Not a very good day for the cattle complex. Both the live and feeder markets started on the south side of unchanged and finished there as well. In the live cattle, losses were just minimal and the front month February contract still closed over the top of last week’s Southern Plains cash high. Feeders were under a little more pressure, pushing down more than $1 on the January.
Cattle slaughter was a lot larger yesterday than expected, which was a good sign in a market that’s caught a lot of attention lately because of covid-induced worker shortages at slaughter and processing plants. Two weeks ago, we had the smallest weekday M-F kill tally since May 2020 in the middle of the early covid outbreak. Between that week and last week most days have been in the 113k-114k head range. 117k head yesterday was great, but we’ll see if it doesn’t get revised lower midday when slaughter totals are released. Monday’s hog kill was revised lower by 7k head. Saturday’s totals were revised lower in both beef and pork, which reduced the weekly total, so we’ll see where this lands.
Negotiated cash saw a little action yesterday at the same $137 tops as last week in the Southern Plains. Nebraska had some $218 dressed trade as well with a couple weeks time attached. While we may not be seeing cash drop much below these levels because of token bids and consequently futures are finding support from it too, the longer term ramifications of light kills are taking a lot of bullish potential away from the market. Lower slaughter totals result in delayed marketings which result in rising finished weights and more pounds on the market down the road. The faster this new outbreak blows through the better off we’ll be later on.
Coming up on Friday we get monthly COF data released. The range of estimates for the On Feed total on January 1 are from 99.5% of a year ago up to 100%. Placements in December actually have a really tight range of trade guesses from 100% up to 105% of a year ago. Marketings in December are pegged between 100.5% and 102.1% of a year ago. There was also one more slaughter day in December versus the year prior, which takes that marketing number estimate that’s over 100% and whacks about 4% off the top for the true daily figure.
Cattle slg.__ 117,000 +3k wa -2k ya
Choice Cutout__289.49 +1.63
Select Cutout__278.39 +1.34
Feeder Index:___161.30 -.41
Lean Index.__76.78 +.88
Pork cutout___87.21 -4.73
Nat’l direct carcass avg__66.19 +4.08
Hog slg.__468,000 +15k wa -29k ya
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Moving on to the grain and oilseed trade, fairly heavy pressure early on in the soybean trade gave way to only minor losses at the close, corn squeaked out a higher close and the wheat complex found a bid and shot up to aggressive gains of over 20c in all three markets. For the KC wheat market in particular, I think it was technicals more than anything that led to the rally. Friday’s close was right on downtrending support and futures were pretty heavily oversold, so it was due. The first headline I read regarding wheat this morning cited dryness across winter wheat country as the reason for 20 higher futures. Well, newsflash, it was also dry eight days ago when the market started a 50c drop into Friday’s close. Nobody is going to disagree with it being dry, but the point I’m trying to make is often times there’s a lot of grasping for straws to create a headline when technicals and fund money flow takes as much credit as anything.
Funds yesterday were estimated buyers of 8500 wheat, 5k corn and sellers of 3k beans.
Weekly export inspections were bearish wheat once again, but they were strong in both corn and soybeans. Corn inspections totaled 47.4 mln bushels, which was up 18% from last week and 29% over last year in the same week. Soybeans were a healthy 63.2 mln bushels, which was 75% above last week, but unfortunately down 21% from last year same week. Wheat was 13.6 mln bushels which is bearish, but by the same token, the number this week was up 57% from a week ago and 30% over last year same time.
Looking at these weekly inspections as part of a bigger picture, for the current marketing year to date, total corn shipments are down 13% from last year, milo is down 22%, soybeans are down 23% and wheat is off 17%. USDA has corn exports pegged to be down 12%, so the current 13% pace isn’t too far out of line. They have soybeans 9.5% under last year and we’re down 23%. That’s not good and it’s also part of the reason we stated following the report that we wre surprised USDA didn’t trim soybean exports some. USDA has wheat exports down 17% from last year and we’re currently right at that mark.
Pete Loewen
Loewen and Associates, Inc.
Pete Loewen / Matt Hines / Doug Biswell
www.loewenassociates.com