Date: February 26th, 2020
Equities and cattle took another hit yesterday as most other commodities stabilized. It wasn’t right off the bat, livestock futures did open higher yesterday and traded mixed through the morning hours. Cash feedlot trade already ramping up activity yesterday at $115 live in TX and KS, which is $5 lower than a week ago, and $185 to $188 dressed, mostly $186 in the NE, down another $4 from last week. The Fed Cattle Exchange online auction will be held later today with 755 head consigned compared to last week’s 422 head of which none sold.
Cattle slaughter from Tuesday estimated at 124,000 head, up 1,000 from last week and up 6,000 from last year. Hog slaughter from Tuesday estimated at 495,000 head, also up 1,000 compared to last week and up 22,000 compared to last year.
Boxed beef cutout values firm on Choice and sharply lower on Select on light to moderate demand and offerings for a total of 141 loads sold.
Choice Cutout__207.47 +.40
Select Cutout__199.90 -2.47
Beef prices down over $12 compared to a year ago and Select cutouts sub the $200 level for the first time since this past October.
CME Feeder Index__139.72 -1.30
CME Lean Hog Index__56.16 +.25
Pork Carcass Cutout__65.97 -.35
IA-S.MN Wtd Avg Carcass Base__49.56 +1.07
National Wtd Avg Carcass Base__49.60 +.88
February live cattle extending lower, but with expiration this Friday, we should see the $115 hold. April is now below all major moving averages and retracement lines with the only support left at $109.37, the contract low hit back in September. After February expires, April will become the front month and the $115 area will become resistance on the weekly chart. March feeders went cruising past the $134 support area yesterday with the next down at $130. The contract low was also hit last September down at $126.05 with a gap from $138.02 to $139.65 and resistance above that up near $141.50. April lean hogs reversed higher yesterday, but were unable to fill the gap left from Monday’s collapse. It looks as though it is desperately trying to hold a higher trend this month with support at $63 and resistance up at $68.25.
Grains held onto small gains with corn and soybeans not even dipping down into new lows. Wheat futures did touch new recent lows in the overnight before pulling back into positive territory yesterday.
Soybean harvest in Brazil continues to look very good and progressing well. Some private estimates are now talking a 126+ MMT or 4.63 BBU crop potential! USDA estimated 125 MMT a couple weeks back while Brazil’s CONAB was down at 123.25 MMT. For comparison, the U.S. produced 3.5 BBU last year following the record crop of 4.428 BBU in 2018/19. There is some rain expected this week which could delay harvest but vessels are already lining up for new crop soybeans. Rumors swirling yesterday that China may be asking Brazil to delay shipments though due to supply chain disruptions and slowing feed demand. China has secured a record number of Brazilian soybeans through May but the future pace could be slow along with a shift back to the U.S. Our corn export window is also closing fast as Brazilian new crop offers just slipped below U.S. values and Argentina is already the cheapest by approximately $.15/BU.
Grains were mixed overnight on very quiet trade. Equities took another dive lower but have since pulled back higher. Corn finished the overnight steady, soybeans 1 higher and wheat 1 lower to 2 higher.
South Korea active again overnight buying corn and wheat, corn though from Argentina this time but they did secure 85,000 MT or 3.1 MBU of U.S. milling wheat. USDA did announce an optional origin private sale of 123,000 MT or 4.8 MBU of corn for South Korea this morning.
Weather looks fairly mild for the rest of this week across the country with heavy rains in the forecast again for the Southeast heading into early next week. The 6-10 day outlook showing above normal temperatures central and east with normal to below normal west and above normal precipitation centered on the Southwest and Corn Belt.
March corn breaking the long term range bound trade down to $3.70 for a new recent low on Monday. The contract low is down at $3.65 ¾ from mid-September with resistance in a range from $3.80 to $3.85. March soybeans reversing lower on Monday after holding a higher trend so far this month yet not taking out the recent low at $8.68 ¾ with resistance from $9.00 to $9.02. March KC wheat holding the higher trend going back to early September with support $4.37 and resistance up at $4.86. March Chicago wheat breaking the higher trend and into new 2 months low yesterday at $5.28 ½ with support next at $5.16 and resistance at $5.70. March soybean meal hit a new contract low Monday at $284.80 with resistance around $295.
Loewen and Associates, Inc.
Pete Loewen / Matt Hines / Doug Biswell / Matt Burgener
www.loewenassociates.com pete@loewenassociates.com matt@loewenassociates.com
866-341-6700