Date: March 16th, 2020
Friday closed out a wild week for the markets and the first major separation of the stock market from the cattle market in over a month. Now part of, in fact over half of Friday’s gain for the equites came after the commodity markets closed as President Trump announced a major private/public sector partnership in combatting the spread of COVID-19 and declaring the first public health national emergency since the H1N1 emergency in 2009. After the 10% collapse on Thursday, the stock market rallied back 9.3%. Cattle futures opened sharply higher but failed to hold gains mid-morning and used the expanded limits to set new lows. Nearby through December live cattle contracts closed the expanded limit $4.50 lower while only August through October feeders closed their expanded limit $6.75 lower. Beef prices shot higher on Friday as pork prices and cash hogs continue to climb higher as well.
NATIONAL FEEDER & STOCKER CATTLE SUMMARY – WEEK ENDING 03/13/2020
RECEIPTS: Auctions Direct Video/Internet Total
This Week: 174,600 22,000 1,900 198,500
Last Week: 179,900 46,000 28,300 254,200
Year Ago: 206,300 48,000 2,800 257,100
Compared to last week, steers and heifers sold 5.00 to 10.00 lower nationwide. The shear uncertainty in the worldwide marketplace is driving a massive downward trend in the livestock sector. The CME Cattle Complex has taken the brunt of losses in the Ag sector, but grains have reported losses as well. In the last three weeks, the March through October Feeder Cattle contracts have been 27.20 to 29.50 lower. The April CME Live Cattle contract has declined by 19.02; 10.18 of that coming this week when expanded limits were in effect. June and August contracts are more than 22.00 lower in the three-week time period as well. Some ranchers that have worked diligently to increase profits with genetics that are feed efficient and higher in marbling do like to feed their calf crops and market them in the May to June time frame as “calf-feds”. Demand for meat products used at home have continued to be at the forefront. The foodservice and meat packing industry are concerned short term as many events have been cancelled or postponed. The product that has been fabricated for those large events will now be setting in a warehouse or freezer somewhere and will hopefully be consumed later.
For the week, Friday March 6th through Friday March 13th, April Live Cattle -$10.17, June -$10.27, March Feeder Cattle -$17.70, April -$17.45, April Lean Hogs -$9.55, June -$8.45. Boxed Beef, Choice +$.67 @ $208.14, Select -$.59 @ $201.98. Pork Carcass Cutout +$2.98 @ $69.84.
Cattle slaughter from Friday estimated at 101,000 head, down 18,000 from the week previous and down 2,000 from last year. For the week, 630,000 head, down 17,000 from the week previous but up 22,000 from last year. Beef production estimated at 522.5 million pounds last week compared to 536.3 million the week previous and 485.5 last year. Beef production year to date is up 3.7% with slaughter up 1.8%.
Hog slaughter from Friday estimated at 492,000 head, down 1,000 compared to the week previous but up 58,000 compared to a year ago. For the week, 2,648,000 head, down 32,000 compared to the week previous but up 195,000 compared to a year ago. Pork production estimated at 569.5 million pounds last week compared to 576.8 the week previous and 524.3 last year. Pork production year to date is up 4.5% with slaughter up 4.1%.
Boxed beef cutout values sharply higher on good demand and heavy offerings for a total of 153 loads sold.
Choice Cutout__208.14 +2.13
Select Cutout__201.98 +4.10
CME Feeder Index__127.91 -3.13
CME Lean Hog Index__58.86 +.54
Pork Carcass Cutout__69.84 +.65
IA-S.MN Wtd Avg Carcass Base__54.60 +.14
National Wtd Avg Carcass Base__54.19 +.15
Shortly after the Dow mini futures opened last night, they hit their limit 5% lower and locked, US$ and gold sharply lower, crude down $2 trading under $30 per barrel. Over the weekend the Fed held another emergency meeting and moved interest rates down to 0% while also promising a round of quantitative easing up to $700B. On a good note, grocery store meat counters wiped out over the weekend across the country, depleting short term supply and will need replenished this week pulling demand and beef prices higher. Live cattle and lean hogs trading expanded $4.50 limits today while feeders normal limits at $4.50.
April live cattle down over $17 so far this month, support next at lows from 2010 down around $90 and lows from 2009 around $80. March feeders down over $18 so far this month. Support next down at $106.50, the spot low from October 2010. April lean hogs into a new contract low as well with support next at $52.25, the spot low from last year.
Corn and wheat markets were able to hold steady to finish out the week while soybeans continued to press lower. President Trump announced Friday afternoon that one step being taken during this national emergency will be buying oil for the strategic reserve, his quote, “We’re going to fill it up”. Brazil’s soybean harvest moving past 60% complete with some areas reported yield loss now due to dryness. Argentina already made significant cuts to its production estimate earlier this week.
For the week, Friday March 6th through Friday March 13th May Corn -$.10 ¼, July -$.10 ¾, May Soybeans -$.42 ½, July -$.44, May KC Wheat -$.14 ¾, July -$.15, May Chicago Wheat -$.09 ¾, July -$.09 ¾, May MPLS Wheat -$.17 ¼, July -$.16 ¾, May Soybean Meal -$5.60/T, July -$8.40/T.
Overnight, grains were mixed, trading both sides of unchanged but finished 2 to 6 lower across the board.
News from China is the spreading of COVID-19 is getting under control and they desperately have a protein shortage. New shutdowns are changing daily domestically though, please continue to monitor local news outlets, county and state health departments for accurate news.
Heavy rains continue this week across the Southern Plains, Corn Belt and Southeast. Temperatures later this week showing freezing temps dipping into the Southern Plains later this week. The 6-10 day outlook showing below normal temps across the majority of the U.S., the Southeast still above normal with above normal precipitation across the U.S.
May corn into a new contract low overnight at $3.60 with support next at $3.57, the spot low from this past December and resistance up at $3.75. May soybeans also into a new contract low at $8.39 overnight, matching support from this past fall, with resistance up at $8.85. May KC wheat holding a lower trend since mid-January and tested support at $4.24 with resistance around $4.60. May Chicago wheat 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