Tough and bumpy road again yesterday for the meat complex trade. Live cattle finished with a pair of contracts down over $1, feeders with several months over $1 lower and hogs were triple digits down on the April contract. Oddly enough, feeders and hogs also had some contract months that finished higher and for the feeders that was the front two in the March and April contracts.
Chart technical analysis looks really shaky in the cattle contracts still. Feeders have bounced around key support levels for several days, trying to figure out what direction is next. Live cattle are still $1-$2 off key support levels and look bound and determined to try and hit them.
Adding to the weakness, it didn’t help matters that negotiated cash feedlot trade was $1 lower last week and that product is off close to $4.09 in choice since the last day of January. A lot of the heavier weakness started in spillover from the Coronavirus outbreak and it has just been really hard to break the downhill momentum.
Cattle slg.__119,000 -2k wa +1k ya
Choice Cutout__208.91 -1.21
Select Cutout__203.70 -.19
Feeder Index:___140.41 -.22
Lean Index.__ 58.46 -1.12
Pork cutout___65.02 +.21
IA-S.MN direct avg__49.65 +.94
Hog slg.__496,000 unch wa +57k ya
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Grain and oilseed trade was quietly mixed at the close yesterday with corn, Chicago and MGEX wheat a little lower. KC was close to unchanged and beans were mildly higher. Funds were estimated buyers of 4k beans and sellers of 4k wheat and 9k corn.
Weekly export inspections were good in milo, but mildly bearish in everything else. Milo shipments were 3.1 mln bushels versus a pace needed each week to hit USDA’s target of 2.4 mln. Corn was only 30.3 mln bushels versus 44.8 mln needed each week. Soybeans fell short as well with 22.2 mln bushels in export loadings compared to 26.3 mln needed. Wheat was 19.2 mln versus 20.2 mln needed. The top destination for everything was China for milo and soybeans, Mexico for corn and Bangladesh for wheat. One other important note, today’s USDA S&D report could very well give us changes in USDA export forecasts and that shakes up the weekly averages needed in everything, skewing it higher or lower depending on whether export projections are higher or lower. I’m hoping they raise the soybean export number today, but I’m a little worried about wheat and corn numbers being lowered a touch.
The February S&D numbers come out this morning at 11am CST. While there isn’t historically supposed to be any US production data changes in anything, it’s possible with the late harvest and crops still in the field in northern states that production could see some minor changes. We do get updates on world production numbers, like Brazil and Argy bean updates. Average estimates for South American corn have Argentina down 200k mt’s from January at 49.8 mmt’s. Brazil corn is expected down the same 200k at 100.8 mmt’s. Soybean estimates have Argentina at 53.1 mmt’s, which would be up 100k from last month and Brazil beans up 800k mt’s to 123.8.
US ending stocks estimates show corn at 1.856 bln, down 36 mln from last month. Soybeans 448 mln, which is off 27 mln bushels. Wheat ending stocks are expected to be down 12 mln bushels at 953 mln.
World ending stocks forecasts versus January numbers are pegged at 300k mt’s lower in corn, 500k mt’s higher in beans and 900k mt’s lower in wheat. Compared to the previous marketing year numbers, that would put world corn stocks down 22.9 mmt’s, soybeans down 13.1 mmt’s and wheat up 9.1 mmt’s. Not much for fireworks normally in February reports. There was a chance for excitement when we all thought the Phase One agreement with China would be factored into US export totals, but USDA actually confirmed last week they would NOT make any adjustments in this report based on trade projections from any China deal.
Egypt was in with another wheat tender yesterday afternoon. Results will likely be announced sometime this morning and so far, Romanian wheat is offered the cheapest. Their last tender was Jan 30th with three cargos, or 180k mt’s bought and all of that was French wheat.
6-10’s last night showed normal to below normal temps from the High Plains through everywhere west. The rest of the Plains and Corn Belt were above normal on temps. Precip was above normal in the Central and Southern Plains, as well as the Corn Belt. The Northern Plains were a mixed bag of confusion ranging from below to above.
Pete Loewen
Loewen and Associates, Inc.
Pete Loewen / Matt Hines / Doug Biswell / Matt Burgener
www.loewenassociates.com