Date: August 12th, 2020
Cattle futures traded mixed yesterday but finished strong across the board as lean hogs were fairly steady in the nearby August contract but triple digits lower on the deferreds. Cash feedlot trade steady with the upper end of last week’s trade on light volume so far this week at $103 in KS and $105 in IA. The concern for cattle still remains the higher weights and lower slaughter rates if they continue, beef prices remaining high or honesty seeing some strength. Charts look very good though with long term higher trends for both fats and feeders as deferred feeders continue to make new contract highs.
Joplin Regional Stockyards Feeder Cattle – Carthage, MO
Livestock Weighted Average Report for 8/10/2020
Total Receipts: 4,442 Last Week: 7,030 Last Year: 2,533
Compared to last week, steers under 550 lbs 2.00 to 3.00 lower, 550 to 750 lbs steady to 2.00 higher, over 750 lbs unevenly steady, heifers under 450 lbs 2.00 to 3.00 lower, 450 to 700 lbs steady, over 700 lbs steady to 3.00 lower. Demand moderate to good, supply moderate.
Oklahoma National Stockyards Feeder Cattle – Oklahoma City, OK
Livestock Weighted Average Report for 8/10/2020
Total Receipts: 8,386 Last Week: 7,229 Last Year: 5,252
Compared to last week: Feeder steers steady to 3.00 lower. Steer calves steady to 3.00 higher. Feeder heifers mostly steady to 2.00 lower. Heifer calves unevenly steady. Demand moderate to good.
Tulsa Livestock Auction – Tulsa, OK
Livestock Weighted Average Report for 8/10/2020
Total Receipts: 2,257 Last Week: 2,752 Last Year: 1,531
Compared to last week: Feeder steers traded steady to 5.00 higher, steer calves mostly steady. All classes of heifers fully steady to 4.00 higher. Demand good.
Cattle slaughter from Tuesday estimated at 117,000 head, up 1,000 from last week and matching last year. Hog slaughter from Tuesday estimated at 458,000 head, down 1,000 from last week and down 17,000 compared to a year ago.
Boxed beef cutout values higher with 156 loads sold on Tuesday.
Choice Cutout__208.08 +.88
Select Cutout__195.02 +1.09
CME Feeder Index__142.33 -.28
CME Lean Hog Index__53.79 +.77
Pork Carcass Cutout__70.39 +.32
IA-S.MN Wtd Avg Carcass Base__36.97 -1.15
National Wtd Avg Carcass Base__37.42 -1.01
Equities and energies starting the day higher, US$ steady. August live cattle have a higher trend holding since bottoming out in early April. Yesterday it hit a new 5-month high at $104.90 with nearby support down around $102 and resistance next up at $106. August feeders also holding the long term higher trend and into new 5-month highs last week with support at $139 and resistance at $146 then around the $150 area. August lean hogs holding a lower trend going back almost a full year, although trading a $10 choppy range these past 2 months with nearby resistance around $55 then around $58 and the contract low down at $47.52.
Grains were mixed, mostly steady to higher yesterday. We did start higher but unable to generate or sustain a rally a day ahead of the crop report or with bearish technicals. The storms that rolled over a 750+ mile stretch from SD to OH on Monday were very damaging with many areas, possible millions of acres of crops damaged. This isn’t to say to millions of acres are zeroed but were are talking the potential of 100’s of MBU of corn lost. The other side is the massive amounts of both on farm and commercial storage damaged or lost right before fall harvest. Iowa’s top Ag official yesterday stated there could be nearly 10 million acres affected and tens of millions of bushels grain storage impacted.
Overnight, grains were quietly mixed with corn finishing steady to 1 lower, soybeans steady to fractionally higher and wheat 1 to 4 lower.
USDA announced private sales of 258,000 MT or 9.5 MBU of new crop soybeans sold to China and 120,000 MT or 4.4 MBU of new crop soybeans sold for unknown destinations.
USDA will update supply and demand estimates later this morning, remember this is only from producer survey and satellite data as of August 1st. The report is already expected to be bearish. The average trade estimates for both corn and soybean national yield are 2 BPA higher than a month ago at 180.4 and 51.3 respectively. The average trade estimates for corn production is up to 15.17 BBU pushing ending stocks up to 2.8 BBU. U.S. soybean production average trade estimate is up to 4.258 BBU with ending stocks up to 524 MBU. Global corn stocks are expected to be increased by 5 MMT to 320.3 MMT for the 2020/21 crop year. This of course coming primarily from the increase in U.S. stocks. Chinese stocks are the big question mark. There was a massive adjustment higher to Chinese stocks a few years back. Recent purchases and weekly government auctions completely gobbled up give a different sign that stocks in China are very tight right now. World soybean stocks are expected to be 3 MMT higher than a month ago at 97.92 MMT. The average trade estimate for world wheat stocks is 1 MMT lower than a month ago at 313.85 MMT.
The rest of this week looks fairly mild across most major growing areas. There is some excessive heat in the forecast for the Southwest and Southeast heading into the weekend. The 6-10 day outlook showing above normal temps centered on the Southwest with above normal in the western half of the U.S. and below normal for the eastern half and above normal moisture in the Southeast with below normal centered over the Corn Belt. This is getting a little more chatter in the markets and we’ll see what the models show after the crop report for more direction.
September corn into a new contract low last Friday at $3.07 ¼ with resistance around $3.18 then $3.30. The $3 mark is the long term physiological support area which as of now looks to hold as the market balances a huge crop potential and large ending stocks with expanding exports, especially the potential for more Chinese business. September soybeans choppy over this past month, but breaking into a new recent low on Monday at $8.63 ¼ with support next around $8.55 and resistance at $9.04. September KC wheat hit a new contract low last Friday at $4.09 ¾ with support next around the $4 mark and resistance up at $4.45. September Chicago wheat stopped at $4.90 the past three trading sessions and touching it again overnight with the contract low down at $4.71 and resistance around $5.20.
Loewen and Associates, Inc.
Pete Loewen / Matt Hines / Doug Biswell
www.loewenassociates.com matt@loewenassociates.com
866-341-6700