Date: November 4th, 2019
Cash feedlot trade higher again last week with KS and TX trade starting midweek at $110 to $112 live. By the end of the week live trade peaked in the North at $116 and dressed trade up to $180 to $182. Live cattle futures have been leading the way now within just a few dollars of this past spring’s highs. Feeders though are still some $10+ from those highs. Compared to last year, cattle prices are still discount but beef prices remain at a premium to a year ago levels keeping packer margins in the green. The concern moving forward is still cheaper alternatives to beef such as pork which has held consistently about 1/3 the price for the majority of this year.
NATIONAL FEEDER & STOCKER CATTLE SUMMARY – WEEK ENDING 11/01/2019
RECEIPTS: Auctions Direct Video/Internet Total
This week: 274,600 49,000 2,000 325,600
Last week: 290,200 33,700 32,700 356,600
Year Ago: 341,400 43,200 23,000 407,600
Compared to last week, yearling steers and heifers sold steady to 3.00 higher. Steer and heifer calves sold steady to 2.00 higher. Good demand on the remaining supply of yearlings. Long time weaned calves with full rounds of preconditioning vaccinations sold on good demand creating wide price spreads compared to calves with partial vaccinations. The Central Plains and Midwest endured unseasonably cold temperatures this week. Furthermore, cattle movement was hindered by rain, wintery mix and snow systems that moved across the country, keeping auction receipts lower than normal for the fall run.
For the week, Friday October 25th through Friday November 1st, December Live Cattle +$3.45, February +$3.15, November Feeder Cattle +$3.75, January +$4.40, December Lean Hogs -$.47, February -$.77. Boxed Beef, Choice +$7.76 @ $233.20, Select +$7.67 @ $207.51. Pork Carcass Cutout -$.92 @ $75.64.
Cattle slaughter from Friday estimated at 115,000 head, up 7,000 from the week previous but down 3,000 from last year. For the week, 655,000 head, up 15,000 from the week previous and up 2,000 from last year. Beef production estimated at 537.5 million pounds compared to 526.1 million the week previous and 538.2 million last year. Beef production only up .2% compared to a year ago with cattle slaughter up 1.1%.
Hog slaughter from Friday estimated at 486,000 head, up 8,000 compared to the week previous and up 20,000 compared to a year ago. For the week, 2,669,000 head, down 24,000 compared to the week previous but up 78,000 compared to a year ago. Pork production estimated at 564.5 million pounds last week compared to 568.3 the week previous and 549.7 million last year. Pork production is up 4.2% compared to a year ago with slaughter up 3.7%.
Boxed beef cutout values higher on moderate to good demand and offerings for a total of 79 loads sold.
Choice Cutout__233.20 +1.02, +7.76 for the week
Select Cutout__207.51 +1.02, +7.67 for the week
CME Feeder Index__145.99 +.76
CME Lean Hog Index__62.10 -.64
Pork Carcass Cutout__75.64 -.41
IA-S.MN Wtd Avg Live Price__N/A, Wtd Avg Carcass Base__47.10 -1.03
National Wtd Avg Live Price__38.57 -.65, Wtd Avg Carcass Base__48.95 -.10
December live cattle into a new 6-month high at $119.70 with resistance up near $124 and support first at $116 then $114.40. November feeders hit a new 5-month high at $149.40 with resistance at $150.35 and support near $145. December lean hogs holding the lower trend that has been in place since mid-April with support at $63.50 and resistance at $69.
Grains finished the week mixed with a run higher for both soybeans and wheat futures while corn held steady. Looking back over October, corn did not stray more than a dime from $3.90 except for a few days. Harvest continues to progress slowly yet basis remains firm and spreads have narrowed indicating a smaller crop while there hasn’t been enough bullish news to push futures out of the rangebound trade. Soybeans still show a higher trend, peaking and testing recent highs mid-October. The chatter around China is getting old as the market really needs to see action vs. words to push into new highs. Wheat has been flat recently with world values increasing which in turns help support U.S. values.
For the week, October 25th through Friday November 1st, December Corn +$.02 ½, March +$.01, November Soybeans +$.04, January +$.02 ¼, December KC Wheat +$.03 ¼, March +$.03, December Chicago Wheat -$.01 ¾, March -$.01 ¾, December MPLS Wheat -$.05 ½, March -$.03 ¼, December Soybean Meal +$.60/T.
Overnight, grains were mixed with soybeans firm but corn and wheat weaker. Soybeans finished the overnight 1 to 2 higher, corn 2 to 3 lower and wheat 3 to 5 lower.
China continues to expand its access to protein by lifting bans on imports of poultry and products from Spain and Slovakia while also approving seven meat packing plants in Brazil for the export of pork products.
Now the Chinese say they have agreement in principal with the US on the Phase I trade deal. The U.S. of course was saying this weeks ago, so I guess the positive rhetoric continues. Pressure is now building to very heavy for the Dems to bring USMCA to a vote, which will be positive. Together this is all excellent news for the US economy, and the stock market.
USDA will update crop progress later this afternoon. As of last week, corn harvest was pegged at 41% complete, 20% behind a year ago and the 5-year average. Soybean harvest last week was reported at 62% compared to 69% last year and 78% 5-year average. Progress this past week has been slow and I wouldn’t expect to see more than 10% for either in today’s report.
This week features the continued well below normal temps for most of the U.S. but moisture should be limited to the Southeast. The 6 to 10 day outlook continues to show below normal temps for the eastern half of the U.S. with above normal now from the Rockies west and above normal moisture in the Northern Border States, East Coast and Gulf Coast with below normal in the Southwest.
December corn breaking the higher trend that started in early September, now holding a lower trend since the October high at $4.02 ½ with support from $3.85 to $3.82. November soybeans are now in delivery with Cargill stopping over 1,600 contracts or over 8 MBU, nearly all that have been tendered. January soybeans peaked at $9.59 ½ mid-October which matches the highs from earlier this summer. The higher trend is still holding from early September with support at $9.25 and resistance at $9.40. December KC wheat with support at $4.10 and resistance up at $4.37. December Chicago wheat with support at $5.01 and resistance at $5.35. December MPLS wheat with support at $5.18 and resistance up near $5.40. December soybean meal with support at $301.50 and resistance up at $306.70.
Loewen and Associates, Inc.
Pete Loewen / Matt Hines / Doug Biswell / Matt Burgener
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