Well, it took until late in the day to get it done, but Mother Nature dropping the hammer on feedlot country last week with rain and snow finally forced beef packers to pay up significantly for cash cattle. The trade two weeks ago was $119 in the Southern Plains. Friday’s trade gained $4 over that previous week, trading at $122-$123 in Kansas and mostly $123 with a few up to $124 in Texas. Nebraska traded $123 live and $195 dressed. The best part of that cash rally is that last year’s final week was trading at the same $123 price, meaning the same value for cash despite 2018 total beef production being up exponentially versus 2017’s number. Granted, without the weather there’s no way it would have happened, but since it did, I’ll still call it a major milestone for the cattle complex. Packers had another holiday shortened kill week to buy for because of the New Year falling on a weekday this week. Next week is back to full throttle on the chain speed though and hopefully backed up by good demand for the middle meats through the Christmas and New Years holidays.
The partial government shutdown has brought grain market newsflow to a standstill since export business, along with SA weather are the two major market driver’s in the winter months. Granted, we get the weather, but the lack of export news cripples the news flow. Meats are struggling with no export data just like the grains, but USDA market news service is still putting out data, which means we’ve had slaughter, product quotes and cash trade information still flowing freely.
Meat complex futures trade finished Friday’s session mixed to mostly lower in the hogs, mixed and quiet in the feeder cattle and solid green across the live cattle contracts, along with the front month December being up over $1. The closing quote in that Dec resulted in a negative $1.07 basis on the bulk of that feedlot trade since futures was over cash.
Cattle slg.___115,000 fri 86k sat wtd 438,000 -221k wa -60k ya
Choice Cutout__ 214.41 -.89 wtd +.35
Select Cutout___ 207.52 +.30 wtd +.47
Feeder Index:___147.26 +.06
Lean Index.__53.11 -.01
Pork cutout___70.46 +.02 wtd -.86
IA-S.MN direct avg__44.93 +.53 wtd +1.26
Hog slg.___ 467,000 fri 431k sat wtd 1.884 mln -833k wa 205k ya
Weekly closes in the meats had Feb hogs down 47 cents, April hogs down 72 cents, December live cattle up 3.20, February fats up 1.47, January feeder cattle up 1.72 and March feeders up 1.35.
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Grain and oilseed trade last week lacked a lot of fundamental drive based on the factors I talked about previously from the government shutdown. No 8am daily export reporting, no weekly export sales and no export inspections this week, even though they were released last week still ironically. Winter-time grain and oilseed market trade hinges on that data and without it things just kind of stall out.
Trade in the soybean market was moderately exciting on Friday with double digit gains to counter some of the double digit losses from earlier in the week. Corn and wheat were boring and quiet, although they still managed to close higher across most markets. Fund activity on Friday was estimated as buyers of 2k corn, 8k beans and flat on wheat.
Weekly closes in the grains had March Corn down 3 cents, Dec 19 corn down 1 ¾, Jan beans down 2, Nov beans down ¾, March KC wheat down 6 ¾, July down 5 ¾, March Chicago wheat down 2 ½, july down 2 ½, march MGEX wheat down 10 ¾ and Sept down 9 ¾.
We have another holiday shortened week with no trade tomorrow and normal market hours in the ags today. Tuesday night there is no night session in the grains, so we get a hard open on Wednesday morning.
Despite no daily export announcements, a lot of market participants still feel like if China is in the market at all for US beans, we’ll get the news even without USDA reporting it. Seems like there’s some forward momentum building still in trade talks, but I’m not going to get bulled up until more sales are announced, or more importantly, some US beans are actually offloaded on Chinese soil.
6-10’s last night showed above normal temps for the vast majority of the Plains States and Corn Belt. The exception being the far eastern Corn Belt that was normal. Precip was below normal for the Central and Southern Plains and the central, south and east parts of the Corn Belt. The Northern Plains and northern Corn Belt were normal on precip.
Pete Loewen
Loewen and Associates, Inc.
Pete Loewen / Matt Hines / Doug Biswell / Matt Burgener
www.loewenassociates.com