Date: February 12th, 2020
USDA updated supply and demand estimates yesterday that were actually neutral to friendly for the grains but bearish for the meats overall. Beef production is estimated higher for 2020 but overall a 59 million pound reduction in supply, which is good news. Pork production though is estimated 1.248 billion pounds higher than last year with a net increase of 84 million pounds to supply and poultry a 1.964 billion pound increase in production for a 1.625 billion pound net gain to supply! It also didn’t help cattle futures yesterday with cash feedlot trade already being reported at $2 to $3 lower from $119 to $120 live everywhere except TX and $190 dressed trade in the North. The Fed Cattle Exchange online auction will be held later this morning with 413 head consigned compared to last week’s 627 head of which none sold.
Joplin Regional Stockyards Feeder Cattle – Carthage, MO
Livestock Weighted Average Report for 2/10/2020
Total Receipts: 4,817 Last Week: 7,512 Last Year: 3,956
Compare to last week, steers and heifers under 600 lbs steady to 5.00 higher, 600 to 700 lb steers unevenly steady, 600 to 700 lb heifers steady to 2.00 higher, steers and heifers over 700 lbs 2.00 to 3.00 lower. Demand good for calves, moderate for yearlings, supply moderate.
Oklahoma National Stockyards Feeder Cattle – Oklahoma City, OK
Livestock Weighted Average Report for 2/10/2020
Total Receipts: 7,598 Last Week: 6,492 Last Year: 6,378
Compared to last week: Feeder steers trading steady to 4.00 lower. Feeder heifers steady to 4.00 higher. Steer calves steady to 6.00 higher on a light test. Heifer calves 1.00-6.00 higher.
Tulsa Livestock Auction – Tulsa, OK
Livestock Weighted Average Report for 2/10/2020
Total Receipts: 2,070 Last Week: 2,669 Last Year: 1,483
Compared to last week: Feeder Steers 5.00-8.00 higher. Heifers 2.00-4.00 lower. Demand good. Quality good. Slaughter cows mostly steady to 2.00 higher. Slaughter bulls had too few receipts to establish a trend, however a much lower undertone is noted.
Cattle slaughter from Tuesday estimated at 122,000 head, matching last week and up 1,000 from last year. Hog slaughter from Tuesday estimated at 496,000 head, also matching last week and up 48,000 compared to a year ago.
Boxed beef cutout values lower on Choice and higher on Select on light to moderate demand and offerings for a total of 112 loads sold.
Choice Cutout__207.83 -1.08
Select Cutout__204.53 +.83
CME Feeder Index__140.67 +.26
CME Lean Hog Index__57.93 -.53
Pork Carcass Cutout__63.65 -1.37
IA-S.MN Wtd Avg Live Price__N/A, Wtd Avg Carcass Base__49.17 +.14
National Wtd Avg Live Price__39.78 +.09, Wtd Avg Carcass Base__49.92 -.02
February live cattle into a new recent low yesterday and tested nearby support at $119.05 with support next down around $116.50 and resistance up at $124. March feeders trying to hold support near $134 the past couple weeks with support next at $130 and resistance up around $138. February lean hogs expire later this week. The April contract is carrying over an $8 premium now from February with support at $61 and resistance at $68.
Grains finished steady to lower even though U.S. ending stocks were unchanged for corn, that’s a win, and lower for soybeans, wheat and grain sorghum. USDA did decrease the export estimate for corn yesterday by 50 MBU as this year’s sales and shipments are lagging. Ending stocks were unchanged though with an increase of the same amount to corn used for ethanol. World corn stocks were decreased 1 MMT to 296.84 MMT, down over 44 MMT since 2017/18. South American crop production estimates were left unchanged although Brazil’s CONAB increased total corn production 1.8 MMT from a month ago.
U.S. soybean ending stocks decreased by 50 MBU to 425 MBU due to an increase in exports of 50 MBU. The current pace justifies this increase in the estimate yet some concern as we move into the time period for which South America takes over as the primary world supplier of soybeans. World stocks were bearish though, increasing 2.19 MMT to 98.86 MMT with Brazil’s crop production estimate increased by 2 MMT and beginning stocks higher as UDSA also increased imports for China by 3 MMT.
U.S. wheat ending stocks decreased by 25 MBU to 940 MBU due to an increase in exports of the same amount. This one may be a little harder to achieve compared to soybeans. We now need to average 22.3 MBU over the next 16+ weeks compared to only averaging 17.8 MBU per week based off inspections so far this marketing year. World stocks were only decreased slightly. The bearish news that pushed wheat lower was a massive sale to Algeria and Egypt yesterday confirming world prices lower, for the Egyptian tender some $7/MT lower, or $.19/BU, compared to 2 weeks ago.
Overnight, grains traded mixed in fairly tight ranges with corn finishing steady to 1 lower, soybeans steady and wheat steady to 2 lower. It seems the markets may be trying to stage a holding pattern, waiting for additional news on the spread of the coronavirus. That information has been questionable since the beginning even for world health officials dealing with Chinese as they control that flow of information. There is chatter that just maybe we have finally peaked or at least plateaued on the number of or rapid escalation of infections.
South Korea actively buying more optional origin corn overnight, up to 336,000 MT or 13.2 MBU, along with 2 cargoes of soybean meal.
Heavy rains to continue into early next week in the Southeast as flooding now a major concern in the Tennessee River Valley. The 6-10 day outlook still holding above normal temps for the eastern half of the U.S. and below normal west with above normal precipitation across most of the U.S., below normal in the Southwest 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. So far a higher trend is holding since early February with resistance up at $8.90 then $9.03. March KC wheat holding the higher trend going back to early September with support $4.58 and resistance up at $4.77. March Chicago wheat dipping below that long term higher trend with support next around $5.16 and resistance at $5.65 ½. March soybean meal holding a lower trend since mid-June and 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
