Great start to the week for the bulls since it was a buy it all day on Monday. The meat complex was all solidly up in the green with feeders and hogs enjoying some triple digit gains on some contracts. Grain and oilseed trade was higher in everything as well, which essentially erased all the fall crop market losses following Friday’s Quarterly Stocks report bearishness.
For the front months in the meat complex, October live cattle pushed into new recent highs and the highest level traded since mid March. October Feeder Cattle came within 32 cents of the contract high, but just couldn’t quite push up into new high territory. The next two months out, which are the Nov and Jan contracts did make new life of contract highs. Front end October hogs pushed solidly into new recent highs, hitting the highest price for that contract since June and almost $17 off the lows from early August.
I think a big part of the ag sector bullishness yesterday was tied to buying in reaction to the US, Canada and Mexico inking a deal to replace NAFTA. Good action if that’s the case, but it didn’t get much follow through in the grains overnight, so it might be old and moldy news already this morning.
Cattle slg.___119,000 unch wa +13k ya
Choice Cutout__205.08 +1.20
Select Cutout___194.63 +1.19
Feeder Index:___157.48 +.59
Lean Index.__ 67.26 +.81
Pork cutout___81.05 +.97
IA-S.MN direct avg__63.02 +.04
Hog slg.___ 456,000 -16k wa +16k ya
*****************************************************************************
Grain and oilseed trade hit double digit gains at the close in soybeans, corn was knocking at the door of double digits, but missed it by a narrow margin. Wheat got a participation ribbon, but that’s about it, because it reluctantly squeaked out higher closes across the complex.
Fund activity yesterday was reported as buyers of 21k corn, 7k beans and 2k wheat.
Weekly export inspection numbers were bullish corn, but the good news ends there since milo, soybeans and wheat were all solid bears. Corn inspections were 52.9 mln bushels, which was above the expectations. The weekly pace needed to hit the USDA export projection is 46.4 mln, so yesterday’s number was a solid 6.5 mln bushels above that number. Milo inspections were a paltry 72,634 bushels versus 3.6 mln needed each week to hit USDA’s target for the marketing year. That’s not going to happen if Mexico is going to continue to be our only customer. Soybean shipments came in at 21.7 mln bushels and that’s barely over half what’s needed in beans. Wheat was in the same ballpark as the beans, with just over half what was needed. There were 13.6 mln bushels of wheat inspected for export last week. That pace needs to be 22 mln per week between now and the end of May. Every week we miss the pace needed, the amount needed goes up. I use to elude to the need for 20 mln in sales or inspections to call it bullish for wheat. Now if we get 22 mln it’s just considered neutral, not even bullish. Bad situation for the wheat market because we’re still not close enough to be competitive in the world export trade.
Crop progress and condition numbers that came out after the close yesterday showed winter wheat planting at 43% complex, up 15% from last week. That’s also 3 points ahead of normal. HRW wheat states are ahead of normal, but SRW wheat states are behind. The Northern Plains states are behind as well.
Corn condition ratings were unchanged at 69% g/ex. Last year they were 63% g/ex at the same time. Harvest progress is 26% done versus 17% as the average.
Soybean condition ratings were unchanged from last week as well at 68% g/ex. Last year they were 60% g/ex at the same time. Soybean harvest was pegged at 23% done, which is 3 points ahead of the normal pace.
8am export reporting showed no new sales this morning.
6-10’s last night showed below normal temps from the Panhandle through the Northern Plains, cutting Kansas in half from north to south with below in the west and normal east. From eastern Iowa, all of Missouri and to the East Coast it was above normal on temps. Precip was above normal for the entire Plains and Corn Belt, which probably means a big slowdown in harvest progress next week.
Pete Loewen
Loewen and Associates, Inc.
Pete Loewen / Matt Hines / Doug Biswell / Matt Burgener
www.loewenassociates.com