June 19, 2018
Morning Ag Markets
Pete Loewen
Cattle complex futures finished the day with a mixed bag of closing quotes, some higher and some lower. Front end June fats were down a little bit, but the front end August feeders were up $1 even and the strongest close of anything in cattle. Hogs shot actively higher on the front end, responding to the fact cash and product trade continues to hold really solid high numbers and yesterday’s kill was sharply reduced as well.
This Friday we get monthly COF numbers released and the expectations look friendly for the most part. The On Feed total on June 1 is expected in a ranged from 102.8% of a year ago, up to 104.2% larger on the high end of the guesses. Placements last month have a range of estimates from 91.9% up to 100.8%. The raw data from the total receipts on the National Feeder Cattle Summaries each week would put the number at +1%, but last year’s in-movement was BIG, so that has some analysts opting for the lighter side on estimates. Marketings last month have a range of estimates from 103.9% up to 105.7%. Looking at the declining On Feed total relative to prior months, lighter placement potential and an active marketing rate, there’s friendly potential across all three categories. Hopefully that also encourages supported futures trade in anticipation this week as well.
Cattle slg.___118,000 unch wa +3k ya
Choice Cutout__220.71 -.88
Select Cutout___204.20 +1.47
Feeder Index:___141.28 +.55
Lean Index.__ 82.86 +1.42
Pork cutout___84.41 +.32
IA-S.MN direct avg__82.83 -.68
Hog slg.___ 415,000 -31k wa -12k ya
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Grain and oilseed trade finished off the day with beans up mildly, corn under moderate pressure and wheat getting thumped in KC futures, but not nearly as nasty in Chicago and MGEX. Funds were reported sellers of 19k corn and 7k wheat and buyers of 6k beans.
Export inspections that came out mid-morning were bullish corn and beans and bearish wheat. Corn export loadings were 65.7 mln bushels, which was really friendly and obviously also had zero impact on futures price. We need to see 56.5 mln/bu per week to hit the USDA target by the end of the marketing year on the last day of August. This week’s number left a lot of cushion, which is good. Soybean inspections were 30.1 mln, which was friendly and also well above the 26.4 mln needed each week to hit the USDA export target for the marketing year. Wheat inspections stunk it up pretty badly with only 13.7 mln bushels inspected for export. Through the first two weeks of the new marketing year now the cumulative pace is right at half what it was last year at the same time. In the last S&D report, USDA increased the wheat export forecast by 25 mln bushels over the May estimate and it’s now 50 mln bigger than the old crop export total. Granted, it’s early in the marketing year, but it’s also a really bad start.
Part of the pressure in the overnight is coming courtesy of the continued concerns over trade talks and US ag commodities, but some of it is also from the crop condition report numbers yesterday. On the trade issues, it’s a far bigger issue for US beans than it is for corn and wheat, yet those markets are feeling some pressure as well. I have emphasized this a lot in the past and I’ll continue to promote the fact China really isn’t going to survive very well without access to US soybeans. There’s no way with reduced South American crops and increasing Chinese demand that they’ll be able to fulfill their needs solely from Brazil and Argentina between now and February of next year, which is the next time South American crops will be harvested. It sure has some trade groups scrambling and screaming about this administration being a disaster though, which is incredibly premature in my opinion. That’s politics though…
Crop progress and condition numbers yesterday showed corn crop conditions improving 1 point to 78% g/ex versus 67% g/ex at the same time last year. P/vp was 4% compared to 8% last year at the same time. Soybean plantings moved up to 97% done, up 4 from last week and 6 points above the average for that date. Condition ratings dropped 1 point to 73% g/ex though and that’s versus 67% g/ex last year at the same time. Just a reminder though, last year’s crop condition ratings were a complete joke and incredibly inaccurate all year long, so don’t get too caught up in those numbers for corn and beans.
Winter wheat condition ratings were up 1 point to 39% g/ex. HRW wheat states got 2 points better and SRW wheat was off 2. Spring wheat ratings jumped a whopping 8 points up to 78% g/ex. Winter wheat harvest increased from 14% done last week to 27% done and that’s 8 points ahead of the average pace. Last Monday they had Kansas at 2% done, which I thought was on the light end of the actual pace and Kansas came in at 23% done this week, which is 12 points ahead of a normal pace. Texas reported 65% done, Oklahoma 73% complete, Nebraska and Colorado were still at zero.
6-10’s last night showed above to much above normal temps everywhere. From Nebraska, Kansas and Oklahoma to a line straight east, the precip was above normal. North and south of that line and all through the western US, everything was normal to below precip.
Pete Loewen
Loewen and Associates, Inc.
Pete Loewen / Matt Hines / Doug Biswell / Matt Burgener / Alex Gasper
www.loewenassociates.com