Pretty good day of solid green ink across most of ag sector to start the week. The exception being some of the wheat contracts that were down mildly in the face of new highs most markets early and then wheat slowly losing ground as the day progressed. In the meats, triple digit gains of over $1 were the norm, although live cattle trade had a few more sub-$1+ closes than triples. Good day overall though, especially given the fact most months spent some time at lower money during the session as well. Plus, with the corn market on a tear higher at times, seeing feeders on the plus side of unchanged was fantastic.
Technical analysis of that feeder market showed a strong bullish key reversal higher yesterday. The reversal didn’t happen at new contract low territory, but it’s still going to be noted by chartists and also maybe stands a chance at pulling in some speculative buying as well. Corn was down pretty hard at times last night so that’s a plus for the fundamental side of the equation to add to the technical buying potential. Corn market volatility isn’t going away anytime soon though and with fundamentals stacked heavily towards the friendly side overall for that feedgrain, sustaining higher trade in feeders might be tough.
Cattle slg.___120,000 -1k wa +4k ya
Choice Cutout__221.82 -.41
Select Cutout___202.51 -.25
Feeder Index:___133.55 -.70
Lean Index.__79.27 -.19
Pork cutout___82.97 -.24
IA-S.MN direct avg__n/a–national avg 75.42 -.37
Hog slg.___ 467,000 -4k wa +51k ya
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Moving on to the grain and oilseed trade, it was a beautiful day of strong buying early on, but the enthusiasm faded as the day progressed. Funds ended up estimated net buyers of 1k wheat, 8k corn and 9k beans. That still leaves the funds short an estimated 25k wheat and 81k beans, but they are long close to 180k corn.
Weekly export inspections that came out midmorning were disappointing across the board. Corn export loadings were 25.7 mln versus a pace needed every week of 53.9 mln bushels to hit USDA’s export target of 2.2 bln for the marketing year. Milo inspections were dismal as well coming in at 119k bushels versus 2.5 mln needed each week on average. Soybean inspections were 24.8 mln bushels and we need 35.5 mln every week between now and the end of the marketing year on the last day of August to hit USDA’s 1.7 bln bushel target. Wheat’s marketing year started on June 1, so we’re very early into that data set. For the entire marketing year, we need to see 17.4 mln bushels per week and yesterday we got 13.8 mln. I’m not going to pick on wheat because it’s still early. That export pace has a long time to improve, or it can also get worse I guess. Last year, exports were pegged at 950 mln bushels. This year that estimate is down to 900 mln. USDA started the last marketing year with a BIG expectation and we were all disappointed when exports were bad and continued bad, leading them to trim export estimates as the marketing year progressed. Perhaps starting with an estimate that’s lower than last year is a proactive enough approach it will save us from disappointment later on, so the jury is still out on how this progresses.
Crop progress and condition report numbers were closely watched yesterday, particularly for the planting pace numbers in corn and beans. Along with that though, there’s a lot of irony in the fact those numbers were so closely watched, because there’s so much confusion in the actual numbers. Case in point, the expectations for planting pace in corn was for 92%-93% done. Well, yesterday’s number came in at exactly 92% done nationwide, but the irony comes with the question, 92% of “what” actual acres are planted??? Is it 92% of the March Intentions? How is prevent plant acreage calculated in those totals? Technically, an acre that was intended to be planted back in March that was turned in as prevent plant would be considered 100% planted, but in the end it’s not a production acre. So, it gets really confusing analyzing a 92% done number when nobody has even a clue as to what the acreage potential was for corn anyway… We’ll add even more confusion on the last business day of the month when the June Final Acreage data is released. Those surveys were conducted at the first of this month when there was still way north of 20 mln acres of corn yet to be put in the ground.
The moral to this story is in 27 years of being in this business, I don’t think I’ve ever witnessed a planting season that created far more questions than answers. There’s an astronomical number of moving parts to this equation that will continue to move until the last farmer parks their planter in the shed. Then all we’ll get is more questions on late planted yield potential and GDU discussions and more confusion heading into fall. The one factual piece of information I want to pass on today is, if someone tries to make you think they have a handle on acres, or production potential at this moment in time, they’re full of crap, yet in two or three minutes of browsing through social media, or ag news sites I can find five or ten people who are proclaiming just that. This is one of those years where trying to remain profitable is exponentially more important than trying to pick the high.
That being said, given the data yesterday versus the USDA acreage figure from the June Crop Production report, there were still 6.4 mln acres of corn left in the top 11 states as of June 16. 7.4 mln acres unplanted in total. South Dakota was only 78% planted, Ohio 68% planted, Indiana 84% done and Illinois 88% done. All of those states have a 5 year average of 100% on that date. That’s either going to be a LOT of late planted corn, or a LOT of Prevent Plant claims.
Emergence on corn yesterday was 79% versus 97% as the 5 year average. Crop condition ratings were 59% g/ex, unchanged from last week and down from 78% g/ex last year.
Soybean seeding was 77% done versus a 5 year average of 93%. Emergence was 55% versus 84% average. They haven’t put out condition ratings on beans yet. That still leaves soybeans with 19.4 mln acres yet to be planted as of June 16.
Winter wheat harvest moved up 4 points to 8% complete versus 20% on average. Texas was at 42% compared to 56% normal. Kansas was 1% compared to 12% average. Oklahoma was 16% done versus 56% as the average pace. There’s rain in the forecast that’s going to hamper that harvest progress this week as well.
One of the bigger things to note though is 5 day precip potential that’s really wet for South Dakota, Illinois, Indiana and Ohio, along with all of Missouri. That’s not doing the corn and soybean planting pace any favors either, which gets back to this thought process regarding all the moving targets in these markets. Way too many unknowns and we’re not getting answers with any credibility anytime soon.
6-10’s last night showed above normal precip over the entire Plains states as well as all of the Corn Belt. Temps were below normal in the Central and Northern Plains and above normal south and east.
Pete Loewen
Loewen and Associates, Inc.
Pete Loewen / Matt Hines / Doug Biswell / Matt Burgener
www.loewenassociates.com