Date: August 19th, 2019
All the damage was done early last week in both livestock and grain futures. The Tyson cattle slaughter plant fire in Holcomb cut 6,000 head per day capacity. This was seen a major blow early but has since been reported the plant will only be down a few weeks vs. months. Cattle futures crashed lower as beef prices shot higher pushing already positive packer margins higher. Cash feedlot trade in the South was reported $5 lower than the week previous at $105 live. Dressed trade in the North was $10 lower at $172 and $105 to $106 live trade, down $6 to $7.
NATIONAL FEEDER & STOCKER CATTLE SUMMARY – WEEK ENDING 08/16/2019
RECEIPTS: Auctions Direct Video/Internet Total
This Week 104,800 27,900 70,100 202,800
This Week 154,600 54,100 241,400 450,100
Year Ago 149,500 53,700 7,100 210,300
Compared to last week, steers and heifers sold 5.00 to 10.00 lower. Uncertainty started the week as the news spread over the weekend of a fire that has halted slaughter at the Finney County, Kansas fed cattle operated by Tyson Foods. Some cattle auctions were either downright cancelled or saw reduced receipts as the industry took in the news over the weekend. Backgrounders do like to market cattle before the Labor Day holiday in August and some may be forced to wait until the market finds footing which could be after their historical marketing time period.
For the week, Friday August 9th through Friday August 16th, August Live Cattle -$8.12, October -$8.70, August Feeder Cattle -$4.32, September -$6.07, October Lean Hogs -$4.97, December -$3.90.
Cattle slaughter from Friday estimated at 114,000 head, down 4,000 from the week previous and from last year. For the week, 651,000 head, up 9,000 from the week previous with a huge Saturday kill at 74,000 head, down 8,000 compared to a year ago. Hog slaughter from Friday estimated at 454,000 head, up 3,000 compared to week previous and up 10,000 compared to a year ago. For the week, 2,497,000 head, up 143,000 from the week previous and up 38,000 from last year.
Boxed beef cutout values sharply higher on good demand and moderate offerings for a total of 100 loads sold.
Choice Cutout__238.69 +2.57, +22.32 for the week
Select Cutout__213.26 +2.59, +19.45 for the week
CME Feeder Index__137.60 -1.55
CME Lean Hog Index__79.02 -.32
Pork Carcass Cutout__86.26 -1.97, -4.18 for the week
IA-S.MN Wtd Avg Live Price__55.09 unch, Wtd Avg Carcass Base__72.87 +.35
National Wtd Avg Live Price__55.21 +.07, Wtd Avg Carcass Base__69.65 -.49
August live cattle into a new contract low at $99.70 last week, the first time a nearby contract has been below the $100 level since October of 2016. Support is down at $94.30 with resistance at $101.50 and a gap from there up to $105.05 followed by another up to $107.55, the 2 limit lower moves from last Monday and Tuesday. August feeders with a new contract low down at $127.65 but since has filled one gap and nearly the next with a gap remaining from $137.77 up to $138.65. October lean hogs holding a long term lower trend with choppy/sideways trade so far this month from $61.50 to $70.82.
Over in the grains, again it was early in the week with the bearish corn production numbers from USDA on Monday morning that caused the biggest movement. Soybean numbers were actually friendly yet unable to gain traction with corn limit lower. Weather has been forecasted non-threatening recently, yet drought continues to build from IA to OH while severe storms in the Western Corn Belt and Plains have dumped some heavy rains causing floods yet again this year and massive hail storms reports this past week.
For the week, Friday August 9th through Friday August 16th, September Corn -$.39 ¼, December -$.37, September Soybeans -$.11 ¾, November -$.12, September KC Wheat -$.22 ¾, December -$.24, September Chicago Wheat -$.28 ¾, December -$.24, September MPLS Wheat -$.13 ½, December -$.12 ¼, September Soybean Meal -$3.60/T, December -$3.40/T.
Overnight, grain markets were under pressure with decent rain falling over the dry parts of IA over the weekend. Corn 5 to 7 lower, soybeans 7 to 8 lower and wheat 3 to 4 lower.
News and volume were very light overnight. This week’s will be highlighted by weather and forecast changes along with the highly publicized and typically bullish Pro Farmer Crop Tour. The key question is not only how does the crop look but will it finish and have the potential for 160+ BPA corn and 48+ soybeans. Acreage of course can also be adjusted in the upcoming crop reports but for now the planted number is in, harvested for grain is yet to be determined.
Last week I had the opportunity, thanks to Kansas Farm Bureau to attend the USDA crop report lockup. The NASS August crop production was already laying on each chair as we entered the briefing room. As you can all imagine, I dove into the numbers making notes and comparing to the data sheet I had brought with me. By 11:15 EST I knew this was not good news for the corn market today but could do nothing about it as all electronic devices are not allowed in. We discussed the numbers quietly amongst the group for a few minutes and then were handed the published WASDE for which I proceeded to do the same work looking at ending stocks and world adjustments.
After the executive briefing to the Ag Secretary Designate and USDA Chief Economist, we had a brief Q & A with NASS Crop Chiefs Lance Honig and WAOB Chair Dr. Mark Jekanowski. I asked, “What would justify an adjustment to acreage from now until the January final crop report?” Objective yield data with enumerators on the ground from September forward, continued FSA data and completion by October and another producer survey during December were the times highlighted by Mr. Honig. Another question was asked about corn yield coming up from 166 to 169.5 BPA with all this corn planted 30+ days late. The answer again was this yield was derived from producer survey information and satellite data. They did comment that satellite coverage this year has been difficult with excessive amounts of cloud cover and NASS does not project or forecast weather, it is all assuming that every acre intended to be harvested will be.
Heavy rains in the forecast Eastern KS, MO and the Southeast over this next week. The latest 6 to 10 day outlook showing normal to above normal temps with above normal moisture for the eastern half of the U.S. and normal to below normal west.
September corn down into a new recent low at $3.58 ¼ last week with support next at $3.52 ½ and a gap from $3.79 to $3.85 ¼. The December contract dipped down to $3.69 last week with support next down at $3.63 ¾ and a gap from $3.88 to $3.92 ¾. September soybeans holding support near $8.58 with the next down near $8.40 and resistance up at $8.84. The November contract holding $8.70 support then $8.54 with resistance up near $9. September KC wheat holding a lower trend with the contract low down at $3.80 ¾ and resistance up around $4.20. September Chicago wheat trending lower into a new recent low at $4.65 with support next down near $4.53 and resistance up at $4.80. September Minneapolis wheat lower trend as well, new contract low at $5.02 and resistance up at $5.05. September Soybean Meal trending lower with the contract low down at $286.9, support at $2.91 and resistance around $300.
Loewen and Associates, Inc.
Pete Loewen / Matt Hines / Doug Biswell / Matt Burgener
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