The ag commodity complex finally picked up some steam and volatility in the price movement yesterday after a long hiatus of really slow action. Case in point, live and feeder cattle futures have been trading in close to a $1 range from high to low through the Christmas and New Year weeks, but fats expanded to more than $2 from high to low and feeders over $3 in yesterday’s range. Unfortunately, most of that was at lower money as well with some steep losses at times. By the close though, the active selling subsided and prices moved back closer to unchanged with a finish that was just mildly lower in cattle. Hogs closed out the day mildly higher.
Finding solid reasoning for the cattle weakness was a wasted effort. We’re still solidly in holiday-type sluggish news flow. There hadn’t been any trending volume trading in the negotiated cash yet and export sales were delayed until this morning. Whether yesterday’s selling was tied to commercials trying to beat things down to get cattle bought cheaper is irrelevant after the mildly lower close. Cash trends are up, despite product trends being down. I think we’ll trade higher this week.
Weekly export sales were somewhat lackluster in beef, but pretty decent in pork. Expectations were already thin because the sales represent business for December 20-26. Net beef sales for 2019 were 3700 mt’s, along with 5700 mt’s for 2020, resulting in a grand total of 9400. Taiwan, Japan and South Korea were the top three buyers. Shipments totaled 12,600 mt’s and Japan, South Korea and Mexico were the top three destinations.
Net pork sales were 3300 mt’s for 2019, but 24,100 mt’s for 2020, for a total of 27,400. Mexico, China and Australia were the big buyers. Shipments were really solid at 30,600 mt’s, especially since it was a holiday week. China took around 1/3 of that total and Mexico and Japan were in the #2 and #3 spots.
Cattle slg.__122,000 +2k wa +1k ya
Choice Cutout__208.25 -1.17
Select Cutout__202.63 +.51
Feeder Index:___142.48 +.67
Lean Index.__57.93 unch
Pork cutout___73.85 +.83
IA-S.MN direct avg__50.40 -.52
Hog slg.__494,000 +1k wa +20k ya
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Grain and oilseed trade was polar opposite of the cattle trends yesterday. At times there were some nice gains, particularly in KC wheat and soybeans, but those gains faded into the close, just like the losses faded in cattle. The finish looked really boring with only mild net changes, most of them still a net positive though thankfully.
Funds yesterday were estimated buyers of 2k wheat, 8k corn and 4k beans.
Weekly export sales were disappointing, as expected, so don’t read too deeply into the data. Corn sales were 20.9 mln bushels, along with zero milo. Soybean sales were 12.1 mln. Wheat sales were 11.5 mln bushels. Versus last year’s cumulative pace, wheat sales are currently 40 mln bushels ahead of a year ago, soybeans are 54 mln bushels behind, corn is 530 mln bushels behind and milo is 25 mln bushels ahead of the previous year. Here’s some important data to remember to go along with those numbers; USDA is projecting corn exports to be 215 mln bushels lower than the last marketing year, soybeans to end up 27 mln ahead and wheat 39 mln bushels ahead. Of those three, wheat is the only one on pace to get the job done.
Several individual states put out crop progress and condition numbers yesterday, so we got a little data on wheat and some updates on corn harvest in the north as well. Starting off with the corn harvest numbers, North Dakota has now moved up to 48% complete which is a gain of 5 points since December 8th. That translates into 1.7 mln acres left unharvested still in that state, or roughly 244 mln bushels of corn still in the field. South Dakota gained 7 points from back in early December, moving up to 90% done. That’s about 392k acres yet to go in that state, or 59 mln bushels, whichever way you want to look at the data.
Regarding wheat crop condition, the government was shut down last year at the same time, so the only comparisons are versus the last set of data that was released for this year’s planted crop specifically. Colorado wheat was rated 57% g/ex, versus 65% g/ex at the end of November, Oklahoma is 40% g/ex, down 5 points from November, Kansas 40% g/ex down from 46%, Nebraska 70% g/ex, 2 points better and South Dakota 73% g/ex, up from 67% in November. I didn’t see any numbers released from Texas, but for Kansas, Oklahoma and Colorado, things definitely got worse, not better.
6-10 day forecasts last night showed the colder air in the western US slowly creeping east. From the western side of the High Plains to the West Coast the temps were below normal. There was a small band of normal over the western edge of the Panhandle and western Kansas that extended through most of the Dakota’s and Minnesota and everything east of that was above normal still. Precip went wetter across HRW wheat areas with above normal moisture chances over all of the Plains from north to south as well as all of the Corn Belt.
From the Panhandle to the Nebraska border over the last week, there has been some excellent moisture in places, although there’s also some areas that missed it. With a lot of wheat through those areas in tough shape from lack of topsoil moisture, there’s still considerable uncertainty whether there’s viable wheat out there in some areas or not…
Current trade:
@LEG20 125.275 -0.500
@LEJ20 125.900 -0.575
@LEM20 117.875 -0.825
@GFF20 143.800 -0.850
@GFH20 142.775 -0.950
@GFJ20 145.625 -0.875
@HEG20 70.300 -1.250
@HEJ20 76.700 -1.300
@HEK20 83.000 -1.375
@CH20 388′ 6 -2′ 6
@CK20 395′ 4 -2′ 4
@CN20 401′ 0 -3′ 0
@SF20 935′ 2 -9′ 0
@SH20 946′ 4 -9′ 6
@SK20 959′ 6 -9′ 6
@KWH20 474′ 6 -10′ 4
@KWK20 483′ 0 -10′ 6
@KWN20 490′ 4 -10′ 6
@WH20 552′ 6 -7′ 4
@WK20 555′ 6 -7′ 4
@WN20 558′ 2 -6′ 6
Pete Loewen
Loewen and Associates, Inc.
Pete Loewen / Matt Hines / Doug Biswell / Matt Burgener
www.loewenassociates.com