Date: June 24th, 2019
Cattle futures finished the week triple digits lower as lean hogs finished down the $3 limit. Cash feedlot trade $2 to $3 lower than the week previous at $108 to $110 live in TX and KS, NE $110 live and dressed trade ranged from $176-$187.
Cattle on Feed June 1 at 11.7 million head, 102.0% vs. last year and the highest June 1 inventory since the series began in 1996. Placements in May at 97.0% with Marketings at 101.0%. Not much to see in the report. Placements were skewed towards heavier cattle. On Feed total was slightly larger than the estimate, viewed overall neutral to slightly bearish.
Total red meat supplies and total frozen poultry supplies on May 31, 2019 were down 2 percent from the previous month and down 6 percent from a year ago. Total pounds of beef in freezers were down 6 percent from the previous month and down 13 percent from last year while frozen pork supplies were up 1 percent from the previous month and up 1 percent from last year.
NATIONAL FEEDER & STOCKER CATTLE SUMMARY – WEEK ENDING 06/21/2019
RECEIPTS: Auctions Direct Video/Internet Total
This Week 159,800 41,600 15,000 216,400
Last Week 134,900 52,900 49,400 237,200
Year Ago 164,000 65,800 17,000 246,800
Compared to last week, steers and heifers sold uneven; 3.00 lower to 2.00 higher. The CME futures exhibited support to the cash markets early this week as the Cattle Complex posted triple digit gains on Monday with follow through support on Tuesday. However, when Wednesday arrived, the foundation laid early week had eroded and the Board displayed negatives the rest of the week. Cattle feeders have approached the dog days of summer cautiously this year, with cost of gains expected to creep up with the lack of corn acres being planted nationwide this year. Flesh condition of cattle has really been attractive after the cold, wet, muddy conditions cattle have had to endure to this point. Backgrounders have historically sold cattle this time of year and probably wouldn’t hold on this long if the crystal ball would’ve predicted a much lower market for short and long yearlings. Profitability in the cattle business right now has sure taken a hit and bankers are keeping an eye on the bottom line. Cow-calf producers are also cognizant of break-evens due to increased costs of just about every input you can think of. The cattle feeder selling fed cattle is facing the same battle and are keeping their eyes locked on the futures contracts looking, looking for marketing flexibility.
For the week, Friday June 14th through Friday June 21st, June Live Cattle -$2.22, August -$2.05, August Feeder Cattle -$1.70, September -$1.75, July Lean Hogs -$5.10, August -$2.72. Boxed Beef Choice -$2.41 @ $219.82, Select -$3.21 @ 199.55. Pork Carcass Cutout -$6.48 @ $76.73.
Cattle slaughter from Friday estimated at 118,000 head, matching both the week previous and a year ago. For the week, 662,000 head, down 3,000 from the week previous but up 4,000 from a year ago. Beef production estimated at 522.3 million pounds last week compared to 525.8 the week previous and 528.9 last year. Year to date slaughter running 1.1% ahead of last year while beef production is essentially unchanged.
Hog slaughter from Friday estimated at 462,000 head, down 5,000 from the week previous but up 39,000 compared to a year ago. For the week, 2,449,000 head, up 18,000 from the week previous and up 285,000 compared to a year ago. Pork production estimated at 524.9 million pounds last week compared to 521.2 the week previous and 451.1 last year. Year to date slaughter running 3.0% ahead of year ago with pork production up 3.6%.
Boxed beef cutout values lower on light demand and moderate offerings for a total of 99 loads sold.
Choice Cutout__219.82 -.90, -2.41 for the week
Select Cutout__199.55 -1.93, -3.21 for the week
CME Feeder Index__131.37 -1.62
CME Lean Hog Index__79.14 -.41
Pork Carcass Cutout__76.73 -.71, -6.48 for the week
IA-S.MN Wtd Avg Carcass Base__N/A, last price 78.00 +1.31 from 6/19
National Wtd Avg Carcass Base__74.03 -.85
June live cattle into a new contract low at $106.42, still discount to cash with one more week of trade. The August contract also hit a new contract low on Friday at $102.05 with resistance up near $107. The weekly low from 2018 down at $101.37. August feeders into a new contract low to end the month of May at $132.15, getting within a few ticks of that last Friday but able to hold it so far. Support next at $131.87 then $128.57 and resistance up near $137 then $141. July lean hogs into new recent lows last week with support next near $75 and the contact low down at $70.05.
Over in the grains, corn and soybeans were choppy all week with corn lower for the week but soybeans higher. Wheat pulled back the hardest as any blimp in the corn market let harvest pressure push wheat futures lower. July options also expired on Friday keeping nearby July corn close to $4.40 and the December contract near $4.50. This coming Friday will be first notice day for all July grain contacts prior to entering delivery next week. Wet weather continued throughout the Midwest over the weekend with more areas or continued flooding.
In the COT report, managed money through Tuesday +32.3k corn (net long 143.5k), +20.9k Chicago wheat (net long 22.7k), +2.8k KC Wheat (net short -20.7k), +35.8k beans (net short -55.3k), -4.6k meal (net long 18), +11k oil (net short -42.7k). When including recent estimates, the funds were heading into the weekend net long about 70,000 combined corn futures and options.
For the week, Friday June 14th through Friday June 21st, July Corn -$.10 ¾, December -$.10, July Soybeans +$.06, November +$.04, July KC Wheat -$.23 ¾, September -$.24, July Chicago Wheat -$.12 ½, September -$.11 ¼, July MPLS Wheat -$.27 ¼, September -$.26 ½, July Soybean Meal -$7.90/T, December -$7.70/T.
Overnight, grains were higher getting back most of Friday’s loss with corn finishing 4 to 5 higher, soybeans 5 to 6 higher and wheat 5 to 8 higher.
Weather will remain the focus of the markets with planting effectively complete, the focus is on growing weather. There was also some chatter about hot temps across the EU this week. This week’s U.S. forecast calling for scattered light rains. The latest 6 to 10 day outlook showing mostly normal to above normal temperatures with below normal precipitation in the Southern Plains but above normal still in the North, ECB and Southeast.
This could be a another crazy week though as the market looks to this afternoon’s crop progress and conditions report and then the major USDA reports on Friday, Quarterly Stocks and the Acreage report. The market will be looking for near 90% of soybean acres planted and conditions for the first time this year near 58% G/E compared to last year’s 75% rating. Corn conditions expected to be unchanged at 59% G/E. The acreage report of course is dated back to the first of the month, but may provide some additional insight into USDA thoughts on both corn and soybean acres.
Another positive for the grains is the sharply lower U.S. dollar this past week. Trade talks continue with China heading into the G-20 summit starting this weekend.
July corn showing strong support near the gap at $4.05, December near $4.20. Last week’s highs up at $4.64 for July and $4.73 for December with the next nearby levels up near $4.70 and then $5.19, the nearby highs during the spring of 2014. July soybeans trading a $.25 range last week with support near $8.96 and last week’s high at $9.21 ½. July KC wheat holding support near $4.50 last week with spikes the last few weeks up to $4.87 and $4.97. July Chicago wheat still holding a higher trend with support near $5.15 and resistance up near $5.50.
Loewen and Associates, Inc.
Pete Loewen / Matt Hines / Doug Biswell / Matt Burgener
www.loewenassociates.com pete@loewenassociates.com matt@loewenassociates.com
866-341-6700