It was a sluggish start to the week for the cattle complex, particularly in the feeders. Red on the screen slowly but surely changed to green as the day progressed though and by the close some of the live cattle contracts were up well over $1, feeders were mildly higher across the board and hogs were up over $1 on some, just like the fats. Grain and oilseed trade enjoyed solid green across the screen as well, so essentially it was a solid day up for the entire ag sector. Oddly enough, while the ags were up, the DOW was lower. Granted, not sharply lower, but lower nonetheless. Last week when some of the hard hits came in stocks, the ag sector was taking it on the chin hard as well. Good separation yesterday in that trade.
Back to the cattle, negotiated cash trade has been stuck at the $111 mark in the Southern Plains for five straight weeks. To some extent, there’s some positives that come from that action given the fact product has slowly leaked lower in the same timeframe, yet cash has remained unchanged. On the other hand though, Sept-Dec are also historically positive movement months in cash fed cattle trade. To be stuck at $111 when spot October fats closed $2.37 higher than cash yesterday and Dec futures a healthy $6.97 over cash carries some frustration with it as well. Need some “up” weeks, not “stuck” weeks.
Cattle slg.___119,000 +5k wa +8k ya
Choice Cutout__204.80 +2.09
Select Cutout___191.89 -.39
Feeder Index:___156.26 -1.22
Lean Index.__68.75 -.24
Pork cutout___81.50 +1.46
IA-S.MN direct avg__59.98 -.67
Hog slg.___ 459,000 -14k wa +14k ya
*****************************************************************************
Grain and oilseed trade included a BIG rally in the soybeans yesterday with 20+ cent gains on a lot of months. That pushed soybean and also corn prices up to the highest levels traded since mid-August. That being said, corn and wheat trade acted a lot more reluctant to rally and only finished mildly higher. Fund activity was estimated as buyers of 23k corn, 17k beans and 4k wheat.
Export inspections data was bearish corn, very bearish wheat and bullish soybeans finally! Another bright note for beans was the data including some beans shipped to China from the US. Total inspections for beans were 42.5 mln bushels. The weekly pace needed to hit the USDA target for the marketing year is 41 mln, so that was a great change of pace from what had been some dismal weeks recently in shipments.
Corn export inspections were 39.2 mln bushels versus a pace needed to hit the USDA export target of 48 mln per week. Milo shipments were much larger than recent weeks at 2 mln bushels, but we need to see 3.2 mln per week to hit the target. That’s not possible this year without China in the mix.
Wheat shipments are so far behind this marketing year that it takes 22.4 mln bushels per week now just to call it neutral. Yesterday the total was 16.6 mln bushels. Sad situation for wheat, because the potential is there, but there’s just zero reality to this situation aside from a very bearish reality still.
Crop progress numbers that came out yesterday afternoon showed the corn harvest pace only advancing 5% up to 39% done. That’s still 4 points ahead of normal. Condition ratings were unchanged from the previous week at 68% g/ex.
Soybean harvest is 38% complete, up 6 points from last week and 15% behind normal now. I’m guessing between China showing up on the roster in soybean shipments and all the concerns surfacing about deteriorating quality of the bean crop needing harvested in wet, cold fields were big catalysts for the rally yesterday. Oddly though, soybean condition ratings only dropped 2 points to 66% g/ex, down from 68% the previous week.
Winter wheat seeding is sitting at 65% complete nationwide, up 8 points from last week and 2 points behind the normal pace. Every single one of the major HRW wheat states is behind the normal pace and with wet conditions from last week’s rains, this week’s pace isn’t going to gain much. That’s causing some growing concerns about getting wheat in the ground soon enough for ideal yield potential still.
6-10 day forecasts last night showed normal to above normal temps for the Northern Plains and western US. Aside from the NW corner of Kansas where it’s normal to above, the entire Panhandle, Oklahoma, the rest of Kansas , eastern Nebraska and all the I states were below normal on temps. Precip was above normal from the Panhandle through SW Kansas and western Oklahoma and below normal for the rest of Kansas through all of the Corn Belt and Northern Plains. Good forecast for getting harvest progress ramped up next week.