Monday was a sour start to the week for the lean hog contracts once again. Following a decent rebound on Thursday and Friday from last week’s heavy bleeding, a lot of folks thought maybe there was a chance the damage was over, but that wasn’t the case. The front five contact months in hogs were down triple digits and then the heavy losses tapered off. Live and feeder cattle spent time on both sides of unchanged and finished with the front month lower and all the back months higher.
Cattle on Feed numbers from Friday definitely had a friendly bias with placements coming in under the estimates by several points, but the lack of negotiated cash feedlot trade cast a little doubt into the market. The limited trade that did occur was $1 higher at $126 in Kansas and $1.50 better in Nebraska up to $126.50, yet compared to some of the weather-induced expectations of a several dollar jump, it was still disappointing.
The On Feed numbers from Friday were the delayed release of the January report. It showed the On Feed total on Jan 1 at 102%. Placements in December down 2% from the previous year versus estimates that averaged 1.4% up. Marketings in December were mildly disappointing though, coming in at 99% versus expectations of 99.7%.
Cattle slg.___114,000 +14k wa -2k ya
Choice Cutout__219.55 +.16
Select Cutout___214.57 +2.22
Feeder Index:___140.42 -.89
Lean Index.__ 53.13 –.52
Pork cutout___60.92 +1.91
IA-S.MN direct avg____45.91 -.39
Hog slg.___ 367,000 -111k wa -97k ya
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Grain and oilseed trade got ugly for the wheat market yesterday. Losses as deep as 20 lower were hit, along with another round of new contract lows in the Chicago SRW wheat. KC Wheat was in the double digits lower as well. I’ve been saying for a long time that the woes of the wheat market were focused on the lack of ability to export enough wheat to start trimming our excessive ending stocks instead of building stocks. Maybe, just maybe this flush to the downside will create some positives in that export category. We will certainly find out in coming weeks in the sales and shipments data.
Export inspections data yesterday got really close to being friendly for wheat, but missed it by a hair. The wheat total was 25.5 mln bushels versus a total needed each week to hit USDA’s target of 28.3 mln bushels. That’s significantly better than recent weeks, which is great, but it’s also not quite big enough to get the job done. Once again, maybe lower futures and the resulting lower cash will entice more sales in coming weeks. In the long run that could create a bullish story instead of what’s going on currently. Corn export inspections were 29.6 mln bushels versus 54.4 mln needed each week to hit the export target. That’s solidly in the bearish category for corn. Soybeans were 48 mln bushels versus 35.4 mln needed each week to hit the target. That put beans solidly in the bull category and that’s exactly how things closed yesterday as well. Beans were up, corn was down and wheat got hammered.
Funds were estimated as sellers of 10k wheat, 20k corn and 4k beans.
USDA put out some state-by-state wheat condition reports yesterday afternoon. Kansas wheat ratings were 51% g/ex and 9% p/vp. Last year at the same time we were 12% g/ex and 49% p/vp. Oklahoma was listed at 38% g/ex versus 4% g/ex last year. Nebraska is 60% g/ex versus 43% a year ago. Colorado was 50% g/ex compared to 31% last year and Texas showed 30% g/ex ratings compared to just 4% last year at the same time. SRW wheat states had Illinois at 46% g/ex and North Carolina at 42%. Keep in mind, those ratings in Kansas are on a LOT fewer planted acres than normal and also a crop that in a lot of areas went in the ground at a lot later date then what’s ideal. The bullish storyline from acres and planting dates is still out there, but at the moment it is also still taking a back seat to 1 bln+ in old crop ending stocks. At some point that storyline will hopefully shift.
6-10’s last night were nasty in the temperature category. Much below normal temps were forecast from Canada all the way south into the deep Southern Plains and it spread all the way through the East Coast. Precip was below normal for the far Northern Plains, Central and Eastern Corn Belt areas. Nebraska, Kansas and a big portion of Oklahoma and the Panhandle region were all above normal on precip. I’ll put that forecast solidly in the bullish category from the standpoint the spring thaw is going to be pushed farther down into the calendar now.
8am export reporting showed 120k mt’s of US beans sold to Mexico.
Pete Loewen
Loewen and Associates, Inc.
Pete Loewen / Matt Hines / Doug Biswell / Matt Burgener
www.loewenassociates.com