Date: September 23rd, 2019
Cash feedlot trade was higher last week with live sales reported at $101 to $103, up $2 to $3 from the week previous and dressed trade from $160 to $165, up $5. African swine fever now discovered in the Philippines and Russia along with the Chinese trade talks not going as well as week ago pressured livestock futures to end the week. The Cattle on Feed report was friendly after the close with 99% on feed vs. a year ago and August placements down to 91% compared to pre report estimates at 95%. This is the fourth consecutive month for placements below a year ago. YTD Cattle Slaughter through August was released on Thursday with heifer slaughter 8.6% above a year ago while beef cow slaughter was 11.6% above a year ago. This is the largest YTD numbers for heifers since 2011 and largest for beef cows since 2013.
NATIONAL FEEDER & STOCKER CATTLE SUMMARY – WEEK ENDING 08/20/2019
RECEIPTS: Auctions Direct Video/Internet Total
This Week 158,500 78,100 32,100 268,700
Last Week 176,400 73,500 122,000 371,900
Year Ago 175,800 114,500 40,000 330,300
Compared to last week, steers and heifers sold 2.00 to 7.00 higher. Demand for yearlings and calves improved throughout the week as the CME Cattle Complex found a support level and Feeder Cattle is now trading higher than levels “pre-fire”. The drain of capital from cattle feeders has been extreme and they have struggled all summer long to achieve profitability. Surprisingly the feeder cattle market is active at the auctions as outgoing fed cattle continue to lose money as fed cattle hover on both sides of the 100.00 mark. Most lots of yearlings are coming off the copious amounts of summer grass that has been available all summer. Several consignments have been selling lighter than last year due to the “washy” pasture grass that causes cattle to weigh up with a lighter flesh and compensatory gain will be a new buyer’s best friend. As grass has been abundant, and no frost yet, there has been no need to pull yearlings off grass and get them sold before they start to lose pounds without supplemental feed. These feeder cattle producers aren’t anxious to sell cattle yet as they hope for a continued rally that will leave them with a positive return on their investment they have made. Fall officially starts on Monday, however the fall runs have not.
For the week, Friday September 13th through Friday September 20th, October Live Cattle +$1.27, December +$.77, September Feeder Cattle +$3.82, October +$4.62, October Lean Hogs -$6.12, December -$2.45. Boxed Beef, Choice -$3.91 @ $216.97, Select -$6.88 @ $191.72. Pork Carcass Cutout +$.94 @ $69.15.
Cattle slaughter from Friday estimated at 116,000 head, up 9,000 compared to the week previous but down 13,000 from last year. For the week, 658,000 head, up 29,000 from the week previous and up 5,00 from last year. Beef production estimated at 536.6 million pounds compared to 512.0 million the week previous and 540.7 million last year. Beef production only up .1% compared to a year ago with cattle slaughter up 1.1%.
Hog slaughter from Friday estimated at 446,000 head, down 30,000 compared to the week previous but up 7,000 compared to a year ago. For the week, 2,587,000 head, down 24,000 compared to the week previous but up 253,000 compared to a year ago. Pork production estimated at 539.8 million pounds last week compared to 542.8 the week previous and 485.8 million last year. Pork production is up 3.9% compared to a year ago with slaughter up 3.4%.
Boxed beef cutout values lower on Choice and weak on Select on light to moderate demand and offerings for a total of 121 loads sold.
Choice Cutout__216.97 -1.20, -3.91 for the week
Select Cutout__191.72 -.44, -6.88 for the week
CME Feeder Index__138.53 +1.24
CME Lean Hog Index__56.32 -.44
Pork Carcass Cutout__69.15 +.13, +.94 for the week
IA-S.MN Wtd Avg Live Price__44.34 -.80, National Wtd Avg Live Price__44.14 -.22
No Wtd Avg Carcass Base prices due to confidentiality
October live cattle have recovered to the $100 level with support at $98 and resistance up at $101.67. It currently looks like an inverted head and shoulders is forming and there are still 2 major gaps from $101.67 to $103.75 and from there up to $106.42. September feeders expire later this week. The October contract is carrying the most volume now and into a new recent high last Friday at $139.60. Support is at $136.80 and $133.50 with resistance up at $140.30 then around $144. October lean hogs still holding the long term lower trend and remain choppy in a $10 range from the recent low down at $59.30 up to the nearby resistance near $69.
MPLS wheat led the grains higher to end the week as torrential rain has fallen that will negatively impact mature spring wheat. MPLS has scored seven consecutive higher highs. Trade talks going back to negative pressured the rest of the grain and oilseed complex. Talks abruptly ended and China cancelled previously scheduled trips to Nebraska and Montana. Additional tariffs have been delayed until October 15th but comments from President Trump that this has to complete deal or no deal at all along with he doesn’t need a deal to secure the 2020 election were not good signs of progress. U.S. weather has not varied much this month with above normal temps helping fall crops progress.
For the week, Friday September 13th through Friday September 20th, December Corn +$.02, March +$.00 ¼, November Soybeans -$.16, January -$.15 ¾, December KC Wheat +$.07 ¾, March +$.07, December Chicago Wheat +$.00 ¾, March +$.01 ½, December MPLS Wheat +$.18 ½, March +$.17, October Soybean Meal -$6.80/T, December -$6.50/T.
Overnight, grains recovered all the losses from Friday as China state media reporting the talks with the U.S. last week were very productive and the farm tips into NE and MT were not cancelled due to a breakdown in negotiations. Corn finished 2 to 3 higher, soybeans 10 to 13 higher and wheat 2 to 9 higher.
This week’s trade will again be focused on trade talks with China, waiting for the official news that a trade deal is complete with Japan and of course weather. Heavy rains expected over parts of OK up through the Great Lakes. The latest 6 to 10 day outlook still showing above normal temps from the Plains to the East Coast, below normal out West. Precipitation chances are below normal east and above normal north and west. The same patterns looks to hold for the 8 to 14 day outlook as well. Export inspections will be out later this morning and USDA will update crop progress and conditions after the close today.
December corn still unable to get through resistance around $3.74 with the next up at $3.80 and a gap from $3.88 to $3.92 ¾. November soybeans up to $9.04 ¾ last week for a new recent high with support at $8.80. December KC wheat holding a higher trend so far this month and into a new recent high overnight with resistance next up near $4.40. December Chicago wheat also trending higher with support at $4.76 and resistance up at $4.92 then around the $5 mark. December MPLS wheat nearly $.50 higher from the contract low hit the first of September with resistance next up at $5.44. October soybean meal choppy and still trending lower from $289 to $302 these past couple months.
Loewen and Associates, Inc.
Pete Loewen / Matt Hines / Doug Biswell / Matt Burgener
www.loewenassociates.com pete@loewenassociates.com matt@loewenassociates.com
866-341-6700