Date: September 14th, 2020
The holiday shortened trading week ending pretty well for the Ag sector, all but wheat finishing higher. Cattle futures flipped from steady to lower up to higher as the day progressed last Friday. Lean hog futures did not take full advantage of their expanding daily limits but still gapped higher again on Friday and finished $2 to $3 higher. The African swine fever discovery in Germany led to an immediate import ban in South Korea and most likely a ban into China. Cash feedlot trade continues to grind lower with live sales reported last week from $100 to $101 and dressed trade from $160 to $162, $1 to $3 lower than the week previous.
NATIONAL FEEDER & STOCKER CATTLE SUMMARY – WEEK ENDING 09/11/2020
RECEIPTS: Auctions Direct Video/Internet Total
This Week: 119,800 24,000 68,200 212,000
Last Week: 160,800 27,900 5,200 193,900
Year Ago: 176,400 73,500 122,000 371,900
Compared to last week, steers and heifers sold uneven; 2.00 lower to 2.00 higher. Demand for yearlings coming off grass is good to very good, with the demand for calves being moderate at this point in the calendar year. The normal seasonal occurrence of price spread between steers and heifers are going to be at the forefront again this fall.
For the week, Friday September 4th through Friday September 11th, October Live Cattle +$1.07 December +$1.42, September Feeder Cattle +$2.35, October +$2.07, October Lean Hogs +$6.75, December +$7.75. Boxed Beef, Choice -$5.96 @ $219.89, Select -$2.20 @ $207.10. Pork Carcass Cutout +$.69 @ $81.25.
Cattle slaughter from Friday estimated at 119,000 head, up 4,000 from the week previous and up 9,000 from last year. Saturday’s kill was estimated at 95,000 head bringing week to date up to 574,000 head, down 59,000 from the week previous and down 62,000 from last year. Beef production estimated at 479.7 million pounds compared to 527.3 million the week previous and 519.8 million pounds last year. Year to date beef production is down 1.9% compared to last year with cattle slaughter -4.6%.
Hog slaughter from Friday estimated at 480,000 head, up 29,000 from the week previous and matching a year ago. Saturday’s kill was estimated at 415,000 bringing the week to date up to 2,335,000 head, down 140,000 compared to the week previous and down 297,000 compared to a year ago. Pork production last week estimated at 491.5 million pounds compared to 522.2 million the week previous and 553.5 million pounds a year ago. Year to date pork production is up 2.1% compared to last year with hog slaughter up 1.3%.
Boxed beef cutout values continued to slide lower with 164 loads sold on Friday.
Choice Cutout__219.89 -.94
Select Cutout__207.10 -.22
CME Feeder Index__140.99 -.11
CME Lean Hog Index__63.28 -.16
Pork Carcass Cutout__81.25 +.39
IA-S.MN Wtd Avg Carcass Base__53.37 -1.20
National Wtd Avg Carcass Base__54.40 +1.72
Over the weekend, China formally moved to halt German pork imports due to the discovery of African swine fever last week. Year to date data shows Germany has supplied nearly 14% of China’s pork imports.
October live cattle rounding a bottom last week around $103.50, hopefully breaking the month long lower trend while the 6-month long higher trend is still holding. Nearby resistance is up at $106.30 then $109 and $111 is the recent high from last month. September feeders also a rounded bottom with the 100-day moving average providing support now at $137.60. September feeders do expire next week though and the long term higher trend has been taken out this past month. Nearby resistance is up at $142 with last month’s high at $149.32. October lean hogs gapped higher last Thursday and Friday hitting new recent highs not seen since this past March with resistance up around $70 and support at $59.
USDA crop report was the market mover to end last week. Overall it was a friendly report for the fall crops and mostly in line with expectations. No changes made to domestic wheat supply or demand but world stocks increased 2.58 MMT as export market competitors Australia’s production was increased 2.5 MMT and Canada increased +2.0 MMT. U.S. Corn yield reduced 3.3 BPA, harvested acres down ½ million equated to a production estimate -378 MBU and ending stocks -253 MBU. U.S Soybean yield reduced 1.4 BPA with production down 112 MBU and ending stocks -150 MBU. World corn stocks were reduced over 10 MMT, most of which from the U.S. reduction but also an increase to feed demand for China of 5 MMT over 2 marketing years. Speaking of China, more U.S. soybeans sold Friday morning bringing total export sales up to 1.098 BBU, 583 MBU on the books for China, compared to a total at this time a year ago of only 347 MBU. Grain sorghum export sales on the books even more impressive with a total of 96.4 MBU, 55.8 MBU for China, compared to a year ago of only 2.7 MBU. Corn exports are also looking strong this year with a total of 742 MBU on the books, 350 for China, last year only 283 MBU sold by this date.
USDA on Friday afternoon also updated prevent plant acreage. As of September 1st, US corn prevent plant acres at 6.077 million compared to 5.374 million on the previous report. US soybean prevent plant acres at 1.451 million, last month 1.223 million and US wheat prevent plant acres at 1.268 million compared to 1.194 million last month.
For the week, Thursday September 4th through Friday September 11th, December Corn +$.10 ½, March +$.09 ¾, November Soybeans +$.28, January +$.25 ¾, December KC Wheat -$.01 ¼, March -$.01 ¼, December Chicago Wheat -$.08 ¼, March -$.08, December MPLS Wheat -$.10 ¼, March -$.10 ½, October Soybean Meal +$7.80/T, December +$7.40/T.
Grains were firm again overnight with corn and soybeans into new recent highs. Corn finished 1 higher, soybeans 3 to 5 higher and wheat steady to 1 higher.
USDA announced private sales this morning of 350,000 MT or 13.8 MBU of corn sold to China, 106,000 MT or 4.2 MBU of corn sold to Japan, 129,000 MT or 4.7 MBU of soybeans sold to China and 318,000 MT or 11.7 MBU of soybeans sold for unknown destinations. USDA also corrected the August 27th announcement of 140,000 MT or 5.5 MBU of corn sold for unknown destinations to sold to China.
Weather this week looks fairly mild for major producing areas, a bit warmer than last week, and another hurricane making landfall in the Gulf. Currently it is rated as Tropical Storm Sally but forecasted to strengthen and taking aim on LA later tonight or into tomorrow. The 6-10 day outlook showing above normal temps over the western half of the U.S. and below normal on the East Coast with above normal moisture in the North and below normal from the Southwest to covering the eastern half of the U.S.
December corn again into a new recent high overnight with resistance next up around $3.85 and support around $3.54. November soybeans into a new contract high overnight at $10.08 ¾ with resistance next up around $10.50 looking at the weekly continuous chart and going back to the summer of 2018. December KC wheat hit a new 3-month high on September 1st testing the $4.90 resistance pulling back to find support around $4.66. December Chicago wheat also spiked higher 2 weeks ago to test resistance around $5.70 with support around $5.40. December soybean meal testing resistance around $328, with the next up around $335 and nearby support at $309.
Loewen and Associates, Inc.
Pete Loewen / Matt Hines / Doug Biswell
www.loewenassociates.com matt@loewenassociates.com
866-341-6700