Date: June 10th, 2020
Livestock futures traded flat to mixed until midday as equites and crashing beef prices continue to cause most of the uncertainty and pressure on sustained rallies moving forward. Cash feedlot trade very minimal so far this week which is off from the past few weeks as packers have been very active daily. Only light trade so far and continuing lower in the North at $104 to $106 live and $166 on a dressed basis. The Fed Cattle Exchange online auction will be held later today with 1,447 head consigned compared to last week’s 1,736 head of which only 199 sold at $110.50 live for 1-17 day delivery.
Cattle slaughter from Tuesday estimated at 117,000 head, up 1,000 from last week but down 5,000 from last year. Hog slaughter from Tuesday at 450,000 head, up 33,000 compared to last week but down 22,000 compared to a year ago.
Boxed beef cutout values continue lower on high demand with 230 loads sold yesterday.
Choice Cutout__247.00 -7.58
Select Cutout__227.95 -3.17
CME Feeder Index__129.52 +.45
CME Lean Hog Index__51.77 -.16
Pork Carcass Cutout__69.26 -1.62
IA-S.MN Wtd Avg Carcass Base__31.10 but no comparison due to prices not reported yesterday due to confidentially
National Wtd Avg Carcass Base__30.76 -.05
I have quite a bit of concern moving forward here for the cattle markets as we have now been through multiple acute demand and supply shifts over these past few months. Drought persists in the Southwest as well forcing those typically summer grazing to either start feeding hay, place heifers and pairs in feedlots or send cows in for slaughter. The additional beef supply is most certainly not needed as more than a million head of slaughter ready cattle are still out there. We do need to catch up but in doing so will oversupply the market with beef, driving prices lower. Maybe we can find a point where exports pick up to demand that extra supply or beef becomes more competitive with other proteins to increase domestic demand, but we are not there yet.
Outside markets mixed overnight with equities higher while the energies and the US$ are lower. June live cattle snapped higher yesterday trying to break to the lower trend so far this month. Nearby support around $92 and resistance up at last month’s high at $101.60. August feeders holding a higher trend with support at $128.50 and resistance around $136. June lean hogs expire later this week holding between $46 and $49. The July contract holding a lower trend now for over a month with a new recent low yesterday at $52.45, contract low from April down at $49 and resistance up at $57.
Grains were under mild pressure all day on Tuesday as crop conditions improved for corn, soybeans and spring wheat and HRW harvest is rolling fast in the Southern Plains. The new recent low in Chicago wheat spurred Egypt to throw out another snap tender for wheat after the close. As of this morning, there were only 4 offers, all from Russia. Egypt purchased 120,000 MT or 4.4 MBU. It is also rumored that China may have purchased up to 4 cargoes of new crop U.S. soybeans yesterday, another day or two of awaiting USDA confirmation now begins.
Overnight, grains were mixed with corn finishing 1 to 2 lower, soybeans 1 to 4 higher and wheat steady to 3 higher.
China reportedly is spreading out more risk buying a couple of cargoes of grain sorghum from Argentina overnight. Australia increased their new crop wheat production estimate by nearly 25% up to 26.7 MMT as heavy rains on their east coast broke a three year drought. Russia raised their 2020 wheat crop production estimates 1.5 MMT to 82.7 MMT based on improved weather in May and forecasts. USDA estimated Australia’s wheat crop at 21 MMT and Russia at 77 MMT last month.
USDA will update supply and demand this coming Thursday as most expect to see corn ending stocks increase yet again domestically but possibly enough decreased production in Brazil as a large area in the South suffers from drought to offset any increase in world stocks.
US 19/20 Corn ending stocks at 2.15 BBU, May at 2.098 BBU
US 20/21 Corn yield unchanged at 178.5 BPA but production 71 MBU lower to 15.924 BBU
US 20/21 Corn ending stocks at 3.36 BBU, May at 3.318 BBU
World 19/20 Corn ending stocks at 313.3 MMT, May at 314.7 MMT
World 20/21 Corn ending stocks at 339.8 MMT, May at 339.6 MMT
US 19/20 Soybean ending stocks at 577 MBU, May at 580 MBU
US 20/21 Soybean yield +.2 to 50 BPA with production up 56 MBU to 4.152 BBU
US 20/21 Soybean ending stocks at 425 MBU, May at 405 MBU
World 19/20 Soybean ending stocks at 101.2 MMT, May at 100.3 MMT
World 20/21 Soybean ending stocks at 98.6 MMT, May at 98.4 MMT
US All Wheat production at 1.850 BBU, May at 1.866 BBU, Winter Wheat at 1.238 BBU, of which is 718 MBU HRW, 297 MBU of SRW and 224 MBU of white winter wheat
US 19/20 Wheat ending stocks at 979 MBU, May at 978 MBU
US 20/21 Wheat ending stocks at 897 MBU, May at 909 MBU
World 19/20 Wheat ending stocks at 294.6 MMT, May at 295.1 MMT
World 20/21 Wheat ending stocks at 307.7 MMT, May at 310.1 MMT
Heavy rains in parts of the WCB and Southeast so far this week with high winds causing damage across the Southern Plains. The 6-10 day outlook showing above normal temps through the Central Plains with below normal in the PNW and Mid-Atlantic and above normal precipitation only in the PNW while below normal dominates the Plains, Corn Belt and Southeast.
July corn still holding steady to higher since mid-April. The contract low is down at $3.09, nearby support at $3.23 with resistance at $3.35. July soybeans breaking out of the range bound trade with new recent highs last week just above $8.73 and support at $8.50. July KC wheat finding support around $4.40, holding a higher trend since mid-May with resistance at $4.76. July Chicago wheat found support around $4.94 in May which matched the lows from mid-March with resistance up around $5.30.
Loewen and Associates, Inc.
Pete Loewen / Matt Hines / Doug Biswell
www.loewenassociates.com matt@loewenassociates.com
866-341-6700