Date: March 9th, 2020
U.S. and world equity markets closed out the week sharply lower taking cattle futures with them. Cash feedlot trade was down another $2 at $113 live with dressed trade off $5 from $180 to $182. Beef prices rallied back and hog futures finished the week higher. The spread of the coronavirus has improved in both China and South Korea but still spreading in Europe and the U.S. with Italy the hardest hit and going on lockdown.
NATIONAL FEEDER & STOCKER CATTLE SUMMARY – WEEK ENDING 03/06/2020
RECEIPTS: Auctions Direct Video/Internet Total
This Week: 179,900 46,000 28,300 254,200
Last Week: 202,700 67,000 1,200 270,900
Year Ago: 204,000 63,400 36,900 304,300
Compared to last week, steers and heifers sold uneven; from 2.00 lower to 3.00 higher as auctions that had drastic swings lower last week swung sharply higher this week. New lows were made this week in the CME Cattle Complex as fears of the COVID-19 virus are still consuming the 24-hour news cycle.
For the week, Friday February 28th through Friday March 6th, April Live Cattle -$1.82, June -$1.17, March Feeder Cattle -$.57, April -$2.65, April Lean Hogs +$3.65, June +$2.52. Boxed Beef, Choice +$2.17 @ $207.47, Select +$3.66 @ $202.57. Pork Carcass Cutout +$2.74 @ $66.86.
Cattle slaughter from Friday estimated at 119,000 head, up 4,000 from the week previous and from last year. For the week, 647,000 head, up 20,000 from the week previous and up 40,000 from last year. Beef production estimated at 536.6 million pounds compared to 519.3 million the week previous and 488.0 last year. Beef production year to date is up 3.3% with slaughter up 1.6%.
Hog slaughter from Friday estimated at 493,000 head, up 7,000 compared to the week previous and up 21,000 compared to a year ago. For the week, 2,680,000 head, up 124,000 compared to the week previous and up 154,000 compared to a year ago. Pork production estimated at 576.8 million pounds last week compared to 550.7 the week previous and 541.6 last year. Pork production year to date is up 4.1% with slaughter up 3.7%.
Boxed beef cutout values steady on Choice and higher on Select on moderate to fairly good demand and light to moderate offerings for a total of 103 loads sold.
Choice Cutout__207.47 +.22
Select Cutout__202.57 +1.51
CME Feeder Index__133.87 +.04
CME Lean Hog Index__56.98 +.19
Pork Carcass Cutout__66.86 -.18
IA-S.MN Wtd Avg Carcass Base__51.22 -.23
National Wtd Avg Carcass Base__50.90 -.23
Overnight, the US Dow mini futures hit what’s called a circuit breaker, a pause in the market when sharp moves takes place. This first circuit breaker is at 5%, that’s a 5% loss, with the next pause at 7% then 13% and at a 20% move stocks halt trading for the session. The main 2 stories the morning, the continued spread of the coronavirus and Saudi Arabia launching an aggressive oil price war targeting it biggest rivals after Russia refused to join production cuts with OPEC. Saudi Arabia has threatened to pump an additional 2 Mil barrels of crude per day to hike its world market share and offer its crude at deep discounts, 20% in key markets to win new customers, punish Russia and also squeezing out U.S. shale industry and higher cost producers.
April live cattle gapped lower last Friday into a new contract low at $105.65 with support from the continuous weekly chart next at $105 and resistance up at $112.70. March feeders also gapping lower but rallied enough early last week to stay above the recent low at $128.72. The contract low is down at $126.05 from this past September and resistance up near $136. April lean hogs chopping sideways since early February with the contract low the next line of support down at $61 and resistance up at $68.25.
Over in the grains, corn was the leader lower Friday but also the only one able to hold gains for the week as all others settled mixed on Friday and lower for the week. Fresh fundamental news has been lacking. The US$ remains under pressure but we have yet to see any major new export sales. The main influence continues to be the outside markets and media updates on the spread of the coronavirus. Brazil soybean harvest is over 50% done and soy exports through February are on track to match a year ago’s high pace. Second crop corn planting is also ahead of the 5-year average in Brazil. Forecasts look to improve as dry conditions have been building recently.
For the week, Friday February 28th through Friday March 6th May Corn +$.07 ¾, July +$.06 ¾, May Soybeans -$.01 ½, July -$.01 ½, May KC Wheat -$.07, July -$.06 ¾, May Chicago Wheat -$.09 ¼, July -$.09 ½, May MPLS Wheat -$.02 ¼, July -$.01 ¼, May Soybean Meal -$.50/T, July -$.70/T.
Overnight, grains were under pressure led by soybeans finishing 18 lower, corn 5 to 7 lower and wheat 8 to 10 lower. The US$ is sharply lower along with crude dipping below $28 for the first times since early 2016. The price war in oil is also bearish for the bio crops as world energy values get pressured lower. It would be really nice to see China stepping in soon as they have been seeking offers recently yet no sales announced on US DDGS, ethanol and wheat.
USDA announced a private sale this morning of 123,500 MT or 4.5 MBU of soybeans for unknown destinations.
Heavy rains remain in the forecast for the Southeast this week. The 6-10 day outlook showing above normal temps south and east and below normal north and west with above normal precipitation across most of the U.S., below normal only in the PNW and Florida.
May corn gapping lower overnight, holding off from taking out the contract low hit on February 28th at $3.65 ¾ with support next at $3.61 ¾ then $3.57 and resistance up around $3.87. May soybeans into a new 10-month low overnight at $8.70 ¼ with the contract low down at $8.54 and resistance up around $9.00 then $9.12. May KC wheat testing support around $4.30 and resistance up around $4.65. May Chicago wheat holding a lower trend since mid-January, now testing support at $5.06 with resistance at $5.40. May soybean meal unable to break the long term lower trend last week with support at $300 and resistance at $311.
Loewen and Associates, Inc.
Pete Loewen / Matt Hines / Doug Biswell / Matt Burgener
www.loewenassociates.com pete@loewenassociates.com matt@loewenassociates.com
866-341-6700