Date: June 3rd, 2019
After a limit lower day last Thursday for feeders, the pressure continued with $4 to $5 lower day on Friday. Live cattle and hog futures were also triple digits lower to end the week even though export sales were bullish with net pork sales a whopping 54,700 MT, 29,100 sold to China and net beef sales friendly at 21,600 MT. Cash feedlot trade was at $115 in the South and $116 in the North, which is generally steady with the week previous, while dressed trade developed late Thursday at $186 to $187, $1 to $3 lower than the week previous.
NATIONAL FEEDER & STOCKER CATTLE SUMMARY – WEEK ENDING 05/31/2019
RECEIPTS: Auctions Direct Video/Internet Total
This Week 91,200 22,400 18,100 131,700
Last Week 130,300 45,300 1,000 176,600
Year Ago 110,900 51,600 15,900 178,400
Compared to last week, steers and heifers sold steady to 5.00 lower. Sharp gains in the corn and soybean markets have put a damper on feeder cattle gains even though last Friday’s Cattle on Feed report was viewed as somewhat bullish due to the tempered number of placements when compared to industry guesses. Auction receipts were curtailed this week due to the Memorial Day holiday as well as widespread moisture throughout the Plains and Midwest. Reports of rainfall in the double-digit inches this week will do nothing but increase river levels. It will test those levees and dams in South Dakota, Nebraska, Kansas, Oklahoma, Arkansas, Missouri and Illinois. These states seem to not be able to catch a break this year; inundated with rainfall is not what hay producers need this time of year too. After the last two years of unseasonable cold weather into May, hay stocks have been depleted and hay farmers are ready to get to business as well.
For the week, Friday May 24th through Friday May 31st, June Live Cattle -$2.70, August -$4.87, August Feeder Cattle -$10.10, September -$9.80, June Lean Hogs -$4.70, July -$2.02.
Cattle slaughter from Friday estimated at 121,000 head, up 2,000 from the week previous and up 1,000 compared to a year ago. For the week, 582,000 head, down 59,000 from the week previous and down 3,000 from a year ago. Beef production estimated at 463.8 million pounds compared to 511.7 the week previous and 464.7 last year.
Hog slaughter from Friday estimated at 471,000 head, up 68,000 from the week previous and up 20,000 compared to a year ago. For the week, 2,128,000 head, down 197,000 from the week previous but up 94,000 compared to a year ago. Pork production estimated at 456.2 million pounds last week compared to 499.0 the week previous and 431.0 last year.
Boxed beef cutout values weak to lower on light to moderate demand and moderate to heavy offerings for a total of 112 loads sold.
Choice Cutout__223.21 -.37
Select Cutout__207.69 -1.18
CME Feeder Index__132.47 -2.53
CME Lean Hog Index__81.92 -.30
Pork Carcass Cutout__82.68 +.83
IA-S.MN Wtd Avg Live Price__60.66 no comp, Wtd Avg Carcass Base__77.61 -1.49
National Wtd Avg Live Price__60.06 -.53, Wtd Avg Carcass Base__76.70 -.88
June live cattle hit a new 11-month low on Friday at $107.65 yet cash trade some $7+ premium as we enter delivery next week. Support next at $107.42 then $106.60 with resistance up near $113 then $115. August feeders into a new contract low at $132.15 with support next at $131.87 then $128.57 with resistance up near $144, $146 and $148. June lean hogs into a new recent low at $81.40, contact low at $72.20 back on 2/20/19, with resistance up at $88 then $93.
Grains finished Friday lower on some end of week, end of the month liquidation but still only the 3rd lower close going back to May 13th when corn reversed higher after hitting a new contract low and since has rallied nearly $1 higher. Managed money or funds as of May 28th only short 20K contracts and estimated to be net long as of this past Friday. In 9 trading sessions they purchased over 262K contracts, second only to the repositioning back in July of 2015. Positions thru May 28th in the other commodities, net short 130K contracts of soybeans, short 23,780 contracts of Chicago wheat and short 39,469 contracts of KC wheat. Export sales for the grains were friendly for wheat at 20.75 MBU combined old and new crop and corn at 35.7 MBU. Soybeans sales were light again at 16.7 MBU and cancellations of 2.9 MBU of grain sorghum exceeded the net sales for a net reduction of 2.0 MBU.
For the week, Friday May 24th through Friday May 31st, July Corn +$.22 ¾, December +$.24, July Soybeans +$.48, November +$.48 ½, July KC Wheat +$.31, September +$.31 ½, July Chicago Wheat +$.13 ½, September +$.13, July MPLS Wheat +$.04, September +$.06, July Soybean Meal +$20.80/T, December +$20.70/T.
Overnight, grains were mixed to higher with corn finishing 1 higher, soybeans 1 to 2 higher and wheat popping 12 to 16 higher. Wheat was the leader as fund shorts get serious about covering those positions with the wet weather starting to take its toll on US wheat quality and production potential with harvest just around the corner. The market focus remains on supply side threats with demand to be traded another day.
The bulls/bears each have weather talking points to start the week; better than expected seeding across portions of the Midwest into Wednesday while soaking rain returns late week and on the weekend for the South Midwest.
Crop progress report this afternoon should show corn and soybean planting advance 10-11% on the week which puts corn at 68-70% and beans 39-40%. At this point we expect a similar advance for the coming week which would put corn at around 80% the following week leaving 20 million acres of corn unplanted on June 10 and around 40 million acres of beans.
The 5-7 day forecasted rain looks heavy again centered on Eastern OK and AR at 3 to 5 inches with 1 to 2 inches for all the surrounding states. The latest 6 to 10 day outlook showing above normal precipitation for the Plains, Midwest and Southeast, below normal for the PNW and Northeast with below normal temps for most, above normal on the West Coast and Gulf Coast.
July corn hitting long term resistance last week as well as December, $4.39 for July and $4.54 for December. The first line of support for July is at $4.10 with a gap from $4.07 ½ to $4.04 ¾. Soybeans also testing but unable to push through resistance last week for July around $8.90 and November at $9.20. July soybeans first support line at $8.63 ½ with a gap from there down to $8.58 ¼. July KC wheat back up to match Friday’s high overnight at $4.90 with resistance next up at $5.07 and support near $4.50. July Chicago wheat with resistance up near $5.20 and support at $4.80.
Loewen and Associates, Inc.
Pete Loewen / Matt Hines / Doug Biswell / Matt Burgener
www.loewenassociates.com pete@loewenassociates.com matt@loewenassociates.com
866-341-6700