The vast majority of the ag sector ended yesterday’s session with strong closes to the plus side. Meats were able to fight off early pressure to push higher late. Grain and oilseed trade was very similar.
Beef packers passed another milestone yesterday when they hit 121k head on the daily slaughter number. To date, both beef and pork packers have been making up for lost time by expanding Saturday kills and that helped both segments boost last week’s totals up to levels that surpassed year ago numbers. Seeing a 121 number in cattle yesterday gets us one step closer to working through the Covid-induced backlog. The added total production it generates is bearish, but the faster we get through those numbers, the quicker we get to friendlier times down the road.
Negotiated feedlot trade saw very light action yesterday with no reported sales in Kansas, but $91-$92 traded in Texas and $152-$153 dressed in Nebraska. That’s all considerably lower than last week, but not on enough volume to consider it an established trend. Definitely fits the narrative of bigger production being met with lower cash though…
Cattle slg.__121,000 +2k wa +2k ya
Choice Cutout__208.36 +1.19
Select Cutout__200.71 +1.86
Feeder Index:___129.68 -.36
Lean Index.__45.23 unch
Pork cutout___65.21 -.74
IA-S.MN direct avg__28.65 -.31
Hog slg.__468,000 +19k wa +12k ya
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Grain and oilseed trade posted some great gains yesterday. Corn was knocking at the door of 10 higher at times, but couldn’t quite get there. Wheat finished double digits higher in Chicago, but wasn’t quite there in KC. Fund activity yesterday was estimated at buyers of 7k wheat, 25k corn and 1k beans. Based on the estimates, they set a new record short by almost 20k contracts Friday, but that hasn’t shown up in the COT report yet.
There are a lot of things going on this week that raise the volatility risk across the board. July option expiration was last Friday, FND for deliveries in the July grain and oilseed futures started after the close yesterday. End of the month is today, which brings with it a lot of fund rebalancing. We have a holiday shortened trading week because of the 4th, which means markets are closed this Friday. Plus, June final planted acreage and quarterly stocks data gets released this morning at 11am. That’s a LOT to digest in just a few days.
The quarterly stocks number for wheat will end up being ending stocks for the old crop marketing year and the average trade estimate for that is 979 mln bushels. Last year’s number was 1.080 bln bushels, so we’re looking at a smaller number this time, yet historically, anything still close to 1 bln bushels is way too much supply in the US.
Planted acreage estimates have corn at 95.21 mln acres versus 97 mln in the March Intentions report. Last year the total corn acres were 89.7 mln. Soybean acres are pegged at 84.76 mln versus 83.5 mln in March. That’s up sharply from last year’s 76.1 mln tally. The Spring wheat acres estimate was 12.57 mln, down just slightly from 12.59 mln acres in the March Intentions. It’s also very close to last year’s 12.66 mln acre total.
Stats Canada came out with planted acreage data yesterday. Wheat acres were below the expectations at 24.971 mln, although that’s still 311k more than last year. Canola acres are down slightly from last year, soybeans are down slightly and so are total corn acres.
Weekly export inspections were neutral in corn, friendly wheat, but bearish soybeans. It’s frustrating that for quite a few weeks the export sales numbers are bullish beans and bearish corn and wheat, but then inspections come out and it’s the reverse in everything. Corn inspections were 48.6 mln bushels yesterday versus a pace needed to hit USDA’s target of 49.1 mln a week. Milo was 6.2 mln bushels, which is above the 5.5 mln needed to hit their target. Soybeans were only 11.9 mln bushels and beans need 31.3 mln per week. Wheat came in at 18.9 mln and needs 18.1. The top destination in everything was Philippines for wheat, Japan for corn, China for milo and Egypt for soybeans.
Crop progress and condition data showed 73% of the US corn crop in g/ex condition, up 1 point from last week and 17 points better than last year. Soybeans got 1 point better, moving up to 71% g/ex, which is also 17 points better than last year. Spring wheat dropped 6 points out of g/ex, moving to 69%. Winter wheat harvest is now 41% done nationwide, which is right at the average pace. Kansas is 47% done, 4 points behind normal, Texas is way ahead of normal at 96% done and Oklahoma is 95% done, which is way ahead of normal as well.
8am daily export reporting showed no new overnight sales.
Quotes a/o 8:47a CST
@LEM20 94.600 -0.400
@LEQ20 96.425 -0.050
@LEV20 99.800 -0.250
@LEZ20 103.500 -0.275
@LEG21 107.225 -0.300
@GFQ20 132.950 -0.550
@GFU20 133.775 -0.500
@GFV20 134.525 -0.600
@GFX20 135.350 -0.600
@GFF21 134.850 -0.575
@HEN20 45.400 0.025
@HEQ20 48.150 -0.300
@HEV20 47.275 -0.150
@HEZ20 49.925 0.025
@HEG21 58.375 -0.125
@HEJ21 65.050 -0.250
@CN20 328′ 0 1′ 6
@CU20 329′ 6 1′ 0
@CZ20 336′ 4 1′ 6
@CH21 347′ 0 1′ 4
@CK21 354′ 0 1′ 4
@CN21 359′ 6 1′ 2
@CZ21 367′ 0 0′ 4
@SN20 870′ 4 4′ 0
@SQ20 863′ 4 2′ 0
@SU20 861′ 2 3′ 0
@SX20 864′ 2 2′ 6
@SF21 867′ 2 2′ 2
@SH21 864′ 0 1′ 4
@SX21 866′ 0 0′ 4
@KWN20 431′ 0 2′ 2
@KWU20 437′ 2 0′ 6
@KWZ20 449′ 4 0′ 2
@KWH21 462′ 0 0′ 0
@KWK21 469′ 4 0′ 2
@WN20 485′ 2 -0′ 2
@WU20 487′ 0 0′ 4
@WZ20 494′ 2 0′ 6
@WH21 502′ 4 1′ 2
@WK21 508′ 2 1′ 2
@WN21 510′ 2 2′ 4
Pete Loewen
Loewen and Associates, Inc.
Pete Loewen / Matt Hines / Doug Biswell
www.loewenassociates.com