4th to Friday January 11th, March Corn -$.04 ¾, New Crop December 2019 -$.02 ½, March Soybeans -$.11 ¼, New Crop November -$.05, March KC Wheat -$.01 ½, New Crop July -$.02 ¼, March Chicago Wheat +$.02 ½, New Crop July unchanged, March MPLS Wheat -$.00 ¼, March Soybean Meal -$4.40/T.
Overnight grains were steady to lower. Corn finished fractionally higher, wheat 3 lower and soybeans leading the charge lower and finishing the overnight down 5.
China’s December soybean imports plunged 40% vs last year to 5.72 mmt. This is the lowest December import since 2011. Total imports for the year came in at 88.03 mmt, off 7.9% on the year. The next round of trade talks will take place in Washington at the end of the month with high level trade representatives. It is expected that China will ramp up purchase commitments of US ag and energy products and this anticipation continues to support prices.
Brazil soybean harvest just getting started with their second crop corn being planted right behind it. Overall, South American soy crop still estimated 10 MMT higher than last year with Argentina’s crop back to more normal and making up for losses in Brazil and Paraguay.
Heavy precip continues on the West Coast this week with heavy snow expected in the Rockies and heavy precip in the Southeast. The latest 6 to 10 day outlook showing above normal temperatures on the West Coast and below normal throughout the Midwest. Precip is forecasted below normal for the Southwest and above normal in the Northwest and eastern half of the U.S.
March corn rangebound over the past 4 months from $3.67 to $3.90 with nearby support at $3.72 and resistance at $3.84 ½. March soybeans still holding the long term higher trend from this fall with support at $8.80 and resistance at $9.27 then $9.41. March KC wheat still holding a long term lower trend with support at contract low at $4.82 ¼ and resistance up at $5.24 ½. March Chicago wheat also trending lower but more sideways recently with support at $5.01 and resistance up at $5.24 ½ then $5.38 ½. March soybean meal stuck in $24 range since mid-August with nearby support at $307 and resistance at $324.
Loewen and Associates, Inc.
Pete Loewen / Matt Hines / Doug Biswell / Matt Burgener
www.loewenassociates.com pete@loewenassociates.com matt@loewenassociates.com
866-341-6700