[Mon]: cash markets were quiet last week … [Fri]: Boxed beef cutout values this afternoon were lower… Choice fell $1.13… Select went up 27 cents… In negotiated cash sales, the USDA reported 268 head sold dressed in Nebraska at $197-199, with no live sales. In Iowa-Minnesota, there were 1,023 head sold dressed at $198-199, with 971 head sold live at $123-126…
Farm Commodity Newsletter/Iowa Farmer Today
Mon 2/4/2019 8:56 AM
Cattle - Cattle moved higher to start last week, but that move “lacked conviction,” Blue Line Futures said. They noted that they finally saw the break on Thursday “allowing us to reduce that short exposure and eventually look to the long side of things with clients on Friday morning.” They believe the market will trade in a more defined range this week.
“The sweeping key reversal is a bearish signal, and the lower close for the week is also bearish,” The Hightower Report said. They noted that cash markets were quiet last week, and close-in resistance for April cattle sits at $127.12 and $127.62.
Small Chinese producers could leave hogs
Reports indicate “tens of thousands smaller Chinese hog farmers are expected to abandon pig farming after months of weak prices and restrictions on moving pigs to market,” Allendale said. They note this could reduce production by one-fifth this year, boosting prices and demand for cheaper imports.
With technical action turning bearish in cattle, The Hightower Report indicated that the supply outlook going into the spring is “showing more production than in previous years.” The expected second quarter beef production is estimated to be up 410 mln pounds from the first quarter, the largest increase since 2008.
Fri 2/1/2019 4:09 PM
Boxed beef cutout values this afternoon were lower on Choice and firm on Select on light to moderate demand and light offerings, USDA said.
Choice fell $1.13 to $214.26/cwt. (last week: $217.01)
Select went up 27 cents to $213.15 (last week: $212.03)
In negotiated cash sales, the USDA reported 268 head sold dressed in Nebraska at $197-199, with no live sales. In Iowa-Minnesota, there were 1,023 head sold dressed at $198-199, with 971 head sold live at $123-126.
“The market opened lower, but there was a lack of new selling interest,” The Hightower Report said. “The market bounced to trade slightly higher on the day in the mid-session.” They noted that the latest cold weather caused a “severe drop” in beef demand for a couple of days.
There has been some short-covering “after yesterday’s strong reversal,” Stewart-Peterson said about the cattle trade throughout the day. “Yesterday’s trade was pushing into new contract highs on the April contract and reversing strongly into negative territory posted a topping signal on April charts.” They noted that this changed the technical picture, and could trigger some long liquidation.
Livestock firms after yesterday's down action
Yesterday’s pull back should be really short-lived, as the beef market firmed up today, Virginia McGathey of McGathey Commodities said. She said there was a scare in some of the traders but some buying came in to shore up the market.
Slaughter estimates this week were estimated at 567,000 head for cattle and 2.076 mln head for hogs.
The cattle number is down 17,000 head from last week and down 19,000 head from the same stretch a year ago. Hogs were down more than 200,000 head from last week.
Grains stay green on trade
China’s vow to purchase more U.S. goods continued to help support the markets today, as grain prices continued their recent rise.
U.S. Treasury Secretary Mnuchin and U.S. Trade Representative Lighthizer are expected to head to China in February to work on some of the intellectual property theft and technology issues, as they continue to attempt to work out a deal with China, The Hightower Reort said. “Still, China has indicated tha they would be buyers of agricultural products in tandem with a trade truce.”
Corn bounced back from yesterday’s fall. “We found out that the export data was a little bit above what the forecast was, so it did fulfill what was needed,” Virginia McGathey of McGathey Commodities said. “Right now we need a little more data to get this moving.”
Yesterday’s market saw a little weakness, largely due to the Buenos Aires Grains Exchange raising their Argentinian corn production to 45.0 mln tonnes, The Hightower Report said. “They stated that early corn plants are developing so well that bumper yields are expected.” A crop at the projected mark would be a record high, nearly 4 mln over the previous record.
“The China purchase of the 5 mmt (of soybeans) really sent the market screaming and was up double-digits for quite a while,” Virginia McGathey of McGathey Commodities said. “It really relieved a lot of the uncertainty with many of the traders. It was improving some optimism that more will come.”
The upside in soybeans may be limited by the South American weather patterns, Stewart-Peterson said. “South American weather has seen some improving forecasts,” they said, “but dryness concerns may have impacted this year’s harvest.”
The U.S./China negotiations “ are helping to bring more buyers active in the grain markets,” Stewart-Peterson said. “With prospects of additional Chinese purchases, wheat may be on the list.” They noted that after a lower trading week for wheat, they are seeing some short-covering going into the weekend.
“World prices have continued to firm over the last few weeks, and the U.S. price has held or improved only slightly,” Jack Scoville of the Price Futures Group said. “USDA has not said anything about the January reports, but those will be of interest. The Wheat seedings report could easily show that not all of the winter wheat got planted in the Midwest and Great Plains due to wet conditions in the Fall planting period.”