It’s not like anyone needed to throw any more gasoline on the volatility fire that erupted last week in the lean hog futures market, but that’s exactly what happened on Monday. August hogs had a fairly wild ride, trading in a $4 range from high to low and closed triple digits higher, along with the October contact up triples as well. The next three months out were close to or a little over triple digits lower. October hogs actually had an $8.40 range yesterday from high to low and that’s a monster.
Not to be too far outdone, September feeder cattle had a $6.90 range from high to low, yet only one contract was triples in any direction on the net changes at the finish and that was the Sep at $1.17 higher. The live market had a range of close to $4 on a few months. Fats and feeders finished with everything higher except one contract month and that was October live.
Starting out the day in the hole, the live cattle market was disappointing considering the news from Friday that the US and EU had inked a deal on US beef exports. Granted, we closed higher in most months, but that was money flow related and likely not solely from the trade news.
Cattle slg.___ 119,000 unch wa +2k ya
Choice Cutout__214.70 -.03
Select Cutout___191.67 +1.04
Feeder Index:___141.62 -.09
Lean Index.__ 84.68 +.04
Pork cutout___88.13 +1.49
IA-S.MN direct avg__76.19 -2.38
Hog slg.___427,000 -25k wa ++33k ya
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Grain and oilseed trade was very similar to the meats. Almost everything Ag started the day actively on the minus side of the net changes, but when the pendulum swung towards the buy side, it also did it in everything all at once, lending more odds to money flow as the catalyst than anything else. Wheat and corn settled mildly up and the bean market was flat. At one point early in the day, corn and wheat were down close to 10 and the bean market was well over 10 lower, so pretty remarkable turnaround across the board. Funds yesterday were estimated buyers of 4k wheat, 12k corn and 2k beans.
Some attributed the turnaround to an article from a farm publication citing 83.5 mln corn acres planted this year and 79.6 mln planted on soybeans based on farmer surveys. The production numbers off those figures were 12.723 bln bushels of corn and 3.816 bln beans. Informa was out yesterday with their numbers as well with corn production estimates of 13.867 bln corn and 3.823 bln beans. FC Stones numbers from last week were 13.9 bln corn and 3.74 bln beans. Linn LLC’s estimates are 12.55 bln corn and 3.47 bln beans. There’s an enormous difference in some of those corn projections and I’m not going to give the benefit of the doubt to any particular set. At this point in the game, acres are the biggest potential variable. USDA already indicated they won’t be surveying yield factors until September, breaking their long term trend of August enumerator data.
So, just to emphasize it one more time, the fact meats and grains all swung from big bears to bulls at very similar times leans fairly heavily in favor of money flows influencing the movement yesterday more than crop production guesses ahead of next Monday’s report. The move from lower to higher was also very counter to the latest China news since their government told importers to stop buying US commodities.
Weekly export inspections that came out midmorning were bearish across the board and the most disappointing number was in corn. Corn inspections were 24.9 mln bushels and we needed to see well over 70 mln bushels this week to stay on target for USDA’s 2.1 bln export estimate. With four weeks left in the old crop marketing year, we’ll need to get 80 mln+ per week to hit that target, so it isn’t looking good for the corn market. Soybean inspections were 37.8 mln bushels versus 44+ mln needed this week to hit the 1.7 bln bushel export target. Cumulative exports so far this marketing year are 1.520 bln, so there’s 180 mln bushels needed in August to hit that 1.7 bln mark. That equates for 45 mln a week between now and September 1. Wheat export loadings were 14.5 mln bushels versus a pace needed of 18.5 mln per week. Still very early in the wheat marketing year, so I’ll continue to give wheat the benefit of the doubt. Corn and soybeans, not so much.
Crop progress and condition numbers showed corn g/ex ratings at 57% nationwide, which was down 1 point from last week and 14% under last year’s ratings on the same date. Soybean ratings were 54% g/ex and that was unchanged from last week, along with 13% below last year at the same time. Spring wheat condition ratings were 73% g/ex, unchanged from last week and 1 point under a year ago.
Spring wheat harvest was reported for the first time yesterday coming in at 2% done versus 14% as the 5 year average. South Dakota was 5% versus 42% normal, emphasizing the struggles in that state all year. Winter wheat harvest was 82% done versus 92% average for that date. Sodak’s winter wheat harvest is 49% complete compared to 81% normally.
78% of US corn is silking versus a 5 year average of 93% and 23% of the crop is in the dough stage versus 42% normal. In the big 4 corn states, Illinois is 29% dough versus 58% normal, Iowa 20% versus 42% normal, Nebraska 27% vs 40% normal and Minnesota 15% versus 34% as a 5 year average. South Dakota was 7% compared to 31% normal and North Dakota 1% versus 14%. The reason I added the Dakota’s was just to continue and emphasize the lateness of this year’s crop in northern areas that are obviously at greater risk to frost or freeze as we get closer to fall.
The percent of the soybean crop setting pods was 37% compared to a 5 year average of 63%. Illinois is 30% compared to 66% normal and Iowa 33% versus a 68% average. .
6-10’s last night showed above normal temps for most of Kansas and everywhere south. Nebraska, southern Iowa and all of Illinois and Indiana was normal and below normal temps were on tap everywhere north. Precip was above normal from the Panhandle region through most of Oklahoma and everywhere north. The far northeast portion of the Corn Belt was normal to below and south of the Red River to the Gulf in Texas was below normal.
Pete Loewen
Loewen and Associates, Inc.
Pete Loewen / Matt Hines / Doug Biswell / Matt Burgener
www.loewenassociates.com