Banner day for the feeder cattle market yesterday, but the live cattle and lean hogs didn’t really take the bait and follow along very well. Feeders finished the session up over $2 in every contract month. Fats and hogs were must mildly higher in most contracts at the close.
The monthly Cold Storage report was released yesterday afternoon and there were some big swings in the data. Total red meat in freezers was down fractionally from a year ago, but frozen beef was down 12%, while frozen pork was up 11%. Those are some big year-to-year changes. Total frozen poultry was down 5% from a year ago with chicken specifically down 6%. The biggest news coming out of that data was several record large storage totals in numerous different cuts of pork. We obviously need to continue the strong sales and shipment pace in the export side of the pork market to avoid further backlogs in some of these cuts. Weekly exports have been really good, but when you kill 49,000 more head of hogs per day than the previous year, like what we saw yesterday, “good” sales sometimes still aren’t enough.
Versus the expectations from last Friday’s COF report, the data was mildly friendly, so I’ll attribute at least part of yesterday’s strength to that reaction. Feedgrains were under heavy pressure as well, which was helpful in the strong buying push in the feeder cattle market.
Cattle slg.___ 114,000 -3k wa +4k ya
Choice Cutout__213.32 -.10
Select Cutout___189.59 +.08
Feeder Index:___138.16 -.49
Lean Index.__73.27 +.87
Pork cutout___80.61 +2.08
IA-S.MN direct avg__78.78 +3.77
Hog slg.___473,000 +63k wa +49k ya
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Grain and oilseed trade got a little ugly in the wheat and soybean trade with double digit losses prevalent in those markets. Corn was bordering on ugly and did touch double digits to the downside at times, but managed to close just above the 10 lower mark in everything. Funds yesterday were sellers of 6k wheat, 10k corn and 7k beans.
Export inspections data that came out yesterday morning was once again sadly disappointing in corn and soybeans, but the milo number was good and wheat was only mildly disappointing. Corn inspected for export for the week ending July 18th was 17.2 mln bushels. That’s a long shot from hitting the 63.8 mln bushels needed every week between now and the last day of August to attain USDA’s export target for the marketing year. Only 27% of what’s needed to be exact. Soybeans were slightly better with 20.6 mln in inspections versus 42.8 mln needed each week. Half what’s needed in beans is better than the ¼ we got in corn, but they’re both bad. Milo inspections were 2.4 mln versus 2.2 mln needed every week, which keeps milo on a pace that has a good shot at coming in very close to USDA’s projection. Wheat was 15.9 mln bushels compared to 18.3 mln needed every week.
I touched on this a little bit last week, but the unfortunate reality to seeing export inspections miss the target so many times in a row is when that happens, we usually see USDA lower their export projections in the S&D’s. Every time you lower exports, generally that also translates into larger ending stocks. Not a good combination for the markets.
Crop progress and condition numbers that came out after the close continued to emphasize the lateness of this year’s fall crops. I still think the progress numbers are far more important for the trade than condition numbers, so we’ll start with that data. Corn silking was at 35% nationwide versus 66% as the average for that date. In the big four corn producing states, Illinois was 36% compared to 84% normally, Iowa 41% versus 71% normal, Minnesota 21% compared to 56% normal and Nebraska 40% versus 70% normal. Percent dough was released for the first time this week and it was 5% nationally versus 10% normal.
Soybean % blooming was 40% compared to 66% as the 5 year average. Current levels compared to 5 year averages had Indiana at 21% vs 67% normal, Illinois 30% vs 72%, Iowa 47% vs 72 and Minnesota 47% vs 70% normal. North and South Dakota are also way behind their normal pace, which emphasizes the dire need for a later than normal first frost date in those states, since they generally push the envelope on freeze in a lot of areas even in a normal year. Soybeans setting pods was released this week for the first time this crop year and came in at 7% nationwide versus 28% as the 5 year average.
Condition ratings had corn at 57% g/ex nationwide and that was down 1 point from last week. We were 77% g/ex last year. Soybean condition ratings were 54% g/ex, unchanged from last week and down from last year’s 70% g/ex rating at the same time. Spring wheat condition ratings were 76% g/ex, which was the same as last week, but down slightly from last year’s 79% g/ex rating at the same date.
Winter wheat harvest was pegged at 69% complete and that’s 10 points behind last year’s pace, but was a gain of 12% from last week.
Back to the export picture for a moment, there was a lot of banter yesterday about China being back in the market for US ag products. Egypt also tendered for more wheat yesterday. Last week they bought one cargo of Russian wheat and there weren’t any US offers in that mix, because we’re too high on price.
6-10’s last night showed above normal temps over most of the Plains and all of the Corn Belt. Precip chances were above normal for the Central and Eastern Corn Belt and most of the Northern Plains. Central and Southern Plains were mostly in the below normal precip category. After last week’s heat and the last week of no rain in a lot of areas from Kansas south into Oklahoma and Texas, that means a lot of crops are starting to backpedal pretty hard.
Pete Loewen
Loewen and Associates, Inc.
Pete Loewen / Matt Hines / Doug Biswell / Matt Burgener
www.loewenassociates.com