Date: December 31st, 2019
Cattle futures didn’t stray too far from unchanged yesterday while lean hog futures broke into new recent highs. Volume was light and should be again today as the December Live Cattle contract expires and markets are closed Wednesday, New Year’s Day. Cash feedlot trade last week confirmed over 61K head compared to over 79K the week prior at a weighted average price for steers at $122.29 live and $195.23 dressed. It will be another light slaughter week this week but packers will be buying for a full run next week and by all indications will require rather large purchases.
Cattle slaughter for Monday estimated at 116,000 head, up 3,000 from the week previous and up 39,000 from last year. Hog slaughter for Monday estimated at 486,000 head, down 11,000 compared to last week but up 92,000 compared to a year ago.
Boxed beef cutout values firm to higher on moderate to good demand and heavy offerings for a total of 106 loads sold.
Choice Cutout__209.66 +.70
Select Cutout__205.41 +.84
CME Feeder Index__139.14 -5.47
CME Lean Hog Index__58.17 -.86
Pork Carcass Cutout__74.75 -.29
IA-S.MN Wtd Avg Live Price__37.65 -.78, Wtd Avg Carcass Base__50.05 +.82
National Wtd Avg Live Price__39.03 +.40, Wtd Avg Carcass Base__49.71 +.65
December live cattle expire today, testing the contract high at $124.17 from April. The February contract has been chopping sideways from $123.12 to $127.90 over the past 2 months. The weekly continuous chart looks strong and hopefully we can test the $130 area like we have the past 2 years shortly after the New Year. January feeders hit resistance around $146.60 back on December 13th 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 long lower trend that has been in place since mid-April but now showing a nearby higher trend with support at $69 and resistance next at $72.
It was a mixed day for the grain yesterday. Soybeans led the charge higher and stayed in the green gaining back all of Friday’s loss, able to post a new recovery higher, not a key reversal higher though after posting a key reversal lower on Friday. Corn and wheat traded both sides of unchanged with corn finishing 1 lower and wheat 1 higher.
Rumors still that the U.S. and China will sign Phase 1 of the trade deal later this week in D.C. The U.S. negotiators continue to hold to the narrative that the delay was only due to translating the 84 page document into Chinese and making sure nothing was lost in translation. The actual verbiage is still a mystery though as the contents of the agreement will be made public at the signing. The U.S. has been touting a Chinese purchase commitment of agricultural products worth $40-$50B per year for the next two years while the Chinese have yet to confirm any such numbers. And a tweet by President Trump this morning stating it will be signed Jan 15th.
Export inspections for the week ending December 26th were all below expectations. Soybeans at 33.5 MBU were the only that came in above the weekly average needed to meet USDA’s current export estimate. Soybean shipments to date are running 150 MBU over a year ago or 25% ahead with China the #1 destination again last week taking 10.3 MBU. Corn inspections were only 16.1 MBU, we need to average 43.2 MBU. Shipments are down over 390 MBU from last year or 55%. The top three destinations continue to be Mexico, Japan and Colombia. Wheat inspections totaled 11.5 MBU, 74% of that going to SE Asia. Year to date shipments are up 67 MBU or 14% from last year but the average weekly need is just under 20 MBU. Grain sorghum shipments were only 159,402 BU, all going to Mexico. China has been taking quite a bit recently but none this past week. Grain sorghum shipments are up 16 MBU or 89% from a year ago and the average needed per week is just over 2 MBU.
Overnight, grains were quietly mixed with corn finishing fractionally higher, soybeans fractionally lower and wheat 1 to 2 higher.
Markets should remain fairly quiet today as we wrap up another month and year. Normal closing times today, all markets are closed tomorrow and reopen Thursday morning at 8:30. Not to jump ahead too far, but the January USDA crop report is scheduled for the next Friday the 10th. There will be a large amount of fundamental data for the markets to digest as USDA will update crop production, demand estimates, quarterly stocks and winter wheat seedings.
South American crop conditions overall are very good and forecasts are not threatening in the near term. Argentina welcomed some much needed rains last weekend as early soybeans may be harvested a couple weeks earlier than normal in Brazil. The U.S. has shipped over 300 MBU of soybeans to China since fall harvest but even without tariffs in place, the U.S. is still couple dollars premium to Brazil’s new crop offers for this spring.
Heavy rain expected heading into the New Year for the PNW and Southeast. The 6-10 day outlook showing below normal temps now for the eastern half of the U.S. and the Rockies but above normal for the Southwest and Southern Plains with above normal precipitation across the Northern Border States and below normal now for the southern half of the U.S.
March corn was able to hit a new recent high at $3.92 yesterday with resistance next up around the $4 mark and support at $3.83. January soybeans hitting $9.40 to $9.41 ½ the past 4 trading sessions, resistance next up around $9.59, the highs from October and June, with support down at $9.20. March KC wheat into new recent highs with resistance next up near $4.90 and support at $4.65. March Chicago wheat still trending higher with support at $5.38 and resistance up at $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