Date: December 27th, 2019
Livestock futures finished higher yesterday with feeders triple digit higher as we opened after the Christmas Day break. Cash feedlot trade has been mostly inactive, only light volume trade at $122 live which is $2 higher than a week ago. Their certainly hasn’t been any rush by feedlots as the December contract is $3+ premium to last week’s cash and expiring next Tuesday. Also the carry to the February contract of another $3+ is supportive as well. The U.S. hog supply is still burdensome and keeping pressure on prices but hope is building that China will soon be turning the corner and begin rebuilding their hog herd. Until then, China will continue to be a major protein importer.
Cattle slaughter from Thursday estimated at 120,000 head, down 1,000 from last week but up 20,000 from last year. Hog slaughter from Thursday estimated at 493,000 head, matching last week and up 52,000 compared to a year ago.
Boxed beef cutout values lower on Choice and firm on Select on light to moderate demand and heavy offerings for a total of 202 loads sold.
Choice Cutout__210.15 -1.42
Select Cutout__205.25 +.61
CME Feeder Index__145.81 -.12
CME Lean Hog Index__59.12 -.78
Pork Carcass Cutout__75.78 -1.05
IA-S.MN Wtd Avg Live Price__N/A, Wtd Avg Carcass Base__48.76 +.17
National Wtd Avg Live Price__38.16 -.76, Wtd Avg Carcass Base__48.75 +.02
Weekly export sales in the meats were solid in both beef and pork when you combine the current year sales with 2020 business. Net 2019 sales in beef were 6,300 MT, along with another 13,100 MT for 2020. Actual shipments were 16,000 MT. The top three buyers for this year’s business were South Korea, Japan and Mexico. Hong Kong, South Korea and Japan were the top three for 2020. The biggest shipment destinations were Japan, South Korea and Mexico. With a combined sales total of 19,400, it was great week for beef commitments.
Net pork sales were 16,400 MT for 2019 and 17,800 MT for 2020, resulting in a net total of 34,200 MT. Mexico, Japan and South Korea were the big buyers in this marketing year and China, Mexico and Australia for 2020. Total shipments were 40,100, which is an outstanding total for the week. China took 16,100 MT, or 40% of the total, Mexico was over 10k MT and South Korea hit the #3 slot, way under the first two at 3k MT.
December live cattle into a new recent high yesterday at $123.27 with resistance next up near the $124 area and 10-day moving average providing support now at $122.20. January feeders hit resistance around $146.60 early last week but then fell under technical pressure when it was not able to break through with support holding just above $143. February lean hogs still holding the lower trend that has been in place since mid-April with support at $69 and resistance being tested around $71.50.
Grains finished higher yesterday led by the wheat market. Funds continue to dump short positions in wheat, now net long in Chicago and testing recent resistance levels, pushing KC wheat into new recent highs and even MPLS higher for a test of the long term lower trend. Most of this recent rally has been supported by higher world values and technicals, but there is some overall fundamental friendly news building. U.S. acreage and world acreage should both be lower this upcoming year which should reduce stocks. U.S. exports have been above average to good recently as well which led the adjustment higher by USDA last month. Volume was thin though yesterday, a higher follow through day today would be helpful.
Overnight, grains were firm, again led by wheat which finished 2 to 6 higher while corn and soybeans held 1 higher.
Export sales this morning were bullish for wheat but only mediocre for corn and soybeans. Wheat sales for the period from December 13-19 totaled 26.3 MBU with the top three buyers the Philippines, Taiwan and Mexico. Corn sales totaled 23 MBU which were towards the bottom end of expectations. The top three buyers continue to be Mexico, Japan and Colombia. Soybean weekly export sales were below expectations at 27 MBU with China the top buyer at 14.7 MBU. Net grain sorghum sales were only 1.7 MBU but China increased by 3 MBU due to a switch of 2.6 MBU from unknown destinations.
No sales announced by USDA this morning. Taiwan purchased 65,000 MT or 2.6 MBU of corn overnight, likely to come from Argentina.
A winter storm moves through NE and up into the Great Lakes over the weekend with rain expected locally and heavy rain for the Southeast. The 6-10 day outlook showing below normal temps in the Southwest and normal to above normal for the rest of the U.S. with above normal precipitation across the Northern Border States and in the Southeast and below normal for the Southwest.
March corn still bumping the $3.90 area but unable to break through with support at $3.80. January soybeans into a new recent high overnight with resistance next at $9.42 then around $9.59 which was the high from this past summer and fall, support at $9.20. March KC wheat into new recent highs with resistance next up near $4.82 and support at $4.40. March Chicago wheat still trending higher with support at $5.38 and resistance up at $5.57 then $5.73. January soybean meal still holding a lower trend with the contract low down at $292.60 and resistance around $303.
Loewen and Associates, Inc.
Pete Loewen / Matt Hines / Doug Biswell / Matt Burgener
www.loewenassociates.com pete@loewenassociates.com matt@loewenassociates.com
866-341-6700