Triple digit lower closes create another crazy day of trade for the hog market once again. In the last two weeks, pork cutouts are up more than $12 and cash hogs are $16 higher in the same timeframe. In the midst of that rally there have been some steep drops, particularly in some of the deferred futures months and Monday’s action fit the profile once again. Multiple hog months were down over $2 and the October contract finished down the limit of $3.
Live and feeder cattle spent time on both sides of unchanged, but finished in the red across all but one unchanged month and that was the spot August live cattle contract. There was some confusion in that action as well given the fact last week’s negotiated cash feedlot trade was up $1 to the $112 area in the Southern Plains and that’s $3+ above yesterday’s August live futures close. Odd there was little to no futures reaction to higher trade and a trade that’s strong premium to futures heading into deliveries next week, so essentially we had confusing trade across the entire meat complex.
Cattle slg.___ 119,000 +5k wa +5k ya
Choice Cutout__213.26 +1.09
Select Cutout___189.76 +1.42
Feeder Index:___141.46 ++1.88
Lean Index.__ 80.36 +1.50
Pork cutout___84.04 -.34
IA-S.MN direct avg__86.49 +3.34
Hog slg.___ 457,000 -16k wa +16k ya
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Grain and oilseed trade was mildly higher in everything at the closing bell. Export inspections that came out mid-morning were bearish across the board and thankfully that didn’t impact prices negatively. Two bright spots from that data came from China being a taker on 2.5 mln bushels of US corn shipments and 22 mln bushels of US beans. That’s right at 58% of the total beans shipped last week, so that’s a pretty significant deal even in the face of the total shipments being a little weak. Soybean export inspections were 37.9 mln bushels versus a pace needed each week to hit USDA’s export target for the marketing year of 43.8 mln. With only 5 more weeks of reporting for the corn and soybean marketing year that ends on the last day of August, that’s bad news for beans, although the corn picture looks exponentially worse. Corn export loadings were 25.4 mln bushels versus a pace needed of 71.5 mln. Milo needs 2.5 mln bushels per week and only got 359k yesterday. It faces the same dilemma as corn and soybeans with good chances the export forecast for the old crop marketing year gets trimmed in the August S&D numbers. Versus a year ago totals, corn shipments are down 284.6 mln bushels, milo off 118.4 mln and beans are down 447 mln.
The wheat new crop marketing year is different than the fall crop markets and began on June 1. The weekly pace needed in wheat to hit USDA’s export target is 18.4 mln bushels and yesterday’s inspections number was 14.4 mln. It’s still early enough in the marketing year to give wheat some benefit of the doubt. Last Thursday’s weekly export sales were bullish. We’ve recently seen Black Sea region, EU, Australia and Canada wheat crop production estimates trimmed as well. Add in the fact that with a faltering central Kansas corn crop, there might be some extra incentive to feed HRW wheat this year still and the wheat market does show some friendly potential. Mind you I’m not calling it bullish potential yet, because ending stocks are still pegged at 1 bln bushels for the current crop year and that’s a nasty big number. As opposed to “more bullish”, I’m more in the camp of calling things a little “less bearish” for the time being.
Fund activity yesterday was estimated at buyers of 4k wheat, 7k corn and 4k beans. That puts the funds at a mild to moderate net long, a small net short in wheat and a mild to moderate short in soybeans still.
Crop progress and condition data yesterday had corn conditions improving 1 point from last week in the g/ex category to 58% g/ex. Last year it was 72% g/ex on the same date. Only 44% of the Illinois crop is rated g/ex. Iowa is at 65% g/ex. Soybean condition ratings were unchanged from the previous week at 54% g/ex. Last year it was 70% g/ex at the same time. Iowa beans were 62% g/ex and Illinois 44% g/ex. Spring wheat was 73% g/ex, down 3 points from last week and 5 points behind last year’s rating.
Winter wheat harvest is still struggling with a sluggish pace. Nationwide, 75% of the crop is harvested versus a 5 year average of 86%. Aside from the states that are 100% done already, there’s only one other state in the top 18 producing states that’s at or ahead of the 5 year average pace and that’s California. Most states are way behind normal, some to the tune of 30% behind or more.
Corn % silking was 58% nationwide compared to 83% normal. % dough was at 13% versus 23% as the average. Once again, in the northern states with the shortest growing season, there’s still big concern over whether crops will have enough time to mature this year. Minnesota was 54% silked versus 81% as the average for that data, Sodak 27% compared to 77% normal and Nodak 38% versus 59% normal.
Same story goes for the soybeans. 57% of the crop is blooming versus 79% as the average for that date. 21% of the crop is setting pods versus a 5 year average of 45%.
6-10’s last night showed above normal precip chances for all of the Plains states, extending into the Central Corn Belt. Illinois was a mix of normal to above and east of that line was normal. Temps were pegged at above normal from west Texas into SW Kansas and normal to below normal everywhere north in the Plains. Most of Iowa and all of Missouri was below normal on temps. The Eastern Corn Belt was normal to above.
Pete Loewen
Loewen and Associates, Inc.
Pete Loewen / Matt Hines / Doug Biswell / Matt Burgener
www.loewenassociates.com