I wouldn’t say it was a great start to the week for the cattle complex on Monday, but it was better than expected given the fact Cattle on Feed numbers from last Friday afternoon had a bearish undertone. The On Feed total came in at 102% which was just barely over the pre-report estimates. Placements were 4.1 points over the average trade guess, coming in at 105% and marketings came in under the expectations at 97%. That could have very easily resulted in triple digit losses yesterday, but the open was quietly lower. The close was mixed in live cattle with an equal share of higher and lower. Feeders were down mildly and both markets had fairly tight ranges of trade from high to low. Coming off another $1 being added to the negotiated trade with prices pushing up to $120, yesterday’s futures trade had forces pulling in both directions and finished pretty boring.
There were two different meat-related reports that came out yesterday afternoon between Monthly Cold Storage and Quarterly Hogs and Pigs. Cold storage report numbers showed total frozen poultry supplies down 1% from a year ago and total stocks of chicken specifically up 7% from last year. Total red meat in freezers was up 2% from a year ago. Beef in freezers was down 7% from last year at the same time. Total frozen pork was up 13%, along with pork bellies being up 40% from a year ago. New record highs were set in boneless hams and total pork. There were no record lows set in any of the meats or cuts.
Quarterly Hog and Pig report numbers had expectations of active expansion and the actual data met those expectations with most numbers coming in really close to the pre-report estimates. Big picture, the data is bearish, but with everything coming in close to expectations, the knee jerk reaction really shouldn’t be much reaction. The total inventory on Dec 1 was 77.3 mln head of hogs, which is up 3% from last year. Breeding herd numbers were up 2%. Market hog numbers were up 3%. The Sep-Nov pig crop was up 2%, even though the sows farrowed through that timeframe was down 1%. The translation there is the number of pigs per litter was up a bunch from the year prior. Dec-Feb 2nd intentions are up 1% from a year ago and the first intentions for Mar-May are just a touch more than last year. In all four of the quarterly reports this year, market hog numbers, pig crop and pigs/litter numbers have been record large since the data series has been kept. Total inventory were record numbers in March, June and September, but ironically 1943 was the record total inventory number for hogs. We didn’t set a new record yesterday on total inventory.
Cattle slg.__113,000 -7k wa ya was 18k head due to holidays
Choice Cutout__211.57 +1.87
Select Cutout__204.64 +3.61
Feeder Index:___145.98 -.28
Lean Index.__59.12 -.78
Pork cutout___76.83 +.29
IA-S.MN direct avg__48.02 +.75
Hog slg.__497,000 +5k wa 86k ya
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Moving on to the grain and oilseed trade, the fall crop markets of corn and soybeans finished the day mildly higher, while the wheat complex was a little higher in MGEX, but lower in KC and Chicago. With holiday market closures in the middle of the week this week and next, we have officially moved into the timeframe where unexplained market volatility shouldn’t be surprising and neither should markets that don’t move much at all. In other words, anything can happen when a big part of the participants that usually watch and trade the markets may not be watching or trading at all. That usually keeps the news flow running pretty thin as well. A lot of government data won’t be coming out today and the normal Thursday stuff, like export sales, are going to hit Friday morning.
Export inspections from yesterday morning were a mixed bag of bullish and bearish. Corn inspections were terrible, coming in at only 15.2 mln bushels versus a weekly average needed of 42.5 mln to hit USDA’s export target for the marketing year. The current cumulative shipment pace is 370 mln bushels behind last year on the same date. Milo on the other hand is way ahead of the previous year and China is accounting for most of that increase. The milo inspections were 6.2 mln bushels yesterday versus a weekly pace needed of 2.1 mln. 5.5 mln of the 6.2 total went to China. 39% of the soybeans loaded for export went to China as well. Soybean inspections were 39.8 mln bushels and that’s well above the 28.7 mln needed each week. Wheat got a pleasantly friendly surprise as well with 21.3 mln in export inspections. The weekly paced needed in wheat to hit USDA’s target is 19.4 mln. Last week’s export sales were solid bullish in wheat.
This week’s inspections are mildly bullish wheat. Hopefully that becomes a trend. The December USDA balance sheet included a 25 mln bushel increase in the export forecast and ending stocks that fell below 1 bln bushels, moving down to 974 mln in the projection. While that’s still at a level that should be considered solidly bearish, it’s also moving in the right direction by getting tighter.
Fund activity was estimated as sellers of 2k wheat and buyers of 3k corn and 5k beans.
6-10 day weather forecasts last night showed above normal precip for the Central and Southern Plains and all of the Corn Belt. The Northern Plains were normal to above on precip. Temperatures were below normal in the SW US, normal in the Panhandle and extreme SW Kansas. The rest of the Plains and Corn Belt continued with the above normal temp theme that’s been prevalent in those runs for the last week or more. 5 day precip model runs are showing really good moisture chances from the Panhandle up through SW Kansas and there are certainly areas through that stretch of country that desperately need it for the wheat.
Current trade a/o 8:50am CST
@LEZ19 122.325 -0.075
@LEG20 125.600 -0.075
@LEJ20 126.550 -0.100
@LEM20 118.050 -0.125
@LEQ20 115.725 -0.125
@LEV20 117.400 -0.050
@LEZ19 122.325 -0.075
@GFF20 143.775 0.250
@GFH20 143.925 0.200
@GFJ20 146.100 0.150
@GFK20 147.250 0.225
@GFQ20 152.050 0.250
@GFU20 152.450 0.125
@HEG20 70.600 0.350
@HEJ20 77.900 0.350
@HEK20 84.000 0.100
@HEM20 89.800 0.300
@CH20 388′ 4 -0′ 2
@CK20 395′ 0 -0′ 2
@CN20 401′ 2 0′ 0
@CU20 400′ 6 -0′ 2
@CZ20 402′ 4 0′ 0
@CH21 411′ 6 0′ 0
@CZ21 410′ 2 0′ 0
@SF20 934′ 2 0′ 2
@SH20 942′ 4 0′ 2
@SK20 955′ 4 0′ 0
@SN20 966′ 6 -0′ 2
@SQ20 970′ 6 0′ 2
@SX20 968′ 6 0′ 0
@KWH20 464′ 2 5′ 6
@KWK20 472′ 4 5′ 6
@KWN20 479′ 6 5′ 2
@KWU20 487′ 0 4′ 6
@KWZ20 495′ 2 3′ 0
@KWZ20 495′ 2 3′ 0
@WH20 542′ 4 3′ 0
@WK20 546′ 2 2′ 4
@WN20 549′ 4 2′ 4
@WU20 555′ 0 2′ 2
@WZ20 562′ 0 -0′ 2
Pete Loewen
Loewen and Associates, Inc.
Pete Loewen / Matt Hines / Doug Biswell / Matt Burgener
www.loewenassociates.com