Date: June 5th, 2019
Cattle futures quickly surged higher Tuesday as support developed in feeder cattle futures, then spilled over to live cattle. Triple-digit gains sparked added interest as traders quickly moved back into the complex following the aggressive liquidation over the past month. Hog futures struggled early to find support with the nearby June contract reaching down for a new recent low but all deferred contracts held $1+ gains. Light cash feedlot trade continued in TX and KS on Tuesday with prices steady to $3 lower than Monday’s trade at $110 to $113 live and some $114 trade in the North, both mostly $2 lower than a week ago. The lower end of the range being reported for cattle delivered 3 to 4 weeks out. Fed Cattle Exchange online auction later this morning with 412 head consigned compared to last week’s 483 head of which 137 sold at $115 out of KS.
Oklahoma National Stockyards Feeder Cattle – Oklahoma City, OK
Livestock Weighted Average Report for 6/3/2019
Total Receipts: 10,212 Two Weeks Ago: 7,611 Last Year: 12,696
Compared to two weeks ago: Feeder steers 4.00-7.00 lower with instances of 9.00 lower. Feeder heifers 3.00-8.00 lower. Steer and heifer calves too lightly tested for an accurate market trend, however a much lower undertone is noted. Demand moderate. Quality plain to average.
Tulsa Livestock Auction – Tulsa, OK
Livestock Weighted Average Report for 6/3/2019
Total Receipts: 2,357 Two Weeks Ago: 1,939 Last Year: 3,594
Compared to two weeks ago: Feeder Steers 7.00-9.00 lower. Feeder Heifers 6.00-8.00 lower. A much lower undertone is noted on steer and heifer calves. Demand good. Quality good. Slaughter cows 6.00-9.00 higher. Slaughter bulls 4.00 lower.
Joplin Regional Stockyards Feeder Cattle – Carthage, MO
Livestock Weighted Average Report for 6/3/2019
Total Receipts: 6,909 Two Weeks Ago: 6,137 Last Year: 10,534
No sale last Monday in observance of Memorial Day, compared to two weeks ago, steers under 500 lbs and heifer calves steady to 5.00 lower, steer calves over 500 lbs 6.00 to 10.00 lower, yearlings 4.00 to 8.00 lower. Demand and supply moderate.
Cattle slaughter from Tuesday estimated at 120,000 head, down 1,000 from last week and last year. Hog slaughter from Tuesday estimated at 477,000 head, down 2,000 from a week ago but up 27,000 compared to a year ago.
Boxed beef cutout values steady to firm on moderate to fairly good demand and moderate to heavy offerings for a total of 140 loads sold.
Choice Cutout__223.00 -.20
Select Cutout__207.21 +.34
CME Feeder Index__131.95 -1.10
CME Lean Hog Index__80.90 -.38
Pork Carcass Cutout__83.65 -1.26
IA-S.MN Wtd Avg Live Price__58.44 no comp, Wtd Avg Carcass Base__76.57 -.18
National Wtd Avg Live Price__59.73 no comp, Wtd Avg Carcass Base__75.98 -.13
June live cattle hit a new one-year low on Monday at $106.52 yet cash trade this week still some $6+ premium as we enter delivery next week. Support next at the contract low from May 2018 at $105.05 with resistance up near $113 then $115. August feeders into a new contract low at $132.15 last Friday, so far holding above the 2018 spot lows and resistance up at $143.30. June lean hogs still holding a lower trend going back to mid-April, into a new recent low yesterday at $80.85, contract low at $72.20 back on 2/20/19, with resistance up near $85.
The continued planting delays were supportive for corn and soybeans yesterday but wheat reversed lower in the overnight and crashed double digits lower. Wheat remains volatile with seven consecutive trading days of double digit moves. Russian wheat prices continue to rally as heat moves in pressing production estimates lower. Some planting progress will be made this week but I wouldn’t expect to see more than 80% corn planted in next week’s report which would imply nearly 20 million acres of corn not planted yet, soybean acreage could still be north of 40 million.
Overnight, grains were lower with corn finishing 7 lower, soybeans 6 to 7 lower and wheat 8 to 15 lower. Rains this week have been very isolated and lighter than projected especially for HRW areas. The heaviest rains are shifting south and east for the balance of this week and into next with light to 1+ inches expected in the Southern Plains up to 5+ for the entire Southeast. Remember a supply led weather rally is only as good as the next forecast.
Chinese importers are preparing applications for waivers on import tariffs levied on US products after the finance minister indicated it would start taking applications. The waiver program was announced last month amid growing concerns over a costly trade war on an already slowing Chinese economy. The Ministry of Finance last week posted a list of goods for which waivers could be granted that includes beef, pork and soybeans. My concern now is that China is digging in deeper and the end of this trade war will not be anytime soon.
No daily export sales to announce this morning, but South American corn will be heading into the U.S. and Taiwan purchased 65,000 MT or 2.6 MBU of Brazilian corn. High river levels here in the U.S. are making exports a challenge this spring. China still has some 7 MMT or 257.2 MBU of soybeans on the books to move in the next couple months while booking at least another 9 cargoes from Brazil so far this week.
The latest 6 to 10 day outlook showing above normal precipitation for the Southwest and eastern 1/3 of the U.S., below normal remains in place in the PNW. The next weather story may be the below normal temps centered on Southern Plains and covering all but the western ¼ of the U.S. in not only the 6 to 10 day outlook but also the 8 to 14 day run.
July corn testing long term resistance over this past week as well as the December contract, $4.39 for July and $4.54 for December. The July contract with a gap from $4.07 ½ to $4.04 ¾ and support at $4.02 then $3.90. Soybeans also testing but unable to push through resistance for July around $8.95 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 into a new recent high this week at $4.97 but reversing lower since and finding support near $4.50. July Chicago wheat up to new 4-month high at $5.29, pulling back hard these past 2 days with 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