Meat complex futures started the week in great shape. Live and feeder cattle finished on the plus side in all contract months, with quite a few of the feeder contracts up in the triple digits. Hogs were down on the front two months, but higher on everything else and everything closed just in the double digits on the net changes.
Negotiated cash feedlot trade was a big success last week, jumping $3 in the Southern Plains up to a $115 top. That actually matched last year’s feedlot trade from the same week, although it was still $9 lower than the same week back in 2017. That’s the first time cash has traded steady with the comparative week from 2018 since the first full week of August. The 2nd week of July was the last time cash was higher than a year ago.
Before you get too worked up claiming the cattle market is broken because prices aren’t higher than last year, remember that total beef production this year is still forecast to increase 164 mln lbs over last year and exports are down year-over-year. When you add pork and poultry to that mix, the total production increase in 2019 is 2.576 bln lbs. That’s a LOT of extra meat on the market compared to last year and with total red meat and poultry exports only projected to be up 560 mln lbs from last year. That’s right in the vicinity of 2 bln extra lbs that needed consumed in the US this year versus 2018.
Hard to argue for any of these markets outperforming last year’s prices with that setup in the S&D’s. Then again, choice beef is more than $22 higher than the same week last year and pork cutouts have been higher for the last two weeks versus year ago levels as well. That’s what has helped promote the recent run higher in cattle in both futures and cash. Cash hog values haven’t been quite as fortunate. Plus, with beef product significantly higher than last year same time, one might wonder why cash is still trailing so hard. We don’t need to look any farther in either market past the fact so few hogs and cattle are openly competitively negotiated in price. In essence, we’ve dug our own grave with all the captive supply, so that cash lag problem isn’t going away.
Cattle slg.__112,000 -3k wa +1k ya
Choice Cutout__238.59 -.53
Select Cutout__213.69 +.43
Feeder Index:___146.52 +.68
Lean Index.__59.44 -.83
Pork cutout___86.34 +3.67
IA-S.MN direct avg__42.72 -.11
Hog slg.__444,000 -47k wa +4k ya
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Grain and oilseed trade was ugly in the fall crop markets of corn and soybeans. Wheat wasn’t much better, aside from the fact KC had a higher close on a contract or two. Everything else was lower. Yesterday’s Veteran’s Day holiday delayed all the normal Monday reporting of things like daily sales, weekly export inspections, or crop progress data. That all gets released today and Thursday’s export sales will come out Friday instead.
Funds were estimated sellers of 5k wheat, 20k corn and 8k beans.
There’s a lot of frustration mounting regarding the fact corn yields were lower in last week’s report, ending stocks were decreased 19 mln bushels and that pushed carryout 204 mln bushels below last year, along with being solidly under 2 bln. Soybean ending stocks increased 15 mln bushels in the report, but that’s still 438 mln bushels less than last crop year’s stocks number, which is almost a reduction of 50%. Very disheartening to see beans down double digits yesterday, along with corn slipping farther away from the $4 mark. Nov beans were only a nickel away from an “8” handle at yesterday’s close as well.
Coming in to single digit temps this morning, it was good to know that the 6-10’s last night were predicting above normal temps for most of HRW wheat country and all of the Northern Plains and east into the central Corn Belt. From central Illinois east and angling SW through most of Arkansas it was all below normal temps still as this current cold system pushes east. Precip chances were normal to below normal along the same areas as that colder air in the forecast. All of the Plains states from north to south and over into central Illinois were also above normal on precip, along with the warmer air. That’s still going to create struggles to get crops dried down in the northern Belt and Dakotas. There’s a LOT of June planted corn to come out still. It’s not drying down in the field very well and with propane supplies for dryers running low it’s a monumental disaster for some of those northern farmers.
Pete Loewen
Loewen and Associates, Inc.
Pete Loewen / Matt Hines / Doug Biswell / Matt Burgener
www.loewenassociates.com