Date: February 10th, 2020
Livestock futures were mixed Friday and for the week with deferred lean hogs getting the best bump higher after China’s comments that tariff levels would be reduced for pork, beef and soybean imports. Cash feedlot trade slipped another $1 to $2 this past week down to $120 to $121 live in the South and in the North trade was reported at $121 to $123 live and $193 to $194 on a dressed basis.
NATIONAL FEEDER & STOCKER CATTLE SUMMARY – WEEK ENDING 02/07/2020
RECEIPTS: Auctions Direct Video/Internet Total
This Week: 186,600 7,900 24,900 219,400
Last Week: 253,100 14,300 2,500 269,900
Year Ago: 259,700 56,100 22,300 338,100
Compared to last week, steers and heifers sold mostly steady to 3.00 higher, nationwide except for the Southeast which was 1.00 to 3.00 lower. Demand was evident this week in the Dakotas on lighter weight calves suitable for summer grazing (under 600 lbs). The heavier weight cattle that will go directly to the feedyard are still in demand; just not at the handsome prices seen at the beginning of January. Another winter storm blew through the country this week but impacted the Southern Plains more than the Northern Plains this time. Travel was dicey from the Texas Panhandle through Missouri as temperatures were at the right level for frozen precipitation.
For the week, Friday January 31st through Friday February 7th, February Live Cattle -$.05, April +$.12, March Feeder Cattle -$.87, April -$.02, February Lean Hogs -$.02, April +$4.65. Boxed Beef, Choice -$2.88 @ $210.12, Select -$6.77 @ $203.89. Pork Carcass Cutout -$4.76 @ $64.81.
Cattle slaughter from Friday estimated at 115,000 head, down 7,000 from the week previous but up 1,000 from last year. For the week, 631,000 head, down 9,000 from the week previous but up 6,000 from last year. Beef production last week estimated at 520.3 million pounds compared to 528.5 the week previous and 510.1 last year. Cattle slaughter is running .6% behind a year ago while beef production is up .3%.
Hog slaughter from Friday estimated at 492,000 head, up 8,000 compared to the week previous and up 43,000 compared to a year ago. For the week, 2,691,000 head, down 12,000 compared to the week previous but up 180,000 compared to a year ago. Pork production last week estimated at 582.2 million pounds compared to 584.8 the week previous and 538.6 last year. Hog slaughter is up 3% compared to year ago with pork production up 3.6%.
Boxed beef cutout values lower on Choice and sharply lower on Select on light to moderate demand and offerings for a total of 130 loads sold.
Choice Cutout__210.12 -.81
Select Cutout__203.89 -2.07
CME Feeder Index__140.63 -.90
CME Lean Hog Index__59.58 -.86
Pork Carcass Cutout__64.81 -.54
IA-S.MN Wtd Avg Carcass Base__48.71 -.44 from Wednesday, price not available due to confidentiality on Thursday
National Wtd Avg Live Price__38.67 -.52, Wtd Avg Carcass Base__50.01 -.18
February live cattle hit a new 4-month low last week at $120.10 with support next down around $119 and resistance up at $125. March feeders also into a new 4-month low last week at $133.65 with support next at $130 and resistance up around $138. February lean hogs stabilizing last week, with deferred contracts higher, after hitting a new contract low last Monday at $54.67 with support next at $52.75 and $52.25.
Choppy trade continues for the grains but all finished higher week over week. Managed money or funds remain net short around 100,000 corn contracts, about the same position held for the past few months now. Soybean pressure still coming from China news and overall good conditions in South American with new crop supply becoming readily available. U.S. wheat exports are still slow although world prices continue to climb with HRW values now competitive but SRW still premium.
Southern hemisphere crop conditions remain mostly favorable with large production potential intact. Brazilian rains are starting to cause meaningful delays in soybean harvest which will impact the timing of the second crop corn or “safrinha”. Soybean harvest has reached 15.7% compared to 27.3% this time last year. The later the corn planting date, the more risk of summer heat and dryness negatively impacting yields – with very strong domestic corn prices in Brazil, that should be enough to keep the farmer incentivized to plant.
Private estimates now above 124 MMT for Brazil’s soybean crop, slightly higher than a month ago over 4% higher than the 2018/19 crop. They attributed the monthly increase to better average yields in some growing regions and some higher planted acre figures.
Private estimates are expecting near 105 MMT total Brazil corn crop, which is up 1.4% from the prior month forecast, but below the prior year’s 107.4 MMT. Only 21.73 MMT of this is ‘first crop’; the balance has barely begun planting at this point. Some very early Argentine corn will come to market in a month or two, but there will be areas there that will be harvesting into June. The first crop is a much bigger deal for soy, than corn.
For the week, Friday January 31st through Friday February 7th March Corn +$.02 ¼, May +$.02, March Soybeans +$.09 ½, May +$.08 ¼, March KC Wheat +$.07, July +$.05 ¼, March Chicago Wheat +$.05, July +$.04 ½, March MPLS Wheat +$.02, May +$.02 ¼, March Soybean Meal -$1.70/T, May -$1.10/T.
Overnight, grains traded mixed to lower with corn finishing 3 to 4 lower, soybeans 1 lower, and wheat steady to 1 lower.
USDA will update supply and demand tomorrow with Outlook Forum due in about two weeks. March will give us another monthly supply and demand update and end-of-March will be planting intentions and quarterly stocks data.
Pre report estimates…
US 19/20 Corn ending stocks at 1.865 BBU down from January’s 1.892 BBU
US 19/20 Soybean ending stocks at 443 MBU down from January’s 475 MBU
US 19/20 Wheat ending stocks at 954 MBU down from January’s 965 MBU
World Corn ending stocks at 297.2 MMT compared to last month’s 297.81 MMT
World Soybean ending stocks at 96.9 MMT compared to last month’s 96.67 MMT
World Wheat ending stocks at 287.4 MMT compared to last month’s 288.08 MMT
19/20 Argentina Corn production at 49.97 MMT, last month’s USDA at 50.00 MMT
19/20 Brazil Corn production 100.85 MMT, last month at 101.0 MMT
19/20 Argentina Soybean production at 53.2 MMT, last month’s USDA at 53.00 MMT
19/20 Brazil Soybean production at 123.7 MMT, last month at 123.0 MMT
Heavy rains continue this week in the Southeast with seasonal weather elsewhere. The 6-10 day outlook showing above normal temps for the Southeast and below normal for the Southwest and West Coast with above normal precipitation across most of the U.S., below normal for the West Coast and Florida.
March corn still holding rangebound trade with support at $3.75 ¼ and resistance at $3.94. March soybeans into a new 9-month low last Monday at $8.68 ¾, with the contract low from last May down at $8.41 ½ and resistance up at $8.88 then $9.03. March KC wheat holding the higher trend going back to early September with support $4.58 and resistance up at $4.90. March Chicago wheat also holding the higher trend with support at $5.45 and resistance at $5.76 ½. March soybean meal into a new contract low last week at $286.40 with resistance around $300.
Loewen and Associates, Inc.
Pete Loewen / Matt Hines / Doug Biswell / Matt Burgener
www.loewenassociates.com pete@loewenassociates.com matt@loewenassociates.com
866-341-6700