Date: December 27th, 2021
Livestock futures finished last week steady to higher and triple digits higher week over week. Cash fed cattle trade dropped another $3 last week to $135 live and $216 to $218 dressed. After the close, USDA released its monthly Cattle on Feed report and Quarterly Hogs and Pigs report.
The Cattle on Feed report was neutral vs. the expectations but slightly bearish overall. Cattle and calves on feed as of December 1st totaled 12.0 million head, just slightly below last year’s inventory. Placements in feedlots during November totaled 1.97 million head, 4% above 2020 and marketings of fed cattle during November totaled 1.87 million head, 5% above a year ago but also with one more business day.
The Quarterly Hogs and Pigs report was bullish but also expected with U.S. inventory of all hogs and pigs on December 1, 2021 at 74.2 million head, down 4% from last year and down 1% from September 1, 2021. Breeding inventory, at 6.18 million head, was up slightly from last year, but down slightly from the previous quarter. Market hog inventory, at 68.0 million head, was down 4% from last year, and down 1% from last quarter. The September-November 2021 pig crop, at 33.7 million head, was down 4% percent from 2020. Sows farrowing during this period totaled 3.01 million head, down 5% percent from 2020.
For the week, Friday December 17th through Thursday December 23rd, December Live Cattle +$2.20, February +$3.20, January Feeder Cattle +$3.20, March +$2.05, February Lean Hogs +$2.42, April +$1.87. Boxed Beef, Choice -$.07 @ $262.94, Select +$4.67 @ $252.95, Pork Carcass Cutout +$5.65 @ $91.47.
Cattle slaughter from Thursday estimated at 117,000 head, down 5,000 from the week previous with weekly total through Thursday at 478,000 head, down 1,000 from the week previous. Hog slaughter from Thursday estimated at 465,000 head, up 7,000 compared to the week previous with the weekly total through Thursday at 1,885,000 head, up 47,000 compared to the week previous.
Boxed beef cutout values on Thursday higher on light demand with 91 loads sold.
Choice Cutout__262.94 +1.08
Select Cutout__252.95 +2.12
CME Feeder Cattle Index__160.25 from last Wednesday
CME Lean Hog Index__71.67 from last Wednesday
Pork Carcass Cutout __91.47 +6.80
National Wtd Avg Carcass Base__ 60.53 -.56
December live cattle expire on Friday and the previously discount to cash flipped last week with futures now $2 higher than cash. The February contract hit a contract high on November 29th at $141.85 with support tested last week at $135.50. The long term higher trend still intact with major support down around $130. January feeders remain choppy with resistance at $166 then $168, a new recent low last week at $158.40 and support below that at $156.80. February lean hogs chopping in a $14 range since June with nearby support around $79 and resistance at last month’s high at $84.67.
Grains continued to rally last week, most posting higher closes everyday . The soy complex continues to lead the charge higher with the nearby January soybean contract $1.50+ higher from the November lows and meal $95/T higher from its October lows. Weekly export sales reported on Thursday were actually a marketing year low for soybeans at 29.8 MBU. Shipments have been good, just not great as China continues to source beans from both the U.S. and Brazil. The hot and dry forecasts for Argentina seem to be the most supportive news right for the grains adding in some weather premium during these low volume holiday trading days.
For the week, Friday December 17th through Thursday December 23rd, March Corn +$.12 ½, May +$.13, January Soybeans +$.46 ¾, March +$.52 ¼, March KC Wheat +$.51 ½, July +$.45, March Chicago Wheat +$.39 ¾, July +$.36, March MPLS Wheat +$.10, January Soybean Meal +$26.60/T.
Grains extended the rallies overnight with corn finishing 3 to 6 higher, soybeans 8 to 15 higher and wheat 1 to 5 higher. Equities are firm this morning along with the US$ but crude and gold lower.
News fairly light coming off the Christmas break. USDA announced a private sale of 269,240 MT or 10.6 MBU of corn for delivery to unknown destinations. Export inspections will be out later this morning. We do have a full week of trading with normal hours on New Year’s Eve this year.
Below normal temps and winter weather dominate the Northern Plains to start the week as the Southern Plains remain dry. Heavy rains in the forecast for the Southeast and Midwest towards the end of the week and into the New Year. The 6-10 day outlook showing normal to above normal temps across the southeastern quarter of the country and below normal in the North and West with above normal moisture for the PNW, North and eastern quarter but below normal remaining in place for the Southern Plains. 6-10 day for South American showing below normal precipitation for the far south of Brazil with below normal temperatures, below normal precipitation for the Argentine grain areas with above normal temperatures,
March corn still trending higher with a new 6-month high overnight at $6.14 ¾, the highest since the July 1st spike high up to $6.16 ½ with support around $5.90. January soybeans another new recent overnight, followed by another so far this morning up to $13.53, the highest price since mid-August with resistance next up at $13.84 and support at $12.75. March KC wheat sharply higher last week with resistance at the contract high from November at $8.92 ¼ and support at $8.24. March Chicago wheat testing resistance around $8.20 with the contract high up at $8.74 ¾ and support at $7.92 then $7.50. March MPLS wheat chopping sideways from $9.91 to $10.66 since late October with a tighter range this month from $10.47 ½ to $10.02. January Soybean Meal closing on the contract high from May at $423.60 and support down at $380.
Loewen and Associates, Inc.
Pete Loewen / Matt Hines / Doug Biswell
www.loewenassociates.com matt@loewenassociates.com
866-341-6700