Big week of wild trade for the hog market last week and at times there was decent volatility in the cattle, but weekly closes in both the live and feeder markets were mixed and fairly quiet. Friday’s trade was mildly weaker in fats and feeders and strongly higher in hogs.
Beef product prices continue to slide and a big part of that is in reaction to a large increase in production created when daily kills jumped up to the 120k+ head per day level. Late December and through January there were a lot of low teens and mid teen daily numbers with labor issues at plants being pegged as the culprit for the slowdown. February has been full throttle though and the jump in output has taken more than $23 off of choice cutouts just this month. At the same time, pork cutout has gained over $16. The price ratio of choice beef to pork cutout went from 3:1 at times in January to 2.42:1 on Friday. That’s really close to giving beef a competitive advantage over pork and will hopefully start to pin some support under beef price as well. Not that beef price to the packer influences cash price to the cattle feeder at any point over the last couple of years, but at some point that changes since the cow/calf industry has moved from expansion to liquidation.
Negotiated cash the first two weeks of February had $140 tops in the Southern Plains and that blossomed into $142 to $142.50 last week. If daily kills continue on the same 120k hd/day path, the odds of steadily increasing cash are good.
Cattle slg.__ 121,000 fri 51k sat wtd 660k +1k wa +111k ya
Choice Cutout__265.83 -3.74 wtd -8.67
Select Cutout__262.63 -2.22 wtd -5.20
Pork cutout___109.91 -6.63 wtd -.05
Hog slg.__wtd 2.498 mln -18k wa +85k ya
Weekly closes in the meats had February Live Cattle +$1.37, April -$.30, March Feeder Cattle
-$.80, April +$.15, April Lean Hogs +$7.17, June +$6.42.
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Moving on to the grain and oilseed trade, if you only looked at the weekly closes, corn and wheat were flat and beans were mildly higher, but the daily action had some big time volatility in both directions that made the weekly finish look deceiving. South American weather is still being heavily traded, but I think the biggest item watched was the indecisiveness in whether the war drums were beating or not in this Russia/Ukraine situation on a daily basis. When it looked hot, wheat was up big. When it looked cold, wheat was down. Given the fact both of those countries are massive players in world wheat export trade, that answers the question of “why” it influences the wheat market so much. KC wheat was up close to 30c at one point Friday, but sold off quite a bit into the close.
Funds were estimated on the buy side of 1k wheat, 5k corn and 3k beans.
Weekly closes in the grains had March Corn +$.03 ¼, December +$.03, March Soybeans +$.18 ½, November +$.19 ¾, March KC Wheat +$.10, July +$.13, March Chicago Wheat -$.00 ¾, July +$.02 ¼, March MPLS Wheat -$.00 ¾, September +$.04 ¼
Overnight trade in the grains finished__3-8 higher corn, 2-6 higher in all the old crop soybean months, but 3 lower on new crop and wheat was anywhere from 7-18 higher. KC was the strongest and Chicago had most months up double digits as well. MGEX finished in the high single digits in everything. So, based on that overnight finished, you could tell the war drums were beating again in the Black Sea region.
8am daily export reporting showed two nice sales this morning. 132k mt’s of US new crop beans were reported sold to China. 120k mt’s of US HRW wheat was sold to Nigeria. That was split between 60k old crop and 60k new.
Current trade a/o 8:37a
@LEG22 143.500 0.250
@LEJ22 145.875 0
@LEM22 141.625 0.125
@GFH22 164.750 -0.675
@GFJ22 169.850 -1.000
@GFK22 174.850 -1.050
@HEJ22 109.675 0.275
@HEK22 113.850 0.500
@HEM22 119.300 0.675
@CH22 666′ 4 12′ 2
@CK22 664′ 6 12′ 0
@CN22 657′ 6 10′ 6
@SH22 1617′ 2 15′ 6
@SK22 1617′ 6 14′ 2
@SN22 1614′ 6 13′ 6
@KWH22 853′ 4 18′ 2
@KWK22 858′ 0 18′ 0
@KWN22 858′ 2 17′ 4
@WH22 809′ 6 12′ 6
@WK22 817′ 4 13′ 4
@WN22 814′ 2 13′ 4
Pete Loewen
Loewen and Associates, Inc.
Pete Loewen / Matt Hines / Doug Biswell
www.loewenassociates.com