Date: August 26th, 2019
The additional round of tariffs announced by China and possibly a cancellation of the upcoming September meeting pressured all the markets to end the week. Lean hogs and soybeans of course under the most pressure. Cash feedlot trade in the South was reported at $106 live, $1 higher than the week previous. Dressed trade in the North was mostly $3 higher at $175, some deferred delivery up to $178 and live trade at $108 to $110, steady to $2 higher. After the close a friendly Cattle on Feed report compared to pre report estimates with Aug 1 on feed at 11.1 million head, 100.2% vs. a year ago, still the largest ever on feed for August 1st. July placements totaled 1.71 million head, only 98% vs. a year ago, and marketings of 2.0 million head were up 7% from a year ago but with 1 extra business day this past July.
NATIONAL FEEDER & STOCKER CATTLE SUMMARY – WEEK ENDING 08/23/2019
RECEIPTS: Auctions Direct Video/Internet Total
This Week 87,400 64,900 65,900 218,200
Last Week 104,800 27,900 70,100 202,800
Year Ago 163,700 60,400 249,600 473,700
Compared to last week, steers and heifers sold 1.00 to 5.00 higher. Not as many calves were seen at auctions this week as yearlings. Typically, backgrounders like to get their stock sold prior to the Labor Day holiday. However, there was a kink thrown into the plans of some just a couple weeks ago, but most areas (exception being the Southern Plains) have plentiful grass around them, so holding on for a couple extra weeks didn’t add much cost to the bottom-line. The supply of feeders was light this week with receipts much lower than normal. Coupling this week’s receipts with last week, a new two-week non holiday low was set by only having 192,900 head sold at weekly auctions.
For the week, Friday August 16th through Friday August 23rd, August Live Cattle +$4.70, October +$1.35, August Feeder Cattle +$2.77, September +$.87, October Lean Hogs -$2.70, December -$2.00.
Cattle slaughter from Friday estimated at 115,000 head, up 1,000 from the week previous and from last year. For the week, 654,000 head, up 3,000 from the week previous, up 12,000 from the week prior to fire with another huge Saturday kill at 77,000 head, up 12,000 compared to a year ago. Beef production is estimated at 528.7 million pounds compared to 524.8 million the week previous and 526.7 million last year. Year to date beef production is up .3% from last year while cattle slaughter is up 1.3%
Hog slaughter from Friday estimated at 476,000 head, up 22,000 compared to week previous and compared to a year ago. For the week, 2,528,000 head, up 36,000 from the week previous and up 7,000 from last year. Pork production for the week estimated at 525.8 million pounds compared to 519.2 million last week and 524.6 million last year. Year to date pork production is up 3.7% from last year with slaughter up 3.1%.
Boxed beef cutout values lower to sharply lower on light to moderate demand and offerings for a total of 77 loads sold.
Choice Cutout__237.52 -1.76, -1.17 for the week
Select Cutout__213.26 -3.20, -.55 for the week
CME Feeder Index__139.72 +1.83
CME Lean Hog Index__75.94 -1.10
Pork Carcass Cutout__79.65 -.29, -6.61 for the week
IA-S.MN Wtd Avg Live Price__N/A, Wtd Avg Carcass Base__63.88 -1.59
National Wtd Avg Live Price__48.98 -3.12, Wtd Avg Carcass Base__64.55 -1.57
August live cattle closed the first gap last Friday but unable to close above the $105 level. The October contract though still has a gap from $101.45 to $103.75 then another from there up to $106.42. August feeders closed the last remaining gap on Friday but proceeded to reverse lower with support at $135.62 and resistance up at $138.72 then near $144. October lean hogs gapped and finished limit lower on Friday for a new recent low at $59.30 with resistance up near $63.
Over in the grains, again soybeans took the biggest dip lower on the Chinese story. Pro Farmer published their crop estimates after a week of scouting the Midwest. Both their corn and soybean yields were under USDA, which was expected. It may not be bullish enough though to pull grains higher this week without some help from the weather forecasts. The tour typically runs near 5% below USDA and this year their overall U.S. yield came in -3.7% for corn and -4.9% for soybeans. President Trump announced an increase in tariffs on Chinese goods after the close. The CFTC Commitment of Traders report showed managed money selling over 100K contracts of corn for the week ending August 20th and flipping into a new net short position of over 56K contracts and estimated over 75K contracts through Friday. They also sold nearly 6,000 contracts of soybeans taking their net short position to 72,432 contracts.
For the week, Friday August 16th through Friday August 23rd, September Corn -$.11 ¼, December -$.13, September Soybeans -$.24, November -$.23 ¼, September KC Wheat -$.02 ¾, December -$.04 ¾, September Chicago Wheat +$.04 ½, December +$.00 ¼, September MPLS Wheat -$.07 ½, December -$.04, September Soybean Meal -$5.00/T, December -$4.90/T.
Overnight, grain markets were firm with corn 2 to 3 higher, soybeans 8 to 9 higher and wheat 1 lower to 3 higher. President Trump met with other world leaders over the weekend at the G7. The U.S. and Japan have agreed in principle to the core elements of a trade deal that does not require congressional approval like the USMCA deal that is on hold in the House. Japan has promised to purchase more beef and corn. The market mover though overnight was due to the Chinese calling and asking to get back to the table and stating they are willing to resolve the trade dispute.
This week’s forecast looks similar to last week’s with heavy rain in eastern KS and surrounding areas. The latest 6 to 10 day outlook showing below normal temps centered over the Western Corn Belt, above normal west with above normal moisture for the Southwest and Plains and below normal in the Southeast extending into the Eastern Corn Belt.
September corn down into a new recent low at $3.57 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 $3.65 ½ last week with the contract low down at $3.63 ¾ and a gap from $3.88 to $3.92 ¾. September soybeans holding support near $8.42 with resistance up at $8.84. The November contract holding $8.55 support 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 $4.56 and resistance up at $4.80. September Minneapolis wheat lower trend as well, new contract low at $4.97 and resistance up at $5.02. September Soybean Meal trending lower with the contract low down at $286.90, support at $289 and resistance around $300.
Loewen and Associates, Inc.
Pete Loewen / Matt Hines / Doug Biswell / Matt Burgener
www.loewenassociates.com pete@loewenassociates.com matt@loewenassociates.com
866-341-6700