Date: March 13th, 2020
The World Health Organization officially classifying the COVID-19 coronavirus a world pandemic adding more fuel to the market fire sale. Of the over 118,000 cases reported globally in 114 countries, 4,291 people have died, more than 90 percent of cases are in just four countries, and two of those – China and South Korea have significantly declining epidemics. This coronavirus has spread rapidly but compare these stats with 2019-2020 flu season. According to the CDC, so far this season there have been at least 34 million flu illnesses, 350,000 hospitalizations and 20,000 deaths from flu just here in the U.S. President Trump declared a travel ban for 30 days from Europe, all sporting events, conferences cancelled, universities going to online classes and some public schools extending spring breaks. The CME announced they will close trading floors effective after the markets close on Friday. Trading will still go on via the electronic platform CME Globex as normal. I personally feel it shouldn’t have come to this, if you are sick, stay home. Our own school as a 24 hour no fever policy. But in saying that, I know this virus has and will spread prior to showing any symptoms. This also means in fact it has already been carried around the world and spread.
Another day of massive selling yesterday with the Dow finishing 10% lower, the worst day since the 1987 market crash, after hitting a couple more circuit breaker pauses in the morning trading hours. Livestock futures closed limit lower, expanded limits will be in place today. The option market was synthetically showing cattle down another $1 at the close yesterday. The markets were not locked limit lower all day as well with some activity in the nearby cattle contacts sporadically throughout the day and hogs trading off the limit most of the day. A few thousand head clean up cash feedlot trade in KS and TX yesterday down at $105 to $108, $3 to $5 under the bulk of the trade done on Wednesday and $5 to $8 lower than last week. China announced some good news in terms of easing the standards on beef imports yesterday.
Winter Livestock – Dodge City, KS
Livestock Weighted Average Report for 3/11/2020
Total Receipts: 2,175 Last Week: 3,125 Last Year: 2,961
Compared to last week: Feeder steers sold mostly 10.00 to 15.00 lower. Feeder heifers 600-700 lbs sold 2.00 to 4.00 lower, 700-800 lbs sold 7.00 to 10.00 lower. Limited calves available, steer calves lower undertone noted. Heifer calves 500-600 sold steady to 2.00 higher. Overall, demand moderate to good, quality mostly average.
Winter Livestock – Pratt, KS
Livestock Weighted Average Report for 3/12/2020
Total Receipts: 2,976 Last Week: 3,749 Last Year: 5,153
Compared to last week: Feeder steers sold mostly 9.00 to 13.00 lower. Feeder heifers sold mostly 8.00 to 11.00 lower. Not enough calves for accurate market trend.
Cattle slaughter from Thursday estimated at 117,000 head, down 6,000 from last week but up 15,000 from last year. Week to date now at 485,000 head, up 5,000 from last week and up 31,000 from last year. Hog slaughter from Thursday estimated at 496,000 head, up 1,000 compared to a week ago and up 44,000 compared to a year ago. Week to date now at 1,972,000 head, down 8,000 compared to a week ago but up 112,000 compared to a year ago.
Boxed beef cutout values lower on Choice and higher on Select on light to moderate demand and moderate to heavy offerings for a total of 153 loads sold.
Choice Cutout__206.01 -1.16
Select Cutout__197.88 +1.39
CME Feeder Index__131.04 -2.01
CME Lean Hog Index__58.32 +.57
Pork Carcass Cutout__69.19 +.37
IA-S.MN Wtd Avg Carcass Base__54.46 -.03
National Wtd Avg Carcass Base__54.04 +.08
Dow futures were over 600 points lower until 11 PM last night, proceeding to move higher and tripped the 5% breaker up 1,110 points by 6 this morning. The US$ is higher, gold lower and crude holding above $30 per barrel, up $1 now.
April live cattle hitting support right around $100 yesterday, unable to go any lower due to the $3 limits, with the next support down at $93.40, last year’s spot low in September after the Tyson plant fire. We did fill yesterday’s gap at the open today, 2 remaining gaps on the chart all the way back up to $117, nearby resistance first at $112.70. March feeders hitting a new contract low yesterday, just below the lows set in 2016 and down to a level not seen since December 2010. Yesterday’s gap on the chart also filled at the open this morning with resistance all the way up at $136. April lean hogs into a new contract low as well with support next around $57 and resistance up at $66.
Grains also pressed lower into new recent or contract lows with soybeans the leader again. Weekly export sales were disappointing for the soybeans but impressive for both corn and grain sorghum. Soybeans did climb back from 20 cent losses earlier on and nearby meal actually traded and closed in positive territory. There was not a lot of additional grain news yesterday as the outside market influence continues to be the controlling factor.
Overnight, grains responded to the outside markets higher with corn 5 higher, soybeans 9 to 11 higher and wheat 4 to 5 higher.
USDA announced a private sale of 136,000 MT or 5.4 MBU of corn sold to South Korea. This is very good news as they have continued to be active buyers these past few weeks, but mostly buying as optional origin.
Still showing heavy rains in the forecast for the Southeast for the rest of this week and into the next with updated forecasts pulling the rain east into the Southern Plains for next week. The 6-10 day outlook hasn’t changed the past few days, still 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 in the PNW and Florida.
May corn into a new contract low overnight at $3.66 ½, support next at $3.61 ¾ and resistance up at $3.87. May soybeans also into a new contract low at $8.45 ¼ with support next around $8.40 and resistance up at $8.85. May KC wheat holding a lower trend since mid-January and tested support at $4.24 yesterday, holding so far, with resistance around $4.60. May Chicago also holding a lower trend with support next at $4.88 and resistance at $5.25. May soybean meal choppy this month from $311 down to $296.
Loewen and Associates, Inc.
Pete Loewen / Matt Hines / Doug Biswell / Matt Burgener
www.loewenassociates.com pete@loewenassociates.com matt@loewenassociates.com
866-341-6700