Date: August 27th, 2019
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 U.S. House. Japan has promised to purchase more beef and corn. The market mover though to start the week was the administration stating that the Chinese called and asked to get back to the table and stating they are willing to resolve the trade dispute. This turned the limit lower hogs from Friday to hit the expanded limit higher yesterday. Cattle futures held triple digit gains throughout the day with additional support from a friendly Cattle on Feed report after the close last Friday. Placements have been lower than a year ago the past three months and so long as inventory stays current we could finally see a Cattle on Feed number lower than year ago next month.
Joplin Regional Stockyards Feeder Cattle – Carthage, MO
Livestock Weighted Average Report for 8/26/2019
Total Receipts: 3,833 Last Week: 1,749 Last Year: 6,191
Compared to last week, steer and heifer calves traded steady to 3.00 higher. Yearling and heifers traded steady.
Oklahoma National Stockyards Feeder Cattle – Oklahoma City, OK
Livestock Weighted Average Report for 8/26/2019
Total Receipts: 4,900 Last Week: 2,382 Last Year: 5,225
Compared to last week: Feeder steers traded 2.00-4.00 higher. Feeder heifers sold as much as 6.00-7.00 higher. Steer and heifer calves not tested as of yet.
Tulsa Livestock Auction – Tulsa, OK
Livestock Weighted Average Report for 8/26/2019
Total Receipts: 2,202 Last Week: 1,369 Last Year: 2,258
Compared to last week: Steers and Heifers unevenly steady to 3.00 higher. Quality plain thru attractive. Demand good. Slaughter cows 2.00 lower. Slaughter bulls 2.00 higher.
Cattle slaughter from Monday estimated at 116,000 head, up 1,000 from last week but down 4,000 from last year. Hog slaughter from Monday estimated at 477,000 head, down 3,000 compared to a week ago but up 9,000 compared to a year ago.
Boxed beef cutout values firm on Choice and lower on Select on light to moderate demand and light offerings for a total of 87 loads sold.
Choice Cutout__238.06 +.54
Select Cutout__211.66 -1.05
CME Feeder Index__137.66 -2.17
CME Lean Hog Index__74.49 -1.45
Pork Carcass Cutout__78.99 -.66
IA-S.MN Wtd Avg Live Price__N/A, Wtd Avg Carcass Base__64.22 +.85
National Wtd Avg Live Price__49.96 +.98, Wtd Avg Carcass Base__63.26 -1.29
August live cattle closed the first gap last Friday and found resistance at the 50-day moving average at $105.77. The October contract though still has a gap from $101.67 to $103.75 then another from there up to $106.42. August feeders closed the last remaining gap on Friday, holding now a higher short term trend with support around $136 and resistance up near $144. October lean hogs gapped and finished the $3 limit lower on Friday then flipped and finished with an expanded limit, $4.50 higher on Monday. The lower trend is still in place with resistance up at $65.80.
Grains opened firm yesterday as the trade talks were positive coming out of the weekend instead of the negative side heading into it. The soy complex were the only contracts to hold those gains throughout the day though. Export inspections for the week ending August 22nd were within the expectations but still low volume overall. Corn totaled 25.2MBU, Soybeans 35.3 MBU (22.5 to China), wheat 18.1 MBU and grain sorghum 374K BU. This means 8 days left to ship 258 MBU corn, 67 MBU of soybeans and 5.9 MBU of milo according to year to date inspections but according to Census adjustments we should still hit the current USDA estimates.
After the close USDA updated Crop Progress and Conditions with a 1% bump higher in corn conditions and 2% higher for soybeans. Corn in the dough stage at 71% (+16% from last week) compared to 91% last year and 87% average. Corn dented now at 27% (+12% from last week) compared to 59% last year and 46% average, MI, MN, ND, OH and SD all still in the single digits.
Soybeans setting pods at 79% (+11% from last week) compared to 94% last year and 91% average. Grain sorghum 86% headed, 41% coloring compared to 54% last year and 32% average, 22% of the crop is mature compared to 26% last year and 30% average, 20% harvested which matches last year and the average, TX 69% harvested. Conditions up 1% to 66% rated G/E while P/VP unchanged at 7%.
Winter wheat harvest now 96% complete, WA still behind at 84% complete. Spring wheat harvest is 38% complete compared to 75% last year and 65% for a 5-year average.
Overnight, grain markets were weaker with some selling from the improved crop ratings. Weather and trade talks should determine the market direction from here until the September crop report scheduled for September 12th. Corn finished the overnight steady to fractionally lower, soybeans 7 to 8 lower and wheat 1 lower to 1 higher.
Egypt in for more wheat and surprisingly the lowest FOB offer came from France this round followed by Russia and Ukraine. The freight disadvantage though should result in more Russian wheat filling Egypt’s needs unless they purchase multiple cargoes. South Korea purchased 30,000 MT or 1.1 MBU of U.S. milling quality wheat yesterday. Today another firm purchased 20,000 MT of various U.S. wheat varieties and 10,500 MT of Canadian wheat.
Cool weather and crop maturity remain as the biggest concern, just not enough concern yet to generate a weather rally in this market. Heavy rains towards the end of this week still in forecast for the Western Corn Belt. 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, Rockies and Southeast and below normal in the Plains extending into the Eastern Corn Belt.
September corn with a recent low at $3.57 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 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