Meat complex trade finished mixed in hogs with the 2nd and 3rd contracts out higher and the rest lower. Live and feeder cattle trade was quietly lower which was a big change from some wide swings we’ve seen recently. Chart technicals in the cattle complex look terrible right now.
The near term fundamentals looked pretty good going into last week, but when futures puked two Monday’s ago it really trimmed that bullish momentum. Unfortunately it wasn’t anything fundamental specific that led to that hard down day either. After it happened I talked about the frustration in seeing bigger, volatile moves in futures without fundamental justification, like we endured for a couple years not too long ago. Since that time, the volatility had tamed considerably and it still isn’t as bad as it was back then, it’s just tough as fundamental analysts to try and justify and explain things when it happens.
Granted, there’s also some bearish factors that everyone needs to be cognizant of relating to supply and demand in the meats. This year in 2018, total red meat and poultry production is forecast to be up 2.347 bln lbs above 2017 levels. Exports across the board are projected to be up only 730 mln lbs. That’s 1.617 bln more lbs of meat that needs consumed domestically this year versus last year. Specifically for beef, total production is supposed to be up 747 mln lbs this year versus last, while exports are only up 330 mln lbs. I guarantee you’ve read stories or heard people talk about export projections being up 11.8% this year over last year. They fail to divulge the whole story and the reality that the 11.8% increase is less than half what was needed to get rid of the yearly increase in production. Moral to the story always consider all the facts after listening to or reading biased, one-sided news. Those biased news sources are unhealthy to your financial well-being.
Cattle slg.___118,000 -1k wa -2k ya
Choice Cutout__213.16 -.92
Select Cutout___197.18 -1.80
Feeder Index:___149.38 -.51
Lean Index.__ 60.47 -.73
Pork cutout___69.02 -1.67
IA-S.MN direct avg__50.78 +.65
Hog slg.___ 478,000 +6k wa +13k ya
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Grain and oilseed market trade finished flat to mixed in corn yesterday, higher in soybeans and lower in wheat. Prior to the open the 8am daily export announcements showed 148k mt’s of soybeans sold to unknown destination and 212k tonnes of corn sold to Mexico. That bean business mixed with more rumors that China might be interested in talking again helped the soybean market fend off the bears and trade higher most of the day. Wheat is still solidly stuck in the rut of really poor export inspections, although last week’s export sales were bullish for the first time in a really long time. This week’s export sales are delayed until Friday because of Monday’s holiday, so we’ll have to wait another day in hopes there’s a bullish number for the second week in a row. If it happens, at that point we’ll be one step closer to calling it a trend, not just a one week aberration. Tuesday’s export inspections were terrible. Cross your fingers for bullish exports tomorrow!
Funds yesterday were reported as sellers of 1k corn, 5k wheat and buyers of 3k beans.
Higher trade in the overnight was driven by multiple sources indicating China may have provided a written proposal to US officials regarding US trade negotiations. Haven’t seen or heard anything regarding what’s in the document, bit it pushed a nice rally in everything last night nonetheless.
There were no new sales reported in the 8am announcements this morning.
6-10 day forecasts for the central US last night showed above normal temps from the Missouri River border in South Dakota, Nebraska and Kansas to the west. Missouri and Iowa, along with the far Northern Plains and Minnesota were normal and Illinois east was below normal. Precip was above normal from the Central Corn Belt south, below normal in the Northern Plains and also the Eastern Corn Belt and normal everywhere else.
Pete Loewen
Loewen and Associates, Inc.
Pete Loewen / Matt Hines / Doug Biswell / Matt Burgener
www.loewenassociates.com