In the past week and a half, there has been a very strong correlation between equity market trade and the cattle complex, so yesterday prior to the open yesterday when the DOW was up nicely it injected some enthusiasm into the meats as well. At one point the DOW was up well over 1000 points and at one point live cattle were up the $3 limit on some contracts and feeders were knocking on the door of their $4.50 higher limit. We didn’t close at those levels, but the front three months in fats were solidly over $2 and the front four in feeders were over $2 higher as well. Bottom pickers were coming out of the woodwork calling for the lows to be in, but if the equity market washout was focused on Coronavirus economy fears when they collapsed, that doesn’t appear to be over yet given the fact the media is still fear mongering just as heavily now as they were last week and the week before.
Despite cash trade being very disappointing last week, along with the implosion of futures, product trade exploded higher with afternoon quotes up $1-$2+ higher in beef and solidly over $2 better in pork.
Cattle slg.__121,000 +3wa +4k ya
Choice Cutout__206.53 +1.53
Select Cutout__201.16 +2.25
Feeder Index:___133.52 -2.08
Lean Index.__56.25 -.08
Pork cutout___66.55 +2.43
IA-S.MN direct avg__49.78 -.46
Hog slg.__495,000 unch wa +22k ya
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Moving on to the grain and oilseed trade, it was a very solid day of steady gains in the corn and soybean markets, but wheat was more reluctant to catch a bid. KC and MGEX still ended higher, but Chicago just couldn’t manage to pop up over the north side of unchanged. Funds ended the day as estimated sellers of 3k wheat, but buyers of 14k corn and 8k soybeans.
Weekly export inspections data that came out yesterday morning was mildly friendly for wheat and milo, mildly bearish soybeans and solid bearish for corn. Corn inspections came in at 35.3 mln bushels versus a pace needed to hit USDA’s export target of 44.1 mln bushels per week. Soybeans were 24.6 mln bushels versus USDA’s target pace of 27.9 mln. Milo was 2.9 mln bushels and that’s slightly above the 2.4 mln pace needed. Milo of course is also coming off of a new marketing year high in last week’s export sales and also the biggest weekly total in more than 5 years at 17.5 mln bushels. The biggest potential benefit from the milo export interest is in basis appreciation. It’s not a given, but it’s a good possibility it’s going to get even better. Also mildly beneficial for corn that the milo export pace has been good. Finishing with the wheat, inspections yesterday were 24 mln bushels versus a 22.8 mln bushel pace needed.
January Census Crush numbers were released yesterday as well and for soybeans it showed the largest monthly total on record, along with a number that was on the top end of the pre-report estimates. Another small tidbit of friendly news was Argentina’s soybean export suspension last week as they evaluate whether to increase export taxes from the current 30%, up to 33%. Brazil soybean exports last month were 5.12 mmt’s and that’s their biggest monthly total since last July. It was also 150k mt’s smaller than the same month last year.
A few state crop progress reports came out yesterday. Kansas wheat condition ratings were 20% p/vp and 43% g/ex. Texas wheat was 36% g/ex and 23% p/vp. 24% of the Texas wheat was headed versus only 4% a year ago and 1% as the 5 year average. 12% of both their corn and milo was planted and that compared to 6-7% on average for that date. Oklahoma wheat was 11% p/vp and 57% g/ex. Versus the January numbers in each of those states, Oklahoma wheat got 11% better in the g/ex category, Kansas improved by 8% and Texas improved by 5%.
6-10’s last night had the common theme of “spring is in the air”, especially for HRW wheat country. Temps were above normal across all of the Plains states and Corn Belt and that included much above normal for HRW wheat areas. Precip was above normal from north to south through the Plains and for the entire Corn Belt as well. I guess it’s time to find out what wheat survived the winter or not based on what’s greening up or not in coming days and weeks.
8am daily export reporting showed no new sales this morning.
Quotes a/o 9:14am CST
@LEJ20 111.925 1.775
@LEM20 105.350 1.375
@LEQ20 105.350 1.000
@LEV20 109.950 0.750
@GFH20 135.000 1.275
@GFJ20 136.050 1.000
@GFK20 137.000 1.025
@GFQ20 144.925 1.150
@HEJ20 64.150 1.350
@HEK20 70.300 1.325
@HEM20 78.125 1.100
@HEN20 79.150 1.175
@SMH20 303.6 1.4
@SMK20 309.7 0.8
@CH20 381′ 4 6′ 6
@CK20 381′ 6 6′ 2
@CN20 384′ 2 5′ 6
@CZ20 385′ 0 4′ 2
@CZ21 396′ 4 3′ 2
@SH20 892′ 2 1′ 6
@SK20 905′ 2 4′ 2
@SN20 914′ 6 4′ 0
@SX20 921′ 2 3′ 4
@KWH20 451′ 0s 5′ 4
@KWK20 464′ 0 6′ 2
@KWN20 470′ 6 6′ 4
@WH20 534′ 4 8′ 2
@WK20 531′ 0 7′ 6
@WN20 530′ 6 6′ 4
@MWH20 [10] 523′ 2 11′ 0
@MWK20 [10] 536′ 4 8′ 2
Pete Loewen
Loewen and Associates, Inc.
Pete Loewen / Matt Hines / Doug Biswell / Matt Burgener
www.loewenassociates.com