Big up day for the cattle complex yesterday. With cash feedlot trade in an upswing, the futures market had a lot of catching up to do given the big discount in futures relative to cash. Through yesterday’s market close, prices from Nebraska to Texas ranged from $191-$195. December live cattle started the week with an opening price of $187.40, but Tuesday and then yesterday’s sharply higher price action quickly erased the deficit. Live cattle finished yesterday’s session up more than $2 on the front two months and $1+ on the rest. Feeders were up just shy of $2 across the board.
Interesting twist to the cash feedlot action where packers came into Monday bidding steady with last week’s $191 tops in Texas and Kansas, which bought quite a few cattle. Nebraska trade was fairly quiet while that happened, but it heated up afterwards with packers acting like they were short bought and bidding a couple dollars over the Southern Plains prices. $193-$195 was paid in the north, along with dressed trade up to $303, which left the trend for the week steady to just a touch stronger south and $2-$4 higher north.
The rally in Dec fats finally broke through the highest level it has traded in 2024 so far and the only resistance left on the chart is the contract high from last year at $197.47. Feb looks good, but not as good as the Dec. Yesterday the Feb took out the October high, but there’s a couple more levels of resistance before it gets a chance to gun for contract highs. I’m certainly not insinuating that’s a ringer and going to happen by any stretch, but charts sure look good and cash is definitely on a roll higher. I gotta keep reminding myself that markets often turn lower when they look the most friendly, or bottom when they look the worst. Crazy stuff going on price-wise right now…
Weekly export sales in the meats were up significantly from a week ago in beef, although it was still just a neutral number. Pork sales were bearish after being really friendly last week. Net beef sales were 16,400 mt’s of combined 2024 and 25 business. Actual exports were 15,100 mt’s. The top three buyers were South Korea, Japan and Mexico. Top destinations for shipments were South Korea, Japan and China.
Net pork sales were 27,100 mt’s, along with 33,800 mt’s in shipments. Mexico, Japan and China were the top buyers. Mexico, South Korea and Japan were the top destinations for actual shipments.
Moving on to the grain and oilseed trade, the December crop report back on Tuesday was fundamentally bullish corn, mildly friendly wheat and neutral to still bearish beans. Domestic corn ending stocks dropped below 1.8 bln bushels and came in below even the lowest pre-report trade estimates. Spot December corn broke up through strong resistance and traded at it’s highest level since June, but the March contract hasn’t been able to break through the same resistance level on the charts, even though it has tested it pretty decisively. Prices poked up into new weekly highs early yesterday, then settled back to a lot quieter action in corn, beans finished mildly higher and wheat was mildly higher also.
The weekly EIA ethanol data was friendly. Production increased ½% from the week prior. Blender demand was up 1% and exports held very close to steady. Stocks declined by 1.5%, making every trending aspect of the report friendly. If this week’s grind was the average for a full marketing year, the US would consume 5.65 bln bushels of corn for ethanol production. USDA’s current estimate in the S&D’s is for 5.5 bln bushels of corn use for ethanol. The aggressive grind since the marketing year started caused USDA to raise their corn for ethanol estimate from 5.45 bln up to 5.5 in Tuesday’s crop report. That, along with a 150 mln bushel increase in the export projection is what led to corn ending stocks to go from 1.938 bln in the November report down to the current 1.738 bln total.
Weekly export sales in the grains backed off considerably from last week’s numbers. New crop sales were non-existent. Old crop totals showed 37.3 mln bushels of corn sales, which was down 45% from last week. Milo sales were 200k bushels, which was actually up 46% from a week ago, although it was still a terrible number. Soybeans came in at 43.1 mln bushels, down 49% from last week. Wheat sales barely hit double digits with only 10.7 mln in sales and that was off 23% from last week. Oddly USDA increased their wheat export estimate by 25 mln bushels in Tuesday’s crop report and that might be a stretch unless exports pick up quite a bit.
8am daily export reporting showed 334k mt’s of US soybean sales to unknown destination.
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