Date: December 28th, 2020
The first week of holiday trade now complete as livestock futures finished last week mixed. Cash feedlot trade reported at mostly $2 higher than the week previous at $110 live in the South and $4 to $6 higher at $172 dressed in the North. Beef exports remain neutral as pork export sales slipped lower this past week but actual exports remain very strong. Mild liquidation in hog breeding herd that was confirmed in last week’s Quarterly Hog and Pig report…
Inventory down 1% from a year ago
Breeding herd down 3%
Market hog numbers down 1%
Fall farrowings down 1% and the pig crop down 1%
For the week, Friday December 18th through Thursday December 24th, December Live Cattle +$1.67, February +$.12, January Feeder Cattle +$.47, March +$.02, February Lean Hogs +$1.15, April +$1.17.
Boxed beef cutout values last reported on Wednesday were sharply lower with 119 loads sold.
Choice Cutout__207.54 -3.13
Select Cutout__197.93 -1.66
CME Feeder Cattle Index__139.82 -.17 from 12/23
CME Lean Hog Index__61.62 -.42 from 12/22
Pork Carcass Cutout__69.34 +1.18
IA-S.MN Wtd Avg Carcass Base__50.84 -1.62
National Wtd Avg Carcass Base__50.44 -.88
We begin this second week of holiday trading on solid ground. Futures should be supported to begin the week and again the expectation is for steady to higher cash feedlot trade. December live cattle expire this Thursday with strong support from $109 to $110. February live cattle have support at $113 with resistance at $115.45 then $116.60. January feeders holding a higher trend since mid-October with support around $139 and resistance at $142. February lean hogs choppy the past 2 months with support at $63 and resistance at $69.
Over in the grains, last week was filled with higher trading and new contract highs for both corn and soybeans. January soybeans actually now running 7 consecutive days with a new contract high including the new high overnight. Union port strikes continue in Argentina bogging down exports. Some might think this is not a big issue as their new crop is still a few months away but Argentina is the #1 soybean meal exporter at nearly 40% of the world’s trade and more than double what the U.S. exports annually. I have been asked many times this year, so what will happen to soybeans when Brazil’s new crop comes on and we stop shipping to China? Neither country actually stops shipping as the other brings on a new crop but the volume leader does go back and forth every 6 months or so. For example, Chinese customs data released on Christmas day showed November imports of US soybeans were 6.04 MMT, compared to 3.4 MMT in October. Since January, China has imported 20.05 MMT of US soybeans. Chinese import of Brazilian soybeans during November totaled 2.74 MMT compared to 4.23 MMT in October. Accumulated Brazil soybean imports over the January through November period this year were 63.1 MMT.
For the week, Friday December 18th through Thursday December 24th, March Corn +$.13 ½, May +$.12 ½, January Soybeans +$.43 ½, March +$.40 ½, March KC Wheat +$.19 ¾, May +$.18 ½, March Chicago Wheat +$.18 ¾, May +$.16 ½, March MPLS Wheat +$.14 ¼, May +$.14, January Soybean Meal +$11.30/T, March +$8.80/T.
Overnight markets were mixed with corn and soybeans hitting new contract highs but fading as the night progressed to finish only 1 to 3 higher. Wheat futures traded both sides of unchanged and then faltered to finish 4 to 7 lower.
We do have another holiday shortened trading week with markets closing early on Thursday and closed on Friday, New Year’s Day. Export inspections will be released later this morning with weekly export sales again released a day early this week on Wednesday. South America will be the main focus for additional news this week with the ongoing port strike in Argentina and updated weather forecasts.
USDA reported a few private sales this morning, all for unknown destinations…233,700 MT or 8.6 MBU of old crop soybeans, 125,000 MT or 4.6 MBU of new crop soybeans, 149,572 MT or 5.9 MBU of corn and 33,000 MT of soybean oil.
Weather remains dry in Argentina with ½ inch to 2 inches scattered rains in Brazil over the weekend. The forecast so far this week looks similar with very little relief expected in Argentina and scattered rains for Brazil. A winter storm bringing the chance for heavy snow and heavy rains moves through the central U.S. into the Midwest over these couple days. The 6-10 day outlook showing normal to above normal temps for all except in the Southwest with above normal moisture in the Northwest and below normal for the Southern Plains and eastern 1/3 of the U.S.
March corn hitting a new contract high overnight at $4.55 ½ with support at $4.30. January soybeans, again the seventh consecutive trading day in a row, a new contract high at $12.79 ½ with support around $11.80. March KC wheat, a new recent high at $5.93 last week with support at $5.62. March Chicago wheat with resistance at $6.37 and support at $5.98. January Soybean Meal a new contract high last week at $424.80 and support around $390.
Loewen and Associates, Inc.
Pete Loewen / Matt Hines / Doug Biswell
www.loewenassociates.com matt@loewenassociates.com
866-341-6700