Date: July 8th, 2020
Equities were weaker yesterday as cautious optimism continues with improving economic data but rising cases of COVID pushing some states to reverse course or pause on a full opening of business and travel. Livestock markets finished mixed to mostly lower as follow through buying did not appear yesterday for cattle futures and lean hog futures try not to make new lows. Steady to $5 higher light cash feedlot trade so far this week with Kansas and Texas at $94-$95 live and dressed trade in Nebraska and Iowa at $157-$160. The Fed Cattle Exchange online auction will be held later today with 1,458 head consigned compared to last week’s 1,814 head of which only 144 sold at $95 live.
Joplin Regional Stockyards Feeder Cattle – Carthage, MO
Livestock Weighted Average Report for 7/6/2020
Total Receipts: 4,630 Last Week: 10,786 Last Year: 4,341
Compared to last week, steers and heifers steady to 3.00 higher. Demand good, supply moderate.
Oklahoma National Stockyards Feeder Cattle – Oklahoma City, OK
Livestock Weighted Average Report for 7/6/2020
Total Receipts: 4,446 Last Week: 9,182 Last Year: 7,254
Compared to last week: Feeder steers traded 2.00-5.00 higher, feeder heifers are selling 3.00-6.00 higher. Steer and heifer calves mostly steady on limited comparable offerings. Demand good to very good especially for feeder cattle. Quality plain to average, few attractive.
Tulsa Livestock Auction – Tulsa, OK
Livestock Weighted Average Report for 7/6/2020
Total Receipts: 1,874 Last Week: 2,572 Last Year: 1,516
Compared to last week: Steers mostly steady. Heifers 3.00-7.00 higher. Quality plain thru attractive. Demand good. Slaughter cows 4.00- 7.00 lower. Slaughter bulls mostly steady.
Cattle slaughter from Tuesday estimated at 119,000 head, down 2,000 from last week and down 1,000 from last year. Hog slaughter from Tuesday estimated at 469,000 head, matching a week ago but down 8,000 compared to a year ago.
Boxed beef cutout values steady to lower with 124 loads sold on Tuesday.
Choice Cutout__205.30 -.16
Select Cutout__196.84 -.13
CME Feeder Index__130.13 +1.15
CME Lean Hog Index__45.90 +.24
Pork Carcass Cutout__62.60 -1.74
IA-S.MN Wtd Avg Carcass Base__29.52 +2.06
National Wtd Avg Carcass Base__29.28 +.76
Outside markets fairly quiet overnight with equites shifting from lower to higher during the night, US$ fractionally lower and energies steady to higher. August live cattle have been holding a steady to lower trend since early May with a breakout to the upside last Thursday. It has since been unable to take out the strong resistance above $101, the next being up at the 200-day moving average at $105, with support around $95. August feeders chopping sideways these past couple months, holding a slow moving higher trend since mid-April. Strong resistance is up at $136, also the 200-day moving average, with support around $132. Fundamentals sure don’t support higher prices for cattle futures, but technical buying and taking out nearby resistance levels could override that. July lean hogs continuing to hold a lower trend with a new contract low last week at $44.50, support next around $37 from the continuous weekly chart and resistance up at $50.
Corn and soybeans taking a quick pause from the sharp rally that began last week as the latest weather models turn less threatening for the Corn Belt. The forecast is still showing some hot temps but adding in some spotty rain for most areas into mid-July with the second week potentially looking cooler now. The weekly USDA crop progress did surprise with a 2 point decline in good to excellent rated corn while soybeans were as expected unchanged a from a week ago. Wheat harvest continues here in the U.S. as well as in Russia with a recent drop in production estimates for both Russia and France. Russia also sold 230,000 MT or 8.5 MBU of wheat to Egypt yesterday and Jordan picked up 60,000 MT or 2.2 MBU of wheat most likely from Romania.
Overnight, grains were mixed with corn and soybeans still easing back while wheat is able to hold small gains. Corn finished the overnight steady to 2 lower, soybeans 3 to 4 lower and wheat 1 to 3 higher.
Preliminary Brazil export data shows soybean exports at 13.75 MMT or 505 MBU in June with 70% going to China, January through June total soy exports +38% vs last year at +30% vs 2018 while US export inspections this current marketing year -1% vs a year ago. Brazil’s CONAB reduced their corn production estimate by .5 MMT while increasing soybean production by nearly the same and increasing their soybean export estimate by 3 MMT to now 80 MMT or nearly 3 BBU.
USDA will update domestic and world supply and demand this Friday. I am not looking for many surprises as the quarterly stocks and acreage report was just released this past Tuesday. Old crop wheat stocks should be right at 1.044 BBU yet most still looking for around 950 MBU for the new crop stocks or this current marketing year. World wheat stocks have shot higher due to production increases but mostly in countries that consume a majority of their own production like India. I feel USDA still needs to reduce EU and Russian wheat production estimates but they may hold off another month. Corn and soybean ending stocks will be viewed very closely as we near the end of the current marketing year and see if USDA will decrease old crop demand again this month. New crop stocks for corn should be considerably lower with the acres down 5 million and production around 1 BBU lower. New crop soybean stocks should be up slightly with the increase of 300,000 acres.
This week’s forecast still calling for above normal temps with some scattered showers across Eastern Kansas, Nebraska and up into the Northern Corn Belt. The 6-10 day outlook continuing to showing above normal temps across the U.S. except in the PNW with below normal moisture from the Southwest into the Midwest.
September corn into new 3-month highs last week with resistance next around $3.60 and support at $3.35. August soybeans into new 4-month highs with resistance up around $9.20 and support at $8.80. September KC wheat hitting a new contract low on June 26th at $4.23 ¾ with resistance at $4.50 then $4.73. September Chicago wheat still trying but unable to break though the strong resistance at the $5 mark with support around $4.80 and the contract low at $4.71.
Loewen and Associates, Inc.
Pete Loewen / Matt Hines / Doug Biswell
www.loewenassociates.com matt@loewenassociates.com
866-341-6700