Well, this is two COF reports in a row now that the market hasn’t faded the data when it opens on the first trading day following the release. Last Thursday’s numbers were mildly bearish versus the expectations and moderately bearish in the big picture data. The On Feed total was 2% larger than last year. Placements were up 5% and marketings were down 3%. That marketing total came in just a shade better than the estimates, but the Placements and On Feed numbers were both worse than the estimates which led to the overall bearish undertone. Cattle complex futures spent the day on the south side of unchanged and finished with two contracts more than $1 lower in live cattle futures and everything in feeders was down more than $1 except the spot May contract.
There might have been some additional spillover pressure for the cattle complex coming via the hog market, since several months in hogs finished over $2 lower and the rest $1+ to the downside. That volatility in hogs isn’t going anywhere soon either, given the fact the African Swine Fever situation gets more volatile as it spreads to a new location seemingly every day.
Monthly Cold Storage data came out yesterday afternoon, which was somewhat of a surprise given all the commodity calendars stating it was supposed to be released this afternoon, not yesterday. The report showed total frozen poultry supplies at the end of March down 3% from February and 2% lower than last year at the same time. Chicken specifically was down 3% from last year. Total red meat in freezers was down 3% from February and 2% lower than last year at the same time. Total beef in freezers was down 3% from last year and frozen pork stocks were down fractionally. Overall, I’d have to call that friendly data with the drawdown across the board in all three meat classes.
Cattle slg.___114,000 -7k wa -2k ya
Choice Cutout__234.48 +.83
Select Cutout___222.64 +2.15
Feeder Index:___145.97 -.01
Lean Index.__ 81.54 +.52
Pork cutout___87.86 +.62
IA-S.MN direct avg__81.39 -.17
Hog slg.___ 324,000 -96k wa -128k ya
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Moving on to the grain and oilseed trade, we watched the meats covered in red ink most of the day and the grain market action was very much the same with fall crop markets, as well as the wheat complex in solid red ink. Fund activity for the day was estimated as sellers of 4k wheat, 10k corn and 4k beans.
Export inspections data that was released mid-morning showed solid numbers in wheat and corn, but was bearish beans. Corn inspections came in at 53.3 mln bushels, which is above the 52.1 mln needed each week to hit the USDA export target for the marketing year. Soybeans had 14 mln bushels in export loadings versus 38.6 mln needed every week to hit their target. Wheat inspections came in at 29.8 mln, which was still just a touch shy of the 30.5 mln needed each week, but it was also close enough to get me excited about the improvement. The problem though is futures market obviously didn’t care given the fact wheat was the downside leader in losses at the close.
Crop progress and condition data from yesterday afternoon showed winter wheat conditions improving 2 points up to 62% g/ex nationwide. HRW wheat states were unchanged in the g/ex category, but soft wheat states jumped 2 points. Kansas is sitting at 57% g/ex, Oklahoma 70% g/ex and Texas 52% g/ex. 41% of the Texas wheat was headed down from 50% on average for that date. 11% of Oklahoma and 0% of Kansas was headed. Normally Oklahoma is at 37% and Kansas 9%. Spring wheat seeding is 5% complete, which was up only 3 points from last week and well below the 22% average for that date.
Given the continued wet conditions, corn and soybean planting progress wasn’t expected to gain much last week and the numbers reflected those expectations. 6% of the nation’s corn crop was planted, which is up 3 points from last week and half of the normal 12% pace. Soybean plantings weren’t reported yet last week and they came in at 1% done yesterday versus 2% as the average pace. Looking at the Big 4 corn states specifically, Illinois shows 1% planted in corn versus a 5-year average of 17%, Iowa is 4% done versus 10% normal, Nebraska is 2% versus 8% as the average and Minnesota is at zero compared to 11% done as the 5 year average on that date.
6-10 day weather forecasts last night continued to show unseasonably cool and wet conditions in the Central and Northern Corn Belt. Temperatures were below normal for all of Iowa, the northern ½ of Illinois and the northern 25% of Nebraska and everywhere north. Above normal temps were forecast everywhere south of that east to west line. Precip was below normal from central Oklahoma down into the Delta and along the Gulf Coast. From the Panhandle curving up around all of Kansas and Missouri to the north it was above normal in the moisture offering.
On a final note, Stats Canada comes out with their planting intentions data tomorrow morning. The average trade estimate for all wheat acres is 24.8 mln, which is just slightly higher than last year’s total wheat acres. Durum acres are expected to be down just shy of 1 mln, which puts spring and other wheat classes higher than a year ago.
Pete Loewen
Loewen and Associates, Inc.
Pete Loewen / Matt Hines / Doug Biswell / Matt Burgener
www.loewenassociates.com