Date: January 27th, 2020
Livestock futures were mixed Friday but lower for the week. The fast spreading coronavirus that started in China has added quite a bit a fear to all the markets as any disruption or let down in consumer spending and consumption in the largest populated nation is very critical to world trade. Cash feedlot trade starting in the South midweek at $124 live, steady with the week previous and steady now for 4 weeks in a row. Trade in the North again holding out for higher money but settling again steady at $124 live and $198 to $200 on a dressed basis.
Monthly cold storage data showed total frozen poultry supplies up 1% from a year ago, although chicken specifically was up 9% and frozen turkey down 23%. Total red meat was up 5% from last year. Beef specifically was off 3% and frozen pork was up 15% from last year. Stocks of pork bellies were up 61% year-over-year
Weekly export sales in the meats were solidly bullish across the board. Net beef sales were 27,800 MT, along with shipments of 17,900 MT. Net pork sales were 30,300 MT with actual exports of 44,400 MT with China taking 38% of that total.
January Cattle on Feed Report
USDA Actual / Average Estimate
Cattle on Feed January 1 102% / 102.2%
Placed on Feed in December 103% / 103.2%
Marketed in December 105% / 105.2%
Placements by weight (expressed as % of previous year) Under 600 lbs 104%, 600-699 lb 99%, 700-799 lb 103%, 800-899 lb 104%, 900-999 lb 106%, Over 1000 lb 124%
Neutral considering actuals versus expectations, but big picture, bearish report. One more slaughter day in December 2019 versus December 2018 takes actual daily marketing rate down to 100%.
NATIONAL FEEDER & STOCKER CATTLE SUMMARY – WEEK ENDING 01/24/2020
RECEIPTS: Auctions Direct Video/Internet Total
This Week: 220,600 39,600 36,800 297,000
Last Week: 281,400 49,300 61,700 392,400
Year Ago: 186,800 34,800 32,100 253,700
Compared to last week, steers and heifers in the Southeast were steady to 2.00 higher, while those in other areas were steady to 3.00 lower. The market was the most active on the lightweight cattle, in light flesh, as numbers of those cattle are not as plentiful as their heavier mates. Wintry weather conditions have been seen in several states this week as receipts were curtailed. The temperatures dropped considerably last weekend with some areas well below zero. Couple that with dangerous winds topping in the 50-60 mph area made for terrible conditions. Farmer feeders in the Midwest were ready to buy cattle this week as cattle appeared to take the weather in stride and hardened up in the extreme winter conditions.
For the week, Friday January 17th through Friday January 24th, February Live Cattle -$1.50, April -$2.95, January Feeder Cattle -$3.50, March -$5.32, February Lean Hogs -$.45, April -.65. Boxed Beef, Choice +$.32 @ $214.49, Select -$2.05 @ $210.70. Pork Carcass Cutout +$1.91 @ $77.38.
Cattle slaughter from Friday estimated at 122,000 head, up 6,000 from the week previous and up 5,000 from last year. For the week, 647,000 head, up 16,000 from the week previous and up 39,000 from last year. Beef production estimate at 534.6 million pounds compared to 521.8 million the week previous and 498.0 million last year.
Hog slaughter from Friday estimated at 494,000 head, up 54,000 compared to the week previous and up 25,000 compared to a year ago. For the week, 2,720,000 head, up 220,000 compared to the week previous and up 233,000 compared to a year ago. Pork production last week at 586.7 million pounds compared to 536.5 million the week previous and 534.0 million last year.
Boxed beef cutout values weak to lower on light to moderate demand and moderate offerings for a total of 100 loads sold.
Choice Cutout__214.49 -.83
Select Cutout__210.70 -.50
CME Feeder Index__144.84 -.02
CME Lean Hog Index__61.53 -.24
Pork Carcass Cutout__77.38 -1.46
IA-S.MN Wtd Avg Live Price__N/A, Wtd Avg Carcass Base__53.83 +2.17
National Wtd Avg Live Price__39.81 -.61, Wtd Avg Carcass Base__52.73 +.59
February live cattle into a new recent low on Friday with support next in a range from $123.80 to $123.12 and if taking out would be a new 3-month low breaking the sideways pattern since early November. January feeders expire later this week, trending lower so far this month. March pushing lower into a new 3-month low on Friday with support next around $138 and resistance up at $144. February lean hogs continue the long-term lower trend with support at $65.50 and resistance at $69 then $72.
Grains finished lower on Friday and lower for the week for all except Chicago Wheat. Soybeans have taken the biggest hit recently as the letdown from signing of Phase 1 with China continues and no sales were announced this past week ahead of the long Lunar New Year holiday. Now throw on top of that the coronavirus and fear added into the markets. Weekly export sales for the week ending January 16th were actually friendly with over 1 MMT for corn and the best week in a month, 3rd best week for wheat this marketing year and best week for soybean meal in the past several years.
For the week, Friday January 17th through Friday January 24th, March Corn -$.02, May -$.02 ½, March Soybeans -$.27 ¾, May -$.27 ¼, March KC Wheat -$.08 ¼, July -$.08 ½, March Chicago Wheat +$.03, July +$.02 ½, March MPLS Wheat -$.12 ½, May -$.11 ½, March Soybean Meal -$2.30/T, May -$2.70/T.
Overnight, grains gapped lower and global financial markets are in turmoil as the latest updates from the coronavirus outbreak show nearly 3,000 people have been infected, 5 confirmed in the U.S. and at least 80 dead, all of which in China. Corn finished the overnight 4 to 7 lower, soybeans 10 to 11 lower and wheat 6 to 11 lower.
The rapid spread and high mortality rate is alarming but also consider that in 2017/18 just here in the U.S., 45 million fell ill during the flu season with 61,000 deaths according the CDC. The markets are in fear/selloff mode but also getting to an oversold point very quickly. Friendly fundamental grain news is still out there but all being overshadowed by the fast spreading virus hitting Southeast Asia during their week long and highly celebrated Lunar New Year. Wheat prices in Russia higher again and now hitting levels not seen since last February which continues to support U.S. values. President Trump to officially sign the USMCA trade deal this week as Canada is the last to officially approve with most stating should happen very soon. USDA announced a private sale of 111,252 MT or 4.4 MBU of corn sold to Japan this morning.
A band of mixed rain/snow to move through the Southern Plains over the next couple days with heavy precipitation in the forecast for the PNW towards the end of the week. The 6-10 day outlook still showing normal to above normal temps throughout the U.S. with above normal precipitation stretching from the Southwest into the Northern Plains and on the East Coast and below normal centered on the West Coast and Southern Plains.
March corn again gapped lower overnight with support at $3.75 ¼ after a new recent high was hit last week at $3.94. March soybeans on a steep lower trend so far this month with support near $8.82, the lows from early December and resistance up around $9.30. March KC wheat still trending higher with support at $4.70 and resistance around $5.04. March Chicago wheat also still trending higher and continues to look the most impressive with nearby support at $5.45 and resistance at $5.93. March soybean meal still holding a lower trend with the contract low down at $295.50 and resistance at $304.
Loewen and Associates, Inc.
Pete Loewen / Matt Hines / Doug Biswell / Matt Burgener
www.loewenassociates.com pete@loewenassociates.com matt@loewenassociates.com
866-341-6700