The relentless pounding of the feeder cattle market continued with another round of triple digit losses yesterday in most contract months. The exception was the front end May future that were already close to $9 discount to the next month going into the day. In the August feeder contract, since life of contract highs were made just 7 days ago at $161.40, prices have dropped more than $10 with $8.62 of that coming in just the last four sessions.
By comparison, the June live cattle, which is also the second month out, is more than $10 off it’s high as well, but that contract high for June was back in mid-March. The last four sessions in that contract have taken $6.32 off of price.
There isn’t any divergence going on in the meat complex either, because hogs have been equally as ugly since posting their contract highs earlier this month. At yesterday’s low, June hogs were $12.80 off their high water mark, once again proving there’s a strong connection between these meats these days.
In reality, nothing significant changed in the fundamental picture for any of these meat markets. Versus year ago values, everything was trading considerably higher than year ago levels at the highs and that was happening with 2019 production slated to increase considerably versus those year ago levels in the USDA projections. What was running it was China buying US pork. So perhaps what this market needs another shot of is China being back in the market for more pork. They were absent last week.
Cattle slg.___120,000 +6k wa +2k ya
Choice Cutout__233.14 +.15
Select Cutout___217.72 -1.69
Feeder Index:___145.19 +.94
Lean Index.__83.46 -.27
Pork cutout___84.99 +.72
IA-S.MN direct avg__80.60 -.10
Hog slg.___ 472,000 +148k wa +15k ya
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Grain and oilseed trade started yesterday with corn adding some weather premium, while the bean market faded from the same effects. Beans were tugging pretty hard on the corn by the finished though, which ended up leading to just a fractionally higher finish. Since last week’s new contract lows, Dec Corn was up 13 ¼ cents at yesterday’s peak. Sad when that’s the most exciting news going on in the grain markets and it took snow in MN, SD, NE and Iowa just to squeeze that 13 cents out of the market.
Funds were reported buyers of 2k corn yesterday, but sellers of 6k wheat and 8k beans.
The wheat market looked like an absolute dumpster fire and it was KC wheat leading the charge into the abyss. KC July wheat closed 38 ¼ cents under the Chicago July and $1.10 under MGEX July. It was also a close that took both the May and July futures solidly under the $4 mark and into the “3” handle.
Weekly export inspections that came out yesterday morning were very solid in corn with a bullish 53.8 mln bushel tally versus 52 mln needed each week to hit USDA’s export estimate for the marketing year. Milo was very bearish with 685k bushels versus 2.1 mln needed every week. Soybean inspections came in at 18.1 mln bushels versus a weekly pace of 39.8 mln needed to hit USDA’s target, so that’s bearish beans. Wheat was a disappointment as well, logging 23.2 mln bushels in export loadings versus 31.8 mln needed every week to hit USDA’s target.
Crop progress and condition data that came out yesterday afternoon showed the nationwide corn planting pace at 15% complete. That’s even with last year’s progress, up 9% from a week ago and 12% below the 5 year average for that date. In the big 4 corn states, Iowa is 31% done versus 36% as a 5 year average, Illinois is 9% done versus 43% normally, Nebraska was at 16% complete versus 23% normal and Minnesota was sitting at 2% done versus 24% normally…, and it snowed!
The soybean planting pace came in at 3% complete nationwide versus 5 last year and 6% on average.
Spring wheat seeding was 13% complete, up 8 points from last week, but well below the average pace of 33% done. There wasn’t a single state at or above average on planting pace. MN is at 2% versus 33% normal, South Dakota 8% versus 60% normal and Nodak was at 5% versus 21% as the 5 year average.
Winter wheat crop condition ratings showed 64% of the crop in the g/ex categories, 8% p/vp and 28% fair. That g/ex rating increased 2 points from last week, taking it out of fair. Last year 33% of the crop was rated g/ex. With the annual Wheat Quality Council wheat tour starting today, there will be a lot of information to process this week based on their findings and I look forward to seeing some of those reports.
6-10 day forecasts last night showed below normal temps in the Northern Plains, including all of Minnesota. Iowa, far northern IL and curving to the SW around the NW corner of Kansas was at normal temps. Everywhere south of that line was above normal. Precip was above normal across the entire Plains and Corn Belt.
Pete Loewen
Loewen and Associates, Inc.
Pete Loewen / Matt Hines / Doug Biswell / Matt Burgener
www.loewenassociates.com